LESSON SIX

MATERIALS MANAGEMENT IN CONSTRUCTION.

1. MATERIALS MANAGEMENT IN CONSTRUCTION.

1.1 Definition and scope of materials management

Materials management is a core function of supply chain management, involving the planning
and execution of supply chains to meet the material requirements of a company or
organization. These requirements include controlling and regulating the flow of material while
simultaneously assessing variables like demand, price, availability, quality, and delivery
schedules.
Material managers determine the amount of material required and held in stock, plan for the
replenishment of these stocks, create inventory levels for each type of item (raw material, work
in progress or finished goods), and communicate information and requirements to procurement
operations and the extended supply chain. Materials management also involves assessing
material quality to make sure it meets customer demands in line with a production schedule and
at the lowest cost.
Typical subheads in Materials Management include inventory analysts, inventory control
managers, materials managers, material planners, and expediters as well as hybrid roles like
buyer/planners.
Regardless of role, the main objective of Materials Management is assuring a supply of material
with optimized inventory levels and minimum deviation between planned and actual results.
The objectives of material management are sometimes referred to as the ‘Five Rs of Materials
Management:’
1. The right material
2. At the right time
3. In the right amount
And of the quality that is:
1. At the right price
2. From the right sources

1.2 Building materials

Building materials are substances, whether natural or man-made, which are used for construction
purposes to create structures and buildings.
Examples
  Stone
 Sand
 Fired Bricks
 Metal
 Cement
 Concrete
 Wood
 Glass
 Bamboo
 EPS Panels
 Glazed Ceramic Tiles
 Roofing Sheets
 Roofing Tiles
1.3 Pretender and pre-contract and contract planning for materials
Planning By the Contractor:
A contractor has to plan for the work at the following two stages:
a. Pretender Planning
b. Precontract Planning
c. Contract Planning
Pretender Planning
The planning undertaken by the contractor after receipt of tender notice and before submitting
the bid is called pretender planning. At this stage, planning for materials involves the following
steps:
 A careful study of tender documents and drawings to find out the quantities of each item
of work, time limits and other conditions of work.
 Working out the quantities of material required in different items.
 Finding out the availability of required materials e.g. sources, suppliers and distance to
site.
 Finding out the market prices of required materials
Precontract planning
The planning undertaken by the contractor after receipt award letter/notification of award and
before signing of the contract is called precontract planning. At this stage, planning for materials
involves the following steps:
 A careful study of tender documents and drawings to find out the quantities of each item
of work, time limits and other conditions of work.
  Working out the quantities of material required in different items.
 Finding out the availability of required materials e.g. sources, suppliers and distance to
site.
 Finding out the market prices of required materials
 Finding out the type, availability and cost of machinery and equipment needed to be used
with the materials specified and any other facilities such as testing facilities.
Contract Planning:
The planning undertaken by the contractor after signing of the contract is called contract
planning. The contractor needs further intensive planning at this stage and this continues during
the implementation of the contract up to completion. This planning in relation to materials
involves the following steps:
 Studying alternative methods of construction.
 Working out the quantities of materials required at each stage of work,
 Locating the sources of supply of materials and their comparative cost.
 Working out the requirements of the construction labor, supervisory and managerial staff
at various stages of work and arranging their selection and recruitments.
1.4 Material estimating and costing
Before commencement of work, contractors have to estimate the quantity of materials need.
The steps in calculation of materials needed is as follows
Step One: Determine the quantity of work to be done.
To determine the quantity of work to be done can be through:-
a. Direct measurement from the drawings.
b. Adopting quantities from the Bill of Quantities. Adopting the Quantities from the BoQ is
the easiest but will require the material estimator to check the drawings and confirm if
they are accurate.
Step Two: Determine which constituent materials are to be required.
From the work description, one item of work can require more than one type of materials. Below
is an illustration.
BOQ FORMAT SCHEDULE OF MATERIALS FORMAT
Amount Constituent Amount
Item Description of work Units Qtys Rates Units Qtys Rates
(Kshs) Materials (Kshs)
50mm thick Mass concrete
a class 15(1:3:6):in under column m2 Cement (50kg) Bags
bases
Sand (fine
Tons
aggregates)
Ballast (coarse
Tons
aggregates)
Reference A142; mesh 200 x
200 mm weight 2.22kgs per
square metre (measured net-no
b allowance made for laps); m2 BRC Mesh A142 Rolls
including bends, tying wire and
distance blocks. Rate to include
laps
Binding wire (16
Rolls
gauge 25kg/Roll)
Cement (50kg) Bags
Sand (fine
Tons
aggregates)

Supply and fix High tensile steel

reinforcements bar in structural
c concrete work including cutting, Kgs Ribbed bar T-12 Number
bending, hoisting, tying wire,
spacing blocks and supporting
all in position as required = T 12
Binding wire (16
Rolls
gauge 25kg/Roll)
Cement (50kg) Bags
Sand (fine
Tons
aggregates)
Fair face (Marine board) finish
d formwork to soffits of m2 Marine boards Number
suspended slab.
Nails- 3 inch Kgs
Timber frames Feet

Timber poles Number

200mm thick hand dressed

natural stone walling bedded in
200mm thick
cement and sand mortar (1:3)
e m2 foundation walling Number
with minimum stone crushing
stones
strength of 7N/mm² and
reinforced with hoop iron gauge
500 in every alternative course.

Cement (50kg) Bags

Sand (fine
Tons
aggregates)
25mmx3mm thick
Rolls
Hoop iron
BOQ FORMAT SCHEDULE OF MATERIALS FORMAT
Amount Constituent Amount
Item Description of work Units Qtys Rates Units Qtys Rates
(Kshs) Materials (Kshs)
12mm thick plaster: 12 mm
cement/lime putty/sand: steel
m2 Cement (50kg) Bags
trowelled: on masonry or
concrete: to wall surfaces
Sand (fine
Tons
aggregates)
Lime (50kg) Bags

Prepare surfaces: one

undercoat, skimming of surcaes
f and two coats of Crown Solo m2 Skimming Bags
silk vinyl emulsion paint or other
equal approved: on steel
trowelled plastered surfaces
Silk vinyl paint liters
Undercoat
liters
covermatt paint
300 x 300 x10mm Thick Quarry
tiles on prepared backing
(measured separately)
g m2 Tiles Boxes
complete with cement mortar
and grouting ( measured area
includes skirting)
Spaces Packets
Cement (50kg) Bags
Grouting Kgs
900mm high balustrading in
MILD STEEL comprising 50x2
mm diameter mild steel circular
hollow section(CHS) handrail ,
25 x 25x1.5mm SHS steel
h rails,60x10mm thick flat steel m Cement (50kg) Bags
balusters at 600mm centres
with one end grouted to
concrete floor and other end
welded handrail; all as per
architect's detail
Sand (fine
Tons
aggregates)
Ballast (coarse
Tons
aggregates)
2mm thick 50mm
Number
CHS mild steel
25 x 25x1.5mm
Number
SHS mild steel
60x10mm thick
Number
flat steel
Step Three: Calculate quantity of materials
After identifying the constituent materials, the next step is to calculate the quantities of those
materials.
To do this, one must know the coverage rates of each material per the each unit of measurement.
The coverage rate is then multiplied by the BoQ quantities to get the total quantities of each
constituent materials.
The coverage rate can be obtained from:-
i. Experience,
ii. Manufacturer’s instructions
iii. Calculation from first principle.
The coverage rate/ratio must have a factor to include wastages and breakages.
Once the absolute quantities are determined, the estimator will have to convert the quantities into
the available packaging units as sold out/ supplied by hardwares and manufactures.

For Example, Calculate the Quantity of materials needed to construct 108m2 of foundation
walling.
Solution
The Constituent materials needed are stones, cement, sand, and ballast and hoop iron
Quantity (Number) of stones needed
If the Quantity of foundation stone walling is 108m2, the material estimator needs to
know how many stones will cover 1m2. From experience or 1m2 of walling takes about
12 walling stones. Therefore the number of stones needed is 108 x 12 = 1296 number of
stones.

Quantity (Number) of bags of cement needed

Student to attempt to calculate

Quantity (tons) of sand needed

Student to attempt to calculate

Quantity (tons) of ballast needed

Student to attempt to calculate
Quantity (rolls) of hoop iron needed

The cost of materials is basically the cost of purchase and supply. The total cost of materials is
derived by pricing all the materials in the schedule of materials and totaling up the entire amount.
The price of materials is obtained from suppliers and manufacturers.
1.5 Material order and lead Times
In procurement, lead time refers to the number of days from when a company places purchase
order for production inputs it needs, to when those items arrive at the manufacturing plant.
Purchase order lead times vary from company to company and from industry to industry, and
depend on many factors such as the types of goods or materials being ordered, their relative
abundance or scarcity, where the suppliers are located, and even the time of year.
The purchase order lead time includes a number of different steps including the confirmation of
the order, availability of the goods, the order placement, acknowledgement of the order, the
shipping notice, and receipt of the goods, invoicing, and payments.
Components of Lead Time
a. Preprocessing time: This is also referred to as the planning time, and it includes the time
taken to receive a request for replenishment, understand it and create a purchase order
(when buying an item), or create a job in the case of a manufacturing firm.
b. Processing time: The processing time is the time taken after receiving a purchase order
to procure or produce the item.
c. Waiting time: The waiting time is the time that’s taken between procuring necessary
items to the time when the production process commences.
d. Storage time: Storage time is the amount of time that items stay in the warehouse or
factory awaiting delivery.
e. Transportation time: The transportation time is the time that the produced item takes to
move from the warehouse/factory to the customer.
f. Inspection time: The inspection time is the time spent by the customer checking the
product to see if it meets the specifications. It also refers to the time required to deal with
any non-conformity with the order request.
Companies must carefully plan purchase order lead times when planning a manufacturing run
because if production inputs do not arrive on schedule, manufacturing will be delayed, costing
the company money in lost sales, idle worker time, and lower factory overhead absorption. On
the other hand, if inputs arrive too early, the company could incur additional inventory storage
costs.
For this reason, managers need to plan as precisely as possible when they need to order the
materials needed, lest they incur additional overhead.
How can you effectively shorten your lead times and optimize inventory management
There are ways companies can reduce the number of days in a POLT:
 Increasing the number of orders: This is a better option compared to putting in one or
two large orders. By doing so, companies can save both time and money, and can ensure
they don't have too much of a certain supply, while maintaining enough stock to keep
fulfilling orders.
 Changing suppliers: Using local or domestic suppliers over international ones may help
cut down on lead times, which, again, can save on time and money.
 Automating the order process: By moving to a system that automatically places and
fulfills orders, companies can free up manpower for other tasks, and personnel can have
more time to do their jobs. Automation also helps cut back on any possibility of error
when it comes to order placement.
 Source and purchase locally: It should not come as a surprise that shipping your
products from international suppliers will increase your lead time. Finding international
suppliers may seem appealing due to potentially lower manufacturing costs, but in the
long run, it could cost your business more if you are just waiting for stock to arrive.
Finding local suppliers could help reduce your lead time significantly.
 Increase the frequency of orders and decrease the volume
Instead of ordering a large amount of inventory, order smaller amounts that take less time
to manufacture and ship. Your inventory is then replenished more frequently and more
consistently.
 Incentivize your suppliers
Work a lead time clause into your contracts with suppliers. This could either be in the
form of a bonus should they deliver well in advance of what they estimated or in the form
of a penalty if they are delayed. This helps in getting your suppliers to stick to the agreed
lead times.
 Automate your inventory management process
Speed up your time to market by automating your inventory management workflows.
With tools like QuickBooks Commerce you can reduce the time taken to create and
manage purchase orders, always be in contact with your suppliers, keep track of stock
levels all without worrying about manual data entry and human error.
 Establishing better transportation models such as use of dedicated trucks.
 Use of functional tracking and communication systems.
 Carrying out supplier performance on vendors of same category.
 Proper forecasting and scheduling
 Sound equipment and machineries.
 Use of appropriate shipping methods i.e. express freight or airfreight for lightweight
materials
When choosing what inventory models to implement for your construction company, economic
order quantity should always be considered.

1.5.1 Economic Order Quantity

Economic order quantity is the amount of product you should order to meet demand without
having to store any excess inventory. It is the ideal amount of product a company should
purchase to minimize inventory costs.
Importance of Economic Order Quantity
Managing economic order quantity is an important skill to have. It can help avoid issues like
excess stock or dead stock and helps increase the company's sales and revenue.
EOQ Formula: Economic Order Quantity Formula
The EOQ formula is made up of three variables: holding costs, demand, and order cost. We
break down each variable below.
i. Holding costs (H)
Holding cost (also known as carrying costs) refers to the total cost of holding inventory.
Minimizing inventory costs is an important retail supply chain management strategy.
How much do you spend on holding and storing inventory, per unit, per year? In order to
properly calculate EOQ, you’ll first need to determine your holding cost. To do so, you
can refer to the simply formula below:
(Storage Costs + Employee Salaries + Opportunity Costs + Depreciation Costs) /
Total Value of Annual Inventory = Inventory Carrying/Holding Cost
 ii. Annual demand (D)
How much demand do you get for a product each year? By looking into historical order
data, you can determine the number of units you sell year over year.

iii. Order cost (S)

Also referred to as ‘setup cost,’ how much does an order cost per purchase? This is done
on a per-order basis and includes both the shipping and handling costs.

The economic order quantity formula

The formula for economic order quantity is:
EOQ = square root of: [2SD] / H
S = Order Cost (per order, generally including shipping and handling)
D = Demand rate (quantity sold per year)
H = Holding costs (per year, per unit)

An EOQ example
Let’s say you have these variables:
 $0.75 in holding costs per unit = H
 Demand rate of 10,000 per year = D
 Setup cost of $500 = S
 You’d get this formula: EOQ = square root of (2)(500)(10,000)/.75) = 3,652 units per
order.
Your optimal order quantity is 3,652 units for that specific product.

Economic Order Quantity Problems

Though there are definitely positive aspects of calculating EOQ, there are also a few drawbacks
that you need to be aware of. Most of them stem from the fact that it is based on assumptions as
outlined below:-
 The rate of demand is constant.
 Ordering costs are consistent.
 Unit price is constant.
 Lead time is constant.
 There is no safety stock.
Benefits of calculating EOQ.
a. Minimize inventory costs
Having extra items in your inventory can quickly increase storage costs. Inventory costs
can also go up depending on how you order, what gets damaged, and what products never
sell. If you’re constantly re-ordering products that have low velocity, EOQ can help
determine how much to order in a certain time period.
b. Minimize stock-outs
EOQ can help you better understand how much you need to re-order and how often. By
calculating how much you need based on how much you sell in a given period of time,
you can avoid stock-outs without having too much inventory on hand for too long. You
may be surprised that ordering in smaller quantities may be more cost-effective for your
business, or it could be the opposite — calculating EOQ can help determine this.
c. Improve overall efficiency
Overall, calculating EOQ can help you make a better decision when it comes to storing
and managing inventory. The truth is that many ecommerce business place orders based
on a “gut feeling” of how much to order, instead of actually ordering how much product
is actually needed. Calculating EOQ is a smart way to better quantify how much you
need based on important cost variables.