Construction Procurement Management

Welcome to "Procurement for Project Engineers." This video provides a quick introduction to the course. Attached to the course notes is a course map showing how all the lectures fit together and relate to the overall procurement process. A list of key terms and definitions is also provided that will prove useful as you go through the course.

Welcome to section 1.1 - What is procurement and why is it important.

Our course intentionally focuses on procurement and is separate to our contract management course

Let's discuss the importance of effective construction procurement management

Let's look at the outcomes we are trying to achieve by managing procurement successfully.

This section goes through at what stage of the project lifecycle procurement occurs.

When there are significant numbers of scope gaps, not only will we pay expensive variations, but the delivery team's focus is taken away from planning and managing the works, and changes to managing and focusing on delivering the works

Let's review the course scope and how the remaining sections are structured.

Let's wrap up and re-cap what we covered in Section 1

Section 2 of the course goes through procurement planning in detail. In this section of the course, we'll cover the development of the procurement management plan, the work breakdown structure, the procurement schedule, and typical roles and responsibilities within the procurement team.

This section of the course goes through the procurement management approach. Basically, this is where we decide how we are going to conduct procurement on the project.

Now we've established our procurement strategy, the next step is to work out what we need to procure

In this section of the course, we go through the Work Breakdown Structure (WBS). This is where we work out what we need to procure. We take the project scope, decompose it into smaller components, and decide what we need to procure to complete each of these components. By the end of this section, we'll know everything we need to procure for the project. Attached for your reference is an example WBS and WBS Dictionary.

For each of the work packages identified in the WBS, in this section we need to work out the best way to deliver it.

An important consideration for how to deliver the works is how well equipped we are to do so. Self-performing works require more management while sub-contracting out works is easier and requires less supervision. We have to make a realistic assessment of how involved we want to be with the coordination and planning of the works and if we are best placed to do this.

In this section, learn about a super useful planning tool used to map out and validate all the different scopes of works and ensure there are no gaps or interface issues.

Battery Limit drawings are an invaluable tool for planning and defining each sub-contractors scope and responsibilities.

In the previous section, we worked out everything we need to procure from the market. In this section of the course, we'll work out when we need to procure all these packages. This is captured in a document called the procurement schedule where for each package we detail all the steps in the procurement process and when they are to occur. Attached is an example procurement schedule.

The procurement schedule works out when each package needs to be procured. It tells us when each procurement activity needs to take place so the goods and services are available on-site to meet the construction program.

While procurement is mainly driven by the commercial and delivery teams, other teams play an important role in setting the project up for success.

Let's wrap up what we covered in Section 2

Section 3 of the course goes through executing/conducting procurement. In the previous section, we developed the plan for procurement, in this section, we put that plan into action. We'll cover engaging the market, preparing tender packages, commercials, managing the tender process, and finally evaluating tender submissions and awarding contracts. By the end of this section, we'll have selected the best contractors to achieve the project outcomes and be ready to commence works.

In this section, we'll go through engaging the market and why it's important to do so early. We'll also cover how to identify all the potential contractors that could potentially perform the works.

In this section, we'll go through preparing tender packages and getting all the bid documents ready. This is preparing the set of documents that we will send to tenderers. These documents will provide tenderers all the information required to develop their delivery solution and submit to us a formal, binding quote. Attached is an example scope of works document, the key document the delivery engineer is responsible for creating.

Through the tender documents, we need to accurately define what works potential sub-contractors are required to complete.

The Invitation To Tender (or ITT for short) is like the front page of the tender package. It provides instructions to tenderers on how the tender process is to be run and what documentation they'll need to submit.

In section 3.3 we'll go through and show you how to prepare the key document that describes a contractor's scope of works.

Learn about how to break down the project scope and develop a pricing schedule that can be filled out by tenderers. The pricing schedule will also be used to manage payment during project delivery.

Learn how to make the potential sub-contractor responsible for meeting the project's program requirements.

Through the procurement process, we ned to make our sub-contractors responsible for meeting the milestones in our construction program.

Learn how to make the potential sub-contractor responsible for meeting the project's quality requirements.

Through the procurement process, we need to make sub-contractors responsible for the project quality requirements. We need to ensure they are responsible for complying with the design and technical specifications.

Learn about the importance of including drawings and specifications within the tender package

As procurement is about the development and eventually signing of contracts, it's critically important to understand the commercial side of procurement. This section provides a brief overview as to the development of the contract and choosing the correct commercial structure.

Once the bid documents have been prepared and the initial contract developed, it's time to issue the documents to the market and let potential subcontractors and suppliers develop their delivery solution and provide us with a quote. This section goes through issuing packages to the market, responding to questions, and best practice communication with tenderers.

Let's look at what internal records and documents we need to keep to keep track of the tender process

Once tenderers have submitted their quotes and solutions for the works, it's time to review these and choose the contractor who is best placed to complete the works. This involves reviewing their responses and comparing them to our project objectives. Once the best contractor is selected, we'll need to get internal approval to make a financial commitment and eventually award the contractor the works. Once this is complete, we're ready to begin the real works!

Attached to this section is an example tender evaluation form.

When sub-contractors submit quotes, they'll usually make certain inclusions and exclusions. We need to understand what these are so we can accurately compare different sub-contractor quotes and ensure they have included all the scope we require them to complete.

Good sub-contractors can make projects, and bad sub-contractors can ruin them. We need to make sure we are choosing the sub-contractors and suppliers best placed to deliver the project with us.

Let's wrap up and re-cap what we covered in section 3

Struggling to get ahead in the construction industry? Want to boost your salary and land your dream job?

Welcome to Section 4, let's recap what we've covered and check out some of the other learning opportunities available.