Procurement and Purchasing Methods in Construction

Study Notes

Procurement is the process of acquiring goods and services while ensuring timely delivery of the right quality and quantity.
Purchasing is a part of procurement and focuses on the transactional phase of buying goods and services.
Traditional procurement methods in construction include lump sum, re-measurable, and cost reimbursement contracts.
Lump sum contracts require the contractor to provide a fixed price for a defined project and are suitable for well-defined projects.
Lump sum contracts can be based on drawings and specifications or bills of quantities.
Re-measurable contracts are appropriate for projects where the design is not firm at the time of tender and rates are provided in the contractor's tender.
Remeasurement will be carried out once the drawings are finalized and the contract amount is based on the rates provided.
Cost reimbursement contracts are applicable to projects where time is of the essence, immediate start on site is needed, and the project completion is fixed.
Cost reimbursement contracts include cost + fixed fee with guaranteed maximum price, cost + fixed percentage, and cost + fixed fee contracts.
Cost + % fee is the least risky to the contractor among the three types of cost reimbursement contracts.
Lump sum contracts have minimal client risk, fewer variations, and predictable contractor cash flow but high contractor risk.
Procurement time can be longer for lump sum contracts, and improper details in design can lead to project disputes.

Description

Test your knowledge of procurement and purchasing methods in construction with this informative quiz! From traditional procurement methods like lump sum, re-measurable, and cost reimbursement contracts to the transactional phase of purchasing, this quiz covers it all. With keywords specific to the topic, this quiz is perfect for anyone in the construction industry looking to expand their knowledge. Challenge yourself and take this quiz today!