Addis Ababa University

EiABC
Program: Construction
Technology and management
Course code: CoTM 5202
Course name: Construction
Materials Management
Course Content

Lecture -1 to 2
1. Introduction to construction materials
management
 Definition
 Importance of construction materials management
 Management of Permanent and Temporary Materials

2. Management of construction Materials Production

 Management at: Quarries, Plants and Industries
Course Content
Lecture – 3 to 8
3. Construction Materials Supply Management:

 Supply chain management in construction

 Procurement of Construction materials
 Transportation of Construction Materials
 Construction Materials Handling
 Storage and Inventory Management
Course Content
Lecture – 9 to 10
4. Construction Materials Standard and Quality
management.

 Evaluation and Requirements for the completion of the

course
 Assignment 10 %
 Class participation 10 %
 Written examinations 80%
 Attendance requirement 75%

 Reference
 Lecture note
 Any related materials to the subject
Introduction to construction
materials management
Introduction Contd…

 Materials management is part of logistics and

refers to the location and movement of the
physical items or products. There are three
main processes associated with materials
management: spare parts, quality control,
and inventory management.
INTRODUCTION CONTD…

Definition
Materials Management
“Materials management is a process: It is
how a building is designed and how materials
are estimated. It is how materials are
acquired and even how the packaging is
specified. It is how the delivery schedule
is designed. It is how contractors plan
materials use and how they manage previously
used materials and cuts. It is how waste is
managed for use elsewhere or recycling
rather than being discarded in a landfill.”
[Construction Materials Management
Guideline, A Chapter of the American
Institute of Architects]
Introduction Contd…

 Materials Management is The planning and

control of the functions supporting the complete
cycle (flow) of materials, and the associated flow
of information. These functions include (1)
identification, (2) cataloging, (3) standardization,
(4) need determination, (5) scheduling, (6)
procurement, (7) inspection, (8) quality control,
(9) packaging, (10) storage, (11) inventory
control, (12) distribution, and (13) disposal.
Introduction Contd…
 Materials management in construction is the efficient use
of goods and equipment before, during and upon
completion of a building process.
 It deals with material cost, material supply material
storage, utilization and handling
 The scope of materials management applicable to
construction industry involves the planning of materials,
procurement of materials, packaging, storage, inventory
control, transportation of materials, material handling,
disposal of scrap and surplus
 Successful materials management requires the
participation of all persons involved in a construction
process.
Objectives of Materials
Management
 Economy in Materials Cost
 Efficient control of inventories
 Ensure Uniform flow of Materials for
production/construction
 Ensure right quality at right price
 Establish and Maintain good relations with
customers
 Economical consumption of important items
and finding their substitutes
Why is CMM important?
 One of the three cost components in Construction is Material .
Hence, Materials management is an important element in project
planning and control to make construction projects cost efficient.
 Materials represent a major expense in construction, so minimizing
procurement or purchase costs presents important opportunities for
reducing costs.
 Poor materials management can also result in large and unavoidable
costs during construction.
 First, if materials are purchased early, capital may be tied up and
interest charges incurred on the excess inventory of materials.
 Even worse, materials may deteriorate during storage or be stolen
unless special care is taken.
 Second, delays and extra expenses may be incurred if materials
required for particular activities are not available. Accordingly,
insuring a timely flow of material is an important concern of project
managers.
Why is CMM important?
 Materials management is not just a concern during
the monitoring stage in which construction is taking
place.
 Decisions about material procurement may also be
required during the initial planning and scheduling
stages. For example, activities can be inserted in the
project schedule to represent purchasing of major
items such as elevators for buildings.
 The availability of materials may greatly influence
the schedule in projects with a fast track or very
tight time schedule: sufficient time for obtaining
the necessary materials must be allowed.
 In some case, more expensive suppliers or shippers
may be employed to save time.
 Who are involved in CMM?
 Many People are Involved
 Successful materials management like
any successful project relies on the skills of many
professionals from the architect and designers through
project management to the trade contractors.
At Pre-construction phase, people Involved In
materials
management:
Team Role in Materials Management
Member
Architect Designs for best use of standard sizes, for multiple applications
and for their recyclability.
Engineer Ensures appropriate structural component dimensions, quality
and spacing for use of standard fasteners and materials for
multiple applications and recyclability.
Estimator Uses latest materials takeoff technologies and exercises
accuracy in estimates.
Purchaser Plans purchases and deliveries to reduce
surplus and to balance materials maintenance
during on-site storage versus transportation
On Construction site people involved In materials
Management:

Team Role in Materials Management

Member
Site Applies the materials management plan to the site and oversees
construction its implementation. Takes into consideration physical space
management available
and ensures subcontractors are familiar with and committed to
the plan
Site materials Keeps track of new materials, cuts and used materials; organizes
manager and stores them for availability by the various trades throughout
the project in accordance with the materials management plan.
Communicates with site management and Materials Manager
Subcontract regarding the types of materials they may be able to use for
management various
purposes. Ensures trades follow the Plan's practices.
Trade Use materials properly, store new materials properly, handle and
workers. cut them carefully for maximum use and minimum waste.
Consider
Management of Construction
Materials, Permanent and
Temporary

 Classification of Construction Materials

 Management of construction
 Construction materials cover all types of materials used in construction including
materials
electrical and mechanical fittings fixture, devices and instruments that are
incorporated during the construction of permanent works and temporary
supporting works at site.
 permanent works: Materials used for the construction of permanent works are
named as permanent materials
 temporary supporting works: those materials used for the construction of
temporary works are categorized under here. ( engineers facilities, offices,
false works, formworks…)
 In construction projects, materials account more than 40% of the project cost.
 Hence a small saving of material cost through efficient management result in a
large contribution in overall cost saving/profit maximization
 Efficient materials management in project environments calls for an integrated
approach covering numerous functions such as materials planning, purchasing,
inventory control, store-keeping and warehousing, handling and transportation,
codification and standardization, and the disposal of the surplus.
 * Materials planning, which is the key function of materials management, is
closely linked with project planning and control set-up.
 aim to develop a plan for procurement and stocking of construction materials
so as to provide at the site materials of the right quality in right quantity at the
right prices from the right sources at the right time.
ABC Classification of construction Materials
 The primary concept purpose of classifying materials
is to control quality, cost and timely supply. There are
many factors that need consideration while classifying
materials. These include storage space, shelf life,
supply reliability, inventory costs, ease of
identification, construction sequence, transportation
requirement, price, procurement time, procurement
source and project life. Some of the general categories
are;
(a) bulky, one –time purchase, repetitive use, and minor
materials
(b) Vital, essential and desirable materials
(c) Indigenous and imported materials
(d) High price, medium price and low price materials
(e) High usage value, medium usage value and low-usage
value materials
 The most commonly used method for classifying
construction materials is to group them into high-value,
medium-value and low-value materials. * this classification
is achieved using the ABC analysis. The prerequisite for
applying the ABC analysis technique is that the project
should have a standardized bill of materials listing the
physical quantities (including standard usage), unit rate and
total cost for each item.

BILL OF MATERIALS

S.No. Item of Unit Quantity Rate Amount

materials
 The materials
Group Total Inventory
management
technique of ABC Class Items Costs
analysis is based on the
principle of “control by A 10% 70%
selection” which
implies that is not
necessary to give the B 20% 20%
same degree of
attention to
procurement , storage, C 70% 10%
issue and control of all
types of materials.
 ABC Classification

 Class A
 5 – 15 % of units
 70 – 80 % of value
 Class B
 30 % of units
 15 % of value
 Class C
 50 – 60 % of units
 5 – 10 % of value
ABC Classification:
Example
PART UNIT COST ANNUAL USAGE
1 $ 60 90
2 350 40
3 30 130
4 80 60
5 30 100
6 20 180
7 10 170
8 320 50
9 510 60
10 20 120
 ABC Classification:
Example (cont.)
TOTAL % OF TOTAL % OF TOTAL
PART PART
VALUE UNIT
VALUE COST ANNUAL
QUANTITY % USAGE
CUMMULATIVE
9 1
$30,600 $ 60
35.9 6.0 90 6.0
8 16,000
2 18.7350 5.0 11.0
2 14,000 16.4 4.0
A40 15.0
3 30 130
1 5,400 6.3 9.0 24.0
4 4
4,800 5.680 6.0 B60 30.0
3 5
3,900 4.630 % OF TOTAL
10.0 100% OF 40.0
TOTAL
6 6
3,600
CLASS 4.220
ITEMS 18.0
VALUE 180 QUANTITY
58.0
5 3,000
7 3.510 13.0 170 71.0
10 A
2,400 9, 8,2.8
2 71.0
12.0 C 15.0
83.0
8
B 320
1, 4,2.0
3 16.5 50 25.0
7 1,700 17.0 100.0
9
C 5107
6, 5, 10, 12.5 60 60.0
$85,400
10 20 120
Example 10.1
Methodology
(a) Identifying materials required and estimate
quantity of each material.
(b) Obtaining the approximate unit rate for each
item.
(c) Assessing the requirement during the period
under consideration, i.e. yearly or project
completion basis.
(d) Determine the usage value of each type by
multiplying the quantity required with the
corresponding unit rate.
Methods contd…
e. Calculate the percentage usage of each material
with respect to total project cost
f. Arrange the items in the descending order of
usage value and then compute cum. Usage value
against each item.
g. Draw two horizontal demarcating the
descending order of the cum purchase value at
70% level and 20% level
Plant and equipment management in
Material production
 Introduction
 Construction Materials produced at quarries and plants: masonry, concrete
aggregate, sand, concrete, asphalt, etc
 Machineries and plants are required (such as batching plants, dozers,
excavators, loaders, dump trucks,…)
 Plant and machineries, if poorly managed on construction projects, suffers
from low utilization rates. Therefore the principal contractor needs to
concentrate efforts on the removal of non-value-adding activities.
 Plant and equipment Management
 Considerable care is necessary when purchasing plant and equipment of any
kind. The person charged with making the purchase needs to thoroughly
investigate the various aspects identified below.
 The successful and profitable operation of plant is dependent not only on the
price paid but also on the necessity to conduct a critical evaluation of its
suitability.
 This is an activity that should not be left solely to a plant department but
should involve consultation with the operational and user personnel.
 The plant department should not function in isolation or this will impact upon
operational effectiveness and efficiency.
Plant and equipment management
in...
 If due consideration is given during consultations between
plant department and operations the benefits available
include:
● simple installations
● minimum commissioning time
● rapid training of operators (learning curve theory)
● high utilization with the minimum of ‘down time’
● longer life of plant (doing the job for which it was designed)
● lower operational costs
● ease of maintenance with the minimum investment in spare parts.
 During purchasing plants and equipments one can ensure an
adequate return on investment by paying attention to:
● maintainability
● reliability
● installation and commissioning
● product support
● costs.
Plant and equipment management
in... Maintainability
 The designers of all industrial plant should ensure that their
designs provide:
 a minimum maintenance requirement
 rapid fault diagnosis and repair
 low maintenance and repair costs.
 Equipment which conforms to these three objectives has
maintainability.
Reliability
 This is demonstrated by the length of time between
breakdowns in operational service.
Installation and Commissioning
 The signs of an unsatisfactory purchase usually become
obvious during the installation and commissioning period. This
is the time when plant is delivered and put into operation.
Product Support
 This includes providing the following:
Plant and equipment management
in...
• operating, installation and maintenance manuals
• maintenance schedules
• training aids
• special tools
• technical assistance
Cost
 The total cost is the cost of the equipment plus the
cost of delivery, installation, servicing and product
support (life-cycle cost).
Plant and equipment management
in...
 Some of the benefits to be obtained through
careful procurement are explained below.
 Plant and equipment management
in...
Commissioning
 This can be a long process if the purchaser selects the wrong vendor
or incorrect equipment. A competent vendor arrives on site with
proof in the specification that the plant meets set objectives
Installation, testing and operator training should not take long if the
plant attains the required performance and if the technical
information for training is available.
Minimum Down Time
 This is the time in which the plant is not available for production
because of a need for maintenance or repair. Down time can be
caused by a breakdown of plant or by a shutdown period for
preventive maintenance.
Long Life
 The purchasers must assure themselves of the ability of the plant to
attain long service. This is closely linked with ‘reliability’.
Plant and equipment management
in... Low Operating Costs
 A vendor should be asked for predictions of
operating costs and its approach to this problem
will indicate whether it has adequately assessed
this before selling its product. Operating costs in
each year could include:
 cost of fuel
 cost of operating labor
 cost of maintenance
 cost of down time
Plant and equipment management
in...
 During Operation of plants and equipments
procedures that has to be followed to ensure
efficiency in materials production:
 Setting hourly/daily performance standards
 Evaluating outputs against standards
 Identifying reasons for recorded production below
minimum performance threshold, if any.
 Take remedial measures
Supply chain management
in construction
SCM
Definitions
A supply chain is a system of
organizations, people, technology,
activities, information and resources
involved in moving a product or service
from supplier to customer. Supply
chain activities transform natural
resources, raw materials and
components into a finished product
that is delivered to the end customer
 Supply chain Management…

Internal Supply Chain

Suppliers Purcha Product Distrib

Customers
sing ion ution

An illustration of a company's supply chain; the arrows stand

for supplier-relationship management, internal SCM and
customer-relationship management
Supply chain Management…

 SCM has been defined as “the network of

organizations that are involved, through
upstream and downstream linkages, in the
different processes and activities that produce
value in the form of products and services in
the hands of the ultimate customer” (Vrijhoef
and Koskela, 1999).
Supply chain Management…
● Handfield and Nichols (1999) have also expanded the supply chain
definition to include upstream supplier networks and downstream
distribution channels. They have argued that SCM is not as simple as
materials demand and supply networks; it also includes the
management of information systems, procurement, production
scheduling, order processing, inventory management, warehousing,
customer service and after-market disposition of packaging and
materials. The supplier network consists of all organizations that
provide inputs, either directly or indirectly, to the host firm. Thus a
supply chain includes internal functions, upstream suppliers and
downstream customers, defined as:
● a firm’s internal functions include the different processes used in
transforming the inputs provided by the supplier network
● the upstream supplier network consists of all organizations that provide
inputs, either directly or indirectly, to the host company
● the external downstream supply chain encompasses all the downstream
distribution channels, processes and functions that the product passes
through on its way to the customer.
Supply chain management in construction
The Emergence of SCM
 Supply chain management (SCM) is a concept that has flourished in
manufacturing, originating from Just-In-Time (JIT) and logistics; it
represents an autonomous managerial concept.
 SCM endeavors to scrutinize the entire scope of a supply chain and
offers a methodology for addressing the myopic (narrow) control in
supply chains that has been reinforcing wastage problems in
construction (Vrijhoef and Koskela,1999).
 The first signs of SCM were perceptible in the JIT delivery system as
part of the Toyota Production Process which aimed to regulate
supplies to the Toyota motor factory (noted previously under JIT).
 The main objective of Toyota was to drastically decrease inventory
and to regulate the suppliers’ interaction with the production line
more efficiently and effectively (Vrijhoef and Koskela, 1999).
 After its emergence in the Japanese automotive industry as part of a
production system, the conceptual evolution of SCM has become a
distinct subject of scientific research.
Supply chain Management…
 SCM combines particular features from various
concepts including Total Quality Management
(TQM), JIT, Value Management, Risk
Management and Partnering.
 The traditional way of managing is essentially
based on a conversion (or transformation) view
on production, whereas SCM is based on a flow
view of production.
 The conversion view suggests that each stage of
production is controlled independently,
 whereas the flow view focuses on the control of
the total flow of production (Koskela 1992).
 A comparison of traditional
Management and SCM views
Elements Traditional management Supply chain management
Inventory management Independent efforts Joint reduction of channel
approach inventories
Total cost approach Minimize firm costs Channel-wide cost
efficiencies

Time horizon Short-term Long-term

Amount of information Limited to needs of current required for planning and
sharing and monitoring transaction monitoring processes

Amount of co-ordination of Single contact for the transaction between levels

multiple levels in the Multiple contacts between in firms and levels of
channel channel pairs channel

Breadth of supplier base Large, to increase Small, to increase

competition and spread co-ordination
risks
SCM

 Although contractors, engineers, construction

managers do not typically consider SCM, they deal
with SCM on a daily basis.
 In construction supply chain refers to the end-to-
end-chain of stakeholders and partners that come
together both on individual projects and during the
firms business life.
 In projects, it includes the owner, the contractor, the
consultant(the architect, planner, designer,..), the
construction manager, subcontractor, supplier,
distributor, manufacturer..
 In a firm`s business it also include accounting,
human resource, equipment fleet operations
SCM
 With in the construction project, SCM is conceived
with the owner at the top, followed by the designer,
contractor,…forming various levels of supply chain
 Demand can be seen as flowing down the chain in
terms of information, eg project brief, drawings,
schedule, work orders…
 And materials flowing in the opposite
direction.(McCafer and Root 2000)
 However; the management of this supply chain is
often problematic due to the fragmentation in the
construction industry and increasing the complexity
of the projects and the demand of greater
performance at lower costs from clients
Advantages of Deploying SCM
● The theoretical advocated advantages of deploying SCM
within a construction operational environment may be
summarized as follows:
● cost savings for all members of the supply chain
● increased effectiveness of information transfer
● a drive for continued quality improvements
● enhanced client satisfaction
● a reduction in the number and severity of disputes
● the company embarks upon a learning curve, leading to its
continued existence based on stakeholder satisfaction
● increased technical and process innovation
● a reduction in overall project duration
● increased intrinsic motivation related to enhanced job
satisfaction.
Methods in SCM

 A generic methodology of SCM can be deduced

combining and generalizing the commonalities
of different SCM methods. In a way, the SCM
methodology bears resemblance to the Deming
Cycle .
 Generically, the methodology of SCM consists of
four main elements:
(1) Supply chain assessment,
(2) Supply chain redesign,
(3)Supply chain control, and
(4) Continuous supply chain improvement
SCM

 The first step is to assess the current process

across the supply chain in order to detect actual
waste and problems. The issue here is to find the
causality between the waste and problems, and
locate their root causes.
 Once the causality is understood, and having
found out about the root causes, the next step is
to redesign the supply chain in order to introduce
structural resolution of the problems. This
includes redistribution of roles, tasks and
responsibilities among the actors in the supply
chain, and a review of procedures.
SCM
 The next step is to control the supply chain according to
its new configuration. An important part of the control
is the installation of a monitoring mechanism to
continuously assess how the supply chain operates. This
includes systems to measure and estimate waste across
the supply chain process, and feedback systems to
discuss and evaluate underlying problems.
 The objective is to continuously identify new
opportunities, and find new initiatives to develop the
supply chain. In fact, this continuous improvement
implies the ongoing evaluation of the supply chain
process, and the recurring deployment of the previous
three steps: assessment, redesign and control
SCM-Generic Supply chain
Management Methodology

SCM methodology Deming Cycle

SCM
ROLES OF SUPPLY CHAIN MANAGEMENT IN CONSTRUCTION
 The generic concepts, methods and lessons learnt, which have
been developed in the framework of SCM, can be used in
different ways for the improvement of construction supply
chains. In the following, illustration of how the methodology of
SCM can contribute to the understanding of construction
supply chain problems, and in giving direction to improvement
efforts.

SUPPLY CHAIN MANAGEMENT’S CONTRIBUTION TO

RESOLVE BASIC PROBLEMS IN CONSTRUCTION:
UNDERSTANDING CONSTRUCTION SUPPLY CHAIN
PROBLEMS
 Based on the insight gained by means of supply chain
assessment, the SCM methodology needs to be fully applied to
resolve the problems that were found in the construction
supply chain.
SCM

 Because most problems spread across (a

considerable part of) the supply chain,
solutions are needed that equally cover
multiple stages of the supply chain, including
the actors involved. The range of the
solutions and the part of the supply chain
involved depend on the scale of the
problems.
SCM

 After having assessed the supply chain, the SCM

methodology suggests redesign (reconfiguring
the supply chain’s structure), control
(coordinating the supply chain according to the
new configuration) and continuous
improvement. For instance, towards suppliers,
the methodology could include reengineering
the procurement process, installing joint
coordination of logistics and recurring product
development programs. Typically, such activities
include joint activities between separate actors
in the supply chain.
SCM
 Supply chain arrangements counteracting adversarial relations
with other actors (e.g., partnership) are needed to enlarge the
magnitude of the SCM methodology, and clear the way for
resolution of interdependency-based problems and myopic
control. In fact, actors are dependent on each other for
implementing the supply chain methodology successfully.
 Supply chain development should take place in co-operation
with a growing number of actors tackling a growing number of
issues.
 The actors involved should have a common development goal,
share the same view on the development, and adopt the same
approach to issues such as grasping concrete and objective
performance information, and searching for improvement
opportunities cooperatively (Wegelius-Lehtonen and Pahkala
1998).
SCM

 SCM has been introduced including an appropriate

methodology to resolve the basic problems in the
construction supply chain.
 Understanding existing problems is an absolute
necessity to be able to resolve them effectively. The
goal is to become totally aware of the real basics of
the problems (i.e. seeing the “big picture”), and
approaching the issue properly (i.e. holistically) in
order to unlock possibilities for effective
improvement of the supply chain. In fact, it’s a
matter of making waste and problems visible and
tangible, and identifying and detecting the root
causes to make it possible to resolve them all.
SCM
ARGUMENT FOR SUPPLY CHAIN MANAGEMENT IN
CONSTRUCTION: FULFILLING THE SUPPLY CHAIN
METHODOLOGY
 Based on the insight gained by means of supply chain assessment,
the SCM methodology needs to be fully applied to resolve the
problems that were found in the construction supply chain.
 Because most problems spread across (a considerable part of) the
supply chain, solutions are needed that equally cover multiple stages
of the supply chain, including the actors involved. The range of the
solutions and the part of the supply chain involved depend on the
scale of the problems.
 After having assessed the supply chain, the SCM methodology
suggests redesign (reconfiguring the supply chain’s structure), control
(coordinating the supply chain according to the new configuration)
and continuous improvement. For instance, towards suppliers, the
methodology could include reengineering the procurement process,
installing joint coordination of logistics and recurring product
development programs. Typically, such activities include joint
activities between separate actors in the supply chain.
SCM
 Supply chain arrangements counteracting adversarial relations
with other actors (e.g., partnership) are needed to enlarge the
magnitude of the SCM methodology, and clear the way for
resolution of interdependency-based problems and myopic
control. In fact, actors are dependent on each other for
implementing the supply chain methodology successfully.
Supply chain development should take place in co-operation
with a growing number of actors tackling a growing number of
issues. The actors involved should have a common
development goal, share the same view on the development,
and adopt the same approach to issues such as grasping
concrete and objective performance information, and
searching for improvement opportunities cooperatively
(Wegelius-Lehtonen and Pahkala 1998).
 It is interesting to compare the development issues of SCM, as
defined by Lin and Shaw (1998), to the actual practice of
construction (Table 4).
SCM-Conclusion

 The concept of SCM represents a logical

continuation of previous management
developments.
 It has been influenced by other management
concepts such as JIT, TQM, Value Management
and Partnering.
 The most critical issue in SCM is the achievement
of a co-operative relationship between all supply
chain partners. SCM would enable the efficient
and effective utilization of both plant and
materials.
Procurement of Construction
materials INTRODUCTION
 Construction of materials needed for a project work
vary with the nature of the project.
 In road projects-materials required may be few in number
 In building-may be counted in hundreds
 The determination of the type, quantity and
specification of construction materials needs a
detailed study of the contract document , including
The BOQ, Drawings, Specifications, pretender
estimates, preliminary vendor enquiries
INTRODUCTION
 Materials provisioning to the site should be
planned in the sequence of their requirement on
the site.
 For example materials that are required for site
development, foundation work, superstructure
frame, which are needed in the early stages of
construction, are considered first.
 The procurement management , the provision of
construction materials to construction projects,
have the following processes.
INTRODUCTION
1. Study contract documents to Identify items for purchase.
2. Estimate quantities to be purchased
3. Float inquiry indents to locate sources of supply
4. Invite quotations from selected vendors
5. Submit proposals for technical, financial and client`s approval
6. Negotiate with vendors and finalize supply orders
7. Place purchase orders and monitor order execution.
8. Conduct pre shipment inspection, where necessary
9. Inspect goods received at site and initiate action where
warranted for in-transit losses(theft) damages, short
shipments, and rejection of substandard supply items.
10. Close material supply contract after confirming no further
demand from concerned site manager. Inform accounts,
planning, costing and the project manager accordingly.
Material Procurement Management
 Procurement management is one of the
important factors to be considered on
construction projects since it is the major source
of expenditure that is incurred .
 It converts plans and programs in to
commitments to utilize resources.
 Materials of poor standard and ineffective
quality control will cause delay in the
implementation of the project and the resources
may get wasted, thus increasing the overall cost
of the project
Saturday Lecture
Material Procurement Management
Identification of materials and materials package
 Materials break down can be determined from the BOQ
which contains work items with quantities involved
 Details regarding finishes can be read from the
architectural drawings/engineering drawings.
 In case of electrical and mechanical items, a detailed
scrutiny is required to identify the items and its
components. In some cases these items may have to be
designed.
 Materials package includes all types and qualities of
materials needed to perform a given activity or a work
item . For Example a work package of Concreting of
foundation requires cement, sand, aggregate, water,
formwork.
Material Procurement Management
Materials Quantity Estimation and scheduling of materials
 Materials quantities estimates are based on the abstract of quantities of
work calculated by the quantity surveyors from the contract drawings.
 Total material quantity required = work quantity x quantity of materials
required for a unit item of work.
 Example: Let the concrete requirement of a project is 3500 m3, and the concrete is C-25
concrete. 360 Kg of OPC cement is required to prepare 1m3 of C-25 concrete . Hence
the quantity of OPC cement required for the project is = 3500m3 x 360 Kg/m3= 12,600
qtls
 Material estimates should include standard wastages which occur during
work execution.
 The final material quantities of major cost items ( that falls in the category of
type A & B materials as per ABC materials classification) should be
compared with the preliminary material estimates prepared during
tendering to check variations, if any. If there is a significant variation, it has
to be communicated with the responsible body at a project/ a firm level
before ordering the purchase of materials.
 Material Procurement
Materials Usage Standard
Management
 Some wastage is inevitable in actual work. This wastage
in materials is generally expressed as a percentages of
materials calculated theoretically from the quantities of
the work involved, and are termed as ‘standard
wastage'. The total quantity of materials to be
provisioned should cater for the standard wastage by
increasing the theoretical quantity, proportionally.
 Materials to be provisioned;
=Theoretical quantity of materials X
[{100+standard Wastage(%)}/100]
 It may be noted that standard wastage caters for
wastage during utilization only for causes considered
beyond control at the site. In addition to the controllable
wastage, there is wastage which falls in the category of
uncontrollable wastage. The main cause of controllable
wastage are;
Material Procurement Management
Materials Usage Standard
(a) Wastage on account of designers specifying non-
standard materials having unattainable specifications.
(b) Wastage due to incorrect purchasing resulting in over
buying, wrong buying, unnecessary buying and
untimely buying.
(c) Wastage in transpiration and handling including
breakage and pilferage.
(d) Wastage during storage resulting from deterioration,
improper storage, breakage, obsolescence and theft.
since, controllable wastage falls under the purview of
the materials management staff the additional
provisions to compensate for such wastage should be
made by them so as to ensure that the right quantity
of materials are available at the right time.
Material Procurement Management
Construction materials wastage planning norms.
I/No. Type of Materials Planned
Wastage in %
1 Cement 2
2 Sand 10
3 Aggregate 5
4 Structural Concrete 2
5 Lean concrete 10
6 Reinforcement Steel Bars 3
7 Reinforcement Steel Bars 10
8 Stone Masonry 5
9 Paints 5
Material Procurement Management
Materials Quantity Estimation and scheduling of
materials
 After materials required for the work are
evaluated, a usage schedule at the site based on
the project construction plan is prepared with a
view to evolve their delivery schedules and the
stocking policy.
Material Procurement Management
Materials Procurement Enquiries
 Investigation for developing sources for
procurement of materials are made by floating
enquiry indents (floating tender and inviting
vendors to offer their price).
 Material inquiry indents containing quantities,
specifications and delivery times are jointly
prepared by the project planning cell and material
procurement department
 Inviting of tenders for quotations with samples of
materials, where applicable is carried out by
material procurement department
Material Procurement Management
Materials Procurement Enquiries
 On receipt of the quotations, a comparative study
of the price, quality, delivery time, terms of delivery,
payment terms is made jointly by both materials
and project planning in charges
 Vendors proposal are compared with enquiry
specification and stipulated requirements for and
the resulting deviations are examined for
acceptability.
 Vendors enlistment is based on its size, capability,
past performance, market reputation and if
necessary this may be confirmed by a visit to the
vendor`s works.
Material Procurement Management
Materials Procurement Enquiries
 Criteria's for evaluating vendors is:
 Quality of the material-its past records, recent test
reports, performance reports, performance reports from
old users,…
 Company`s financial status
 Company`s management team and their professional
competency and engineering skills
 Support services
 If there is deviation from stipulated specifications
and delivery timings it should be discussed with the
project manager/ manager concerned and if
required with the consultants
Material Procurement Management
Finalization of Source of Materials Procurement
The following activities has to be undergone before placing
of purchase order
a. Approval in principle for processing proposals
 effect of prices on profitability
 in case of changes in offers, approval by project management
prior to commencing further negotiations with the suppliers.
b. Client`s approval of proposed materials- as per the terms
of agreement and standard construction practices, the
contractor submits proposals to the client/consultant for
approval of the materials.
 The proposals can be in the form of :
 Samples of materials
 The manufacturers write up on the materials
 The materials test results…
Material Procurement Management
Finalization of Source of Materials Procurement
C. Negotiations of terms of supply-final negotiations with the
vendor prior to the placing of order are carried out to evolve
mutually agreed terms for supply particularly, with respect to
the following:
 To finalize prices through negotiations by securing a better price
offer
 To finalize mode of transportation of materials up to site
 To finalize payment terms including the opening letter of credits, if
required
 To finalize prior delivery and post delivery inspection/quality control
procedures with particular reference to contract stipulations and
design specifications
 To finalize the material delivery schedule
 To finalize guarantees and penalties
 Before finalizing negotiations, a recheck is done to ensure that
the necessary documents needed for manufacturing
Material Procurement Management
Monitoring Materials delivery Schedule
After the purchase order is placed with the vendor, steps
necessary to ensure that right quantity and right quality
materials arrive at the site at the right time are:
i. Preparation and monitoring materials movement schedule
ii. Conduct pre-transportation inspection where necessary
iii. Obtain periodic information on shipment/transportation
status
iv. Keep ready the documents necessary for clearing customs
and other formalities during transit
v. Plan in advance for receiving materials at the site
vi. Checking the quality and quantity as per requirement and
bringing out discrepancies, if any, for further action including
timely replacement/reordering and claiming
insurance/compensation if applicable
OPERATIONS RESEARCH
Transportation Problem
 Introduction: The objective of the
transportation problem is to transport
various quantities of a single homogenous
commodity, which are initially stored at
various origins to various destinations in
such a way that the total transportation
cost is minimum
Transportation Problem

Definitions:
 Basic Feasible solution: A feasible solution to a
m-origin, n-destination problem is said to be
basic if the number of positive allocations are
equal to (m+n-1).
 Feasible Solution: A set of positive individual
allocations which simultaneously removes
deficiencies is called a feasible solution.
 Optimal Solution: A feasible solution (not
basically basic) is said to be optimal if it
minimises the total transportation cost.
Transportation Problem
 Mathematical Formulation of Transportation Problems
• Suppose there are ‘m’ ware houses (w1,w2,w3, _, _, wm),
where the commodity is stocked and ‘n’ markets where it is
needed.
• Let the supply available in ware houses be a1, a2, a3, _,_,_ am
and
• The demands at the markets (m1, m2, m3, _, _, mn) be b1, b2,
b3, _, _ , _ bn.
• The unit cost of shipping from ware house i to a market j is Cij
(C11,C12,_, _ Cn),
• Let X11, X12,X13,_, _, Xmn be the distances from warehouse to
the markets
• we want to find an optimum shipping schedule which minimises
the total cost of transportation from all warehouses to all the
markets
Transportation Problem

 The total minimum transportation cost is

Z = X11C11 + X12C12 + _ _ _ + XmnCmn
 Types of Transportation Problems
1. Minimisation Balanced Transportation Problems
2. Minimisation Unbalanced Transportation Problems
3. Maximisation Balanced Transportation Problems
4. Maximisation unbalanced Transportation Problems
5. All the above models with degeneracy.
Transportation Problem
 Methods of solving Transportation Problems
1. North- West Corner Rule method
 Begin with x (starting from the northwest corner).
11

 If x was the last basic variable selected, then next select xi,j+1
i,j

(move one column to the right) if source i has any supply

remaining. Otherwise, next select xi+1,j (move one row down).
2. Row-minima Method
3. Column minima method
4. Matrix Minima Method or least cost method
5. Vogel's Approximation method (VAM)

 Methods for checking Optimality

1. Modified Distribution Method, UV or MODI method
• For allocated cells Cij – (Ui +V ) = 0
j

• For unallocated cells Cij – (Ui +Vj)> 0

Transportation Problem
Steps in VAM method
Step-I: Against each row and column of the matrix, denote
the difference between the two least cost in that
particular row and column.
Step-II: Select the maximum value noted as per step-I, in
this row or column select the cell which has the least cost
Step-III: Allocate the maximum possible quantity
Step-IV: After fulfilling the requirements of that particular
row or column, Ignore that particular row or column and
recalculate the difference by the two lowest cost for each
of the remaining rows or columns, Again select the
maximum of these differences and allocate the maximum
possible quantity in the cell with the lowest cost in that
particular /corresponding row or column.
Step-V: Repeat the procedure till the initial allocation is
completed
Transportation Problem

 PROBLEMS:
1. Solve the following transportation problem
by North-West corner rule, Row Minima,
Column Minima, Matrix Minima and VAM
Method:
Transportation Problem 1
Factories W1 W2 W3 W4 Supply

F1 6 4 1 5 14

F2 8 9 2 7 16

F3 4 3 6 2 5

Demand 6 10 15 4 35
Transportation Problem :
Problem 2.
Factories W1 W2 W3 Supply

S1 90 100 130 20

S2 100 140 100 15

S3 100 80 80 10

Demand 5 20 20 45