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Construction Purchasing & Supply Chain Management is an authoritative guide that provides proven strategies for the construction supply chain management (CSCM) function. The material in this book explains how to achieve maximum integration with upstream and downstream supply chain members using the latest methodologies and technologies. It is also a comprehensive step-by-step guide to CSCM that is intended to help project owners, design engineers, architects, prime contractors, subcontractors, suppliers, and construction managers involved in construction projects throughout the world establish a strategic framework to meet the budgetary and scheduling goals of any project.
This book can be used to teach the fundamentals of construction purchasing and supply management in a logical, simple, and concise format in construction management courses designed for undergraduate business and civil engineering students or for construction management graduate students. CSCM focuses on strategies for Lean construction including just-in-time purchasing, supplier evaluation, subcontractor selection, subcontractor relationship management, equipment acquisition, information sharing, and project quality management. The treatment of CSCM in this book is extensive and complete. There are more than 70 illustrations and ready-to-use forms.
The construction industry has changed in its complexity over time. However, the primary objective of the industry is basically the same as it was 100 years ago: to build communities, roads, schools, homes, businesses, and hospitals. In 2007 approximately $2 trillion was spent in the construction industry. A unique project-delivery system is the cornerstone of the construction industry. The industry is fragmented and distinguished by a collection of large and small firms, related bulk material suppliers, and many other support professionals. The typical supply chain for any given construction project could include architects and engineers, prime contractors, specialty subcontractors, and material suppliers that come together one time to build a single project for a specific owner.
This complex supply chain is characterized by adversarial short-term relationships driven by the competitive bidding process. Except for the architect, support engineer, or other construction professional whose fees are negotiated, the low bid win is the pricing model that repeats itself in each link of the supply chain. The project owner selects a prime contractor who is the low bidder. In turn, the prime contractor uses price as the basis for selecting subcontractors and suppliers. This approach continues even if a subcontractor hires his or her own subcontractor; again, the low bid wins
In most private and some public markets it is an industry practice after the contract is awarded and the overall project price is known, for the prime contractor to “shop” the prices of subcontractors before deciding which to use. Likewise, prime contractors may receive unsolicited quotes from subcontractors who aggressively pedal their low prices after the contract award. This adversarial behavior causes dissatisfaction throughout the supply chain and results in arms-length, one-time, project-focused relationships. Time is one of the most critical factors in construction operations and has significant legal consequences.
The project owner sets rigid beginning and ending dates for the construction process. Delays are costly and are specifically addressed in contract documents in anticipation of liquidated and other damages. Pricing in construction can be lump sum, cost plus, negotiated, or unit price. All pricing in construction depends on the time that the contractor determines it will take to complete a job. Barring any circumstances caused by the project owner and outside of the control of the contractor, the contractor must meet the time set by the project owner or lose mone