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Six Procurement Best Practices for the Construction Industry

As competition intensifies in the construction market, procurement department plays a critical role in the construction industry, as it has to manage the project execution and closure in time. This can be explained in terms of material order planning with budget allocation, budget planning and cost savings, and to ensure delivery of material to site on time, without jeopardize the entire project activities.

This article attempts to examine the best practices for procurement and purchasing in the construction industry. But first, let us differentiate the terminologies of procurement and purchasing. Purchasing covers the system and processes from sourcing to order management. Procurement involves the strategic implementation of Purchasing, as well as, active interaction with both internal customers and the external suppliers, through Supplier Relationship Management (SRM). The chart below illustrates the difference between Procurement and Purchasing.

PP Organogram of proc vs pur
Chart taken from SIPMM: https://sipmm.edu.sg/key-success-factors-for-an-effective-procurement-or-purchasing-process

“Singapore’s Building and Construction Authority (BCA) has already released its forecast that the value of construction contracts awarded this year will increase between SGD 26 million to SGD 31 billion”.In view of the above statement, below are six procurement best practices that can be applied to maximize the value contribution of procurement to organizations.

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Vivien Cheah Khar Wai, DPSM
Vivien Cheah Khar Wai, DPSM
Vivien Cheah Khar Wai has several years of experience in the field of procurement and logistics management, specifically in the construction sector. She is a member of the Singapore Institute of Purchasing and Materials Management (SIPMM). Vivien Cheah completed the Diploma in Procurement and Supply Management (DPSM) course on December 2018 at SIPMM Institute.

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