The role of the procurement manager in a construction company is a crucial one. A procurement manager, also known as a purchasing manager, is a supply chain and logistics professional. The procurement manager purchases all the necessary materials for the construction company’s projects, searching for the most cost-effective and appropriate materials for each job. The procurement manager also ensures the materials arrive on time and within budget. That’s no small feat in the construction world because prices on construction materials can fluctuate widely and with little warning.
A procurement manager requires a certain set of skills to perform well. Helpful skills include:
- Analytical thinking skills
- Superior negotiation skills
- Excellent communication and business skills
- Strong math skills and budgeting abilities</
- Knowledge of the construction industry and materials to understand the overall picture
When handling complex construction projects, a procurement manager must be adept at juggling all the moving parts of the job and overcoming daily challenges. How well they perform can have a significant impact on each construction project’s cost savings and profitability.
PROCUREMENT MANAGERS RESPONSIBILITIES
A procurement manager has many responsibilities beyond managing the company’s supply chain strategy. They must ensure the materials meet acceptable quality regulations such as tolerances and maintain stock at an optimal level. Procurement managers also negotiate with suppliers and vendors for better prices, service and delivery deals.
The procurement manager’s responsibilities in construction also encompass other duties that might not be as evident such as:
Evaluating RFPs and bids. Procurement strategy includes assisting with creating requests for proposals (RFPs) and the evaluation of bids.
Basing a proposal or bid on unrealistic numbers can impact the number of bids won and the profitability of a project. Bid too high, and the company will lose out to a competitor. Bid too low and the company’s profitability suffers, which will not appeal to internal stakeholders. A procurement manager provides input on the cost of building materials and other costs associated with the proposed project used to prepare the proposal or bid.
An effective strategy for evaluating RFPs and bids in today’s super competitive environment is critical for construction procurement managers. On average, a general contractor wins one out of every six jobs it bids, while a subcontractor wins one out of every seven jobs. Some have a bid: hit ratio as low as 35:1. Ouch!
An extremely low bid: hit ratio is one of the main reasons the average profit margin in the construction industry is less than 1%. Why? Every proposal or bid a procurement manager and others on the project team put together takes hours of work and contributes nothing to its bottom line.
Managing resources and defining deadlines. A construction procurement schedule identifies the different items needed to be purchased and the schedule needed to ensure each is available onsite at the right time. It is a helpful tool in developing the cash-flow plans for the project. The procurement schedule can also include the timeline for such line items as shop drawings, approvals, the project contract, building permits and the contractual notice to proceed. Understanding procurement times for items such as how long it typically takes to get shop drawings and approvals comes with experience.
Another procurement manager’s responsibilities in construction involve coordinating the procurement schedule with the project manager and the project construction schedule. This is vital to the overall construction schedule and ultimately to the success of the project. For example, if the light fixtures are not in the staging area and ready to go when needed, the entire project schedule could be impacted and the project could be delayed.
Monitoring the building process. A procurement manager’s responsibilities in construction don’t end with purchasing the materials and services necessary for the project. Throughout the project’s lifetime, he or she is responsible for managing contracts, change orders, submittals, evaluations and performance.
Procurement managers can use project data to collaborate with clients, vendors and suppliers to adjust deadlines and renegotiate contract terms as situations change during construction. Getting prompt approvals and not operating within the initial bid’s restraints can save the company thousands of dollars.
Another responsibility procurement managers fulfill during the building process is creating submittals for hundreds of items. This can be time-intensive, tedious work and tracking each submittal item has its own set of challenges.
CONSTRUCTION SOFTWARE CAN HELP
The procurement manager’s responsibility in construction is vast. He or she wears many hats and juggles a lot of balls, all at the same time. It’s no wonder many procurement managers use construction software to make their jobs easier.
Construction software such as eSUB’s software can improve the procurement process from the initial project bid to closeout. It automates routines to be completed more efficiently and gives procurement managers easy access to data such as contracts, purchase orders, submittals, and change orders. All data is in real-time to make scheduling and managing resources much easier. And everything’s stored in one central location. eSUB’s construction software can also set up reminders so essential deadlines don’t slip through the cracks.
Using construction software can help make bidding documents faster and smarter by using information gleaned from past bids. Construction software can quickly find any patterns among past bids won and lost to help you target which bids you have a better shot at winning. That way, you won’t waste time bidding on jobs you likely won’t win, jobs that aren’t as profitable and jobs that aren’t a good fit for your company.
eSUB’s construction software lets you track and log RFIs, change orders and submittals. You can even view submittals by owner, status and type! Construction software also simplifies the change order process. Change orders can be approved via email from any location and they are updated in real-time, so everyone is on the same page.
In short, construction software can provide procurement managers with many advantages that simplify the process and make it more efficient!