Addis Ababa University

Department of Management

A Research proposal on

Assessment of Construction Material shortage

In
Addis Ababa Housing Development Project Office

Presented to: Dr. Gurmeet Singh

By: Ermiyas Mekonnen

June 2005
 TABLE OF CONTENT

1. Introduction 1
2. Background of the Study 1
3. Statement of the Problem 2
4. Objective of the Study 2
5. Significant of the Study 3
6. Scope of the study 3
7. Limitation of the Study 3
8 Methodology of the Study 4
9. Review of the literature 4
10. Time schedule and budget 13
 1. Introduction

Addis Ababa is the capital city of Ethiopia. The city has so many socio-economic
problems, such as health, education, water, electricity, telecommunication,
infrastructure, house etc. The city also a seat of Africa union, Economic commission
for Africans and other continental as well as international organizations. Therefore
we can assume Addis Ababa is a capital of African. As a capital city of Africa, Addis
Ababa needs to be clean, green, beautiful and modern city. Most of Addis Ababa
houses are old enough and built without the consent of the master plan. This distorts
the figure of the city. Therefore the municipality planned to change the old city by
replacing new shared building houses. To implement this plan a project office known
as “Addis Ababa Hosing development project office” (AAHDPO) established. This
project office accomplish it’s objectives after building 200,000 houses with in 5
years.

The main objectives of the project office are building low cost houses for low-income
group of people. The project office start it’s operation on July 7, 2004 (Hamle
1,1996E C) and produce semi annual report on January 8, 2005 (Tahesa 30, 1997
E.C)

The report address many problems such as shortage of skilled man power (specially
in construction engineers, architectures and formans), capital construction material,
and e .t .c from a stated problem shortage of construction materials is critical and it
influence the overall operation of the project office. Material management is the main
responsibility of the logistic department. The department purchase materials from
countryside suppliers, imported from other country, receive the items, stored and
distributed in to different sites.
 2. Background of the Study
In any organization, especially in construction, the vital component of an
organization is construction material. So that the organization to achieve its
objectives, it should be focuses on supplying enough quantity with good quality of
construction materials. These construction materials include, iron bars, stone,
cement, crushed stone, sand, sanitary and electrical material etc.

When we see the practice of Addis Ababa Hosing development project office, there
is a shortage of construction materials need for construction in different sites.
Shortages of supply in construction material increase administration cost of a project
and also delay the accomplishment the project goal .So that to minimize the adverse
consequences which come as a result of shortage of supply on construction
materials, I will try to address all issues in relation to material shortage such as the
cause of the shortage and the possible solution that will help to reduce the shortage
and associated adverse consequences.

3. Statement of the Problem

Addis Ababa Housing development project office is the major contributor to develop
the image of the city in Africa and international society. In the year 2004/2005
(1997 E.C) the project office plan to construct 30,000 houses in ten subs cites of
Addis Ababa. However in the middle of construction shortage in supply of
construction materials occurred in some sites. Therefore it adversely affects the
activity of the project office.

The research will relate the problem of shortage of construction materials with the
following points to get a true picture of the problem
 How may construction sites are affected by the shortage of construction
materials
 What internal /external factors that cause shortage of construction material
 How much will it cost the project because of shortage of construction
materials
  What are other means of getting construction material
 By what amount this storage affect the project objectives
 It is possible to produce some construction materials by the project office

4. Objective of the Study

The research has the following objectives in mind while working in problems of
shortage in construction materials

 To determine the actual constructions sites affected by the shortage of

construction materials,
 To assess the real internal/external factors that causes shortage of
construction materials
 To determine the amount of cost that a project office incurred as a result
of shortage of construction material
 To recommend on the measures that should be taken and implemented
by the project office to overcome the shortage of construction materials
 To provide a theoretical framework about material management

5. Significant of the Study

Even it is difficult to conclude and list all the significant this research will provide for,
the researcher expects the following benefits from the study.
 It gives full understanding about the cause of shortage of construction
material and it’s negative consequences to the project office.
 It will reminds the logistic department personnel’s who are working in
materials management that shortage of construction materials is a serious
issues and should be given consideration to reduce it.
 It provide the possible solution that will help the management of the
project office to overcome shortage if construction materials
 It will use as a base for other research that will study on the same or
related topics.
 6. Scope of the study
The research intends to reach for problems of shortage on construction materials in
Addis Ababa hosing development project office. When doing so the researcher’s is
restricting himself in some construction sits and head office of the project office for
obtained the necessary information that will help to make the research meaningful.
Because it is very difficult to address all the sites and head office this study scope is
limited to some sites.

7. Limitation of the Study

This study is limited only in selected construction sites in Addis Ababa Hosing
development project office because of time (since the researcher is a full time
workers) and money (since the research has no budget and covered all expenses)
constrains. Despite the above limitation the researcher has also faced problem in
getting information.

8 Methodology of the Study

To prepare this research paper the researcher has collected data by using both
primary and secondary source.
8.1 Primary sources
 The researcher conducts interview and administers questionnaire
With logistic department personnel
 The questionnaires also prepare and administers to selected
contractors engineers, storekeeper and foramens
8.2 Secondary Source
 The researcher surveyed and reviewed the project office records
reports, bulletins and other source document which will help together
information in relation to shortage of construction material which can
be purchased at the lowest cost to fulfill the need satisfy the intended
functions for which the material is being purchased
After gathering all the necessary data from selected sample size the researcher
summarize the data and take statistical analysis for proper presentation of the
findings.

9. Review of the literature

9.1 Types of material organization
9.1.1. Purchasing department
This department perform activities such as buying, value analysis purchasing
research inventory control, Auditing, invoices, stores standardization, Receiving,
traffic and sub contracting. The term buying include activities such as interviewing
sales man, negotiation with vendors analyzing bids and making awards, selecting
suppliers issuing purchases orders making adjustment with supplies and keeping
appropriate records

9.1.2. Procurement department

Procurement is including the entire process by which all choices of resources
(people, material, facilities and services) for a particular project are obtained. The
procurement concept encompasses a wider range of supply activities than does the
purchasing concept.
9.1.3. Material management department
Material management is the idea of an integrated management approach to
planning, acquisition, conversion, flow and distribution of materials from the market
to the organization.
9 .1.4. Logistic management
Logistic management is a combination of material management and physical
distribution management. In a broad sense, logistic management view firm as a
single operating system: it seeks to minimize total costs associated with the
acquisition and handling of materials from the inception of material requirements to
the final delivery of finished products to their users.
9.2 Purchasing And Materials Management
9.2.1. Quality
 9.2.1.1. Quality Defined
In industrial and international purchasing, quality has easterly different meaning with
that of the dictionary meaning. Here quality is related to suitable and cost (no price).
Price is one element of cost, rather than to intrinsic excellence. The best quality is
that which can be purchased at the lowest cost to fulfill the need or satisfy the
intended function for which the material is being purchased.
9.2.1.2 Howe quality is determined
Quality is determined by there conciliation of two inseparable
considerations: -
A. Technical considerations of suitability
B. Economic considerations of cost and availability
9.2.2. Management responsibility
In addition to economic responsibility, most companies give their purchasing
department a major management responsibility regarding question the quality
requirement on all requisitions and bills of material received in the purchasing
department. The right to challenge is not the right to change. Rather it is the right to
request reconsideration of the technical decisions for economic reasons
9.2.3. Material availably
To solve problem of material availability, the purchasing and requisitioning
department should work together closely. In case of conflict, two basic approaches
are available to much a firms requirements, with market place availability
1. The technical requirement of the originating department can be modified to
conform that what the market can realistically supply
2. If the modification of technical requirements turns out to be impractical it may
be profitable to develop a new source of supply or substrate.
A. New Source
- Most of the time organizations develop new source of supply to make
sure the material availability
B. Substitute
- Tow broad types of substituted materials are possible
Substitute of existing product and subtitle of newly
 Develop products
9.2.4. How Quality is described
1. Market grades
2. Brand or trade marks
3. Commercial standards
4. Physical or chemical
5. Performance specifications
6. Material and method of manufacture specification
7. Engineering drawing or blueprints
8. Samples
9. Qualified product hilt
10.combination of above

9.3. Objectives and Functions of material management

To achieve organization objectives it is necessary to establishment of an

effective and efficient materials management system. With this context, the
supply and store management division is designed to accomplish the following
objectives:
 To make available a balanced flow of construction materials, supplies,
components, tools, parts, fuel and lubricants and other items.
 To keep inventory at the lowest practicable level without sacrificing
the smooth operation of the project; and
 To keep down the fluctuation in demand and supply of materials;.
 Receiving construction materials, various sanitary, supplies, parts,
chemicals and fuel coupon;
 Issuing materials upon request;
 Storing materials and other items in such a way that they are easily
identifiable and accessible;
  Reporting conditions of materials and other items mentioned above at
time of receipt and during storage;
 Keeping safe custody of all items in store;
 Initiating purchase requisitions based on products set for reordering
stock items;
 Follow up the activities of the storekeeper;
 Carrying out physical inventories;
 Keeping records of quantities received, issued and balances of all the
individual items in store and reporting conditions periodically; and
 Reviewing the status of materials in store from time to time.

9.4. Store policies

 The storekeeper shall check and receives materials, supplies and other items
using pre-numbered receiving reports;
 The goods shall be stored in a proper place, clearly identified using suitable
codes;
 Materials and supplies and other items shall be issued upon presentation of
authorized requisitions
 Materials in store should be segregated according to their special
characteristics;
 Hazardous commodities and flammable materials should be put separately in
store;
 Large and awkward containers and fast moving items should be stored at
suitable area;
 Items in store should be analyzed on the basis of their value and importance,
and special care should be made in making the most critical items available at
all times;
  Items for which goods receiving reports are not prepared shall not be kept in
the store; and
 Items for which store issue vouchers are not prepared shall never leave the
store.

9.5. General Guidelines for the stores

 Storage systems should accommodate the proper inflow and out flow of
goods and materials;
 They should enable easy access and should facilitate safe custody of
materials
 They should minimize risks of fire, theft, pilferage and deterioration due to rust
and other misplacement and miss handling
 Storage systems should facilitate the determination of order points; an
 The structure of stores building and the internal layout and the type of storage
method, equipment, bins, shelves, racks, and stacked box etc. should be
carefully designed and selected to suit the type of materials that will be
stored.

9.6. Receiving and Recording of Goods

One of the major duties of the store section is to receive goods from different
sources. Appropriate arrangements must be made for the inspection of
materials to check that the right quality and quantity are supplied. To carry out
this important function adequately, the receiving operation should be
accomplished as follows:
 Check consignments in detail as soon as they arrive in the presence of
inspectors, and record the arrival of goods in a goods arrival logbooks
 Verify that the quantity by weighing, counting, and measuring using the
appropriate means such as weighing-bridges, scales and meters;
  Sign the carrier’s consignment note (truck manifest) indicating only the
number of packages and the total weight;
 Where goods are damaged, or where there is shortage in terms of weight
or number of packages, indicate such shortage or damages on the
consignment note;
 Prepare Goods Receiving Note Form;
 For materials stored in stockyards, make note on the receiving reports that
the items are stored as such;
 Arrange materials in stock yards in such a way that they became
convenient for frequent counting and issuance;
 Check materials in stockyards by counting them at least every two days;
and
 And report status to the immediate supervisor.

9.7. Locating Stock

The procedures of operating for new stocking system are:
 Arranging the stores in systematic blocks of shelves;
 Keeping goods of particular product group in a given area
 Identifying each block with either letters or numbers, or a combination;
 Assign identification numbers to each bay of shelving or racking;
 Similarly, assign identification numbers to each individual bin opening;
 Assign a place for each stock item and place every item accordingly; and

9.8. Issuing procedures of the goods

The effectiveness of the store function can be judged by the ability of the store
to make available materials needed for the smooth running of the operations of
the project. The store should be able to issue materials requested when
properly authorised requisitions are presented to it.
The procedures of issuing stock items are described below:
  Storekeepers keep specimen signatures of persons empowered to approve
issues;
 The requisitioned sends to the storehouse properly authorised requisition
giving details of what is required;
 The storekeeper checks that the description of the item(s) and stock code(s)
allocated correctly express the requirements of the requisitioned;
 When details of requisitions are inadequate or inaccurate, the storekeeper
may assist the requisitioned, making use of his experience, knowledge, and
facilities such as catalogues and microfiche films which may be available;
 The store keeper or issuing clerk sees the balance of the item(s) in the bin
card and notes the location of the item(s) in the store;
 He then checks the physical existence of the item(s) and notes on the stores
requisition the quantity on hand;
 If the item requested is a critical one, as described in the stores control
section, the person empowered to approve the issue has to give his opinion
before the store issue voucher is prepared; and
 The store issue voucher is then filled and approved and the handling over of
the materials takes place.

9.9. Inter store Transfers

Stores items may also be transferred from one store to another for the
convenience of subsequent issuing or further storing. In such cases it would be
appropriate to accompany them with inter- store Issuing voucher for control
purpose during the period of transit.
The stores procedures for handling such transfers are the following:
  The storekeeper of the issuing store prepares inter-store transfer voucher for
the items to be transferred and gets it approved by the authorized official;
 On the basis of the approved inter- store transfer voucher, the issuing
storekeeper dispatches the items to the receiving storekeeper
 The issuing store keeper keeps the inter store transfer voucher in a suspense
file until a Goods Receiving Report is received from the receiving store;
 Upon receipt of the goods, the receiving store issues an appropriately signed
Goods Receiving Report; and
 When the appropriate copy of the Goods Receiving Report is received by the
issuing store, it will be attached to the inter-Store Transfer Voucher and filed.

9.10. Store Returns

Items issued from stores may be returned to store for several reasons. In such
cases, the goods will be returned to store using Store Return Note to prevent the
treatment of the receipt by store as a new entry. The Return Note will indicate the
Store Issue Voucher by which the items were taken out from the store and reversal
entry will be made in the bin card, the stock card and the financial ledger.

The following points shall be clearly indicated on the form:

 The Store Issue Voucher number and the store from which the issue was
made initially;
 Description of the item, quantity, unit and total price;
 Remarks indicating why the item is returned; and
 Signature and name of the receiving storekeeper.

9.11. Store Record

A perpetual stock record system has been suggested for the project office. This
system will facilitate the effective and efficient management of the stores of the
project. It is particularly useful to:
 Indicate the amount of stock at any time;
 Establish a link between the physical stock and stores accounts;
 Provide a means of determining the reorder point and the quantity to be
reordered;
 Verify the accuracy of physical counts;
 Provide information on the location of the items in store; and
 Facilitate decision and the quantity to be issued especially on the critical and
vital items.

A. Bin Cards

Bin cards (forms) are kept with physical stock attached to the bins or tracks
containing the materials using separate cards for each item in stock.
The following are the procedures that should be followed in keeping bin
cards:
 As soon as an item is received or issued, the quantity received or taken
out is entered in the appropriate column of the card; and
 The person, who entered the quantity in or out, put his initials after filling
the balance on the card.

B. Stock Cards

These records are kept outside the custodianship of the stores. To ensure
adequate internal control, storekeepers and those who approve issuance
should not have access to these records. Stock cards (Forms) are kept to
serve the following fundamental purposes:
 To maintain an independent record of the details of stock movement for
control purpose; and
 To maintain a continuous valuation system of stock entries, issuance,
and stock in hand, for costing, financial accounting, and reporting
purposes.

10. Time schedule and budget

No. Activities to be performed Time Budget
1 Preparation and duplication of questionnaire 3 Days 1000.00

2 Training of data collectors 2 Days 500.00

3 Arranging and selecting sample size from the 7 Days 1000.00
population
4 Data collection from selected sample 30 Days 5000.00
5 Analyzing of data 8 Days 500.00
6 Preparation and submitting the research paper 10 Days 2000.00
Total 60 Days 10000.00

Bibliography
1. Donald W.Dobler, and David M.vurt, Purchasing and supplies
management 6 edition, Mc graw-Hill book Co. Inc., New York 1996

2. Addis Ababa Housing Development Project Office, Semi annual

Report, 2005.

3. Addis Ababa Housing Development Project Office, Procurement and

material management manual, 2005.