Hello Beanes,
How is E.Procurement used in the construction industry and what
benefits does it provide for construction firms.
From the IT Construction Forum:
The term e-Procurement covers a wide range of web-based methods
spanning every stage of the purchase of goods or services. It includes
tools for obtaining prices, for awarding the contract, for requesting
and making payment, and even for the management of the contract.
IT Construction Forum
http://www.itconstructionforum.org.uk/econstruction/intro.asp?id=75
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Download the report: A survey of e-business implementation in the US
construction industry here:
http://www.itcon.org/data/works/att/2003_2.content.01809.pdf
SUMMARY
?Construction is known for its conservative attitude towards adopting
new technologies. Today, many contractors have Enterprise Web Sites or
use Project Specific Web Sites (PSWS) to share information with other
partners, customers and suppliers. Industry players have formed
various industry specific marketplaces to unite the buyer with the
seller in cyberspace. This study examines whether the construction
industry has redefined its way of doing business based on e-Business.
The study focuses on determining the level of adoption of e-Business
within project management systems by general contractors. The
development of business transactions such as e-Procurement,
e-Marketplace, trade exchange, and business strategies such as project
collaboration, project management, Customer Relationship Management
(CRM), and knowledge/data management are discussed, taking into
consideration such issues as availability and reliability in the
current business environment, with their advantages and
disadvantages.?
Relevant excerpts:
e-Procurement
?Despite the fact that construction is mainly a service industry, a
majority of its activities require material handling and assembly
functions. e-Procurement is critical to construction because it
involves a number of partners on each project who all have the need
for inventory management in order not to delay the project nor to tie
space and money on excess inventory while also complying with
specifications and other variables (Pheng and Meng 1997). Beyond the
obvious transaction cost savings and access to suppliers,
e-Procurement can offer product standardization, quality assurance,
inventory management and the opportunity to manage material flows down
the value chain (i.e. the contractor having input in subcontractors
choices, the owner having input in contractors choices, etc.). The
best practices of the procurement processes in the construction
industry are based on searching for vendor databases and comparing the
products based on relevant technical and cost factors as well as
detailed, uniformed, standard documentation (Opentext News 2001). ?
?Sanders et al. determined that e-Procurement saves up to fifteen
percent (15%) of total purchase cost. It lowers the internal
requisitioning cost by automating the internal requisitioning process.
Companies reduce personnel costs and time inefficiencies with
requisition approval and order processing. e-Procurement automates the
workflow of procurement/resource management processes, which reduces
the cycle time of purchases, decreases stocking requirements, and
lowers inventory management costs. Finally e-Procurement applications
enable enterprises to manage long-term relationships with suppliers.
These relationships can be leveraged to create an enterprise-wide
buying environment with the most favorable conditions.?
See Figure 3: Benefits of e-Procurement to the construction industry.
- Cost Savings
- Time Savings
- Quick return on investment
- Better customer relationships
?Most analysts believe that long-term relationships with suppliers are
one of the most important benefits of e-Procurement. According to
Biz2Biz (2001) the average cost per purchase order runs from $75 to
$150. In addition, e-Procurement reduces administrative costs
significantly, from 60% to as much as 90% and it also reduces maverick
buying or off-contract purchasing.?
Source: A SURVEY OF E-BUSINESS IMPLEMENTATION IN THE US CONSTRUCTION INDUSTRY
PUBLISHED: May 2003
http://www.itcon.org/data/works/att/2003_2.content.01809.pdf
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The IT Construction Forum lists the following benefits of e-procurement:
?Efficient procurement is increasingly being recognized as an
essential part of business. It can lead to better value for money
through more streamlined processes and improved management
information. And it can cut a lot of the tedium from a job, freeing
people up to concentrate on the less routine aspects of their roles.?
?Both suppliers and purchasers can benefit from:
- Business growth without a substantial increase in overheads;
- Reduction in delivery errors through greater automation;
- Quicker processing of orders;
- Faster, cheaper processing of payments;
- Exposure to new customers for suppliers, and to new suppliers for purchasers;
- Better customer support where information is made available online;
- Easier, cheaper and timelier updating of catalogues;
- Greater visibility of smaller organizations;
- Removing barriers caused by distance;
- Better control for purchasers;
- Better management information as more data is captured;
- Avoiding the rekeying of data;
- Greater transparency, with all the details recorded?
The IT Construction Forum
http://www.itconstructionforum.org.uk/econstruction/benefits.asp?id=75
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Here is an informative report on survey of council implementation of
e-procurement in construction and housing services
Download here:
http://212.22.96.179/documents/constructionsurvey.pdf
?The primary purpose of the survey was to identify those Councils who
have implemented some kind of e-procurement solution within their
construction related departments with a view to sharing the best
practice with other authorities.?
PERCEIVED BENEFITS AND OPPORTUNITIES
?It is clear that the greatest interest is in the potential for
streamlining operations and hence delivering both greater speed and
reduced costs. The other clear pattern that emerges is that councils
see e-procurement as a means of obtaining greater control ? better
management information and control of maverick spend. It is worth
noting that in general this group of construction professionals sees
the benefits in terms of improvement of existing processes, rather
than changes in the purchasing process itself. Few councils identified
better supplier engagement, access to a wider range of suppliers, or
better supplier monitoring as likely benefits. ?
Perceived Benefits in order of importance:
Reduced process costs
Simplified process/less paperwork
Speed of procurement process
Better Management information
Control of maverick spend via frameworks
Demonstration of best value/transparency
Better delivery of targets
Access to wider range of suppliers
Commitment accounting
Reduction in errors
Better engagement of suppliers
Better monitoring of suppliers + projects
Pre spend approval
Construction Survey
http://212.22.96.179/documents/constructionsurvey.pdf
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Case Study
Quantity Surveyor Sarah Cook of Capita Symonds in Sheffield considers
a case study of procuring construction services electronically and
examines the issues of lowest price and best value, together with user
perceptions of the tendering processes by electronic means.
E-procurement in Construction: 17 August 2004
Read the full text of this article here:
http://www.capitasymonds.co.uk/talkingpoint.asp?id=16
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Online Bidding: A CIC Briefing Note
http://www.cic.org.uk/services/online_bidding_briefing_note.pdf
Search terms used:
E-procurement in the construction industry
Benefits of eprocurement in construction
I hope the information provided is helpful!
Best regards,
Bobbie7 |
