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Profitability in procurement doesn't happen by accident. It's the result of deliberate choices made early, repeated often, and backed by solid commercial thinking. For many teams, procurement still means 'get three quotes, pick the cheapest, and hope nothing goes wrong'.
That might lock in a contract, but it doesn't protect margin across the project.
You don't have to look far to see the cracks. Cost overruns, duplicated effort, late packages, and missed opportunities are all signs of a reactive, manual process.
This article explains what strategic procurement looks like and how it directly impacts project profitability.
Strategic procurement aligns procurement activity with the commercial goals of the business. It shifts procurement from a cost-based exercise to a value-based function. The Old Way is reactive — scope gaps, last-minute tendering, and rushed decisions. The New Way is structured, consistent, and commercially focused.
Strategic procurement goes beyond buying. It includes:
It's not a one-size-fits-all solution, more a process shift — from scrambling to secure trades to viewing procurement as a commercial lever.
Every cost you control in procurement goes straight to the bottom line. You don't need a bigger project to make more profit. You need to avoid overspending on the one you already have.
That starts with knowing your spend history. Not just broad categories, but exact rates, suppliers, scopes, and outcomes.
If you've let similar trades on the last five jobs, you should know the average rate per unit. You should also know if a subbie’s quote is 12% above or below that average, and whether you've had issues with them before.
Smart teams run the numbers before tenders go out.
They break down package values across projects and regions. They review subcontractor performance against price. They compare like-for-like trades across tenders, not just within the same job. Lessons learnt from procurement projects are incorporated into processes.
This isn't about squeezing every subbie. It is about knowing where you've already lost margin and stopping it from happening again.
You can't save money if you don't scope properly. A good tender starts with a complete, consistent scope — not one dusted off from two years ago. Ambiguity puts costs up.
Once scopes are set, timing matters. Avoid tendering during school holidays or when the trade is slammed. You will end up with poor coverage or inflated rates.
Then comes the comparison. If your team is still dumping quotes into Excel and basing decisions on who answered the phone first, you're guessing, not managing cost.
Once tenders are in, the focus shifts to negotiation. This isn't just about chasing a lower number. It is about knowing your position and understanding what's up for negotiation.
The contract is often shoehorned at the end. Teams may recycle old terms that don't match the new deal. That is where variations creep in.
Good subcontracts match the scope, lock in agreed commercial terms, and close loose ends. They remove ambiguity. That is exactly where your margin lives. Efficient subcontract creation includes the use of solid templates.
Controlling procurement costs isn't about cutting corners. It is about being deliberate. Every pound you don't waste is a pound you keep.
You can't build reliable projects on unreliable relationships. You also can't build relationships if you're always starting from scratch.
Good suppliers want steady work, and good contractors want steady performance. Both teams benefit from enhanced supplier/contractor relationships.
Procurement teams that treat subcontractors like disposable line items usually get what they pay for: missed deadlines, poor handovers, and friction. That's The Old Way — transactional, short-term, and reactive. The New Way builds long-term value by making suppliers part of the delivery team.
Most disputes stem from confusion over scope, programme, or how decisions get made. Clear communication up front sets the tone.
Problems arise on every job. The difference between a conversation and a claim is how quickly you pick up the phone.
Long-term supply chain relationships are not about loyalty for its own sake. They are about predictability. When you know how a subcontractor performs and they know how you operate, risk falls and noise drops. That is where margin stays intact.
Profit leaks out when risk goes unmanaged. That often shows up in scope gaps, contractor disputes, or delays no one anticipated. Much of it is preventable if you look in the right places early on.
Procurement isn't just about locking in a price. It is about managing the risk attached to that deal.
Before awarding a package, check their track record and make sure it aligns with the project.
This isn't box-ticking. It is about deciding whether to take on their risk.
Relying on one supplier for a big package is fine, until it isn't.
When costs blow out, the contract usually didn't hold up. Vague scopes and soft clauses leave too much room for interpretation.
A well-written contract should be crystal clear. No grey areas, no surprises. Risks left unaddressed in procurement will show up later as cost or time blowouts.
Procurement teams used to rely on memory and guesswork. Sometimes that worked. Most times it did not. The Old Way meant digging through inboxes, manually updating spreadsheets, and making commercial calls half-blind.
Now, decisions are only as good as the data behind them. Timing matters. You can't wait until month-end to discover that four packages lag behind schedule.
“We were constantly chasing people for updates. Tender returns were buried in inboxes or saved to the wrong folders. You couldn’t make a reliable recommendation without triple-checking everything manually.”
— Mark Rafiq, Commercial Manager, Richard Crookes Constructions
Comparing tenders properly is tough. Many QSs still dump quotes into Excel and sort through inclusions, exclusions, and rates line by line. If you do 10 packages a week, those hours are wasted.
Structured comparisons solve that. Each subcontractor enters pricing the same way so that you can spot:
Approvals move faster. Decisions are easier to justify. You avoid the wrong deal just because it arrived first — that's smarter procurement.
A major problem with The Old Way is reporting that lags behind reality. By the time the contract manager learns a package is late, site progress is already disrupted.
Dynamic reporting provides:
You can't fix what you don't know about. Real-time visibility lets you fix issues before they hit your bottom line.
A single project can teach you plenty if the data is stored and shared. The New Way ensures lessons learnt don't vanish when a QS leaves.
Track:
Those insights go straight into the next job. Better scopes. Smarter tendering. Fewer repeated mistakes.
When every decision is backed by real numbers, margin isn't left to chance.
It all depends on your current situation. Are you grossly overspending in procurement due to outdated processes? Do you lose margin down the back of the sofa? Are your commercial team really doing the most they can to engineer value, or do they even have time to? You can use our handy ROI calculator to see how much you could save.
Digital tools reduce profit leaks by cutting admin work, speeding up tendering, and preventing errors. Teams that switch to automated workflows and real-time tracking make faster decisions and avoid costly mistakes that erode margin. Read about construction procurement software benefits.
Diversifying your supplier base protects you from relying on one subcontractor for a critical package. It also keeps pricing competitive across regions and trades, giving you more flexibility when capacity or lead times shift.
Procurement can be just a cost line or a margin lever. The difference is how it is managed and how early it is taken seriously. When procurement is structured, consistent, and visible, it doesn't only protect profit — it amplifies it.
Strategic teams don't trust memory, inboxes, or messy spreadsheets. They use one platform to schedule packages, scope trades, compare quotes, recommend subcontractors, and execute contracts. Efficiency becomes the baseline, not a bonus.
Curious how better tools can help you reclaim time, reduce errors, and boost margin? Book a demo.
Tim Rogers
