INVENTORY MANAGEMENT CONTROL OF BUILDING MATERIALS ON CONSTRUCTION SITES

TABLE OF CONTENTS

CHAPTER ONE

INTRODUCTION

            1.1       BACKGROUND TO THE STUDY

            1.2       STATEMENT OF THE PROBLEM

            1.3       AIMS AND OBJECTIVES

            1.4       HYPOTHESIS.

1.5     SIGNIFICANT OF STUDY.

            1.6       SCOPE AND LIMITATION.

CHAPTER TWO

            2.0       INTRODUCTION

            2.1       THE CONSTRUCTION SITE.

            2.2       CONSTRUCTION MATERIALS.

            2.3       NATURE AND CLASSIFICATION OF MATERIAL.

2.3.1  BULK

            2.3.2  BAGGED

   2.3.3    PALLETED

   2.3.4    PACKAGES

    2.3.5        LOOSE

            2.4       THE COST OF MATERIALS

  2.4.1     DELIVERY TO SITE.

               2.4.2      UPLOADING

   2.4.3        SHRINKAGE:

   2.4.4        LAPS

   2.4.5        BULKING

   2.4.6        COMPACTION:

    2.4.7          WASTE

           2.5       PRETENDER ALLOWANCE FOR WASTE

           2.6       MATERIALS WASTAGE

           2.7       TYPES AND SOURCES OF WASTE

            2.7.1  DIRECT WASTE

            2.7.2  INDIRECT WASTE

            2.8       EFFECT OF MATERIALS WASTAGE ON CONSTRUCTION OUTPUT.

            2.9       MATERIAL MANAGEMENT FUNCTIONS

            2.9.1  SCHEDULING / PLANNING NETWORK

      2.9.1  PRE – TENDER PLANNING

            2.9.2  PROCUREMENT NETWORK.

            2.9.3  PROCUREMENT PROCEDURE

            2.9.4  PHYSICAL / CONTROL AND STORAGE.

2.9.5 USAGE

2.10 METHODS OF MATERIALS WASTE REDUCTION

2.11 SITE ACCOUNTING SYSTEM.

2.12 CONTROL FORMS

2.12.1 THE MATERIAL BUDGET

2.12.2 REQUISITION ORDER

2.12.3 DELIVERY NOTE

2.12.4 MATERIALS RECORD BOOK

2.12.5 MATERIAL TRANSFER NOTE

2.12.6 MATERIALS ALLOCATION

2.12.6.1 “IN AND OUT’’ BIN CARD

2.12.6.2 INVENTORY BIN CARD

2.13 MATERIAL BOOK

2.14 COMPUTERIZED RECORDS

2.15 MATERIAL RECONCILIATION

2.16 MATERIALS HANDLING AND CONTROL STORE KEEPING

2.17.2 WORK IN PROGRESS INVENTORY

2.17.3 FINISHED GOODS INVENTORY

2.18 INVENTORY CONTROL TERMINOLOGIES

2.18.1 LEAD OF PROCUREMENT TIME

2.18.2 ECONOMIC ORDER QUANTITY (EBQ) OR ECONOMIC BATCH QUANTITY (EBQ)

2.18.3 BUFFER STOCK OR MINIMUM STOCK OR SAFETY STOCK

2.19 INVENTORY MANAGEMENT TECHNIQUES

2.19.2 THE RE-ORDER POINT (ROP)

2.2.1 PRICING STORES ISSUES

2.21.1 FIFO (FIRST IN, FIRST OUT)

2.12.2 LIFO (LAST IN, FIRST OUT)

2.21.3 AVERAGE PRICE METHOD

2.21.4 STANDARD PRICE

2.21.5 REPLACEMENT PRICE

2.21.6 BASE STOCK METHOD

2.22 MATERIAL HANDLING AND CONTROL STORE KEEPING

CHAPTER THREE

3.0       DATA PRESENTATION AND ANALYSIS

3.1       DATA ANALYSIS AND HYPOTHESIS TESTING

3.2    DATA ANALYSIS AND HYPOTHESIS TESTING 1

3.3    DATA ANALYSIS AND HYPOTHESIS TESTING III 

3.4       DISCUSSION OF FINDINGS

CHAPTER FOUR

CONCLUSION AND RECOMMENDATIONS

4.1       CONCLUSION

REFERENCE

APPENDIX

APPENDIX II

QUESTIONNAIRE II

CHAPTER ONE

INTRODUCTION

            1.1       BACKGROUND TO THE STUDY

Project delivery in the Nigeria construction industry is largely characterized by abandonment and delay at varied stages of completion. This pathetic situation is borne out of the construction of management in the industry on labour productivity thereby relegating to the background the importance of materials employed in job-execution.

The cost of materials constitutes 50-60% of the total cost of construction. The costs and value have a direct and blank- range effects on the overall cost and value of a building.

          The word ‘’construction’’ is an all embracing term which covers works involved in the erection of buildings for various uses such as; private and public residential buildings for various uses such as; private and public residential buildings, commercial, industry, healthcare and recreation. It also covers all engineering works such as roads, bridges, dams, drainage’s and Sir fields e.t.c. the widespread of activities indicated a very high financial resource involvement. In 2005 alone, Nigeria spent ₦8.0 billion on the construction industry on non- residential buildings as reported by Ademoroti (2009). This figure accounted for 53.3% of the gross capital investment at current purchaser’s value at that time without doubt the construction industry is regarded as a highly capital intensive industry which requires a lot input which if not properly managed will result in great loss.

The very long process of construction procedure makes it more susceptible to losses and wastages. Starting from the process of construction, wastage abound.

The construction process which can be equated to the production process of the manufacturing industry takes place on the construction site, and is regarded as the most vital in the construction industry. This assertion is corroborated by Newcomb et al 2009 ‘’ At the heart of a construction organization is the building site. Therefore the construction production is the dominant process performed’’. Unlike other industries where factory processes are bored on clearly defined past practices and are often largely determined by fixed plant and machinery Seeley (2010).

          Site management in the Nigeria construction industry has tended to be focused mainly on labour organization and productivity to the negligence of materials. However of the five resources that go into production process identified by ward (2011) are:

i.             Men (Labour)

ii.           Materials

iii.         Money (Capital)

iv.         Machines (Equipment)

It is generally recognized that materials constitute a high percentage. This universal truth has been extracted by Wahab (2005) from 2009 United Nation Industrial development Organization (UNIDO) sponsored work report which revealed that building materials and components contribute between 50 and 60 percent of the total value of construction output. Based on this high figure, materials management should not be toyed with. On the other hand, an effective materials management will lead to a substantial cost savings and increased profitability to the client and the contractor respectively. A small percentage cut in materials wastage could bring about a sizeable increase in profit.

Waste come about in different forms on construction sites. example are waste from cut-off, bad storage, transportation e.t.c. Alabi (2011) asserted that if resources are used beyond a particular level in relation to the real values they are wasted. A much more detailed description of wastages by Skoles (2012) states that ‘’the general recognition that not all materials delivered to the construction sites are used for the purpose for which they are ordered and that builders frequently use more materials than those for which they receive payment. These materials are neither lost or are used in construction process in ways that are not recognized by estimators. These differences have never been clearly defined and are collectively referred to as waste’’.

Materials wastage on construction sites are often taken for granted. It should how ever be appreciated that whatever the degree of waste, it has a cost implication. A very serious case of wastage could result in colossal loss of profit to the contractor. As such construction firms wanting to survive in this very hard economic recession which has led to stiffer competition in rates quotation and tendering must place more emphasis on materials wastage control, as it will help to raise profitability.

In Nigeria, the very big projects are handled by the few foreign firm most especially heavy civil works, tall buildings e.t.c. while small and medium scale jobs such as school projects, housing estates and private residential developments, on all of these projects evidences of material wastage are seen in the form of heaps of unwanted materials, old and new, littering the sites.

The study is the focused on control of building materials on construction site and the possible causes of materials wastage on construction sites, and also the ways of controlling them with a view towards minimizing losses and at the same time improving the contractor’s profit margin.

            1.2       STATEMENT OF THE PROBLEM

Wastage arises through such cases as damage, theft misuse, using incorrect material, negligence, in cutting and preparing, and over specification. Whatever the circumstances, the implication is a monetary loss arising from increased cost and quantity of material used as against the measured work, when losses or wastage become very severe, the result may be a complete loss of profit to the contractor.

For contractors to improve upon their profit margin and also reduce losses on scarce material resources. There is need for the established of effective control mechanism over materials all through material phases on construction projects. Not only does materials wastage reduce the profit level of the contractor, its adverse effect on construction works has also been linked to project delay and abandonment.

In the light of these shortcomings, improving material control on the sites.

           1.3       AIMS AND OBJECTIVES

This project is aimed to examine the control of building materials on construction site to reduce materials wastage and correspondingly increase the contractor’s profit margin.

The objectives are;

i.             To determine and causes of materials wastage on construction site.

ii.           To determine whether construction firms adhered to the use of inventory control forms.

iii.         To determine an effective method for materials control construction site.

iv.         To proffer solution to the materials on construction site.

           1.4       HYPOTHESIS.

HYPOTHESIS I:-

To test whether or not there is a statistically significant relationship between the method of materials management policies / practice and the level of wastage experienced on construction sites.

HYPOTHESIS II:-

To test whether there is a statistically significant relationship between wastage of materials on site and the mode of transport / delivery to construction site.

HYPOTHESIS III:-

To test whether there is a statistically significant relationship between wastage of materials that will occur on site during usage of materials and type of construction activity.

1.5   SIGNIFICANCE OF STUDY

Primarily project work titled ‘’Inventory Management – control of building materials on construction sites’’ is aimed at determining the factors leading to and contributing to wastages of materials and the inventory management practice on construction sites. Thereafter suggesting the ways of reducing such losses of materials resource.

Materials constitute a large percentage of all resources that goes into the physical development of buildings or other structures. These materials have cost implications, they are scarce just as well as money is scarce and should therefore be treated as well.

Construction processes by its very nature allow for wastages to occur, it is often prone to large scale waste if proper attention is not paid to materials both in handling and in storage. Since wastage is a loss in monetary terms, a large scale loss may result in complete loss of profit to contractor most especially in this present days of competitive tendering resulting in low percentage charges on profit and overheads.

Materials control is not a particularly new term to the construction firms, but the existence of the total concept of carrying out the control measures, observations, have shown that the operative especially and some supervisors exhibit a lot of indifference to the issue of wastage. Apart from the cost reduction effect it has on the contractor’s profits. It also constitute a menace to easy flow of work on site. There is greater risk of accident to operatives and other personnel on site and also plants hired tend to stay longer on sites due to delay, which may be experienced.

There is a need to check all the negative tendencies occasioned by wastage of materials on site. Whatever the source of the waste, a through control will bring about a reduction in the wastage and an ultimate increase in profit return.

Finally to realize such profit return, there is a need for a solid materials  management policy put in place to check or guide against all sources of materials loss, and it is the responsibility  of all private authorities to ensure that resources are utilized to an optimum level.

           1.6       SCOPE AND LIMITATION.

The general scope of this research covered some problems associated with materials wastage on construction sites and is restricted to minimizing wastage. It is limited to inventory control and accounting control of building materials. The materials referred to in the context of this paper is limited to those materials classified as required medium to much protection.

Only some common sources of wastage will be considered in the research work. And the basic traditional economic order models are considered as an inventory control model and no mathematical model will be applied. Material considered are the general types like cement, concrete block, plumbing material e.t.c.