Discuss briefly why procurement is a key success factor in any construction project.

Construction project and construction management is massive exercise in teamwork.

Procurement is the one parameter of construction management that plays a great role for the
success of a given project.
Project Procurement Management includes the processes necessary to purchase or acquire
products, services, or results needed from outside the project team. The organization can be
either the buyer or seller of the products, services, or results of a project. (PMI, 2013)
Procurement is essential in a project’s success in both the construction and design phases. It
relies heavily on the experience, market knowledge, and resources of project managers.
Procurement models adopted in a project have their advantages and disadvantages depending on
how they are applied. However, there are expected benefits of procurement that cut across the
board, showing how vital procurement is in construction.

Project Procurement Management includes the contract management and change control
processes required to develop and administer contracts or purchase orders issued by authorized
project team members and controlling any contract issued by an outside organization (the buyer)
that is acquiring deliverables from the project from the performing organization (the seller), and
administering contractual obligations placed on the project team by the contract.
Construction management procurement is defined as being the art and manner of securing
necessary goods and services with an eye to:

 Timeliness
 Acceptable quality (which varies considerably from one client to the next)
 Respect of financial parameters (reasonable pricing)
 Minimizing and mitigating risk
 Effective communication and administration
 And last but certainly not least, ensuring clients’ satisfaction by understanding their
dreams.

All of this can be subsumed under the word value–getting Clients what they need at an
acceptable price, reliable schedule, and without unnecessary risk. The process effectively begins
with the procurement of the initial project team.
In the private sector, procurement is viewed as a strategic function working to improve the
organization’s profitability. Procurement is seen as helping to streamline processes, reduce raw
material prices and costs, and identify better sources of supply. In essence, helping to reduce the
‘bottom line’. Indeed, in many organizations, the importance of procurement is recognized by
having their head of procurement placed at an Executive Board level.

In the public sector, the concept of a 'bottom line' is less well defined - there are no shareholders'
dividends to be paid out or publicly declared profit (or loss) announcements. There is however a
need to maximize the output, in terms of teaching within the available funds. These funds come,
substantially, from public funding in the form of grants, student fees, etc. We are the sector's
shareholders as taxpayers, students, and/or staff. This, therefore, places an inherent requirement
that the funds provided are managed in a manner that is accountable and demonstrates both
probity and value for money.

There are several different routes a company can take when it comes to strategic procurement in
the construction sector. When selecting a route, the long-term objectives of the client’s business
plan must be carefully considered. Key factors that will influence procurement include:

 Speed
 Cost
 Quality
 Risks and opportunities
 Budget and financing
 Specific constraints on the project

Example to show how procurement is a key success factor for a Project

Suppose a client wants to construct a building based upon lumpsum contracts which the architect
is engaged directly by the client to undertake all stages of the design process and assist in
administering the client’s separate contract with the contractor.

Benefits gained from Procurement

 A well-defined scope of work and comprehensive documentation to reduce variations to

the contract price.
 Decisions making will be much easier.
 For comprehending project contingencies and appropriate design.
 Selection of the best firm of architects and contractor for the project.
 Effective and efficient resourcing of the project.
 The flexibility of construction management as a procurement method.
 Establish appropriate contingencies. and clear and rigorous documentation.
 Engage design advice from the architect to assist with the design quality management in
brief and contract development.
 Quality assurance in each stage of the project.