Procurement Challenges in Huge Projects

Our customer is a leading global developer and operator of flagship shopping destinations. In Germany, they currently manage a total of 26 shopping centers, nine of which belong to the Group’s own portfolio. In addition to center management, facility management, and leasing, one of the main business priorities is successful asset management for investors and partners.

Objective

Amongst other things, we were tasked with identifying service providers in the areas of structural construction and site logistics who could take on as much of the overall project as possible and meet the requirements in terms of scope, complexity, and timing. Terms also had to be optimized in order to retain within budget.

Urban redevelopment project

They company is now constructing one of the largest urban redevelopment projects in Europe. Fourteen buildings are being built on the site. In projects of this scale, masterly logistics are required on the part of the construction planner in order to ensure that all the different trades are completed on time and according to plan.

We were commissioned to provide support and optimize budgets. The consultants took on procurement-related and higher-level control tasks.

Challenges

The size and complexity of the project presented the greatest challenges.

 

  • 14 individual buildings
  • Different types of building use (e.g. as an office complex, commercial space, and residential units) required different specifications.
  • 12 planners were involved, who needed to be coordinated.
  • Ambitious planning: As a result of the tight schedule, certain trades had to be contracted at short notice.
  • The location of the site in the city center posed a challenge for all trades in terms of site logistics.
  • Challenging market situation due to overstretched construction companies.
  • Legal procurement guidelines made it difficult to use foreign service providers.

 

Approach

The complex starting point resulted in very challenging specifications which many service providers were simply unable not cope with.
This made a thorough advance search for suppliers even more critical. Suppliers able to meet the requirements were identified and invited to tender. In addition to the negotiation of prices, the subsequent discussions with the selected suppliers focused primarily on whether the provider could cope with the level of complexity involved and deliver the service within the planned timeframe.

During the course of the project, we also supported the search for a new project manager. This role carries a great deal of responsibility and includes having to coordinate the different processes, manage all the service providers, and also be responsible for the budget and overall procurement. The consultants specified the catalog of services required and supported the negotiations. In addition, potential ways to optimize procurement were identified and processes were defined for the new project manager in conjunction with the customer.

 

Result

We have driven the professionalization of procurement processes and identified potential ways to optimize project procurement, which the company will also be able to implement and benefit from in subsequent projects.
Despite the difficult starting point, suppliers for all trades were found. Thanks to the professional approach taken to site logistics, it was even possible to undercut the planned budget.

 

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Mike Jansen

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