Economic evaluation of materials planning systems for construction

It has been noted that many problems exist among local construction contractors owing to inefficient materials management. Problems reported include delays in the supply of construction materials, and inappropriate scheduling of materials in construction projects. There is a need for an improved materials planning approach. Efficient planning of materials not only means increased productivity and profit to the company, but also facilitates the completion of construction projects. In view of the variation in size, timing and frequency of material orders, the authors felt that the implementation of a materials planning system (MPS) in construction would produce cost savings similar to those achieved in the manufacturing industry. However, an economic evaluation of a construction MPS would probably involve the treatment of uncertain costs and savings. A practical risk analysis based on converting subjective estimates of timing and magnitude of cash flows to beta distributions was used to illustrate the feasibility of implementing such a system in construction.