INDIVIDUAL/GROUP

ASSIGNMENT COVER SHEET

UTS: MANAGEMENT DISCIPLIINE GROUP

SUBJECT NUMBER: 21877 SUBJECT NAME: Strategic Procurement

Student first name: Nyan Wai

Pyae Thinzar
Eden
Nidhi

Student last name: Lin

Mone
Dsouza
Patil

Student ID: 13642083

13729165
13796418
13717970

Student’s email address: 13642083@student.uts.edu.au

13729165@student.uts.edu.au
EdenLloyd.Dsouza@student.uts.edu.au
nidhi.v.patil@student.uts.edu.au

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Declaration: I declare that this assignment is my individual work. I have not copied from any other
student’s work or from any other source except where due acknowledgment is made explicitly in the text,
nor has any part been written for me by another person.

If this assignment is submitted after the due date I understand that it will incur a penalty for lateness
unless I have previously had an extension of time approved and have attached the written confirmation of
this extension.
Signature of Student: Nyan/ Pyae/ Eden/ Nidhl
Date: 18th
May 2021

DUE DATE: 18th May 2021

Introduction

Construction, demolition of old buildings and factories, reconstruction of new facilities, and
reconstruction or rehabilitation of houses, buildings, and other infrastructures have become
the priority of the constitution industry. In addition, the building sector encompasses a wide
range of activities, from site planning and surveying to interior design and serviceability
enhancements such as painting and polishing. Furthermore, the construction industry is
critical for policymakers in emerging and advanced countries because it can produce many
jobs, encourage investment, and provide solutions to socioeconomic, environmental, and
power problems. Further to that, the construction industry is inextricably tied to various other
industries, implying that it affects GDP and economic growth that extends well beyond the
direct contribution of construction activities. Since the construction industry contributes more
than 5% of US GDP and 8% of GDP in Australia, it must respond to new innovative trends
such as changes, automatic transmission, and lower labor costs. However, the construction
industry had been run by many laborers with a heavy dependence on significant mechanical
technology and old-fashioned processes and business models; thus, the construction industry
competitiveness had been stagnant, and they did not see enough of the results they wanted.
Procurement has progressed from some quantitative structure-activity position to highly
strategic (Bailey et al. 2016). Even when it has such a powerful influence on crucial business
decisions, it will embrace a holistic management perspective to manage better risk's political,
personal, and environmental implications.

Developing investigation suggests that the construction industry should understand a

connection between procurement's position and distribution stability to risk management. As
business aspects of sustainability could not always be applied to a specific, procurement
policies should create competitive effects on environmental concerns and analyze risks
effectively. Furthermore, the threats faced by the supply chain's prolonged existence must be
considered. According to the study, the majority of a business sustainability burden currently
exists beyond its own actual corporate sense (Freise & Seuring 2015), with current
revelations like Rana Plaza and Foxconn highlighting the significance of vendor dangers. The
report's purpose is to provide the organization comprehensive solutions for mitigating
sustainability-related procurement risks. The practical solution is a hybrid of AHP and QFD
that ranks the weights of defined sustainability risk criteria based on the policy maker's
responses. The risk parameters are derived from an analysis of relevant literature, which is
the next step. Because of its customer-driven essence, a hybrid AHP-QFD solution is more
critical to our goal (Lam & Dai 2014). The results of this experiment are then objectively
explored using fundamental competitive recruitment theories, with a recommendation with
institutional consequences in the framework of sustainability.

LITERATURE REVIEW
Human life is fraught with risk, and it is common to all human endeavors. The existence of
challenges and uncertainty involved in project planning and execution plays a major role in
all phases of project failure (Nasirzadeh, Afshar, & Khanzadi, 2008). Nonetheless, due to the
challenges of the work associated with the construction operations, they are more prone to
danger. Project time and cost overruns are a normal occurrence in the construction sector, and
they are considered a worldwide occurrence (Mahamid, 2014; Sambasivan & Soon, 2007).
Because of this ambiguity, the aspect of the risk responsible for construction is often more
diverse and ranges in degree (Dey, 2004). Several scholars have attempted to describe risk in
a variety of ways; in most cases, these concepts were adapted to the goals of the initiatives
they were working on at the time.
Drouin, Besner, Besner, and Hobbs (2012) use current risk control practices to explain the
challenge of coping with ill-defined and unpredictable programs. Rasool, Franck, Denys, and
Halidou (2012) combine Risk Breakdown Structure (RBS) with Multi-criteria Judgment
Approach to support RBS as a framework for assessing risks associated with the construction
project in France. Xu et al. (2012) created a VBA-based risk assessment model to effectively
resolve the most high - risk areas in a PPP project while minimizing human and statistical
failures. Fuzzy group TOPSIS was used by Makui, Mojtahedi, and Mousavi (2010) for risk
management assessment and interpretation focused on making decisions. Mills (2001)
undertook studies in Australia to demonstrate the importance of systemic risk assessment and
to illustrate the risks of risk assessment methods with inconsistent hypotheses.
Risk has an influence or effect on any construction process, according to various findings.
The consequences can be calculated using a variety of words, including monetary loss,
collateral harm, personal injuries, and even a mixture of both of these (Abassi et al., 2005).
Nonetheless, the emphasis exerted on integrated management in an entity influences the
concept of risk (Simu, 2005). As a result, the infrastructure industry is vulnerable to risk, with
construction delay, cost overruns, and failure to reach quality requirements. The need for a
more efficient risk management strategy is necessitated by the burden on project delay and
expense, the need for better results in the construction sector, and the rising legal agreements.
In an unpredictable world, construction operations including such planning, architecture, and
growth are vulnerable to certain causes, according to (Johnson, 2008). Construction programs
are thus carried out in an atmosphere characterized by differing levels of risk and
contingencies, which may arise from established or unknown circumstances (Smith et.al,
2006). Chance cases of situations where the probability distribution is unknown are examples
of such contingency plans.
 
QFD MODEL
Quality function deployment (QFD) is a planning and coordination mechanism that helps to
organize the product production cycle (Cohen, 1995). It is not only motivated by technical
advances, but also by what consumers want (Bossert, 1991). Yoji Akao, a Japanese scientist,
invented QFD in the late 1960s. It was first used to ensure customer loyalty at Mitsubishi
Kobe Shipyards in 1972. (Akao, 1990). Ford, Toyota, General Motors, Hewlett-Packard,
Kodak, IBM, Procter and Gamble, and Xerox are only a few of the world's most well-known
businesses that use QFD (Griffin and Hauser, 1993). Despite the fact that QFD has received a
lot of publicity, it may not have always converted into efficient functioning. When used
incorrectly, it will raise work without providing any advantages (Akao, 1990). During the
introduction of QFD, a variety of issues may arise. QFD is often paired with other
methodologies to maximize performance, and it has been successfully applied in many
multicriteria decision making trials over the years, together with the analytical hierarchical
method (AHP). (Kwong & Bai 2003, Bhattacharya et al. 2005, Chowdhury & Quaddus 2015,
Chowdhury & Quaddus 2015). The Analytic Hierarchy Process (AHP), where described by
Saaty, is "a method of measurement based on correlation coefficients and expert decisions to
extract structure and management" (Saaty 2008). 
The advantages of using this form of decision model are immense. Modeling attempts to
organize the nuances and unknowns that come with a decision-making dilemma into a
coherent structure that can be thoroughly examined. One of the most significant advantages
of using a target programming strategy to decision making is that it consistently produces
feedback that aids in improving analytical decision making. A mathematical model can help
add order to confusion in certain cases. Due to the extreme elaborate interrelationships within
decisions and voluminous details, a condition can be really complicated that the subconscious
person may be unable to internalize all of the important factors without the assistance of a
decision model.
 
 
METHODOLOGY
The first step of QFD using the HoQ system is to classify the most significant supply chain
threats correctly. The decision-maker was expected to indicate the company's procurement
challenges and management's plans for addressing them. Just one primary stakeholder was
considered for this study. It is worth noting that existing research in this area often considers
data from various key stakeholders to determine credibility (Chowdhury & Quaddus 2015). A
study of relevant literature discovered additional problems. Economic vulnerabilities, such as
rising stakeholder quality standards, are a clear emerging trend in many reports (Song et al.,
2017; Varzandeh et al., 2014). Environmental disruptions are now becoming an increasing
point of concern for many industrial firms, according to a study, with new rules and policies
being applied around the chain (Song et al., 2017). Furthermore, the Rana Plaza and other
controversies have shed light on the social trade-offs made by producers in the pursuit of
short-term economic gains. Working practices and labor regulations have been tightened due
to these accidents, which directly affect manufacturers. Based on these current threats, the
interview yielded the ten most relevant tactics outlined in Table.

RISK FOR THE CONSTRUCTION INDUSTRY

 
Sustainability Risk Risk Definition
Criteria weight

Environment R1 0.085 Safety risk: noisy surrounding, permit of utilising toxic chemicals;

water, waste, energy consumption

Economic R2 0.06 Financial risk: Clients' late payments, cash flow issues, inflation,
market fluctuation, variance, and so on.

  R3 0.07 Time risks: Plan deadlines are tight, and there isn't enough time to
plan a bid.

  R4 0.17 Design and technical risk: Plan, procedure, products, facilities, and
site-related risks

  R5 0.125 Contractual risk: Provisions that are ambiguous, misinterpretation

  R6 0.15 Political and regulation risk: Politics in flux, legislative shifts,

collusion, and expropriation

  R7 0.065 Disruption of labour, rising wages, and the ability of other countries
to deliver goods at a lower cost

  R8 0.125 To remain successful, the technology push necessitates modern

equipment and information systems.

  R9 0.065 Stakeholders' quality aspirations are rising.

Social R10 0.085 social policy and stickers (workplace safety, human rights, working
hours, underage labor)

 STRATEGIES FOR CONSTRUCTION INDUSTRY

This report on supply chain resilience highlights the significance of objectively assessing the
impact and likely consequences of any possible risk to determine the best mitigation
approach(Giannakis & Papadopoulos (2016)). There is a distinct difference between regular
supply chain risk and supply chain sustainability threats(Hoffman et al., 2014). As a result,
experiments related to supply chain risk and weaknesses were considered to arrive at
appropriate solutions, as described in the literature review. The challenges found by the
decision-maker were analyzed, and the implications on stakeholders were investigated using
the methodology developed by Hoffman et al. (2014), participating in an interdisciplinary
framework to risk assessment. The methods in following Table were addressed, and the costs
of implementing them were calculated. As a result, the outcome identified a budget of $65
million to execute risk prevention measures.

 
Strateg Definition Implementation costs
y (in million $)

St1 The company  investing in the new strategy and logical methods to apply for the 12
commitment of procurement management in the building industry.

St2 Fairtrade label (Ethical Sourced), collaboration with businesses to ensure quality. 5.5
as well as decent pay in order to shorten working hours

St3 The company will investment in new trendy technology for the information 7
management and environmental sustainability process. (undertake EPC to projects)

St4 Providing staff instruction on environmental sustainability to raise awareness. For 4.5
example, how to reduce construction materials consumption, reduce maintenance
costs

St5 Conceptual model contract for shipping/freight, batch distribution optimization and 11.5
building construction projects

St6 Delivering supervisor preparation in order to improve occupational safety, shift 12.5
rotations, and timekeeping.

St7 Construction of workers apartments near the plant to improve work quality and 6
comfort, with contractor support.

St8 Switch to several supply sources 7

St9 When goals are exceeded, implement a compensation scheme for workers (increase 8.6
employee efficiency)

St10 Redesigning, build Construction projects, and private initiatives in the construction 3.8
processes to improve the quality and performance of the construction organization
USING AHP BY DETERMINING AI AND RI
Risk management is an important component of sustainable risk assessments. The widely
used 1-3-9 scoring scheme for QFD analysis was used. This grading scale, which ranges from
1 (very low) to 9 (very high), has the advantage of providing more distinct scores for strong
and weak rankings (Iranmanesh & Salimi 2003). The AI and RI reflect the relative and
absolute value of the AHP-derived strategies. Correlations between approaches are
established using the HOWs to create interactions in practical systems (Chowdhury &
Quaddus 2015), resulting in cost savings for the enterprise. Following that, the policy maker
was contacted for information on the budget allotted for plan execution. After the decision
maker has optimized and ranked the related methods, the next move is to investigate
connections between them in order to establish correlations. The decision-maker was required
to choose the tactics that, in their view, should be implemented at the same time to save
money.

Decision Variables

ANALYSIS AND RESULTS 

The analysis comes after we have identified strategies to mitigate those risks. In order to
analytically quantify which of the ten strategies are suited to best mitigate the risk within the
set budget excel solver has been used to come up with a decision. The risks and strategies are
mentioned in table 1 and table 2. Procurement manager has the responsibility of key decision
making. The decision maker was asked to give the weights based on the Analytical
Hierarchical Process (AHP). These weights were applied for each of the QFD model what is
 known as sustainability risks. In the table the risks have been mentioned as WHAT i.e., w1,
w2 and so on. Out of the ten risks the decision maker ranked the top five as follows;

·         Risk 1 (w1): Safety risks. Noisy surroundings, permit of using toxic materials; water,
waste energy consumption. Weight (0.15)

·         Risk 4 (w2): Design and technical risk. Plan, procedures, products, facilities and site
related risks. Weight (0.17)

·         Risk 5 (w5): Contractual risks. Provisions that are ambiguous, misinterpretation. Weight
(0.125)

·         Risk 8 (w8): To remain successful, the technology and push necessitates modern
equipment and information systems

·         Risk 10 (w10): Social policy and stickers. (Human rights, workplace safety, working hours
and underage labour) Weight (0.085)

These risks are classified based on the literature identified in the construction industry. The
ethical oriented practices are given much focus due to the corporate social responsibility. Out
of the five top risks, two are based on social issues of supply chain risk. Now, the decision
maker is asked to establish hierarchy weight for all the ten risk factors. As we know, the QFD
model is used to portray the result. The absolute importance (AI) is obtained by interpreting
the data in the QFD. The decision maker was asked to set up the AI based on a ranking scale
which was between 1 to 9 for each of the ten strategies. The ranking 1 was of low relation
whereas, ranking 3 specifies moderate relation. The ranking 9 had the strongest relation
between two strategies. These rankings can now be applied to the QFD model by taking the
rank given by the decision maker for each strategy and multiplying this by the weight
corresponding sustainability risk. The sum of each multiplied value will give you the absolute
importance (AI). This is shown in the below figure.
 

Figure 1. QFD Calculations

The results based on the A.I shows that the top three strategies to implement would be
strategy 3 i.e., St 3 (A.I of 3.915), strategy 2 i.e., St 2 (A.I of 3.84) and strategy 7 i.e., St 7
(A.I of 3.81). The company has a constraint of budgetary restraint of $65 Million.
Considering the budgetary restraint, the decision maker was asked to estimate the cost of
implementing each strategy that was proposed. These costs are depicted in the QFD
model shown above in figure 1.
Figure 2 Decision variables to implement strategies

RE that is Resilient Efficiency is calculated by taking A.I of each strategy and dividing it by
the estimated cost of that strategy. For instance, strategy 1 (st1) has an A.I of 2.745 divided
by the cost of implementing strategy 1 i.e., $12Million which equals 0.2288 as shown in
figure 2. Same way, to find out RE for St 8 A. I of 2.395 is divided by cost $7 Million which
equals 0.34214. Keeping the budget in mind the decision maker was asked to find out the
total cost of implementing all the ten strategies. The decision maker gave a total cost of $62.8
Million to implement these ten strategies. Strategy 1 (St 1) and strategy 2 (St 2) had a
correlation and could save up $2 Million while, strategy 1 (St 1) and strategy 10 (St 2) can
have a cost saving of $5 Million, with additional savings up to $4 Million by implementing
strategy 6 (St 6) and strategy 10 (St 10).

DISCUSSION

The QFD analysis and the results identified certain risks which relate to environmental,
economic and social factors all of which include sustainability issues. The construction
industry has major problems when it comes to environmental factors such as pollution which
is a key element for risk assessment. Safety risks such as noisy surroundings, permit of using
toxic chemicals, waste generation and energy consumption has a focal point which is why the
weightage is given more to those risks. The decision maker has weighed top three risks which
all include sustainability factors (w4, w1, w6).  

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