Introduction to Procurement #2
- Fran Butterworth
- May 10, 2024
- 3 min read
Building Success: Packaging strategies in construction procurement
The packaging of works is widespread in construction procurement owing to the size, scope and nature of projects undertaken in this category. Packaging strategies can enable a targeted approach to market, the streamlining of processes, and reduction of costs to ultimately maximise efficiency and value throughout the project lifecycle.
At its core, packaging in construction procurement involves breaking down the scope of work into manageable packages or contracts that align with project objectives and market conditions. Rather than pursuing a one-size-fits-all approach, packaging allows for customisation to suit the unique needs of each project and the associated supply chain. These packages can encompass various aspects of the project, including design, construction, materials supply, and maintenance.
When considering how to package a project, you will need to consider their own risk appetite, their confidence in delivering the works in larger packages, or their capacity to handle the interactions between smaller packages. Alongside internal factors, the capability and capacity of the supply chain should be assessed to ensure that the market can respond to the favourable packaging strategy.
Advantages of Packaging Strategies
Risk Mitigation
By dividing the project into smaller packages, the overall risk exposure is minimised. This allows for better risk allocation among project participants and reduces the potential impact of unforeseen events.
Increased Competition
Smaller, focused packages attract a broader pool of bidders, fostering competition and driving down costs. Targeted packaging strategies can also provide opportunities to Small and Medium Sized Enterprises (SMEs) and Start Ups. Increased competition also encourages innovation and quality improvement as suppliers strive to differentiate themselves.
Enhanced Flexibility
Packaging provides flexibility in project execution by enabling phased delivery and parallel work streams. This flexibility is particularly valuable in complex projects where overlapping activities and tight schedules are common.
Optimal Resource Utilisation
Packaging allows for the efficient allocation of resources, both human and material. Contractors can mobilise resources more effectively, leading to improved productivity and reduced downtime.
Key Considerations in Establishing Effective Packaging Strategies
Clear Scope Definition
Each package should have a clearly defined scope of work, objectives, and deliverables. Ambiguity in scope can lead to disputes and delays, undermining the success of the project.
Modular Design
Breaking down the project into modular packages facilitates parallel execution and enables phased implementation. This approach improves coordination and accelerates project delivery.
Risk Allocation
Consideration should be given to the allocation of risks among project participants. Risk factors such as market volatility, regulatory changes, and unforeseen conditions should be appropriately distributed to mitigate their impact.
Performance Metrics
Establishing measurable performance metrics for each package helps to monitor progress and ensure compliance with project requirements. Key performance indicators (KPIs) should be defined upfront and regularly monitored throughout the project lifecycle.
Collaboration and Communication
Effective collaboration and communication among project stakeholders are essential for successful packaging strategies. Clear lines of communication, regular meetings, and collaborative problem-solving contribute to project success.
In conclusion, packaging strategies in construction procurement offer a strategic approach to project management that enhances efficiency, reduces risk, and maximises value. By breaking down the scope of work into manageable packages, clients can optimise resource allocation, foster competition, and improve project outcomes. Embracing effective packaging strategies is crucial for navigating the complexities of construction procurement and achieving success in today's competitive market.
Fran Butterworth is a Senior Procurement Consultant at Arup, experienced in delivering expert procurement and commercial advice, especially in relation to public procurement.
If you have any questions on this topic, or would like support, please contact your Delivery Associate, or email DeliveryAssociatesNetwork@Arup.com