Importance Of Procurement In The Construction Industry

by Procurement Freelancers Team

The construction industry depends strongly on the procurement sector. Obtaining services and products from resources at the best rates and without failing the deadline, is what procurement brings to the construction industry. Numerous contractual agreements are available with the construction companies. Accordingly, procurement subcontractors are hired and assigned different responsibilities concerning various procurement methods. Different contracts are issued and subcontractors from different sectors are hired to handle the responsibilities.

Procurement Categories

When it comes to the construction industry, there is a wide range of categories dealing with procurement methods. Which contract/method of procurement will be picked? This will depend entirely upon the requirement of the client while chalking out the blueprint of the project.

How To Choose A Perfect Procurement Contract?

Is It Possible To Choose A Proper Procurement Method? What Type Of Contract To Consider?

Once a person plans to renovate, develop, or construct a property, a professional project management representative is appointed for consultation purposes. The project management team will comprise mostly of an engineer, quantity surveyor, and architect.

The Most Important Part Of This Process:

The representative, after discussing with the client, needs to pass on the info to the project management team. It is the responsibility of the team to have a clear understanding of the requirements that the client is highlighting. This is of utmost importance before the project planning process commences. Accordingly, suitable and efficient procurement subcontractors are hired.

The Project Management Team Will Focus On The Following Areas:
  • The intention of the project
  • Requirements of the project
  • Quality of the project expected
  • The time frame for the project completion
  • Budget (building cost & running cost)

The above factors will be scrutinized deeply by the project management team. Accordingly, the appropriate procurement methods will be chosen for project execution. Additionally, the procurement method must be such that it meets the client’s expectations completely.

Deciding A Procurement Method – Factors To Consider

The Major Factors To Consider When Deciding The Best Method For Procurement Are Listed:

  • Overall budget
  • Total time for project completion
  • Risk factors involved
  • Expected quality
  • Any project constraint (Specific ones)
  • Financing options
  • Asset ownership

Each of these factors plays a significant role in the procurement process for a construction project. However, there are two specific methods or contracts of procurement that the construction industry follows steeply.

Keeping It Simple, You Need To Understand That Every Procurement Method Available In The Construction Industry Is Divided Into 2 Major Categories. These Are:

  • The traditional method of contract or procurement
  • An alternative method of contract or procurement
When Opting For The Traditional Method, There Are Three Options Available:
  • Lump-sum contracts
  • Re-measurable contracts
  • Cost-plus / Cost reimbursement

In the traditional method of contract, the employer is responsible for appointing the project management team. As a result, the task of the contractor reduces. His/her only task remains the proper project execution and also handling suppliers and procurement subcontractors. Construction projects that follow this traditional method emphasize the use of the competitive tendering process to select an expert contractor to handle the workload.

When Opting For The Alternative Method, There Are Two Options Available:

  • Management Contracting
  • Design And Build

Then, there are these alternative methods that focus strongly on the different types of contracts. The alternative method promises reduced time to prepare the blueprint and creating the documents. Alternative methods promise fast work processing. These methods assign more responsibility to the contractors, be it in the project designing phase, or handling the procurement process. It benefits the employer even more compared to the traditional methods. Once responsibility is assigned to the contractor, the professional can propose different construction methods and value engineering options.

Understanding The Risk Involvement

Construction projects are not devoid of risks. There are greater risks involved. Hence, experienced procurement subcontractors need to be appointed by the project management team to handle the process. Risks can come from different areas, be it the quality of materials supplied, permission issues, land deformity acts, and lots of other areas. With inexperience, difficulties start to arise. There are different regulations of the construction industries. Follow those norms to avoid the risks or else critical scenarios are bound to happen. Reliability is a big issue when hiring a contractor. Otherwise the professional will take undue advantage while offering poor results.

Final Words

Procurement is an integral part of the construction industry. However, the traditional approaches are usually not followed these days, especially in the post covid19 era. The alternative methods have proven to produce better results without high time involvement. The role of contractors and subcontractors is crucial in these alternative methods. The construction industry relies heavily on procurement and accordingly plays by the rules. What is your opinion? Please feel free to comment below.

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