Procurement is often an afterthought in construction.
In my sector – social housing – I see many providers working on large, multiple-home developments. They buy the land, do the drawings, complete the demolition, but wait until the last minute to develop a supply chain. Building work can be due to start in a matter of months and very little compliant procurement has actually begun.
It may sound extreme, but this scenario happens time and time again, and it stems from procurement’s poor image. Seen as the ‘policing’ pen-pusher by many contractors and clients, procurement has almost become a stigma. Although this is not the case right across the board (there are some high-performing organisations that clearly understand the important role procurement plays), others do still perceive procurement as the function that slows things down, limits choice and lacks technical knowledge. Procurement often gets added to someone’s to-do list and considered last.
This is a key reason for the lack of procurement competency within contractors’ businesses and the wider sector. Clients want things to happen quickly with suppliers they trust. As a result, cosy relationships develop between clients and preferred contractors, and construction heads tackle sourcing activity themselves. But there are a host of benefits that these cosy relationships don’t enable.
Expertise is lacking
Done well, procurement allows clients to engage with the broader supply chain to find out about new innovations. It helps clients manage risk more effectively, evaluating sourcing contracts on a full, lifetime basis. Skilled procurement professionals can contract-manage the supply chain from an independent perspective rather than a ‘cosy’ position and will aim to design a watertight specification – something that can affect the success of a project hugely.
“Cutting costs at the expense of quality is often wrapped up under a false guise of creating value for money”
This type of specialist procurement activity just isn’t happening consistently across the sector – findings from last year’s deep dive into industry competence support this. The Raising the Bar report found numerous instances of procurement being carried out by individuals who lack the appropriate competencies to procure works relating to high-rise residential buildings (HRRBs). This lack of expertise, plus low margins and high levels of competition among contractors, creates an environment that perpetuates poor buying behaviours.
Initial evidence from phase two of the Grenfell Tower Inquiry also supports this conclusion, with the poor buying and product decisions that led to the tragedy laid bare.
So, what can be done? There are some important steps that contractors and the industry as a whole must take to raise procurement skill levels.
Ending the corner-cutting culture
The first is culture change. Construction leaders must loudly advocate good-quality procurement to their workforce so it’s not seen as an additional chore to get off their desk quickly, but a strategic, enabling business function that will make their job easier.
Timing is also critical. Procurement is usually considered at the end of the process, often purely as a sourcing activity. Instead, procurement needs to be thought about from day one so it can act as a ‘glue’, connecting teams and stakeholders, nurturing innovation and offering up the strategic intelligence it gathers along the way.
Challenging fake ‘value-engineering’ must also be a priority. Cutting costs at the expense of quality is often wrapped up under a false guise of creating value for money. This damaging practice must be confronted and a more even approach to commercial decision-making introduced.
The Raising the Bar report recommended that a procurement lead with a comprehensive HRRB procurement competence level is needed at every stage of the RIBA plan of work. Before this becomes mandatory, the industry must take heed from sectors such as oil, gas and automotive, and get well-trained procurement specialists in place.
The procurement-competency gap has, for many years, led to a culture of corner-cutting at the expense of quality in construction. The sector must act decisively now to prevent safety from being compromised once again.
Steve Malone is managing director of Procurement for Housing
