While materials count for a considerable amount of construction costs, the way materials are managed seems to be improvised rather than approached methodically. In the construction industry, one of the common challenges people face is issues with their inventory and onsite material management. Management of materials have over the years been a great problem to most firms in the construction industry. In construction project operations, there is always a tendency of mismanagement of materials by construction firms. As the size of the contract increases, so does the scale of activities on materials management. Changing procedures, installing and using new information technology and elevating managerial practices to the point where decision models are in everyday use have been known to be stressful to organizations that pursue such improvements. In many cases, the inability of the organization to embrace such changes dooms the improvement initiatives.
Purpose of Material Management
- To gain economy in purchasing
- To satisfy demand during period of replenishment
- To carry reserve stock to avoid stock out
- To stabilize fluctuations in consumption
- To provide a reasonable level of client services
- To have adequate materials on hand when needed
- To pay the lowest possible prices, consistent with quality and value requirement for purchased materials
- To minimize inventory investment
- To operate efficiently
It is common for the scope of a project to change while it is coming together, which means the bidding process can be affected. A good example of this is if the property owner decides they want to change the materials to something with higher quality, without the overall budget of the project being changed. The general contractor will usually agree to this and then work with their onsite specialty contractors, like the electrical contractors, to determine what accommodations can be made and how to make them. The electrical contractor is usually one of the last contractors to be brought into the project, and if all of the details of the project have already been determined before they are brought it, they may be asked to lower their bid to accommodate the situation.
This situation can be avoided by simply maintaining communication and involvement among all of the contractors throughout the project. Bringing in all the contractors in the beginning, including the electrical contractor, will help to avoid this problem. The contractors can all provide more realistic costs and timelines to the owner, and they will be able to help the general contractor determine what accommodations can truly be made to the project in order to make the changes the owner is wanting. Figure 1 below represents the ideal procurement cycle for a typical construction project.
In general, material purchasing falls into two categories:
- Major Materials: materials that are specific to the project, and include things like switchgears, lighting fixtures, and alarm systems
- Miscellaneous Materials and Commodities: off-the-shelf items like cables, fittings, conduits, ties, and straps.
Many contractors will order materials daily as needed, collecting the lists that each area needs for the next day. The problem with this is that the materials may not be there before the workers arrive in the morning, so they may be stuck waiting for part of the day until the order arrives on site. A simple solution to this is to determine what will be needed in advance, then scheduling everything to arrive a day before it is actually needed. Many distributors are willing to work with you to break up the project into a schedule of shipments based on what is needed when.
After your supplier has been selected and your materials ordered comes the waiting process. Your contractor will have to develop a system for receiving and tracking your materials as they begin to arrive. Many companies do this by creating a material requisition schedule that specifies the different materials and quantities for each of them, along with the set dates they should all arrive. To avoid having a surplus of materials, many contractors will only order 80 percent of what is estimated as needed for the project, then order the rest when it is closer to completion, when they have a better idea on what is needed.
Customarily, materials will be delivered directly to the job site, but sometimes it is not feasible due to storage limitations; in these cases, the material is sent to the contractor’s warehouse or other storage location. However, if something is not needed right away, it may also be stored in the warehouse instead of onsite for space or security reasons. Sending everything to a warehouse is also common if the contractor is planning on having everything prefabricated before bringing it to the job site. Once you have determined when and where everything is supposed to be delivered, things may become complicated, and you can end up with delays, storage problems, unexpected costs, and more. Some of the complications you may encounter include:
- A miscommunication may lead to materials not arriving at the time needed
- Delivering a material to the wrong location, for instance, sending it to the job site instead of the warehouse, or vice versa
- Receiving the wrong quantity. Too many materials can lead to storage problems, while not getting enough can lead to being held up. Waiting for an important material that holds up construction work until it arrives
Points to be Considered While Purchasing Materials
- Proper specification
- Invite quotations from reputed firms
- Comparison of offers based on basic price, freight & insurance, taxes and levies
- Quantity & payment discounts
- Payment terms
- Delivery period, guarantee
- Vendor reputation (reliability, technical capabilities, convenience, availability, after-sales service, sales assistance)
- Short listing for better negotiation terms
- Seek order acknowledgement
Material tracking, inventory, and storage often lead to challenges on the job site. If there are too many people involved in the process, a simple miscommunication can lead to materials being misplaced, causing things to be held up or reordered. Keeping track of your materials is a huge challenge in construction, especially if it is a large job. A good tracking system is also important for helping minimize theft and loss, and it will help you find something quickly and easily. An easy solution is to implement an electronic tracking system. Automated systems with bar codes are popular, as you only have to scan something to mark that it has been received or removed from the site. It also gives a logical way to organize your inventory, so you know exactly which shelf something is on. There are many types of electronic systems and you can determine which one is the best fit for you. Some systems can even be set up to automatically order something for you when your inventory gets low or you run out of it.
Functions of Inventory Control
- To provide maximum supply service, consistent with maximum efficiency & optimum investment.
- To provide a cushion between forecasted & actual demand for a material
Keep in mind that every job will have different needs for its material management, you will need to make some adjustments for each project. But, if you have a solid system in place, you will have to make only slight changes from project to project. There are countless systems that will help you manage your materials more efficiently, and help you avoid losses and damage; you just need to find the right one that works for your company.
Points to be Considered for Effective Storage of Materials
- Stores must be of adequate space
- Materials must be stored in an appropriate place and in a correct way
- Group-wise & alphabetical arrangement helps in quick identification & retrieval
- First-in, first-out principle to be followed
- Monitor expiry date
- Follow two bin or double shelf system, to avoid stock outs
- Reserve bin should contain stock that will cover lead time and a small safety stock
- Assign unique project number schemas in the event multiple projects are being managed
- Defined part number catalogues must be used for managing tagged equipment, sub-components, commodities and bulk material to ensure that resource names in the MMS system match construction drawings
- Material descriptions, unit of measure and material classifications must be descriptive and accurate to ensure all material can be found quickly and efficiently
- Project controls cost coding structure must be in place at the beginning of the project to avoid confusion later on in the project
- Construction Work Packages must be finalized prior to the start of construction
- Material storage locations must be clearly defined and marked (warehouses, laydown yards, module yards, field and vendor shops)
- Key shipping dates must be accurate to ensure proper equipment is available to off-load material
- Quality requirements, hold points, inspections, and certifications must be tracked digitally
- Preservation requirements and record keeping must be kept up to date
- Logistics requirements and documen- tation should be readily available
- Material acceptance and release from storage forms and processes must be followed
- Implementing site materials manage- ment processes and procedures for inventory counts and receiving
- Automating Integration with Project ERP and Engineering systems will ensure proper data integrity in the System
Material management is an important management tool for getting the right quality and quantity of supplies at the right time. A good inventory control and sound methods of condemnation and disposal will improve the efficiency of the organization and also make the working atmosphere healthy in any type of organization, whether private, government, small or big organization, and household. Everyone should know the basics of material management so that he/she can get the best of available resources and adopt the principles of material management in all the daily activities.