How to Streamline the Requisition Process in Construction: A Step-by-Step Guide
Published 23 Nov 2024
Every construction project relies on having the right materials, equipment, and labor available at the right time. Managing these resources effectively is what keeps a project running smoothly and on budget. But without a clear requisition process, things can quickly go off track.
Requisition management in construction refers to material requisition (purchase). The purchase requisition process involves creating a purchase request, processing it, and authorizing it. This means a project team member or department identifies the need for materials, tools, or services. They create a requisition form (request) that details quantities and delivery dates. Project managers and procurement officers review the request to ensure the items are necessary for the project and align with the budget and project scope.
When the requisition is submitted for approval, it must be authorized by a manager or financial controller. It is important to track each request so they do not deviate from the business’ procurement policies or budget.
Requisition management in construction refers to material requisition (purchase). The purchase requisition process involves creating a purchase request, processing it, and authorizing it. This means a project team member or department identifies the need for materials, tools, or services. They create a requisition form (request) that details quantities and delivery dates. Project managers and procurement officers review the request to ensure the items are necessary for the project and align with the budget and project scope.
When the requisition is submitted for approval, it must be authorized by a manager or financial controller. It is important to track each request so they do not deviate from the business’ procurement policies or budget.
When your requisition process does not work, your projects will suffer material shortages and unnecessary delays.
The following guide explores how to overhaul your existing processes for maximum efficiency and financial control. You will also learn best practices and discover how technology can keep your requisition management process on track.
Contents
Why an Efficient Requisition Process Is Essential for Construction Projects
Construction is a high-stakes industry, with projects operating on tight schedules and even tighter budgets. This means efficient purchase requisition is not only beneficial but critical. Here is how this process directly impacts project success and financial stability.
Improving project timelines. A streamlined requisition process ensures that material, equipment, and labor are available on-site when needed. This helps projects stay on schedule.
When there is a delay in receiving essential materials or equipment, it pushes back deadlines, which has a rollover effect on labor costs. For instance, when the delivery of foundational materials like cement or steel is delayed, it holds up entire phases of a project.
An efficient requisition system prevents this risk because there is a reduced wait time and zero bottlenecks.
An efficient requisition system prevents this risk because there is a reduced wait time and zero bottlenecks.
Controlling costs. Effective requisition management helps control costs by preventing rushed orders or last-minute purchases, which are likely more expensive. Vendors will charge higher prices for expedited delivery when materials or services are purchased without planning or notice.
Project cost control in FirstBit ERP
However, when your business has a clear requisition process, it includes strategic planning. This means knowing when to place orders to secure better pricing. By reviewing and approving requisitions early in the project process, your business can adhere better to budgets and avoid financial strain later.
Enhanced resource allocation. Proper requisition management will allow your business to track and allocate labor, materials, and equipment in an organized fashion. This helps avoid risks of under- and overstocking or underusage. Your business must track what has been purchased so that site managers can optimize the use of all available resources.
For instance, excess materials on a building site can lead to expensive storage costs or waste. An organized system ensures that only the necessary items are ordered and used promptly.
Ensuring regulatory compliance. Regulations, standards, and codes govern Dubai’s construction industry. These all require documentation of material usage, labor, and equipment.
Well-documented requisition processing in construction ensures compliance with all legal requirements. This protects your business from fines and penalties. Requisition records also provide transparency. These documents can prove crucial during audits or inspections to ensure a project meets required standards.
For instance, specific materials may need to meet local standards and safety certifications. A streamlined requisition process can help ensure all items requested comply with regulations.
For instance, specific materials may need to meet local standards and safety certifications. A streamlined requisition process can help ensure all items requested comply with regulations.
Building stakeholder trust. The construction requisition must be a transparent process. Transparency is a crucial means of building trust with important stakeholders, including investors and clients.
Clients will feel more confident working with you if they know the materials and labor needed for each project phase are tracked and managed. Investors and partners appreciate detailed requisition processes because they show that your business carefully monitors and budgets each project.
The more transparent the process, the more credibility your business will enjoy. Your relationships with all parties involved will strengthen. You will also find it easier to secure additional funding for future projects.
Types of Requisitions in Construction
Different types of requisitions play different roles in construction elements, including project planning, budgeting, and timeline management.
Material requisitions. This involves requesting materials for construction, which may include anything from steel and lumber to finishing materials. Accuracy is essential for material requisitions to maintain inventory levels. It also helps prevent project delays that often happen due to shortages.
Equipment requisitions. An equipment requisition is needed when construction teams require specific tools to complete tasks. These tools include heavy machinery and small hand-held devices. When equipment requisitions are managed properly, they minimize downtime while automatically improving productivity.
Labor requisitions. If your project requires more manpower, you can request it via a labor requisition. Through this, you will obtain skilled workers for specific roles with qualifications required for specific jobs. Getting skilled workers on site when needed also forms part of construction labor management.
Service requisitions. Should a project require specialized services, you must request them using a service requisition. This means hiring consultants and subcontractors to ensure the right skills are available for specific project stages.
Emergency requisitions. Unforeseen issues tend to crop up during construction projects. These may include equipment breakdowns and material shortages.
It is important to have an emergency requisition process to keep a project on track when issues threaten to stall it. When emergency requests are made timeously, it expedites the delivery of goods and services.
Key Stages in the Construction Requisition Process
1. Request Creation
The first stage of the requisition process is identifying which resources are needed. A project team decides on critical services, materials, labor, and equipment.
For example, the site engineer will submit a detailed request if a project requires a concrete foundation. This request must specify quantity, quality standards, and delivery timelines.
The more detailed the request, the less likely the risk of misunderstandings and miscommunication will be.
For example, the site engineer will submit a detailed request if a project requires a concrete foundation. This request must specify quantity, quality standards, and delivery timelines.
The more detailed the request, the less likely the risk of misunderstandings and miscommunication will be.
2. Approval Process
When a request is created, it must be reviewed internally to ensure it aligns with the project scope and budget.
If, for instance, a high-grade steel requisition is made, the procurement and project manager will likely have to sign it off.
This stage of the process ensures that requests align with the project priorities.
If, for instance, a high-grade steel requisition is made, the procurement and project manager will likely have to sign it off.
This stage of the process ensures that requests align with the project priorities.
3. Vendor Selection and Order Placement
After approval, the procurement team must decide on which vendors to use. Factors like regulation compliance, reliability, and price influence this decision.
Contract negotiations will take place before orders are placed. A Dubai-based construction firm may work with local suppliers to ensure compliance and faster delivery.
A construction business can minimize quality issues and delays if this process is handled effectively.
Contract negotiations will take place before orders are placed. A Dubai-based construction firm may work with local suppliers to ensure compliance and faster delivery.
A construction business can minimize quality issues and delays if this process is handled effectively.
4. Receiving and Inventory Tracking
When materials and equipment are delivered, they must be inspected against the original requisition order. Doing this confirms order accuracy and quality.
For instance, a project team receiving cement must check the shipment for damage and verify that the quantity matches the order. Inventory tracking prevents unnecessary discrepancies, ensuring resources are ready to use.
For instance, a project team receiving cement must check the shipment for damage and verify that the quantity matches the order. Inventory tracking prevents unnecessary discrepancies, ensuring resources are ready to use.
5. Payment Processing
The final stage involves processing payments to vendors according to agreed terms. If a construction company pays on time, it strengthens its supplier relationships.
However, adhering to manual payment schedules is not always easy. ERP tools like those provided by FirstBit can help automate payment schedules and avoid missed deadlines.
By managing each stage effectively, construction companies can maintain the requisition process to drive project success.
However, adhering to manual payment schedules is not always easy. ERP tools like those provided by FirstBit can help automate payment schedules and avoid missed deadlines.
By managing each stage effectively, construction companies can maintain the requisition process to drive project success.
Challenges in Managing Requisitions for Construction Projects
Dynamic construction markets like Dubai can make requisition management challenging. Complex project requirements and regulatory issues can derail even the most well-planned projects.
Complex project requirements. No two projects are the same. Each has unique requirements, including custom equipment and specialized materials.
The more unique the requests, the higher the chance of a standard requisition system becoming overwhelmed. An overwhelmed system may lead to errors or missed requisitions.
For example, a standard requisition process may not account for a high-rise project that needs advanced scaffolding. This can result in delays and affect the overall project timeline.
To address this, a business can adopt flexible requisition management systems to accommodate unique project needs. For instance, advanced software can be tailored to handle specific requests for high-rise projects. An automated system can flag and route special requests for faster review and approval.
For example, a standard requisition process may not account for a high-rise project that needs advanced scaffolding. This can result in delays and affect the overall project timeline.
To address this, a business can adopt flexible requisition management systems to accommodate unique project needs. For instance, advanced software can be tailored to handle specific requests for high-rise projects. An automated system can flag and route special requests for faster review and approval.
Regulatory and compliance issues. Construction companies operating in Dubai must comply with varied but stringent local regulations, including accounting standards and environmental laws.
Adhering to these different requirements can add another layer of complexity to requisition management. This is especially evident when documentation or processes fall short of compliance standards.
Challenges like these highlight the need for compliance-focused software. A construction ERP system can ensure that all requisitions meet local laws and regulations before processing and approval. It is also a good idea to set up a checklist system that flags potential compliance issues at each stage of the requisition process.
Challenges like these highlight the need for compliance-focused software. A construction ERP system can ensure that all requisitions meet local laws and regulations before processing and approval. It is also a good idea to set up a checklist system that flags potential compliance issues at each stage of the requisition process.
Tracking and data accuracy. Large-scale projects involve multiple requisitions throughout their timeline and across various departments. This can make data tracking a near-impossible task.
When errors creep in, it can lead to duplicated requests or resource shortages. For instance, miscounting available metal bars could instantly halt progress on structural work.
In this instance, an automated software system can cross-check requisitions for metal bars and alert procurement teams of excess material or no stock.
In this instance, an automated software system can cross-check requisitions for metal bars and alert procurement teams of excess material or no stock.
Supplier and inventory management. Managing relationships with multiple suppliers is another significant challenge. So are fluctuating material prices and inventory levels.
Late deliveries and price hikes inevitably disrupt projects. Overstocking means less capital for other necessary requisitions. Therefore, supplier and inventory management is essential for all projects.
A smart inventory management system tracks stock levels and can even place automatic orders for critical materials when needed. Supplier audits can help keep inventory costs low and reduce the risk of overstocking.
A smart inventory management system tracks stock levels and can even place automatic orders for critical materials when needed. Supplier audits can help keep inventory costs low and reduce the risk of overstocking.
Approval bottlenecks. In hierarchical construction companies, approval bottlenecks are very common. They can also cause chaos in the middle of a project. A delay in approval of critical requisitions, such as emergency equipment repair or replacement, can lead to missed deadlines and escalating costs.
Digital approval workflows can speed up the approval process via mobile devices and laptops. An escalation rule for urgent requests can also ensure that critical requisitions get to the right person the first time around.
Best Practices for Optimizing the Requisition Process in Construction
If you want to improve the requisition process in your business, you must follow best practices. The following are actionable steps you can take to streamline requisition workflows.
Establish clear procedures. A standardized workflow ensures consistency and reduces errors. You must define roles and responsibilities, especially regarding approval thresholds. Doing this will ensure all team members know what to do and when to do it.
The best way to ensure a clear procedure is to use a step-by-step guide for submitting and reviewing requisitions. This will prevent miscommunication and improve accountability.
Implement a centralized requisition system. You should also use one platform that gives you visibility and coordination across each department. You can use software to track requisitions in real-time, avoiding duplicates and other errors.
FirstBit can help you consolidate requisition activities, allowing your project managers a comprehensive view of procurement status. It offers a centralized dashboard that provides an overview of all procurement activities. Requisition requests, approvals, and deliveries can be tracked in one place.
The software also offers automated workflows to streamline the requisition process. Project managers are automatically notified of pending approvals or when further action is required.
The software also offers automated workflows to streamline the requisition process. Project managers are automatically notified of pending approvals or when further action is required.
Utilize data analytics. Before improving your requisition process, you must know where things go wrong. Analyzing historical requisition data can help uncover costly trends. These may include repeatedly delayed materials or ongoing supplier issues.
You can use this data to negotiate better future contracts and forecast material needs. You will also be able to allocate your project budgets more effectively. For instance, tracking the lead time for certain materials can help optimize future orders.
Provide regular staff training. Training ensures employees learn to use the latest software tools and follow standardized workflows. Regular refresher courses can dramatically reduce errors and improve overall process efficiency.
By enforcing these best practices, you can improve your requisition processes and gain better control of your project finances. This will improve operational efficiency and contribute to project success in the long term.
How FirstBit ERP Can Streamline the Requisition Process in Construction
FirstBit ERP offers the most comprehensive solution to overcoming the above obstacles. The FirstBit software program provides tools that simplify requisitions and improve financial management.
Simplified material and service requests. You can create and track purchase requests or internal transfers from a single platform using FirstBit Enterprise Resource Planning.
So, if a site manager requires more steel for reinforcements, they can immediately submit a requisition via the ERP system. The request will be consolidated with ongoing requests, eliminating redundancy and speeding up the procurement timeline.
Centralized purchase orders. With FirstBit, you can centralize the creation and tracking of purchase orders. This will allow your project teams to follow up with vendors in real-time. For instance, if there is a delay in the delivery of critical equipment, your team can use the system to monitor the vendor’s status.
Purchase orders in FirstBit ERP
Accurate purchase invoices. FirstBit also ensures all purchase invoices are promptly logged, preventing accounting discrepancies. For example, a cement order is fulfilled, and the invoices link to the original purchase order. This system streamlines payment approval, keeping financial records accurate.
Proforma invoices in FirstBit ERP
Efficient debit notes and vendor returns. You can take care of last-minute changes, such as incorrect invoices or defective materials, with FirstBit ERP. You can issue a debit note or initiate a return if a delivery is damaged. Doing this on a centralized platform keeps everyone informed and immediately adjusts accounts.
Invoices received in FirstBit ERP
Robust vendor contract management. When you manage your vendor contracts with the FirstBit ERP system, you reduce legal and financial risk in your business. You can store and track all vendor contracts in one place, ensuring compliance with terms and deadlines.
By making the most of these features, you can use FirstBit ERP to transform your struggling requisition process into a streamlined one.
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