5 Main Types Of Procurement In The Construction Industry
Making decisions on the procurement procedure is important to any construction job’s excellence. Also, the type of procurement that firms in the construction sector go for is a vital deciding element of their general profitability and is essential to the perfection of any construction project.
Most firms have adopted construction procurement software (read here), which helps them decide the type of procurement they will apply depending on the type of construction at hand. Construction firms weigh up different types of procurement and decide on the best depending on robust frameworks like topography, logistics, weather, available technology, finance, labor accessibility, and services.
Read more to fully understand the construction industry’s five main types of procurement.
- Traditional Procurement
It is the most standard procurement method applied by most construction organizations currently. A firm or an individual issues a blueprint, and the contractor assembles that design. If a blueprint is finalized before the construction process starts, this procurement technique can issue an actual division of responsibilities and duties.
The basic disadvantage of traditional procurement is a section of the division of duties and obligations, which can cause disputes about which group is liable for any issues.
Traditional builders who put money into preventive care may provide higher standard work at reduced costs.
- Design And Build (D&B)
In this procurement technique, the builder is responsible for all the duties, risks, and supervision of the architecture and build stages. The process needs that the builder has many employees. Also, the contractor should have an outstanding facility administration staff to supervise all the design and build details.
Another option would be a firm with a rigid and organized partnership with other builders to finalize the assignment.
In this method, the contractor for all the finances and operations.
- Management Contracting
Construction control may be the perfect procurement method for designers that are particular in sizeable, obscure projects and possess internal management resources. In this structure, designers subcontract all project details to the cheapest and most skilled bidder.
However, this technique wastes resources in terms of time. It also consists of complex procedures; firms can save money by making every factor more competitive and maintaining full control over the procedure. It can demand an advanced supply chain control process also.
- Joint Venture/Partnering
The limits between parties frequently could lead to major issues in the construction contract. For you not to be challenged by the limitations, various parties must enact a working environment based on certainty, mutual goals, partnership, and sharing risks and profits. In a joint venture structure, the key control and responsibility are not the obligation of the client, but they are in the administration of the joint venture team.
The excellence of this kind of procurement hugely relies on the memorandum of agreement between the groups involved. Realizing the duties of every group is not so hard in the joint venture procurement structure. A successful joint venture structure works to divide the restrictions, do away with blame between the cooperating members, and redesign all energy to fulfill the client’s goals.
- Private Financing
It is the last procurement technique, and it is not well-known; only a few people use it. It is appealing to clients with unstable financing backgrounds. The technique takes the privately sourced finances and places all construction duties on the builder until the project is finalized. When the construction project is completed, it is moved to the client.
Choosing your construction procurement technique should be based on your resources, forecasts, and duration. By evaluating all those factors, you can pick the best procurement method for your firm.