Contemporary Issues in Procurement Engineering in Construction

Industry

Vijay Kumar Geejula

Abstract: In recent year, a great attention has been paid to procurement engineering in the society of

construction engineering because of high demand in construction of residential and commercial buildings,

transportation. A thorough work has been carried out on contemporary issues in procurement engineering in

construction industry which is one of the major drawback for the project delay now days. A comprehensive

literature review showed that the construction industry is not fully aware of procurement issues which is

most important aspect to complete the project on time. With this in the mind, this paper introduces a method

for addressing such procurement problems, including delivery of materials, using the right tools, supply

issues with suppliers, communication between engineers, sub-contractors and among other factors. Although

some ways are available to solve such procurement issues in construction industry, it is still challenging to

address such complex procurement problems. Therefore, information on construction materials, and low

level of professionalism are implemented into the proposed MATLAB graph. A case study, interviews with

procurement engineers in construction regarding procurement issues, workplace, journal and other

information are considered. A brief survey has been conducted to study on the projects. In the study payment

delay, import of construction material and escalation of prices are identified as a big issue but when using

relative importance index and energy is applied, then payment delay for suppliers and sub-contractors,

disputes while executing the project, engineers are pressurized to reduce the costs are identified as some

major issues in procurement engineering.

Key words: procurement, construction industry, MATLAB, analysis, construction project management.

1. Introduction

Procurement engineering is the one of the most important aspects in construction industry to complete the

project on time (ATIN, 2016). Procurement is the process of finding the right supplier for construction

materials and finalizing sub-contractors for the project, agreeing payment terms with suppliers and sub-

contractor for the awarded project (Towsend, 1998). Issues in procurement engineering has raised drastically

with increasing demands in construction (Outlook, 2021). Procurement delay is directly linked to project

delay in construction industry which puts the company in trouble and eventually leads to disruption of work,

loss of productivity, third party claims (Abedi, 2011), stress increase in employees resulting anxiety and

depression (Goetsch, 2012), and termination of contract and finally ends in disputes and claims. The

common issues in the procurement engineering are summarized as follows:

1a. Material Issues: 1. The Issues will be discussed below, material delay is one of the major problems in

procurement in construction, unavailability of materials for construction like steel (aziz, 2013) , concrete

(delayed due to bad weather, high demand), timber, wrongly delivered material to the site, material damages

in site due bad weather and human errors.

1b. Equipment: Lack of equipment and shortage due to high demand (World, 2018) in construction

industry.

1c. Supply issues: 1. The approved material will be shortage due some other reasons like export/import

problems between countries like the countries (Saudi Arabia and Qatar) (crisis, 2017) who are neighbors

suddenly had to cut the diplomatic relationship between them, then the material coming from the country

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will no longer available. (Kumaraswamy, 1996) studied that factors shortage of material as contributors that

contribute to causes of delays. In construction, we use a different type of material and the three main courses

are cement, timber and steel bar. Besides that, material is one of the main sources in construction industry. It

is because without material, project cannot complete. For instance, a project having shortage ceramic tiles

even though the labors are ready for tiling. In this situation, the project gets delayed for few more time 2.

Disputes between the engineer and suppliers becomes very high if things go wrong, which is very stressful

for procurement engineer leads to anger and less productivity.

1d. Communication and safety rules: 1. Disputes between engineers and sub-contractor while working on

the site which leads to delay of the project the reasons maybe poor understanding and agreement, stress

between engineers and sub-contractors are very high which leads to Anxiety and depression. 2. Improper

communication between procurement engineer and project engineer while requesting material or any other

issues. 3. Procurement engineers and project engineers skips weekly and minutes of meeting with the clients

then they don’t know the status of the project and material status. 4. Necessary variations of work to be

submitted to client if the work is not included in the scope of work.

1e. professional: 1. Failure to start the procurement process on time. 2. Delay during the approval process.

3.slow decision making by clients (Alsendi, 2015) 4. Engineers show low level of professionalism during

procurement process which becomes advantage for suppliers and sub-contractors (Delta, 2017). 5. Poor

knowledge regarding procurement software’s. 6. Evaluating the potential suppliers and selecting right one

(Kumaraswamy, 1996)

1f. Estimation: 1. price of the material was estimated less during estimation process. 2. Engineers are

pressurized to reduce costs and achieve savings target which leads to anxiety and worry because of stress

increase (Alsendi, 2015).

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1g. Tools: Finding the right tools or approach is emerging problems in procurement engineering.

1h. Payments: 1. Payments delay for suppliers and sub-contractors is one of the major problems in

procurement engineering (Deniz, 2007) 2. Issues with suppliers and sub-contractors regarding payment

terms particularly with new companies.

1i. Other: 1. Materials not included in the design while estimating the project. 2. Project delay due to

permissions from the government like current supply, land permit extension (Rahim, 2008). 3. Imported

construction material, (crisis, 2017) most of the countries are depending on each other for the materials like

Arab countries completely depends on other countries like United Stated of America and India for

construction material which results delay in procurement process. 3. Escalation of material price due strike in

market or any other reason. (Scoot, 2005) studied the factor of escalation of material prices was one factor

that contribute to causes of delays. Escalation of material prices will cause shortage material in construction.

It is because the market rate is keeping increasing. Some of the contractor does not buy if high. During same

time, the construction without material cannot run so the project will influence the project delay. For

instance, a contractor because of material cost of market demands higher and does not make any order for

material until material shortage. Finally, the construction cannot run without material and which leads to

project delay.

Scholars and Engineers who are expert in procurement field developed many methods to identify the

problem early: checklists, documentation review, brainstorming (Chapman, 2001), surveys, interviews,

strength weakness opportunity threat analysis, nominal group technique .Few studies have said about

effectiveness of these techniques results show that most of contractors use brainstorming technique,

regardless of its limitations, to identify risks associated with construction projects.

1j. workplace stress in procurement engineering: stress is a silent but potentially dangerous hazard in the

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work place. construction will be one of the most stressful industries, stress-related medical bills and the

corresponding absentee rates cost employers over $150 billion annually. Almost 15% of all occupational

disease claims are stress related (Goetsch, 2012). 58.2% felt that the construction industry is more stressful

then it was five years ago. Procurement engineers feels more stress because they have dead life to buy

material and work with new people every time (suppliers and sub-contractor). Stress which leads to low

productivity of the engineer and now analyzed in 2 ways, one is considered in general way and other is

considered as personal experiences in the below case study.

2. Data Collection

In this study a thorough investigation was carried out with 15 different project which are completed in UAE

and India. The project were mainly concrete structures completed in a 1 year -1-year 6months. Delay was

measured in days based on the primavera data and internal investigations. The procurement engineers who

completed the projects were asked to evaluate stress while working on the project. Then the delay of the all

projects was analyzed and each issue was ranked and simulated using MATLAB. The results were

interesting. Later, energy was applied to Relative importance index to check the which are the major

problems was faced by the procurement engineers while executing the project.

A set of 29 questions were asked to procurement engineers using a survey to identify the problems

accurately. The survey form was sent to all procurement engineers situated in India and UAE:

Table 1 Survey Form

Contemporary issues in Procurement Number of Indicate *, if Indicate *, if

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SN Engineering

days delayed/Type of stress

you faced any of these issues at a time in any of the procurement process

you faced any of these issues at a time in any

of the procurement

process   Type of problem case-1 case-2  Delivery      

1 Materials delayed by suppliers      Steel        Concrete        Timber      

Other ( )        Equipment      

2 Unavailability of equipment/shortage        Supply Issue      

3Shortage of approved material in the market      

4Project delay due to wrong material delivered      

*Stress at that time (rank 0-5 depending up on level)      

5Finding the right supplier for the approved material      

6

Material damages in the site due to human/weather

  Communication & Safety Rule      

7

Disputes between subcontractors and engineers (procurement/project) delayed due to disputes      

*Stress at that time (rank 0-5 depending upon level)      

8Improper communication between engineers (procurement and project)      

9Skipped meetings (minutes of meeting/monthly)      

  Professional      

10Failure to start the procurement process on time      

11 Delay during the approval process      

12 Slow decision making by owner/client      

13 lack of skilled staff      14 Poor knowledge regarding procurement      

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software's

15Evaluating potential suppliers and selecting the right one      

16 Necessary variations of work

17Engineers are pressurized to reduce costsStress of the Engineer at that time

  Estimation      18 Error in Estimate      

  Tools      

19Finding the right tool like Software's or Approach      

Payments

20Payments delay for Suppliers and Sub contractors      Stress at that time (rank 0-5 depending upon level)

  Other      21 Incomplete specification      

22delay due to permission from government      

23 Imported construction material      

24 Escalation of material prices      25 Change order      

Stress

26Overall stress while working on the project

27 Stress while dealing with suppliers

28Stress while dealing with sub-contractors

29Overall stress while as a procurement engineer

Suggestions(Optional): What are the other problems you faced while working as a procurement engineer?

All 15 projects plotted on a graph using excel, the results are seen below: The major problems identified are payment delay for suppliers, imported material, escalation of material prices. The minor issue identified are error in estimate, evaluating and failure to start the procurement process on time.

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Figure 1 (Major issues identified)

3. Qualitative Analysis:

The data collected from the survey from the procurement engineers, then analyzed using MATLAB for

maximum, average and minimum delays for the major problems identified using relative importance index.

The result can be found below:

3.1 One-dimensional data analysis

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Material delay, disputes, delay in importing material, disputes with engineers and sub-contractors was

identified as one of the major problem in procurement engineering in construction based on the data.

Figure 2 Delay due to Imported material

When we look at the above figure (delay due to Imported material), the maximum number of delays are equal to average number of days.

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Figure 3 (Projects delayed due payment delay for suppliers and sub-contractors)

figure 3 clearly indicates that projects are delayed by maximum number of day when comparing with the all projects. This is one of the most common issue in procurement engineering in construction. The issue can be seen most in middle east and developing countries since the payment are release slowly when comparing to other nations. Before starting any project, it is advised to fix payment terms with suppliers and sub-contractors. So that after procurement process the issue won’t be raised and no payment delay occurs.

Figure 4 discuses regarding escalation of prices are caused when the material is shortage in the market and the demand cannot reach expectations then material of price reaches high leads to escalation.

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Figure 4 (Escalation of prices)

Figure 5 (Engineers are pressurized to reduces the costs)

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3.2, One-dimensional data analysis – Quantile-Quantile plot

To evaluate correlation between major issues in procurement engineering in constructions industry. The

issues are identified using surveys and relative importance index. Main problem is recognized as material

and plotted between payment delay, slow decision by clients, escalation of material prices, imported material

from other countries. These are main components for delay of the projects and sensitive at this situation. The

data was analyzed and plotted using QQ graph from MATLAB. The results are show below:

Figure 6 correlation between delay due to material and payment delay

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Figure 7 (Correlation between delay due material and slow decision by clients)

Figure 8(Correlation between delay due material and escalation of material prices)

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Figure 9 (Correlation between delay due material and imported material)

3.3 Three-dimensional data analysis

3d graph: The analysis was carried out between 3 components that are total number of days delayed, material delay and slow decision, escalation of material prices, payment delay, imported material. By observing the below tables, one can say that major issues had been active when compare to total number of all project delay days.

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Figure 10(relationship between delay between material, payment, total number of days)

Figure 11(relationship between delay between material, Slow decision, total number of days)

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Figure 12 (relationship between delay between material, Escalation of prices, total days)

Figure 13(relationship between delay between material, imported material, total number of days)

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Figure 14(relationship between delay between material, engineers pressurized, total days)

4. Quantitative Analysis

To further investigate the case, the quantitative analysis is conducted for the collected data to find out the

major issue among survey questions.

relative importance index (RII) will be calculated using the following formula (Alsendi, 2015):

RII = ∑ P i U i / N (n) (1)

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where,

RII = relative importance index

P i = respondent’s rating of cause of delay

U i = number of respondents placing identical weighting/rating on cause of delay

N = sample size

n = the highest attainable score on cause of delay.

When we apply energy to the equation for a better value and find out major issues in procurement

engineering in construction industry. The major problems are identified using RII(Energy) are Payment

delay for suppliers and sub-contractors, disputes between engineers and sub-contractors and engineers are

pressurized to reduces prices.

RII = (∑ P i U i)^2 / N (n) (1)

where,

RII = relative importance index

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P i = respondent’s rating of cause of delay

U i = number of respondents placing identical weighting/rating on cause of delay

N = sample size

n = the highest attainable score on cause of delay.

Table 2 Relative importance Index(Energy)

No Issues in procurement engineering RII MRII (Vijay)1 Payment delay 5.081 10.1632 Imported Material 3.228 6.45753 Escalation of Prices 2.106 4.21334 Engineers are pressurized to reduce costs 3.598 7.19655 Slow decision by owners/clients 3.715 7.436 Steel delay 2.24 4.487 Disputes 4.297 8.59428 permission delay 3.385 6.77149 finding the right suppliers 1.741 3.4833

10 wrong delivery 2.135 4.271111 variation work 3.065 6.12512 change order 2.3448 4.689713 concrete 2.815 5.815914 other material delay 1.373 2.746715 Equipment shortage 2.275 4.551516 Miscommunication 1.797 3.594417 Timber delay 0.586 1.173318 Skipped Meetings 0.571 1.142919 delay in process 1.924 3.884420 Material damages 1.924 3.848521 late in procurement process 0.90 1.808922 potential suppliers 0.59 1.918523 Estimate Error 2.762 5.524624 Incomplete specification 3.310 6.621525 Material shortage in the market 1.265 2.52526 Lack of Skilled staff 0.92 1.8427 Lack of Procurement Software 0.353 0.70667

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0 2 4 6 8 10 120

2

4

6

8

10

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Rii(energy)

Figure 15(Relative Importance Index(Energy)

Figure 15 indicates that payment delay, disputes with engineers and sub-contractors and engineers are

pressurized to reduce the prices are major issues in procurement when applied with relative importance index

multiplied to energy.

5. Workplace Stress: During the survey procurement engineers are asked to evaluate stress while

working on the project, the results shown below are quite high. Most of the engineers are exposed to

workplace while dealing with project, suppliers and sub-contractor which may result to

musculoskeletal disorders, psychological distress such as depression, cardiovascular disease. To avoid

stress individual may take physical exercise, engaging in various hobbies and seek support. And

employers consider mental health benefits in health insurance coverage, give information on how to

cope with stress, make them work flexible hours, clearly define their work role (Goetsch, 2012).

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1 2 3 4 5 6 7 8 9 10 11 12 13 14 150

1

2

3

4

5

6

Chart Title

Overall stress while working on the project Stress while dealing with suppliersStress while dealing with sub-contractors Overall stress while working as a procurement engineer

Figure 16 Workplace stress

6. Conclusion

One way is developed using MATLAB to know the procurement issues in construction industry and can be

rectified. Gradually relative importance index(energy) used to find out the issues procurement engineering in

constructions industry. Material delay and disputes with engineers, sub-contractors while executing the

project, payment delay, engineers pressurized to reduce the cost, escalation of material price was found to be

major issues in procurement engineering.

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