Are you local?

One of the mantras of modern construction management is "central purchasing - good; site purchasing –bad". It is alleged that central purchasing always gives the lowest price and, with the advantages of B2B e-commerce, all the awkward problems relating to minimum delivered loads can be overcome.

Moreover, the Egan report suggests that one way to reduce construction costs is to organise logistics with supply partners so that direct supply of materials from the manufacturer cuts out any intermediaries – like builders merchants. After all, a construction site is no different from a car assembly plant!

Long-run benefits
But does central purchasing really cut costs? Is it possible that the practical difficulties it can impose – especially on large and complex sites – increases rather than decreases project costs? Builders merchants derive most of their sales income from refurbishment, maintenance and housebuilding sectors. For large public or commercial contracts (hospitals, schools, office developments) the supply chain often bypasses the merchant. But I wonder whether this really benefits the contractor in the long run.

Is it just possible that the practical difficulties which central buying can impose – especially on large and complex sites – increases rather than decreases project costs?

Here are eight reasons why you, the project manager, should always argue with your head office that you should have a greater say over sourcing materials.

Storage. Project managers know how difficult it can be to store materials on site. Local merchants can be your storage depot and so save you valuable site space.

Security. Every contract loses money due to site theft. The more materials you have on site, the more likely it is that something will be stolen. And you will have to pay for guards, CCTV, fencing and other security measures.

Delivery flexibility. You need materials on site at a specific time to suit your programme – not the delivery schedule of a manufacturer. When materials arrive on site unexpectedly and have to be off-loaded, the interruption hinders site productivity.

Lower prices. The much-vaunted claims of central buying - that buying in bulk is cheaper - need to be challenged. Project managers need the flexibility of local supply, but also will be able to cut costs on certain product lines because merchants are competitive.

Credit facilities. All builders merchants offer credit and, for large contracts with assured monthly volumes, terms are negotiable.

Emergencies. Construction sites are beset by unexpected incidents that damage materials. You will need a local supplier in these instances. Their service will be much better if you are already trading with them.

Strength of local partners. Knowing people on the ground is important for all project managers. Builders merchants are an excellent source of local information. If you establish a relationship with one or more merchants based close to your site, you will have partners who are geared to serve you. The driver from a factory, in contrast, usually will only visit your site once or twice; and the head office buyers are faceless to the driver and possibly to you!

New ways of trading with merchants. The national groups (Jewson, Travis Perkins and Wolseley with its Plumb Centres and Builder Centres) and many independent merchants have sophisticated websites and you can order through these if your site office has web-access. This will give you both the advantage of buying from a national catalogue and having a local supply partner.