Importance of procurement in the construction industry
Services 2, Sep, 2015
Why behind each successful construction company in Dubai is a strong procurement team.
Many businesses around the world strongly dislike having to go through their procurement department, as it tends to slow down processes and add extra paperwork. But in an industry like construction, procurement is vital. We look at the main reasons why having a dedicated procurement team is so important in Dubai’s construction industry.
When dealing with large contractors and suppliers, it’s imperative your company has someone who knows what the going rate is and when it’s okay to make budget exceptions. The procurement department know exactly what quote you should be receiving and flag anything which seems like a high or unnecessary spend. This also takes away the bargaining process – instead of you having to deal with suppliers directly, the procurement team are there to barter down any quote and ensure the company gets the best deal possible.
As many people may have noticed from working in the construction industry, most companies ask for three or more quotes from different suppliers before deciding which one to take. This is to show the procurement team exactly what offers are on the table and make sure the decision made is financially viable and not made because of any other reasons. Procurement teams also research the industry and can normally supply extensive lists of suppliers which are approved and which ones should be ignored.
The procurement department and the finance department go hand in hand, with one helping the other. Procurement employees are the middle men in between the client facing roles, such as the Architects, Business Developers or Marketers and the finance team. Their decisions are respected by Finance managers and therefore help the financial process run more smoothly.
Working in a procurement department is not as easy as it may sound. Although many just see procurement as another hurdle to get through when you want to commit to something you promised a client, they are actually in place for very solid reasons. Without the procurement team, tenders would be managed by finance departments, who would opt for the cheapest applicant, or sales and marketing departments, who would not think of the finance when making the decision. The procurement department is the go-between to keep a financial and 360 degree hat on when making a decision, looking at price, reputation, size of the company, proposal, timeline and more.