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Finance

factors that influence procurement and project success

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factors that influence procurement and project success

Although other factors influence procurement and project success, the finance department is vital in funding the project, costing, determines staffing costs, among others. Fig 2 represents an accurate picture of the company’s financial capability; it shows that the company in Enginuity competition cannot bid for work above $25 million. From the above, it is essential to ensure the project continues running, and the company attains profitability after project completion. Besides, involving this department helps the company determine its potential in supporting additional projects and capital requirements for jobs in progress.

Overhead

Controlling overhead expenses would require estimating the costs from the contract document and separating other business overheads from the project expenses. Tracking project overheads ensures efficiency (Kren, 2014). Most constriction projects have overheads and, if not factored and maintained, can have a massive financial implication on the company or clients (Subramani et al., 2014). These costs can be caused by an increase in material prices where the projects take longer duration, poor contract administration, poor project design, long bidding and tendering duration, and project delays. Therefore, the procurement manager has to involve other concerned departments and ensure effective planning and budgeting when playing bids, tendering project processes, and maintenance (El-Abbasy et al., 2017). Additionally, since Constructions Company runs simultaneous contracts, it will require the sharing of different resources such as cash, labor, and machine to avoid the occurrence of such costs. It will also require project scheduling, allocation of funds, and cash forecasting. This will help in prioritizing projects where resources are limited.

Conclusion

The procurement department is critical in the construction industry. Managers in this department are required to provide the managerial role and support needed for the procurement, financing, development, and management of construction projects. Also, managers must note that constriction is a complex industry and requires the relevant and well-trained human resources to provide quality products that meet the required standards and current competitive market. It is good to note that the department highly depends on other departments to ensure sustainable projects, innovation, quality products, and organizational growth. Therefore, it is the role of procurement managers to ensure a good relationship both inside and outside the organization. Nevertheless, enginuity competition is essential in resource management and the face of scarce resources. Proper cultivation and the use of unique resources enable a company to obtain a competitive advantage.

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