Role of Material Management and Maintenance in the Construction Industry - A Case study


By

Lenin Karthikeyan
Assistant Professor - Senior Scale
School of Business
Manipal University - Dubai Campus
UAE
 


Introduction

Materials management is one of the vital activities in the business environment. There is no universal agreement about precisely what activities are embraced by material management. Some managers would relate material management with their material or production control departments which plans for the future procurement of the required materials and may also control inventories of both raw materials and in-process materials. Others would associate it with the activities of their purchasing departments in dealing with outside suppliers (No author, no date, p-1). In other words we can conclude material management is concerned with planning, organizing and controlling the flow of materials from their initial purchase through internal operations to the service point through distribution (Selvaraj, No date, p-2).

Goals of Material Management

- Continuity of supply
- Minimizing Cost
- To guarantee reliability in quality
- Collaborative and Cordial supplier relations
- Minimizing Inventory investment

Objectives of Material Management

Primary Objective

Secondary Objective

Right price
High turnover
Low procurement
& storage cost
Continuity of supply
Consistency in quality
Good supplier relations
Development of personnel
Good information system

Forecasting
Inter-departmental harmony
Product improvement
Standardization
Make or buy decision
New materials & products
Favorable reciprocal
relations


Scope of Material Management

1. Materials Planning.
2. Purchasing.
3. Store Keeping.
4. Inventory Control.
5. Receiving, Inspection and Despatching.
6. Value Analysis, Standardization and Variety Reduction.
7. Materials Handling & Traffic.
8. Disposal of Scrap and Surplus, Material Preservation.

The construction industry has a real impact on our daily lives since it accounts for around one-tenth of the world's GDP , 7% of employment, half of all resource usages and 40% of energy consumption (Alliot Group, 2014) This industry touches the lives of every individual in our society – from the homes we live in, the roads and railways we travel on and the buildings we work in.

The construction industry is considered to be a vital indicator and driver of the economic activity and wealth creation. But, the industry's future prosperity will depend on its capacity to evolve on business, technology and environmental fronts. U.S. construction spending rose in November 2013 at the strongest pace in more than four years, driven by solid gains in home construction and commercial projects.

The Commerce Department said construction spending increased 1% in the end of last year to a seasonally adjusted annual rate of $934.4 billion. The construction industry is more optimistic about revenue growth in 2013/14 than in 2012, according to new research by Timetric. Increased investments in IT infrastructure, public and private-sector construction projects, and growing demand for sustainable construction are likely to be key growth drivers.

Construction Industry in UAE

The building and construction sector is the third largest sector of the United Arab Emirates (U.A.E.) economy after oil and trade and it has experienced rapid growth in recent years.

The UAE construction industry is witnessing a fast track growth with a groove of on-going projects, investment into green open spaces, and the strong government support, a report from RNCOS analysts said the market, which was estimated at $39.4 billion (Dh144.6 billion) in 2012, is expected to grow at a compound annual growth rate of around 9.5 per cent during 2012-2016.

According to the International Monetary Fund (IMF), the population of UAE is expected to reach 6 million by 2015 from 5.4 million in 2010 while the increase in expatriate population, which accounts for more than 80% of the country's population, constitute the main growth drivers for increasing demand for residential and commercial property units in the country.

Added to that, the growth in real GDP is projected by the IMF to reach 4.4% in 2015 from 3.3% in 2011, signifying a revival of the overall economy which augurs well for the construction industry, says the study.

In 2011, the UAE recorded the highest construction project value, reaching USD 319.1 billion accounting for 51.1% of the total construction project value in top 100 projects in the GCC region. Since Dubai is going to host the World Expo 2020 it has to be prepared for further economic development, like building up a new infrastructure and also enhancing the existing infrastructure along with an even stronger global reputation and new architectural landmarks.
 

Focus on Building Maintenance

Maintaining a building is expensive: it costs many times more to run a building over its lifetime than to build it, yet maintenance is often not accorded the priority it warrants. A poorly maintained building will be a drain on resources and will impair building use, whereas a well maintained building will function smoothly and represent an appreciating asset to its owners (Wood, 2009, p-2).

Keeping the above mentioned point in mind, there are a huge number of buildings which have crossed the age of 10years from the date of completion of construction. Many of these buildings during the time of construction have been subject to use of low quality construction materials, namely cement, steel, etc. In such cases, the building would require structural maintenance at an earlier period of time, for e.g.: The use of poor quality mix concrete/cement can lead to loose cement along the walls/ceiling which might become hazardous to tenants or pedestrians.

U.A.E. – a boon for contracting & maintenance companies

Dubai, one of the seven emirates of the United Arab Emirates, is currently a city of vast nationalities and culture. Due to the rapid growth of the infrastructure for both residential and commercial, there has been a huge pressure for the faster completion of buildings in order to meet the demand of the vastly growing populace. This increased pressure for faster construction of structures coupled with increase in costs of the construction materials have often prompted contractors and construction companies to rely on cheaper construction materials. Age on the other hand is another reason for the defects found in the structures.

The use of cheaper materials, would not impact the structural safety of the structure on a large scale, but on a small scale, the impact can be visible. The examples for this are the water leakages from ceilings, unsound concrete slabs, unsound cement walls and ceilings, salty and powdered painted walls, to state a few.

Due to the effects of recession, a vast majority of the major construction companies have shifted into the maintenance industry to capitalize on the increase in the maintenance issues faced with the various buildings within the U.A.E. For this purpose alone they have introduced a dedicated department with a pool of employees from other departments (Mohan Liju, 2012, p-3).

Objective of the study

The objective of this article is to determine the operational effectiveness and process involved in the various maintenance areas of coverage.

1. To identify the appropriate processes involved in the rectification of civil construction defects.
2. To identify challenges related to the maintenance processes involved.
3. To assess effectiveness of the current process in the company and to suggest recommendations.

As a case study we have taken Oberoi Contracting and General Maintenance which was established in 1983. The company is masters in construction and renovation work for G+1 villas, multi-storey buildings, warehouses, offices, shops, etc. The current strength of the company is 127 employees with qualified engineers, supervisors and foremen.  Apart from construction they also focus on building maintenance work with the major sites being, Zabeel Palace, at Zabeel, Emirates Accommodation at Sonapur and Le Meridian Al Aqah Beach Resort at Fujeirah.

The company is well equipped with equipment, machinery and power tools in order to provide the clients with quality work in the agreed period of time. It   provides the following services for their clients apart from the construction work being done:

1. Complete external painting works
2. Internal painting works
3. Decorative painting works
4. Floor painting works
5. Civil Maintenance works
6. Electrical Maintenance Works
7. Renovation Works
8. Refurbishment Work.

Oberoi Contracting and General Maintenance has a fully trained team of experienced technical staff of engineers, supervisors, foremen, electricians, masons, plumbers, welders, pipe fitters, painters and semi-skilled workers. The author intended to identify the current operational effectiveness of the company. For the analysis, primary data was collected which includes, Surveys, questionnaires, interviews with the management and technical staff and the secondary data were collected from censuses and organization record.

Ishikawa diagram (Fish Bone Diagram) and SWOT were the tools used for analysis

An analysis is done using the Ishikawa Diagram to determine the Current issue with recent two sites; where in the problem was delays in the completion of the sites. The delays in completion have in fact damaged the on time completion reputation of the company with the clients. The analysis is carried out in order to determine the root cause of the delays in order to prevent the same cause in future sites.

The various reasons we could have led to the delay in the projects are listed below:


1. Environment:

a. Internal Environment – Internal reasons which could lead to delays are:

* Ergonomics,
* Miscommunication,
* interdepartmental conflicts,

b. External Environment – The external reason which could have a adverse effect on the problem are:

* Recession,
* Societal concerns,
* Unsafe Working Conditions

2. Supplier: The reason for delays in completion could also be associated with issues with the company suppliers. The company had employed new suppliers for the sites. Some of the points in this regards are noted below:

a. Multiple suppliers – irregularities between products from each suppliers
b. Different quality products – the suppliers may promise a quality product but deliver lesser quality goods, therefore extending the time period.
c. Long lead times – delays in delivery of supplier products.
d. Poor relationship with supplier – poor relationship often leads to miscommunication.

3. Employee: The reasons which are attributed to the problem when it comes to employees are mentioned below:

a. Low morale – A major factor in the productivity of a worker is the morale. Low morale could be due to
a. Low Financial Motivation (no bonus)
b. High Work Pressure
c. Limited Product Knowledge
b. Lack of training of staff – improper training is often another reason for wastage of resources and materials
c. Improper utilization of resources
d. Faulty machinery and breakdown
e. No proper supervision – this could lead to workers wasting work hours in order to work overtime for the extra cash

4. Equipment/ Machines: Reasons associated with Equipment

a. Improper maintenance- leads to lower performance of the machinery
b. Unexpected failure
c. Outdated equipment

5. Process:

a. Complexity of process
b. Lack of Proper Planning.
c. Non-adherence to safety procedures – this could discourage workers from performing their optimum best
d. Irregular Quality  inspection procedures – lead to lower quality supplied goods which leads to lower quality finished work
e. Mis-feeds (human error) - human error cannot be ruled out in any process, but it must be calibrated and accounted for.
f. Improper inventory management – in adequate inventory management often leads to damaged materials and insufficient materials on site.
g. Duplication of work – improper planning leads to duplication of work, which is a waste of resources
h. Inadequate documentation

6. Material:

a. Rising costs – of available raw materials
b. Poor Quality - Low quality of available materials hence leads to longer workmanship for better quality finished goods
c. Wastage due to scrap
d. No maintenance of buffer stock.
e. Inadequate purchasing process – leads to delays

Using the SWOT analysis the following factors were identified which would have an created an impact on the company either in a positive or negative way.

Strengths:

* The company serves as an excellent opportunity for training.
* Current Building Maintenance Boom in the Country
* Good structured approach
* Low cost, skilled labor force
* The company has good reputation among major clients such as H.H. The Ruler's Office, Emirates Group and Dubai Real Estate Corporation.

Weakness:

* Distance between projects increases the strain on inventory and material management
* Changing skills with the changing environment required
* Workforce is skilled but aging.
* Improvement in long term career prospects is necessary
* Lack of clearly defined procedures and processes for the workers
* Requirement of stable capital

Opportunities:

* Increased opportunities because of the continuous private sector boom.
* Continued good relationship with Governmental Organizations such as H.H. The Ruler's Court and Dubai Real Estate Corporation
* Developing Inventory and material Management capabilities will greatly reduce the costs of the projects
* Flexible Operations to satisfy customers/clients.
* Providing better training for the staff and also providing incentives for future career prospects

Threats:

* Economic instability would mean acquiring new clients will be a lot harder in U.A.E.
* Due to the economic crisis which has affected U.A.E., many major construction companies have started to venture into the smaller maintenance industry, which is beginning to give a strong competition.

Findings

The analysis had helped to apply the principles of operations management. From the above study the author felt that the techniques used in the company from the management point of view were completely outdated. The staffs were careless in handling documents and there are no systematic updates which was the major issue. Another major aspect is the miscommunication between personnel, which often leads to duplication of work and avoidable errors in the final outcome of the projects. This can be corrected by proper instructions and enforcing the rule of confirming the operations before it takes place. In certain cases, it has been noted that the foremen themselves are not too familiar with the scope of the work of the work to be done.

The current Effectiveness of the Operation of the company, Oberoi Contracting and General Maintenance, can be further improved.

* Improvements must be made in the company's Inventory Management and Material Management; the current techniques are insufficient and inadequate. Improvements can bring about a considerable reduction in the costs incurred.
* Oberoi Contracting and General Maintenance could provide better service to its customers in terms of documentation.
* The Procurement department could improve on the methods used in quality determination by proper sample inspection and approvals.
* The processes of handing down jobs to the workers need to be re-assessed. Currently there seems to be a case of miscommunication among the supervisors and foremen in terms of the work scope and requirements. It is recommended that a detailed copy of the scope be explained to them and given to them in paper for reference to avoid any issues in the future.
* The process of utilization of transportation to transport required goods must also be re-worked, again due to the miscommunication among the dispatcher and the drivers.

References:

No author (No date), Material Management, http://www.productivity.in/knowledgebase/Material%20Management/Scope%20and%20functons%20of%20 materals%20managemen, retrieved on 12/3/2013

Dr. Selvaraj. I.(No date), ' Material Management , www.pitt.edu/~super7/30011-31001/30961.pptý, retrieved on 2/3/2014

No author (2014), Contracting http://www.alliottuae.com/en/submenu.aspx?cid=1&m=3&mid=13&sid=58.

Wood, Brian (2009), Building Maintenance, Wiley Blackwell publications.

Mohan Liju (2012),
A study on the processes and materials involved in building maintenance at oberoi contracting and general maintenance, MBA Project report, Manipal University, Dubai.
 


Lenin Karthikeyan
Assistant Professor - Senior Scale
School of Business
Manipal University - Dubai Campus
UAE
 

Source: E-mail April 1, 2014

          

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