top of page

What is procurement management in construction projects?

Writer's picture: BHADANIS Quantity Surveying and Construction Management Training Institute for Civil Engineers & Construction Professionals OnlineBHADANIS Quantity Surveying and Construction Management Training Institute for Civil Engineers & Construction Professionals Online

Procurement management in construction projects is all about acquiring the goods, services, and contracts needed to complete a project successfully. It involves identifying what you need, finding the right suppliers or contractors, negotiating terms, and making sure everything arrives on time and within budget. Let’s break this down with a real-world example.


Example: Pile Foundation for an Oil and Gas Project in Saudi Arabia


Imagine you're managing the construction of a pile foundation for a major oil and gas project in Saudi Arabia. This type of project requires a lot of specialized materials, equipment, and expertise. You’ll need to procure steel piles, concrete, heavy machinery, and even the services of skilled labor for installation. Here’s how procurement management would work in this scenario:


1. Identifying Needs


  • What to Do: The first step is figuring out what you need. This involves detailed planning and understanding the project’s requirements.

  • Example: For the pile foundation, you determine that you’ll need high-strength steel piles, concrete, and specialized drilling equipment. You also need to hire a contractor with experience in pile driving.

  • Action: You list out all these items, quantities, and specifications required to meet the project’s goals.


2. Selecting Suppliers and Contractors


  • What to Do: Once you know what you need, the next step is to find the right suppliers and contractors. This usually involves sending out requests for proposals (RFPs) or invitations to bid.

  • Example: You send out RFPs to several steel manufacturers, concrete suppliers, and contractors. You assess their bids based on cost, quality, delivery times, and past performance.

  • Action: You select a steel supplier known for their timely deliveries, a local concrete supplier to reduce transportation costs, and a contractor with a strong track record in pile foundation work.


3. Negotiating and Contracting


  • What to Do: After selecting your suppliers and contractors, it’s time to negotiate terms. This includes pricing, delivery schedules, payment terms, and any warranties or guarantees.

  • Example: You negotiate a deal with the steel supplier that includes a discount for bulk orders and an extended payment plan. With the contractor, you agree on a timeline that aligns with your project schedule and includes penalties for delays.

  • Action: Contracts are signed, and all parties agree on the terms.


4. Managing Deliveries and Work


  • What to Do: Procurement management doesn’t end with signing contracts. You need to ensure that everything is delivered on time and meets the required standards.

  • Example: The steel piles arrive on-site, but you notice that some of them don’t meet the specified standards. You immediately contact the supplier and arrange for a replacement, ensuring the project isn’t delayed.

  • Action: Regularly monitor deliveries and work progress, addressing any issues that arise.


5. Closing Out and Documentation


  • What to Do: Once the goods and services have been delivered and the work is completed, you’ll close out contracts and document everything for future reference.

  • Example: After the piles are installed, you review all contracts to ensure that the terms were met. You document any issues and how they were resolved, which will be useful for future projects.

  • Action: Contracts are closed, and all documentation is filed.


Template for Procurement Management

Here’s a simple template in tabular format that you can use to manage procurement for your pile foundation project:

Procurement ID

Item/Service

Supplier/Contractor

Quantity

Delivery Date

Contract Terms

Responsible Person

Status

Comments/Notes

1

High-strength steel piles

XYZ Steel Co.

500 units

01-Oct-2024

Bulk order discount, extended payment plan

Procurement Manager

In Progress

50 units replaced due to quality issues

2

Concrete

ABC Concrete Ltd.

2000 m³

15-Oct-2024

Local supplier, delivery in batches

Procurement Manager

On Track

Batch 1 delivered on time

3

Pile driving services

DEF Contractors

-

01-Nov-2024

Timeline with penalties for delays

Project Manager

Scheduled

Contract signed, mobilization starts 25-Oct-2024

This table helps you keep track of what you need, who’s supplying it, when it’s due, and any special terms or conditions. It’s a handy way to ensure that everything is on track and that you’re ready to address any issues as they arise.

Comments

Rated 0 out of 5 stars.
No ratings yet

Add a rating
bottom of page