Assessment of Supply Chain Management in

Building Construction Projects

(A Case Study of Projects inside Kathmandu
Valley)

Gangesh Kumar Joshi

(CM-016-1035)

July 2020

1
 Presentation Outline

• INTRODUCTION
– BACKGROUND
– STATEMENT OF THE PROBLEM
– RESEARCH QUESTION
– RESEARCH OBJECTIVES
– SIGNIFICANCE OF STUDY
– SCOPE AND LIMITATION OF THE STUDY
• LITERATURE REVIEW
• METHODOLOGY
• REFERENCES

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 Chapter 1 Introduction

• Construction industry is one of the largest industry all around

the world.
• Supply chain management of the materials in a construction
industries play a vital role for its success.
• For any business, to control its business process in a
systematic and defined way supply chain management plays a
vital role. (Winser, et al., 2012)
• The importance of SCM has increase due to the rise in
globalization.
• In most of the construction projects, late delivery of the
construction materials is the main problem. In order to meet
the deadline and maximize the efficiency of the project, the
delivery of the materials should be in time. (Kebede, 2017)
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 Statement of the Problems

• Lack of timely supply of material at construction site.

• Loss of profit, cost overrun, time overrun, quality problem,

environmental problem.

• High chance of delivery of low quality materials.

• High amount of waste collection.

• Chance of stock out, Inventory management related problem.

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 Research Questions

 What are the perceptions of stakeholders working in the

construction sector towards the supply chain management?

 What are the existing challenges in supply chain management

process of the construction industry?

 What are the appropriate approach and solutions efficient

supply chain system?

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 Research Objectives
Overall Objective
• The overall objective of this research is to analyze the supply chain
system of the construction industries of Nepal. The specific objectives
are as follows:

Specific Objectives
• To find out the understanding of stakeholders working in the
construction industry about the importance of supply chain management.

• To find out the existing challenges in the supply chain management

process of the construction industry.

• To recommend appropriate approach and solutions for efficient supply

chain system in the construction of building projects in Nepal.

6
 Significance of Study
• Helps to identify the problems for effective supply of
construction materials.
• Assist to find out the best approach of the supply chain.
• Increase the knowledge about importance of supply chain
management to the stakeholders.
• Assist to identify the factors affecting the supply chain
managements and helps in better planning of material
management.

7
 Scope of the Study
Scope
• The study has focused on the understanding of stakeholders
about the importance of the supply chain management.
• The study has focused on the current status and challenges in
SCM and to explore the main challenges in SCM.
• The study will explore the best approach of SCM and measures
to be adopted for better supply chain.

8
 Limitations

Limitations
• The study was carried out to assess SCM in Building
Construction Projects only.
• The study was carried out to assess the supply chain of
materials only.
• The case study was focused on building construction projects
only and was limited within Kathmandu valley as the valley is
one of the major demand sites for construction materials
coming from various sources outside the Kathmandu valley.

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 Chapter 2 Literature Review
Supply chain
• A concept originated and flourished in manufacturing industry.
• First visible sign of supply chain management in the JIT
delivery system, as part of the Toyota Production System
(Shingo, 1988).
• Supply chain is defined as a group of inter-connected
participating companies that add value to a stream of
transformed inputs from their source of origin to the end
products or services that are demanded by the designated end-
consumers.

Fig: Supply Chain 10

 Literature Review
Supply chain
• To, establish a more efficient and effective supply chain, it is
very important to get the opportunity for a collaborated
approach of the partners of the chain (Christopher, 1998)

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 Literature Review Contd.
• Supply chain management is a set of approaches utilized to
efficiently integrate suppliers, manufactures, warehouse and
stress, so that merchandise is produced and distributed at the
right quantities, to the right locations, and at right time, in
order to minimize system wise costs while satisfying service
level requirements.

Concept of Supply Chain

Group of organizations connected through upstream and
downstream, in distinct activities and processes which generate
value in the form of service and products to the final customer
(Christopher, 1998).

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 Literature Review Contd.
• Supply chain management is a set of approaches utilized to
efficiently integrate suppliers, manufactures, warehouse and
stress so that merchandise is produced and distributed in the
right quantities, to the right locations, and at the right time, to
minimize system-wide costs while satisfying service level
requirements.

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 Literature Review Contd.
• Supply chain management is the management of inventories
linked in orders. It is the process of proper planning and
control of all physical goods that flow from suppliers to the
end-users.

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 Literature Review Contd.
• In order to sustain and survive the objectives of growth, many organizations
should have to defend the international competitors by studying the demand
and supply of the local market. However, the expansion of distribution and
global logistic network is very challenging, for proper shipment of the
products to the consumers who demand in rapidly and dynamically
changing set of channels.

15
 Literature Review Contd.
• The Common challenges for supply chain in the developing countries like
Nepal in dairy businesses are poor transportation facility and road
infrastructures, lack of logistic support, unstable government, insufficient
technology. The type of relationship of the supply chain between upstream
suppliers to the suppliers of downstream of Biratnagar Milk Supply
Scheme’s (BMSS) is shown below.

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 Literature Review Contd.
Factors Affecting Supply Chain
Identification of the factors affecting supply chain is very
important for better understanding and working with the supply
chain. The factors and sub-factors affecting the supply chain
management are, (Quesada, et al., 2012)
1. Environmental Uncertainty
• Company Environment
• Government Support
• Uncertainty aspects from overseas
2. Information Technology
• Communication tools and system
3. Supply chain relationships
• Relationship with suppliers
• Relationship with customers
4. Challenges in the procurement and supply chain
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 Literature Review Contd.
Factors Affecting Supply Chain
The factors affecting the efficiency of Supply chain management
are:
• Poor road condition and shortage of transportation means
• Lead time
• Perfect order/inventory
• Blocked and natural disasters
• Procurement process
• Lack of conflict resolution skills
• Distance between supplier depots and construction sites
• Fill rate
• Cost of material
• Cash to cash cycle

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 Literature Review Contd.
Factors Affecting Supply Chain
The factors affecting the relationships with client and suppliers :
• Relation between demand and supply
• Efficient Supply
• Enhanced customer service
• Efficient Communication
• Simplifying the bidding process
• Ease in construction process
• Government support
• Trust
• Inappropriate organization structure

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 Literature Review Contd.
Factors Affecting Supply Chain
The factors barrier for Supply chain integration are:
• Delay in payment
• Problems due to inferior quality
• Changes made in design, delay in approval, inappropriate
drawings or drawings that do not fit in use and incorrect
documents
• Bidding process
• Delay in delivery, delivery of inferior quality materials
• Large number of substitute products and approval delay

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 Literature Review Contd.
Factors Affecting Material Management
The factors affecting material management are:
• Inappropriate inventory management
• Use of inferior quality materials
• Use of inappropriate materials which requires replacement
• Designers lack of knowledge about available sizes and
alternative products in the market
• Changes made in design during the construction progress
• Delays in communication and decision making
• Project environment
• Order to be placed in huge quantity only
• Inefficient calculation of required quantity of materials

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 Literature Review Contd.
Factors Affecting Material Management
The factors affecting material management are:
• Incomplete and unclear specifications
• Lack of detailed drawings
• Procurement of materials that do not meet the specification
• Ordering errors

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 Literature Review Contd.
Approach of Supply chain management
The main four roles of SCM in construction can be described
depending upon the focus on the supply chain, the construction
site or both, (Vrijhoef & Koskela, 2000).

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 Literature Review Contd.
Benefits of Supply chain Management
The main benefits of the supply chain are decrement of real cost,
on-time delivery, delivery of better value underlying to the client,
improvement in productivity, better confidence and relationship in
long term planning within parties, etc. This improves the
reputation and higher level of satisfaction to the customer
(Georgios, et al., 2016)
• Effective long-term planning and coordination
• Increases overall profit and reduces the cost
• Enhances client satisfaction
• Increases quality works
• More competitiveness
• Increase understanding and communication

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 Literature Review Contd.
Benefits of Supply chain Management
• Reduces delay in process and increases operational efficiency
• Improve coordination with suppliers
• Helps in retaining the employees
• Creates opportunities for new market

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 Literature Review Contd.
Measures for betters supply chain management
The measures for the better supply chain management are:
a. Implementing knowledge management system
b. Identifying the wastages and elimination of non-value
activities
c. Increase effective information system
d. Provide training to the employees
e. Develop good relation with suppliers and subcontractors
f. Tracing the performance of the project
g. Benchmarking
h. Perfect cash to cash cycle
i. Perfect order and inventory management
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 Literature Review Contd.
Measures for betters supply chain management
The measures for the better supply chain management are:
i. Perfect order and inventory management
j. Reducing bureaucracy and line of work
k. Identify the capacity of suppliers
l. Identifying alternative suppliers
m. Proper resource planning
n. The proper relation between main office and site office

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Chapter 3 Research Methodology
Problem Statement

Research Questions

Research
Objectives

Data Collection

Consultant with Supervisor

Literature Review

Primary Data
Secondary Data

-Questionnaire
-Data From respective
projects-Research papers,
-Interview Journals, Articles etc.

Data Analysis and

Interpretation

Results and
Discussions

Conclusion and
Recommendation
 Research Methodology Contd.
Research Approach
• Both quantitative and qualitative approach have been used in
this study.
– Quantitative approach will be used for the measurement of
supply chain system in construction industries of Nepal
– Qualitative approach will be used to find the outcomes and
performance of the Supply chain management

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 Research Methodology Contd.
Study Area
• The study area were the building projects inside Kathmandu
valley.

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 Research Methodology Contd.
List of Public Building construction projects in Kathmandu Valley
S.N. Project Name Location Client Contractor
1 Minister Quarter Bhaisepati DUDBC Sicro-Hanuman JV
Prime Minister Contech Pvt. Ltd.
2 Quarter Baluwatar DUDBC
DUDBC New Rabina Construction
3 Building Babarmahal DUDBC Pvt. Ltd.
Sharma-Samanantar
4 Sarbocha Adalat Kantipath NRA JV
5 Parliament Buildings Singhadurbar DUDBC Tundi-SHEC JV
6 Bir Hospital Ratnapark DUDBC Sharma-ZIEC JV
Sharma-New
7 Singhadurbar Retrofit Singhadurbar NRA Technical JV
8 Balmandir Retrofit Naxal NRA Lumbini-Rabina JV
Keshar Mahal ZCGI-Khani JV
9 Retrofit Thamel NRA
Central Library New Technical-
10 Retrofit Jamal NRA Shanti JV
Department of Road Samanantar
11 Babarmahal Retrofit Babarmahal NRA
New Dharhara Raman-Meheta JV
12 Construction Sundhara NRA
13 Durbar High School Ranipokhari NRA
Basantapur Durbar
14 Square Basantapur NRA
3000 Capacity KC-Samanantar JV
15 Convention Hall Godawori DUDBC
Province Head KC-Samanantar JV
16 Quarter Buildings Bhaisepati DUDBC

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Research Methodology Contd.
CE Real State
S.N. Projects Location Type
1 Goldhunga Height Goldhunga Housing
2 Scenic Housing Thaiba, Lalitpur Housing
3 Premier Apartment Maharajgunj, Kathmandu Apartment
4 Sallaghari Colony Sallaghari,Bhaktapur Housing
5 Bansbari Colony Bansbari, Kathmandu Housing
6 Senon Colony Ekantakuna, Lalitpur Housing
7 Sanepa Height Sanepa, Lalitpur Housing
8 Thaiba Colony Thaiba Heights, Lalitpur Housing

Green Hill City

S.N. Projects Location Type
1 Green Hill City-Imadol Imadol, Lalitpur Housing
2 Green Hill City-Dhumbarai Dhumbarai, Kathmandu Housing

Downtown Housing
S.N. Projects Location Type
1 Downtown Residency Dhapakhel, Lalitpur Housing
2 Downtown Apartment Khumaltar, Lalitpur Housing

Civil Homes
S.N. Projects Location Type
1 Civil Luxury Residence Sundhara, Kathmandu Apartment
2 Phase IV Dhapakhel, Lalitpur Housing
3 Phase IV Apartment Dhapakhel, Lalitpur Apartment
4 Phase VII Sitapila, Kathmandu Housing
5 Phase IX Godavari, Lalitpur Housing

The Comfort Housing

S.N. Projects Location Type 32
1 TCH Tower - IV Sitapaila, Kathmandu Apartment
 Research Methodology Contd.

Study Population
• Total thirty four projects were selected for the study.
Among these, 16 projects were executed by
DUDBC/NRA and 18 projects from the private
developers.
• The study population was 48 person from the public
building construction projects with ( 1 client, 1 consultant
and 1 contractor representative) from each projects and 18
from the private builders ( 1 representative from each
project).

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 Research Methodology Contd.
Sample Size
• The total population under our study is 66 out of which
63 sample was obtained for the study by using Taro
Yamane Formula,
The sample size is calculated with a 5% error and a 95% confidence interval from the
equation (i).

The sample size for this study was determined using Taro Yamane formula for finite
population as stated in equation (i)
𝑁
𝑛= ……………………………. (i)
1+𝑁𝑒 2

Here, n = sample size

N= Finite population
e= level of precision

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 Research Methodology Contd.

Sample Size
• 63 respondents from client, consultant, contractor and
private builders were selected from 34 projects.

27% 25%

Government
Institute
Consultant
Contractor
Private Builders

22% 25%

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 Research Methodology Contd.
Method of data collection
Primary data
• Primary data were collected by questionnaire survey with
the representative personnel of the project.

Secondary data
• Technical and other supply chain system data will be
collected from the corporate offices and site offices of the
studied project.

36
 Research Methodology Contd.

 
Data Analysis
The collected data were analyzed by using Relative
Importance Index (RII).
The relative importance index (RII) has been calculated as
follows:

Here, w = weight as assigned by each respondent on the scale

of 1 to 5 where 1 implies to the least and 5 implies to the
highest.
A= highest weight and N is the total number of samples.

37
 Research Methodology Contd.
For three research questions, the questionnaire was divided
into three category.
For the first research question, two questionnaire under the
section understanding the importance of SCM was analyzed.

For the second research question, five questionnaire under the

section understanding the importance of SCM was analyzed.

For the third research question, Approach and solutions for

supply chain system.

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Research Matrix

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 References

Cox, A. & Ireland, P., 2002. Managing construction supply chains: the common sense approach. Engineering,
Construction and Architectural Management, Volume 9, pp. 409-418.

Cox, A. & Thompson, I., 1997. Fit for purpose' contractual relations: determining a theoretical framework for
construction projects. European Journal of Purchasing and Supply Management, Volume 3.

Czarnigowska, A. & Sobotka A., 2005. Analysis of supply system models for planning construction project
logistics. Journal of Civil Engineering and Management, Volume XI, pp. 73-82.

Domenica, N., 2002. Supply Chain Planning and management. [Online]

Available at: http://www.optririsksystems.com

Georgios, A. P., Nadia, Z., Sotiris, P. G. & Ilias, P. T., 2016. Supply Chain Improvement in Construction Industry.
Universal Journal of Management, pp. 528-534.

Harland, C. M., 1994. Supply chain management: Perceptions of requirements and performance in European
automotive aftermarket supply chains, University of Warwick: s.n.

Harland, C. M., 1996. Supply chain management: relationships, chains and networks. British Academy of
Management, Volume 7.

Jones, T. & Riley, D., 1985. Using Inventory for Competitive Advantage through Supply Chain Management.
International Journal of Physical Distribution and Material Management, Volume 15, pp. 16-26.
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 References

Jones, T. & Riley, D., 1985. Using Inventory for Competitive Advantage through Supply Chain Management.
International Journal of Physical Distribution and Material Management, Volume 15, pp. 16-26.

Kebede, B., 2017. Assessment of Supply Chain Management In Public Building Construction Projects In Addis
Ababa, Addis Ababa: s.n.

Kebede, B., 2017. Assessment of Supply Chain Management In Public Building Construction Projects In Addis
Ababa. Addis Ababa Institute of Technology, Addis Ababa: s.n.

Kharel, S., 2017. www.thehimalayantimes.com. [Online]

Available at: https://thehimalayantimes.com/opinion/supply-chain-management/
[Accessed 09 April 2020].

Klemencic, E., 2006. Management of the Supply Chain- Case of Danfoss District Heating Business Area,
Ljubljana University: s.n.

Koskela, L., 1992. Application of The New Production Philosophy to Construction, Stanford University: CIFE
Technical Report.

Lambert, D. M. & Cooper, M. C., 2000. Issues in supply chain management. Industrial Marketing Management,
Volume 29, p. 29.

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THANK YOU

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