Analysing the problem of procurement in construction

Abstract

In solving the prevalent problems of construction industry, clients have an integral role to play. By its procurement procedures, the client influences the way a construction project is executed, as the procedures affect the form of the project delivery system. What kind of procurement procedures are perceived rational, for one, depends on the underlying assumptions about the function of procurement. This research studies the current conceptualizations of the problem of procurement stemming from the fields of economics as well as engineering and construction management. A recognized tenet in Lean Construction (LC) is that production should be conceived consisting of transformations (T), flow (F), and value generation (V). Therefore, this research exploits the TFV theory in analysing the assumptions underlying procurement. On the basis of the analysis it is suggested that the main function of procurement should not be seen merely as overcoming the problem of exante information asymmetry in the moment of awarding the contract nor tackling the problem of ex-post adaptation just by contractual structures. Instead, it is seen necessary to recognize and address the danger of value loss with an equal diligence as the other problems have been to date. To be more in line with the thinking in LC, the mindset within procurement should be set towards procuring the best possible project production system that is fit for its purpose.