Moren Corporation (B) Moren Corporation was builonig three additional generating stations to serve the rapidly expanding energy market. To link these stations with the total area grid, a new method of carrying the power lines using ornamental tubular poles instead of towers had been adopted. Moren lacked experience with poles and decided to subcoutract the design engineering, fabrication, and erection of the new line. [For company background and line projection information and the selection of enginecring consultunts see Moren (A) case.] Having selected its consultants for its first 345kV transmission line and placed its order for the fabrication of the poles and hardware, Moren was ready to locate a suitable contractor to do the foundation work, erect the poles, and string the lines. Purchasing and engineering had been pursuing this concurrently with the search for a fabricator, because Moren wanted to get started on the line by the fall. Gordon Yarrow, supervisor of materials purchasing, was responsible to the vice president of supply, John Carter. for this contract: CONSTRUCTION SELECTION One company, T.D. Rapier, had done almost all Moren's inansmission work for over the last five years, bet, with the consultant's help, a good cross section of qualified line builders had been invited to bid. In addition, several foendation companies were asked to quove on the subyrade work. This helped to test the market to determine whether foundation contractors could build foundations cheaper than line builders. Mr. Carter reserved the right to award separate contricts for above- and below-grade work. Two meetings were held with the bidders, one for the line builders and another for the foundation contractors. at which all aspects of the job were fully discussed. The unit prices were based on current wage rates and working conditions and were subject to adjastment by a percentage equal to 0.80 times the percentage change in the average wage rates. By September, the consutting engineers were able to provide purchasing with an evaluation of tho biddieg and computation, enabling the attached summary to be com: piled (see Exhibit 1). Notes 1. Two line contractons and one foundation contractor declined to bid. 2. The two lowest line constructon. Rapier and McTaggart, were evaluated, plus the possibility of a split award to (L) for foundations and (h) for EXHIBIT 1 Moren Corporation 345kV Transmissik One company, T.D. Rapier, had done almost all Morens transmission work for over the last five years, but, with the Mersygain: of a split award to (L) for foundations and (D) fo EXHIBIT 1 Moren Corporation 345kV Transmission Line Addison- Smithfield- Mesa Valley 162 Purchosing and Supply Management above-grade work. However, McTaggart is recommended for the following reason: a. Offers lowest bid. b. Highly experienced. Built thousands of miles of line in mountain, desert, and swamp. Experience included 230,345,500, and 750kV construction. c. Presently working for several other power companies. d. Recommended by our desiga engincers and consultants. c. Has done considerable work in this state through a subsidiary, although not for Moren. Assignment-Chapter 06; Case 6-2 Moren Corporation B (16th Edition, p. 161) Additional resource includes a "spreadsheer" that ahould be given consideration in your evaluation, as well as your solution-recommendation NEED IDENTIFICATION AND SPECIFICATION ISSUES: (A) What are the major considerations in spliting a contract into different phases? (B) What is the role of the purchasing manager in roviewing the work of his subordinates? CHALENGE: No. 1: To whom should the foundation and erection contracts be awarded? No. 2 If you were in the position of Me Carter. Which contractor would you select for the foundabion and erection work? SOLUTION AND RECOMMENDATION QUESTIONS TO ADDRESS: Q1. Would you separate these two (2) phases and award them to delerent bidders? Q2. Why do think there is such a wide tange of bids for the foundation instaliations (\$4 million besween the lowest and second lowest bids, $30 milson between the lowest and highest bids)? Q3: How does the selection of a line and foundation installation contractor compare with the selection of a pole manufacturer as far as difficulty of choice is concerned? Q4. What are the advanteges and disadvantages of spliting the erection and foundation contracts? O5. What additional information would you request from your subordinates if you were Mr. Carter? Q6. On the basis of the avallable information which decision would you make? Moren Corporation (B) Moren Corporation was builonig three additional generating stations to serve the rapidly expanding energy market. To link these stations with the total area grid, a new method of carrying the power lines using ornamental tubular poles instead of towers had been adopted. Moren lacked experience with poles and decided to subcoutract the design engineering, fabrication, and erection of the new line. [For company background and line projection information and the selection of enginecring consultunts see Moren (A) case.] Having selected its consultants for its first 345kV transmission line and placed its order for the fabrication of the poles and hardware, Moren was ready to locate a suitable contractor to do the foundation work, erect the poles, and string the lines. Purchasing and engineering had been pursuing this concurrently with the search for a fabricator, because Moren wanted to get started on the line by the fall. Gordon Yarrow, supervisor of materials purchasing, was responsible to the vice president of supply, John Carter. for this contract: CONSTRUCTION SELECTION One company, T.D. Rapier, had done almost all Moren's inansmission work for over the last five years, bet, with the consultant's help, a good cross section of qualified line builders had been invited to bid. In addition, several foendation companies were asked to quove on the subyrade work. This helped to test the market to determine whether foundation contractors could build foundations cheaper than line builders. Mr. Carter reserved the right to award separate contricts for above- and below-grade work. Two meetings were held with the bidders, one for the line builders and another for the foundation contractors. at which all aspects of the job were fully discussed. The unit prices were based on current wage rates and working conditions and were subject to adjastment by a percentage equal to 0.80 times the percentage change in the average wage rates. By September, the consutting engineers were able to provide purchasing with an evaluation of tho biddieg and computation, enabling the attached summary to be com: piled (see Exhibit 1). Notes 1. Two line contractons and one foundation contractor declined to bid. 2. The two lowest line constructon. Rapier and McTaggart, were evaluated, plus the possibility of a split award to (L) for foundations and (h) for EXHIBIT 1 Moren Corporation 345kV Transmissik One company, T.D. Rapier, had done almost all Morens transmission work for over the last five years, but, with the Mersygain: of a split award to (L) for foundations and (D) fo EXHIBIT 1 Moren Corporation 345kV Transmission Line Addison- Smithfield- Mesa Valley 162 Purchosing and Supply Management above-grade work. However, McTaggart is recommended for the following reason: a. Offers lowest bid. b. Highly experienced. Built thousands of miles of line in mountain, desert, and swamp. Experience included 230,345,500, and 750kV construction. c. Presently working for several other power companies. d. Recommended by our desiga engincers and consultants. c. Has done considerable work in this state through a subsidiary, although not for Moren. Assignment-Chapter 06; Case 6-2 Moren Corporation B (16th Edition, p. 161) Additional resource includes a "spreadsheer" that ahould be given consideration in your evaluation, as well as your solution-recommendation NEED IDENTIFICATION AND SPECIFICATION ISSUES: (A) What are the major considerations in spliting a contract into different phases? (B) What is the role of the purchasing manager in roviewing the work of his subordinates? CHALENGE: No. 1: To whom should the foundation and erection contracts be awarded? No. 2 If you were in the position of Me Carter. Which contractor would you select for the foundabion and erection work? SOLUTION AND RECOMMENDATION QUESTIONS TO ADDRESS: Q1. Would you separate these two (2) phases and award them to delerent bidders? Q2. Why do think there is such a wide tange of bids for the foundation instaliations (\$4 million besween the lowest and second lowest bids, $30 milson between the lowest and highest bids)? Q3: How does the selection of a line and foundation installation contractor compare with the selection of a pole manufacturer as far as difficulty of choice is concerned? Q4. What are the advanteges and disadvantages of spliting the erection and foundation contracts? O5. What additional information would you request from your subordinates if you were Mr. Carter? Q6. On the basis of the avallable information which decision would you make