Professional Documents
Culture Documents
Research Paper - B.B.Chathuranga Fernando PDF
Research Paper - B.B.Chathuranga Fernando PDF
B.B.Chathuranga Fernando
Abstract: The efficient and effective supply chain management (SCM) in the
construction industry is hindered by the many factors including the
characteristics of the industry itself. Though the studies have presented the
advantages of SCM implementation of the industry, there is a paucity of studies
carried out on the lower tiers of the supply chain where in between of main
contractor and sub-contractors/suppliers. The purpose of this paper is to extend
on to identifying the barriers and its impact on Sri Lankan context and give
insight on areas need to be improved. This study sets to identify the areas that
most impacting by more definitive approach which can be analysed with
quantitative data thus the focused questionnaire survey was used to collect data
which formed by the base of literature survey carried out. Discouragingly, it was
found that SCM initiatives are failing and facing the negative effects but
reluctant to adopt a collaborative management due to the competitiveness in the
industry although realizing the potential. This study highlights the need for
improved collaboration between the parties in lower tiers and greater degree of
interaction from the main contractor for collective advantage.
I NTRODUCTION
LITERATURE REVIEW
This chapter describes the past studies construction industry being dis from
that have been carried out in relevance to manufacturing as technology transferring is
supply chain in construction between main not possible to cater to the unique needs.
contractor party and subcontractors, though
there is a lack of direct researches been done The Ballard and Howell (1998)
on this particular scope in construction field, contended that parts and components
the understanding of how construction supply compatible for manufacturing and assembling,
chain diversified itself from other should adopt lean construction techniques
manufacturing, relationships in supply chain being used in manufacturing for the varying
of construction, management concepts dynamics in the construction to “minimize the
developed and identified enabler’s and peculiarities”
barriers for the development of this paper’s Focusing on to the subject matter on
scope on the relationship between main and supply chain of lower tiers which Fullford and
sub-contractors. Standing states in spite of the fact that this
separation initially happened due to highly
Construction Supply Chain – Brief
diversified tasks at hand and subcontracting
Characteristic
was formed as an adaptable way of managing
It is commonly accepted that these but it has brought about complex
construction industry is different from the relationships in legal and contractually and
others and need to be provided unique discontinuity among the teams (Fullford and
solutions and concepts for achieving improved Standing, 2014).
performance and efficiency. Koskela(1992)
states that traditionally there are common Numbers of studies have underlined
peculiarities of construction, as unique the requirement of fundamentally unique and
product is delivered, temporary organizations radically different ways to deal with these
formed, production is on site mostly affects supply chain relationships in order to achieve
negatively for achieving efficiency compared the “customer delight” and limit the
to manufacturing. disturbance in the relationships of
stakeholders (Cox, A. and Ireland, P., 2002).
Dubois and Gadde (2000) states that in Also states that there is lack of well
buildings, a general contractor who manages documented examples for successful supply
the project only executes a small portion of chain management on lower tiers.
the “product” by its own construction
facilities. A considerably larger portion about Figure 1 shows the basic tiers in
75% or above of the total value is completed construction supply chain as per the
with the help of suppliers and subcontractors. publication by Pryke (Pryke, 2009).
Gadde also imply that advances in the industry
is often relates to elimination of these said
peculiarities with such as developments of
pre-fabrication to provide uniform products
and industrialization to production. And those
are the core means of the argument that
motivated by the profit but the behaviour of 2. Management of the dynamics between the
main contractor’s opportunism, transfers the suppliers/subcontractors which are
risk to the subcontractor’s in lower tiers, immediately connected.
hinders the collaborative trust between the 3. Management of organizations/business
parties. chains with which the organization has no
legally binding relationships.
Supply Chain Management Concepts 4. Management of organization network that
Due to these identified sluggishness is associated with each other in providing
and problematic areas of this collaboration end product to customers.
between stakeholders of construction projects, The author further expresses that
several government funded reports and reports management of these proposed levels are vital
of research work have been produced on forming the supply network as they an
assessing and suggesting the procedures to
integral part.
upgrade the productivity within the
construction industry. From the beginning of Dianty, Briscoe & Millet (2001a) with
90s, there has been expanded adaptation and Pryke (2009) expresses the concept of
interest on the theories of supply chain construction industry supply chain
management to understand and describe the management as one of the inter-related
lacks and to suggest answers to increase the connection within the organizations are
coordination between subcontractors and implanted with. Further emphasizes on the
suppliers. treating these approaches as a wholly in order
to enhance the execution within the
The Latham report (Latham, 1994) and construction industry.
Egan (Egan, 1998) reports evaluated the and
criticized the practice that has been carried Along with supply chain management
over on the time for loosely connected supply concepts Porter (1985) introduces the “Value
chain in the industry made the move within Chain” which is focuses on the final delivery
the UK for improved and efficient supply value which accounts to all the activities
chain integration between all the connected related, inside and outside of an organization
parties of a project. Dubbois and Gadde (Weele, 2010). Afterwards the management
(2002) made suggestions for integrated supply objectives have been redefined to be focused
chain implementation using collaborative on to the organization basis on its limited
agreements between the parties involve as domain in order to deliver better value with
such contractor, client, material suppliers, competitive advantage (Green, et al., 2005).
labor suppliers. This movement is confirmed by the Lambert
and Cooper (2000) along with the publishment
Harland (1996) introduces four by King and Pitt (2009), states that
categories/levels on supply chain management organizations do not operates as a single
concept; structure but in a “supply chain vs supply
1. Management of internal integration of a chain” competition.
firm’s internal supply chain. Holti et al. (2000) discuss a managing
approach that enhance and improve the
collaboration and integration by providing the
support required for the supply chain actors on interest. Segerstedt and Oloffson (2010)
lower tiers. One of the key concepts is to further adds that due to the communication
make room for supply chain actors to fully problems, the understanding and flow of the
engage and make contribution to the aggregate information such as clear idea of client’s
the value of the final product delivered (Holti, demands from the main contractor to
et al., 2000). This approach is considered subcontractor is affected. Further highlighted
important in regards to the characteristics of the censure of information flow on costing and
vaguely divided, risky and uncertain and large risk involved.
number of stakeholders involved in
construction supply chains, requires a leading Latham (1994) in his report believes
role to coordinate and process these inter and expresses that the main contractor party
has the stronger driving power on the project
connected network.
management part along with the control of the
Established Facts quality of its subcontractor’s works.
Pryke (2009) conclude that with Wong and Fung (1999) states that
improved relationships and involvement of subcontractors or subcontracting is used by
supply chain actors which in this paper’s focus the main contractors to reduce the
of subcontractor’s to a more integrated work commitment and risk of owning plants and
environment and to increase the focus on the workers to be employed as permanent basis.
final product would enhance the competitive In fact they further identified that
advantage with better trusting relationships subcontractors are being used as a buffer for
need to be the objective of supply chain the main contractors and unpredictable
management initiatives. workloads. Ganesan (1996) further states the
fact that general contractor’s obligation of
As mentioned before and further oversee the works, performance and
clarified by Gann (2000), the traditional compliance of its subcontractor’s to meet with
approach to subcontracting, the main the client demands. This fact is due to that
contractors often withhold the required details generally the subcontractors are not well
and information such as necessary for established with likes of policies and
understanding of the risk. These practices lead procedures and also financially thus the
to a hindered collaboration and lose of trust guarantee is little to no on the perspectives of
for a long lasting relationship which points out quality of work and they meeting the
as one of the main objectives of supply chain performance needed without the help of main
management (Edkins, 2009). Broft, Badi & contractor.
Pryke (2015) findings further establishes that
the distrust running within the industry supply In essence of these researches
chain is caused by this traditional procurement conducted on Supply Chain Management and
of opportunist ways adopted that has little to barriers of its implementation is developed
no transparency along with the fear of upon the base of integration of all the actors
uncertainty. Authors further points out that (subcontractors/suppliers) and enabling of
due to the existing compartmentalization, the information and knowledge sharing (Holti et
sound communication between the main al., 2000; Christoper, 2005; Martinsuo &
contractor and sub-contractor is being Ahola, 2010) thus reducing the above
constricted and this leads to conflicts of discussed uncertainities and risks.
Respondent Details 35
54%
30 48% 48%
The targeted professions have 45%
25 39%
cooperated successfully and resulted in 34% 34% 32%
20 30%
25% 27%
following factions on profession wise and 15 20%
23% 23% 21%
over 90% of the respondents over 2 years of 10 14%
7% 5%
experience. 5 2% 4%
0%
0
Director/ General
Manager/ Asis.
1
6 General Manager
44 4
Project Manager /
9 Deputy Project
Manager
results are moving towards the rare side of the mentioned factors on employing for the works
scale on cost and risk related information. likes of pre qualifications thus lead to the
Thus coveying of the idea that the contractors misalignments and quality, payment issues
are keen on sharing these information as it which affects the delivery of the project and
may lead to reduction of profits established by rate of misalignment can be interpreted as
the literature review facts. having communication issues present within
the parties. Thus the collected data represent
The study into the status of integration though there is professionals are known the
followed by the negative impacts these importancy of the integration, it is hindered by
professionals have faced during their the behaviors of profit conscious mind set and
experience in order to determine that this project delivery is largely affected by lack of
distance of integration, literature has sharing proper information such as work
established has affected the industry and scheduled, manpower schedules dow the
following results were received. stream.
Very Often Often Neutral Rarely Very Rarely Barriers of implementing integrated supply
chain
13%
Quality issues and 39% Following up to the findings on pilot
45%
mislignment with 4% survey carried out, second section of survey
specification 0%
focusses on identifying what affects on
Lack of 50%
manpower/material due 30% successful implementation of integrated
7%
to not providing 9% systems in these lower tiers and to achieve
programmes and… 4%
more focused results, already identified
5%
46% barriers were presented to the sample and
38%
Payment issues due to no 11% following results received on the basis of
involvement at early stage 0%
general character of construction industry also
2% on focusing to the perspective of contractor.
Delays of work/Non- 59%
30%
compliances due to not 7%
providing drawings 2% Foremost the identified barriers with
regards to the construction industry was
0 10 20 30 40
presented and questions can be reviewed on
Figure 5Negative Impacts Experienced the annexure. From received responses, over
It can be identified that almost 50% or 85% of all agreed with the identified barriers
more of the total is facing the negative are impacting on the industry in negative ways
impacts often and significantly the lack of in SCM(supply chain management) and more
manpower/material when in need is having the significantly highlighted the unique product
80% for the often scale is alarming as it shows delivery that requires different skills on each
the importancy of integration on project separately thus vast number of
deciding/scheduling the works for the connecting supply chains
continuity to achieve the targets. And these (manpower/material) puts more weight on
lacking of manpower/material from already implementing integration.
established parties lead to on search for
alternatives thus disregarding the previously
comments were received on negative side that successful supply chain management. (Pryke,
backing up from sharing the cost data and 2012)
risks to keep the market which essentially
means on maximizing the profit.
where all stakeholders taken in and shared for facing the negative impacts because of the
collaborative advantage. More significantly lacking of this integration, the ststus of the
the unique nature of the industry and high integration is not at optimal level. The
market competitiveness has driven the main findings also leads to the concluding the
contractors to act more individually for their industry is facing more impacting barriers
advanatage thus very reluctant on sharing the than enablers for implementation and
details of costs and risk factors. Thus the stuggling due to the nature of the industry and
character of industry itself being negatively its attribution to the contractors itself for
impacting to the aim of SCM, irrevocably it negative behaviors. The professionals are in
penetrates in to the character of main align with the key aspects that need to be
contractors too. It is being brught into the light improved as of recommendations to
by the literature and concluded by the majority implementation of successful integrated
of respondants that the listed characteristic of environment.
contractor impacts negatively in SCM
implementations. Taken the consideration of Research Limitations
practical scenario, all are in business to make It needs to be noted this study findings
profits thus when industry itself not have limitations that is incorporated into the
supporting, it is inevitable that contractors selected research methodology of
seeks to make most out of what it can be questionnaire survey and valid sample size is
achieved. only of 56 nos of only main contractor’s
On to development of professions from 15 randomly selected
recommendations, the respondents have projects in Colombo, Sri Lanka and only the
positively responded to the listed options of opinion was gathered from the main
the survey and concludes the need of contractor. A study of supply chain are having
implementation of integrated management many more variables and hard to define in a
system in lower tiers for the more efficient structure thus this study would benefit more in
and increased value in delivery despite the order to cover broader perspectives from other
barriers that is presented. One of key research methods like interviews of the same
managing concepts that can be employed was incorporating more professionals.
published by the (Holti, et al., 2000) The Further Research
Handbook of Supply Chain Management
describes seven principles that need to be The further research can be carried out
employed for successful SCM. And the use of to gather the data from the perspective of
technology need to be increased for improved subcontractors/suppliers in lower tier as a
communication and world is adopting the extension of this study and developing of
cloud based platforms, BIM etc. but Sri SCM framework model based on published
Lankan context is lagging in these SCM concepts eg: (Holti, et al., 2000) Seven
departments. Principles of SCM in Organisations in order to
establish best practices in Sri Lankan context
Overall the objectives of this study for better and improved growth of
was achieved which concludes that the though construction companies.
the industry/professionals acknowledges the
need of integrated model in lower tiers and
Broft, R., Badi, S. & Pryke, S., 2015. Towards Ganesan, S., Hall, G. & Y.H.Chiang, 1996.
Supply Chain Maturity in Construction. Built Construction in Hong Kong. Aldershot, Avebury:
Environment Project and Asset Management, s.n.
Volume Vol. 6 No. 2, pp. 190-195. Gann, D., 2000. Building Innovation:Complex
Cao, M. & Zhang, Q., 2011. Supply chain Constructs in a Changing World, London: Thomas
collaboration:impact on collaborative advantage Telford Ltd..
and firm performance. Journal of Management Green, S., Fernie, S. & Weller, S., 2005. Making
Engineering, Volume Vol. 29 No.03, pp. 163-180. sense pf supply chain management:a comparative
Christoper, M., 2005. Logistics and Supply Chain study of aerospace and construction. Construction
Management:Creating Value Adding Netwroks. Management and Economics, Volume Vol 23 No.
Harlow: Pearson Education. 6, pp. 579-593.
Cox, A. and Ireland, P., 2002. Managing Harland, C., 1996. Supply Chain Management:
Construction Supply Chains: the common sense Relationships, chains and Networks. British
approach. Engineering, Construction and Journal of Management, Volume Vol. 7 No.S1, pp.
Architectural Management, Volume Vol. 9, Nos 63-80.
5/6, pp. 409-418. Holti, R., Nicolini, D. & Smalley, M., 2000. The
Dainty, A., Briscoe, G. & Millet, S., 2001a. New Handbook of Supply Chain Management. London:
Perspectives on Construction Supply Chain Travistock Institute.
Integration. Supply chain Management: An King, A. & Pitt, M., 2009. Supply Chain
International Journal, Volume Vol. 6 No.4, pp. Management: a main contractor's perspective. In:
163-172. In Pryke, S., Construction Supply Chain
Dubois, A. and Gadde, L., 2002. The construction Management:Concepts and case Studies. Oxford:
as a loosely coupled system: implications for Wiley-Blackwell, pp. 182-198.
productivity and innovation. Construction Koskela, L., 1992. Application of the new
Management and Economics, Volume Vol.20 production philosophy to construction, Palo
No.7, pp. 621-631. Alto,CA: s.n.
Edkins, A., 2009. Risk Management and the Lambert, D. & Cooper, M., 2000. Issues in Supply
Supply Chain. In: In Pryke, S., Construction Supply Chain Management. Industrial Marketing
Chain management:Concepts and Case Studies. Management, Volume Vol. 29 No. 1, pp. 65-83.
London: Wiley-Blackwell, pp. 115-136.
Latham, S. M., 1994. Constructing the Team,
Egan, J., 1998. Rethinking Construction, London: Latham Report, London: s.n.
Department of the Environment, Transport and
the Regions. London, K. & Kenly, R., 2001. An Industrial
Organization Economic Supply Chain Approach for
Fullford, R. and Standing, C., 2014. Construction the Construction Industry: A Review. Construction
Industry Productivity and Potential for Management and Economica, Volume Vol. 19, pp.
Collaborative Practice. International journal of 777-788.
Martinsuo, M. & Ahola, T., 2010. Supplier Journal of Engineering, Project & Production
integration in complex delivery Management, Volume Vol. 04 No.01, pp. 36-50.
projects:comparison between different buyer
supllier relationships. The International Journal of Wong, A. & Fung, P., 1999. Total Quality
Management in the Construction industry in Hong
Project Management, Volume Vol. 28 No. 2, pp.
107-116. Kong:A Supply Chain Management Perspective.
Total Quality Management, Volume Vol. 10 No.2,
Mbachu, J., 2008. Conceptual framework for the pp. 199-208.
assessment of subcontractor's eligibility and
performance in construction industry.
Construction Management and Economics,
Volume Vol. 26 No.05, pp. 471-484.