For many years, the primary barrier to accelerating the pace of development and modernization of the road network was the shortage of financial resources allocated to this critical element of economic infrastructure. However, the situation in this regard has changed radically. As early as 2006, the problem of road construction companies being able to “process” the funds made available to them by the road administration emerged. It turned out then that our road construction companies were completely unprepared for such a dynamic increase in financial outlays for road construction. The most difficult barrier to overcome in executing contracted tasks proved to be, in particular, the shortage of basic road materials, such as aggregates (basalt, dolomite, limestone, etc.), sands, and gravels, and to a slightly lesser extent, road asphalts. It would not be an issue if it were short-term, or more precisely, if there were effective mechanisms in the economy to ensure the rapid adjustment of production (supply) of road materials to rapidly growing needs. From my personal experience and observations, related both to working in road administration (previously) and in the execution sector (currently), it follows, however, that there are no rational grounds for such an assumption, especially if we take into account the enormous scale of needs for the construction of motorways, roads, and bridges resulting from the organization of EURO 2012 (for road construction, this is a very short period of time). Therefore, this issue requires a comprehensive analysis, which should be conducted not only at the level of construction companies but also from a much broader perspective, as any delays and disruptions in road construction bring enormous – measurable and immeasurable – losses to the national economy as a whole.
Cooperation with bidding departments
<\/strong>A specific feature visible in the operations of road construction companies is the way orders are obtained. The primary method of operation here is participation in tenders for the execution of individual road projects. Therefore, almost every road construction company has bidding departments whose primary task is to develop and submit bids, and then – in the event of winning the tender – to conclude formal contracts for the execution of specific works. For obvious reasons, the supply services of road construction companies should therefore cooperate closely with the bidding departments, as full security of material needs is one of the basic conditions for the execution of concluded contracts. My personal professional experience shows that this cooperation does not run perfectly in all road construction companies. The most common mistake in this regard is the lack of this cooperation at the stage of submitting a tender bid. Only after concluding (as a result of winning the tender) the relevant contract do logistics departments take steps to secure material needs. The specific features of the road industry (using the same or similar materials for most works) mean that this variant of cooperation between bidding and supply departments is generally quite effective. On the other hand, in certain cases, this variant of cooperation can even bring significant financial losses to a road construction company. Here is a concrete example from economic practice. At the beginning of 2005, one of the companies I know won a large tender for the construction from scratch of a several-kilometer bypass for one of the cities in southern Poland. When developing the tender bid, the average material prices along with transport costs provided earlier by the supply department were taken into account. However, no one paid attention to the fact that there was not enough material on the local market necessary to complete such a large project. This was especially true for the huge amounts of aggregates (almost 600,000 tons) needed for the construction of embankments. To secure the needs in this area, it was necessary to transport aggregates from a distance of even over 200 km, which had to cause a significant increase in construction costs, and furthermore – what is perhaps most important – the contractual deadline for completing the task was not met, with all the consequences thereof (contractual penalties, loss of credibility, etc.).
Instead of the expected profits, the company suffered serious financial losses as a result of executing the above task. This, in my opinion, not isolated example proves how important a role in the operation of a road construction company is played by establishing close cooperation between logistics and bidding, already at the stage of submitting tender bids.
The article comes from the magazine “Logistyka” 2/2008.