Procurement

When analyzing and evaluating the various proposals that you receive from vendors during an RFQ bidding process, what benchmarks do you use? Do you just compare price, or do you also have a list of criteria to compare the bids? Criteria such as: Compliance to Terms and Conditions, Shipping, Reliability, etc. How formal is this evaluation process in your organization? Are your RFQ evaluations – and decision around who is awarded the bid – subject to approval by your client? In 4castplus, the Bid Evaluation module allows users to define their own criteria; and go on to weight each criteria element according to its importance to the whole bid analysis. For example, if it’s a schedule-driven project where timing is critical, perhaps you’d weigh Delivery Date as having high importance. You can create as many or as few criteria as makes sense for each RFQ. Once you’ve received your proposals, you can then rank the defined criteria for each received proposal. 4castplus will calculate an overall Score based on your rankings and criteria weightings.  In addition to the criteria, you can also perform a side-by-side comparison of price for each line item on the RFQ. Not everyone needs software to help rank and evaluate bids like that. It’s often the case where it’s a straightforward process of eyeballing the bids and making a judgement call.  Nevertheless, many organizations that we work with have historically struggled with this area of bid management. Especially when any of the following are true: You’re providing procurement services on behalf of your client, and there is a requirement for bid-award oversight by the client The RFQ is connected to a critical path deliverable The RFQ has

To manage the complexity of procurement on large construction projects requires an exceptionally robust technology solution. Most commercial procurement software products are designed to handle general-purpose purchasing for a broad range of businesses and industry applications.  Procurement on construction projects however, is quite different. It’s not at all like buying pencils for the school board, or buying a fighter jet for the defense department. Construction project procurement has many characteristics that place heavy demands on the software that supports it. The differences fall into the following six categories. I’ll go on to discuss each of these in more detail further below: The need to handle High Volume Procurement The requirement to manage Long-Lead Items and Expediting Integration with Project-Level Cost Codes Tie-in with Project Controls The Need for Speed Multi-Discipline Collaboration In case you didn't notice, I've left out any of the hairy legal details that are unique to construction contracts. The contract management side is a whole other beast that is best tackled in another discussion. For this, I'm primarily focused on the procurement process.  I've also avoided the accounting side of the debate with respect to holdbacks, retainage, punch lists, etc. Again, this is an area more related to the contracts and accounting end of supply chain.  So anyway, here is a more detailed discussion around each of the above cornerstones of construction project procurement. High Volume Procurement Large construction projects face an enormous volume of materials, labor services and equipment that all needs to be contracted, procured and successfully delivered to multiple jobsites & warehouses on a very explicit schedule. The procurement teams on larger construction projects can face managing many thousands of concurrent contracts, hundreds of thousands of line-items and hundreds

One of the biggest challenges most procurement professionals face, is managing the day-to-day madness of having too many things to stay on top of, and not enough information to work with.  A very common frustration we hear about from procurement officers is their constant battle with “emergency procurement”.  A feeling as if they are always behind, in an ongoing reactive state – having to make sudden purchases with next-to-no advance planning. This is obviously pretty risky, since for a successful construction project, procurement should be executed from a position of firm control, proactively planning and managing contracts and vendors, with detailed information at their fingertips.  When vendors get a whiff of a client that’s in a state of emergency with little-or-no options, you can be sure they’ll take advantage of that with some highly leveraged negotiations. Good for the vendor – bad for the client. Procurement management software is all about helping purchasing staff eliminate emergencies like that. It enables the team to plan-ahead with planned-purchase-orders, prepared material requests, shell RFQs, and an abundance of planning dates at both the contract level as well as the detail item level (for material, services and equipment). Software that also has the logic built-in to determine all the required-at-site dates – well ahead of time –so that it can notify users about upcoming events or actions that need to be taken. The procurement team that can additionally forecast potential planning gaps so that they can make informed adjustments well before they become chaotic emergencies, is the procurement team that is truly in control. In construction, timing is everything; and information is gold. Managing project procurement using spreadsheets just invites chaos and reactive contract management,

For any major project, it’s likely that every single dollar spent on that project will have gone through the procurement department. Think about it … the entire project essentially lives in a big stack of purchase orders – contracts that define the supply and services, terms and conditions, and other instructions for vendors.  There’s a lot riding on the successful execution and timing of those contracts. Without a smooth and efficient procurement team – and the right tools – to manage the timely delivery of the volumes of materials and services required; a project could be doomed. Effectively strangled by the overwhelming amount of data and logistics faced by big-project procurement.   Many organizations try to manage the logistics risks by inserting dependencies, milestones and critical-path items into the schedule. But schedules are largely theoretical. If you don’t have visibility and deep reach into how your vendors are performing, you won’t have the key information to modify that schedule (and project budget) to reflect newly forecasted delivery dates that result from delays in supply or service. The information that goes into, and comes out of, procurement is vital to project success. The rest of the project team needs to have continuous detailed reporting on the status of all vendor deliverables. The whole team needs to be in sync with what’s happening beyond their walls and beyond the jobsite. Delays and failures most often occur long before the scheduled delivery date. Delays in fabrication, shipping, customs, or pending labor issues are just a few examples of the types of upstream challenges that can lead to major setbacks in productivity. Just being at the jobsite isn’t going to give you information like that. The