This webinar discusses essential strategies for managing materials in construction projects, a crucial aspect considering materials and equipment comprise 50-60% of a capital project's cost.
Construction materials and equipment typically account for 50-60% of the cost of a capital project. This highlights the need for material management in construction, which includes planning and controlling all materials and equipment in advance, procuring them at a reasonable cost, and making them available as needed. A project’s material management plan is developed by the Project Material Manager, who works closely with the project management, engineering, procurement, construction, and project controls teams to ensure the plan meets project schedule requirements.
An initial material management plan can be developed within a week and modified after the project team reviews it. An effective material management plan must be continuously maintained and updated throughout a project’s life cycle.
Below, our webinar and blog will discuss some of the key aspects and challenges of planning material management in construction and some of the best practices for a robust material management process to help avoid cost and schedule overruns.
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The following are some of the critical features of material management in construction that need to be considered to ensure the successful outcome of a capital project.
Depending upon the engineering deliverables and the project knowledge available at the time, a material list is created that identifies the project material requirements at a commodity level. Based on design specifications, piping and instrumentation diagrams (P&IDs), and plan views, the item requirements for mechanical, civil, structural, electrical, and piping are determined and consolidated by item type for requisition planning. For example, the CS pipe and fittings, SS pipe and fittings, CS gate, glove, and check valves are included and planned for purchase on the same requisition. Material lists are further developed and clarified depending upon the Issued For Construction (IFC) data.
The material requisition plan is based on the material list. The requisitions are identified and “back planned” based on the Required On-Site (ROS) dates. The ROS for each commodity and its procurement depends on typical lead times and the duration of the procurement process. The back plan identifies the key dates to achieve on-time delivery of commodities to the site.
These are the key dates determined by the project schedule. ROS dates are usually identified after the material management team analyzes the schedule. The dates are further reviewed with the construction and project management teams to align their expectations regarding the project schedule. Unless the project schedule is modified, the ROS dates remain unchanged.
Advanced Work Packaging (AWP) involves packaging the engineering and procurement deliverables in the early stages of the project to align with the construction work packages in the field. For example, the requirement for structural steel in the project would be counted as an engineering and procurement deliverable to be completed as a whole package with the idea that the package will be installed as designed. Materials are delivered completely for the package to ensure no interruptions during installation.
Project owners typically have an Approved Manufacturers List (AML) that the contractor utilizes to select suppliers throughout the project. The requisition planning process involves vetting and preselecting the suppliers. Multiple suppliers per commodity are usually identified for competitive bidding to ensure adequate sources are available to support a project.
The material requisition plan needs to be reviewed by the construction team for alignment and buying. The end objective of the material requisition plan is to meet the construction team's expectations regarding material management.
The engineering team must review the material requisition plan and submit their deliverables. Late or unplanned deliverables from the engineering team can lead to delayed project schedules.
Once both teams review the material requisition plan, a detailed Requisition and Purchasing Plan (RPSR) is developed utilizing the available schedules, engineering deliverables (P&IDs, indexes, specifications, etc.), and other information the project team provides. Based on commodity types and schedule requirements, the items to be purchased are grouped in the Requisition and Purchasing Plan.
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The key aspects of material management in construction can often get overlooked due to a lack of alignment between the engineering and construction teams. The following are some of the major challenges that are often faced in the process:
- Material cannibalism: When equipment is lost or damaged, resources that are assigned for a specific construction activity may have to be utilized for other activities instead. This can adversely impact the overall project requirements and lead to delays in procuring the additional resources.
- Overall project buy-in: Depending on the project’s schedule priorities, the installing materials are requested. Over-requesting materials in advance to avoid schedule delays can lead to further challenges such as a lack of adequate workhouse space to store or preserve the additional materials.
- Field workarounds: Purchase orders issued from the construction site for lost or damaged materials without the knowledge of the material management team can increase project costs.
- Training: Training for new personnel can eat up valuable time in a project’s schedule and needs to be completed early and efficiently for streamlined material management.
- Sourcing Limitations: Unforeseen market conditions can lead to an increase in material pricing and material shortages. This directly extends the material lead times and can impact a project’s schedule.
- Logistics: Logistics, including expediting and shipping, provide timely information regarding the delivery of the anticipated materials to all concerned stakeholders. Insufficient trucking and delays in sea transit can lead to overall delays in construction schedules.
To overcome these challenges in material management in construction, a few best practices need to be established in the process.
For efficient material management in construction, it’s crucial to ensure alignment among the engineering and construction teams, a good working relationship with suppliers or vendors, and a high level of quality control, surveillance, and inspection. The following are a few best practices that can help plan requisitions, on-time delivery of materials, and address the major challenges in material management in capital projects.
Inadequate project scope can tremendously affect the material management process. The more complex a project is, the higher the stakes are to align the construction and the engineering teams to streamline the material management process and ensure that no equipment or material is missed during the front-end planning phase. To develop a detailed scope, project requirements should be captured early in the process, including a written scope of requirements that identifies deliverables, equipment and materials, and redline markup documents such as P&IDs to determine component placement onsite.
The construction team needs to be involved early in the process for effective material management in construction, especially during the design phase. Alignment between the engineering and construction teams can ensure that any design error is detected early in the project, thereby reducing potential rework that can lead to fabrication and construction delays. If the design team encounters the need for more material and equipment quantities to execute the project, there could be longer installation times and additional labor requirements, which would inevitably expand the project schedule and cause cost overruns.
Proposals from suppliers or vendors included in the Approved Manufacturers List should be evaluated based on their performances on past and present projects. Performance reviews on terms such as the dollar value of materials committed, the dollar value received, the number of partial deliveries per purchase order, and the number of late deliveries can provide valuable information.
A detailed material storage and preservation plan should be developed in the early stages of capital project planning. Each material requisition is planned with a level of storage and preservation based on the equipment type and manufacturers’ preservation requirements. The scheduled preservation activities that are regularly performed are documented and archived for traceability at later stages. Contractors need to ensure that the equipment is in almost perfect condition at the start of the construction.
The quality assurance and quality control of materials and equipment should be accurately specified and updated. The objective is to oversee the life cycle of materials and equipment from design to construction and reject defective materials or equipment that fail to comply with the inspection requirements. This step should involve all participants, including the project owner, engineers, contractors, and all suppliers. The alignment between the stakeholders is critical, as the prime suppliers are responsible for the work performed by the sub-suppliers, and engineers are responsible for the design work.
At H+M Industrial EPC, our extensive experience in the sophisticated material management process has been successfully utilized on projects of varied sizes. Our in-house team of experts has a wide range of technical aptitude, including piping, structural, civil, electrical, instrumentation, and mechanical equipment. We ensure that your construction supply chain remains uninterrupted, and our procurement management solutions and material services keep project materials readily available to avoid delays in project delivery due to unforeseen events.
We are dedicated to providing trust, experience, and efficiency through all stages of engineering, procurement, and construction through our proven strategic EPC approach. Our comprehensive services, including detail engineering and design, procurement, fabrication, and construction allow us to take your project from conception to completion, tailoring engineering and design solutions to meet your unique needs.
The H+M Industrial Team
For over three decades, we have provided best-in-class capital project management services to Energy and Chemical industries through our proven EPC approach. We are dedicated to providing trust, experience, and efficiency through all stages of engineering, procurement, and construction--on budget and on time.
Partnering with H+M Modular
H+M Modular, a division of H+M Industrial EPC, specializes in custom fabricated equipment, modules, and skids for energy and chemical industries. The approach emphasizes the potential for decreased risk through more controlled fabrication, leading to enhanced quality and safety, reduced labor costs and construction times, improved labor availability, and solutions to geographic challenges. We are dedicated to providing trust, experience, and efficiency through all stages of traditional and modular construction projects using our proven EPFC approach, If you're considering modular fabrication, we invite you to connect with us to learn about how modular solutions can improve project outcomes.
