Contractors are securing ROI with procurement software

It’s all too familiar. Manual procurement costs way too much, and takes way too long. The old, disjointed way of procuring is a cost-centre that eats into profits, but leading main contractors are now benefiting from procurement that enhances project profitability.

How? Many main contractors have identified that using 15+ fragmented processes to procure doesn‘t cut it. They now use specialised procurement software to cut costs, increase value and streamline the procurement process, ultimately improving their bottom line.

It’s all good and well to say this, but where exactly is the ROI coming from?

Here are 6 key ways that main contractors are enabling ROI with their procurement software, plus an easy way for you to forecast what your ROI could be procuring ‘the new way’ with specialised software. Hint: it’s a no-brainer!

“Nearly all businesses (96%) report that digitisation has improved their business performance, with 45% rating the impact as ‘high’ or ‘very high’” Deloitte & Autodesk, 2023.

Benefit 1 - Reduced costs

The first (and most obvious) benefit that drives profitability is reduced costs. With volatility across the construction sector and increasing risks of cost overruns, effectively managing the balance sheet is top-of-mind for main contractors.

How does procurement software reduce costs?

Benefit 2 - Enhanced efficiency & time savings

Traditional procurement requires an incredible amount of manual data entry, often taking 40 hours to procure a single trade. The time it takes to complete a project will always have an impact on profitability, so maximising efficiency is critical.

How does procurement software enhance efficiency?

Benefit 3 - Increased compliance and risk mitigation

Scope gaps, project delays, cost overruns, and over-depending on subbies are just some of the risks associated with procuring in construction. Each of these issues come at a high cost to builders. Procurement software provides main contractors with much tighter controls to effectively manage procurement risks.

Benefit 4 - Subbie management and oversight

Traditionally, main contractors have had a limited view of subcontractor workloads, capacities and project histories, relying on word-of-mouth and the vendors themselves to be upfront and honest. Builders now make informed, cost-effective tendering decisions with full oversight of subbie workload thanks to specialised software.

How does procurement software improve subbie management?

Benefit 5 - Staff retention and attainment

The market for top construction talent is incredibly competitive and costly, so attainment and retention is key to manage rising workforce expenses. Having gold-standard procurement tools is now a necessary requirement for attracting new construction staff and keeping them happy.

How does procurement software improve subbie management?

Benefit 6 - Data-driven decision making

Without software, procurement reports are often only accessed once a month at procurement meetings. This gap in reporting leads to late, reactive decision-making. Procuring digitally makes accurate, meaningful insights freely available so that effective decisions can be made proactively.

Quantifying Impact - The ROI of Procurement Software

ROI in time

Procurement is a time-intensive process with a multitude of aspects and considerations involved. This is a very conservative estimate of the time required to procure ‘the old way’ and compared this to procurement using specialised software, aka ‘the new way’.

In our full ROI breakdown, we’ve identified 58 tasks and subtasks involved in the manual procurement processes. There is a whole lot involved that needs to be done to a high-standard of completion to ensure successful project outcomes.

This doesn’t include the sending of countless emails, back-and-forth collaborating with multiple people, and all of the other traditionally accepted time-intensive barriers involved in procurement. Think about all the different project-specific hold ups that are involved when procuring subcontractors - it is a minefield.

ROI in risk

The other critical cost drain in procurement is the element of risk across the process. Before software, risks could not be effectively managed and came at a high cost to builders when inevitable disputes arose. 

We have broken down the 10 key risks involved in procurement, measured their risk ratings, and provided an accurate estimate of impact reduction by procuring ‘the new way’.

Risk is a painful, but inevitable, aspect of procurement. Specialised procurement software provides peace of mind by controlling these 10 key issues as much as possible, with minimal effort required by users. In a volatile industry like construction, mitigating risks effectively and in a sustainable manner is crucial.

It's a no-brainer!

Procuring manually used to be the only option for main contractors to secure subcontractors for their projects, with inevitable and uncontrollable costs around time, financials, resources, and risks.

Specialised procurement software has now redefined the standard of procurement for builders and has proven to significantly reduce procurement time and risk through a number of key profit-driving benefits. 

The new, digital way of procurement returns its investment in just months, and even sometimes, weeks.

Want to learn exactly how much your construction company can save using procurement software? Use our handy Savings Calculator and request a personalised ROI video.