What is a Procurement Strategy or a Procurement Route?
Procurement is the process of purchasing goods and services. In this topic, it refers to the process of getting a construction project completed.
Procurement Strategy refers to the way in which the clients objectives are met with respect to the project. Procurement Route is the means or the actions required to carry out the Procurement Strategy.
Selecting an appropriate Procurement Strategy is one of the foremost and important tasks to be undertaken before commencing on a project.
Why is selecting an appropriate Procurement Strategy important?
An appropriate Procurement Strategy will help in achieving the client’s project objectives. It will affect the Procurement Route being selected and also affect the relationships between everyone involved in the project.
What factors should be considered while adopting a Procurement Strategy?
- Funds – What are the total funds the client can allocate for the project and what is their liquidity i.e. their availability to make payments during the project lifecycle?
- Time – What is the required completion date of the client? Is it flexible?
- Function/Quality – What is the final required functional performance? Are there any indications of standards of quality?
- Capital vs Operational costs – Is initial cost of project more important to the client or the operational costs? Or should there be a balance between the two?
- Risk – What is the risk to the client with respect to Time, Cost & Quality?
- Type of project – Is it a simple or a complex project?
- Client’s level of experience – Is the client experienced in the construction field? How much is the client willing to engage with the procurement process?
What are the various Procurement Routes?
- Traditional (Lumpsum)
- Traditional (‘remeasurement’ or ‘measure and value’)
- Design & Build
- Construction management
- Management contracting
- Public Private Partnerships (PPP)
How do the Procurement Routes differ from each other?
They differ in terms of following:
- the certainty of the final cost of project before construction
- the degree of control that the client has over the design and construction processes
- the extent of design information available during the time of tender
- the information required for the construction work to commence
- the extent of involvement by the contractor and the supply chain in the design stage, when these parties may be able to contribute to the design and planning of the project
- the distribution of risk, responsibility and accountability
- the sequential character of the process
Reference: RICS Professional Guidance, UK: Developing a construction procurement
strategy and selecting an appropriate route, 1st edition, guidance note