With the amount of competition in the construction industry for projects, there are many challenges construction companies face when trying to win work.
Procurement market intelligence firm SpendEdge recently examined the advantages and challenges of construction services.
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 zero in on the prospective suppliers, which creates intense price wars between contractors to offer the best price.
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 constraints. The procurement process of developed countries varies to that of emerging economies.
Creating a competitive environment helps an organization 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. 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. Keeping a level playing field is one of the most important things when projects are out for bids. Contractors who can provide the most honest and favorable bid will be the ones to come out on top.
