A project-based purchasing portfolio matrix applied to the Australian construction industry

Abstract

For a project to be delivered on-time and to an agreed cost in accordance with the specification, it is important to have an appropriate purchasing strategy. A project succeeds due to many factors, one of which is cost alongside timely delivery and quality. Formal purchasing strategies for different purchasing categories are common in the manufacturing industry, but less so in a project-based industry such as construction. The paper argues that purchasing strategies suited to the project-based nature of construction would improve project delivery and other success factors. The purpose of this study is to determine if a matrix could assist companies in the project-based industry to formulating their purchasing strategies. Case studies of five Australian construction companies’ purchasing practises were undertaken to support this work. There is evidence that, to remain competitive, it is necessary for companies to develop a network of well-established relationships with suppliers and subcontractors. Purchasing strategies need to be adapted to each purchasing situation as projects are rarely, if ever, the same. It is necessary, therefore, to adopt an approach that combines the best commercial deal and most effective collaboration.

Analysis of Inventory Cost Efficiency on Leverage Items: A Case Study on a Machinery and Equipment Manufacturer

“…The supply of raw materials is also influenced by geology, technology, geopolitics, economics, environment, and social condition (Mancini et al, 2018). Raw materials can be mapped using the Kraljic matrixthe most popular model for mapping purchasing strategies for various products and services as well as their combinations (Bildsten, 2021). This method classifies suppliers or purchased items into four quadrants and recommends distinct purchasing strategies for each quadrant (Hong et al, 2018).…”