The importance of the procurement and procurement selection process in the construction industry
The construction industry which embraces the sectors of buildings and civil engineering had a 1.9 trillion euros turnover in Europe from 2011 to 2018 and a value of new work of 118,977 million pounds in the UK in 2019 which makes the industry an important contributor to the function of economies globally.
Inevitably, the industry attracts a wide variety of clients all of whom will have their own objectives and priorities for their particular different projects of dramatically different types, sizes, and complexity (Cooke & Williams, 2010) (Morledge & Smith, 2013).
When a client decides to pursue a project a number of important strategic decisions need to be made before the commissioning of the project works to ensure an efficient and successful final product. In accordance with the code of practice of CIOB, procurement should be considered to be the process of identification, selection, and commissioning of the contributions required for the construction phase of the project (CIOB, 2014).
Therefore, procurement systems play an important role in project success as they establish the roles, relationships, responsibilities, and risks carried by the parties that form the overall organization and communication structure for the management, administration, and control of a project.
Appropriate selection of the procurement system is an important strategic decision that with the guidance of the project manager and a good understanding of the procurement criteria the client must take in the early stages. Provided in the Construction Round Table (1995) in their publication “Thinking about Building” as well as Cooke & Williams, 2010 and Morledge & Smith, 2013 suggest the criteria that must be considered when selecting the appropriate procurement system as listed in (Morledge & Smith, 2013)Table 1.
Complex technically advanced design and highly serviced construction requirements of certain projects play a major importance in selecting the most suitable procurement system with the division of responsibility are solely based on client decisions on the management style of consultants and contractors.
Furthermore, different procurement options provide different levels of risk and control allocation to and by the client with time, cost and quality, being the main categories of consideration as well as providing the range of competition given in projects and the ability to make changes.
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Procurement systems advantages, disadvantages and risks for the construction client:
The procurement options mentioned provide satisfactory performance in the objectives of the golden triangle with both advantages and disadvantages to the construction client based on the project size and client priorities.
Procurement strategies to deliver better value for clients:
The continuing search for maximum value for money in construction work has, in recent years, increasingly focused attention upon the procurement process. Effective delivery of a project requires that the supply chain clearly understands the client’s needs and specific business case to deliver an economical and efficient end product.
Cost, Time and Quality | The Golden Triangle in Construction:
Recent research into major projects by (Dalton, 2008) as shown in Table 1 found that 75-80% of the causes of projects failing were due to procurement, the definition of project requirements, and the client’s management capabilities.