The procurement process is one of the most important ones in any construction company, no matter the size.
It is how goods are purchased (as well as services), and how contractors are selected for planned, and ongoing construction jobs.
The procurement process even sometimes is responsible for selecting subcontractors, manufacturers or independent consultants.
For this process to be efficient and successful it has to be thoroughly managed and the relationships with all partners need to be maintained.
Preparing a detailed and well-structured strategy for your procurement process is a vital part of its success.
This, however, can prove to be extremely challenging since the procurement process is also closely related to many of the other processes carried out in construction projects.
Ok, so is there one right way of doing it? Probably not. However, there are ways to ensure its effectiveness, by following the right procurement tools and methodology.
In the modern age of progress and technology there is an abundance of tools for almost anything.
Digital transformation constantly develops new solutions for construction project management, and in this day and age, it would be unwise not to take full advantage of them.
Here are some of the solutions that modern technology can provide to help you manage your procurement process.
You need to have a broad perspective combined with a detailed view of things to make legitimate decisions.
This is a well-known truth not only in life but in business as well.
The best way to boost your company’s growth is to have a clear understanding of what is going on at all times.
Whether it’s through managing the incoming orders or tracking the budget spend with financial reports it is paramount to know what is happening on every project and process that goes on in your business.
Only with access to all of the information can you make actual informed decisions.
But how are you supposed to manage all of that in one place? By using a system tailored to your company’s needs.
Moreover, when using a cloud-based solution, you are able to have one single platform with all information at your disposal. Here is how it can benefit your business:
Streamlining communication with all of your subcontractors, consultants, and suppliers is the first step to success.
Having it all in one place, automated, and registered helps you track purchase orders, contracts, and much more.
Forget about relying on paper documents or having the information scattered all over different communication channels.
Protect and improve your communication by all means, because it surely will increase your company’s efficiency!
Manage your tenders well
Managing the tendering process is yet another procurement challenge. The bigger you get the more crucial it becomes for your company.
Focus on a solution that gives you a way of automating this procedure. It’s important to thoroughly analyze and compare submitted tender offers before choosing the winner.
Modern ERP systems can offer you tendering solutions that automate the process and make it more efficient.
By speeding up and automating the tendering process you will instantly feel the benefits!
Control your budget
It comes without saying, the budget is a cornerstone of the project. Tracking its spend is crucial for a project’s delivery.
Oftentimes it can be a very complex and demanding job to do, especially without the proper tools.
The budget spend, purchase orders, quote amendments, tenders, valuations, and all other financials rely on each other and are connected.
Use modern solutions to control all of them from one place, track changes and dependencies - never losing another piece of information no matter how complicated the project.
When choosing the solution for your company, make sure you also check for their integration capabilities.
The ability to easily integrate essential external software is a crucial matter for complete project management.
You can take a look at how Archdesk integrates, among others, with (the most common) accounting software Xero here.
Have you ever felt lost trying to manage projects in your company with different materials from various suppliers and distinct terms of payments or conditions? Who wouldn’t be? That is why today we want to present you one of the solutions from our construction management software - Procurement - that will help organise the orders in your construction company once and for all.
Most important fact: taking care of the procurement process in your company gives you a broad view of your spending. With tracking each purchase, it is easier to state whether your company is still on budget with the project. Also splitting the cost into different categories gives you great information on how much was spent on each of them: design or labour or any other category that you need to control. The cost is an essential feature of each project, that is why it is so crucial to track it in the right way.
But the view over budget and spendings is not the only benefit. Our construction management software supports you with the documentation connected with purchase orders. For example, after the supplier sends the purchase invoice, you can add it in the system. You can then have all documents in one place with access anytime you need.
Generally, you can have two types of Purchase Orders:
General purchase orders that are not related to any specific project. This type can be beneficial when we want to order materials for the whole company, and we do not want to register it to a specific project.
Purchase orders for a specific project Here we also have the possibility to create it for: whole quotations, specific quote section or specific line item in the quote. All these purchase orders allow us to track better spending in the specific project.
No matter which type, purchase orders give you detailed information about the order: delivery address, name of the project, project manager responsible for it and more. The information in the order can be customised during the implementation process. However, we want to mention one handy feature. To each order, you can add Terms & Conditions. For example, if you have 15 days to pay your supplier, you can add it in the system. Thanks to that, you will not lose control over deadlines and specific agreements with each supplier.
In the advanced view of the purchase order, you can find another useful feature - an approval process. In the most basic case it consists of:
What is important is the fact that the process of approval can be easily customised depending on your needs. For example, we can set that purchase orders above £20,000 must be accepted by the head of a department or that the legal department must approve one of the stages.
All purchases can be seen in a dashboard. It shows us at which stage our order sits, who created it, under which project and the value of it. Except for orders that need to be completed, the system also shows us a dashboard with orders that are ready to be invoiced. There you can see orders in which the purchase invoice value is not equal to the purchase value. Such information is especially useful for the accounting department as it can speed up their processes connected with invoicing.
As mentioned before, the procurement process supports our clients to properly process expenses and keep budget control. Archdesk enables you to keep track of your spend budget automatically on a high-level macro perspective, e.g. materials, labour, or very detailed view, e.g. floor level, room, type of works, supplier etc. When you choose to do it automatically based on a purchase order once it is moved from the draft, not only it is faster and more convenient for you, it is also safer and less exposed to human error.
As you can see, procurement in a construction company is a broad and important topic. It gives control over the specific costs of the project and also shows you the general financial situation of the company. After all, our profits depend on our costs. If you want to check how else our construction management software can support your company - discover other Archdesk features!
July 3, 2023 • 6 min read
June 14, 2023 • 6 min read
June 14, 2023 • 4 min read
June 6, 2023 • 5 min read