EFFECT OF MATERIAL MANAGEMENT ON PROJECT PERFORMANCE (A CASE STUDY OF EL-ALAN CONSTRUCTION COMPANY NIGERIA LIMITED)

CHAPTER ONE

INTRODUCTION

1.1 BACKGROUND OF THE STUDY

Construction sector is an integral and essential part of infrastructure development which gives tremendous boost to Nigeria’s economy. Materials management is an important element in construction project management. Construction materials management process effect is a key to success of a construction project.

Materials management was treated as cost centred since purchasing department spends enough money on materials while store was holding huge inventory of materials, blocking money and space in the past(Ramakrishna, 2015). But recently it has evolved and changed with respect to the ever growing complexity of projects.

It is a thing of importance to understand the origin of materials management procedures and how they differ from those of other industries. Materials make up a major cost component for construction Industry.

The total cost of materials may be 60% – 80% or more of the total cost incurred in construction project depending upon the type of project and the extent of mechanisation and plant used (Patel et al. 2011). However, with the process of liberation of global economy, there has been a drastic change and evolution in the business environment, resulting in construction organizations exposed to intense competition in marketplace.

Therefore, ineffective material management can cause unavoidable loss for a construction project. Material management can be considered as a prime uncertainty in a construction project. Materials management functions which include planning and material take off, vendor evaluation and selection, purchasing, expenditure, shipping, material receiving, warehousing and inventory and material distribution.

As material management is interrelated to other processes and stages of the construction project and is dependent over various other factors it has high uncertainty. Especially the nature of construction project being fragment basis with unstructured communication and no clear responsibility between the parties, increase the challenge of implementing effective material management.

Although material management problems highly affect the construction professionals all over the world, they are more critical for construction professionals. Acquisition of materials is very important in construction projects since the materials are incorporated into the works to form the structure of the project.

It is therefore important to study the influence of acquisition of materials on the performance of projects in Nigeria. Performance of construction projects is the depending on the acquisition of materials. The indicators of acquisition of materials are establishment of quantities of materials required, testing for quality of materials, establishment of material types required, storage of materials, procurement of materials, and inventory control.

Donyavi and Flanagan (2009) observed that materials management has not received attention from researchers. These studies suggested that materials should be readily available at the points where they are needed so as to enhance the successful completion of the projects at the appropriate time. There are different definitions to material management as provided by several researchers. Material management according to Kanimozhi and Latha (2014) is a process for planning, executing and controlling field and office activities in construction.

Material management is a procedure for executing, planning, and controlling site activities in the construction project(s) as defined by Zeb, Malik, Nauman, Hanif, and Amin (2015). Material management is divided into five categories namely, measurement and specification, procurement and purchasing process where the order is transmitted to the supplier, delivery to site and logistics of checking the order, off loading, and storing on site, administrative and financial process of payment and using the materials in production on the job site and removing the waste according to Donyavi and Flanagan (2009).

Materials management system also attempt to insure that the right quality and quantity of materials are appropriately selected, purchased, delivered and handled on site in a timely manner and at a reasonable cost. Wasting of materials is one of the serious problems in construction industry, it refers to the variance between the estimated and actual consumption of an individual item.

Donyavi and Flanagan (2009) also observed that there are common problems associated with material management on construction site which includes; over ordering, failure to order on time which delays the projects, wrong materials or error in direction of materials requiring re-work, delivery at the wrong time which interrupts the work schedule, theft of materials from delivery into production and double handling of materials because of inadequate material.

The benefits and importance of materials management systems are significant and in order to make materials management on site effective for fast-track projects delivery, there is need for an integrated material handling process from the design stage to the usage of materials on sites (Kasim and Anumba, 2015). Therefore, the research assessed the effect of material management and performance of projects done by El-Alan construction company Nigeria Ltd.

1.2 STATEMENT OF THE PROBLEM

Materials management is the process which integrates the flow of supplies into, through and out of an organization to achieve a level of service which ensures that the right materials are available at the right place at the time in the right quantity and quality and at the right cost. Controlling costs of Purchases with PPV also is key.

Material management is defined as a function of not only receiving material, storing materials, purchasing, but an overall function of an organization. It constitutes the major cost for the organization, and a low profile of the department should be maintained to curtail costs, so the organization could go making profit.

As materials constitute 70% of the bulk requirement the possibility is to curtail cost to the minimum. You have encountered checking, inspection, quality control function of material management. But till date no importance is given to these functions (Arifur Rahman, 2016). It is common to observe the scattered equipment & assets out of the warehouse of the warehouse in the office compound that at risk of theft.

A large number of stocks of materials are stacked in the store which is seriously exposed to dust. Sometimes, the interruption of operations is happened due to the lack of raw materials inventories and there is damage and spoilage of materials due improper placement.

The materials that are broken and need maintenance are located to the different corners of the warehouse compound covered with dust. Items are not stacked in a proper way so that not easily accessible when needed for withdrawal or for execution.

1. AIMS AND OBJECTIVES OF THE STUDY

The major aim of the study is to evaluate the effect of material management on project performance in Nigeria. Other specific objectives of the study are;

1. To examine the need for effective material management in the timely completion of construction projects in Nigeria.
2. To assess the level of construction project performance in Nigeria.
3. To determine the effect of material management on construction project performance in Nigeria.
4. To examine the strategies of material management currently underway in construction projects in Nigeria.
5. To examine the factors responsible for poor materials management in the construction project delivery process
6. To recommend measures that can be adopted for effective materials management and ways of improving construction project performance in Nigeria.
   1. RESEARCH QUESTIONS

1. What is the need for effective material management in the timely completion of construction projects in Nigeria?
2. What is the level of construction project performance in Nigeria?
3. What are the effects of material management on construction project performance in Nigeria?
4. What are the strategies of material management currently underway in construction projects in Nigeria?
5. What are the factors responsible for poor materials management in the construction project delivery process?
6. What are the measures that can be adopted for effective materials management and ways of improving construction project performance in Nigeria?

1.5 RESEARCH HYPOTHESIS

H0: There is no significant effect of material management on project performance of companies.

H1: There is a significant effect of material management on project performance of companies.

1. SIGNIFICANCE OF THE STUDY

This study should be of immense importance or benefit towards the improvement of construction projects and the increase in performance of construction projects as it assesses the impact of material management on construction project delivery and performance. The study would also be of immense importance to students, researchers and scholars who are interested in developing further studies on the subject matter by proving useful literature.

1. SCOPE OF THE STUDY

The study is restricted to the effect of material management on project performance in El-Alan construction Nigeria Ltd as a case study.

1.8 LIMITATION OF STUDY

Financial constraint– Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint– The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1. DEFINITION OF TERMS

Materials Management: Is a coordinating function responsible for planning and controlling materials flow. Its objectives are as follows: Maximize the use of the firm’s resources. Provide the required level of customer service. Materials management can do much to improve a company’s profit.

Project: Temporary organization that is needed to produce a unique and predefined outcome or result at a pre-specified time using predetermined resources

Project Performance: Project performance, seems easy to measure; just track time, cost and scope and it’s done. Performance measurement during a project is to know how things are going so that we can have early warning of problems that might get in the way of achieving project objectives and so that we can manage expectations.

Project Management: Application of knowledge, skills, tools and techniques to project activities to meet project requirements