Streamlining the Buy-Out: Reducing Scope Gaps, Delays & Margin Erosion

There isn’t a single construction project that doesn’t get impacted by how well—or poorly—the buyout phase is managed. In fact, the post-tender subcontract stage of the procurement process is crucial: it is where 70-80% of a project’s total cost is determined.

If it’s so important, why is the buy-out phase so often where things go wrong? The simple answer is: the accumulation of small errors and inefficiencies. Missed scope items, delayed packages, or unclear terms—combined, these can quickly escalate into significant delays, claims, and eroded profit margins. And in the vast majority of cases, the problem is not the competence or diligence of procurement professionals: it is the inefficiency of the processes they have traditionally employed to secure the buy-out. 

The truth is that construction companies cannot afford the losses that result from these ‘small’ oversights. With UK contractors facing average net margins of less than 3%, every pound saved or protected during buy-out has a disproportionately positive impact on profitability.

How can the buy-out process be effectively streamlined? You’ve probably guessed it: digitisation. Digital procurement platforms (such as ProcurePro and Procore) are transforming the buy-out process from a chaotic mix of emails and spreadsheets into auditable, collaborative workflows. This shift accelerates awards, clarifies scope definitions, and helps identify risks earlier.

We spoke to James Metcalfe, a former Quantity Surveyor and now a Solutions Consultant, about his journey from old-school systems to pioneering new technology that is about to transform buy-out workflows—and save industry professionals a lot of money in the process. James shares practical insights gained from implementing buy-out best practices on high value projects.

The Three Common Buy-Out Issues: Scope Gaps, Delays, Late Variations

The good news is that all paths to margin erosion lead to the same main causes: scope gaps (when the construction pro doesn’t know what they’re buying and the contractor doesn’t know what they’re selling), procurement delays, and late-stage pricing fluctuations. The good news is that all three are preventable. However, most commercial directors/QSs learn this the hard way.

James certainly did. Long before his ProcurePro days, James was working on an offsite manufactured building for a new project. The design had been developed through the pre-construction services agreement stage. On the surface of it, everything was going smoothly: the buy-out had been agreed on as a lump sum to take it off the client’s hands; the intention was to get the main contract sealed and across the line. 

What was the problem with this situation? 

In the (understandable) desire to be awarded the project, the company overlooked the complexity around connecting up the different dots, wrongly assuming that it had everything other than the foundations under control, procurement-wise.

As for the financial impact, James quoted £10,000 a week for the liquidated damages, plus about £30,000  a week for the prelims. All told, over £1 million lost from the oversights during the buyout process.

The Solution: A Playbook for Streamlining Buy-Out

In terms of the shortest possible answer to the question, ‘What’s to be done?’ it is: have a plan and don’t ignore all the different threads of information. James recommends really looking into the data you as the buy-out professional have on hand: it will contain all the clues you need to what has gone wrong in the past and how to avoid similar mistakes in the future. Having all the data in one place helps enormously, solving the problem of time scarcity and the tendency to rush.

Mitigating Against Scope Gaps

Scope gaps are not inevitable. James’s main advice is to really study that profit plan in detail. Of course, a plan is a plan: it’s an indicator of the likely performance, not a 100% accurate representation of where the project's going to end up. Still, it’s a good guide based on the project’s cost and value. 

As for the one big red flag that screams “scope gaps ahead”, it’s the budget’s big-ticket items. James recommends paying very close attention to items that have round quantities or rates.

Next, James recommends zooming in on sums of money within the packages that seem to have been produced out of thin air. 

Overly neat or vague figures are especially a concern with higher-risk packages as opposed to easy items like clean or a mastic package. Think about it this way: can you afford a scope gap in this area? If it’s crucial, you really can’t. 

Improving Workflows and Reducing Delays Through Digitisation

Did you know that on average, every trade takes around about 40 hours to complete the full buyout process? And that many procurement professionals spend a lot longer on your typical buy-out, closer to 50 or 60 hours?

Digital workflow management tools can drastically improve these timeframes. The figures speak for themselves. James tells us that a platform like ProcurePro delivers a minimum of 50% time-saving.

Contract preparation and signing times are vastly reduced too. In James’s experience, what used to take him a minimum of 45 minutes, can take as little as 15 minutes. 

Preventing Margin Erosion With Live Dashboards & Reporting Analytics

As we’ve seen, errors during the buyout process can really eat into already thin margins. How exactly can buy-out streamlining prevent losses?  

The answer is, for the most part, very simple: it’s having a straightforward, live view of all of your projects and all of your procurement in one place. Most commercial managers and directors are still accessing multiple projects across different shared drives; they request information over the phone, in meetings, and over email. In other words, they’re meticulously stringing together information about how the quotes have been returned and what the numbers are looking like. James is unequivocal about the impact of this way of doing things and the benefit of having everything centralised and digitised:

Beyond just time saving, this encourages a more collaborative and proactive approach to managing the buy-out. It allows a commercial director to make decisions earlier, way before the recommendation stage.

Proactive planning is one way to mitigate margin erosion. Learning from past mistakes is another. The estimator’s handover report, for example, is a valuable source of information, including where a company may be losing money. Having detailed information on where the losses originated, not just the percentage, is crucial here. 

Having all of the procurement information readily available in one place gives you the insights needed to spot patterns of losses between projects, too. James gives an example of a company that’s making a 10% loss across the business. How do you pinpoint where exactly the loss came from, which projects, which trades?

Digital dashboards provide insights for commercial directors to either take action or delegate action, prevent the reoccurrence, but also to highlight the good work that they do.

Tips for Mitigating Against Late Variations

Every buy-out process carries the risk of late pricing variations from subcontractors. It can’t be completely eliminated, but James offers some insights on how to spot a subcontractor who is clearly looking for variations.  

The possibly surprising major red flag is a subcontractor who is being too nice and trying too hard to secure the contract. James admits that ‘too nice’ may sound like a fluffy term, but he makes what he means very clear with a real-life example:

The lesson to learn from this is: if it seems to be too good to be true, it probably is. A good contractor should be flexible, but if they’re not trying to negotiate at all, expect trouble later. 

Questions to Ask a Subcontractor Before award

As part of this negotiation process, you should be able to quiz your estimators a bit on their figures. James recommends querying specific items, preferably over the phone:

So, it’s obvious that not all subcontractors are aiming for late variations; it’s just that not all want to do that thorough of a job with the pricing. 

Benefits and Performance Improvements From Using Procurement Software

Beyond simply preventing the bad, what is the tangible good of implementing procurement software like Procore and ProcurePro? The benefits can be summarised as simply: change. James elaborates:

Implementation considerations: is integrating procurement software difficult?

Changing old ways of working can be hard. Busy professionals especially may feel some trepidation about having to go through a drastic overhaul to their workflows. However, James stresses that this is not the case where it comes to integrating procurement software.

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