CONSTRUCTION PROCUREMENT
In this report, the need for clients to develop a procurement strategy, which outlines the key`s which clarify objectives of the project are to be achieved is one of our targets. Once a client has established a business case for a project, appointed a principal advisor, determined their requirements and brief, then consideration as to which procurement method to be adopted should be made. An understanding of the characteristics of various procurement options is required before a recommendation can be made to a client.
Our procurement systems can be categorized as traditional, design and construct, management, and collaborative. The characteristics of these systems along with the procurement methods commonly used are described. The main advantages and disadvantages, and circumstances under which a system could be considered applicable for a given project are also identified by our experiences. Strategies for the procurement of building projects have not changed significantly in the last 25 years, though time and cost overruns are still prevalent throughout the industry.
Do you know how to procure more efficiently or effectively?
We understand that the transaction process is a two-way street. Experience shows us that the more the market knows, the less uncertainty suppliers carry, the better the mutual understanding, and thus, the greater, shared confidence. This is the route to lower risk, more accurate costing, and better outcomes for all parties.
Obtaining feedback from suppliers and interactive dialogue sessions are the first steps to creating a relationship with the right supplier and establishing confidence that your shared objectives will be achieved.
We use proven industry best-practice processes and tools to help you achieve maximum value on your external spend by formulating and delivering the optimal commercial strategy.
At an organizational level, we help clients build overall commercial awareness and capability by completing strategic maturity reviews, developing training programs, and completing ‘value capture’ assessments.
We deliver services across all aspects of the classic commercial life cycle on projects and programs – from creating delivery strategies to transaction services and contract management.
Our approach encompasses the whole life of assets, so our clients also benefit from our expertise in building category management (common components) capability and supplier relationship management programs.
On every assignment, our philosophy is to work in a simple, effective, and integrated way, in collaboration with your team, so that together we understand and manage risk appropriately.
ABADIS follows the best practice to develop the packaging, procurement, and contracting strategy for the complex transactions that we manage.
In the course of this work, ABADIS has assembled a suite of best-practice tools to support the tendering and evaluation process, while developing our market-leading approach to interactive dialogue.
OUR CORE PRODUCTS INCLUDE:
• Delivery strategy development
• Transaction strategy
• Contract strategy
• Transaction management
• Commercial and contract management
• Commercial due diligence
• Supply chain review and optimization
• Category management
Six Effective Procurement Strategies for Building Construction Projects:
Two of the most common risks clients face on any building construction project relate to time and money. All clients are concerned about time and budget overruns. Will the project be delivered on schedule? Hope the project won’t outgrow the budgeted funds?
A building construction project which gives tenderers insufficient time to prepare a submission will result in inadequate or inaccurate responses. Also, a building construction project with insufficient funds to meet the established need of the client is likely to result in sub-standard delivery and/or delays in making purchases. It may even mean the need to re-tender.
These and many more are the 2 most common questions clients must contend with when embarking on building construction procurement. To help them develop effective procurement strategies that will enable them successfully to manage these 2 risks of time and budget overruns, is the purpose of this article.
A procurement strategy defines a plan for optimizing external spend, procurement operations and other value contributions in a manner that supports the overall corporate agenda. Without a comprehensive procurement strategy in place, it’s impossible to know whether your procurement organization is aligned with the corporate strategy, and whether progress is being made.
Clients should always devise their procurement strategies based on their project priorities, management capability and the extent of risk that they are prepared to accept. Below are 6 factors to strongly consider for developing effective procurement strategies for building construction projects.
• Account for External Factors
o Consideration should be given to the potential impact of economic, commercial, technological, political, social, and legal factors which influence the client and their business, and the project team during project’s lifecycle. For example, potential changes in interest rates, foreign exchange rates, changes in legislation and so on. All these can impact project costs and delivery time.
• Integrate Client Peculiarities
o A client’s knowledge, the experience of the organization with procuring building construction projects and the environment within which it operates will influence the procurement process. Client objectives are influenced by the nature and culture of the organization. The degree of client involvement in the project is a major consideration.
• Consider Project Characteristics
o The size, complexity, location, and uniqueness of the building construction project should be considered as this will influence time, cost, and risk. This will inform the decision as to what procurement system to use, the risks associated with each procurement system and how they can affect the client.
• Ability to Make Changes
o Ideally the needs of the client should be identified in the early stages of the project. This is not always possible. Changes in technology may result in changes being introduced to a building construction project. Changes in scope invariably result in increased costs and time, especially if they occur during construction. It is important at the outset of the project to consider the extent to which design can be completed and the possibility of changes occurring.
• Beware of Cost Issues
o An assessment for the need for price certainty by the client should be undertaken considering that there is a time delay from the initial estimate to when tenders are received. The extent to which design is complete will influence the cost at the time of tender. If price certainty is required, then design must be complete before construction commences and design changes avoided.
• Thoroughly Evaluate Timing
o Most projects are required within a specific time frame. It is important that an adequate design time is allowed, particularly if design is required to be complete before construction. Assurances from the design team about the resources that are available for the project should be sought.
o Planning approvals can influence the progress of the project. If early completion is a critical factor, then design and construction activities can be overlapped so that construction can commence earlier on-site. Time and cost tradeoffs should be evaluated.
o Choosing appropriate timescales reduces the risk to the project. Delays to the project will cost money, and unrealistic timescales can result in unnecessary additional costs. Having a detailed, realistic project timeline brings clarity to the delivery team and allows progress to be more easily managed.