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A Comprehensive Guide To Procurement In Construction: Methods, Challenges And Best Practices

Posted on by John Hudson

Procurement is a critical element in construction projects, encompassing the process of sourcing and acquiring materials, equipment, and services necessary to complete a project. Selecting the right procurement method can significantly impact a project’s cost, timeline, and quality. In this guide, we’ll explore the fundamentals of procurement in construction, common challenges, procurement methods, and best practices for a successful project.

What is Procurement in Construction?

  • Procurement in construction refers to the strategic process of acquiring materials, resources, and subcontractors for a project. It involves planning, sourcing, and managing vendors and suppliers to meet the project’s budget, quality, and time requirements. Proper procurement ensures that the project remains on schedule and within budget while meeting quality standards.

Common Procurement Methods in Construction

  • Traditional Procurement: Also known as Design-Bid-Build, this method involves separating the design and construction phases. The client first hires a designer, then selects a contractor through a competitive bidding process. This method provides clarity but can lead to longer project timelines.
  • Design and Build: In this approach, a single contractor is responsible for both the design and construction, promoting collaboration and faster project delivery. It’s ideal for clients who prefer a streamlined process and a single point of contact.
  • Construction Management: The client hires a construction manager who oversees the project and coordinates various contractors. This method is often used in complex projects that require specialized expertise.
  • Integrated Project Delivery (IPD): IPD is a collaborative approach where all parties—client, contractor, designers—work together from the start, sharing risks and rewards. This method promotes transparency and can lead to innovative solutions.
  • Public-Private Partnership (PPP): Commonly used for large-scale public projects, PPP involves collaboration between government and private contractors, sharing both the costs and responsibilities.

Challenges in Construction Procurement

  • Supply Chain Disruptions: External factors like economic shifts, material shortages, and geopolitical issues can disrupt supply chains, leading to delays.
  • Cost Fluctuations: Price volatility, particularly for raw materials like steel and concrete, can impact project budgets.
  • Quality Control: Balancing quality with cost-efficiency is often challenging, especially when working with multiple suppliers.
  • Compliance and Regulations: Construction projects must adhere to local and international regulations, which can vary and impact procurement decisions.
  • Communication Gaps: Miscommunication between stakeholders, such as designers, suppliers, and contractors, can lead to errors, delays, or rework.

Best Practices for Effective Procurement in Construction

  • Conduct Thorough Market Research: Research suppliers and materials to identify potential risks and opportunities. This can help you find reliable vendors and anticipate cost fluctuations.
  • Use Technology for Efficiency: Implement procurement software to streamline the tendering, sourcing, and management process. This can improve data accuracy and transparency, enabling better decision-making.
  • Establish Clear Communication Channels: Ensure clear, consistent communication among all stakeholders to avoid misunderstandings and foster collaboration.
  • Prioritize Sustainable Sourcing: Opt for sustainable materials and suppliers to reduce environmental impact and meet regulatory standards.
  • Develop Risk Mitigation Strategies: Have contingency plans for common risks, such as supply chain disruptions and cost changes. Consider fixed-price contracts or bulk-buying agreements to manage cost stability.

Procurement is a vital component of a successful construction project. By selecting the right procurement method, anticipating challenges, and implementing best practices, you can ensure your project runs smoothly and efficiently. From traditional methods to collaborative approaches like IPD, understanding each option’s advantages and challenges can help you make informed decisions.

Need help with your construction procurement process? Contact our team for expert advice on procurement strategies, supplier selection, and risk management tailored to your project needs. Let’s ensure your next project is completed on time, within budget, and with the highest quality.

Related Blog: 5 Reasons Why You Aren’t Winning Tenders for Roofing Work

Types of Procurement in Construction: A complete guide

Posted on by John Hudson

Understanding the Types of Procurement in Construction

Read this to get ahead on the different types of procurement in construction

On its own, procurement is difficult, and more complications arise when it comes to types of procurement in construction. So, let’s take some time to look over the methods of procurement in construction.

What is procurement?

In essence, procurement is a process of obtaining a product or service. In your case, it specifically relates to providing the materials/labour needed to complete a job/product. For most construction firms, a clear, concise, and cost-effective strategy is needed to complete the job. Budget, quality, and timeline are heavily considered here.

When it comes down to it, price and quality are where the competition element lies in construction procurement. If the buyer discovers a cheaper contractor which rivals or exceeds the quality of its competitors, it’s a no-brainer.

How many types of procurement in construction are there?

So, across the UK’s construction sector, there are generally two elements within the construction process. There are other processes, but the ones below are the one’s you’ll most likely encounter. Let’s work our way through them.

Pre- Qualification questionaries- What are they and how do they compare to PAS91’s?

So, the first of our types of procurement in construction is pre-qualification questionnaires.

Also known as PQQ’S, they are used by buyers in the initial stages of construction procurement.  A frequent question we get asked is ‘what is the difference between PPQ’S and PAS91’S?

Well, the biggest difference is the length of the documents, with PAS91’s being on average larger.

Dependent on the buyer, they could also utilise SQ’s (selection questionnaire’s) or SSQ (Standard selection questionnaire’s). You could state that this is the first gate you need to cross. Basic requirements are covered here so that whoever bids for the contract is meets the minimum needs. Depending on whether the process was open or closed, a PQQ and ITT could be required as well. Although its dependent on the size of the contract, the document will include:

  • Health & safety policy- Following on from your insurance, what measures are you taking to ensure the health and safety of everyone involved?
  • Your financial stability- Are you able to cover the project adequately? Can you feasibly deliver the project? In most cases if your annual turnover is worth less than half of the contract, you won’t be selected. They may require a brief inclusion of recent accounts to verify your financial status.
  • Supplier identity- Where are you based, how long have you been practice etc.
  • Quality Assurance policy- How are you ensuring that the work you provide is standardised in its quality? This could include
  1. Audits/inspections
  2. Training or other means of quality assurance
  3. The issue of underperformance, and how you tackle this with your employees
  4. A review of your policies and how you comply with best practice.

Optional requirements

Depending on the buyer, they could also request:

  • Insurance cover- In the event that something goes wrong or awry, are you insured? This is a necessity. If you’re not insured, you won’t be able to get past this stage of the procurement process.
  • Relevant references- This won’t be as in-depth as later parts of the process, but it’s still required
  • What’s your capabilities/capacity? – Similar to finances, if you can’t cover the needs of the client due to your size, you’re unlikely to progress. You need to prove your capability to the buyer.
  • Equal opportunities policy- How are you ensuring that discrimination is eliminated, and fair opportunities sustained within your company?
  • Environmental management policy- We’re all moving towards a greener planet, so what measures are you taking to play your part? This could include:
  1. Covering carbon emissions and how you’re reducing them.
  2. Ensuring environmental awareness through training.

For most of these questions, the PPQ will require a brief answer. Another option is a score in which to describe your proficiency in the given question. Either way, you’ll need to elaborate on your scores/brief answers later in the process.

ITT

So, you’ve passed the PPQ with flying colours, proving you fulfil the requirements for the contract. Now it’s time for the ITT. It’s here that the buyer invites you to tender. Time has been utilised efficiently due to the PQQ shortlisting the potential contractors.

Within the construction industry, this document may include:

  • Instructions to tenderers explaining the process
  • Query process and resolutions
  • The timescale of the tender process (deadlines for tenders)
  • Drawing schedules
  • Site waste management plan
  • How the buyer will provide feedback for unsuccessful tenderers

The response

Now you know what the ITT may contain, it’s good to cover what you should respond with:

  • List of staff- This could include C. V’s to further validate their suitability.
  • Prior experience
  • References
  • A completed tender pricing document

In summary

So, we’ve arrived at the end of this blog regarding types of procurement in construction. You now have a greater understanding of:

  • The function of both the ITT’s and PPQ’S
  • The difference between PPQ’s and PAS91’S
  • The basic and optional requirements of PQQ’s
  • What ITTs require and how you should respond.

Now you’re better equipped to understand the types of procurement in construction, you may be wondering how we can help…

Hudson Succeed

Our Tender Writing service covers PAS-91s, PPQ’s, and much more. We will complete the written, technical, and professional ability sections and/or PAS91 modules on your behalf.

Alternatively, our Tender Ready service will see our team of bid writers prepare case studies and policies.  Each are essential in passing pre-qualification questionnaires and PAS91s – in-line with best practice across the industry.

If you are looking for new opportunities for construction projects, look no further than Construction Tenders. Our dedicated, tender tracking portal, sources tendering opportunities, specifically for the construction sector. Get in touch to book a free live demo and see how the system can help your business.

If there’s anything we can help with, get in touch with our bid writers who can help with the bid writing process.