THE EFFECT OF MATERIAL MANAGEMENT ON REAL ESTATE

PROJECT DELIVERY IN KUMBA

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CHAPTER ONE

INTRODUCTION

1.1. BACKGROUND OF THE STUDY

The real estate industry which plays a key role in the world’s economy and the services
provided by the industry is vital for the achievement of national socio-economic development
goals such as shelter, infrastructure and employment from time immemorial. Tam et al, 2002
revealed that the real estate or construction industry plays an important role in meeting the
needs of society and enhancing quality of life. Real estate development has been an important
player in many countries economy, especially developing countries Shen and Tam, 2002.
The sector currently accounts for more than 11% of global GDP (Betts et al., 2011).

In addition, the real estate industry which is becoming increasingly competitive and materials
management is now considered to be one of the frontiers for cost reduction to improve
profitability and productivity, as construction materials constitute a major cost component in
any construction project. The total cost of installed materials (or value of materials) may be
50% or more of the total cost (Stukhart, 1995), even though the factory cost may be a minor
part of the total, probably less than 20-30%. This is because the item must be stored,
transported, and re-stored before it is put in place or "consumed" at the site. The total cost of
materials includes, in addition to the manufacturer’s selling cost, the cost of procurement
(cost of placing, processing and paying the material, physical distribution, the distributor's
cost, and the transportation of the materials), and the site-handling costs (cost of receiving,
storage, issuing, and disposal) (Haddad, 2006). The efficient procurement and handling of
material represent a key role in the successful completion of any project. It is important for
the contractor to consider that, there may be significant difference in the date that the material
was requested or date when the purchase order was made and the time at which the material
will be delivered. These delays can occur if the contractor needs a large quantity of materials
which the supplier is not able to produce at the time or by any other factors beyond his
control. The contractor should always consider that procurement of materials is a potential
cause for delay (Haddad, 2006). Ballot (1971 as cited in Haddad, 2006), defined materials as
the physical materials that are purchased and used to produce the final product and does not
suggest that materials are the final product. In other words, materials are the parts used to
produce the final product.

Materials management practice is a procedure that coordinates planning, assessing the

requirement, sourcing, purchasing, transporting, storing and controlling of materials,
minimizing the wastage and optimizing the profitability by reducing cost of material (Phu &
Cho, 2014). Management of construction material is a new practice in the construction
industry (Harris et al, 2013). In the present situation, the management and the designers are
mainly concerned on how to control cost without any emphasis on material management
measures (Wahab and Lawal, 2011). On the whole, it is accepted that cost of materials
accounts for a great percentage of the total cost of construction projects (Kerzner, 2013). It
should be worth emphasizing that poor planning and control of materials, lack of materials
when needed, poor identification of materials, rehandling and inadequate storage can cause
losses in labour productivity and overall delays that can indirectly increase total project costs.
On the hand, effective management of construction materials can reduce these costs and
contribute significantly to the success of the project.

Therefore, a critical management of materials on site should be adopted. According to

(Daramola et al, 2010) material management is of central importance to the economic
development of the real estate industry. (Ajayi et al 2017) define construction material
management as a reduction in the amount and environmental effect of material waste
generated, by reducing the amount of materials consumed in a project. Muleya &
Kamalondo (2017) also identify material management as an integrated process of designing,
constructing new structures or re-modeling existing structures, using materials more
efficiently with a great importance of contributing to real estate or construction industry’s
performance improvement as well as solving material waste management problems. Several
authors from different parts of the world have shown that material waste from the
construction firm represents a relatively large percentage of the production costs (Saidu and
Shakantu, 2016)

Furthermore, achieving success in project implementation process is the major function of

materials management. Modern techniques of efficient Material Management were developed
in USA during Second World War which helped them to make a spectacular progress in
improving their productivity. Over the last few years increased awareness in different areas of
material management had been found, many hospitals adopted these management techniques
to provide efficient patient care, of which the construction industry is not an exception
(Kulkarni 2010).

Nevertheless, according to Nwachukwu et al. (2010), the rate at which construction projects
fail, or are abandoned (some even under construction) is largely dependent on effective
application of materials management techniques in developing economies. He further
indicated that failure or abandonment of construction projects in developing economies may
be attributable to inefficient material management practices on construction projects sites.
Stukhart (1995), defines material management as the activities involved to plan, control,
purchase, expedite, transport, store, and issue in order to achieve an efficient flow of
materials and that the required materials are bought in the required quantities, at the required
time, with the required quality and at an acceptable price. According to Ebole (2005),
materials management is the planning and controlling of all necessary efforts to make certain
that the right quality and quantity of materials are appropriately specified on time, are
obtained at a reasonable cost and are available when needed. Dobler and Burt (2009) stated
that material management is designed to improve the activities related to the flow of
materials. They added that material management should coordinate purchasing, inventory
control, receiving, warehousing, materials handling, planning, and transportation. Materials
management involves an integrated coordination of all material related functions. These
functions can be carried out efficiently only when sufficient emphasis is placed on early
project planning, use of qualified personnel, adequate personnel training and proper
communication amongst those involved in the process (Keitany & Mutwol, 2014). According
to Ebole (2005), the essential and desired site materials management characteristics of right
quality, right quantity, right time and reasonable cost are evidently scarce on construction
projects as it is characterized by emergency purchases of materials, inadequate storage,
material shortages and sometimes condemnation of materials and works by consultants. Past
research has revealed that material management techniques has influence on the project’s
(Ademeso and Windapo, 2012; Mutwol et al 2014; Sundararaja et al, 2014). Therefore, it is
believed that materials management techniques could go a long way to either enhance project
success or project failure in the growing Kumba real estate industry. It is against this
background that this study is conducted to identify and assess the effect of material
management practices on project success or failure to enhance the industry’s development
and the economy at large.
1.2. PROBLEM STATEMENT

The real estate industry being one of largest industrial employer in the world and the highest
consumer of material and natural resources (WEC, 2009). Construction materials therefore
are a critical element in the delivery of real estate project as it contributes a major portion to
the cost of projects. The contribution of construction materials may account 50-60 % of the
project cost (M. Safa et al, 2004).

Today, the technological innovation and advancement in the growing real estate industry of
Kumba and Cameroon at large, has been attended with failure ranging from project delay and
abandonment. Proukumtong et al (1996) studied delays in real estate projects of developing
economy and some of the delays were attributed to material management, the study blames
material shortage on site on unreliable supply from material suppliers occasioned by the
general shortage in the industry. Although there were specific instances in which poor
communication between sites and head office purchasing, planning and coordination could be
cited. Furthermore, the delays of some projects were also attributed to unexpected weather
conditions escalate the transportation difficulties to some construction site and the rigorous
procedure to deliver the materials to the construction site also has its own uncertainties and
ambiguities.

Bringing imported construction materials made-to-order for a real estate project is

time consuming and requires high expenditure. On the other hand those projects
depending on the limited local supplier shops face the difficulty to find the right quantity and
quality of materials needed for the projects. Ultimately putting the project
at stake and accelerating the cost of the project. Therefore in this research a study will
be carried out to identify and assess the effect of material management practice and project
delivery in terms of cost overrun and delay. Multiple times the researchers in the field of
construction highlighted the challenges that they are facing due to the imported materials, but
an in-depth study has never been conducted to assess the effect of material management on
real estate project delivery in Kumba and Cameroun at large (Rashfa, 2014). On the other
hand, even though fundamental discussions have been conducted by some real estate developers
in Kumba to raise concern regarding construction material, no solid solution has been reached.
As the answer always tie back to poor management but never rise to find the root causes of
ineffective material management in construction projects and its relation to the existing
material management practice. This study will therefore examine the effect of material
management of project delivery in Kumba in terms of quality and time.

1.3. RESEARCH OBJECTIVES

1.3.1. Main objective

The main objective of this research work therefore is to examine effect of material
management practice on real estate project delivery in Kumba.

1.3.2. Specific objectives

Base on the main objective, the following specific objectives can be deduced.

i. To explore the various material management practice in Kumba

ii. To examine the effect of material management on project in terms of quality and time
upon delivery in Kumba.
iii. To evaluate the advantages and disadvantages of material management on real estate
projects in terms of cost overrun and delay.
1.4. RESEARCH OBJECTIVES
1.4.1. Main Research Question
What is the effect of material management on real estate projects in Kumba?
1.4.2. Specific Research Questions
i. What are the current material management practices in Kumba?
ii. What are the effect of material management on real estate projects in terms of
quality and time?
iii. What are the advantages and disadvantages of material management on real
estate projects in terms of cost overrun and delay?
1.5. SIGNIFICANCE OF THE STUDY
The findings from this research will serve as a guideline to the stakeholders of the
growing real estate industry of Kumba and Cameroon at larger. As a matter of fact
construction material management practices in the Kumba real estate industry have never
been identified or recorded previously. Therefore this study will be the first to reveal the
 existing material management practices and the comparison between the different
approaches will give the field professions a deeper insight into these practices.
Moreover this study will generate a list of root causes for ineffective material
management that can be used as a benchmark to control the existing and future
projects.

In addition to this how these root causes are related to the current material
management practices will create aware the stakeholders to be more cautious.
Furthermore the most concerning issues like cost overrun and delay in terms of project
delivery and its relation with the current material management practice will reveal the
weakness in the current material management practices to the stakeholders.
Apart from this research being useful to the field professionals, this study will be
valuable for the academicians too. As this study will serve as a support of what the
past researchers have written about material management in construction projects.
Furthermore it will also provide information for further researchers who are willing to
investigate on this particular or similar case.
1.6. SCOPE OF THE STUDY
This research paper focuses only on the effect of material management on real estate
delivery in Kumba. Moreover it concentrates specifically on current building projects
such as; residential and non-residential buildings. Furthermore, it will be looking at their
level of adoption of material management approach considering their successes with
respect to project delivery, time quality and cost overrun.

1.7. DEFINITION OF THE TERMS

1.8. STRUCTURE AND ORGANISATION OF WORK