FOUNDATIONS OF CIVIL AND ENVIRONMENTAL ENGINEERING

No. 6

2005

Anna SOBOTKA, Agata CZARNIGOWSKA, Krzysztof STEFANIAK Lublin University of Technology Institute of Construction and Architecture

LOGISTICS OF CONSTRUCTION PROJECTS

The paper discusses selected aspects of logistics with regard to a construction company as an organisation and as a participant in a construction project. On the basis of a recent research in Poland, patterns of development of logistic systems and relations between the participants of construction projects have been presented. The project delivery systems and their connection with possible supply models have been analysed focusing on supply logistics. Experience of construction companies and comparison of supply systems cost simulations point out, that outsourcing of supply logistics processes may significantly reduce total logistic costs.

Key words: logistics in construction, construction project, delivery systems in construction, logistic centre

1. INTRODUCTION
The tendencies towards efficiency improvement and risk control in project management indicate the significance of logistics, i.e. a branch of knowledge applying new concepts to control material, service, information and finance flows between suppliers and customers. In the field of construction, procurement planning and execution (ordering, reception, transport and storage) dominates the logistic processes [7]. Following the example of other industries, there are attempts to integrate construction logistics into logistic chains of suppliers and customers, from the suppliers of raw material, manufacturers, distributors, to the end-users. Logistic processes, being crucial for successful completion of the project but in fact auxiliary, are often entrusted to external professionals specialised in logistic
© Publishing House of Poznan University of Technology, PoznaĔ 2005 ISSN 1642-9303

A company. The enclosed simulation-based calculations of logistics expenses present the impact of supply organisation on costs. Agata Czarnigowska. At the present time of well-developed market for building materials and services. 1. distribution and sales to the end-user and finally. 3] and this tendency is also to be observed in construction. Traditionally. being a member of a larger supply chain of suppliers and customers. 2. centralising and outsourcing the project supply logistics is seen as a more cost-efficient solution facilitating project control. and as the choice of suppliers is considered. has its own system of internal logistics also in the form of supply chains (Fig. the latter being a network of organisations linked by material and information flows bounded with a product (project) life cycle (from the procurement of raw materials through processing and handling the products and the final product. 2. The results of a ten-year survey of changes of construction supply systems are presented and analysed in relation to the project delivery system as a premise for the selection of the supply system.204 Anna Sobotka. traditional decision-makers (designers and contractors) are replaced with new ones: project managers or even owners select materials and suppliers. All the processes and relations concerning the above flows form a logistic system. each contractor taking part in a project was responsible for his/her individual supply chain to provide materials and services required within his/her scope of works. Krzysztof Stefaniak services. such as logistic centres [1. A building contractor within a supply chain of materials and participants of a project .1) Fig. BASIC FEATURES OF CONSTRUCTION LOGISTICS Logistics is often defined as managing the supply chains. With the development of project delivery and management systems. to waste utilisation). The paper focuses on a number of aspects of logistics and its specific features regarding a construction company as an organisation and as a participant in a construction project.

x formal. The participants of a construction project (builders. where co-ordination of logistic tasks of separate departments and fields of activity is enforced within the existing organisational structure of the company. services. Three basic models of logistic systems are to be observed in building companies: x informal. Isolating and integrating logistic tasks performed by all organisational units of a company results in creating logistics departments that co-ordinate all the flows. where these processes are conducted. x domination of the bidding system of contractor acquisition (random partnership within the chain). 11]. For the next enterprise they are going to join new partners and form new supply chains [11]. This results from: x diversification of projects (various materials. suppliers. The particular model of logistics is selected according to the current organisation structure of the company. where a separate department takes over all the logistic processes of the company. The semiformal model with a single specialist is preferred. production. location of each project means a new constellation of supply chain members each time) x technical complexity of a project.: . information and finance. x semiformal. where a logistics manager takes the responsibility for the coordination of logistic processes of the company.) tend to compete among one another to make the most of the project. Construction logistics may be considered in a number of aspects [6. The actual size of company is also important. 97% of all Polish contractors employ up to 20 people and. x number of participants in the project.g.). x difficulty in adjusting each member’s logistic routines to the logistic system of the project.Logistics of construction projects 205 Logistic processes are present in various fields of activity within a company (purchase. Larger enterprises that used to have well-developed logistics departments tend to go back to the semiformal model (reduce the number of employees) or decide to outsource their procurement.7. logistic chains in construction are considerably more difficult to manage and to optimise.9]. which profit with long-lasting partnership with suppliers and customers. Therefore. sale etc. have no logistics department in their structure. e. its targets and management strategy. methods. Contractors are usually only single links of logistic chains that provide a project with products. In contrast to manufacturing industries. Numerous surveys on logistic systems in construction indicate dynamic changes in this domain [3.4. but is not in charge of the departments. employer etc. therefore. the co-operation within the framework of the project supply chain is short-term.

Each stage involves logistic processes. As the success of the project depends on the co-ordination of the on-site and external logistics in all above aspects. x supply chains delivering products from external sources to the building site (supply logistics). The construction project comprises a number of stages from its conception to commissioning. x co-ordination of material flows on the building site (on-site logistics). where complex processes are executed within time. Serra and Oliveira [6] propose a set of guidelines (table 1) for the preparation and implementation of an integrated logistic plan of a construction project.206 Anna Sobotka. space and budget constraints –whole project logistics. Agata Czarnigowska. site design As-built design Gantt physical chart Gantt materials consumption chart Gantt equipment chart Planning Histogram of own labour Gantt subcontractor chart Gantt chart of implementation of work safety-related preventive measures Materials specification plans for materials delivery to the site Gantt chart of the start-up of the purchasing process Supplies Materials/supplies purchasing rules Materials and services suppliers qualification Guidelines for equipment purchasing or leasing Use of indices of material losses and wastage Plan for the execution of work Documentation. Krzysztof Stefaniak x the building site as a production system and a member of many logistic chains. x participants of the construction project as separate entities participating in other projects at the same time. Table 1. a considerable managerial effort is required to bring the efforts of all participants of the project in consonance and to reach the synergetic effect [10]. Logistics production plan guidelines [6] Project phase Guidelines and tools Logistic guidelines for the conception Analysis of technological alternatives Design Definition of the plan of attack for on-site work Production design. implementation and maintenance of the Execution information system Use of labour and equipment productivity indices Work safety and health rules .

suppliers of services and products. This is related to other trends of reducing own transport and using suppliers’ delivery services. but a long-time co-operation with a number of suppliers occurs quite often. Share of value of purchase according to the type of supplier in 1996 and 2002 In most cases. Figure 3. designers. Such partnership allows the contractor to negotiate better terms of contract (discounts. terms of payment). reasons of delivery inaccuracies. bases of material demand forecast and distribution of responsibility for logistic decisions. 3. shows the proportion of long and short-term delivery contracts. Figure 2 presents an average share of value of purchase according to source of supply for years 1996 – 2002. delivery contracts concern single projects and there are no exclusive suppliers.Logistics of construction projects 207 A carefully developed logistic plan accounts for all possible relations among the participants of the project: the project owner and management. contractors. . CHANGES AND PATTERNS OF SUPPLY SYSTEMS IN CONSTRUCTION The chapter presents results of a ten-year survey of logistic systems of building contractors and construction projects [9]. criteria of suppliers selection. 2. Fig. delivery contract routines. the data were collected in years 1992 – 2003 and relate to: sources of supply. The long-time contracts usually regard selected ranges of goods. insurance companies. financial institutions and regulatory bodies [6]. There is a tendency of decreasing direct purchase from manufacturers for the benefit of wholesalers. Manufacturers often concentrate on production and offer no transport services. Considering contractors.

Agata Czarnigowska. The criteria of supplier selection are presented in Figure 4. 3. The suppliers offer additional services of warehousing and deliver on request in batches. Share of long and short-term delivery contracts in Polish construction (2002) The co-operation between contractors and suppliers tends to grow. Fig. Criteria of supplier selection in Polish construction companies (2002) Fig.208 Anna Sobotka. Each batch may be paid separately. 5. Figure 5 shows methods of supplier acquisition. 4. Krzysztof Stefaniak Fig. Methods of supplier acquisition used by Polish contractors (2002) .

The project management. Distribution of responsibility for logistic decisions in Polish construction companies (2003) The results of the survey also point at the changes in the contractors’ supply system. With regard to the supplies. designers or even employers often select materials and suppliers. own transport and warehousing are being kept to the minimum. Secondly. supplier selection. errors in orders. are being limited. processes connected with information flows. These tasks and functions are often taken over by the members of the external logistic chains such as transport companies. difficulty in obtaining non-typical materials. Basic grounds for them are the financial difficulties caused by employers’ delay in payment and change of sequence of works on the building site. there are usually a number of decision-makers within the organisation whose scope of actions differ according to the structure of the enterprise. Also the project management. Typical supplier failures such as problems with transport are rare. Firstly. the bill of quantities (14%) and experience (29%). wholesalers or manufacturers. Further reasons are errors in the design. 6) Fig. The stock stored traditionally on the building sites is often kept by the suppliers and delivered on request in batches. most decisions are made by construction or site managers and purchasing departments (Fig. As for logistic decisions.g. hired logistics professionals or specialised wholesalers take . e. consisting in the reduction of the scope of logistic tasks performed by their own departments.Logistics of construction projects 209 Delivery inaccuracies occur quite often in spite of the consumer domination in the market. Bases of contractors’ forecast of material demand are: the construction schedule (57%). 6.

Fig. The ultimate relation model depends also on the delivery system of the project. location and delivery system. physical and organisational conditions of the project e.g. contractors and suppliers. The most common delivery systems in construction are [12]: x the “design-bid-build” systems x the “design and build” or “turn-key” systems x the professional construction management systems . more participants are involved in a construction project. 7) and further specialisation is to be observed [3. Agata Czarnigowska. The relations among them evolve continuously (Fig. which reflects in the network of relations of project participants. DELIVERY SYSTEMS AND LOGISTICS SYSTEMS OF CONSTRUCTION PROJECTS The logistic system of a construction project influences considerably the project’s time and cost. New. Therefore. Any arrangements concerning the project delivery system are meant to be most economic for the owner and allow him to be involved in any decisions he wishes to influence. 7. Relations among members of a project supply chain [4] It is clear that there is no typical or best system of project logistics.4].210 Anna Sobotka. the employer dominates the highly competitive construction markets and his decisions are binding for any actions of designers. effective solutions have to be implemented to reach the expected efficiency of a project. scope of the project. Currently. however. In a longer perspective each system must be readjusted to the external conditions or even completely redesigned. Krzysztof Stefaniak over the supply planning and scheduling. on economical. 4. The selection of the logistic system depends.

then bidding and finally the construction. acting as a general contractor or hiring contractors. 9). The contractor takes over the whole responsibility for the completion of the project. Fig.a professional whose task is to represent the owner’s interests. The whole process is sequential: first comes the design. to hire an architect and then to select and hire contractors or a general contractor to execute the designed works.Logistics of construction projects 211 The “design-bid-build” system requires the owner to manage the planning phase. Fig. integrate and manage all the processes . 9. Traditional conflicts between designers and contractors are eliminated. The design and construction processes may be conducted simultaneously (within one team or one company) and therefore improve information flows and shorten the time of the project delivery. the owner employs a single contractor providing managing. Schematic diagram of the relations within the “design-build” system with and without a general contractor Professional construction management systems introduce another party to the traditional triangle of the owner. designer and contractor) work separately within their scopes of responsibility (Fig. designer and builder . The three main actors of the project (owner.8). There is only one contractual relationship involving the owner. 8. Schematic diagram of the relations within the “design-bid-build” system with independent contractors (left) and with a general contractor (right) In the case of the “design and build” or “turnkey” systems. design and construction services (Fig.

excessive expenses and delays. Krzysztof Stefaniak and to co-operate with the designers and the contractors. Supply systems based on independent chains or services of an external logistics company are possible in any type of project delivery systems. Such party benefits directly from any improvement of logistics. by means of their own logistics departments. The manager offers his expertise to support any decisions from the conceptual phase to the commissioning of the project and to co-ordinate planning. Shifting responsibility for supplies to many subcontractors may result in the building site congestions. In the case of delivery systems with a general contractor or other party that disposes of necessary logistic resources. Agata Czarnigowska. e.g. four basic models of supply systems are possible: x independent supply chains for individual contractors. 10. x centralised supply system managed by an external logistics company. x combination of the above. x centralised supply system managed by general contractor or other party managing the whole project. Business organisations offering service in the field of logistics may exist in the form of independent companies or be created specially for the needs of a construction project. Integrated logistics for the whole project means the possibility of optimising supply chains and co-ordinating deliveries. which is significant for sizeable construction projects that involve many contractors working in confined space. Schematic diagram of the relations within the construction management (left) and management contracting systems (right) Regarding the project logistics. it is reasonable to use them to create and manage the whole project supply system. The manager may enter the project as a consultant with or without being at risk (i. transport and warehousing. According to their scope of activities they may take over all the logistic processes within the project’s life cycle or focus on some functions.e. The complete logistic service of a construction project may comprise [2]: . supply control. supply planning and scheduling is the duty of each contractor.212 Anna Sobotka. entering contractual relationship with contractors or not – Fig. where selection of suppliers. 10). design and execution activities to reach the synergetic effect and to shorten the project’s completion time. Fig.

x developing logistic standards for bid preparation. x environmental impact assessment. 5. Assisting bidders (potential suppliers.Logistics of construction projects 213 1. transport and execution of construction works: x creating operational logistic centres servicing a complex of projects. 2. x plans of logistic processes and information flows. 4. improve quality of works and reduce the project completion time. x implementing IT systems. it is only possible to estimate buying costs. Optimising supply and purchasing process x within the scopes of manufacturers. . x benchmarking logistic systems of other industries. 6. The scope of the above logistic services partly complements and partly overlaps the constituents of the logistic plan for the whole construction project life cycle as presented by Serra and Oliveira [6]. x economic efficiency study. participating in contractors selection. x implementing ideas of the supply chain management on the building site. x constructing IT networks to improve information flows and to optimise them. general contractors and subcontractors. x recording feedback information on the effects of implementing integrated logistic systems. integrating purchase. x evaluating bids. Developing logistic concepts for designing and planning: x feasibility study of logistic alternatives. it is not possible to specify the cost of supply logistics directly on the basis of the account. Controlling x developing and implementing systems of quality assessment for logistic processes. As the Polish construction companies keep no account of material cost (and buying cost) according to the source of their origin. If a material is delivered by a number of suppliers and also by means of the contractor’s own delivery services. forwarders and contractors) in bid preparation: x developing specific logistic solution to improve the quality of service. 3. x assisting bidders and supervision over their logistic solutions. Developing plans of the building site logistic and supervising their execution. Developing strategic guidelines for bidders: x preparing bidding requirements. Centralisation of logistics is meant to lower total cost of the project.

80 35 280. Table 2.00 -1 563.) show that using the common supplier for this particular material allows the customer to save 6% of acquisition costs.00 0.80 205 067. Logistic centres are able to co-ordinate and optimise their transport and therefore diminish the traffic loads (important in cities) and reduce air pollution. The prices. Krzysztof Stefaniak A simulation of acquisition costs of a single building material (bricks) [9] has been based on two supply models: 1.75 discount Cost of 26 460.62 The advantages of logistic centres are not limited to cost reduction.00 value Buying 3 627. .86 319 153.00 0.00 2 520. There are also costs of internal transport (from the logistic centre to its customers).70 4 38 640.00 0. storage. but its average stocks are heavier and the cost of frozen capital grows.40 0. The logistic centre is able to negotiate better discounts and offers lower buying costs.90 8 820.29 567 507.45 cost Price -51 744.00 Cost type 1 2 Material 540 960.16 43 286.00 Advantage of logistic centre services [zá] (3+4+5)-2 0 3 273.72 transpor t Frozen 13 176.09 648. The quality of service is also higher due to specialisation of logistic organisations. Results of supply cost simulation [9] Individual supply cost [zá] Centralised supply cost Contractor Contractor Contractor Total [zá] 1 2 3 3 193 660.00 20 130.67 -21 242. 1 563.00 2 952.40 -15 433.70 2 117. Agata Czarnigowska. the contractors supply themselves individually. The results of the simulation (Table 2. three contractors use the service of a logistic centre.00 2 469.90 5 609. transport and unloading costs and charges assumed for the simulation base on real market conditions in the Lublin region in the last quarter of 2002.20 30 501.80 12 630.00 0. 2.32 33 464.46 2 843.87 -5 809.45 -7 566.00 5 308 660.00 1 478.214 Anna Sobotka.00 shipping Int. the material consumption is a random variable for the period of simulation.00 3+4+5 540 960.00 6 900. discount rates for bulk purchase.28 capital (stocks) Total 534 042.

each contractor uses and manages his own supply chains.R. 1/2 (1994). Baumgarten H. incompatibility of logistics concepts and lack of co-ordination results in serious disturbances in material and information flows. . 4. Technische Universität Berlin. Shifting most of the logistic processes on logistic professionals allows construction companies to reduce their fixed costs and to concentrate on the development of their core competencies.: Information for the management of the building-materials flow. In the case of larger projects involving a number of contractors.M. Traditionally. 139-140. Technische Universität Berlin. 15-20. Fachbereich Wirtschaft und Management. Baumgarten H. Gospodarka Materiaáowa i Logistyka.Logistics of construction projects 215 5.. 8 (2003).). to minimise disturbances in local traffic and air pollution due to exhaust gases emission. extensive earthworks requiring transport of excavated material). System-based Vision for Strategic and Creative Design. Implementation of integrated logistic systems such as these offered by logistic centres may be particularly effective in larger construction projects located in city centres (confined space. Serra S.: Zmiany w logistyce dostaw materiaáów dla wykonawczych firm budowlanych w latach 1992-2002.J. 3.B.: Development of the logistics plan in building construction.. Poortman E. Buszko A.g. Oliveira O. 2-7. The main task of an integrated logistic system is to provide just-in-time deliveries. Bontempi (ed. limited transport possibilities). eliminating most of material handling and storage on site. REFERENCES 1.: Modele wspóápracy przedsiĊbiorstw logistycznych. Berlin 1998. where massive flows of material have to be managed (e. 6. Bereich Logistik. organisational and environmental issues affecting the cost of a project. Bons H.N. centralisation of logistic functions and management allow many actors of a construction project to reach the synergetic effect of their efforts. 4 (2003). According to modern ideas of management. 5.: Baumstellenlogistik Potsdamer Platz. 2. Penner H. 2003..: Erfolge mit zukunftsorientierter Baustellenlogistik. to shorten the time of project completion by eliminating reasons of work stoppage. Engineering Construction and Architectural Management. SUMMARY Construction logistics deals with many technical. 75-80. time and quality of execution.M. Gospodarka materiaáowa i Logistyka. Swets&Zeitlinger. Lisse. Buszko A. Berlin 1997.

2004. Przegląd Budowlany (in press). Sobotka. 8. 8 (1989).: Zmiany w organizacji zaopatrzenia materiaáowego przedsiĊwziĊü inwestycyjno-budowlanych).: WraĪliwoĞü decyzji logistycznych w przedsiĊbiorstwie budowlanym.: Simulation modelling for logistics re-engineering in the construction company. Received. A. Stefaniak LOGISTYKA PRZEDSIĉWZIĉû BUDOWLANYCH Streszczenie Artykuá zawiera omówienie wybranych aspektów logistyki i jej specyfiki w odniesieniu do przedsiĊbiorstwa i z punktu widzenia przedsiĊbiorstwa budowlanego jako uczestnika przedsiĊwziĊcia. 3-8. Swets&Zeitlinger 2003. Lublin. .: Productivity and logistics in the construction industry. Sobotka A. 9. Sobotka A. Zwrócono uwagĊ na zaleĪnoĞü modelu obsáugi logistycznej od systemu realizacji przedsiĊwziĊcia. 19. Sobotka A.: Existing and emerging delivery systems for construction projects.. A. Czarnigowska.). Veiseth M. Rostad C. Tenah K. Stefaniak K. Construction Management and Economics. 18 (2000). Andersen B.06.A.09. 10. 2000. System-based Vision for Strategic and Creative Design. 11. a takĪe zachodzące zmiany w logistyce na podstawie badaĔ. Zaáączony przykáad obliczeniowy przedstawia wpáyw modelu obsáugi logistycznej na koszty logistyczne przedsiĊwziĊcia. Bontempi (ed.216 Anna Sobotka. Oslo 26. Wydawnictwa Uczelniane. 02.: Integrating the supply chain. Krzysztof Stefaniak 7.C. Nordnet 2003. 151-156.Ch. Dokonano analizy systemów zarządzania przedsiĊwziĊciem w aspekcie wyboru modelu obsáugi logistycznej. International Journal of Physical Distibution and Materials Management. 183-195. Conference Proceeding. 12.. K. Stevans G.2003. Lisse. Agata Czarnigowska.

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