Article #94
Introduction
When we think about the words construction procurement, the first thing that comes to our mind is construction, the process of constructing buildings, and procurement, which is the process of supplying and sourcing goods and services. Therefore, from the two terms, we can define construction procurement as sourcing raw materials and labor for construction. Procurement of building raw materials and labor is essential for the construction of the house because, with these two items, construction can take place. Regarding construction procurement, sourcing raw materials are taken seriously since only suitable quality materials should be used in construction. Construction procurement is usually a very tedious task that requires a lot of time for the manager to evaluate different raw materials to ensure that the building does not collapse after construction. Therefore getting suitable construction materials from a trusted and reputable supplier can be very beneficial.
One of the critical procurement in construction is labor. All construction work requires a lot of labor for things to go smoothly and fast. Procuring labor is also a challenging process since you only need people who are well-experienced in construction, especially when it comes to things like plumbing and electricity wiring in the building. These vital areas in construction are essential since a miss in one area can lead to serious problems in the building, and this is very common with electricity connection in the building. Procuring of labor can also be expensive depending on the design of the house and how big or tall the building is designed to be. The bigger the building, the more expensive the labor will be. Construction managers often source for construction companies with their own laborers to supply labor. This help gives the construction manager an easier time with the construction. It is clear that construction procurement is very important. Therefore, in this article, we will discuss more construction procurement.
Methods of construction procurement.
When a company is outsourcing procurement, they mainly aim at getting the best procurement that will save on time and cost and be the most efficient in their project. Most of the time, the project manager will check the timeline required for the completion of the project, and he will also look at the expectations of the construction, such as the quality of the work to be done and the budgeted cost for that particular project so as to determine which procurement method to take that will be beneficial to the company as well as provide the best and highest quality. It is, therefore, important that companies and project managers evaluate the different methods of construction procurement so as to see which one best suits them. The following are some of the commonly used construction procurement methods.
1. General contracting.
General contracting is one of the most popular construction procurement methods because of its high-efficiency level. General contracting is where a company or an individual gives the contractor a design to build. This widely involves the division of responsibilities and budget among different people to make work easier. The contractor is tasked with coming with his people for labor and raw materials so as to construct the building. Many contractors usually have their own people on standby to build the building, and they always have their own construction resources.
Since there is a high division of labor in general contracting and contractors are tasked with handling everything. Determining who should take responsibility for any damage or accident that might occur during construction can be challenging. That is why most contractors take up insurance covers and preventative maintenance to protect themselves and their workers in case of an accident. This helps in improving the quality of work since laborers can be assured that they are protected and well covered, and it also saves on the cost of damages.
2. Design and build.
The design and build method of construction procurement is rare. Still, in this case, the contractor is tasked with all the responsibilities, from designing the project and sourcing the raw materials and labor. He also undertakes the obligation in case of any accident or danger that might take place during construction. The contractor, in this case, usually has a huge team of employees in various aspects of construction, such as building, architecture, project management, plumbing, electricity connection, and financial advisors. All these people are essential to ensure the smooth running of things during construction.
Suppose the project is huge, and the timeline required for that particular task is short. In that case, some contractors usually partner with other contractors to help supply labor and construction materials. It is usually a tedious process that requires proper project planning to implement good designs and deliver high-quality work. Most contractors generally have insurance covers for their company that also covers their employees for prevention of risk during construction. The contractor designs and builds the whole building from scratch with the budget allocated to their company.
3. Joint venture.
This is one of the most commonly used construction procurement methods for big and complex projects. In joint venture construction procurement, two different parties or contractors come together to deliver the client’s construction job by each offering their part in the construction. In this method, both contractors are hired by the client; therefore, they do not take any responsibility for any damages incurred during construction. At the same time, they are not liable for any losses the client may incur during construction. Each team has a different role to play in the building. One might be tasked with the supply of building raw materials, while the other might be charged with the supply of labor. In the end, they must work together to get the job done within the stipulated timeline by the client.
This is one of the best construction procurement methods since it simultaneously reduces blame games and helps both parties focus on the task allocated to them. This makes work easier and faster. When big projects use this construction procurement method, time is saved, and at the same time, high-quality work is guaranteed. At the same time, the contractor does not incur the cost for any damages since the client is responsible for all damages. This gives the contractors an easy time carrying out and organizing their job with their respective teams, producing high-quality results.
4. Construction management.
This is a type of construction management in which the company or client gives the construction procurement job to the lowest bidder but of high quality. This is mainly common for construction projects that could be more convenient and easier to deal with. The company can take days or weeks to evaluate and select the best contractor. This can be tiresome and costly for the company due to the cost incurred in the evaluation process. At the same time, this method is suitable since it helps the company and client find the best contractor to handle the task.
Often, contractors will bid for such big projects due to the benefits they will likely gain once they complete the project. Contractors can find themselves securing better deals for the previous good jobs done. This method mainly aims to reduce costs for the company and client since the process is very competitive. Hence they can secure cheap construction deals from clients at very low costs. Hence the result of this is high-quality jobs at low prices. Contractors equipped in all construction areas, such as access to construction materials, labor, and designers, are more likely to win the contracts.
5. Private financing.
Private financing is rare, but it is employed by customers who only have limited financial resources available to them. In this scenario, the customer goes to the contractor with the intention of constructing the building from the ground up. The contractor agrees to be responsible for designing, financing, and constructing the structure. When the building has been done being constructed, the customer leases it from the contractor for a period of time. After the customer makes payments on the building, the property is handed to them.
Since the customer must wait until the project is finished and paid all he can to have the building under his name, this technique might be time-consuming. The customer does not have to pay any additional costs as a result of the potential dangers that may arise over the course of the building project when using this approach. This is another way in which the technique benefits the client. The contractor bears all of the associated dangers and duties by themselves. After the project is finished, the customer is in a strong position to profit financially since the contractor is the one who assumes all of the obligations. Clients and people who wish to purchase a building or a home but want more funding may profit from this construction procurement form.
Role of construction procurement manager.
When it comes to construction procurement, the manager has very many responsibilities since he is tasked with overseeing the whole project from start to finish. Who is a construction procurement manager? This person is charged with overseeing the purchase of all construction materials the company requires in its construction project. For a construction procurement manager to carry out his job effectively, he needs to have a few skills such as communication skills, where he communicates with the subordinates on the work to be done, negotiation skills, to negotiate prices for construction materials, and critical thinking skills to be able to differentiate between a high-quality material and a low-quality material. Some of the responsibilities of a construction procurement manager are;
1. Monitoring of project.
The procurement manager has a role in overseeing the whole project and ensuring that everything is conducted. They play a vital role since they are the eyes of the client, and they are required to evaluate the project’s performance and give a report on how the project is fairing and whether it will be possible to complete the project within the allocated time. Regarding project monitoring, the procurement manager can use his power to make minor changes to the project, for example. They can change the number of laborers or a particular material as long as the changes they make do not affect the whole project.
They can also use their project monitoring role to negotiate with suppliers about the price of raw materials supplied and increase or decrease the number of construction materials. Procurement managers are expected to report to the client regularly about the project’s overall performance and how far the project is to completion.
2. Management of resources.
When it comes to procurement, the supply of raw building materials and the maintenance of other construction resources are the two most important things to focus on. It is the responsibility of the procurement manager to place orders for construction materials with vendors that offer materials of good enough quality to be used in the construction of structures of a high grade and level of durability. When he has put the demand for the supplies, he has to monitor the order to make certain that the raw materials arrive on time so that the project runs smoothly. In addition, he ensures that raw materials are not wasted on-site so that costs may be reduced and the budget can be adhered to. Also, he ensures that the workers come on time for the job without delays.
In the event that there is a deficiency in the materials, it is his responsibility to record the orders and submit a request for an additional batch. This contributes to the efficient operation of the project, and it also contributes to the successful completion of the project within the allotted amount of time, as was planned throughout the project planning process.
3. Initiating the construction procurement project.
Whenever there is a new construction procurement project, the procurement manager is tasked with the responsibility of initiating the construction procurement project by him gathering all the stakeholders, such as accountants to help in calculating the cost of purchasing materials, laborers to instruct them on how to use the raw materials provided for construction and explain to them why it is essential not to waste anything. He also reaches out to the stakeholders to explain how long the project should take, which days are for working, and which are for resting.
4. Establishing a procurement plan.
Creating a procurement plan is very important for any project to be effectively completed since procurement is the backbone of construction. Without a proper procurement plan, things are bound to go sideways. A good procurement plan should clearly state how raw materials will be procured and from which vendor. A procurement manager should devise a plan on how the construction materials will be supplied from the vendor to the site.
A good procurement plan should consist of accessible technologies like machines to make work easier for the laborers. When coming up with a procurement plan, the procurement manager should consider the time and budget for the construction project. Therefore he shouldn’t come up with an absurd procurement plan that might drain the construction project’s budget. He should involve the client in the procurement plan to meet the client’s needs and wants of the design of the construction.
5. Supplier selection.
The work of a construction procurement manager is challenging since it involves a lot of responsibilities for the construction project to be completed efficiently and effectively. One of the roles of the procurement manager is to select vendors or suppliers. This can be challenging since they have to evaluate a list of suppliers who can supply construction materials. The procurement manager has to look at whether a particular vendor has excellent and high-quality materials. He also has to check how long a specific supplier has been in the market and whether he is well-known by construction companies.
The procurement manager should especially check the cost of procuring raw materials from a particular supplier. Some suppliers hike prices because of how big the construction project is said to be. Therefore, it is the responsibility of the procurement manager to choose the vendor whose prices are more favorable according to the construction procurement budget. The procurement manager should also be keen enough to avoid getting conned by any supplier and only pay suppliers for goods delivered since some suppliers might fail to return goods because they are fake.
Construction procurement process.
The procurement process goes through a number of stages, from the minute the construction deal has been placed up to the time the construction project has been completed. Several things are also implemented, such as strategies and plans for construction procurement. Here are some steps in the construction procurement process.
– Assess the need for construction procurement, this is the first stage in construction procurement, where the construction project has already been assigned to the contractor, and all the plans have already been laid. In this stage, the procurement budget is put in place to see how much will be needed to purchase the raw materials and labor for construction.
– In this stage, procurement strategies are put in place, stakeholders are briefed on the design of the project, and work is assigned to all on who does which particular task. Here are the procurement manager and contractor strategies on whether to increase the number of construction materials or not. Also, people are briefed on how long it will take for the project to be completed and how long the working hours will be.
– Selecting a vendor or supplier is a crucial step in procurement since it determines which vendor will supply the construction materials and the quality. When selecting the vendor, cost should be put into perspective since the raw materials provided should align with the budget.
– Procurement implementation, in this stage, procurement strategies are implemented. The tender documentation is prepared, the selected suppliers are assessed, and contract execution is carried out.
– When the contract has been signed by the chosen supplier and the project has been awarded, the supplier is responsible for delivering the raw materials so that construction may get underway. During delivery, the procurement manager is responsible for ensuring that all requested supplies have been delivered in the appropriate quantity and confirming that all of the materials have been given. After that, he is entrusted with ensuring that the supplier has been played and that whatever transaction the building firm and the supplier have entered into has been effectively completed.
Benefits of construction procurement.
1. Improved quality of work, when companies are competing against each other to get the best contract, they end up working even harder to improve their services, therefore when clients seek construction procurement of whichever type, the best company with the highest quality of work tends to do a good job, hence improved quality of work.
2. Reduced delays, construction procurement ensures that projects are completed at the right time and within the stipulated time. This helps in saving on the cost incurred for delayed projects. Construction procurement aims to work with the best contractors up to the task to ensure proper implementation and completion of projects.
3. Improved efficiency, in construction procurement, a huge staff is put into a task to carry out the project. When everyone is given a job, all resources are well utilized, the cost is minimized, and time is well spent on finishing the project. This helps improve the quality of work and complete the time effectively.
4. Saves on cost; the proper construction procurement process ensures that cost is saved by engaging your suppliers to give you the best prices for raw materials. This helps cut costs and drive the saved money into other construction areas, such as labor.
Conclusion.
Construction procurement is the process of purchasing materials and labor for construction projects. There are many methods of construction procurement that you can always choose from to effectively construct your building, and some of them support construction for people who have low finances. Get construction procurement and make your building today.
