Procurement in construction: proper planning improves your business

For the best customer experience, custom home builders know that good planning, coupled with proper management of homeowner expectations, is critical–especially in a tough construction industry experiencing potential cost fluctuations that make every dollar count.

By the time a home construction project is ready to break ground, months and tens of thousands of dollars have been spent planning and designing the average custom home, which today costs about $500,000 (in the US).

However, even as the build date draws near, additional planning, known as the construction procurement process, is necessary to ensure dollars are well spent when purchasing materials and scheduling contractors and labor. Construction procurement also ensures that those purchases are in line with the original scope and vision of the project as agreed with the owners.

Why it pays to have a construction procurement strategy

A well-designed home not only informs the customer on how much the build will cost and how long it will take to complete, but also provides the builder with the necessary plans and information to make well-informed construction procurement decisions.

As a custom home builder, you will have to think through not only what materials to purchase, but from what dealers. You will have to decide if a dealer can meet the timelines of your project team and at the level of quality the homeowner expects. In the end, you will need to reach out to multiple dealers through a series of RFQs to answer these questions. Keeping dealer quotes organized is critical to making accurate procurement decisions that will keep your project on budget, your customers happy about their dream projects, and your profitability protected. 

Obviously, when deciding how to source your materials, you will want to work with the dealers that provide the best materials at the best price. But finding accurate pricing in today’s inflationary market can be a challenge; so it’s best to submit RFQs to those dealers who do more than offer just a low price. You want to work with a dealer that can offer a wealth of services, up-to-date pricing, and has the time to work with you on finding suitable material alternatives in times when supplies are running short or prices turn out higher than expected. 

Also, you will want to search for dealers who can properly schedule and manage material shipments. Logistic breakdowns or miscommunication can cause material shipment delays that can cost you thousands of dollars–wasted dollars that are hard to pass on to the homeowner and likely will come out of your pocket.

Common procurement issues

A successful procurement phase of the home construction project brings in the best available materials at the best price. To ensure your success, be sure to navigate around these key problems that are not always self-evident:

Miscommunication

Be sure to keep detailed reports that track your conversations with dealers about prices and availability. You want a record of what your dealer commits to you, and you’ll need an easy way to include these commitments in your construction progress reports that you supply to homeowner. Progress reports are essential when tracking large projects and require the services of multiple contractors.

Inaccurate data

Be sure your quantity takeoffs are done early and done right so that you include all the materials needed for the build. Increasingly, builders are getting more done faster using digital tools to perform takeoffs, and from these takeoffs, create complete material estimates that include the most recent, most accurate pricing straight from the dealer.

Lack of flexibility

With your busy schedule, you need to work with dealers who are there when you need them. Modern builder and supplier tools allow you to research and send quote requests and material orders 24/7, whenever the time is convenient to you. After all, you want your free time to be spent spending time with your friends and family and not pouring through material catalogs.

Construction management software helps your project schedule and budget

To win more work and to steady your cash flow, builders like you are ditching cumbersome spread sheets and paper plans and turning to digital software tools to manage their procurement process. The best software comes at an affordable monthly price that includes not only what you need for procurement but all the tools and training for managing your custom home build–from estimating, procurement, scheduling, invoicing and accounting. When choosing the right software for your business, keep the following in mind:

Simplify your management

To be at your best, typically you need to be on the job site and not behind the desk. Modern construction management software allows you to connect from wherever you have a web browser and an internet connection. Imagine quickly researching material orders for your next job right after wrapping an onsite visit with your contractors working on a current job. That kind of productivity is a two-for-one game-changer made possible using modern software that securely stores all your information in the cloud.

Streamline workflows and documents

The right construction management software not only allows for better tracking of dealer communications but also serves as a hub for customer records. You ditch paper records and spreadsheets by storing your prospective leads and active customers in one place. Modern digital tools allow you access to client portals that you can customize with your own company logo and contact information. You can use the portal to update customers on progress as well as perform contract management by sending client invoices and having the client approve those invoices and change orders online.

Know your numbers

Modern cloud-based software helps you eliminate paperwork and errors by integrating your building project management with popular accounting tools, like Xero or Quickbooks. With this connection, you can easily receive and pay invoices generated during the procurement process.

Ready to learn more?

For more information about how construction management software can improve how you procure materials, try Buildxact. Book a 14-day free trial today!