Tuesday, 12 November 2013

The Power of Procurement

Whilst in many industries over the last 30 years it has been technology which has had the greatest impact on progress and development, in construction a range of approaches to procurement have driven our delivery methods and product..

Procurement across construction is driven by a lack of trust across all parties from client to contractor, contractor to design team and contractor to subcontractor.

In the majority of cases this lack of trust is well founded with construction having a reputation aligned with used car sales men. We like to play our cards close to our chest and ideally get one over in the party at the other side of the contract. This is usually driven by cost or service. We get ourselves wrapped up in what we are doing or not doing rather than focussing on service and product improvement.

The contractural position is usually focussed on risk and who will be responsible . The design and build procurment process was developed several years ago as a response to clients concerns around the level of risk they were exposed to in what was a very unpredictable process. Detailed traditional contracts such as JCT were used which put the onus on the client to provide clarity and accuracy in their requirements.

This type of contract expects the design to be completes and correct. As buildings became more complex this became an increasing challenge. AT this point design and build was born and this risk was passed to the main contractor.

What this did was develop a generation of s designers and engineers who were very good at front end design with reduced skills in the delivery to completion.

The gap has been the area of contention ever since. This is the undefined risk which is ultimately a gamble between contractor and client. In good times a contractor can win big. When work is scarce the contractor loses as he increases his apatite for risk.

We now have technology which means there is no reason for a design not to be fully developed before procurement and construction. We can now achieve far greater surety in delivery to reduce risk. This moves our industry away from one based on a gamble to a one which is far more predictable allowing investment and development.

Recently I visited Mace offices in London and was shown their Business School. This is a fantastic initiative where Mace work with their supply chain to develop the Mace way together. The subcontractors have to invest in this development which has been controversial across the industry.

To me businesses which are willing to invest should be those who benefit in the long run. I hope in the years ahead procurment plays far less a role in our industry and we are able to improve our reputation for a quality and predictability

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