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Article
Publication date: 1 March 1986

Roger G. Schroeder, Gary D. Scudder and Michael J. Pesch

The cost of materials has often been neglected by managers faced with the problem of reducing manufacturing costs. However, as direct labour, the classical cost reduction…

Abstract

The cost of materials has often been neglected by managers faced with the problem of reducing manufacturing costs. However, as direct labour, the classical cost reduction target, is reduced by automation the task of reducing materials cost has become much more urgent. As a result of this pressure new approaches have been developed to address the reduction of materials costs. This article reviews and describes five such approaches.

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International Journal of Physical Distribution & Materials Management, vol. 16 no. 3
Type: Research Article
ISSN: 0269-8218

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Article
Publication date: 1 January 2003

Winston Shakantu, John E. Tookey and Paul A. Bowen

Construction is possibly one of the most cost orientated industries in any economy. The primary mode of supplier selection has always tended to be on the basis of lowest…

Abstract

Construction is possibly one of the most cost orientated industries in any economy. The primary mode of supplier selection has always tended to be on the basis of lowest material or service cost at point of consumption. Indeed, this remains the case even in the post‐Latham (1994) and Egan (1998) world in which we live. In general, construction cost estimates are based on a straight ‘take off’ of the quantities required. All further ‘other’ costs in the form of overhead, profit, labour and wastage are consolidated into the cost of the materials. Construction is unique within the various industries making up a modern economy in that the bulk of the materials and components that it uses are of relatively low value while being of high volume. Consequently, a significant proportion of the ‘other’ costs associated with materials purchases must be in the form of transportation from the point of extraction and / or production to the point of consumption. This paper provides an overview of the hidden costs associated with the transportation of construction materials within the industry and proposes improved methods of managing the logistics of the construction process e.g. reverse logistics, in order to reduce costs and increase the basic sustainability of the construction process.

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Journal of Engineering, Design and Technology, vol. 1 no. 1
Type: Research Article
ISSN: 1726-0531

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Article
Publication date: 22 March 2013

Samuel Lindén and Per‐Erik Josephson

The purpose of this paper is to discover whether on‐site materials handling should be performed in‐house or out‐sourced. This is done by studying visible and hidden costs

Abstract

Purpose

The purpose of this paper is to discover whether on‐site materials handling should be performed in‐house or out‐sourced. This is done by studying visible and hidden costs related to materials handling and of the managers' awareness of these costs.

Design/methodology/approach

The data have been gathered through 15 interviews, a number of short discussions on construction sites, and direct observations on six occasions in four housing projects in Scandinavia.

Findings

Indirect and waste costs for materials handling on construction sites are unknown and are often underestimated during budgeting, planning, scheduling and organizing construction projects.

Practical implications

The short case‐studies indicate that the benefits of out‐sourcing on‐site materials handling outweigh the costs.

Originality/value

The solution for materials handling in practice studied in the paper is undergoing rapid development in Scandinavia.

Details

Journal of Engineering, Design and Technology, vol. 11 no. 1
Type: Research Article
ISSN: 1726-0531

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Article
Publication date: 23 May 2018

Oluwole Alfred Olatunji, Adenike Omolabake Orundami and Oluwatomi Ogundare

A section of project management literature attributes overruns to estimators’ deceit and delusion. An example of this is Flyvbjerg’s theorisation of strategic…

Abstract

Purpose

A section of project management literature attributes overruns to estimators’ deceit and delusion. An example of this is Flyvbjerg’s theorisation of strategic misrepresentation and optimism bias. To show that such a notion is not true entirely, the study elicits evidence relating to how costs of projects often fluctuate erratically as prices of construction materials change throughout contract cycle times. The purpose of this paper is to examine the causal relationships between persistent changes in prices of construction materials and project’s outturn costs.

Design/methodology/approach

The authors obtained and analysed price data of construction materials published in a Nigerian national daily in the 16 years between 2000 and 2015. Additional data were obtained from a quantity surveying firm to validate the archival data on material prices, and to compare the firm’s robust database of project estimates and the corresponding outturn costs of specific building elements (detailed in the study). The goal of the analysis is to explore spontaneity and causal impact in the relationship between changes in prices of construction materials and project costs. Kolmogorov-Smirnov and Anderson-Darling tests were used to obtain the probability distributions of the causal relationships.

Findings

Findings show disproportionate positive correlations between changes in material prices and outturn costs in Nigeria. An important dimension to this, however, is that although fluctuations in material costs often trigger variations to project costs, outturn price only accounts for about one-third of actual cost variability. Recovery of costs, not least profit making, under these conditions is a complex process.

Originality/value

This paper concludes that dynamism in cost attributes is neither a deceit nor a delusion; understanding and tolerating them is not a systemic weakness, rather an essential key to project success and stakeholder satisfaction. Findings from the study also bring measured certainties to the transformation of variable costs into fixed price outcomes, an important consideration that will help contract estimators and project managers to understand the likelihood of fluctuation in material costs and how these might trigger variability in project costs.

Details

Built Environment Project and Asset Management, vol. 8 no. 4
Type: Research Article
ISSN: 2044-124X

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Article
Publication date: 1 February 1993

Richard Dobbins

Sees the objective of teaching financial management to be to helpmanagers and potential managers to make sensible investment andfinancing decisions. Acknowledges that…

Abstract

Sees the objective of teaching financial management to be to help managers and potential managers to make sensible investment and financing decisions. Acknowledges that financial theory teaches that investment and financing decisions should be based on cash flow and risk. Provides information on payback period; return on capital employed, earnings per share effect, working capital, profit planning, standard costing, financial statement planning and ratio analysis. Seeks to combine the practical rules of thumb of the traditionalists with the ideas of the financial theorists to form a balanced approach to practical financial management for MBA students, financial managers and undergraduates.

Details

Management Decision, vol. 31 no. 2
Type: Research Article
ISSN: 0025-1747

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Article
Publication date: 1 February 1991

John Gattorna, Abby Day and John Hargreaves

Key components of the logistics mix are described in an effort tocreate an understanding of the total logistics concept. Chapters includean introduction to logistics; the…

Abstract

Key components of the logistics mix are described in an effort to create an understanding of the total logistics concept. Chapters include an introduction to logistics; the strategic role of logistics, customer service levels, channel relationships, facilities location, transport, inventory management, materials handling, interface with production, purchasing and materials management, estimating demand, order processing, systems performance, leadership and team building, business resource management.

Details

Logistics Information Management, vol. 4 no. 2
Type: Research Article
ISSN: 0957-6053

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Article
Publication date: 1 October 2001

Helena Moussatche and Jennifer Languell

The tight schedule of developing, designing, and managing educational facilities limits the time and resources needed to correctly assess the full cost of building…

Abstract

The tight schedule of developing, designing, and managing educational facilities limits the time and resources needed to correctly assess the full cost of building materials. As a result, the selection of interior finishing materials is commonly driven solely by initial cost. This study evaluates interior floor materials currently available for use in K‐12 educational facilities in the State of Florida. The range of materials chosen for the comparison encompasses common flooring materials installed over appropriate sub‐floor materials. The flooring alternatives are evaluated using a service life‐cycle cost (LCC) analysis based on the 50‐year service life specified by the Florida Department of Education. A net present worth (NPW) analysis that includes initial costs, operation and maintenance costs, and replacement costs of each selection is used to evaluate the materials. Interior floorings initial cost, replacement cost, service life, and operations and maintenance costs are compared to the materials resulting LCC.

Details

Facilities, vol. 19 no. 10
Type: Research Article
ISSN: 0263-2772

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Article
Publication date: 7 May 2020

Hessa Almatroushi, Moncer Hariga, Rami As'ad and AbdulRahman Al-Bar

This paper proposes an integrated approach that seeks to jointly optimize project scheduling and material lot sizing decisions for time-constrained project scheduling problems.

Abstract

Purpose

This paper proposes an integrated approach that seeks to jointly optimize project scheduling and material lot sizing decisions for time-constrained project scheduling problems.

Design/methodology/approach

A mixed integer linear programming model is devised, which utilizes the splitting of noncritical activities as a mean toward leveling the renewable resources. The developed model minimizes renewable resources leveling costs along with consumable resources related costs, and it is solved using IBM ILOG CPLEX optimization package. A hybrid metaheuristic procedure is also proposed to efficiently solve the model for larger projects with complex networks structure.

Findings

The results confirmed the significance of the integrated approach as both the project schedule and the material ordering policy turned out to be different once compared to the sequential approach under same parameter settings. Furthermore, the integrated approach resulted in substantial total costs reduction for low values of the acquiring and releasing costs of the renewable resources. Computational experiments conducted over 240 test instances of various sizes, and complexities illustrate the efficiency of the proposed metaheuristic approach as it yields solutions that are on average 1.14% away from the optimal ones.

Practical implications

This work highlights the necessity of having project managers address project scheduling and materials lot sizing decisions concurrently, rather than sequentially, to better level resources and minimize materials related costs. Significant cost savings were generated through the developed model despite the use of a small-scale example which illustrates the great potential that the integrated approach has in real life projects. For real life projects with complex network topology, practitioners are advised to make use of the developed metaheuristic procedure due to its superior time efficiency as compared to exact solution methods.

Originality/value

The sequential approach, wherein a project schedule is established first followed by allocating the needed resources, is proven to yield a nonoptimized project schedule and materials ordering policy, leading to an increase in the project's total cost. The integrated approach proposed hereafter optimizes both decisions at once ensuring the timely completion of the project at the least possible cost. The proposed metaheuristic approach provides a viable alternative to exact solution methods especially for larger projects.

Details

Engineering, Construction and Architectural Management, vol. 27 no. 9
Type: Research Article
ISSN: 0969-9988

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Article
Publication date: 1 May 1983

In the last four years, since Volume I of this Bibliography first appeared, there has been an explosion of literature in all the main functional areas of business. This…

Abstract

In the last four years, since Volume I of this Bibliography first appeared, there has been an explosion of literature in all the main functional areas of business. This wealth of material poses problems for the researcher in management studies — and, of course, for the librarian: uncovering what has been written in any one area is not an easy task. This volume aims to help the librarian and the researcher overcome some of the immediate problems of identification of material. It is an annotated bibliography of management, drawing on the wide variety of literature produced by MCB University Press. Over the last four years, MCB University Press has produced an extensive range of books and serial publications covering most of the established and many of the developing areas of management. This volume, in conjunction with Volume I, provides a guide to all the material published so far.

Details

Management Decision, vol. 21 no. 5
Type: Research Article
ISSN: 0025-1747

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Book part
Publication date: 29 July 2019

Igor E. Mizikovsky, Viktor P. Kuznetsov, Ekaterina P. Garina, Elena V. Romanovskaya and Nataliya S. Andryashina

This chapter is devoted to the study of the standard control of the material costs of production as a factor of technical growth of an enterprise of manufacturing…

Abstract

This chapter is devoted to the study of the standard control of the material costs of production as a factor of technical growth of an enterprise of manufacturing industries: ways of integration in a single information space of information that allows you to manage the cost and quality of products at all stages of the value creation; theoretical and methodological approaches to the implementation of control functions of material costs (technological waste and production losses) according to preestablished consumption rates in the value creation of an industrial enterprise, especially in a number of machine-building factories of Nizhny Novgorod industrial cluster; theoretical methods of synthesis and comparison data, structured description of characteristics of the object of study, system analysis, as well as empirical methods of observations and descriptions of the subject area. The necessity of further improvement of effectiveness and methodology of a control function of a standard cost accounting system in the aspect of maintaining the technical growth of an enterprise is substantiated. Current condition is analyzed, and ways of modernization of organizational, managerial, methodological, metrological, and competence types are proposed. Also, sets of conditions for implementation of standard control and procedures incorporated into instrumental information space are substantiated. It is proved that the application of standard accounting of material costs for production within the framework of a system of standard accounting effectively contributes to noticeable technical growth and meets modern criteria and parameters of an effective management. It is substantiated that conditions for the implementation of a standard control of material costs for the production of an industrial enterprise that contributes to technical growth are availability and comprehensiveness of organizational, managerial, methodological, and metrological types of security control of material resources in the production; compliance with technical standards for processing, warehousing, storage, transportation of material resources; and matching competencies of management personnel with their functions. It is expected to introduce a standard control of material costs within the framework of a standard accounting system in practices of machine-building enterprises, as a significant factor of technical growth. Scientific understanding of an essence of the standard control of material costs within the framework of a standard cost accounting system, justified and outlined by the author, ensures incorporation into practice of effective production management, contributes a noticeable technical growth of industrial enterprises of the processing industries; provides a significant improvement in a quality of accounting results in general.

Details

Tech, Smart Cities, and Regional Development in Contemporary Russia
Type: Book
ISBN: 978-1-78973-881-0

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