Materials Management
Materials management is an important element in project planning and control. Materials represent a major expense in construction, so minimizing procurement or purchase costs presents important opportunities for reducing costs. VICC utilizes a materials management system which avoids large and avoidable costs during construction.
Materials management is not just a concern during the monitoring stage in which construction is taking place. Decisions about material procurement are also be required during the initial planning and scheduling stages. Activities are utilized in the project schedule to represent purchasing of major or long lead items such as elevators, generators, electric power systems, etc.. The availability of materials may greatly influence the schedule in projects with a fast track or very tight time schedule. VICC has successfully provided management of long lead items on all of our projects allowing sufficient time for obtaining the necessary materials. '
Materials management is also a problem at the organization level if central purchasing and inventory control is used for standard items. In this case, the various projects undertaken by the organization would present requests to the central purchasing group. In turn, this group would maintain inventories of standard items to reduce the delay in providing material or to obtain lower costs due to bulk purchasing. This organizational materials management problem is analogous to inventory control in any organization facing continuing demand for particular items.
VICC utilizes a computer based system to insure the consistency and completeness of the purchasing process. WE use an automated materials requirements planning system that is automatically linked master production schedule (Primavera P5), inventory records and product component lists are merged to determine what items must be ordered, when they should be ordered, and how much of each item should be ordered in each time period. The heart of these calculations is simple arithmetic: the projected demand for each material item in each period is subtracted from the available inventory. When the inventory becomes too low, a new order is recommended. For items that are non-standard or not kept in inventory, the calculation is even simpler since no inventory must be considered. With a materials requirement system, much of the detailed record keeping is automated and project managers are alerted to purchasing requirements.
VICC has invested more than $500,000 in software, hardware, and consulting to provide a turnkey automated computer system that integrates all key areas into one software package. Timberline is now used for all accounting, hr, inventory, scheduling, estimating, and also a very key area…Project Management.
Benefits for Materials Management Systems.
- Reduction in craft labor costs occurred due to the improved availability of materials as needed on site
- Savings due to reduced delay for materials
- Increase in productivity
- Warehouse costs decrease
- improved inventory management
Material Procurement and Delivery
For projects involving the large scale use of critical resources, VICC often initiate’s the procurement procedure based upon a large amount of approved submittals already received from past projects in order to avoid shortages and delays. The VICC procurement department will shop for materials with the best price/performance characteristics specified by the designers.
Once goods are purchased, they represent an inventory used during the construction process. The general objective of VICC’s inventory control is to minimize the total cost of keeping the inventory while making tradeoffs among the major categories of costs: (1) purchase costs, (2) order cost, (3) holding costs, and (4) unavailable cost.
