Why procurement is a key success factor in any construction project
In most sectors, procurement refers to the process of sourcing products or services. Specifically, procurement in construction means labor and material buying – it’s the allocation of design and construction work and the choice of components that go into the building. Maintaining control of the procurement process is vital work involves multiple stakeholders, such as input from site and project managers, and can significantly impact the outcome of any construction project.
Procurement in construction is not easy. Working with a complex and opaque supply chain, procurement professionals must source high-quality products and services with a specific budget, and simultaneously comply with regulatory guidelines. Accuracy, timeliness, and quality of procurement are, therefore, important in the construction sector.
In fact, 87% of construction professionals believe that good procurement is synonymous with a successful project (The Chartered Institute of Building). And we at Medius believe successful construction procurement relies on industry knowledge, experience, and the right technology - especially with the supplier challenges the construction industry faces post-COVID-19.
Finding the right suppliers
Quality of suppliers is essential, as it’s all about getting the right person to do the job. However, due to the size of projects - especially construction firms that work with multiple sites - the pool of suppliers that a construction company work with can be massive, meaning that it can be challenging to deal with quality control.
With the right technology, such as a best-of-breed supplier information management system, you can put the onus onto the suppliers by allowing them to self-serve everything – from registration to account maintenance. Instead of using your valuable time to manage your suppliers, you can ensure that all your supplier information in your database is already accurate and up to date.
In addition, because suppliers have to submit and renew proof of mandatory certifications, you will only trade with suppliers that are up to your standards.
Some software, such as web3 for construction, is integrated with pre-qualification databases, such as Archilles and ConstructionLine, so you can ensure all activities meet your compliance and project requirements.
Strategic sourcing
Procurement professionals need the knowledge and experience to source the best quality products and services available, procure on schedule, and stay within budget. Due to the amount of labor and material involved in construction projects, volume-leveraged pricing is crucial in construction procurement.
With a sourcing platform, you can reduce cycle time and cut evaluation time by up to 85%, allowing you to align your strategic sourcing activities with a project schedule. And thanks to a digital, transparent sourcing process, you can outreach much further and establish a large network of providers. An eSourcing system can help with the products and service evaluation process, and in some cases, the built-in geo-location functionality allows you to factor in any logistic consideration in transporting materials to the project site too.
Medius has over ten years experience in helping construction organizations to achieve procurement excellence. Our fully integrated Medius for construction solution has helped many clients such as Skanska, Barratt and Murphy to manage supplier risk and performance, and gain visibility and control across the large and complex supply chain.
Download our Medius for construction solution guide to find out more about procurement in construction and how to better control the procurement process with automation.
