View of procurement as 'barrier to progress' must change

Will Green is news editor of Supply Management
11 May 2020

The perception of procurement in the construction sector as a “barrier to progress” must change if it is to become an “enabler of productivity”, according to a report.

The report, Procuring for productivity by industry body Constructing Excellence, said the construction sector had “flat-lined in terms of productivity” and one reason was “procurement has not evolved to address the current landscape of the industry”.

The report, which focuses on the nuclear sector, said major clients were “now increasingly reliant on the expertise of external contractors to deliver complex outcomes”.

“The network of organisations that are required to come together to deliver an infrastructure project need to be coordinated and managed effectively,” said the report.

“Therefore, the role of procurement needs to move beyond getting the contracts in place, to managing boundary-spanning enterprise-wide activities.

“Developing suppliers’ capabilities by implementing training and continuous improvement programmes, forming collaborative relationships not only with its own supplier network, but also between all of the suppliers in the construction sector supply chain.”

Among the practices that need to change are specifying components according to need rather than driving up costs through over-specification, procuring based on outcomes rather than detailed specifications, encouraging tenderers to outline full lifecycle costs, and using data management systems to share information across the supply chain.

The report said poor procurement practices that impact project delivery included poorly-defined project scope, inadequate project planning, lack of managing key interfaces, political/stakeholder influence, numerous legal amendments to standard contracts, supplier prices exceeding budgets, and traditional contracting behaviours.

The report recommended simplifying the transactional procurement process to focus on strategic activities, designing for productivity at the outset and maximising off-site construction, building long-term relationships with the supply chain, and involving procurement from the earliest stages of project inception.

“The perception of procurement needs to change, from its current position of being seen as a barrier to progress, to become the enabler of productivity,” said the report.

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