Quality cost of material procurement in construction projects

2018 ◽  
Vol 25 (8) ◽  
pp. 974-988 ◽  
Author(s):  
Rema Sawan ◽  
Jwen Fai Low ◽  
Andrea Schiffauerova
Keyword(s):  
Construction Projects ◽  
Construction Material ◽  
Quality Cost ◽  
Content Type ◽  
Procurement Process ◽  
Purchase Order ◽  
Failure Cost ◽  
Material Procurement ◽  
Using Data ◽  
The Cost

Purpose Material procurement constitutes a large share of the overall cost of construction projects. Understanding the factors influencing the cost of quality (COQ) in the procurement process could help identify opportunities for lowering quality cost without compromising quality. The paper aims to discuss these issues. Design/methodology/approach In this paper, a COQ model for the construction material procurement process is developed using the traditional prevention–appraisal–failure (PAF) approach. Using data from a $4bn aluminum smelter construction project, the authors conducted a simulation of the COQ model to evaluate various quality assurance policies. Findings This paper confirms that raising the prevention cost leads to a drop in failure cost as well as COQ for the project studied. While the authors are unable to provide blanket recommendations as the results are derived from a single project case study, it does suggest that construction material procurement processes would benefit from a higher prevention expenditure. And for certain cases where the authors observe a deviation from the traditional Juran’s model of COQ – the high appraisal cost in the procurement process – reduction of appraisal expenditure may in fact be more beneficial than its increase. Originality/value The research results suggest that appraisal expenditure should be tailored to each purchase order in order to maximize the total benefits. Additionally, this paper presents the first COQ model developed for the construction material procurement process. Another unique feature of the model is its inclusion of supplier-side costs, which are excluded in the conventional COQ analysis.

Implementasi Analisis Proses Bisnis Sebagai Upaya Pengurangan Biaya

2019 ◽  
Vol 10 (1) ◽  
pp. 1-27
Author(s):  
Aniek Wijayanti
Keyword(s):  
Business Process ◽  
Cost Reduction ◽  
Process Analysis ◽  
Value Added ◽  
Added Value ◽  
Natural Material ◽  
Management Activity ◽  
Procurement Process ◽  
Material Procurement ◽  
The Cost

Business Process Analysis can be used to eliminate or reduce a waste cost caused by non value added activities that exist in a process. This research aims at evaluating activities carried out in the natural material procurement process in the PT XYZ, calculating the effectiveness of the process cycle, finding a way to improve the process management, and calculating the cost reduction that can achieved by activity management. A case study was the approach of this research. The researcher obtained research data throughout deep interviews with the staff who directly involved in the process, observation, and documentation of natural material procurement. The result of this study show that the effectiveness of the process cycle of natural material procurement in the factory reached as much as 87,1% for the sand material and 72% for the crushed stone. This indicates that the process still carry activities with no added value and still contain ineffective costs. Through the Business Process Mechanism, these non value added activities can be managed so that the process cycle becomes more efficient and cost effectiveness is achieved. The result of the effective cycle calculation after the management activities implementation is 100%. This means that the cost of natural material procurement process has become effective. The result of calculation of the estimated cost reduction as a result of management activity is as much as Rp249.026.635,90 per year.

The 2008–2009 global financial crisis and the cost of debt capital among SMEs: Swedish evidence

2020 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Darush Yazdanfar ◽  
Peter Öhman
Keyword(s):  
Financial Crisis ◽  
Large Scale ◽  
Global Financial Crisis ◽  
Dynamic Panel Data ◽  
Cost Of Debt ◽  
Cross Sectional ◽  
Content Type ◽  
Debt Capital ◽  
Using Data ◽  
The Cost

PurposeThe main purpose of this study is to describe and analyse the relationship between the 2008–2009 global financial crisis and small and medium-sized enterprises' cost of debt capital.Design/methodology/approachStatistical methods, including multiple OLS and dynamic panel data, were used to analyse a longitudinal cross-sectional panel dataset of 3865 Swedish SMEs operating in five industry sectors over the 2008–2015 period.FindingsThe results suggest that the cost of debt was influenced by the financial crisis and another macroeconomic factor, i.e. the interbank interest rate, and by firm-specific factors such as firm size and lagged cost of debt.Originality/valueTo the authors' best knowledge, this is one of few studies to examine the cost of debt among SMEs during the crisis and post-crisis periods using data from a large-scale, longitudinal, cross-sectional database.

Request for information frequency and their turnaround time in construction projects

2019 ◽  
Vol 10 (1) ◽  
pp. 1-15
Author(s):  
Ajibade A. Aibinu ◽  
Simon Carter ◽  
Valerie Francis ◽  
Paulo Vaz-Serra
Keyword(s):  
Construction Projects ◽  
Turnaround Time ◽  
Content Type ◽  
Staffing Levels ◽  
Management Platform ◽  
Complex Projects ◽  
Project Characteristics ◽  
Using Data ◽  
Information Frequency ◽  
Data Analytic

Purpose The purpose of this paper is to study the nature of request for information (RFIs) on construction projects by using data analytics to understand the frequency of RFIs, when they occur on projects, and the relationship between project characteristics and frequency of RFIs and between project characteristics and RFI turnaround time. Design/methodology/approach A data-analytic approach using RStudio and Minitab software on 168 construction project cases in Australia and New Zealand involving 1,032,949 correspondences and 53,042 RFI event records made available by Aconex, one of the world largest cloud-based project management platform. Findings Large and complex projects tend to have significantly larger number of RFI events per day and longer RFI turnaround when compared with smaller and less complex projects. Projects with fewer users per organisation recorded a higher RFI turnaround time when compared with projects with more users per organisation – users mean persons involved in managing the project using the online platform (an index of project complexity). RFIs occur early on less complex projects and occur later on more complex projects. Research limitations/implications Benchmarks of RFI incidences and turnaround time have been developed for various project characteristics and, practitioners can use them to monitor the RFI performance of projects. Organisations need to pay greater attention to staffing levels needed to handle RFIs to reduce RFI turnaround time. Originality/value A data-analytic study of RFI yielded insights for managing RFIs. The findings of previous studies on RFIs are difficult to generalise because they are based on single project case study. The influence of project characteristics on RFI frequency and RFI turnaround time is not yet known.

scholarly journals ANALISIS FAKTOR-FAKTOR YANG MEMPENGARUHI WAKTU TUNGGU PENGADAAN MATERIAL KONSTRUKSI PADA PROYEK GEDUNG DI KABUPATEN BADUNG

2016 ◽  
Vol 4 (2) ◽  
Author(s):  
Putera Kumarayasa Mudita ◽  
I K. Sudarsana ◽  
Mayun Nadiasa
Keyword(s):  
Lead Time ◽  
Construction Projects ◽  
Large Scale ◽  
Construction Material ◽  
Dominant Factor ◽  
Building Projects ◽  
Project Completion ◽  
Factor I ◽  
Material Procurement ◽  
Material Transportation

Abstract :When undertaking construction projects, the smoothflow of materials to the project site must be maintained.Waiting for material, which frequently happens, will have a big impact, especially for large-scale projects that use a lot of labor. If the arrival of the materials is not in accordance with the schedule of material procurement planning, the workers will have nothing to do and the project cost will blow out and there will be delays in project completion time. This research investigates the factors which influence the lead time of construction material procurement in the Badung Regency. Data was obtained by distributing a questionnaire to 50 respondents. A research sample was obtained by purposive sampling aimed at the experts who work on building projects in the Badung regency. Before being used as a research instrument, the questionnaire was tested for the validity of data by using the Pearson Product-Moment correlation and its reliability was tested using the Cronbach alpha method. Processing and data analysis was conducted by Factor Analysis. The research results show there are twenty four variables identified that influence the lead time of construction material procurement on building projects in the Badung regency. All variables can be grouped into seven factors (Factor I, II, III, IV, V, VI, VII). The most dominant factor reviewed based on the percent of variance is Factor I which is formed by six variables being the material production process at the suppliers, the relationships between contractors and suppliers, a lack of material stock at the suppliers, the availability of material transportation, access to the project, and extreme topography.

Regulatory non-compliance and performance of deposit money banks in Nigeria

2018 ◽  
Vol 26 (3) ◽  
pp. 425-441 ◽  
Author(s):  
Ismaila Yusuf ◽  
Damola Ekundayo
Keyword(s):  
Emerging Economy ◽  
Bottom Line ◽  
Content Type ◽  
Correlational Research ◽  
And Performance ◽  
Using Data ◽  
The Cost ◽  
The Impact ◽  
Nigerian Banking ◽  
Practical Implications

Purpose The purpose of this study is to examine regulatory sanctions from an emerging economy perspective and analyzing the impact of regulators imposed monetary sanctions on banks’ performance. Design/methodology/approach The study adopted correlational research design to examine the effect of regulatory penalties on the performance of deposit money banks in Nigeria. This study used panel data from a sample of 15 deposit money banks in Nigeria for the period of 2006-2015. Multiple regression analysis was carried out. Findings Results showed that penalties imposed by regulators in the Nigerian banking industry have no significant impact on the bottom line of the defaulters. Penalties imposed on foreign exchange and international trade related infraction showed that the cost of penalties is below the benefits enjoyed from such infractions. Practical implications The insignificant impact of penalties on performance implies that deposit money banks have considered penalties imposed by regulators as operational expenses and transferred such to customers. Originality/value The study differs from other studies that examined regulatory penalties on performance by focusing on financial performance and using data from an emerging economy perceived to have weak regulatory environment.

Measuring efficiency of Vietnamese banks

2017 ◽  
Vol 29 (2) ◽  
pp. 171-182 ◽  
Author(s):  
Thanh Ngo ◽  
David Tripe
Keyword(s):  
Cost Efficiency ◽  
Stochastic Frontier Analysis ◽  
Stochastic Frontier ◽  
Control Variable ◽  
Banking System ◽  
Alternative Methods ◽  
Content Type ◽  
Frontier Analysis ◽  
Using Data ◽  
The Cost

Purpose This paper aims to examine alternative methods for treating nonperforming loans (NPLs) in bank cost-efficiency studies using stochastic frontier analysis (SFA). Design/methodology/approach The authors consider three methods of treating NPLs in SFA: as an additional control variable, as an environmental factor or as a deduction from total loans. Using data from the Vietnamese banking system (2003-2010), the authors then compare these results with those of the base model (where total loans is used regardless of the NPLs) to see which one is more appropriate for this study. Findings The authors observed that the first two methods are inappropriate for the analysis: one cannot find the significant relationship between NPLs and the banks’ total cost, and the other cannot account for any inefficiency at all. The authors suggested that the third method of separating NPLs from total loans can provide better insights. Using the proposed method, the authors showed that the cost-efficiency of Vietnamese banks over the period examined was moderate with a slight decreasing trend. When NPLs are separated, the cost-efficiency decreases in state-owned banks and big banks, whereas it increases in small and private banks. Research limitations/implications Research is limited to Vietnamese banks during a certain period, and it would be useful to apply the same technique to other data sets. Practical implications The paper suggests a new approach to account for NPLs in cost SFA studies in banking. Originality/value The paper provides a much more searching analysis of NPLs in banking than has generally been seen in previous research.

scholarly journals Physical and Chemical Properties of the Slate Aggregate

2019 ◽  
Author(s):  
Petar Radanliev
Keyword(s):  
Case Studies ◽  
Construction Projects ◽  
Construction Material ◽  
Chemical Properties ◽  
Transportation Cost ◽  
Physical And Chemical Properties ◽  
Cost Of Transport ◽  
The Cost ◽  
Physical And Chemical ◽  
And Chemical Properties

The slate aggregate has long been perceived as a substandard, low quality waste material with its physical and chemical properties not being competitive with those of the primary aggregates. It is assumed that the slate aggregate particles are not strong, that is not durable and will not compact. This research aims to address those claims and review the available literature on the performance of the slate aggregate. The review inaugurates by analysing the physical, chemical and mechanical properties of slate, before expanding into a literature review of laboratory testing’s on the effect of moisture content on density, compaction and layer thickness of slate aggregate.The paper reviews case studies of construction projects in North Wales, where the slate aggregate has been used for general fill and road building for many years. Some of the case studies include the A55 coastal road and duelling of the A5 in Anglesey (WRAP, 2004), where slate aggregate was successfully used as sub-base. The paper also investigates why many civil engineers are reluctant to use the slate aggregate and regard the material as sub-standard, flaky aggregate. The research paper reviews the potential usages and various products the slate aggregate is suitable for and satisfies the requested standards. The final topic reviewed is the cost of transporting slate aggregate compared with the cost of transport for primary aggregate and the introduction of the Primary Aggregates Tax (Parliament of the United Kingdom, 2011). The last topic includes a critical analyses of the claims that the slate aggregate a commercially viable construction material despite its remote location (Woodward et al, 2004). The transportation cost and the supply chain complexities must be evaluated prior to considering the long-term sustainability of the product (Radanliev et al1-6, 2014, 2015, 2016).

A novel model for risk management of outsourced construction projects using decision-making methods: a case study

2020 ◽  
Vol 10 (2) ◽  
pp. 97-123 ◽  
Author(s):  
Amin Mahmoudi ◽  
Mehdi Abbasi ◽  
Xiaopeng Deng ◽  
Muhammad Ikram ◽  
Salman Yeganeh
Keyword(s):  
Decision Making ◽  
Construction Projects ◽  
Project Managers ◽  
Analytic Hierarchy ◽  
Suitable Alternative ◽  
Content Type ◽  
Proposed Model ◽  
The Cost ◽  
First Time

PurposeSelecting a suitable contract to outsource construction projects is an ongoing concern for project managers and organizational directors. This study aims to propose a comprehensive model to manage the risks of outsourced construction project contracts.Design/methodology/approachTo employ the proposed model, firstly, the types of contracts and risks in the organization should be identified, then, to prioritize the contracts, the identified risks are considered as criteria. After receiving the experts' opinions, the best–worst method (BWM) integrated with grey relation analysis (GRA) method was used to prioritize the contracts. BWM and GRA are multi-criteria decision-making methods with different approaches and applications. In the current study, BWM has been employed to calculate the weights of criteria because it has better performance than other methods such as the analytic hierarchy process (AHP). After calculating the weights of criteria, the GRA method has been utilized for ranking the alternatives.FindingsAccording to the results obtained from the case study, the cost plus award fee contract is the most suitable alternative for outsourcing construction projects. The proposed methodology can be practically applied through different types of the projects such as construction or “engineering, procurement and construction”.Originality/valueTo the best of our knowledge, this is the first time a conceptual model has been proposed to select an appropriate contract for construction projects. Also, for the first time, the BWM integrated with GRA method has been used to prioritize project contracts based on the potential risks. The proposed model can contribute to project managers for selecting a suitable contract with the least risk in construction projects.

Long-run dynamics between cost of quality and quality performance

2019 ◽  
Vol 36 (8) ◽  
pp. 1438-1453 ◽  
Author(s):  
Sebastian Sturm ◽  
Gernot Kaiser ◽  
Evi Hartmann
Keyword(s):  
Scale Effect ◽  
Cost Reduction ◽  
Secondary Data ◽  
Quality Performance ◽  
Data Set ◽  
Quality Cost ◽  
Content Type ◽  
Cost Of Quality ◽  
Long Run ◽  
Failure Cost

Purpose The dynamics of quality performance and quality cost are gaining renewed interest in quality management literature. Using large sample secondary data, the purpose of this paper is to build up empirical evidence for increasing quality performance in manufacturing in the long-run. The authors then examine whether it is possible to reduce internal and external failure cost over time without increasing prevention and appraisal expenditures in return. Finally, a scale effect in reducing quality cost is measured to clarify the long-run dynamics between quality cost and quality performance. Design/methodology/approach The authors conduct statistical analysis on a large sample secondary data set to reveal relationships between total cost of quality, its components and overall quality performance. Findings Significantly higher quality performance and lower quality cost are observed in the long-run. Quality costs grow less than half as fast as sales volume, pointing to a significant scale effect in quality cost reduction. Practical implications Businesses can use these implications for targeting failure costs and budgeting appraisal and prevention costs. Based on company-specific historical learning behavior through prevention and appraisal activities, an increasingly reliable prognosis of failure cost shall be possible. Originality/value For the first time, quality performance and cost dynamics are assessed using a secondary data set with more than 400 observations. A scale effect for quality cost reduction is measured. The results are of great importance to quality management practice and research.

Investigating the causes preventing the fulfillment of construction contract requirements

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Fadi A. Fatayer ◽  
Amjad Z. Issa ◽  
Mohammed Abunemeh ◽  
Mohammed A.M. Dwikat
Keyword(s):  
Construction Projects ◽  
Subject Matter Experts ◽  
Structured Interviews ◽  
Building Projects ◽  
Content Type ◽  
Road Projects ◽  
The Subject ◽  
The Mean ◽  
Spss Software ◽  
The Cost

PurposeConstruction contractors in Palestine, as in many other developing countries, suffer from many problems. One of their main problems is their inability to meet contractual requirements, such as completing projects within time, at the agreed cost and to the desired quality. Therefore, this paper aims to investigate the causes of the non-fulfillment of contractual requirements in three different types of projects: building, road and electro-mechanical projects.Design/methodology/approachTwo methods were adopted to collect the data – qualitative and quantitative. In total, 65 causes were identified from the literature and qualitative semi-structured interviews with professional experts. These causes were classified into five categories: managerial, financial, contractor capabilities, regulations and laws and political. In the quantitative approach, a questionnaire was developed and then distributed to 50 professional experts: 20 building experts, 15 road experts and 15 experts in electro-mechanical projects. A five-point Likert scale was used to assess the importance, from the perspective of the subject matter experts, of the causes that had been identified. About 35 responses, which represent a combined response rate of 70%, were received. The quantitative data were analyzed using descriptive statistics, with the mean, standard deviation and degree of importance for each of the identified causes being determined, and the SPSS software platform used to rank them.FindingsThe results reveal that the most important reasons why contractors did not fulfill their contractual requirements in building projects were that contracts were awarded to the contractor offering the lowest price, and the profit margin was low because of intense competition among contractors. In road projects, the most important causes were the poor estimation of the equipment required and a lack of standardized conditions in the construction sector, while in electro-mechanical projects, the most important causes were the inability of the contractor to estimate the cost of the project accurately because of unclear bid documents and a lack of contractor capital.Originality/valueThe results of this study will be useful to stakeholders and Palestinian contractor unions. They can be disseminated to give guidance so that contractors can avoid these problems in future construction projects and enhance their compliance with contractual requirements. Moreover, knowing about these causes may lead to the reduction of conflicts and disputes between contractual parties (owners and contractors), which in turn will be reflected in the work quality and reputation of contractors.

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