A Guide to Construction Procurement in Australia

Construction projects almost always have a lot of moving parts. There are specialised materials to order (many of which need to be customised), suppliers to negotiate with, contractors to manage and a schedule to adhere to.

In this article, we walk through the steps in the construction procurement process, providing an overview of the responsibilities and common challenges during each phase.

What is Construction Procurement?

Construction procurement is the process of acquiring goods, services, and works for construction projects. It involves selecting contractors, suppliers, materials and consultants to deliver a project on time, within budget, and to required standards. 

Procurement is a critical element of project management. It ensures all resources are available when they’re needed and that delivery aligns with project goals, budget constraints, and timelines. 

Without a robust procurement strategy, even well-planned projects are more likely to face significant disruptions and financial setbacks.

Procurement vs Purchasing: The Difference in Construction

Procurement and purchasing are often used interchangeably, but they serve distinct functions within a construction project. 

Purchasing refers specifically to the act of buying the materials or services needed—placing orders, managing financial transactions, and ensuring the right products are delivered on time. But this is just one step in the procurement process, which also includes things such as logistics, approval, and strategy.  

An effective procurement strategy ensures that purchasing decisions are made at the right time and under the right conditions, preventing—or at least minimising— delays and cost overruns. 

Who is Responsible for Procurement?

Usually, responsibility  for procurement will depend on the size of the organisation and complexity of the development. 

On larger infrastructure projects there will almost always be a dedicated procurement team with specialised positions (e.g. procurement managers, supply chain coordinators, and purchasing officers). 

On smaller projects, procurement is typically less formal, with duties shared among several roles. Site engineers, project managers, site managers, and even foremen often take on procurement responsibilities. 

On residential projects, procurement is even simpler being organised but the owner or foreman.

What are the Different Construction Procurement Methods?

There are various construction procurement methods organisations use depending on the project's size, complexity, and the number of stakeholders involved. Each of the common procurement methods has its own strengths and weaknesses, meaning that it suits a particular style of project.

Design-Bid-Build

This method is typically used for larger projects, such as government infrastructure or large-scale private developments. 

The design phase is completed first, either by the owner’s in-house team or an independent consultant. The project is then put out to tender, and a contractor selected. 

Design and Construct

In this method, a single contractor is chosen before the project begins and is responsible for both design and construction. This approach is often chosen for projects that require fast-tracking or when the owner wants to streamline the procurement process.

Construct Only

This is incorporated in the design-bid-build method. In construct only, the owner completes the design plans separately, often with a consultant, before tendering the project as ‘construct only’. 

There is a clear delineation between the design and build phases. The contractor delivers the project to predefined design specifications, managing all construction activities and subcontractors as required.

Construction Procurement Management Process

The construction procurement process is essential to project management, though its steps vary with project size and complexity.

In the early stages, procurement focuses on estimating costs, preparing tenders, and gathering data for planning and pricing. Long lead-time items and procurement schedules are arranged at this time. As the project moves into construction, the project team takes over procurement, finalising and tracking items to ensure smooth delivery.

Steps in the Procurement Process 

There are generally some key steps most procurement processes go through. 

• 1. Identify requirements.

  The design team creates detailed specifications, outlining the materials and services needed. This is crucial for accurate budgeting and planning.

• 2. Prepare estimates and tenders.

  Contractors prepare estimates and submit bids, including bill of quantities, based on project specifications. For larger projects, this involves getting quotes from multiple suppliers and subcontractors.

• 3. Award contracts.

  The client reviews the bids, selects the contractors, and formalises contracts. For complex projects, the procurement team may begin ordering long lead-time items well before construction begins. From this point, the responsibility of procurement typically lands on the hands of a project team who are responsible to finalise and track procured items for the remainder of the project. 

• 4. Order materials.

  Contractors confirm lead times with suppliers and issue purchase orders. For smaller projects, this may be as simple as getting three quotes and placing an order.

• 5. Approve materials.

  The client and relevant authorities inspect and approve all materials, making sure they meet required standards.

• 6. Manage delivery and coordination.

  Procurement managers track the delivery of materials, making sure they arrive on site as scheduled. This involves coordinating with suppliers and arranging logistics to avoid delays and site congestion.

• 7. Inspect quality and compliance.

  Materials are inspected for quality and compliance. Any issues are addressed before approval and installation.

Solving Procurement Challenges

Construction procurement can come with its fair share of challenges. If not managed effectively, these can lead to delays, budget overruns, and disruptions.   By identifying these risks and developing contingency plans, teams can respond swiftly to unforeseen challenges, safeguarding project timelines and budgets.

Standardisation, preparation and technology can improve the procurement process.

In conclusion, effective construction procurement is essential for ensuring projects are completed on time, within budget, and to the required quality. With so many moving parts, from material lead times to contract management, a well-planned procurement strategy helps align stakeholders, manage risks, and streamline processes. Early collaboration fosters clearer communication, minimising delays and budget overruns. Leveraging standardisation, preparation, and integrated technology, enhances visibility across procurement activities, ensuring smoother operations. 

By anticipating challenges and implementing proactive solutions, teams can safeguard project timelines and avoid costly disruptions. Ultimately, strong procurement management is key to driving successful project delivery in Australia’s dynamic construction industry.

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