Products & Solutions
July 7, 2023

Tips and Tools for More Efficient Procurement in Construction

In the complicated realm of construction projects, procurement managers bear the weight of a lot of responsibility. From juggling tight budgets and timelines to coordinating with every single supplier and stakeholder, the task of procurement in construction can be overwhelming.

A lot of these struggles can be alleviated by simply having smart construction technology that gives you accurate, transparent financial visibility for a project as it progresses. We’ll cover the most common contracting methods that lend themselves to different procurement approaches. We’ll also give you solutions to procurement challenges using the best risk analysis platform.

Mastering Construction Procurement Management

Procurement in construction: engineers discussing something while using a tablet

Procurement is more than just choosing a supplier, signing contracts, and waiting for materials to roll in. It impacts the construction project's entire lifecycle. If you're building a structure like a hotel, every facet—from the structure to the interiors—is influenced by procurement. Whether it's the quality of procured cement, the design and build contracts, or the speed of the supply chain, every element circles back to procurement.

Furthermore, procurement is the glue binding the project together, coordinating between stakeholders like the project team, subcontractors, and suppliers. Their duties extend from charting procurement paths and handling change orders to monitoring key metrics, thereby ensuring the project sails smoothly towards completion.

The 6 Most Common Contracting Methods in Construction

Procurement in construction: engineers using a laptop

Unsure about which procurement method suits your next construction project? Understanding the different contracting methods is the first step towards effective project management. Discover the ins and outs of these methods, which can require differing procurement approaches, and choose the best path for your construction project's success.

1. Traditional Contract/Design-Bid-Build

This method is as straightforward as it gets in the construction industry, but don't let that fool you into thinking it doesn't need your full attention. The owner contracts with a designer, who produces detailed plans. These plans are then used to solicit bids from contractors. 

This approach requires careful coordination and extensive planning. Mistakes in the early stages can lead to change orders, cost overruns, and delays later on. So, double-check everything and then check again. 

2. Design and Build

Picture this — you're hosting a big dinner party but you're not a good cook. So, you hire a caterer who takes care of everything from menu planning to the actual cooking. That's what design and build procurement entails. The owner hires a single entity who designs and constructs the project. It's efficient, cuts down on communication hiccups, and works wonders when time's tight. 

But it requires a whole lot of trust in the contractor's design capabilities. Therefore, careful selection of this team is crucial to ensure they have both design and construction expertise.

3. Management Contracting

This method calls for early involvement from a management contractor, often during the design phase. The contractor then oversees work carried out by various subcontractors. It offers significant flexibility, with changes possible throughout the project. The owner pays the actual cost of work plus a management fee. 

The catch? This approach needs a capable and experienced management contractor to juggle the various elements, keeping everything on track and within budget.

4. Construction Management

Here, a construction manager oversees the project while the owner contracts directly with various trades. This offers the owner greater control over proceedings, including cost savings. 

It also places greater responsibility on the owner. Knowledge of construction is beneficial, as the owner assumes many risks usually managed by a general contractor.

5. Private Financing

This method can jump-start significant infrastructure projects, where private companies finance, design, build, and sometimes operate a facility. Payments are made over the contract period (think toll roads). 

It's an excellent option to get large-scale projects off the ground when public funds are limited, but it requires a clear understanding of the long-term profitability to ensure a good return on investment.

6. Integrated Project Delivery (IPD)

Integrated project delivery is a collaborative approach where all stakeholders — owner, architect, general contractor, and subcontractors — are involved from the get-go. Everyone's on the same page, driving towards the same goal. 

This is a far cry from traditional procurement methods where stakeholders often work in silos, leading to miscommunication and project delays.

4 Strategies and Tools for Efficient Procurement

Procurement in construction: engineers working together

Are you ready to take your procurement strategy to the next level? Efficiency is paramount, and having the right strategies and tools can make a world of difference in your construction projects. Using Avvir can help set up procurement success through building a historical record of projects and performance, allowing you to draw from in future projects. Some of the most effective areas Avvir can be effective at are:

1. Transparent and Competitive Bidding

To ensure a fair and competitive bidding process, it's essential to maintain transparency. Clearly communicate the project scope, deadlines, and quality standards. It's vital to remember that the lowest bid might not always provide the best value. Keep an eye on past performance and quality alongside cost. 

With Avvir’s Progress 5D, you get a bird’s eye view of the project’s progress, ensuring that bids align with the actual work. This can be an effective tool to influence future projects.

2. Strategic Supplier Selection

You don't want to rush into a supplier partnership without checking out their past, reliability, and if they can meet your needs. And just like any good relationship, it’s about the long-term. Cheaper isn’t always better if it compromises the quality or the delivery times. The goal should be balancing cost with value. This is where Avvir’s quality tracking can come into play as you build a historical database of past projects and subcontractor performance. 

3. Effective Contract Management

Once you've chosen your suppliers, make sure everyone knows the rules of the game. Clear contracts with defined scope of work, timelines and payment terms make life easier. 

Contracts are more than just ink on paper — they need to be actively managed throughout the project. Progress 5D tracks work-in-place with reality capture from the field, ensuring compliance and reducing the likelihood of disputes. The tool then combines this analysis with other project data, like subcontractor scope, your BIM, and project schedule to give you objective confidence when validating work completed. 

Setting the stage early for this level of project analysis will effectively add a protective layer to your budget and ensure your procurement strategy stays on course.

4. Robust Risk Management

As much as you prepare for a construction project, there's plenty of unknowns along the way. By identifying potential pitfalls early, you can plot a safer route. Maybe it's a supplier going bust or a vital component delayed in customs. 

Whatever it is, having a plan B and even a plan C is crucial. Avvir’s Inspect tool helps identify and mitigate potential issues early, keeping your project on track. These issues are published in a shareable report and sent to the field, while clashes in the model can be pushed to third-party issue management tools like BIM Track or Revizto. Your teams can quickly take action from there.

After using Inspect over several projects, one can begin to see trends in the actuals vs. budgets along with quality of installations and subcontractor efficiency. This can be a great lens for which to look at upcoming projects. 

Better Procurement, More Efficient Builds

Architects looking at a laptop

Choosing the right procurement approach can be a powerful determinant of your project's success. And it's worth remembering that one size doesn't fit all. Different projects require different methods.

And when it comes to elevating your procurement to new heights, it's all about embracing transparency, nurturing partnerships, having a handle on contracts, and being a step ahead in risk management.

Avvir is here to help pave the way on your project, making procurement simpler, smarter, and more efficient. Reach out to us and let's tackle construction procurement together.

Men showing construction tool to group
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