Procurement Opportunities in Construction Management

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Introduction

The construction industry has experienced exponential growth over the past few years due to new opportunities for improving the quality of the end product, managing available information, and supervising all the essential communication processes (Robinson, Symonds, Gilbertson & Ilozor 2015). Creating and realizing a building project has become both more challenging, due to a greater variety of options, and, at the same time, simpler because of the new tools that can assist in drafting and implementing the project (Martínez-Jurado & Moyano-Fuentes 2013). However, when it comes to choosing a specific area in the construction industry that has been affected by recent changes and the introduction of breakthrough technologies to the greatest extent, there is a very strong argument for choosing the process of procurement.

Within procurement, the latest tools for data management, an array of processes associated with procurement, including logistics, transportation, transfer of the relevant data, etc., have been simplified considerably. Moreover, the extensive options for controlling these processes have made it possible to improve the quality of services significantly. Therefore, exploring new opportunities for improving procurement-related operations in the construction industry is bound to lead to a significant improvement in overall product quality and safety.

‘Buildability’/Constructability

The concept of ‘buildability’, also known as constructability, is crucial to the successful implementation of procurement methods within the construction industry. According to the definition provided by Turina, Car-Pušić, and Radujković (2013), buildability, or constructability, is “the optimum integration of construction knowledge and experience into all project activities, starting from feasibility and continuing throughout the life of the project, to achieve the desired project objectives” (Turina et al. 2013, p. 167). In other words, the phenomenon of constructability implies that every stage of the planned construction process should be revisited and evaluated carefully before the actual construction should start. The specified notion, therefore, concerns evaluating the ease of building a particular construction (Bako 2016). Even though new opportunities have emerged for improving buildability rates in the construction industry, maintaining the levels of constructability remains a problem, mainly due to the continuous demands for quality and the increasingly high complexity of structures (Turina et al. 2013).

Procurement plays a crucial role in increasing the degree of buildability of a particular construction. The enhancement of procurement entails a significant rise in the involvement of key participants, including the contractor and the client. Thus, the communication process intensifies, leading to a significant drop in the number of misconceptions and, thus, a more productive process overall. The choice between the four types of procurement available in the construction industry leads to a sharp rise in the quality of the result.

In particular, the use of the traditional method allows the process to remain uninterrupted and sets rigid quality standards for the end product. It should be noted, though, that because of the high number of intermediaries, and the possibility of delays, the application of the traditional tools for reinforcing the buildability of a particular project may lead to a drop in productivity and customer dissatisfaction. Furthermore, the lack of consistent communication between a contractor and a client creates numerous opportunities for misinterpretation of the available information and, as a consequence, the delivery of poor results (Turina et al. 2013).

The introduction of the Design and Build strategy, in turn, offers a better communication process and, therefore, lowers the instances of misunderstanding since it implies a direct conversation between a contractor and a client (Bako 2016). The amount of detail provided by the contractor regarding the project, its goals, and the expected outcomes, serves as the foundation for producing the building that meets the customer’s expectations precisely. Furthermore, the fact that the communication process between the employer and the employee is completely uninhibited implies that the time management issue will also be addressed by reducing the time spent on transferring messages from one side to another (Turina et al. 2013).

However, despite the numerous advantages that it provides, the Design and Build framework is also likely to lead to a steep increase in the number of responsibilities and roles that a contractor must accept. The framework known as the Management Contracting Method, in turn, creates the environment in which the conversation between the contractor and the employee remains consistent, yet a range of responsibilities is delegated to other participants. The management contractor, in turn, handles the design process. This specified approach can be used in the scenario when there is a significant lack of time; however, careful planning and consistent control over every stage of the process is still required (Bako 2016).

Finally, the adoption of the Public-Private Partnership Method as the means of carrying out procurement processes in the construction industry should be noted. The specified strategy implies that a contractor should handle all processes associated with the construction process. Given that the identified framework puts a considerable strain on the manager as the sole person responsible for making the workplace processes run smoothly, managing risks, and carrying out all financial transactions, this approach should be viewed as only applicable to very small projects (Turina et al. 2013).

Productivity

With the adoption of more efficient procurement tools, it is expected that production processes will improve. For instance, raw materials will be delivered on time, preventing delays in production. The concept of off-site production can be introduced into the context of the construction industry. The phenomenon of off-site production might seem a rather challenging way of managing the process of building, yet, with the reinforcement of procurement techniques, it becomes increasingly easier. Indeed, the incorporation of efficient procurement strategies allows for a detailed analysis of the local infrastructure and a choice of routes that will allow expeditiously delivering the necessary materials. As a result, the improved delivery of the necessary inventory, raw materials, equipment, and other items required for the construction process provides a significant boost to the productivity rates (Robinson et al., 2015).

A closer look at the factors that define the productivity of the construction process reveals that there are four primary factors defining success;

concrete workability;
reinforcing steel congestion;
volume of pours; and
height relative to ground level (Robinson et al., 2015, p. 96).

The workability of concrete is a notion that serves as the umbrella term for a range of properties of concrete, as well as all the factors that contribute to its usage in the construction industry. For instance, factors such as the ratio of water to cement, the size and shape of the target area, and the admixtures included in the solution all affect the workability of cement. The uses of procurement techniques, especially the ones that involve the adoption of the latest IT technologies, contribute to the quality of the additive. For instance, the time used to transport the additive can be constricted greatly, thus, allowing the additive to retain its properties so that a high-quality solution can be produced (Robinson et al., 2015).

The phenomenon of steel congestion must also be included among the factors that affect the productivity levels in the construction industry and that can be improved by using the appropriate procurement tools. For example, the incorporation of efficient procurement strategies reduces the threat of corrosion and, thus, leads to a significant improvement in the quality of the end product (Turina et al. 2013). Furthermore, the fact that procurement methods address the problems associated with the volume of pours also needs to be listed among the advantages of this strategy. There is a strong need to set the schedule for the tasks associated with concreting so that the volume of pours can be maximized fully. The incorporation of a successful procurement framework, in turn, will allow the introduction of an intense schedule that will help keep the pours at their maximum volume (Robinson et al., 2015).

Last, but not least, the fact that procurement retains the height of the construction relative to the ground should be mentioned. Controlling the relative height of the equipment is essential to the precision of operations and the quality of the end product (Turina et al. 2013). The application of an adequate procurement framework, based on the enhancement of the information transfer, in turn, leads to an opportunity to elevate or lower the equipment to the necessary level so that the result is accurate and meets all quality standards and specifications (Kotsovos, Vougioukas & Kotsovos 2013). Therefore, the promotion of innovative procurement tools into the construction industry leads to a massive rise in output of the production process, as well as an increase in the quality of the end products.

Supply Chain

As highlighted above, the incorporation of different procurement strategies implies the availability of different tools for managing the supply chain. For instance, the emphasis on the communication process between the participants that the adoption of different procurement tools provides in the context of the construction industry leads to a rapid enhancement of this area. It should be borne in mind, though, that some of the procurement strategies involving the introduction of third parties can complicate data management and create obstacles for carrying out a flawless transfer of relevant information. Nevertheless, with the enhancement of the procurement process, one is likely to have wider control over the environment in which the construction supply chain is built and, thus, can ensure greater efficiency.

When considering the effects that procurement has on the development of supply chain management (SCM) in the construction industry, one can list the incredible opportunities that the enhancement of procurement strategies has on the development of the information management process. With the focus on procurement-based techniques and the application of IT tools, it is possible to improve the data transfer process considerably. However, it is also necessary to take a closer look at the chances that altered procurement techniques create for the enhancement of logistics strategies.

For example, improvement of the transportation process will allow for rapid enhancement of the SCM processes due to the improved communication process between suppliers. Also, the reconsideration of the procurement framework, and its further reinforcement, will mean that it is possible to take into consideration both the specific circumstances of a client and those of a supplier. Consequently, a massive drop in the number of delays and misconceptions is expected. The specified changes, in turn, are bound to lead to a continuous improvement of the SCM process. A drop in delays and the promotion of more efficient transportation of necessary materials and inventory increases the likelihood of building a well-managed supply chain (Papadopoulos, Zamer, Gayialis & Tatsiopoulos 2016).

Also, procurement is often viewed as not only the tool for carrying out the tasks associated with logistics and transportation but also as the means of exploring and analyzing the structure of the industry so that any problems can be addressed accordingly (Kotsovos et al. 2013). Thus, by deconstructing the industry and assessing the processes that take place within it, it is possible to rationalize them and offer new and improved frameworks for their successful management.

Lean Construction

Procurement as an essential addition to the construction industry framework is also bound to build the foundation for the implementation of lean management principles. According to the existing definition, lean management is a notion that promotes steady improvement in the context of an organization by introducing the principles of efficient waste management, corporate social responsibility (SCR), and a set of rigid quality standards and ethical principles (Martínez-Jurado & Moyano-Fuentes 2013). The phenomenon, thus, contributes to the reorganization of a company’s priorities and the redesigning of values based on which decisions are made (Kotsovos et al. 2013). By cutting the number of delays, this approach ultimately addresses the issue of waste management. To be more accurate, the amount of produced waste will drop. Furthermore, the application of lean management principles is bound to trigger a steep rise in the competitiveness of an organization, which, in turn, will lead to an increase in its performance and profit margins (Martínez-Jurado & Moyano-Fuentes 2013).

The incorporation of innovative procurement strategies affects the promotion of lean management principles in the environment of a construction firm significantly. Furthermore, the use of efficient procurement tools sets the premise for developing and launching the lean construction process (Turina et al. 2013). The concept of lean construction is similar to the lean management framework since it is also concerned with the rearrangement of current principles of decision-making and usage of resources toward a sustainability-based approach (Martínez-Jurado & Moyano-Fuentes 2013).

Lean construction can be successfully utilized with the help of an appropriate choice of a procurement strategy. However, it should also be borne in mind that the connection between lean management and procurement is reciprocal (Turina et al. 2013). Therefore, once the foundation for lean management is built, this is bound to support the further enhancement of the procurement processes:

Further contextual variables that might affect the outcomes produced by lean, agile, and leagile mechanisms are suggested by other procurement and supply chain academics. Here, we again see the appearance of both power and business behavior, with some arguing that certain power structures and behaviors within supply chains can make the successful implementation of lean, agile, and leagile supply chain practices and techniques problematic. (‘Chapter 6. Evidence on the impact of procurement and supply chain management practices and techniques’, 2015, par. 135)

The connection between the philosophy of lean manufacturing in construction and procurement is quite evident. By focusing on the reduction of waste, organizations can introduce a cost-efficient framework for managing their financial resources. As a result, the significance of choosing the purchasing technique that will ultimately lead to even more careful use of the company’s financial assets becomes essential.

Sustainability

Improvement in waste management processes will create a more sensible resource management framework. Consequently, the foundation for environmental and economic sustainability will be designed. The recent focus on the promotion of green technology and its active use in a variety of industries has sparked further enhancement of environmentally friendly approaches to procurement in the realm of the construction industry. A recent study showed that the identification of the procurement strategies based on selecting the approach that will lead to a rapid reduction in the amount of waste produced, as well as the number of resources consumed during the production process, shows that the identified approach entails a massive improvement in the efficacy of the supply chain (Robinson et al., 2015). Indeed, the introduction of procurement techniques, in general, and the principles of green procurement, in particular, allows for a massive increase in the productivity and waste management of an organization:

While the high technology manufacturers and global supply chains are facing a competitive market environment and cost pressure for survival, using green materials and component procurement for sustainability requires practical models, such as component procurement collaborations and SSCM that incorporate the triple objectives of social, environmental, and economic requirements, as the benchmarks for industrial applications. (Yan, Chien, & Yang 2016, p. 117)

In other words, the introduction of new technology tools allows for a massive improvement in the overall quality of procurement processes, particularly, the use of the available resources. Furthermore, the reconsideration of the procurement framework and the introduction of innovative approaches can be regarded as a platform for promoting the principles of sustainable usage of the available resources. Apart from helping an organization to maintain an environmentally friendly approach, which is especially important in the area of construction, where natural resources are used extensively, a framework based on principles of sustainability will contribute to the development of a rational approach toward managing any corporate resources, including inventory, finances, staff members, etc. As a result, the productivity levels in the building firm are bound to rise significantly.

It would be wrong to assume, though, that the concept of sustainability as a vital part of the construction industry revolves solely around the principles of environmentalism. Quite the contrary, the subject matter also concerns the options for generating benefits for all stakeholders involved, including not only the current population but also future generations (Martínez-Jurado & Moyano-Fuentes 2013). The enhancement of procurement as a crucial part of construction processes, in turn, should be acknowledged as a crucial addition to existing sustainability frameworks. Particularly, the incorporation of the latest procurement strategies based on the application of innovative technologies and a reduction in waste levels is bound to lead to the usage of the triple bottom lines (TBL) of sustainability. A TBL is typically defined as the “distinction of the economic and social dimensions of sustainability, which have been absorbed by the environmental dimension of sustainability” (Govindan, Khodaverdi & Jafarian 2013, p. 346). Therefore, it has to be viewed as one of the fundamental principles on which the sustainability-based approach must be built.

By incorporating the ideas of sustainable uses of resources, one addresses the issue of footprint, which usually remains unresolved: “The reports often refer to ‘sustainability’ and ‘sustainable development’, but leave virtually unaddressed issues of footprints, carrying capacities, equity, and social justice” (Milne & Gray 2013, p. 17). The focus on the enhancement of procurement strategies leads to a rethinking of the issue of ecological footprints and contributes massively to the rearrangement of existing approaches to environmental resource allocation. In other words, the enhancement of procurement approaches based on the principles of sustainability is likely to entail an increase in the significance of the footprint issue, which is currently overlooked.

Innovation and Technology

Once the waste levels drop and the financial strategy is redefined, a construction company will be capable of investing in the purchase of updated equipment and the latest technological innovations. Therefore, procurement processes are inseparable from the concept of innovation and the introduction of the latest technological advances into the process of acquiring new items for the company’s inventory. By stimulating construction agencies and suppliers to use innovative technology, one can improve the processes associated with procurement to a considerable extent. First and most obvious, the effects of technology and innovation on the communication process must be mentioned. Once the latest IT tools have been implemented for communication purposes, the ability to address instances of misconception and misunderstanding between a vendor and a contractor will be much greater. Furthermore, one must also keep in mind that procurement itself can be utilized as the means of incorporating innovative technologies into the context of a construction agency. Thus, the basis for reinventing the very concept of communication in the environment of the construction industry will be built (Yan et al.2016).

The incorporation of modern concepts of communication, and its value in the era of information technology, will help view the very concept of procurement as the process of sourcing not raw materials, equipment, and other inventory but, instead, sourcing innovative ideas that will become the bulk of the new approach toward establishing relationships between the key stakeholders involved in the construction process. Therefore, one must also keep a close focus on the incorporation of technological innovations, in general, and disruptive innovations, in particular, as the means of boosting the productivity of an organization and promoting efficient communication (Yan et al. 2016).

Value Engineering

The promotion of value engineering, typically defined as a systematic approach toward boosting production processes (Kelly, ‎ Male ‎& Graham 2014), will also become possible once procurement processes are enhanced. As a result, a significant rise in quality is expected. With the implication of the development of opportunities for saving costs associated with construction processes, in general, and procurement, in particular, the specified framework integrates technical knowledge and general strategies to produce an approach that will lead to a significant drop in the costs of managing the value chain. For instance, with the enhancement of the communication process as a result of deploying innovative IT devices, one will be able to reduce the waste levels significantly. As a result, the value of the end product can be increased considerably because of a rise in quality and a drop in waste levels (Martek & Chen 2016).

The introduction of innovative procurement techniques as the means of reducing expenses taken to replenish the firm’s inventory is bound to lead to engineering the value of the end product successfully. For instance, procurement approaches allowing the purchase of necessary items for a price that is lower than the traditional one will create an environment in which a company can build resources that may be used for unexpected costs. By setting the pricing strategy that will both make the company retain its competitiveness levels in the context of the target market and, at the same time, provide enough financial resources for the purchase of necessary materials and investment in other areas of the organization’s operations, it is possible to boost the value of the end product significantly. For example, apart from rearranging the value-price correlation, one may consider investing available resources in R&D processes and marketing campaigns. As a result, the quality of the buildings produced by a construction company will rise, while the promotion campaigns of the firm’s products will attract a larger number of clients. Coupled with sensible pricing policy, this approach could help generate an impressive profit by increasing the value of the end product (Martek & Chen 2016).

BIM

Building Information Modeling (BMI) can provide extensive opportunities for boosting the development of procurement strategies in a construction company. Indeed, the focus on the active use of IT tools as a key part of the Supply Chain Management (SCM) process provides the foundation for implementing the Building Information Modeling framework due to the availability of an array of IT data management tools and, therefore, the chance to systematize the existing data effectively (Costa & Grillo 2015). The BIM framework is a comparatively recent concept that introduces the principles of smart management to construction companies (Costa & Grillo 2015).

According to the existing definition, BIM is a tool that allows the creation of intricate systems for carrying out construction-related processes by setting priorities and introducing a set of specific and well-thought-out steps for implementing the suggested strategy (Robinson et al., 2015). The BIM approach is implemented with the help of a range of IT tools that contribute to designing the strategy for a linear workflow (Costa & Grillo 2015). The introduction of order into the construction process primarily implies that the contractor and the employee have an opportunity to discuss emerging issues in detail and plan the work process carefully. Consequently, the incorporation of the principles of BIM into the construction process is likely to lead to a significant improvement in the result and a rise in customer satisfaction rates.

E-procurement

The use of electronic tools will enable the transfer of a range of procurement-related processes into the digital realm. Moreover, when considering the opportunities for improving the quality of the construction process and the end product, one must mention the concept of e-procurement. The integration of this identified notion into the construction industry leads to an impressive improvement in the management of key supply chain processes. According to the existing definition, e-procurement can be defined as the procurement strategy involving the use of digital tools that allow the procurement process. It also automates a range of processes associated with the transfer of relevant data and controls the delivery of items necessary for the construction process (Lee & Wang 2013). The incorporation of groundbreaking IT innovations contribute a massive boost in the information management process and leads to a rapid increase in the accuracy of operations carried out in the context of a construction supply chain, the reduction in the number of delays, the drop in the waste levels and the number of defects produced in the course of construction, etc. (Martek & Chen 2016). Furthermore, e-procurement can be used in the context of B2B and B2G frameworks (Lee & Wang 2013).

Conclusion

Procurement is a crucial concept defining the success of any organization. However, the subject matter is especially important in the environment of the construction industry. By focusing on the opportunities that efficient procurement strategies offer, one will be able to increase a company’s performance levels extensively. In particular, the significance of innovative IT tools as the means of controlling the crucial processes associated with procurement needs to be addressed. The incorporation of devices and strategies allowing for enhanced management of the available data has led to a significant drop in the number of misconceptions, misunderstandings, and delays caused by them. This, in turn, has triggered a massive improvement in the quality of the end product. Therefore, new opportunities for exploring procurement options in the construction industry must be analyzed carefully to assess whether traditional methods could be combined with innovative approaches. Through such a combination, it is expected that the efficacy of procurement processes in the construction industry will reach its peak.

Reference List

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