Procurement consultancy for the real estate and construction industry

Massively increased prices for energy, wages and materials, interrupted supply chains and now the interest rate turnaround: In the real estate sector, everything points to a downturn. Numerous construction projects have already been put on hold. What construction companies can do now to optimize costs.

Raw Materials Whitepaper

 

Cost optimization in real estate and construction

Construction has been booming in recent years, with top prices being demanded and paid in almost all trades – thanks to low interest rates and overflowing order books. It would appear that this period is now coming to an end. Clients and contractors each face new challenges, but also opportunities. To continue to perform, real estate companies must optimize their costs.

That is why now is the time to professionally set up procurement in your company. We support you in setting up and optimizing your procurement department with our results-oriented consulting approach, from potential analysis to implementation.

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Inflation in Procurement

Procurement teams with the knowledge of all of its cost drivers will find that not every increase is justified. This makes it possible to fend off price increases and look to adapt commercial models to ensure fairness for both sides when commodities start cooling off.Thibault Lecat, Managing Director and System Leader LAB&F, INVERTO – BCG Company

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How do we proceed when advising in the real estate sector?

Within the scope of a potential analysis, we identify the existing savings potential in your procurement. In doing so, we evaluate your procurement strategies, suppliers and contracts as well as the procurement processes in order to identify all possible levers for cost reduction. Based on this, we develop strategies to realise the potentials and develop an action plan, which we are happy to implement together with you.

 

Immediate measures, e.g. as part of your ongoing modernisation or maintenance projects, can already be implemented by us during the potential analysis, which quickly produces visible results.

Within the scope of a potential analysis, we identify the existing savings potential in your procurement. In doing so, we evaluate your procurement strategies, suppliers and contracts as well as the procurement processes in order to identify all possible levers for cost reduction. Based on this, we develop strategies to realise the potentials and develop an action plan, which we are happy to implement together with you.

In the implementation phase, we identify the suppliers best suited for your projects in the course of a comprehensive sourcing approach. We conduct broad market screening and tendering initiatives and actively support supplier negotiations to conclude cost-optimised construction contracts. In addition, we design structured framework contracts for repetitive services to ensure nationwide coverage. In addition to reducing costs, the focus is on ensuring quality and deadline requirements and creating planning security.

Our goal is to increase your company’s results in the long term by optimising procurement. Accordingly, we analyse your procurement organisation, existing infrastructures, resources and processes as well as the underlying regulations to ensure procurement compliance. Based on the findings, we work with you to develop a concept that ensures optimal procurement of construction and facility management services. In order to successfully implement the defined processes in the overall organisation, we also support you with the following measures:

 

  • Interim management
  • Job advertisement and recruiting
  • Induction of new employees (coaching)
  • Development of guidelines in procurement (e.g. guidelines, procurement manual, checklists)
  • Development of a procurement controlling system and the establishment of e-procurement solutions
  • Compliance check and process support
  • Establishment of trade strategies and tendering calendars
  • Establishment of contract management

To maximize planning security and avoid highly fluctuating performance qualities and costs, we recommend setting up service specifications for recurring construction and facility management services, such as modernization & maintenance measures. As far as possible, fixed price agreements are made with suppliers and service providers within the framework of modular unit price agreements (EPA) – of course, regular reviews should be scheduled for this, since in the current volatile situation it is not clear how prices will develop in the medium and long term.

Time problems, which are the order of the day in the construction sector, can be minimized on the procurement side with the help of modular bills of quantities and overhasty tenders or awards can be avoided. The latter often lead to excessive construction costs due to high bid prices and cost-intensive supplements – this should be avoided at all costs, especially in the current situation where rising interest rates and energy costs are restricting budgets anyway.

To keep the complexity of the bills of quantities low, the services are specified as modularly usable mixed items if possible and provided with target prices. If necessary, it is advisable to introduce markup and markdown rates depending on the location. Finally, the services can be selected according to the modular principle by the property manager (even without complete specialist knowledge) and ordered directly from the construction service provider.

This minimizes the technical planning effort and reduces the number of tenders. With the transparency gained, price and supply fluctuations can be cushioned and awards, even for larger construction projects, can be implemented efficiently and quickly.

Results of procurement optimisation

  • Cost reduction within the scope of new construction, modernisation and maintenance projects
  • Plan security due to agreed fixed price agreements with your suppliers
  • Price-optimised framework agreements for construction and facility management services
  • Establishment of a professional procurement organisation
  • Securing supply through efficient procurement processes and a scalable supplier platform
  • Compliance-compliant procurement activities

Selected clients from the real estate & construction industry

 

Our expert in the real estate industry

Jens Kiebler

Associate Director

jens.kiebler@inverto.com Contact

Real estate and construction insights

Category management

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