The article sheds some light on the following areas:
– Modern era’s construction industry significant changes.
– How material procurement is considered as a difficult juggling act.
– Procurement process most common challenge.
The modern era has brought about significant changes in the construction industry. Construction techniques have been refined to become more efficient while materials have become stronger and more durable. Along with them, however, are new and updated legal standards, requirements, environmental concerns, and systemic problems that exist within the current construction framework.
One area to consider is the construction procurement process. As of now, it is undergoing massive changes as stakeholders try to choose the procurement strategy that fits the needs of the business, control costs, and ensures the quality and profitability of the project. In a volatile field where companies struggle to be ahead amidst cash flow problems, tight margins, and contract management, procurement is a difficult juggling act.
Here are some of the most common problems in construction procurement.
One of the biggest challenges in procurement lies in supplier management. Companies need to identify the best suppliers, maintain a steady supply of high-quality materials, and assess supplier performance for a continuous business relationship potential. So Suppliers need to be monitored in terms of the following things:
Supplier’s delivery capability.
Supplier’s timelines of the delivery, and
Supplier’s quality of supply.
Finishing the construction project within the allotted cost is always one of the priorities of construction companies. This means actively looking for opportunities to reduce costs and realize savings. With increased prices of goods and services when the project is executed, along with budget constraints, reducing costs and achieving savings are rarely achieved.
Long Procurement Cycle
Long lead times and procurement cycles in construction have several causes. One of the biggest reasons is the delay in the preparation of technical specifications, terms of reference (TOR) for services, and statement of work (SOW) for works. Failure to start the evaluation process on time, as well as hitches during the contract negotiation, contributes to the long procurement process. Human error such as overlooking the procurement schedule also delays the process further.