Construction procurement encompasses obtaining required labor, materials and equipment to facilitate a successful project outcome. Businesses often hire procurement managers to oversee progress and ensure a smooth experience when working with suppliers, contractors, architects, designers and other professionals. This procurement takes place through a bidding configuration, where parties interested in working with you will submit their proposals. Finding the right partners is crucial to fostering a project with a stable budget and cost-effective timeline.
Construction procurement involves numerous moving parts as clients, contractors, managers and other stakeholders attempt to work together. Regardless of what you need, the entire process generally involves three steps, including:
Maintaining a smooth construction procurement process is critical to your projects' success. It's a widely implemented process across countless industries, enabling businesses to form an organized structure that increases their chances of success. Unique benefits of construction procurement include:
There are multiple procurement structures your business can implement during the procurement process. Before deciding on a single strategy, you should carefully evaluate how much you're willing to spend, the vendor's quality, imposed risk and speed of service. With a better idea of what you're looking for, you can choose from one of the following plans.
Known as the Design-Bid-Build method, the traditional strategy is one of the most widely used. A client will appoint a team to create the construction design with a project underway. Once complete, the design team will return all the proper documents, drawings, schedules and lists of needed materials. Plans are shown to interested contractors who submit bids to earn the project. Once an agreement is in place, the general contractor must manage every part of the build.
This construction procurement structure generally requires more time yet can reduce the risk of faulty designs or budget infractions.
Clients rely on a single contractor who oversees everything from design to construction. There are two variations to this strategy, which you can choose between based on your needs. With one option, you'll provide your contractor with a preliminary design, which they'll send to their in-house team to finish before moving into the construction phase. You can choose the other to request a ready-made, modular design, which is often used for warehouses, factories or offices.
No matter what you need, this process is the simplest and fastest because it requires only a single third party to take care of all your needs.
Under management contracting, clients hire designers and management contractors separately. They'll work alongside the design team to determine plans and costs and decide on required services and products. The project moves through the pipeline to the management contractor, who oversees the entire process and hires specialized subcontractors to complete construction.
Experienced clients commonly use management contracting on large builds.
Clients provide a single contract that encompasses every step in the procurement process, including design, construction and financing. Contractors are hired for a flat rate and supply short-term financing solutions to postpone required expenses for some or all of the construction. During bidding, both parties will set a maximum amount they can use, and any spending over that amount will become the builder's responsibility.
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