Client
A development PropTech corporation ranked among the top 5 in CIS by construction volume. Included in the list of systemically important enterprises. As of June 2022, the client had 20 active projects under way with a total area of 1.5 million sq. m.
Problem: material procurement deals are handled manually, poorly controlled, and delay construction projects
Suppose the client is planning to build a 10-story building. Based on the project data, it can be calculated that approximately 500,000 tons of concrete, 30,000 bags of cement, 5 km of pipes, 1,200 interior doors, 7,000 windows, and several hundred other materials will be needed.
Materials cannot be ordered, paid for, and delivered to the construction site all at once for the following reasons.
Given these circumstances, each material had to be procured separately. Suppliers and contractors negotiated among themselves, and the client only learned about a deal when receiving the invoice for the materials. To clarify details, managers called each other several times a day, coordinated documents by email, and often had to come to the office in person to sign them.
Several construction contractors may work on one site. In turn, each contractor may have several suppliers
Any changes on site only made the process more confusing. Need more cement? That means a new deal. The contractor built the walls 2 weeks faster? Then insulation has to be found urgently.
In such a system:
- Materials are only needed at a specific stage. For example, roof tiles and plastic windows will not be needed until the walls are built.
- Materials lose their properties during prolonged storage. Concrete sets within a few hours, wood becomes damp, and bricks can crumble.
- Managers do not know the exact order volume. For example, builders may use more rebar or concrete when producing reinforced concrete structures.
- Materials can be brought to the site from another construction project. For example, if there is leftover insulation there, then less of it needs to be ordered for this house.
- A tender may be announced for the supply of certain materials, which will increase delivery times.
- Documents must be signed in person, and the responsible employee may be on extended leave.
- the client's employees repeated the same routine procedure thousands of times during the construction of a single project;
- the client could not quickly see the situation with materials on site (how much had been used, how much had arrived, how much had already been ordered, which deals required payment and the client's attention, and so on), so they called the contractor to get information and clarify the details of each purchase separately;
- project handover deadlines increased because of the time spent on approvals and error corrections, as well as delays in material deliveries.
Task: design and digitize the material procurement process for the client's construction sites
The system had to standardize material purchase requests while taking into account their specifics, supplier terms, delivery timelines, and any other details important for processing the purchase.
The system backend is built on the Django framework. The frontend must use the client's internal React component library, shared across the entire IT infrastructure.
kt.team:
- designed a universal material purchase request form;
- designed a deal processing workflow that takes into account approval, payment, and material acceptance rules;
- created an additional materials receiving service in the client's mobile app.
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Result 1: the client, contractors, and suppliers understand and control the material procurement process for the sites
kt.team, together with the client's teams, contractors, and suppliers, developed a universal material purchase request form that adapts to 5 main delivery scenarios.
We asked the client about the main stages of request processing, assigned roles, and implemented automatic document generation with signing via EDS (short for electronic digital signature) directly in the system. At each stage, the system prompts the client's managers and counterparties on what still needs to be done and which documents must be prepared.
This was the overall business process view (the image is blurred to protect the client's confidential data).
Final workflow diagram and stages for processing a material purchase request
Prompts during request submission speed up every stage and reduce the number of errors
The client gets information about any request in one place and can quickly respond to approval delays and other disputed situations.
- A standard request. For example, deliver 100 entrance doors by December 20.
- A request without a contract, without estimated cost, and without specific materials. For example, custom pipe fittings need to be ordered or procured directly without a tender.
- A request with postpayment based on actual material consumption. Concrete, for example, is ordered this way.
- A request with prepayment and volume changes based on actual material usage. For example, 1 ton of rebar may be ordered but only 900 kg used. Or, conversely, an additional order is placed.
- A request with a specific postpayment scheme. For example, payment in stages: first an advance payment, then shipment, and final payment based on the actual volume of materials delivered.
Result 2: material procurement with prepayment became 4.9x faster, and with postpayment 3x faster
Before: no one monitored the workflow from request creation to invoicing. It was impossible to optimize the process or improve its speed.
According to a study by Swedish researcher Andreas Ekeskar (Swedish: Andreas Ekeskär), less than half of construction material deliveries arrive on time, in the required quantity, and without errors. As a result, builders on site spend a third of their time waiting for materials and finishing work, and a quarter unloading materials.
The amount of useful work performed by builders on site depends directly on how quickly materials are delivered
After: in the first month after launch, the time for a request to move through the stages from draft creation to invoice payment was 69 days for prepayment purchases and 46 days for postpayment purchases.
After the system was debugged and the client's team was trained, request closing times decreased: in July 2022, requests were handled in an average of just 2 weeks.
After the new system was implemented, request closing time was significantly reduced, and the timelines for prepayment and postpayment were equalized. As a result, the client and contractors gained better control over the availability of the required materials on site, regardless of type
Reducing request processing time gives the client highly important advantages:
- sites are built and completed faster;
- Project costs decrease by reducing builders' downtime on site.
Technology stack
Frontend: React
Backend: Django
Mobile app: React Native
