Whether you’re an owner, main contractor or sub, it hasn’t been an easy year for construction organisations.
But firms around the world have proven their resilience and ingenuity, continuing to provide vital services despite the disruption.
And construction will be at the heart of every nation’s recovery, as we look to rebuild, stimulate economic growth and prepare for a brighter future.
No one organisation will do this alone. Construction has always been an industry built on collaboration, and it’s the relationships and trust between firms that will power this change.
That’s why preconstruction – and specifically procurement – is so important, as organisations decide who they’re going to work with, and how.
From mitigating risk to choosing the right partner, preconstruction is where you make your money and ultimately lay the foundations for a successful project.
But the procurement process is complex, and challenges in every country are leading to inefficiencies and costly mistakes. This can compromise the success of the project and impact the organisations involved, at a time when performance really matters.
We’ve surveyed 900 construction professionals in Australia, New Zealand, Ireland and the UK to explore the process of procurement, the value of trusted relationships and the future of the industry.
There are opportunities for owners, main contractors and subcontractors to use technology to improve outcomes before they even break ground. This will help every organisation – and every country – to work together towards a brighter future, beyond the pandemic.
Discover how BuildingConnected can help organisations to streamline the tendering process and ensure the right team is in place.
The Mechanics of Procurement
Procurement is a crucial part of preconstruction. It’s the opportunity for owners to ensure their vision comes to life, by selecting the best, and most qualified, partners for the job.
Meanwhile, it’s the chance for contractors to optimise their profit margins and prepare for successful delivery.
Everyone has a lot to win, or lose, during the process. But despite this, construction companies in the UK, Ireland, Australia and New Zealand take a highly individual and varied approach to managing bids/tenders.
Organisations use a disparate digital tools including email, Google Drive and Microsoft Excel – but in many areas, technology usage is limited.
For example, nearly a fifth of owners say most of their tenders are still paper-based in Australia (18%), New Zealand (18%) and the UK (17%).
Custom solutions are popular, particularly in the UK, where 28% of owners and 18% of subcontractors have developed a system in-house.
Many still rely on manual processes for key parts of procurement.
For example, only around half of the owners and main contractors surveyed use technology to find new contractors to work with (53% and 46%) and for tender comparison (54% and 52%).
And with these manual processes, it decreases the opportunities for Main Contractors to discover new partners and for subcontractors to identify new opportunities.
Just 27% of owners and 21% of main contractors say that it’s easy to find qualified subcontractors for projects. On the other hand, subcontractors are able to submit proposals for only 51% of the projects that they see.
Having access to digital procurement solutions that facilitate visibility into new labour and project opportunities are distinctive quality to overall business success.
Small Errors Lead to Costly Mistakes
These disconnected workflows result in inefficiencies and mistakes during the procurement process, with significant consequences for project – and business – success.
Importantly, 86% of main contractors and 77% of subcontractors admit that errors are routinely made during tendering that impact the project down the line.
The most common mistakes are:
- Lacking the skilled labour needed in the business by UK and New Zealand contractors
- Underestimating the cost of subcontractors or supplies by Australian contractors
- Underestimating the project timeline by Irish contractors
Manual processes make it harder to spot the inconsistencies, gaps, errors and even hidden costs in proposals that can so often impact the project later.
And crucially, organisations are missing out on the project data that can improve quality, reduce risk and protect profitability in the future.
The Value of Trust
Every construction organisation is highly dependent on others for their success, making partner selection a vital part of every build.
But unfortunately, construction professionals report that working with new collaborators for the first time can present significant risks. In fact, 100% of the owners surveyed has experienced issues with a new partnership.
Some challenges come up again and again. In the UK, a lack of transparency about project challenges (49%) is the most common complaint; disputes about work quality and completion are the most common in New Zealand (49%) and Ireland (52%).
But the issues can extend beyond a single project. A third of main contractors (34%) have experienced reputational damage to their company due to working with a new subcontractor – rising to 40% in New Zealand.
Perhaps as a result, professionals are clear about the value of trusted collaborators. A third of owners (36%) say that reliability is more important than cost when it comes to contractors.
For main contractors, transparency about mistakes (41%) and a high quality handover (41%) are the most valuable attributes.
And in New Zealand (41%) and Australia (43%), main contractors are particularly concerned about regular communication and project updates.
All of this underlines the value of building strong relationships, based on communication and transparency.
But equally, it’s important that owners and main contractors can get an informed view of new suppliers when needed, rather than relying on the same contacts every time. And it’s here that construction networks and bid management tools can help.
Looking to the Future
Unfortunately, COVID-19 has intensified many of the challenges facing construction organisations.
The pandemic has disrupted many projects with delays and cancellations, sadly forcing some organisations out of business and making it even harder to find the skilled labour needed.
A significant proportion of owners (31%), main contractors (29%) and subcontractors (22%) say that as a result of the pandemic, collaborators they work with have gone out of business – with the UK the worst affected.
But construction businesses are resilient, and many are looking to work in new areas to mitigate the damage of the pandemic.
And despite their current challenges, construction businesses are looking ahead to wider transformation in the industry, including the adoption of technology.
Nearly three quarters of owners (70%) are focused on adopting new sustainable construction designs or methodologies – and 39% are incorporating sustainable construction requirements into tender invitations.
There’s also growing interest in using technology on the site: 34% of owners and 23% of general contractors will require subcontractors to adopt technology for projects going forward.
Owners and general contractors are looking for new partners to adapt to industry-wide trends – but procurement processes will need to evolve to enable these changes.
Around a third of owners (36%) and general contractors (30%) say that pressure to use more sustainable construction methods is driving their organisation to find new subcontractors and vendors.
However, 20% of subcontractors report that owners’ internal procurement processes are a roadblock to adopting innovative construction methods like off-site manufacturing – and 29% of owners agree.
Procurement has a critical role to play in the transformation of construction, both in finding the right partners and enabling changes in approach. Construction networks and the platforms that carry the tools to manage procurement workflows can help builders identify the right contractor for the right job.
In the face of labour shortages, construction networks can provide greater visibility of the suppliers available, to ensure projects can access the talent needed.
Meanwhile, adopting digital tools to manage tenders can help general contractors and subcontractors to expand their networks, to see – and win – more projects.
It’s time to reconsider legacy procurement processes, and look at how technology tailored to the construction industry can support vital decisions during preconstruction.
By working together to improve this crucial part of the construction process, organisations can create better outcomes across the construction industry – and ultimately spur their national recoveries, after a very difficult year.
For more details on the research findings in the UK and Ireland, check out the report “Connected procurement: The foundation of construction success.” Research findings from the Australia and New Zealand report will be published soon.
Learn more about BuildingConnected, the preconstruction solution that combines the largest real-time, construction network with an easy-to-use platform.