Procurement Process in Construction vs. Software Industries

Introduction to Procurement Across Industries

The procurement process typically follows clear guidelines that ensure it remains manageable and that goods or services are acquired in a timely manner. Although the procurement process can be employed differently across industries, the primary aim in any sector is to maximize profit opportunities. Sollish (2007, p. 26) notes that the financial planning and budgeting of a project follow a similar process across various industries. Another element that applies similarly across industries is the concept of procurement management, which plays a vital role in the overall procurement process.

However, the procurement process can vary significantly depending on the industry. For instance, the procurement process in the construction industry will differ from that in the software industry. A key factor to consider when reviewing these two industries is the mobility of procured items. Whereas the mobility and deliverability of procured items is essentially immediate in the software industry, the opposite applies in construction. Accordingly, risk in the software industry can be mitigated almost immediately, while a reasonable period must be allowed for performance assessment in the construction industry (Sollish, 2007, p. 29).

It is vital to monitor and manage risks in the procurement process regardless of the industry involved. Equally important is the need to improve the process where necessary in order to attain the desired procurement standards. The key aspects examined by risk management include the quality and quantity of the goods or services procured. According to Craig (1999, p. 19), the quality of goods or services procured in the software industry cannot be assessed until the software is put into use, meaning that quality can only be confirmed after the procured item has been deployed. In contrast, the construction sector does not require the use of a procured good to ascertain its quality, as this can be done prior to procurement or use.

Risk Management and Quality Assessment

Additionally, quantity can be easily determined in the construction sector because the goods are tangible, whereas the intangibility of software products makes this assessment more difficult. This dissimilarity underscores the need to adopt different methods of reviewing and integrating the procurement process according to the specific industry in question (Craig, 1999, p. 33).

Contractual obligations are also essential to the procurement process, as it is critical that all concerned parties are aware of what they are required to do. Compliance with contractual obligations is mandatory in any industry, and the performance of a procurement process depends entirely on this compliance. These obligations must be integrated into the process and reviewed periodically to ensure they continue to meet the conditions of the agreed arrangement. The contractual obligations in the software industry will differ from those in the construction industry in several respects. Rainer and Cegielski (2009, p. 40) argue that although penalty clauses may apply in both cases, the circumstances under which such penalties are triggered will not be the same.