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Keep ‘Em Separated: Construction Project Management and Procurement

By Editor | |

Time is money. We all know this truism yet how many hours do construction project managers spend per week – outside of their key focus area – on sourcing and procurement? For instance, how much time is spent finding and negotiating with suppliers? How about dealing with GC contracts?

Why not leave it to the experts and consider partnering with a sourcing and procurement service provider?

Construction project managers have a highly critical responsibility in managing construction projects. They help ensure a project is tracking along to plan. They manage a project so it finishes on time and on budget, and that their team completes it according to building codes, plans and specifications. Other functions include determining scope, budget and schedules, resolving conflicts and more.

Majoring on the Minors

Based on our experience with numerous clients, you may be surprised to learn that an average construction project manager spends at least 20-30% of their time on sourcing and procurement-related tasks. This takes construction project managers away from their main priorities to focus on the sourcing and procurement minutia. They’re looking for new suppliers, developing RFx documents, negotiating pricing and dealing with supplier issues.

Simply put, construction project managers spend a lot of time on things they shouldn’t–namely, sourcing and procurement. Although highly-skilled in their given area of expertise, they lack the knowledge required to conduct sourcing and procurement activities in a manner that saves time and money and ensures a quality result.

Expertise Matters

We propose decoupling construction and procurement by outsourcing procurement to an external expert. As an example, our work with a rapidly growing retailer helped them define a more efficient sourcing and procurement approach to their retail development and operations spend.

What was the end result?

  • An annual net savings of over 15% across materials, labor and services expenditure
  • A 25% improvement in speed-to-open
  • Scale to take on more and more openings and remodels without added headcount
  • A best-in-class sourcing and a procurement capability that was up and running in 90 days

On average, cost reductions of up to 15% and timeline efficiencies of as much as 30% can be realized by partnering with a sourcing and procurement provider. Consider outsourcing your procurement needs. This way construction managers can focus on their core responsibilities. Leave the sourcing and procurement to experts with proven ability in strategic sourcing, supplier relationships, negotiating and–ultimately –building efficient and effective procurement programs.

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