Procurement in Construction: Definition, Process, & Methods

Procurement in construction is how projects get the materials, services, and contracts they need to stay within budget and on schedule. It directly affects costs, quality, and risk. A well-structured procurement process helps avoid delays, supply chain issues, and cost overruns.

But without the right approach, construction projects can face serious financial and operational setbacks. This guide answers key questions about procurement methods, contracts, and processes to help you manage procurement efficiently.

What is Procurement in Construction?

Procurement in construction is the process of acquiring materials, equipment, and services needed to complete a project. It includes selecting suppliers, negotiating contracts, and managing purchases to ensure everything arrives on time and meets project requirements.

Key aspects of procurement in construction include several essential steps that help organize the acquisition of resources:

• Procurement involves sourcing materials and equipment to supply construction projects with the necessary resources.
• It includes selecting contractors and suppliers who provide goods, labor, and specialized services.
• The process requires contract management to define costs, delivery schedules, and terms of agreement.
• Procurement scheduling ensures that orders are placed on time so materials and services arrive when needed.
• Compliance with regulations, building codes, and safety standards is part of procurement to meet legal requirements.

Construction procurement is a structured process that organizes the purchase and delivery of everything a construction project needs. It ensures that materials, labor, and contracts are secured before construction begins.

If you want to keep projects on budget and avoid cost overruns, understanding project cost management is just as important as having a strong procurement strategy.

Why is Construction Procurement Important?

Procurement is important in construction because it controls costs, prevents delays, and ensures quality. It helps construction teams get the right materials, equipment, and services at the best price while meeting project deadlines. Without a clear procurement process, projects face budget overruns, supply shortages, and compliance risks.

Key reasons procurement is important in construction include several critical factors that directly affect project success:

• Procurement controls construction costs by securing materials and services at fixed prices, preventing budget overruns from rising steel and concrete costs.
• It ensures on-time delivery of materials and equipment, avoiding delays that disrupt project schedules and slow construction progress.
• Procurement maintains quality standards by selecting reliable suppliers, reducing risks of failed inspections, structural issues, and costly rework.
• It reduces legal and compliance risks by ensuring materials meet safety standards, building codes, and contract terms, preventing fines or shutdowns.
• A well-structured procurement process improves efficiency by coordinating materials, labor, and contracts, preventing last-minute shortages and supply chain disruptions.

A strong procurement strategy helps construction projects stay on budget, meet deadlines, and comply with regulations. Without it, costs rise, schedules slip, and quality suffers, leading to major project risks and financial losses.

💡 Pro Tip: Poor procurement tracking can lead to budget overruns and delays. Mastt streamlines forecasting, reporting, and scheduling to keep projects on track.

What are the Procurement Phases in Construction?

The procurement process begins with planning and identifying project requirements, followed by selecting suppliers, requesting bids, and awarding contracts. Once agreements are in place, purchase orders are issued, deliveries are scheduled, and materials are inspected for quality. The process ends with payment processing and contract closeout.

1. Planning What to Buy for the Construction Project

The first step is to list all materials, equipment, and services needed for the project. This includes determining quantities, specifications, and delivery schedules.

Procurement teams work with project managers to ensure cost estimates and timelines align with the overall project plan.

If you need to estimate project expenses accurately, using a construction cost calculator can help you plan budgets and control costs more effectively.

2. Choosing the Right Suppliers and Contractors

After planning, the next step is to research and shortlist suppliers and contractors who can meet the project’s requirements. Procurement managers evaluate options based on price, reliability, quality, and past performance before inviting bids.

3. Sending Bid Requests and Comparing Offers

Once suppliers and contractors are shortlisted, a Request for Proposal (RFP) or Request for Quotation (RFQ) is issued. Bidders submit pricing, delivery timelines, and service details. The procurement team then compares offers to select the best value for the project.

4. Negotiating and Signing Contracts

After evaluating bids, contract negotiations begin. This step ensures that terms on pricing, delivery schedules, warranties, and payment conditions are clearly defined. Once finalized, contracts are signed, making the agreement legally binding.

5. Ordering Materials and Scheduling Deliveries

With contracts in place, procurement teams issue purchase orders (POs) to suppliers and vendors. This document confirms what is being purchased, the cost, and the expected delivery date.

Scheduling is carefully managed to ensure materials arrive when needed, avoiding storage issues or project delays.

6. Checking Delivered Materials for Quality

Once materials and equipment arrive at the construction site, they must be checked for quality and compliance. Procurement teams and site managers inspect shipments to ensure they match specifications and meet safety standards. Any defects or incorrect orders are reported for replacement or adjustment.

7. Paying Suppliers and Closing Contracts

The final step is to process invoices and release payments once deliveries and services are confirmed. Procurement teams also document all transactions, resolve any outstanding issues, and finalize procurement records. This ensures a clear audit trail and prepares the project for the next phase.

Who Manages Procurement in Construction?

Procurement in construction is managed by procurement managers, project managers, contractors, subcontractors, and procurement teams. Each role ensures that materials, equipment, and services are acquired on time, within budget, and according to project requirements.

Procurement managers and project managers play the most significant roles in handling supplier contracts, negotiating prices, and ensuring materials arrive as scheduled.

Large construction companies often have dedicated procurement teams, while smaller projects may have project managers handling procurement responsibilities.

What are the Procurement Methods in Construction?

The most commonly used procurement methods include Design-Bid-Build, Design and Build, Management Contracting, Construction Management, Public-Private Partnerships (PPP), EPC Contracts, and Framework Agreements.

Key procurement methods in construction include:

• Traditional (Design-Bid-Build): The project owner hires a designer to complete the design before selecting a contractor through bidding.
• Design and Build: A single contractor is responsible for both design and construction, reducing project coordination challenges.
• Management Contracting: A management contractor oversees multiple subcontractors but does not directly perform construction work.
• Public-Private Partnership (PPP): A long-term agreement where a private company finances, builds, and operates a public infrastructure project.
• EPC (Engineering, Procurement, and Construction): A single contractor handles engineering, procurement, and construction under a fixed-price contract.
• Framework Agreements: A pre-arranged contract with selected suppliers or contractors for future projects over a set period.

Among these, Design-Bid-Build and Design and Build are the most common procurement methods used by project managers. Design-Bid-Build is preferred when owners want full control over the design before selecting a contractor, while Design and Build are chosen for projects that require a faster process with a single point of responsibility.

Make Construction Procurement More Efficient and Cost-Effective

Procurement in construction keeps projects on track by securing materials, contractors, and services at the right time and cost. A well-organized process prevents delays, controls budgets, and reduces supply chain risks.

Without proper management, construction projects face cost overruns, late deliveries, and contract disputes. By improving supplier coordination, cost tracking, and contract management, companies can streamline procurement and avoid unexpected setbacks.