Introduction
The construction industry comes from the high demand industry and the requirement for construction material is so big that it becomes vital to manage the efficient material supply. Materials procurement is an integral part of any industry including construction.
Construction material includes all the necessary materials or supplies needed for a construction site. Construction materials are not limited but enclose all types of supplies from aggregates, and cement, to fans, lighting, emergency safety systems, and many more.
What is Procurement and how does the procurement process work?
Procurement is a common term used in supply chain management, it means acquiring goods, services, or any supply for the business. For any industry, material plays a vital role in the cost and quality of output in manufacturing or production.
Purchasing services or goods is a complex process. Procurement starts with demand and identifying the number of materials is the first step of the procurement process. The construction team will share the requirements and then the procurement team initiates the process. The procurement team would shortlist vendors based on the capability and quality of the products. After finding the list of qualified vendors, a request for a quote (RFQ) is submitted in order to receive a quote. It involves the floats inquiry, as once the requirement is placed, the vendors come with proposals. The selection of the vendor is done depending on the vendor's price, reputation, and quality, they must be trustworthy. After the selection of the vendor, a purchase order is filled and sent to the supplier. The procurement process is further carried out with delivery, invoice, and payment. The construction material is purchased from a trustworthy supplier. As procuring of construction material plays an essential part in the construction industry.
The material requirements are made within a certain specification. Each construction material involves its own quantity and specification according to the project as there are numerous types of material available in the market.
What are the types of procurement in construction?
Choosing the best procurement and mostly the suitable process according to the construction project is vitally necessary for the successful completion of the project. Comparison of various types of procurement to choose the ideal depends on various key factors.
To move forward with choosing the type of procurement, it is necessary that project functions are embarked upon. Most basic key functions in a construction project not limited to these ones are design, construction, management, finance, and operation.
Exploring the characteristics of the procurement helps to define a procurement system scope. So, there are five common procurement methods. To implement the type of procurement method in the industry, it is necessary to have a deep understanding of certain procurement methods.
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Turnkey project
The turnkey type of project is common in the construction Industry. The contractor is accountable for the whole design and execution of the project, after completion of the entire project they turn over the keys to the buyer. The outcome of these projects is high quality and provides cost savings. In India, many firms have turnkey project methods. The company is wholly responsible for the design, and construction.
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Traditional Procurement
In traditional procurement, contractors are just responsible to build. So major work like design and project management is done by a consultant or an engineer. This procurement method has been used in the construction industry for a long time. Traditional procurement is suggested for a complex and comparatively big project
Challenges in Procurement
Procurement helps to make the construction project to be complete successfully. It involves a variety of things and depends on experience, market knowledge, and resources. There are many benefits of procurement in construction and with benefits comes challenges.
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Lack of technology
In the modern era, everything is getting developed and needs technology. The use of technology has become most useful and important. In the procurement process to have smooth functioning of each element, involvement in technology is vital. Many are still dependent on the traditional methods that are used to complete fundamental workflow but it can sometimes hamper the whole procurement process. We may get a deficiency of results with the use of less technology. The proper use of technology can help to analyze and reduce the risk, maximize savings, and improve efficiency. New tools and technique contributes to managing the teams and having good internal and external communication,
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Lack of Planning
Planning is the base of any successful work. But, planning is taken for granted but that leads to failure. Planning includes the three main steps that are scope, time schedule, and budget planning. In procurement, planning helps to make optimum availability of materials and resources available for construction. Lack of planning helps to develop the conflicts to proceed with the workflow.
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Lack of using the tools
The tools are just a part of using the technology. Using the right tool for relatable tasks in procurement can help to make an efficient workflow. Procurement involves various stages, procurement starts with the demand for goods or services. For example, ensuring to have clear registration of the demands is important but if it is not done properly then it may hamper the project with a lack of material availability. So, just like this for every stage, it is important to use the necessary tool to improve work efficiency and reduce hassle.
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Budgeting and Cost-related issues
In procurement, we consider the issues that are mostly associated with resources, analysis, managing, budgeting, and control. Here, we are highlighting the budgeting and cost-related issues. Budgeting is most important from the start to the end of the project. The cost-related issues might also occur after the completion of the project. Analyzing the accounting details, the use of the proper tool is essential to control the procurement flow.
Conclusion
The procurement process is obtaining the material needed for business. In the case of the construction industry, the procurement process varies with small to large projects.
Procurement management plays a vital role to secure the material and improve efficiency.
It is considered that detailed analysis and understanding help to have a clear picture of procurement and its methods in the construction industry.
