Supply Chain Optimization to Gain a Competitive Edge in the Construction Industry: Fid-Bau Portal

Supply Chain Optimization to Gain a Competitive Edge in the Construction Industry

Mansoor, Asif / Khan, Muhammad / Shakeel, Waleed / Ali, Ghulam Muhammad / Bouferguene, Ahmed / Al-Hussein, Mohamed

Globally, project owners have serious concerns over growing project costs and have been looking for ways to reduce or contain construction costs to meet organizational objectives. Likewise, consultants and contractors are also attempting to be the most competitive in the market to get more business. Nevertheless, the scarcity of skilled labor and increasing material costs due to inflation are inevitably pushing construction costs up and forcing the industry to live with minimum possible profit margins. Therefore, the construction industry is in dire need of finding creative ways to lower overall construction costs, to not only align with project owner goals, but to also improve the bottom-line without impacting negatively on-time project deliveries. In the coming years, economists foresee a sizable surge in construction volume and a potential deficit of skilled workers, which obviously calls for the industry to pay higher wages to secure the right people, which means there will likely not be a way for the industry to lower costs in the human resources category. Therefore, the industry may be left with only the option to investigate more creative and modern ways of acquiring project materials to generate hard and soft cost savings to lower the overall cost and consequently improve profit margins. Researchers on construction procurement topics have already done a significant amount of work that is focused on refining conventional acquisition processes and pinpointing the right time to involve critical suppliers on individual projects in order to help with balance of projects (BOP) design, to minimize rework, and to improve schedule and labor productivity by ensuring timely material deliveries to the job site in order to realize some soft cost savings. Since very limited research has been done in the context of lowering material costs, there is an opportunity to study techniques with the potential to shift cost-saving approaches from conventional to world-class and to reposition the materials management function from individual projects to programs and from programs to portfolios with the intent to consolidate commodities and leverage enterprise-wide buying power.