Construction Sector

The BPG ‘Optimise’ Method is evidenced from over 500 complex supplier relationships. It shows there are 8 characteristics present in every successful complex relationship. We can help you successfully implement these quickly to improve service innovation, supplier relationships and drive down BAU costs.

Click here to see how the ‘Optimise’ process can help you drive maximum value in your strategic supplier relationships.

We’ve dealt with optimising over 500 complex supplier relationships. More than 50% of complex supplier relationships experience misunderstandings between client and supplier over your requirements and expectations.

If the right foundations are not in place to drive maximum value, you may experience:

• Additional charges and costs for ‘misunderstood expectations’
• A lack of understanding of contractual roles and responsibilities
• Governance and performance escalation not clearly delineated
• Senior client executives not being clear on their expectations and dynamics of the relationship
• Not enough investment by senior executives in the resourcing or skills of the client supplier management team
• Loss of key in-house expertise to the supplier (inadvertent staff poaching)
• Employee resistance to new working methods from the supplier
• Clashes of culture between client and supplier staff and so forth.

The Construction Industry is a key driver of the economy in the UK and the rest of the developed world. It often ranks in the top 5 of being the largest and most dynamic. In turn with other sectors, the construction sector faces major changes, including:

• Skilled Labour Shortage. Increasing numbers of projects means the industry remains heavily dependent on manual labour. An ageing workforce, a lack of younger people joining construction, coupled with strong growth, means good labour is thin on the ground. 
• Rising Cost of Raw Materials. It’s common to bear the risk of cost changes due to fixed price contracts and speculative home construction. Land and raw material costs can change rapidly. This can leave you with less leverage, and costs adversely impacted between the time the project commences and when it ends.
• Slow Invoicing and Payments. Regulating cash flow is often a challenge. Progress payment schedules can help outline what is expected at different phases of the project and determine when each phase of the project is considered complete. Without regular progress payments you can have too many resources tied up in one project, which often adversely impacts cash flow.
• Undercapitalisation. It is not uncommon to underestimate capital requirements to pursue the most profitable projects. Working capital is critical to the success of every construction project and companies.
• Business Planning. It is critical that you have a clear perspective of your cash and manpower to help you not to overestimate or underestimate your capabilities. You should map out the details of all your project stages to stay on track.
• Inappropriate Safety Training. Safety training can be a challenge as demand grows in the industry. Companies can sometimes reduce training as they try to improve profitability, putting them at risk of incurring heavy losses due to increased insurance and litigation costs caused by building non-compliance.
• Technology Adoption. Technology has transformed the construction industry. It plays a key role in both day-to-day operations and when competing for projects. Construction technology includes cloud-based software, mobile, wearable, IoT technology and estimating technology. 
• Uncontrolled Growth. One of the greatest challenges is to plan for foreseeable growth and tracking it so that it doesn’t get out of hand.
• High Insurance Costs. Most contractors today pay high premiums for various types of insurance. This includes; general liability for construction delays and defects, and accidents. The ever-increasing insurance costs can be a crippling overhead when competing for work. 
• Legacy IT Systems. Some state-of-the-art software options have substantial cost-saving potential, if organisations can overcome the internal challenges of the legacy IT systems they use.