How to Build a Smarter Procurement in the Construction Industry

Choosing the most suitable procurement method for the specified construction project is a long term hard decision; it is a

Over the past few years, the construction industry has been changing dramatically. One of the most important stages in the construction management and business management is the planning phase. They share similar two main levels of planning which are the strategic and operational planning. However, business management planning to decide in advance what should be done, and how to do it, when you do and you are done. On the other hand, Construction management strategic planning is to deal with selection on a high level of overall objective of the project, including the scope, procurement methods, schedules and financing options but the planning of operations, including the

The procurement life cycle can be made up into 13 key stages. The stages I am going to follow the CIPS stages of procurement and supply management. (Cips.org, 2017)

This paper includes a description of the procurement planning process. The most valuable output of the plan procurement process will be identified. Furthermore, the various contract types will be explained. A source criterion that would be applicable to any project will be described and three criteria that would apply to most projects will be identified. An analysis of the ethical

Procurement management is the processes to purchase or acquire the products, services or results needed from outside the project team to perform the work. Project Procurement Management involves not just purchasing products, services or results, but also ensuring that those that are purchased are right for the project, meets standards and is based on project requirements. This life cycle includes tracking from order through deployment and completing with invoice reconciliation.

It is quite challenging to discuss about procurement management without stating the importance of its strategies. There are four main basic procurement strategies that serve different functions within a procurement management. To begin with, a “Partnership” strategy focuses mainly on constructing mutual commitment in long term relationship with suppliers. While a “Secure Supply” strategy aims to secure short and long term supply while reducing risk from suppliers. In addition, a “Category Management and E-Procurement solutions” serves as a tool to reduce logistic complexity, improve operational efficiency, and attempts to reduce the number of suppliers. Lastly, a “Competive Bidding” strategy emphasizes on obtaining the “Best Deal” for short term transactions with suppliers.(van weele) Each of these four strategies involves a unique purchasing methodology, which implies that the complexity is embedded in an individual strategic implication. Therefore, it requires different tools to accomplish the specific strategical characteristics. A business entity may need to support and execute procurement decisions with other strategic apparatus with analytical methods, including market analysis, uncertainty analysis, price forecasting, supplier relationship and along with others.(Harvard)

Comparing to the option of upgrading the whole procurement system, my recommendation aligns with Russell Menere (National Procurement Manager of BAL)’s idea, which is to implement short term improvements based on current procurement system in

Procurement intends to explore supply market opportunities and to implement resourcing strategies that deliver the best possible supply outcome to the organization, its stakeholders and clients (Kidd, 2005). Therefore, construction procurement exists to purchase a construction project as requirement of firms or organizational entities to achieve its goals. However, the choice to use external resources is the part of firms’ decision-making

Choosing construction management as a procurement strategy means the client is responsible for leading the

Construction projects can be extremely complex and fraught with uncertainty. Risk and uncertainty can potentially have damaging consequences for the construction projects. Therefore nowadays, the risk analysis and management continue to be a major feature of the project management of construction projects in an attempt to deal effectively with uncertainty and unexpected events and to achieve project success. Risk is inherent on construction projects and disputes frequently arise. One in four construction projects results in a dispute that leads to arbitration or litigation. With large scale, complex projects the likelihood of serious, time-consuming and expensive claims increases.

The completion of any project depends on the execution of various parameters mostly set at the beginning of the project. In order to complete the project to satisfactory levels, the project must be completed within the stipulated timelines, fall within the approximate budget and be of the required quality standards. However, most of the projects are affected by adverse changes and unforeseen events that occur during the execution period. Research shows that the magnitude of change is dependent on the size of the project, with large projects experiencing more uncertainties due to several factors including; planning and design complexity, interest groups having deferring opinions, resource availability, Economic and political climate and statutory regulations, which may necessitate change of plan. Most of the uncertainties are known to occur in the concept phase and if not intervened, they may affect the entire project. The burden falls on the management of such risk as some managers choose to ignore the uncertainties since they call for additional costs. Other inherent risks may go unnoticed and therefore remain unsolved,

There however are challenges in the industry occasioned by uncertainty on future spending on construction projects by the government. Moreover, the cost of doing business and the ability to increasingly make revenue have created a challenging environment for the construction firms. Therefore stakeholders in the construction industry are concerned with whether the government would increase its spending and whether the public construction projects will be available in the future since less than 10 percent are currently financing their clients.

To select a suitable procurement strategy for a construction project, there are some issues which need to consider. From all of those issues, there are 3 big issues that mainly affect the selection decision which are time, cost and quality. There is several type of procurement strategy available in market that commonly used for construction project and each of the common method will be analyze and compare to find the most appropriate method for this project. The choice of procurement strategy is very important to the success of a construction project. Therefore, the characteristic of each strategy have to analyze and also its relative advantages and disadvantages. A recommendation of most appropriate procurement

When choosing a type of procurement it is based on the clients experienced and knowledge of construction that the client has and there requirements. Once this has been decided then the relevant contracts can be drawn up outlining the relevant responsibilities shared and risk taken into consideration and also meeting the correct legislation and the Housing Grants, Construction and Regeneration Act 1996. With regards to the Housing Grants, Construction and Regeneration

In each of the procurement method, there are advantages and disadvantages being analysed in accordance with the client’s requirements, which will help the client have a better perspective of the happenings of his project.