Construction Procurement Trends in 2025: US Mechanical Contractors

In collaboration with New Horizons and SMACNA, Field Materials ran a first of its kind survey of SMACNA members in the HVAC and sheet metal trades. The goal of the study was to benchmark current material and equipment procurement processes. 

50 organizations participated in the study. Most respondents are from medium to large companies (100-1000 employees) – consistent with SMACNA membership. 

Over 80% of the study participants were top-level executives and owners of mechanical contractors:

• Owners/presidents 39.5%
• VP of Operations 11.6%
• Other Executives 32.6%
• Project Managers 4.7%
• Superintendents 4.7%
• Accountants 4.7%
• Purchasing Managers 2.3%

The study reveals both the best practices used by the mechanical contractors in procurement as well as sources of administrative burden caused by procurement. The study concludes with automation opportunities identified by the respondents.  

One of the things that the survey reveals is that the construction ERP market is highly fragmented. No single accounting system is used by more than 13% of the respondents. This means that the issues described in the study are not due to a specific ERP but rather are omnipresent across all ERPs. 

Burden of Purchase Orders

Almost half of the surveyed contractors have dedicated purchasing departments and 46% use a separate PO for each delivery. Creating a separate PO for each delivery is certainly a good practice in procurement and we strongly advocate for it. However, today this creates an administrative burden on the organization and that’s one of the main reasons why mechanical contractors set up a dedicated purchasing department. The other half of respondents either sometimes create POs or don’t create POs at all and have no dedicated purchasing department. This is considered not a good practice but such organizations are usually smaller and cannot afford dedicated purchasing staff. If they could automate PO creation without reliance on the additional staff, they would certainly do it. 

In addition to creating POs, purchasing departments also play a role of approving expenses.  Over 80% of the organizations require pre-authorization of 90% of their material and equipment purchases. Such practice is highly recommended and minimizes rogue spending (also known as maverick spending). However, it does create an administrative burden on the office staff. A lot of times, requisitions are sent as paper forms to the office and purchasing staff have to review them before manually entering them as purchase orders into the accounting software. 

Finally, purchasing departments are often tasked with getting competitive quotes on materials. Close to 60% of contractors request at least 3 quotes from suppliers on orders above $500. Again, this is a highly recommended procurement practice because it provides more choices for pricing and maximizes your margins. But it adds an administrative burden on the office staff and is one of the main reasons for setting up dedicated purchasing departments. 

Burden of AP Invoice Processing

60% of contractors face a high volume of AP invoices (over 250/month). Such a high volume puts a heavy administrative burden on the office staff. 90% of surveyed companies rely on AP staff to enter invoices into their accounting systems, before project managers approve them. This is labor-intensive for both accountants and PMs. Furthermore, the slow AP process can cause contractors to miss early payment terms on vendor invoices cutting into margins. 

However, there is a big opportunity for automation here. Based on the study, 60%+ of organizations receive the majority of their AP invoices via email. Given that invoices are received in a digital form, they can be easily downloaded and read by AI technology to streamline their data entry and approval. 

Finally, the study reveals that 40% of companies pay supplier invoices by checks. This manual process creates a substantial administrative burden on the AP staff that need to cut checks and mail them. Again, we see this as a major opportunity for automation with ACH and virtual card payments.

Delivery Slip Handling

The cornerstone of the efficient AP process is the 3-way match: ability to verify invoiced quantities against what was ordered and received. The latter is a very important piece: tracking backordered quantities is often one of the most painful parts of procurement.

The study reveals that nearly 50% of respondents physically collect packing slips at the job site or shop and send them to the office. Only 9% use a mobile app to capture and correlate slips with purchase orders. This reliance on paper creates a huge administrative burden on both field and office staff and increases the risk of lost documents, delayed processing, and mismatched records.

Again, we see this as a big opportunity for automation. Field staff can easily snap a picture of the packing slip using a mobile app and AI can scan the slip to read all the received quantities without creating additional overhead work for the field staff.

Procurement Automation Opportunities

The final question of the survey is about what mechanical contractor organizations would want to automate in material and equipment procurement. Here are the results to this question:

• Quote scanning: 9.2%
• Receipt scanning: 9.2%
• Quote analysis: 17.3%
• Purchase order entry: 18.4%
• AP invoice entry and verification: 18.4%
• Delivery slip scanning: 27.6%

Automated delivery slip scanning represents the biggest opportunity for automation followed by purchase order entry and AP invoice entry automation. For all of these areas, AI is the enabler that can enforce best practices for procurement while minimizing the office staff overhead and disruption to the current operating procedures.

Learn more about how Field Materials is leading the way in transforming construction procurement with AI.

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