How procurement is becoming the profit center builders can’t ignore

How procurement is becoming the profit center builders can’t ignore

For decades, builders have viewed procurement as a back-office cost function. Something used to source material, manage bids and keep contracts in order. But that is no longer an industry reality with recent major shifts.

Today, construction procurement is a profit driver.

Instead of just cutting costs, procurement now strategically fuels revenue, growth and competitive advantage. With margins averaging right around 5% in U.S. construction, according to Turner & Townsend’s 2024 survey, builders can’t afford to overlook the profit power procurement holds.

We’ll dig into why procurement isn’t just about cutting costs anymore – it’s about driving real, lasting growth.

What is construction procurement and why does it matter?

At its core, construction procurement is the process of selecting and securing supplies and services for a construction project. It’s carried out in stages that require close communication with suppliers, contractors and subcontractors.

Key stages of construction procurement:

• Planning and needs assessment: Define the project scope, budget and timelines to guide procurement decisions
• Supplier prequalification: Evaluate contractors, subcontractors and suppliers for capability, reliability and compliance
• Tendering and bidding: Issue requests for proposals (RFPs) or quotes (RFQs) and collect competitive construction bids
• Bid evaluation and selection: Compare proposals based on cost, quality, schedule and project requirements
• Contract awarding: Negotiate terms and finalize procurement contracts for construction materials and services
• Ordering and delivery: Manage purchase orders and coordinate timely delivery to the jobsite
• Monitoring and quality control: Track supplier performance, ensure contract compliance and resolve issues quickly
• Payments and closeout: Complete invoicing, release payments and close out procurement records

In today’s market, strategic procurement gives builders more predictability to ensure materials, labor and budgets align so projects run smoothly from start to finish.  

Why is procurement no longer considered a cost function?

With labor shortages, supply chain volatility and shrinking margins, procurement is now one of the strongest levers builders can pull to stay competitive. By leveraging group purchasing power through organizations like CBUSA, builders can unlock significant savings, earn rebates and strengthen supplier relationships.

Smart builders understand procurement is a strategic growth function built on:

• Stronger supplier relationships
• Volume purchasing power
• Rebates and incentives
• Operational efficiencies

CBUSA highlights how these benefits transform procurement from a cost center into a true profit driver for independent builders.

How does procurement drive builder profitability?

1. Cost savings that boost margins

Group purchasing power changes the game. Through CBUSA, builders report savings like:

• 25% on appliances
• 20% on roofing
• 10% on drywall
• 8% on lumber
• 20% on plumbing and fixtures.

Those numbers directly lift job site margins in a market where average overhead on a new home is just 5.7% of the final sale price, as outlined by the National Association of Home Builders (NAHB). When every dollar matters on tight margins, it’s an edge in a tight market.

As Justin Einstein from Aubuchon Homes puts it: “We get better prices and better commitments on deliveries and we wouldn’t be able to do that without CBUSA.”

2. Rebates and incentives

Procurement when does right gives builders a second paycheck on every project. The benefits don’t stop at the initial buy. Millions of dollars in annual rebates flow back to CBUSA members. That turns purchasing decisions into recurring revenue streams that strengthen margins long after the materials are delivered.

3. Efficiency gains

Smart procurement processes cut delays and errors. With CBUSA, builders lock in committed buys from suppliers that protect against volatile market pricing while securing reliable delivery schedules. That means materials arrive on time, even amid ongoing supply chain disruptions. This approach gives builders greater control over schedules, reduces downtime and keeps projects moving forward with confidence.

4. Stronger supplier partnerships

Reliable relationships matter. CBUSA chapters gives builders long-term supplier partnerships that reduce volatility, create preferential pricing and ensure availability during market crunches.

As Alan Degen, New Leaf Builders, in Charleston, South Carolina explained, “The most appealing thing is the accessibility to people on the manufacturing side that you won’t get anywhere else. I had dinner with the vice president of sales at Lennox. You just don’t have access like that as a small local builder without a CBUSA membership.”

5. An extension of your team

CBUSA’s team works directly with suppliers and partners to negotiate the best deals – so builders don’t have to go it alone. They aren’t a replacement for your internal staff, but rather an extension of your team that brings added leverage and expertise to every negotiation. Check out how CBUSA does the heavy lifting for builders here.

Technology’s role in modern construction procurement

Digital tools are redefining procurement, too. Where the process once relied on spreadsheets, phone calls and manual tracking, platforms like Buildertrend now bring everything into one place. That shift makes procurement faster, smarter and far more strategic.

• Streamline bids across vendors: Compare suppliers side-by-side, reduce back-and-forth emails and award contracts with confidence.
• Track costs in real time: Stay on top of budgets as expenses happen, not weeks later, so there are no surprises at the end of a project.
• Forecast with accuracy: Use historical data and reporting to plan future jobs with realistic numbers that project margins.

Technology makes procurement more transparent, collaborative and proactive, giving builders confidence in every decision. As Supply Chain Digital notes, procurement is pivotal not only for cost control but also for embedding sustainability and resilience.

Case study: Procurement success in action

At a recent Raleigh CBUSA chapter meeting, more than 25 builders sat down together and discovered they could tap into the kind of pricing power usually reserved for the nation’s largest production firms. One member, Homes by Dickerson, shared how vendor partnerships and pooled volume helped them lock in product and material rates they never thought possible.

“It’s because I’m a part of this group that I have the opportunity to sit down with people like David Kohler, head of Kohler, and have a discussion,” said Jon Showalter, chief operating officer at Homes by Dickerson. “The doors are open to so much more networking than any one business.”

And the wins don’t stop in Raleigh. In Charleston, New Leaf Builders exemplified just how powerful one switch can be and reported they tripled their return on investment in a single year simply by sourcing garage doors through CBUSA.

“In the rising cost market, CBUSA provides the stabilization we need,” said Alan Degen, Director of Operations. “With the contract locks and committed buys, we are doing significantly better as a company.”

Alan credits chapter meetings for sparking those opportunities, noting that every conversation is about making each build stronger.

How CBUSA turns procurement into your profit center

CBUSA gives builders the purchasing power, supplier partnerships and expert support to transform procurement into a profit-driven function.

• Reduced material lead time and predictable supply delivery through CBUSA’s group purchasing power
• Chapter meetings and group buying power that reduce per-home costs
• Rebates and vendor partnerships that create recurring revenue

It’s not just about saving money — it’s about building profitability into every project.

Learn more and inquire about becoming a member today

FAQs about construction procurement