Procurement policy

Challenges

BAM's philosophy is to offer real value to its clients and work with them in close and lasting co-operation that provides outstanding performance in relation to the maintenance, innovation and expansion of built up environments. BAM is recognized and acknowledged for the quality and reliability of its products and services as well as for the commitment, knowledge and experience of its employees. This philosophy is also applicable for BAM's suppliers/sub-contractors/construction partners.

From a procurement perspective, this takes on the one hand a project wise, but on the other hand also a project overarching focus. It is BAM's ambition to work on lasting relationships with a selected number of construction partners, in which entrepreneurship and specific knowledge in the field of product, market and process are leading. The making and implementing of the right choices in this are the success factors of the BAM procurement policy.

Within BAM's decentralised organisational structure, the procurement column is organised in accordance with the coordination principle. No choice has been made for either centralised procurement or decentralised procurement. The level at which to pursue strategic procurement processes is determined for each sub-segment. The BAM model can therefore be best qualified as a 'coordinated' approach.

The benefits of scales of economy are derived by pursuing procurement activities in such a manner that, on the one hand, local management retains the flexibility and control of its processes and, on the other hand, the entire BAM organisation enjoys the quantitative and qualitative economies of scale.

Due to the nature of the sector in which BAM is active, primary processes focus on obtaining and completing projects in as efficient and effective a manner as possible. Accordingly, procurement activities should share this focus. As many projects pursued within and outside a specific region or by an operating company, respectively, have shared procurement segments and processes, combining them can generate substantial and structural procurement economies of scale.This applies to supply/equipment supplies, subcontractors, suppliers involved in the supporting facility management process and intra-organisational supply activities.

In addition to costs and risk management, there is a growing emphasis placed on cash management. Accordingly, this theme should be incorporated structurally in various procurement processes (project-based and otherwise).

During the previous period, the concepts of 'sustainability' and 'corporate social responsibility' became more tangible at BAM. This also applies to procurement activities. During the 2010-2012 period, the primary challenge will be to further build on specific procurement activities in terms of the BAM sustainability focus themes:

  • Safety
  • CO2 emissions
  • Waste

There is growing awareness that the effective interpretation and implementation of these concepts (by, for instance, the procurement column) also positively impact BAM's top-line results (added value/returns) and that this demands a comprehensive supply chain-based approach.

Another challenge is how BAM can benefit more from the expertise and talents available in its supplier network. When does a procurement process/supplier become early involved in a project? A differentiated approach should be taken in analysing the supplier network's potential contribution during the preparation/tendering and specification phase. The terms preferred supplier and preferred customer are key in this. A logical consequence will be the potential development of long-term relationships with unequivocal objectives.

More emphasis will be placed on who is involved and who does what in BAM processes. The expertise and talents of our construction partners can be mobilised in an optimal manner to improve BAM's operations. This facilitates a structural approach to increasing the size of the total available 'project margin pie', rather than simply and solely 'fighting' for the largest part of existing margins.

Vision on procurement

It remains essential for procurement activities to continue to be a core element of BAM's operations and processes and to pursue policy that effectively dovetails the objectives and strategy of BAM, its operating companies and regions/business units (BUs). The diagram below illustrates the interrelationships:

With this approach, the procurement strategy, policy, operations and organisational structure is brought fully in line with BAM's strategy and objectives and that of its operating companies and regions/BUs. Via this model, this is also integrated in the individual PYP's. This leads to the following BAM wide vision on procurement:

In implementing Royal BAM Group's procurement processes in a professional manner, its network of suppliers, subcontractors and construction partners contributes to achieving objectives of the BAM Strategic Agenda

This leads to the following BAM House of Procurement: