Driving your Construction Project through procurement

So all your hard work and nerve-racking nights have finally paid off and you’ve been awarded the construction project you’ve been bidding for! Now the only thing left is to build it. Although this seems like a fairly straightforward task but as most construction professionals know, projects are made up of smaller specialized construction packages commonly referred to as subcontract packages and finding the right subcontractor or vendor in a timely manner and within the budget can make or break a construction job. In this article we present the 7 steps to procuring your project to success.

Step 1: Setting the Plan

The procurement process is a great undertaking that requires proper planning. As such, the first step entails preparing a procurement plan. In order to do that, the project team must decide on the project packaging strategy. The total project should be divided into manageable packages delineated by a common scope. When doing this, the team should take into account the capabilities of Vendors and subcontractors in the market and resource availability. The procurement plan should indicate when the package is required on site (deadline) and work backwards to list the dates for package preparation, floating enquiries, technical review, commercial review, award recommendation, award approval, and lead time. The procurement plan should be populated and updated at regular intervals to avoid delayed package commencement.

Step 2: Prepare the packages

Care should be taken in preparing the work packages in order to avoid long pricing durations by vendors / subcontractors, scope gaps, duplicate scope, and variations & claims down the line. This will require the input and engagement of all the project team. Avoid including unrelated project documents in the package and clarify the scope to the greatest extent possible.

Step 3: Build your Vendor List

Selecting whom to include in your vendor list for each package is a paramount step. Failure of a vendor or subcontractor to deliver can jeopardize your project and put your organization at great risks. We cannot stress more the importance of selecting specialized partners that have the capabilities and the proven track record to carry out the job. Exploring new vendors and Subcontractors is very beneficial to an organization but we recommend that you take your time in vetting them and obtaining feedback from their previous clients. Buildingbling.com have dedicated an online portal for providing Engineering and Construction professionals with a platform for exploring and selecting the right specialized partners to successfully carry out their projects and share their experiences.

Step 4: Send Enquiries to your Vendors

Send out the tender enquires or Request for Quotations to your vendor list on or before the date specified in your procurement plan. Make sure you include instructions to your vendors and subcontractors on how you want them to present their offers and the scope for which they should price. This will ensure a common basis for comparing offers in what is referred to as “apple to apple” comparison. Also we recommend that you include details of the commercial terms and agreements that you intend to enter into with the successful bidder in order to avoid a long drawn out commercial negotiations process. Make sure you include a clear deadline for the submission of offers. Give particular importance to early work packages such as mobilization works, earthworks, Thermal & moisture protection, Concrete Works, and MEP works to name a few.

Step 5: Comparing the Offers

Once you receive all the offers, comparisons should be made on a technical and commercial basis. The technical team should ensure that the proposals submitted are as per project requirements and in compliance with the drawings, specifications, and schedules. Consider creating a compliance schedule to ensure that all bidders meet the requirements. The commercial team should create a comparison sheet for the prices making sure that there are no exclusions or scope gaps. If acceptable exclusions are present then these should be priced and added to the bid to ensure a fair comparison.

Step 6: Recommendations and Approvals

Once the technical and commercial comparison is done the project team should convene and render a recommendation. This recommendation should take into account the technical offer and the resulting price. If all vendors and subcontractors are not at par technically then we strongly discourage rendering a recommendation on a purely financial basis. The result may be a costlier recommendation if the selected vendor / subcontract fails to deliver, does not cover the full scope, or is not in compliance with the project requirements. Once final management approval and in some cases the approval of the Employer and the Consultant is secured you can proceed to the final step.

Step 7: Issuing the Order and Kicking off the Package

The final step in engaging a vendor / subcontractor should be formalized by issuing an order, be it through formal agreement, purchase order or any other contractually binding method. It is also recommended to kick off the package on site through a kickoff meeting where both parties introduce the team that will be dedicated for the Job and list out the submissions and requirements to initiate the works. The protocol for communications should be set along with the safety, Quality Assurance /Quality Control and planning requirements during the Kick-off meeting.

Projects are made up of smaller manageable work packages, which if procured the right way, should to be driven by suitable specialized vendors and subcontractor. This will lead to a successful and profitable outcome to all parties. To achieve this, the project team should set the procurement plan, prepare the work packages, send out enquires, compare the offer technically and commercially, issue their recommendation and obtain approvals, and formalize the selection to kick off the package and complete the project to the required quality, on time, and within budget.

October 21st, 2017|0 Comments

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