MANAGING INFORMATION FLOW IN CONSTRUCTION SUPPLY

CHAINS

1.0

INTRODUCTION

Now days Malaysia and other countries in the world entered a new era of the
Information Age. Where by Management Information System (MIS) plays an important role
in a construction environment whether it is during the preconstruction period or during the
project implementation. Such information is vital not just to the procurer but to all the
suppliers and parties involved in the project.

Procurement within the construction context applies to a combination of goods and

services defined to meet specific requirements. The basis of procurement depends on the
specific needs and objectives of the project. In a procurement project the parties involved
have decisive roles based on the information available or communicated to them.

Besides that, information systems are an integral part of organization for some
companies there would be no business without an information system. It needs to be captured
and communicated efficiently between relevant parties during a construction project. Better
means of managing the information flow results in enhanced productivity of projects.
However, inefficiency in handling information does not depend solely on the industry process
or the technologies adopted. Several other factors are identified within the framework of this
paper.

2.1 DISCUSSION

2.2 Construction supply chain

The construction supply chains are characterized by the involvement of many
companies from a wide variety of trades. A construction project involves a diverse
group of participants including contractors, architects, engineers, labourers, and
developers. A project of medium to large scale typically involves hundreds of different
companies supplying materials, components, and a wide range of construction
services. The multi-participant and multi-domain characteristic is partly caused by the
high fragmentation of the industry.
The temporary project-based nature of construction projects also hinders
integration of construction supply chains. Even though the processes can be similar
for construction projects of a specific kind, most construction projects create new
products or prototypes and consist of temporary supply chains that organizations need
to be reconfigured for each project. A flexible system may facilitate adapting to new
configurations and changes in supply chains. Based on the characteristics of
construction supply chains, literature review, and feedbacks from practitioners in the
industry, the following sections summarize the desirable requirements of a
collaborative platform to enhance communication among members and integration of
services in a construction supply chain.
2.3 Supply chain management

The definition of supply chain Supply chain management (SCM) is the

management of the flow of goods, flow of cash, and flow of information internally
and externally of a company or a group of companies that share the same value chain.
It includes the movement and storage of raw materials, work-in-process inventory,
and finished goods from point of origin to point of consumption; cash or credit in
purchasing or selling of products or services; as well as the information that conducts
those activities, such as orders, demand forecast, or even picking lists. Interconnected
or interlinked networks, channels and node businesses are involved in the provision of
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products and services required by end customers in a supply chain. Supply chain
management has been defined as the "design, planning, execution, control, and
monitoring of supply chain activities.

SCM draws heavily from the areas of operations management, logistics,

procurement, and information technology, and strives for an integrated approach.
Each industry has its own product characteristics and builds networks on its own
standards. Supply chain strategies require a total systems view of the linkages in the
chain that work together efficiently to create customer satisfaction at the end point of
delivery to the consumer. As a consequence costs must be lowered throughout the
chain by driving out unnecessary costs and focusing attention on adding value.

In the construction process, By working as directed by the vision of supply

chain management, the direction of the development for individuals as well as
companies can be changed. A process is defined as a repetitively used network of
orderly linked activities using information and resources for transforming inputs to
outputs, extending from the point of identification to that of the satisfaction of the
customers needs (Ljungberg, 1998). A specific type of process is what is termed the
construction processes. In this paper the term refers to the processes that are
associated with construction projects. It is typical for a construction company to carry
out production in projects.

The Construction procurement is a term Construction Procurement or

Procurement Process is used in this paper to describe the process required to supply
equipment, materials and other resources required to carry out a construction project.
Construction procurement is a key activity within the supply chain associated with the
provision of construction works and forms an integral part of supply chain
management functions. The construction industry has developed many different
contractual arrangements and procurement routes for carrying out construction works.
They include both traditional practices and new initiatives.
2.3

Role of information in the supply chain

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The role of information in the supply chain management in construction deals

with the management of materials, information, and financial flows in a network
consisting of general contractors, subcontractors, suppliers, and distributors. The coordination and integration of these flows within and across companies are critical in
effective supply chain management. The traditional approach to project management
in construction has been based on activities to monitor each subcontractors activities
against the schedule (Howell, 1999). The organization of a construction project
usually consists of temporarily designed teams from different companies to produce a
unique product. In addition, divergent goals and objectives of project participants
deter from information sharing. As the structure of the supply chain becomes intricate,
it is also unlikely that a single person would be able to deal with the entire
information and material flow.

In the literature, several techniques are proposed for implementing supply

chain management. In this context, information sharing is a fundamental approach
that underlies both communication and collaboration. Existing tools in the
manufacturing industry are often intended to provide information sharing to help
supply chain managers. The construction industry has project based temporary supply
chains: that is, its supply chains keep changing from project to project in most cases
and participants cannot afford to spend much time in configuring a system.

Although many engineers, construction managers and contractors do not

consciously recognize a supply chain, they all interact with it and make supply chain
management decisions on a daily basis. However, real-time availability is not an easy
task: information is not easily accessible; it takes too long to have; and no single
person can handle all the information in a supply chain because one has to deal with
thousands of products, numerous requirements on production, and many types of
interactions.

2.4

Contracting phases
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The construction procurement is divided into two phases within a project

environment such as pre-contracting and post-contracting phase. These are the main
phases of the contracting process. The information contained in the precontracting
phase is the early development of a project where negotiations and one or more
bidding processes take place. Since each construction project has unique
requirements, the supply chain identified or selected tends to vary from project to
project.
The post contracting phase includes the activities and flows in the supply
chain that take place based on the contractual agreements between the procurer and
the supplying partners. During the precontracting phase, sharing of information is the
main activity that takes place while negotiating for a contract and identifying
requirements. In the post contracting phase, the flow of materials and services is
added along with the managing information among supply chain partners. Supply
chain integration, which depends on the easy flow of project information with the
partner suppliers, is obviously significant during the post contracting phase.

2.5

The information flow model

The purpose of the model is to understand the information flow that takes

place throughout the construction procurement supply chain both during the precontracting and post-contracting phases. An abstract view of information flow was
earlier analysed in the manufacturing and process industry (Titus, 2001). This model
is developed here to accommodate the project-based approach of the construction
environment and further explain the flow of information among supply chain partners.
The procurer identifies different actors that form the supply chain: the
architecture firms, main contractors, specialized subcontractors, and engineering
firms. The construction supply chain with its multitier customer and suppliers has less
of a linear pattern compared to what is known from other industries. The production
methodology adopted in a manufacturing setting cannot be immediately transferred to
a construction project. This project-centred approach enables increasing collaboration
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and communication as seen in the model (Figure 1). The two arrows represent the
bidirectional information flow: the requirement information that a partner receives,
and information that the partner releases.
The requirement from the procurer initiates the procurement. This mostly
takes place with the tender request from the procurer or could even be in response to a
spontaneous offer from a supplier. The information flow is considered bidirectional at
the level of each partner firm though it needs to communicate further upstream to
suppliers in order to cause the fulfilment flow. The procurement requirement is the
intended purpose of the procurer that needs to be converted to information and
communicated.

Figure 1: Project model depicting information flow in construction supply chain

2.6

Time, cost and quality

The three most common primary objectives in project management are lowest

cost, highest quality and shortest time. Very often the gain in one of these objectives
needs a compromise in the other. Simplifying, the literature indicates that client core
objectives can be summarized as: highest realistic quality, lowest realistic cost,
minimum realistic time into service, high prestige for the building (within what is
affordable) and minimum conflict during the process. However, aside from core
wants, there is a huge variety of noncore client requirements that a construction
project has to assimilate.
2.6.1

Time
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Effective

planning

and

programming

the

design

and

construction is fundamental to the timely completion of the project. The

project plan and programme will be established using a hierarchical system of
programmes within a project planning framework. Progress through the stages
of design, procurement, construction and commissioning will be monitored on
a regular basis and any action required to overcome delays will be noted and
implemented as early as possible for these actions to be effective.
2.6.2

Cost
Effective cost control can only be obtained when the whole of the

project team has the correct attitude to cost control. Rider Levett Bucknalls
cost management strategy places emphasis on ensuring that close liaison and
free exchange of cost information between the project team is maintained at all
times.
2.6.3

Quality
Quality control will be implemented within an overall Quality

Management framework. Appropriate procedures and controls will be

established to ensure compliance with specifications and to confirm that
standard and quality of workmanship and materials are attained.
2.7

Managing information

Nobody would deny that proper management of information brings in value.

The value is obtained when information enables people and systems to efficiently
perform actions and make decisions. Managing information is particularly valuable in
the procurement projects in that it provides timely information in decision making
among the member firms within the supply chain. Those decisions may be good or
bad, brilliant or inept, but the decisions are largely driven by the information as
presented.
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Human

System

Human

Human

System

System

Figure 2: Three types of interaction

Figure 2 shows three types of such interactions between deciders are

identified: Human to Human, System to System, Human to System, and system to
system. Managing information is not just information processing in pure system terms
but also includes decision making by various actors involved in enhancing the
information flow. Such decision makers can either be systems or people, based on the
type of information and type of decision. According to the project model described
above, the requirement and fulfilment flow is based on the decision making efficiency
associated with each individual partner or firm. Based on the decision made, the
subcontractor causes the fulfilment flow as information is sent to the required parties.
Each participating firm in the project supply chain has a decision making role
in managing the information flow within the network of the construction project. The
deciders in the decision making process sense the environment they are in (here
environment is the instance when a partner firm needs to make decision based on the
information received or possessed). The decision making process generally is
modelled or understood as a feedback loop. Several models have been proposed for
describing the decision making process. Based on this model it is understood that
proper information flow involves both sharing of information between partner firms
and managing information by proper decision making within each partner firm in the
supply chain.
The flow of information in supply chain management depends on the tradeoffs each partner firm is willing to make in terms of information sharing with the
other partner firms in the project. The cost-effective communication of high quality
and timely information increases the value of project partner as a communicator of
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information within the project. The inter-relatedness of the value of information to

efficiency in information flow is presented in Figure 3. The nature of information
received, the decision made and the information communicated are inter-related
within the context of each partner firm. The value of information can be analysed
according to the three underlying factors that cover the objectives of the procurer:
quality, time and cost. In Figure 3 shows the managing of information and the overall
efficiency is a result of information handling capabilities within each project partner
.It is also a fundamental fact that each partner within a single project can be part of
several other projects and supply chains. The environment of supply chains also
depends on the nature of the project and the firm.

Value of Information
Quality

Project Partner as a
Recipient

Time

Decider

Cost

Communicator

Efficiency in Information flow

(Of information)

Figure 3: Efficiency in information flow from a project partners perspective

3.0

CONCLUSION

The case study presents a model for better understanding the information flow in
complex construction projects. Though the construction process in many ways is dissimilar to
what is typical of production in the manufacturing industry, several conclusions can be drawn
from both the theoretical viewpoint of supply chain management and the managing of
information.
Supply Chain Management System of a construction project use to help manage
relationship with their partners, identifies the partners involved and their respective roles in
handling the flow of information. The procurer initiates the project and the requirements are
broken down and communicated between the participating partners. On an abstract level,
each instance of information triggers bidirectional flows to and from each partner, flows that
are identified as a requirement and a fulfilment flow, respectively. Once the information flow
is considered, the factors of time, cost and quality need to be analysed with the partner firm
deciders capacity to handle information to cause the requirement and fulfilment flow.
The quality of information received, the timeliness of the manner it is received and
the cost-effectiveness in obtaining the information determine the efficiency of a project
partner. This framework can be used as a tool to examine information flow efficiencies and
implement better supply chain strategies, developing the appropriate metrics. It has
implications for users and developers of construction procurement related information
systems and supports managers in better decision-making while adopting new technologies
for procurement process.
In addition, it helps identify the information gathering and retrieval among various
partners in the procurement process and thus design better procurement systems. This
framework leads to an impetus to further explore the areas of information management and to
define a next step in construction supply chain management, the continuing struggle to adapt
the principle of a totally integrated supply chain in other industries to the construction
industry.

4.0

REFERENCES

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1. Silas Titus Jan Brchner, (2005), "Managing information flow in construction

supply chains", Construction Innovation, Vol. 5 Iss 2 pp. 71 82
2. Kenneth C.Laudon, Jane P.Laudon, (2014), Supply Chain Management
System, Management Information System, 13rd Edition, page 85-86
3. http://www.academia.edu/6207486/Construction_Supply_Chains_A_proposal_to_
develop_a_new_conceptual_model
4. http://en.wikipedia.org/wiki/Supply_chain_management
5. https://buyandsell.gc.ca/for-government/buying-for-the-government-ofcanada/the-procurement-rules-and-process/phases-of-the-procurement-process
6. http://www.academia.edu/7824884/SUPPLY_CHAIN_MANAGEMENT_IN_CO
NSTRUCTION_DIAGNOSIS_AND_APPLICATION_ISSUES

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