Case Studies  /  Leading Design Build Contractor Tackles COVID Cost Escalations in a Volatile Market with the Power of Prediction

Leading Design Build Contractor Tackles COVID Cost Escalations in a Volatile Market with the Power of Prediction

Like most industries in the past few years, the construction industry was hit hard by COVID-19. A national design build contractor sought a solution that would allow them to be more agile in their bidding events to make decisions quickly in a volatile market. Here’s how they did it with Arkestro’s Predictive Procurement software.

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“Arkestro shines quite a bit by having an easy interface and being able to collect bids quickly from suppliers. We were able to clearly understand costs rather than waiting on emails and spreadsheets and manually compiling data – which was a big win for us,” stated the Materials Procurement Manager at a leading design build contractor.

Overview

COVID-19 price fluctuations and market volatility have been major challenges in the construction industry. Finding basic building materials has become costly or nearly impossible, delaying construction projects.

When you are working on major developments, high rises, multi-family, hotels and more – sourcing setbacks can be a frustrating experience. This leading design build contractor had the added challenge of an outdated file posting system used for bidding that was rigid and ultimately frustrated suppliers.

Arkestro was able to help the company transform from long lead times and cost escalations that affected their bottom line to a predictive procurement model that allowed them to lock in prices before market conditions changed. The platform’s user-friendly interface also alleviated suppliers’ technological issues.

Approach

The transition from the old system to Arkestro for sending bids out happened virtually overnight. After analyzing the company’s internal data from the past 30+ years (number of units, square footage, etc.), Arkestro was able to predict the bill of materials and suggest suppliers and pricing as soon as a contract came in.

As a leading design build contractor that is part of the top 15% of construction companies, they are now able to build categories of materials and costs up front into their contracts without having to get an estimator involved – giving them a competitive advantage on project bids.

“We were initially focused on using Arkestro to accelerate procurement cycles in order to maximize the efficiency of our procurement team and thus maintain access to scarce supplies. We are now buying materials an average of 11 days before they are actually needed, helping us to guarantee supply access and paving the way for smoother, more cost-efficient and timely projects overall,” shares the Materials Procurement Manager at a leading design build contractor.

Result

Arkestro was able to help the company meet their challenges head on by offering flexibility and agility in their bid events to make decisions quickly. In the past, they would win a construction design contract and it would take multiple months to organize internally and output the bill of materials for bidding to begin. Now they are purchasing materials before they even launch construction projects.

 

Conclusion

“Arkestro allowed us to adapt faster to be able to launch bids. We are purchasing materials before we sign on the dotted line for construction projects. It helps us predict costs and make sure we don’t experience cost escalations – definitely a winning brag for our procurement team!” says the Materials Procurement Manager at a leading design build contractor.

Now that materials are becoming more available and prices are stabilizing, the company hopes to focus on the negotiation aspect of procurement versus the cost avoidance model they had to adapt to from COVID. This means finding the appropriate strategic partners, focusing on competitive pricing, and bidding appropriately – all with the support of Arkestro’s Predictive Procurement.