Simon Herod, International Lead at EstimateOne, says that increased engagement with the supply chain is directly linked to more successful tender wins.
In the last few years, construction has been facing unprecedented challenges, including uncertainty, labor shortages, rising insolvency, and projected price concerns. Many companies are preparing to deal with a possible revenue decline and are now focusing on the crucial phase of the business that is the key to its success.
Supply chain and procurement are a central hub for decision-making that impacts the entire project. This includes the selection of subcontractors, as well as the precise pricing.
In order to support and navigate this industry, builders and subcontractors must make better choices.
“ It’s absolutely vital that main contractors find the right subcontractor match in the tender phase,” believes Simon Herod, International Lead at digital procurement specialist platform EstimateOne.
When you are in the tendering phase, the subcontractor that you choose can make or break a project. You need to do some research and ensure that the subbie’s skills match your project requirements.
Contractors have an extremely powerful tool in their hands thanks to digital features. You can actively scout a network and see what each subcontractor has to offer. Digital tools allow you to reach out to a larger pool of subcontractors.
It’s crucial to get accurate estimates by choosing subcontractors with competitive pricing and high qualifications. You’ll be in trouble if you accept a contract at the wrong price. This can lead to financial problems and cutting corners down the line.
“During the tender stage, improving your selection process should be a top priority. You can make informed decisions by gathering all of the necessary information. Think about things like their award rates, previous performance, and track record. You’ll get more accurate quotes for your project if you follow this advice.
EstimateOne, founded in 2004 by Mike Ashcroft and Andrew Ritchie, now operates in Australia, New Zealand, the UK, and Ireland. The company was born out of the frustration of the lengthy tender process in the construction industry. It is now Australia’s leading digital procurement platform, assisting over 94,000 companies to tender for over 14,000 commercial construction projects valued at US$137 billion by 2023.
Data-driven selection to support the labor shortage
Data-driven selection allows contractors to accurately assess risk and project outcomes as the construction industry continues its labor shortage crisis.
Herod states that we’ll need 225,000 more workers to meet the current demand by 2027.
Depending solely on the tried and tested network of subcontractors may not always be enough. This is where data-driven choice comes into play. Data gives you the ability to focus on specific trades in which you need additional coverage.
Pricing practices that are adaptive and holistic
Construction is no different. A successful financial strategy is essential to any business. Finance teams must adapt their pricing strategies to the changing market and manage cost estimates.
Herod explains, “You, the estimator, and the pre-construction team have a tough job.”
They have to secure up to 80% margins for your project before any equipment is delivered to the site. It’s for this reason that a solid pricing strategy is essential to the success of any project.
Simon Herod is the international lead for EstimateOne, a digital tendering platform that specializes in digital tendering.
By adopting a holistic pricing approach, you are not only playing it safe but also setting yourself up for success. You will minimize the risk of delays and unexpected costs, and your project will run smoothly. This comprehensive approach will ensure a smooth, efficient project in a world of surprises that can be expensive.
Collaboration and communication in supply chain management
Positive relationships and effective cooperation are essential in the construction industry. Herod gives three important tips.
- Avoid going overboard. Don’t overwhelm your partners with information they don’t need.
- Customization: Send relevant documents and create specific trade packages for each trade.
- Spam is not allowed: Do not send irrelevant emails or excessive emailing.
Digital tendering will help you to reduce the amount of paperwork you have to do.
“Seamless communications between main contractors, their supply chains, and the project are essential to its success. We’ve discovered at EstimateOne that a greater level of engagement with your supply chains is directly related to more successful tenders.
Open communication with subbies builds trust. We encourage subbies to provide feedback and be involved in the project planning process. This not only reduces misunderstandings but also leads to better project outcomes and competitive pricing. It’s so much easier to do this online than on the phone. “My final tip is to always reward your subbies, as this will help you build your network.”