Procurement Principle in Material Management For Construction

CASESTUDY4:MATERIALMANAGEMENT 61
PROCUREMENT PRINCIPLE IN MATERIAL MANAGEMENT FOR

CONSTRUCTION
ABSTRACT
The objective of the case study is to understand about all the problems occurring
in construction because of improper application of material management. In
construction project operation, often there is a project cost variance in terms of the
material, equipment, manpower, subcontractor, overhead cost, and general
condition. Material is the main component in construction projects. Therefore, if the
material management is not properly managed it will create a project cost variance.
Project cost can be controlled by taking corrective actions towards the cost
variance.
INTRODUCTION
Materials management is defined as a management system that is required
in planning and controlling the quality & quantity of the material, punctual
equipment placement, good price and the right quantity as required. Material
management is a management system that integrates purchasing, shipping and
material control from suppliers. Based on those definitions, generally materials
management can be defined as a process of planning, executing, and controlling
the right source of materials with the exact quality, at the right time and place
suitable for minimum cost construction process. Capability to coordinate and
integrate purchasing, shipping and material control from suppliers is required for
material cost control. Three important phases that holds the key to a successful
materials management are materials purchasing, materials usage, and storage. It
is used to reduce the cost, which increases profitability and streamlines the
production. Apart from management of material cost and its supply it helps in its
proper utilization, transportation, storage, handling and distribution. Selection of
personnel for marketing, purchasing, inventory control, stores management and
materials handling and their training and placement is also to be seen by the
materials management department This indicates that it is very essential to have
a materials management department in any organization to support the

management in the production activities. It also helps in the marketing, sales
promotion and control of all the types of materials for its quantity, quality and cost.
Thus, the objective of this paper is to clarify the roles and possibilities of material
management in construction.
An important problem that adversely affects the performance of

construction projects is the improper handling of materials during site activities.
The inappropriate handling and management of materials on construction sites
has the potential to severely hamper project performance. There are major issues
which affect materials management activities such as constraints on storage
areas, site logistics with regards to materials handling and distribution, and also
ordering and delivery of materials to the construction site.
OBJECTIVES OF THE STUDY

To understand about all the problems occurring in construction because of
improper application of material management.
To define material management.
To find out some factors affecting material management in construction
To suggest remedial measures to overcome factors affecting material
management on construction.
MATERIALS MANAGEMENT
This section defines materials management and reviews materials
management on construction projects.
Definition
It is concerned with planning, organizing and controlling the flow of materials
from their initial purchase through internal operations to the service point
through distribution.
Material management is a scientific technique, concerned with Planning,

Organizing & Control of flow of materials, from their initial purchase to
destination.
Materials Management on Construction Projects

The construction industry is the most significant industry in the economy
and the successful measure with completion within time, budget- accordance with
specification and satisfaction of stakeholders (Nguyen et. al, 2004). Construction
is the process of physically erecting the project and putting construction
equipment, materials, supplies, supervision, and management necessary to
accomplish the work (Clough et ah, 2000). Construction projects are complex, with
many organizations involved such as clients or owners, architects, engineers,
contractors, suppliers and vendors. This includes the heterogeneous and often
complex process of producing unique, large and immovable products with a supply
of the resources (money, equipment, material, and labor).
The management of materials in construction projects is an important

function that significantly contributes to the success of a project. As projects grow
in scale and complexity, materials management becomes more difficult, often
requiring the use of appropriate tools and techniques to ensure, amongst other
things, that materials are delivered on time, stock levels are well managed, the
construction schedule is not compromised, and that wastage is minimized.
Materials management is especially problematic for large and complex projects,
where sophisticated tools and techniques are necessary. The management of
materials in complex construction projects needs adequate consideration due to
the various elements involved and the importance of the project.
Basic Components of Material Management

Value analysis
Purchasing
Material Handling
Store Keeping
Recycling/Disposal
PROCUREMENT
The term procurement encompasses a wide range of activities that includes
purchasing of equipment, materials, labor and services required for construction
and implementation of a project (Bame and Paulson. 1992). The objective of
procurement in materials management is to provide quality materials at the right
time and place, and at an agreed budget. Payne et. al (1996) stated that
procurement is about organizing the purchasing of materials and issuing delivery
schedules to suppliers and following-up. to make sure that suppliers deliver on
time.
A failure in the purchasing process or in overseeing and organizing the

buying functions as listed by Canter (1993) could result in:
Over-ordering of materials (wastage problems):
Over-payments for materials (inadequate administration procedures):
Loss of benefits (lack of skilled negotiating procedures): and
Lack of knowledge (when and where the best service / source might be
available at any particular time).
Procurement of materials begins with defining the requirements of the

project, followed by the selection of suppliers or subcontractors, and ends with the
delivery of materials at the destination (Kent. 1991). Purchasing materials from the
best source, at the right price and with timely delivery are challenges of many
construction companies. Therefore, a control strategy is needed during materials
procurement to achieve the targeted objectives. All requests for quotations and
purchases must be initiated through a properly authorised requisitioning procedure
normally controlled by the Project Manager. The Project Manager must ensure that
the purchasing of materials follows the standard requirement, time and quality.
MATERIALS MANAGEMENT PROBLEMS

There are many issues which contribute to poor materials management in
construction projects. Zakeri et al. (1996) suggested that waste, transport
difficulties, improper handling on site, misuse of the specification, lack of a proper
work plan, inappropriate materials delivery and excessive paperwork all adversely
affect materials management. Shortage of materials contributes to the cause of
delay in managing materials in the construction site. Late delivery of ordered
materials is also problematic in materials management.
Furthermore, the common issues relating to materials management are as follows:

Receiving materials before they are required, causing more inventory cost
and chances of deterioration in quality
Not receiving materials at the time of requirement, causing loss of
productivity
Incorrect materials take-off from drawings and design documents
Subsequent design changes
Damage / loss of items
Selection of type of contract for specific materials procurement
Vendor evaluation criteria
Piling up of inventory and controlling of the same
and Management of surplus materials
RECOMMENDATIONS
The following recommendations were given considering all sizes of construction
firms:
Top management should pay more attention towards material
management.
Use of software like MSP, PRIMAVERA. ERP, SAP. etc. should be done to
avoid manual errors in material management.
To avoid delay due to rejection of materials by quality control department or

seasonal problems. The construction firms should store extra materials like
steel, cement, etc. for emergency purpose.
To avoid communication problems, it is recommended that all the indents,
requests, notes; records should be kept in the written format.
To reduce the wastage due to improper material handling, material handling
equipment like conveyor belts, trolleys, cranes, etc. should be used.
CONCLUSION
Material management is an important management tool which will be very
useful in getting the right quality & right quantity of supplies at right time, having
good inventory control & adopting sound methods of condemnation & disposal will
improve the efficiency of the organization & also make the working atmosphere
healthy any type of organization, whether it is Private, Government ,Small
organization, Big organization and Household.
Even a common man must know the basics of material management so that
he can get the best of the available resources and make it a habit to adopt the
principles of material management in all our daily activities.
REFERENCES
Bame. D.S. and Paulson. B.C. (1992) Professional construction
management: including CM, design-construct, andgeneral contracting. MC
GrawHill: London.
Canter. MR. (1993) Resource Mnagement for Construction an Integrated
Approach. Macmillan: London.
Clough. R.H.. Sears. G.A. and Sears. S.K. (2000) Construction Project
Management. John Wiley & Sons: USA.
Kent. T. (1991) In Guidelines for the Management ofMajor Construction
Projects, NEDC. HMSO: London.
Nguyen, L.D., Ogunlana, S.O. and Lan, D.T.X. (2004) "A Study on Project
Success Factors in Large Construction Projects in Vietnam" Engineering
Construction and Architectural Management, Vol. 11, No. 6, pp. 404-413.
Payne. AC. Chelsom. J.V. and Reavill. L.R.P (1996) Management for
Engineers. John Wiley & Sons: England.
Zakeri. M. Olomolaiye. P.- Holt. G.D. and Harris. F.C. (1996) "A Survey of
Constraints on Iranian
Construction Operatives' Productivity" Construction Management and
Economics, Vol. 14, No. 5, pp. 41 7-426.

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CASESTUDY4:MATERIALMANAGEMENT 61

PROCUREMENT PRINCIPLE IN MATERIAL MANAGEMENT FOR

a materials management department in any organization to support the

An important problem that adversely affects the performance of

OBJECTIVES OF THE STUDY

Material management is a scientific technique, concerned with Planning,

Materials Management on Construction Projects

The management of materials in construction projects is an important

Basic Components of Material Management

A failure in the purchasing process or in overseeing and organizing the

Procurement of materials begins with defining the requirements of the

MATERIALS MANAGEMENT PROBLEMS

Furthermore, the common issues relating to materials management are as follows:

To avoid delay due to rejection of materials by quality control department or

Bame. D.S. and Paulson. B.C. (1992) Professional construction

management: including CM, design-construct, andgeneral contracting. MC

Canter. MR. (1993) Resource Mnagement for Construction an Integrated

Approach. Macmillan: London.

Management. John Wiley & Sons: USA.

Kent. T. (1991) In Guidelines for the Management ofMajor Construction

Projects, NEDC. HMSO: London.

Success Factors in Large Construction Projects in Vietnam" Engineering

Construction and Architectural Management, Vol. 11, No. 6, pp. 404-413.

Engineers. John Wiley & Sons: England.

Construction Operatives' Productivity" Construction Management and

Economics, Vol. 14, No. 5, pp. 41 7-426.

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