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Simplified procurement strategies for large scale construction companies

Simplified procurement strategies for large scale construction companies


Procurement is vital for the effective execution of construction processes as it provides the food for work to be done. Without a smart procurement strategy, there may be a lag between the demand and supply requirements making it hard for the project managers to put the resources to the best use.

Higher demand when not met with adequate supply will lead to a shortage of required resources which may lead to delayed completion of tasks which in turn may incur more than expected costs.

On the other hand, excess supply may force the project managers and site engineers to store them in warehouses which in most cases collect dust, occupy space, and become redundant after some time.

Not having clarity of what is consumed in what quantity at what field/site by whom and for what purpose indicates improper planning, communication, and coordination among the crew across various departments.

Steps to establishing a sound procurement process

Construction management planning

Planning

List out what is required and in what quantity. Make provisions to accommodate buffer stocks in cases of emergency like the covid - 19 pandemic for instance. The plan should include the details of potential vendors based on multiple RFQ received from various vendors.

Warehousing

Warehousing

Not having a sound storage facility may result in speedy damage and depreciation of the resources. That’s a waste of money.

Construction Project Monitoring

Monitoring

Keep an eye on the items requested to see if they are arriving as per schedule. Material delayed is material denied. Track the application of the resources like where they are transported, their purpose of use, the site location that requires their usage, etc

Distribution

Distribution

This is a crucial component of the supply chain as without an organized structure for distributing the limited resources, the judicial and effective use of resources may not be possible.

Documentation

Documentation

Register the procurement process from the top to the bottom to make sure there are no leakages or ambiguity in the workflow. Record the details of actions taken with the materials, time consumed, the crew responsible for the materials, etc for cross verification and reference.

Construction has always been the sector that has been the last to adopt technology and has ultimately remained unorganized for most of human history. CIMS addresses this issue of the unorganized structure by digitizing the construction workflow processes to set standards, streamline, and organize the traditional sector for seamless management. CIMS has a construction management software (module) designed specifically for targeting the pain points faced by construction companies in dealing with the procurement processes. The workflow of which is given below:

Construction Procurement Software Module

  1. The process starts with the allocation of the budget. The orders for procurement are sent as per the availability of the budget. Budget plays an important role in deciding the quality and quantity of material to be procured. The same applies to the selection of vendors which is decided by the size of the purse.
  2. The second step is to generate the Purchase Request (PR) with the flexibility of making deviations or altercations as per the ad hoc requirements of the project. The PR is made by the project manager at the site level which is transmitted digitally to the HO.
  3. Once approved, the budget is allocated to the respective personnel of the procurement team. Now commences the vendor selection process by enquiring and comparing multiple quotes and comparative statements from various vendors. In the meanwhile, there is a provision for cash purchase at the site level by the site engineers just in case something shows up unexpectedly on the radar.
  4. Once the right vendor has been identified, the purchase order is sent to the vendor. At every stage, there is provision for making adjustments and corrections in the actions taken by the contractor to support last-minute reconciliations.
  5. The received materials are directed to the stores from where they can be utilized as and when required.

Purchase Management for Construction Sites, Centralised Procurement Operations, Purchase Requests and Approvals, - Closely Linked with Material Management Module.

  • Centrally manage all material, equipment or machinery purchases using the procurement management module.
  • Issue RFQs to vendors using Vendor Portal and purchase based on vendor quotations.
  • This is tightly integrated with Payables, taxes and related legal compliances.

CIMS generates multiple digitized reports like Requisition Tracker , Comparative Statements , Vendor Ratings , etc. As all these processes are automated , the need for human intervention is minimized and so is the room for errors, time consumed, duplication of work, and other discrepancies in the procurement workflow. The use of construction ERP software in India has a huge untapped potential for contractors to explore and benefit from.

For additional information on the Procurement Module of CIMS Construction ERP Software, get a free DEMO.

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