Managing the complexity of procurement for large construction projects requires an exceptionally robust technology solution.
Most commercial procurement software solutions are designed to handle general purchasing for a broad range of businesses and industry applications. Procurement for construction projects has more complex needs such as:
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.
Risk is everywhere in business. Whether you’re a large or small company; or whether you run large or small projects – you are always running the very real risk that you’re project won’t succeed according to plan. How your business performs on a project however, goes well beyond just your own internal issues of cash flow and resourcing. The interdependencies that are inherent in construction projects means that what you do has a direct effect on your peer organizations and the owner. In other words: what you do is not just your own problem. If you blow it, you may end up blowing it for everyone around you. That doesn’t go over well – people talk.
How on earth do we manage to make sense of the chaotic volumes of information that gets thrown at us every day? If you’re anything like me, in any 24-hour period you can get hundreds of emails, documents, txts, tweets and messages filling your inbox and various other mediums. It’s impossible to believe we can do a decent job of cataloging and organizing it all in order to get back to it later.
I don’t have any stats on this, but I bet that over 90% of people use Outlook as an information management system – supported by hundreds of folders located somewhere on a company shared drive. And to some degree that works ok. There does come a point, however, when that system simply breaks down. I talk to a lot of people who plan, manage and procure construction projects, and easily one of the biggest struggles they fight to endure is how to tackle the barbaric amounts of information they need to stay on top of. Contracts, drawings, change orders, vendor invoices, daily site reports, budgets, status reports and on and on it goes. Each document and email thread can contain important information that’s critical to a project’s smooth and healthy progress.
At some point, engineering and construction companies need to upgrade the systems they use for managing all that project-related content. It’s like when you used to have no kids, and now you have three kids: you have to face the reality that you need to upgrade your two-seater car to something that can haul around the whole family. I specifically wrote project-related content as opposed to enterprise content. There’s a very big difference. The difference is: Project Data should reside with the project – not in a corporate document management system (or in Outlook or on a shared drive).
For any major construction 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.
I was visiting a client yesterday helping them get started with some new projects they were planning. They’re a fairly new client and are still working through some of their internal processes with respect to how they’re going to take full advantage of this enterprise software they've just adopted. They were engaged in a very productive, but heated dialogue about how to manage this transition. The challenges they face are similar challenges that most companies would in this situation, so I thought it’d be worth writing about.
Back in the 18th century there was a period of new thinking called the Age of Reason; or the Enlightenment. The thinkers of the time were moving towards a largely fact-based view of the world and all things in it – using reason rather than sentiment or religion to explain things. Dominated by a well-known group of French Philosophers, it’s this period that has significantly influenced our current scientific approach to our view of the world. Amongst other things, they described the process of understanding things by breaking them down into individual parts. Like, a bicycle is made up of wheels, a chain, handlebars, pedals, etc. As though all whole things in the universe were merely a sum of their parts. At the same time as the French philosophers were enjoying their breakthroughs in thinking, there was a smaller group of British philosophers, like Edmund Burke and David Hume, who believed that there was more to it than just Parts.
Hands up if you don't know what an Expeditor is
Oh don't worry - you're not alone if you're not too sure what an expeditor is or does. The expeditor is just that quintessential guy-behind-the-guy that plays a pivotal role in successful project execution. That's all.
The management of critical path items in large construction projects usually involves the coordination of multiple events coming together at exactly the right time. In order for work to be completed smoothly, you need the crews, equipment, materials, drawings, instructions, etc. to all be there at-the-ready, with all preconditions and preparations met, at precisely the right time. For most organizations, the responsibility for the logistics in making sure this all happens without a snag, is perceived as the job of the Project Manager. While true, the project manager is the face of project coordination, there’s a lot going on behind the scenes that enable the project manager to achieve the success they’re looking for.