REAL ESTATE AND PROCUREMENT TODAY
In today’s procurement landscape, bottlenecks involving tenders and change requests still exist. The traditional procurement process, currently abided by most of the present-day firms, is time-consuming and causes easily-avoidable errors.
Living in today’s digital age and ecosystem has redefined many aspects of our lives. Take our personal lives and the way we currently purchase for example. Online purchases are but now only a click away. Product comparison and sieving through reviews are easily achievable within a matter of minutes. Within minutes, we can become quite confident in making informed purchase decisions.
Procurement processes within a B2B setting, however, is far more cumbersome and time-consuming. Businesses are expected to profile, source and review purchases at the approval of the entire finance, procurement and some even management or a committees team – which lengthens the entire process by double becaus of the various avenues of consent needed. Making it a less than desirable process for most PMs…
According to CBRE: “80% of project savings result from stages preceding construction.”
In essence, frustrating contract gridlocks in this murky phase of tendering and bidding process can still be eliminated before the execution stage – so long as we are willing to address them.
NEXT-GENERATION REAL ESTATE PROCUREMENT
The overarching theme, within the next 5 to 10 years, for real estate procurement lies in digitalisation. Businesses are just beginning to ride on the burgeoning Proptech trend to address common inefficiencies in vendor and bid management processes.
In general, the Proptech ecosystem covers the idea of combining real estate and innovative technologies to deliver customer-centric value and operational efficiency across the real estate value chain. With a $20 billion investment mark set this 2019, the sector is expected to evolve as an enabler for the B2B market in a way that has never been possible before.
HOW IS PROPTECH GOING TO IMPACT ME?
If you are a property manager or a real estate investor yourself, chances are you’re likely to be part of the proptech experience already. Proptech seeks to come into the procurement value chain in various ways.
From intelligent supplier profiling to automated bid contracts, proptech leverages on advanced technologies to improve some of the poor project management principles within traditional procurement processes at current.
Poor IT security
Proptech is now influencing traditional project management firms to adopt end-to-end encryption. With the use of public ledgers, blockchain can help ensure authenticity in bidding and cut suspicious documents.
Poor lead time
The procurement department is also considered one of the weakest in data management as compared to other real estate segments. Extensive and repetitive administration processes which usually involves thorough proposal amendments and contract filling can easily be automated real-time.
WHY CURRENT PROCUREMENT PROCESSES ARE UNSUSTAINABLE
One of the issues is the lack of a clear and inclusive benchmark system or process that allows buyers to feel confident about their choices. On a global market, any sort of sourcing request might return with an answer, but the current marketplace is divided into many sub-markets which makes it near impossible to get a comprehensive and accessible benchmark.
As such, project managers are restrained to the limited pool of existing providers within their network. These ‘lemon markets’ (Akerlof) lack transparency and are not as effective and sustainable for project management as we think.
SMARTER MARKETPLACES AS A SOLUTION FOR ALL
Presently, there are only a few mobile procurement solutions within the market. The adoption of these solutions increases but still at a galatial pace, considering the perceived security issues and the obstinacy in the culture of Fintech. However, customs within the procurement process are slowly changing for the better, such as the automation of purchase orders.
Firstly, smart marketplaces should have the ability to intuitively filter and profile vendors based on their current offerings and previous track records. (Features available within the Really tool!) Similarly, project managers should undergo a standard qualification process to verify their working experience, past track record and professional certifications in their respective service line. This helps build user confidence in an open and highly professional network of genuine vendors and contractors.
Secondly, comprehensive product details are imperative in closing the extensive informational gap between vendors, clients and their project managers. For projects which grant more flexibility in procurement requirements, buyers should be able to shop freely through product catalogues and effortlessly drop-in enquiries. (Features that can be found within the Really tool!)
Ultimately, such ideal smart marketplace facilities should aim to improve the end-user operational efficiency for both vendors and project managers.
THE RESULT OF DIGITALISATION AS AN ENABLER
Consequently, real estate players should be able to improve their workflow efficiency with digital time management tools. Smart marketplaces should be able to intelligently identify and benchmark the specifics of each item. In essence, each and every service or product should be easily sourced and comparable regardless of their origin.
To combat poor lead time, the ability to perform thorough profiling also means that project managers need not painstakingly sieve through thousands of profile across numerous products for their suitability. Such marketplaces should be able to intelligently filter out relevant prospects based on necessary project requirements. In short, project managers deserve to reduce their hours spent on irrelevant products and services, and focus on maintaining healthy client relationships and managing risks and project timelines.
WHAT REAL ESTATE STAKEHOLDERS CAN EXPECT
Ironically, ensuring effective procurement management likely involves getting traditional procurement out of the way in the long run.
Technology will play a pivotol role in this transformation, but not without the use and deployment of end-users like project, property and facility managers as well as all relevatn stakeholders and clients, and finally the suppliers – vendors, contractors and providers. A user-friendly procurement experience can certainly be achieved if we are open to embracing new-age technology that serves to support workflows, making them more efficient and smarter. For one such tool, check out Really Singapore. Singapore’s first integrated project and property management, e-procurement and open marketplace solution.