On Thursday 28th September, the Procurement group met to discuss price evaluation, using Chair Rebecca Rees’ Building Magazine article as the basis for discussion. The group explored the behaviours and actions that take place within construction that encourage a ‘race to the bottom’ and what can be done to improve current procurement practices.
Four key themes emerged throughout the discussion, these were Cost, Culture, Procurement Models and Training. Read on to find out more about how these specific challenges effect procurement in construction.
Cost
One of the main challenges within procurement is the lack of transparency around cost when tendering a project. It’s impossible to know for certain how much it’ll cost when delivering a project as prices will usually change between tender and delivery. This can lead to a fictionalised price as tenders end up being based on similar projects that have been previously delivered.
Therefore, the whole premise of selecting a tender based on lowest cost is flawed as the costing is likely inaccurate in the first place. By introducing a rationale around the price of a tender, clients will be able to gain a better understanding of how the final number was reached and begin to take a wider view than just cost.
Training
There’s currently no training on offer, at a professional body level, about what good procurement in construction looks like. This sort of training would benefit all involved in project deliver, from designers to project managers.
Professional bodies do work with universities to inform their accreditation, helping to ensure time is spent in the areas that construction needs the most. However, this often reflects the needs of the professional body rather than the needs of the industry as a whole.
Even at university level, not enough weight is given to procurement specifically. Better governance of construction-based training would support further opportunities to develop good procurement practices.
Procurement Models
Procurement models play a key role in setting the tone for projects- if you begin with an adversarial tone that lacks trust/skills/competence, this will follow through the whole project.
Procurement models should enable early engagement of all parties involved in a project. The supply chain should be engaged from the outset to ensure that good practice is supported by all and that good procurement practices filter down from tier 1 onwards.
Culture
There needs to be a cultural shift in the way projects are delivered. Clients need to lead the drive for better procurement practices and enable contractors to change their business models. The current way of tendering projects leaves little room for contractors to procure for value due to clients’ focus on lowest price.
The big question is, how do we begin to hold clients and their finance departments accountable?
