How Rising Costs Make Construction Procurement Jobs Even More Important
Posted by Daria Tkach, Recruitment Consultant on Sunday, July 24, 2022
With rising costs becoming part and parcel of everyone’s daily lives, those working in construction procurement jobs are forced to face these cost challenges head on, making the procurement role within the construction industry more important than ever. The Construction Index states:
“Average inflation for products and materials so far this year has been around 23%; with more significant price increases in energy intensive products such as insulation, cement, concrete and many steel products.”
When the cost of raw materials rise excessively, the cost of construction projects rise. Those working in construction procurement jobs can’t stop these rising costs, but they can manage a variety of other time and cost factors relating to a construction project.
Through strategic procurement planning, costs and their associated risks can be mitigated. Paying a fixed price and passing the cost risk to the contractor, or coming up with agreed contracts that tie other parties in as partners with the success or failure of a project, thus making sure everyone pulls in the same profitable direction. Maxim have procured staff for our construction clients throughout the supply chain for many years and these successful partnerships have shown to be commercially shrewd and in the context of the costs for a whole project, highly cost effective.
Industry Growth versus Rising Costs
The different construction industry sectors have seen extensive growth in recent years, which is good news for everyone involved in construction recruitment and the construction industry. However, this has been tempered by rising costs and according to the Chartered Institute of Procurement & Supply:
“UK construction companies reported another strong rise in business activity during April, but the speed of recovery lost momentum amid weaker new order gains. Survey respondents noted that higher costs and worries about the economic outlook had started to act as a brake on demand.”
Construction projects are under tremendous pressure to remain successful and profitable and it is managing costs that will ensure good results.
Companies along the construction supply chain will have to manage their costs to survive and pass on increased prices affected by rising costs. It is strategic procurement planning that will see supply chains and construction projects remain profitable.
Strategic Procurement Planning
In these high cost times, it is paramount those in strategic procurement consultant job roles find the best possible procurement contracts, from initial sourcing to completion. Strategic procurement planning requires just that - planning strategically. Strategic procurement planning is often used in the construction industry sectors which require forward planning and involve high cost and high risk. According to The Chartered Institute of Building (CIOB):
“The importance of procurement in a project cannot be underestimated – an overwhelming majority (87%) believe good procurement to be synonymous with a successful project.”
The core processes consist of, evaluating current spending and the supply market before identifying suitable suppliers. Evaluating total cost of goods and services also needs to be taken into account before any purchasing can be made. Negotiating good procurement contracts is key to saving money and keeping costs low. Partnering and involving other parties in the cost risk through contracts ensures a project’s profitability is everyone’s goal. Negotiating a premium top price also mitigates cost rises, which then fall to other parties within the construction project. These contractual elements can make future costs more predictable and a good procurement manager will plan and manage a procurement team to minimise any future cost risks.
Procurement Specialists with Management Experience
Procurement specialists need many skills, meaning a team is usually better than an individual. A good procurement team can provide many talents under one roof and members of a team can dedicate themselves to a particular procurement area bringing better cost effective results than an individual doing numerous jobs. Although “Procurement is essentially a series of considered risks” (CIOB), a good team under a good procurement manager, will bring profitable results every time, such as procuring within the same framework and set of company rules leading to predictable costs and reliable delivery of goods and services.
Maxim have a number of high-profile procurement roles available; lets profile a few of them. The Senior Procurement Consultant role is a prestigious role based in London working on UK and international construction jobs. The opportunity involves working within a large procurement team of industry specialists based from offices (and WFH) across the UK.
The Pre Contract Senior Commercial Manager role is also an exciting position well worth review.
Construction procurement jobs and strategic procurement consultant roles require skills to set up and manage a procurement process with cost efficiency at its core. With rising costs making construction procurement jobs even more important, Maxim Recruitment has an excellent procurement record. With many job opportunities for construction professionals with procurement experience, Maxim can provide specialist help to progress procurement careers. We work with procurement employers in the following sectors and areas of specialism: construction, property, transport, rail, water, power, nuclear and the MOD & defence sectors. If you’re looking to procure a construction job, Maxim are likely to have the right procurement jobs for you!