THE FRAMEWORK OF IMPROVING ON-SITE MATERIALS TRACKING FOR
INVENTORY MANAGEMENT PROCESS IN CONSTRUCTION PROJECTS
SITI RADZIAH BINTI LIWAN
A project report submitted in partial
fulfilment of the requirement for the award of the
Degree of Master of Technology Management.
Faculty of Technology Management and Business
Universiti Tun Hussein Onn Malaysia
August 2015
iv
ABSTRACT
Inventory management is important especially in construction projects because
materials and components constitute 50-60% of the total project cost. While
inventory management has increased concerned among various parties within the
project, materials tracking for inventory management also act the same way. Material
tracking could provide timely information on materials availability and enables real-
time on-site measurement of the project performance which is important for
inventory management. However, material tracking practices in construction projects
has been using manual method and it has many drawbacks. Although the application
of advanced technology is needed as it has ability to assist materials tracking,
however; there is still lack of materials tracking framework for inventory
management process in construction projects. Therefore, the research aims to fill in
this gap by developing an on-site material tracking framework for improving
inventory management processes in Malaysian construction projects. In this research,
potential implementation of RFID technology for materials tracking and the existing
material tracking practices in construction projects were identified. Literature review
and case studies approach were conducted to obtain data of the research. Ten case
studies was undertaken to investigate inventory management process and material
tracking practices in Malaysia construction projects. The data analysis involves both
within case analysis and cross-case analysis. The findings conclude by developing an
on-site material tracking framework for inventory management process which
consists of seven components namely; manufacturing, materials delivery, materials
arrival, materials storage, materials use, on-site control centre and report generation.
The framework would be beneficial for contractors having intention to adopt RFID
technology to assist and facilitate materials tracking particularly at the site storage
area.
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ABSTRAK
Pengurusan inventori penting terutamanya di dalam projek pembinaan kerana bahan
dan komponen pembinaan menyumbang sebanyak 50-60% daripada kos keseluruhan
projek. Pengurusaan inventori telah menarik perhatian pelbagai pihak yang terlibat di
dalam projek pembinaan begitu juga dengan pengesanan bahan untuk pengurusan
inventori. Pengesanan bahan dapat memberikan maklumat terkini mengenai bahan
binaan dan membolehkan prestasi projek diukur mengikut keadaan semasa di tapak
pembinaan di mana ini adalah penting untuk pengurusan inventori.
Walaubagaimanapun, kaedah pengesanan bahan yang digunapakai di dalam projek-
projek pembinaan adalah menggunakan kaedah manual di mana ia mempunyai
banyak kelemahan. Walaupun pengunaan teknologi amat diperlukan untuk
membantu pengesanan bahan binaan, tetapi; kerangka kerja pengesanan bahan untuk
tujuan pengurusan inventori di tapak pembinaan masih lagi kurang. Oleh itu, kajian
ini bertujuan untuk membangunkan satu kerangka kerja pengesanan bahan untuk
membantu memperbaiki proses pengurusan inventori di dalam projek pembinaan di
Malaysia. Di dalam kajian ini, potensi penggunaan teknologi RFID untuk
pengesanan bahan serta kaedah pengesanan bahan yang digunapakai di dalam projek
pembinaan dikenalpasti. Kaedah literatur dan kajian kes digunakan untuk
mendapatkan maklumat penyelidikan. Sebanyak sepuluh kajian kes dijalankan untuk
mengetahui proses pengurusan inventori dan kaedah pengesan bahan binaan yang
digunakan di dalam projek pembinaan di Malaysia. Analisis data kajian melibatkan
analisis kes secara individu dan analisis kes secara bersilang. Dapatan kajian ini
disimpulkan dengan membangunkan satu kerangka kerja pengesanan bahan binaan
untuk membantu proses pengurusan inventori di mana ianya terdiri daripada tujuh
komponen iaitu; proses pengeluaran, penghantaran, penerimaan bahan, penyimpanan
bahan, pengeluaran, pusat kawalan (di tapak pembinaan) dan penjanaan laporan.
Kerangka kerja ini amat berguna bagi kontraktor yang mempunyai keinginan untuk
mengaplikasikan teknologi RFID untuk membantu dan mempercepatkan proses
pengesanan bahan binaan terutamanya di kawasan stor binaan.
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CONTENTS
TITLE i
DECLARATION ii
ACKNOWLEDGEMENT iii
ABSTRACT iv
CONTENTS vi
LIST OF TABLES xi
LIST OF FIGURES xii
LIST OF SYMBOLS AND ABBREVIATIONS xiii
CHAPTER 1 INTRODUCTION 1
1.1 Research Background 1
1.2 Problem Statement 3
1.3 Research Questions 5
1.4 Aim and Objectives 5
1.5 Scope of the Research 5
1.6 Research Methodology 6
1.7 Significance of the Research 9
1.8 Structure of the Thesis 9
1.9 Summary 10
CHAPTER 2 MATERIALS TRACKING FOR INVENTORY 11
MANAGEMENT PROCESS
2.1 Introduction 11
2.2 Inventory 11
2.2.1 Definitions of Inventory 12
vii
2.2.2 The Importance of Inventory 12
2.3 Inventory Management Processes 14
2.3.1 Planning 14
2.3.2 Purchasing 15
2.3.3 Materials Delivery 15
2.3.4 Storage 16
2.3.5 Materials Issue 16
2.4 Inventory Management in Construction Projects 17
2.5 Inventory Management Problems 18
2.6 Material Tacking for Inventory Management 21
2.6.1 The Importance of Material Tracking 21
2.6.2 Current Approaches of Materials Tracking 22
2.6.3 Materials Tracking Technology 24
2.6.3.1 Bar-coding 24
2.6.3.2 Radio Frequency Identification (RFID) 26
2.6.3.3 Global Positioning System (GPS) 28
2.6.4 Benefits of ICT for Materials Tracking 29
2.7 RFID Technology for Materials Tracking 31
2.7.1 RFID Technology Application 31
2.7.2 RFID Components 33
2.7.2.1 RFID Tags 33
2.7.2.2 RFID Readers 35
2.7.3 The Advantages of RFID Technology 36
2.7.4 RFID for Materials Tracking in Construction 38
Projects
2.7.5 Issues in RFID Implementation 39
2.7.5.1 Costs 40
2.7.5.2 Standardisation 40
2.7.6 Current RFID Situations in Malaysia 41
2.8 Potential Implementation of RFID for Materials 42
Tracking in Malaysian Construction Projects
2.9 Several Materials Tracking Framework 44
2.9.1 Automated Project Schedule and Inventory 44
Monitoring Framework
viii
2.9.2 Real-time Materials Tracking Framework 46
2.9.3 Ubiquitous Tracking and Locating of 48
Construction Resources using GPS, GIS and RFID
2.9.4 RFID-facilitated Construction Materials 49
Management (RFID-CMM) Framework
2.9.5 Integrating RFID, GPS and GPRS for 51
Real-time Data Collection
2.9.6 Information Lifecycle Management Framework 53
for Material Control on Construction Sites
2.10 Discussion of Materials Tracking Framework 54
2.11 Theoretical Framework for On-Site Materials Tracking 55
2.12 Summary 59
CHAPTER 3 RESEARCH METHODOLOGY 60
3.1 Introduction 60
3.2 Introduction to Research 60
3.3 Research Philosophy 62
3.4 Research Approaches 63
3.4.1 Quantitative Research 63
3.4.2 Qualitative Research 66
3.4.2.1 Case Studies 68
3.5 Research Strategy Decision 70
3.5.1 Selection of Research Methodology 71
3.5.2 Selection of Multiple Case Studies and 71
Interview Techniques
3.5.2.1 Multiple Case Studies 72
3.5.2.2 Interview Technique 75
3.6 The Methods Adopted for this Research 76
3.6.1 Literature Review 78
3.6.2 Case Studies 80
3.6.2.1 Selection of Respondents 84
3.6.3 Framework Development 85
3.7 Summary 87
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CHAPTER 4 DATA ANALYSIS AND FINDINGS 88
4.1 Introduction 88
4.2 Objectives of Case Studies 88
4.3 Case Studies Projects 89
4.3.1 Case A: Agricultural Complex Development 90
4.3.2 Case B: School Development Project 94
4.3.3 Case C: Residential Development Project 97
4.3.4 Case D: Hypermarket Development Project 100
4.3.5 Case E: Condominium Development 103
4.3.6 Case F: Residential Development Project 107
4.3.7 Case G: Public Infrastructure Development 110
4.3.8 Case H: Residential Development Project 113
4.3.9 Case I: Public Institution Development 116
4.3.10 Case J: Public Secondary School 120
Development
4.4 Key Findings form Case Studies 124
4.4.1 Inventory Management Process 129
4.4.2 Problems in Materials Tracking 133
4.4.3 Materials Tracking Technology for Inventory 135
Management
4.4.4 Improving Materials Tracking for Inventory 140
Management
4.4.5 Integration of Inventory Management and 142
Resource Modelling
4.5 Requirement for Real-Time Materials Tracking 145
for Inventory Management Framework
4.6 Summary 147
CHAPTER 5 ON-SITE MATERIALS TRACKING 148
FRAMEWORK FOR INVENTORY MANAGEMENT
5.1 Introduction 148
5.2 On-Site Materials Tracking Framework for 148
Inventory Management- Components
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5.3 On-Site Materials Tracking Framework 152
5.4 Key Components 153
5.4.1 Manufacturing 153
5.4.2 Materials Delivery 154
5.4.3 Materials Arrival 155
5.4.4 Storage Area 156
5.4.4.1 Materials Storage 156
5.4.4.2 Materials Use 157
5.4.5 On-site Control Centre 159
5.4.6 Report Generation 160
5.5 Summary 161
CHAPTER 6 CONCLUSIONS AND RECOMMENDATIONS 163
6.1 Introduction 163
6.2 Summary 163
6.3 Conclusions 166
6.4 Research Contributions 168
6.5 Limitations of the Research 169
6.6 Recommendations for Future Research 169
6.6.1 Recommendations for Researchers 170
6.6.2 Recommendations for Industry Practitioners 171
6.7 Concluding Remarks 171
REFERENCES 172
APPENDICES 181
xi
LIST OF TABLES
1.1 Research Objectives and Chapter Outcome 5
2.1 Summary of Inventory Management in Construction Projects 18
2.2 Inventory Management Problems in Construction Projects 19
2.3 Application of RFID Technology in Construction 27
2.4 Active versus Passive RFID Tags 34
2.5 RFID Tags Common Frequencies and their Uses 34
2.6 Summary of Materials Tracking Framework 57
3.1 Selection of Research Methodologies 61
3.2 Qualitative versus Quantitative Research 64
3.3 Comparison of Qualitative and Quantitative Data 67
3.4 Relevant Situation for Different Research Strategies 70
3.5 Project and Respondent Background 80
4.1 Project and Respondent Background 90
4.2 Summary of Cross-case Analysis 126
4.3 Inventory Management Process 129
4.4 Problems in Materials Tracking 134
4.5 The Application of Technology for Materials Tracking 136
4.6 Factors Improving Current Material Tracking Practices 140
4.7 The Integration Process 143
xii
LIST OF FIGURES
1.1 The Research Process Flow Chart 7
2.1 Bar-coding Label 24
2.2 Typical RFID-based System 31
2.3 Active and Passive RFID Tags 33
2.4 Handheld Reader 35
2.5 Materials Tracking using RFID Reader 39
2.6 Automated Project Schedule and Inventory Monitoring 45
Process
2.7 Real-time Materials Tracking Framework 46
2.8 Automatic Data Collection System 48
2.9 RFID-facilitated CMM System 50
2.10 Automatic Data Collection using RFID, GPS and GPRS 52
2.11 A Conceptual ILM Framework for Material Control 53
2.12 Theoretical Framework for On-Site Materials Tracking 58
3.1 Selection of Research Methodology 62
3.2 Quantitative Research Process 65
3.3 Qualitative Research Process 66
3.4 Basic Types of Designs for Case Studies 73
3.5 Case Study Method 74
3.6 The Overall Research Process 77
5.1 On-Site Materials Tracking Framework for 151
Inventory Management
5.2 Materials Storage Process 156
5.3 Materials Use Process 158
5.4 On-Site Control Centre Process 160
5.5 Report Transmission Process 161
xiii
LIST OF SYMBOLS AND ABBREVIATIONS
ADC Automatic Data Collection
AutoCAD Automated Computer Aided Design
Auto-ID Automatic Identification
BIM Building Information Modelling
BQ Bill of Quantities
C-aIS Context-aware Information System
CCTV Closed-Circuit Television Camera
CIDB Construction Industry Development Board
DO Delivery Order
E-mail Electronic Mail
GIS Geographic Information System
GHz Giga Heartz
GPS Global Positioning System
GPRS General Packet Radio System
GSM Global System for Mobile Communications
HQ Head Quarter
IBS Industrialised Building System
ICT Information and Communication Technology
ILM Information Lifecycle Management
ISO International Organisation for Standardisation
JIT Just-In-Time
kb kilo byte
kHz kilo Heartz
LADAR Laser Detection and Ranging
LAN Local Area Network
m metre
MHz Mega Heartz
MRO Materials Requisition Order
MS Materials Storage
MU Materials Use
xiv
O&M Operation and Maintenance
PDA Personal Digital Assistant
PO Purchasing Order
QS Quantity Surveyor
RF Radio Frequency
RFID Radio Frequency Identification
RFID-CMM RFID-Facilitated Construction Materials Management
UHF Ultra High Frequency
UWB Ultra-Wide Bands
xv
LIST OF APENDICES
APPENDIX TITLE PAGE
A Sample of Interview Questions 182
B Sample of Interview Transcript 187
C List of Publications 195
CHAPTER 1
INTRODUCTION
This chapter presents the context of the research study. Firstly, it starts with brief
introduction to the research background and problem statement that brings to the
research interest in this study area. Secondly, this chapter states the aim and
objectives of the research and the methodology adopted in order to achieve the
research objectives. Finally, the chapter present the structure of the thesis.
1.1 Research Background The demand for construction development is increasing from day to day parallel with
increasing in the growth of population. A lot of development has been carried out
which comprise of the housing development, infrastructure, industry, institutions,
health care and others to fulfil the demand. In project development, materials are
among the important elements to be taken into consideration as they are the building
blocks that make up a project meanwhile material also constitute large amount of the
project costs (Lu et al., 2011). Previous research identified that material cost
comprise of 50-60% from the total project costs (Nasir, 2008; El-Ghazali et al.,
2011). Therefore, inventory which is part of materials also contribute significant
amount to the above percentage.
Inventory in general could be defined as the company’s raw materials, work
in process, supplies used in operations and finished goods which were used to ensure
smooth running of the business (Muller, 2011; Sahari et al., 2012). However, in
construction settings; inventory was referred as materials or components on hand;
which was kept by contractors for the smooth functioning of construction processes.
Inventory is also known as the stock of materials or components kept at the storage
2
for future use in construction process. Adequate amount of inventory is crucial to
ensure the smoothness of construction processes and to maintain a healthy cash flow
for contractors (Lu et al., 2011). However, inadequate amount of inventory results in
job stoppage due to materials required for conducting construction works could not
be specified at time they are needed.
The management of inventory in construction projects is important where
significant amount of money was invested in every single activity. It involves the
management of materials or components as they were unloaded to the site storage
upon arrival at the project site. Several processes which considered important in
inventory management are materials planning, purchasing, materials delivery,
materials storage, and materials issue (Waters, 2003). Despite great demand for
managing inventory, however; there are several problems which bound existing
inventory management practices in construction projects. Those problems are:
materials shortage (Ali et al., 2010), over ordering and double handling of inventory,
missing materials; unavailability of storage space (Donyavi & Flanagan, 2009), and
incomplete and lack of up-to-date information regarding on-site stock (Navon &
Berkovich, 2006).
As inventory management has increase in importance, materials tracking for
inventory management also have received great attention. Material tracking for
inventory management process has become everyone’s concern as construction
materials usually come in bulk without proper identification and difficult to be
traced. Hence, material’s tracking is important as it could ensure that materials are
available at the right time, in the right place and at the right quantity at time are
needed to carry out construction work (Song, 2005). However, in construction
projects; the tracking of inventory along the supply chain and tracking their locations
at jobsites are among important problems related to construction materials (Song,
2005; Navon & Berkovich, 2006; Nasir, 2008). Thus, this research focuses on
material tracking practices for inventory management process in construction
projects particularly at the storage area.
3
1.2 Problem Statement Existing material tracking practices for inventory management in construction
projects has several limitations. Material tracking practices relies on manual method
of collecting and recording data related to tracking activities which is labour
intensive (Ergen & Akinci, 2007). Sardroud et al. (2010) asserts that the data
collected using manual method could be questioned as it depends on workers skill
and level of productivity at time the data is taken during materials tracking. In
addition, received materials is often improperly recorded or not recorded at all (Ala-
Risku et al., 2010).
Navon and Berkovich (2006) has highlighted several limitations of manual
material tracking which are labour intensive, inaccurate and subjected to error-prone
which further leads to waste and surplus of materials, schedule delays, decrease in
productivity, and lack of up-to-date information regarding the status of materials.
Sardroud et al., (2010) also agreed that manual method of material tracking are
labour intensive and data collected is unreliable as they depend on workers
motivations and skills to track the materials during its arrival and at the storage area.
Moreover, the data collected through manual materials tracking are usually
kept and transferred in paper-based format which is difficult to be traced and
accessed in future. Hence, some information is being unavailable to the parties who
need access to them in a timely manner for decision making process (Sardroud et al.,
2010). Demiralp et al. (2012) also stated that manual material tracking practices are
time consuming, results in late deliveries, lead to mislocated components and
incorrect installations. Meanwhile, Grau et al. (2009) addressed several limitations of
material tracking in which it has raised difficulties among labour craft in accessing
the required material and components at time of materials consumption. Thus, this
provides less assurance for materials future identification.
Research conducted based on Malaysian construction projects have found
that construction projects suffered from several inventory management problems
such as improper planning and shortage of materials (Sambasivan & Yau, 2007). Ali
et al. (2010) also found that material shortage is the inventory management related
problems that contribute to delay among construction projects in the Klang Valley,
Malaysia. Hence, Ibrahim et al. (2010) added that surplus of materials are among
factors that contribute to project delay in Malaysian construction projects. The
4
inventory management related problems that occur in Malaysian construction
projects is contributed by the inexistence of appropriate material tracking practices
for inventory management process.
However, the advancement in Information and Communication Technology
(ICT) provided an opportunity to improve material tracking practices for inventory
management process in construction projects. Previous researchers have introduced
technology to overcome the drawbacks of existing material tracking practices (Chen
& Li, 2006; Moselhi & El-Omari, 2006; Grau et al., 2009; Sardroud et al., 2010).
Technologies such as bar-coding, Radio Frequency Identification (RFID), Global
Positioning System (GPS), wireless technology and others has ability to facilitate
materials tracking for the purpose of inventory management and materials control.
Regarding to Moselhi and El-Omari (2006), bar-coding, RFID and other wireless
technology could improve the speed and accuracy of data acquisition in construction
projects in a cost effective manner.
Bar-coding technology has been used in materials tracking to provide instant
and up-to-date information on quantities of materials and equipments exchanged
between the store keepers and the working groups (Chen & Li, 2006). In contrast,
RFID technology could provide unique identification and real-time information
(Sarac et al., 2010) in construction projects. As ICT implementation offers great
advantage in terms of material tracking especially in the construction industry
abroad, therefore; ICT is expected to be adopted in Malaysian construction projects
to overcome inventory management related problems especially in the area of
materials tracking.
However, a framework is needed for successful adoption of technology for
materials tracking in construction projects. Although previous researchers such as
Gajamani and Varghese (2007), Kasim (2008), Sardroud et al. (2010), Ren et al.
(2011), Sardroud (2012) and Lee et al. (2013) have developed several materials
tracking framework, however; this framework does not focused on materials tracking
for inventory management at the storage area. Yet; there is still lack of example of
material tracking framework for inventory management processes in construction
projects particularly focusing at the storage area. Therefore, this research is intended
to develop an on-site material tracking framework for inventory management process
which act as guidance for contractors in order to successfully adopting technology
for materials tracking in construction projects.
5
1.3 Research Questions Based on the problem statement, several research questions have been posed which
comprise:
(i) What is the potential implementation of RFID technology for material
tracking in Malaysian construction projects?
(ii) How does material tracking for inventory management process is practised
among Malaysian construction projects?
(iii) How to improve the on-site material tracking for inventory management
process in Malaysian construction projects?
1.4 Aim and Objectives This study aims to improve on-site materials tracking for inventory management
process in construction projects particularly at the storage area. Towards reaching the
aim of the research, the following objectives have been formulated as reflected in
Table 1.1.
Table 1.1: Research Objectives and Chapter Outcome
No. Objective Outcome
1. To study potential implementation of RFID technology for materials tracking in Malaysian construction projects
Chapter 2
2 To investigate existing material tracking practices for inventory management process in Malaysian construction projects.
Chapter 4
3 To develop an on-site materials tracking framework for improving inventory management processes in Malaysian construction projects.
Chapter 5
1.5 Scope of the Research The research focuses on developing an on-site materials tracking framework for
inventory management process in construction projects particularly at the site storage
area. The target population for this research is main contractors registered with
Construction Industry Development Board (CIDB) Grade 7 (G7) or registered with
Contractor Service Centre (PKK) Grade A. G7 contractors are selected as they has
unlimited tendering capacity (Construction Industry Development Board, 2013)
6
therefore has experience in developing multi-million construction projects and has
high capability for using technology in their projects. However, the samples of this
research is only two hundred and thirty six (236) which consist of main contractors
specialised in building construction which located in three different states namely;
Johor, Selangor and Negeri Sembilan (CIDB, 2012). Those states are selected since
they are moving forward among other states in terms of having progressively
expanding in the volume of new construction development (Construction Industry
Development Board, 2012). Case study research was adopted as a research strategy
while semi-structured interview was used to gather data about the research.
Respondent of the research are related personnel having experience or involved
directly in inventory management and overall site management such as the project
manager, the site engineer and the site supervisor. The data obtained from semi-
structured interviews was analysed using matrix table and thus, presented as ‘within
case’ and ‘cross-case’ reports.
1.6 Research Methodology In achieving the aim and the research objectives, several research methods were
adopted. This includes literature review, case studies and development of the on-site
materials tracking framework for inventory management. Figure 1.1 shows the
method adopted for this research with the respective output from each activity.
Discussions in detail on the methodology adopted throughout the research were
presented in Chapter 3.
(a) Literature Review Literature related to the research was achieved from sources such as books, journal
articles, proceeding papers and online data sources such as webpage of firms,
governments, semi-government organizations and catalogues. Literature review in
this research starts with reviewing existing literature on RFID technology in material
tracking for inventory management in construction projects. This takes into account
the implementation of RFID for materials tracking either locally or internationally.
Upon reviewing the literature, the research problems were established concurrently.
7
Literature Review
- Reviewing existing literature on RFID technology in material tracking for inventory management in construction projects.
Research contexts in RFID technology implementation for materials tracking and the successful RFID adoption in construction projects
Case Studies (Interviews)
- Investigates existing material tracking practices for inventory management in construction projects.
The inventory management processes, materials tracking problems, materials tracking technology for inventory management, improving materials tracking for inventory management and the integration of inventory management and resource modelling
Framework Development
- Develop on-site materials tracking framework for inventory management.
Research Method Activities Output
The outputs generated from the review are the research contexts in RFID technology
implementation for materials tracking and the successful RFID implementation in
construction projects.
Figure 1.1: The Research Process Flow Chart
(b) Case Studies: Interviews The case study approach was undertaken to gain primary data for this research. The
case or unit of analysis involved ten construction projects in order to investigate
existing material tracking for inventory management process within each case.
Construction projects participate in the research are selected due to several criteria.
Such criteria include the projects must be constructed by main contractors registered
On-site materials tracking framework for inventory management at the storage area
8
with Construction Industry Development Board (CIDB) Grade 7 (G7) or registered
with Contractor Service Centre (PKK) Grade A.
The case studies involved face-to-face semi-structured interviews in which
the respondents are selected based on purposive sampling. According to Oliver
(2006), purposive sampling is a type of sampling in which the decisions regarding
the individuals to be participated in the research are determined by the researcher
based upon variety of criteria which required by him or her. Hence, respondents for
this research are selected based on their experience and involvement in inventory
management and the overall site management such as the project manager, the site
engineer or the site supervisor.
A list of predetermined and standardised questions was also prepared for the
interview which acts as the interview guideline. This is important as according to
Cavana et al. (2001), the semi-structured interview need to be carefully ordered and
worded in a detailed interview schedule. Finding from case studies reveal the
inventory management processes undertaken in each project, key problems related to
materials tracking, implementation of technology for materials tracking, several
approaches to improve materials tracking and the integration of inventory
management and resource modelling.
The identification of material tracking problems from each case study enables
the researcher to propose the adoption of ICT, particularly RFID technology to
overcome material tracking related problems within construction projects. However,
the decision to adopt RFID technology was made based on results from literature
review which reveals the advantages of RFID technology for materials tracking.
RFID implementation enables the material to be scanned automatically (Ozumba &
Shakantu, 2008; Sardroud, 2012), reduce labour hours in scanning materials, could
track work-in progress, improves antitheft protection and better inventory
management (Mehrjerdi, 2011).
(c) Framework Development The development of the on-site materials tracking framework for inventory
management process carried out from both literature review and case studies
findings. It starts with the identification of material tracking components and its
9
element obtained from previous literature. The on-site materials tracking framework
was developed based on the suitability of each component and elements with the
actual material tracking practices for inventory management process carried out on-
site. Several questions were designed for the interviews to enable the researcher to
identify suitable components and important elements for the framework. The
developed framework is important to successfully adopting technology in materials
tracking for inventory management process in Malaysian construction projects.
1.7 Significance of the Research This research is expected to contribute to the body of knowledge and study by:
identifying the current status of RFID implementation for material tracking in
Malaysian construction projects,
exploring inventory management processes and identifying existing problems
related to material tracking in Malaysian construction projects, and
propose new on-site material tracking framework for inventory management
by improving the existing framework.
1.8 Structure of the Thesis The thesis is structured into six chapters respectively. The content of each chapter are
as follows:
Chapter 1 briefly introduces the content of the research. It explains the research
background, problems that bring into the research initiative, the aim and objectives;
and the methodology used in the research.
Chapter 2 reviews the literature related to the research. It focuses on the material
tracking practices for inventory management processes in construction sites. The
chapter also review the current ICT implementation to facilitate materials tracking in
construction projects.
10
Chapter 3 reviews the overall methodology in business research and the method
adopted to carry out this research project. This chapter also provide justification for
the adoption of the specific research method.
Chapter 4 explains the findings from the case studies undertaken for the research.
The findings were used to reveal the material tracking problems and the use of ICT
to improve current material tracking practices in construction projects.
Chapter 5 focuses on development of on-site materials tracking framework. In this
chapter, each component of the on-site materials tracking framework were discussed
in details and their integration with RFID were discussed.
Chapter 6 presents the summary and conclusions for the thesis. This chapter
discusses the research findings, conclusions, contributions and several limitations of
the research. In addition, this chapter also provides some recommendations for future
research.
1.9 Summary This chapter outlined several problems in materials tracking for inventory
management and justify the importance to conduct the research. Several problems
have been identified regarding materials tracking for the inventory management in
construction projects. The manual method of material tracking use in construction
projects are labour intensive and rely greatly on paper-based reports which is
difficult in term of traceability. This chapter also outlined the aim and the research
objectives; together with the research methodology and structure of the thesis. The
next chapter explained the literature undertaken for this research.
CHAPTER 2
MATERIALS TRACKING FOR INVENTORY MANAGEMENT PROCESS
2.1 Introduction This chapter reviews inventory management and material tracking technologies for
inventory management process in construction projects. Firstly, it describes the
inventory management as a whole which consist of definition, the process, the
importance and problems in inventory management; and the application of
information and communication technology (ICT) in managing inventory. Secondly,
it explains the need for material tracking and existing material tracking practices in
construction projects. Thirdly, it describes the material tracking technology and its
benefits for material tracking. Finally, the chapter demonstrated the use of RFID for
material tracking and issues of deployment.
2.2 Inventory Adequate amount or level of inventory is important in every business to ensure
business processes for example the manufacturing of goods could be carried out
successfully. Research conducted by Lu et al. (2011) has found that, materials
(including inventory) constitute a great portion from the total costs in construction
projects. However, in order to have better understanding on inventory; it is important
to go through their definitions and why inventory is so important.
12
2.2.1 Definitions of Inventory In general, inventory could be defined as the company’s raw materials; work in
process, supplies used in operations, and finished goods (Muller, 2011; Sahari et al.,
2012). Inventory is the amount of raw materials, fuels, lubricants, spare parts and
semi-processed material to be stocked for the smooth functioning of the plant
(Chitale & Gupta, 2006). According to Maré (2006), inventory were use to mean
several different things, such as;
the company’s or firms raw materials;
work in process;
components/sub-assemblies;
finished goods;
maintenance, repair and operational supplies; and
transportation inventory (movement inventory).
In construction projects, inventory refers to materials or components on hand;
which is kept by construction firms or projects as stock for the smooth functioning of
construction process. In addition, inventory in construction also could be referred to
as the amount of materials or components on the storage area. Regardless their
definitions, it is important for businesses to manage inventory for their survival.
Adequate amount of inventory helps company to fulfil customer need and demands,
and vice versa; the company may incurred loss in profit margins. Therefore, there is
a need for effective and efficient inventory management processes in construction
projects. As according to Navon and Berkovich (2005), the main benefits arises from
efficient materials management or inventory management are increased productivity,
avoidance of delays, reduction of labour working hours and reduction in materials
cost. Thus, effective and efficient inventory management processes is needed to help
improve overall inventory management in construction projects.
2.2.2 The Importance of Inventory Why businesses need inventory or why inventory is so important? Why do
businesses keep inventory in their organisations? As in just-in-time (JIT)
13
manufacturing concept, keeping a stock or inventory is considered as a waste.
However, according to Muller (2011) there are several reasons for holding inventory
in organisations. Such reasons are:
Predictability
In order to engage in capacity planning and production scheduling,
organisations need to control the inventory quantity (raw materials, parts, and
sub-assemblies) they had processed at a given time. This is important as
inventory will act as a buffer as what you need from what you want.
Fluctuations in demand
Inventory on hand acts as a protection against undesirable market conditions.
Inventory of finished goods is important in protecting companies from an
increase in customers demand.
Unreliability of supply
Inventory will provide organisations with a protection from unreliable
suppliers and in scarce conditions where it is difficult to ensure a steady
supply of materials and items.
Price protection
Buying and keeping large quantities of inventory at appropriate time helps
avoid the impact of cost inflation.
Quantity discounts
Buying large amount of items such as buying in bulk is much susceptible to
quantity discounts as compared to buying in smaller quantities.
Lower ordering costs
Buying large quantity of several items, but in less frequent will result in
lower ordering costs. This are differed with buying a small quantities of an
item, but in much frequent.
Keeping or having adequate level of inventory is important for every
business. This is due to inventory carries large amount of hidden cost (Sahari et al.,
2012) such as the cost of equipment to handle them, warehouse, deterioration or
damage if any, and other related costs. In construction projects, adequate amount of
inventory (materials, equipments, tools, etc.) is important to ensure that all
construction works could be carried out according to schedule. Apart from adequate
14
amount of inventory, the management of inventory itself is an important concern in
construction projects. Therefore, current material tracking practices used in
managing inventory in construction projects has successfully captured a great
concern among contractors and clients.
2.3 Inventory Management Processes In general, inventory management is specifically responsible for the management of
inventory as they arrive at the construction site, their storage and the disposal of
inventory wastes. According to Waters (2003), inventory management is so entwined
with activities in logistics which responsible for all aspects of the movement and
storage of materials in a supply chain. Inventory management in construction
projects consists of five main processes. Those processes were discussed in the
following sub-sections.
2.3.1 Planning Planning is the initial process and could be considered as the most important process
in inventory management. Materials planning involve determining the need for
materials to carry out production process and other related works. During planning, if
material is estimated wrongly; the stock level will become too high and generate
other hidden costs. However if the stock level is too low, it may lead to another
problems which related to the distribution (Heck, 2009).
In construction, appropriate planning for materials is important and must be
done concurrently with engineering, construction and other project plans (Kasim,
2011). The author also identifies the process in planning which includes quantifying,
ordering and scheduling. Materials planning in construction involve activities such as
determine the type of materials which to be used in construction works, its quantities,
and specifications in order to carry out construction works. Material planning in
construction projects has significant contribution in increasing work productivity,
increase profit and facilitating the timely completion of construction projects.
15
2.3.2 Purchasing Procurement or purchasing could be defined as the purchase of materials and
services from other organisations in order to support the firm’s operations (Kasim,
2011). The person in charge for procuring materials or the purchasing department in
case of large construction firms need to ensure that the right materials in the right
quantities are purchased from suppliers or manufacturers. Such person also needs to
verify the release dates at which the material is needed and to clearly specify those
delivery dates and the location of delivery to the supplier (Al-Shorafa, 2009).
The purchasing and planning process are interrelated. This is due to, before
the buying process; the advance planning is required in order to determine the
amount of inventory needed for each time period (Hedrick et al., 2013). After the
need for materials was identified, decisions regarding the buying needs need to be
done which include whether to buy or not and in what quantities. Before the
purchasing order were issued to suppliers or manufacturers, it is important to
highlight the exact time in which the materials are going to be used and for which
activities. This is important to ensure materials availability to carry out construction
works.
2.3.3 Materials Delivery Usually, materials are delivered to the project sites during the construction phase.
However, in several instances the delivery of materials to the jobsites may not be
feasible due to storage or access limitations (Al-Shorafa, 2009).This means that
construction materials cannot be delivered to the project sites due to unavailability of
the site storage space. Sometimes, the locations of the project site from the main road
or main area contribute difficulties for manufacturers and suppliers to delivered or
shipped construction materials.
In such cases, construction materials were delivered or shipped to other
locations such as the contractor’s warehouse, a prefabrication shop or the
subcontractor storage area (Al-Shorafa, 2009). In situations where construction
materials are delivered successfully to the site, workers usually the site supervisor’s
need to checked the delivered materials upon their receipt. The site supervisor need
16
to check the delivered material in terms of its quantity and specifications and
compared the information with the purchase order (Heck, 2009). At this time, the
materials which required for further storage are segregated or separated from
materials which required to be used for immediate construction activities.
2.3.4 Storage Materials were added to the stock after checking during materials delivery. The
amount or quantities of materials added to the stock need to be recorded in the store
database (whether using paper-based or registered in the system) for further use by
the store keeper in managing the site storage area (Heck, 2009). Adequate
information on materials identification at the storage area is important to enable
workers to easily retrieve the materials. In addition, proper management at the site
storage area is also important to ensure that materials are available at time they are
needed, thus; avoiding problems related to the unavailability or lack of materials
such as double handling and inadequate site storage.
2.3.5 Materials Issue According to Heck (2009), materials or goods were issued for two reasons; each of
which would depend on its environment. In a warehouse, items or goods were issued
to fulfil an order placed by clients. However, in a production environment; items are
retrieved from stock as they are required for production of goods (Heck, 2009).
Construction materials were issued from the site storage or the unloading area; to the
workers to carry out construction works. Materials which were taken out from the
storage were recorded in the store database. However, materials that were taken
directly from the unloading area upon their received need to be deducted directly
from the inventory lists.
Materials issuance needs high degree of supervision from the person in
charge of the site storage area. If it was undertaken without proper supervision,
materials flow may be not recorded at all; or even worse the materials were taken out
in excessive amount which contribute to wastage. Hence, materials issuance is
17
important to control the flow of materials in and out from the site storage and in
construction projects.
2.4 Inventory Management in Construction Projects In traditional settings, inventories of raw materials, work-in-process and finished
goods were kept as a buffer against the possibility of running out of needed items
(Sahari et al., 2012). However, large inventories consume valuable resources and
generate hidden costs. Adequate inventory level is important for businesses to keep
up competing in the market conditions while operating the business smoothly. On the
other hand, high inventory level could burden the companies as inventories carried
out hidden costs.
Inventory management is one of the most important operations management
responsibilities as inventory involves great deal of capital and the delivery of goods
from manufacturers to the suppliers and customers (Chitale & Gupta, 2006).
Therefore, the management of inventory is important as it has great impact on the
overall business functions. In construction project, materials and equipments may
constitute more than 60% of the total project cost (Donyavi & Flanagan, 2009; Patel
& Vyas, 2011), hence; make the management of materials and inventory as crucial.
In addition, Tersine (1994) asserts that the management of inventory is a
common problem to all organisations in any economic sector. Like other sectors such
as manufacturing, automotive, electronics and others; construction industry also
suffered from poor inventory management especially during construction phase. In
Malaysia, inventory management related factors such as materials shortage and
equipment and tools shortages are among factors that contribute delay to the
construction projects (Sambasivan & Yau, 2007; Alaghbari et al., 2007; Ali et al.,
2010). Therefore, the project management team need to take superior attention on
inventory management in construction projects to ensure materials availability during
conducting the construction works.
18
Table 2.1: Summary of Inventory Management in Construction Projects
No. Author Year Key Elements
Materials Inventory Inventory
Management Construction
Project 1 Tersine 1994 2 Chitale & Gupta 2006 3 Alaghbari et al. 2007
4 Sambasivan & Yau
2007
5 Donyavi et al. 2009 6 Ali et al. 2010 7 Patel & Vyas 2011 8 Sahari et al. 2012
Table 2.1 summarised several researches that has been carried out regarding
the inventory management in construction projects. From the table, it is clear that the
inventory management in construction projects has received a great concern among
researchers. Therefore, inventory in construction projects need to be managed
properly or vice versa it can causes schedule and project delays which in turn
contribute to the project failure. The next section discusses on the inventory
management problems in construction sites.
2.5 Inventory Management Problems Existing inventory management in construction projects are susceptible to various
problems. Table 2.2 has summarises several inventory management problems which
occur in construction projects abroad and in Malaysia. From the table, Donyavi and
Flanagan (2009) have found out common problems related to inventory management
in construction projects. In their study; failure to order on time, wrong delivery time,
over ordering, wrong materials or error in direction requiring rework, double
handling and theft of materials are common inventory management problems in
construction sites. Inventory management in construction projects also suffered from
inadequate site storage space (Kasim, 2010). Due to inadequate site storage space,
delivered materials were leave scattered everywhere around the construction area,
thus; increase difficulties for materials traceability.
In another research, Sardroud (2012) has identified several major problems
related to inventory management in construction projects. Those problems are:
materials required but not purchased, wrong time for delivery of materials, lack of
19
complete and up-to-date information regarding the site stocks; missing or surplus of
materials; inadequate site storage space; and waste of working hours searching for
materials and in tracking them. Similar to the other inventory management problems,
these problems also results in the decrease of labour productivity, schedule delays
and increase the project costs.
Table 2.2: Inventory Management Problems in Construction Projects
No. Author Year Inventory Management Problems Construction Projects Overseas
1. Jang & Skibniewski 2008
- Manual material tracking in which it is labour intensive, inaccurate & subjected to error, wastage, surplus materials, schedule delay, decrease in productivity and lack of timely information regarding materials.
2. Donyavi & Flanagan 2009
- Failure to order materials on time - Wrong delivery time - Over ordering - Wrong materials or error in directions requiring rework - Double handling - Theft
3. Kasim 2010 - Inadequate site storage space
4. El-Ghazali et al. 2011
- Manual material tracking in which it is labour intensive, inaccurate & subjected to error, wastage, surplus materials, schedule delay, decrease in productivity and lack of timely information regarding materials.
5. Sardroud 2012
- Required materials are not purchased - Wrong delivery time - Late of timely information regarding on-site stock - Materials missing and surplus of materials - Inadequate storage space - Waste of man-hours searching for materials and in tracking them
Construction Projects in Malaysia
1. Sambasivan & Yau 2007 - Shortage of materials - Equipment and tool shortage
2. Alaghbari et al. 2007 - Shortage of materials - Equipment and tool shortage
3. Ali et al. 2010 - Shortage of materials - Equipment and tool shortage
4. Ibrahim 2010 - Surplus of materials - Late delivery of materials - Improper planning
5. Hamzah et al. 2012 - Shortage of materials - Equipment and tool shortage
In addition, inventory management in construction also suffers from
traditional-manual material tracking practices (Jang & Skibniewski, 2008; El-Ghazali
et al., 2011). According to Sardroud et al. (2010), manual material tracking relies on
workers efficiency to track and identify materials in construction jobsites. This
method is labour intensive, inaccurate and subjected to error-prone, which further
leads to waste and surplus of materials, schedule delays, decrease in productivity,
20
and lack of up-to-date information regarding the status of materials. Data collected
using manual method is also unreliable as it depends on workers initiative to collect
data regarding materials.
In Malaysia, shortage of materials and equipment and tool shortages are
among the common problems related to inventory management in construction
projects (Sambasivan & Yau, 2007; Alaghbari et al., 2007; Ali et al., 2010; Hamzah
et al., 2012) besides other factors such as surplus of materials (Ibrahim, 2010), late
delivery of materials and improper planning. On the other hand, shortage of materials
is also among the major factors that contribute delays of construction projects in the
Klang Valley, Malaysia (Ali et al., 2010). However, little research has been carried
out regarding the problems faced by Malaysian construction industry related to
inventory management in construction projects (Ibrahim, 2010).
In case of material shortage, materials required to carry out specified jobs are
unavailable when needed, thus; result in delay of construction works, wasting of
labour hours and equipments and increase the total project cost (Ali et al., 2010).
From the above study, it is expected that inventory management problems which
occur among Malaysian construction projects are contributed by the inexistence of
proper material tracking system for the purpose of managing inventory in
construction projects. Song (2005) has highlighted the importance of proper material
tracking in which it provides timely information on materials availability. Timely
information on materials is important for the site manager to make proper planning
on construction works based on materials availability and to make decision regarding
the purchasing of materials. Hence, materials shortage, surplus of materials and other
inventory management problems could be avoided.
The above literature revealed several inventory management problems which
occur in construction projects including existing problems in Malaysia. Therefore, it
could be concluded that effective material tracking practices is required in managing
inventory. Fail to manage inventory results in schedule delays, increase labour
working hours, decrease productivity and increase the production costs. Hence, this
research intended to highlight the importance of material tracking practices for
inventory management processes in construction projects.
21
2.6 Material Tracking for Inventory Management Material tracking in construction projects is not an easy task (Navon & Berkovich,
2006). This is due to construction projects involve large amount of materials to fulfil
the demand of construction activities. Thus, it is important for the project
management to be able to trace every construction materials to make sure
construction works could be carried out in line with the availability of resources
(construction materials).
2.6.1 The Importance of Material Tracking The term material tracking could be defined as the process of collecting and
managing information related to present or real-time location of a products or items
(Shamsuzzoha & Helo, 2011). Material tracking in construction project is crucial as
materials constitute large portion of the total project costs. According to Green
(2005), material tracking in construction projects is important because of several
reasons; (i) to know exactly the location of materials, so workers do not have to
waste their time searching for materials, (ii) to make sure jobs and orders are not held
up because of lack of materials, (iii) to track the quality and cost of each container of
material in order to make sure that the correct materials are received according to
purchase orders, (iv) to make sure the manufacturers have shipped the right materials
to the customer; and (v) the need for traceability.
Material tracking system helps to identify the position of the shipment and
informed the customer about the products or items location in well advance. Vice
versa, it is impossible to find out delivered items and to track lost or stolen item
without material tracking system (Shamsuzzoha & Helo, 2011). In another research,
Song (2005) stated that materials’ tracking in construction projects is important
because of two reasons. Firstly, materials tracking could provide timely information
on materials availability to enhance crew-level work planning and improve labour
productivity. Secondly, materials tracking enable real-time on-site measurement of
project performance indicators that provide the project management with feedback
information for project control. In construction projects, both timely information on
22
material and real-time on-site measurement of project performance is important for
the project management to make decision regarding the project.
Construction environment also demanding high materials traceability where
materials need to be at predetermined locations at time they are needed (Song, 2005).
This is important primarily to facilitate materials consumption during construction
works. At the storage area, material tracking were used to know the specific quantity
of every item within the storage. This is important in order to have correct
information regarding materials in stock while at the same time making new
purchase order if the inventory level is low. Therefore, materials tracking play an
important role for the purpose of inventory management processes in construction
projects. Fail to track materials means failed to manage inventory which could affect
on the overall project performance.
2.6.2 Current Approaches of Materials Tracking According to Sardroud et al. (2010), current material tracking practices in
construction projects rely greatly on manual data collection process. Manual data
collection is inefficient and ineffective as the data collected is not reliable and
accurate. In construction project, accurate and timely information is primary concern
among various parties in the project in order to increase the project control.
However, Grau et al. (2009) has demonstrated current method of material tracking
which were used to tracked pre-fabricated components such as structural steel and
pipe spools in construction jobsites.
In their research, structural steel and pipe spools were first unloaded and
stored in the lay down yard upon their arrival at the construction site. Then, the
delivery information (i.e. delivery date and truck number) was hand-marked to the
components. The piece mark of each received components and their grid location in
lay down yard was manually recorded by workers in paper-based format. Later, this
information was manually keyed into an electronic materials management system for
future use. At the lay down yard, there are possibilities where those components may
be moved to different grids at different times. To have updated inventory
information, workers need to records the new grid location of the components in
every possible movement. Therefore, manual material tracking is very labour
23
intensive and involve excessive paper-based as workers are required to record the
location of the components in every possible movement before installation process.
Not much research has been conducted regarding material tracking in
Malaysian construction projects. Kasim et al. (2013) found that existing material
tracking practices among four construction projects in Malaysia was undertaken
manually which has several drawback. Liwan et al. (2013) also revealed that
Malaysian contractors rely on manual material tracking practices which is
susceptible to several drawbacks. In addition, the CIDB master plan for occupational
safety and health 2004 (CIDB Master Plan OSHA 2004) also highlighted that one of
the problems facing by the Malaysian construction industry is low productivity
which contribute by the low technology usage. It also show that Malaysian
construction industry is lag far behind other industries in embracing technology and
therefore; the overall project management were carried out manually including
materials tracking.
Several case studies have been conducted to explore material tracking
practices in Malaysian construction projects. It is found that each material was
calculated manually one-by-one by the personnel in charge upon its arrival at the
project site with referred to the Delivery Order (DO) (Liwan et al., 2013). Every time
materials were delivered to the construction site, the site supervisor need to manually
check and tracked the materials to ensure it is according to the DO (Kasim et al.,
2013). This is to ensure that the types, quantity, quality and specifications of
materials arrived at the site is according to the DO. However, Malaysian construction
projects also suffered from manual material tracking related problems. Kasim et al.
(2013) reported that manual material tracking practices are labour intensive, lack of
up-to-date information regarding materials and involved excessive paper-based
recording and reporting. In addition, manual method of materials tracking also
involved excessive paper-based recording, lack of timely information on materials,
inadequate storage space, theft and others (Liwan et al., 2013).
Sardroud et al. (2010) has stated several drawbacks of manual material
tracking in which it is labour intensive, inefficient and data collected using these
methods are unreliable as they depend on workers motivations and skills to collect
data on materials. In addition, data collected through manual method are usually kept
and transferred in paper-based format, which is difficult to be reached in term of its
accessibility and traceability. Current material tracking practices also time
24
consuming, results in late deliveries, lead to mislocated components and incorrect
installations (Demiralp et al., 2012). Although current material tracking practices has
many drawbacks, however; the advancement in ICT could be manipulated to
improve current practices. Several technologies could be adopted to assist and
improve material tracking in construction projects. Brief explanations on those
technologies were explained on the next section.
2.6.3 Materials Tracking Technology The implementation of technology in everyday’s life has ability to assist human
works while at the same time improving their life quality. Hence, the implementation
of technology particularly for material tracking in construction projects is expected to
facilitate and improve existing material tracking practices. From previous research,
there are several technologies which were used for material tracking. Explanations
on each technology were made as follows.
2.6.3.1 Bar-coding Bar-coding have been successfully positioned itself against other identification
systems over the past two decades. Bar-coding is a binary code comprising of bars
and gaps arranged together in parallel configuration. The bars and gaps were
arranged according to a predetermined pattern and represent data elements that refer
to an associated symbol (Finkenzeller, 2010). Figure 2.1 depicts the example of bar-
coding label which available in the market.
Figure 2.1: Bar-coding Label
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