Procurement market intelligence firm SpendEdge recently examined the advantages and challenges of construction services in its blog titled ‘Procurement of Construction Services – The One Size Does Not Fit All Approach’.
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SpendEdge observes that “Organizations either tend to invite bids for the project or use single source procurement in case there is only one supplier available in the market. Usually, organizations follow a competitive bidding process, that helps CPOs and category managers to zero in on the prospective suppliers, thereby creating intense price wars between contractors to offer the best price”
However, many challenges are faced during procurement processes and during supplier selection. There is a need to cut short the list of suppliers, and while doing that, procurement managers need to focus on certain factors like on-time completion and speed of the project, quality and cost factors, financial risks, ownership of the project and other project specific constraints. The procurement process of developed countries varies to that of emerging economies. Therefore, it is necessary to have a variation while taking managerial decisions.
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Recently, a leading U.S. based company faced several issues regarding poor construction quality and unethical practices while trying to expand to one of their targeted developing countries. As bidding processes to procure construction services differ vastly across economies and regions, it is critical to design a customized approach to procurement.
Creating a competitive environment may help an organization to fetch the best price from the market but it does not guarantee successful and on-time completion of the project as the suppliers may compromise on the quality of the project, and indulge in unethical practices such as bribery, over- budgeting, etc. Procurement leaders and category managers must know how to cater to these challenges, and be thorough with technical details, design and layout, environmental systems, and maintenance costs. Sometimes, due to lack of relevant information, the CPOs may not be able to benchmark the procurement processes properly. This is supposed to hamper the organizational progress in future.
More information on the latest procurement trends in the construction industry and how various organizations are benefiting from procurement intelligence can be found using resources from SpendEdge. These resources are compiled from SpendEdge’s team of 500+ procurement solutions experts.
SpendEdge shares your passion for driving sourcing and procurement excellence. We are a preferred market intelligence partner for Fortune 500 firms and other leading companies across industries. Our strength lies in delivering actionable insights that help sourcing and procurement professionals get the right information in the right format, without any unnecessary frills. For more information on SpendEdge’s services, please contact us.
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