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Last edited 24 Dec 2021
Managing the procurement process
The procurement process is the method used to purchase goods or services. The process must be carefully managed to ensure good value is obtained, the correct goods or services are purchased, a high level of quality is received, timescales are met and good relationships are maintained between the procurer and the supplier. Establishing a procurement strategy at the outset is key to a successful outcome.
In the construction industry, the term 'procurement' is often used to refer to the selection of the main contractor for the construction of the works. The procurement routes most commonly followed in the UK for the selection of the main contractor are:
- Traditional contract.
- Single-stage design and build.
- Two-stage design and build.
- Management contract.
However, procurement can also refer to any supply contract, such as the selection of consultants, sub-contractors, manufacturers, and so on. On some projects, all first tier suppliers may be selected under a single contract, as an integrated project team. However, in recent years the supply chain has become increasingly complex, with many tiers, and on large or complex projects, their can be a plethora of suppliers, some of whom may be completely unknown to management at the top of the chain.
This means that the supply chain itself is procuring, not just the main client. Depending on the level of experience of the client, their procurement might be managed by an in-house team, or it might be managed by an external project manager or client representative. However, much of the procurement on a construction project is likely to be managed by the main contractor or sub-contractors. This procurement might be undertaken by specialist construction buyers.
- There is greater competition.
- It gives an opportunity to assess a range of different approaches from different suppliers.
- There is a new and motivated approach to each project.
- There are a wide range of learning and collective experience brought to the project.
- The most appropriate procurement method can be adopted for the project.
- The project can be considered in its own right.
- There may be greater attention-to-detail by the project team.
However, some of the disadvantages may include the following:
- It can be time-consuming and costly both for the client and the suppliers.
- It is more difficult to adopt lessons learned.
- There may be less confidence to innovate.
- Relationships may not be as well developed.
- There are likely to be higher client management costs.
- More bespoke solutions are likely to be developed.
- There are greater uncertainties of workflow for suppliers.
- There may be slower implementation periods.
- Transferred learning from one project to another, resulting in improved overall performance.
- Reduction in inefficient activity, such as re-bidding for tenders.
- Reduced design and construction periods.
- Economies of scale and ordering.
- Continuous workflow.
However, some of the disadvantages may include:
- The range of available options and new ideas is reduced.
- There is less incentive to maintain high standards across all projects.
- Repetitive buildings or structures may be developed.
- There is less opportunity to develop new solutions that better suit particular needs and requirements.
 Procurement process stages
Typically there are a number of stages that will be followed in most procurement processes, although they are given a wide range of different names.
 Assessing the need for procurement
It is very important in the first instance to be sure that there is a need for a project. This may involve preparing a statement of need, and then developing that into a business case through discussions with all stakeholders.
 Assessing options
The business case for the project should then be developed and options assessed. On construction projects this may involve the development of a strategic brief, feasibility studies and options appraisals.
A project execution plan may also be developed setting out the strategy for managing the project, describing who does what and how, and defining the policies, procedures and priorities that will be adopted as well as the contracting and procurement strategy. See Project execution plan for more information.
 Defining the solution
 Developing procurement route
A procurement route should be selected that best suits the needs of the project, balancing time, cost and quality. The responsibilities for project delivery and risk lie differently according to the route selected. The construction industry has developed a vast array of different procurement routes for carrying out construction works. For more information on the different types, see Procurement route.
- Preparation of tender documentation.
- Invitation to tender.
- Submission of tenders.
- Assessment of tenders.
- Contract engrossment and execution.
There will also generally be a period following completion of the requirements when the supplier remains responsible for any defects that may become apparent. On the main contract this might be referred to as the defects liability period.
- A post project review may be undertaken to evaluate the project delivery process and ensure that lessons learned are captured for the benefit of stakeholders.
- Performance in use may be assessed to determine how successful the completed development is and where there is potential for further improvement.
- Business case.
- Commercial management.
- Complex project.
- Concession agreement.
- Construction Client Buddy Scheme.
- Construction contract.
- Construction buyer.
- Contract conditions.
- Difference between procurement and purchasing.
- ESPD and the decline of the PQQ.
- European Single Procurement Document ESPD.
- Integrated project delivery (IPD).
- Material procurement.
- Methods used by construction companies to facilitate materials.
- NEC4 Facilities Management Contract.
- OJEU rules.
- Optimised contractor involvement.
- Procurement plan.
- Procurement route.
- Procurement team.
- Project execution plan.
- Project manager.
- Public procurement.
- Reverse auction.
- Sustainable procurement.
- Tender documentation.
- The benefits of e-procurement in construction.
- This is why construction is so corrupt.
- Transforming Public Procurement Green Paper.
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