Mechanisms for optimizing procurement activities in construction based on cost management of contract works

¹ Moscow State University of Civil Engineering (MGSU), 129337, 26, Yaroslavskoye Shosse, Moscow, Russia
² Penza State University of Architecture and Construction, 440028 Titova Street, 28, Penza, Russia
³ Moscow School of Management SKOLKOVO, Novaya Str., 100, Skolkovo, Moscow Region, 143025, Russia

^* Corresponding author: clusterwings@mail.ru

Abstract

The problem of optimizing procurement activities is one of the most important at the enterprises of the construction complex, since it allows saving financial resources and reducing the time of work with constant quality parameters. As a rule, based on the results of the procurement, an agreement is concluded with the supplier that offered the lowest price. This methodology does not allow evaluating the proposed price options in terms of finding reserves to reduce construction costs, since This technique does not reveal all the hidden “pitfalls” that “unscrupulous contractors” lay when conducting tenders. Often, the customer of a construction project becomes hostage to the “low price”, at which it is necessary either to increase the price, or to increase the terms, or to change the contractor organization. The solution to this problem can be a new methodology for preparing tender documents, which assumes the classification of types of work in the form of a hierarchical structure and the determination of cost by type and code of work. This makes it possible to make a comparative assessment of contractors’ proposals in the context of individual cost items and to determine the average price based on the results of the tender. At the second stage of the competitive procedure, contractors are asked to optimize their bids to the level of the average or the lowest price, if they are higher, and to keep the offered price, if it was the lowest. Often contractors work with “usual” suppliers and stop monitoring the market for the best price. The use of this technique leads to minimization of the costs of contracting work both for the customer at the expense of the minimum price and for the contractor by identifying the potential for price reductions, and also allows the customer to obtain the required volume of construction work of the required quality within the planned time frame without reducing the internal rate of return of the contracting company organizations.