THE EFFECT OF MATERIAL CONTROL ON PROJECT SUCCESS (A CASE STUDY OF JULIUS BERGER NIGERIA PLC LAGOS STATE)

CHAPTER ONE

INTRODUCTION

1.1. BACKGROUND OF THE STUDY

Traditionally, project success was assessed on the triple measure set of cost, time, and performance. A project is considered successful if it was completed within its budget estimate, within its initial scheduled time frame, and performed as it was designed to function. The recognition that project success is multi-dimensional raises the question of whether different input factors may have different effects on different project outcomes. However, these three criteria have been criticized as being inadequate for a series of reasons. Let us take the example of project completion times. Because of the delays, project managers occasionally pay penalties that increase the total cost of the project. Yet these projects are still considered as successful. Another example is linked with customer acceptance. We may deliver a project which was implemented on time, within cost and to some quality parameters requested, but which is not used by the customers, not liked by the sponsors and does not seem to provide improved effectiveness for the organization. It is obvious that this is not a successful project. Today we know that determining whether a project is a success or a failure is far more complex than this. Managing project is one of the oldest and most respected accomplishments of mankind. This is spotted by the achievement of the builders of pyramids, the architects of ancient cities, the mason and craftsmen of Great Wall of China and other wonders of the World (Peter, 2001). Project makes up around fifty percent of all work carried out and as a result is deemed the vehicle for the execution of organizational growth. The accomplishment of project through the application, integration of the project management, process of initiation, planning, executing, monitoring, controlling and closing, is known as project management. Project management integrates these functions progressively through the project life cycle with the aim of satisfying the stakeholders and constituents according to the project’s established requirements. Stakeholders are those who have a direct stake in the project while the project’s constituents are those who may be impacted by the consequences of the project. Project success is typically generated when the stakeholders and constituents express their collective satisfaction according to the degree of their involvement. However, this conventional approach to project management seems not to be a sufficient condition for project success. This perhaps is as a result of the increasing complexity of project, large capital investment, widely dispersed project participants, stringent quality standard, escalating cost, environment shocks, increasing stakeholders’ power and advancement in ICT. The foregoing challenges presented have the capacity to influence project success in different ways. However the ability to absorb the shocks thus created may depend largely on project management strategies. In the view of Harvey (1999), a very good project management framework should take cognizance of cultural, structural, practical and personal elements. Expectedly it should reflect good orientation, non−repetition activity and a particular evaluation mechanism to measure output/performance. Materials constitute a major cost component for any Industry. The total cost of installed materials (or Value of Materials) may be 60% or more of the total cost (Stukhart 2007, Bernold and Treseler 1991), even though the factory cost may be a minor part of the total, probably less than 20-30%. This is because the manufactured item must be stored, transported, and restored before it is put in place or "consumed" at the site. The total cost of materials will include, in addition to the manufacturer selling cost, the cost of procurement (cost of placing processing and paying the material, physical distribution, the distributor's cost, and the transportation of materials), and the site-handling costs (cost of receiving, storage, issuing, and disposal). The efficient procurement and handling of material represent a key role in the successful completion of the work. It is important for the contractor to consider that there may be significant difference in the date that the material was requested or date when the purchase order was made and the time at which the material will be delivered. These delays can occur if the contractor needs a large quantity of material that the supplier is not able to produce at that time or by any other factors beyond his control. The contractor should always consider procurement of materials is a potential cause for delay (Willis, 2008). Poor planning and control of materials, lack of materials when needed, poor identification of materials, re-handling and inadequate storage cause losses in labour productivity and overall delays that can indirectly increase total project costs. Effective management of materials can reduce these costs and contribute significantly to the success of the project.

1.2. STATEMENT OF PROBLEM

Construction can be considered as a dynamic industry which is constantly facing uncertainties. These uncertainties and the many stakeholders in these kinds of projects, make the management of costs difficult which consequently causes cost over runs. Therefore, cost overruns are considered one of the most critical issues during the execution of construction projects (Chan, et al., 2004; Doloi, 2011).

As mentioned by Van Der Westhuizen and Fitzgerald (2005), the presence of cost overruns can be a reason for project delays or possible project failures. However this idea has been refuted by many authors who considered that project success depends on many other factors that should be assessed to conclude the success or failure of a project (Chan, et al., 2004). Moreover, there have been many studies that suggest that the success of a project depends on the presence of certain critical factors which can also change depending on the objective to be met (Iyer and Jha, 2005). In other words, some authors ascertained that there are some critical success factors that help to improve cost performance and prevent cost over runs.

1.3 AIMS OF THE STUDY

The major purpose of this study is to examine material control on project success. Other general objectives of the study are:

1. To examine the root causes of ineffective material control.

2. To examine material control and how it enhances project success.

3. To examine the effects of material control on project success.

4. To examine the existing material control processes.

5. To examine the relationship between material control and project success.

6. To suggest ways in which material control can aid in project success.   

1.4 RESEARCH QUESTIONS

1. What is the root causes of ineffective material control?

2. What is material control and how does it enhance project success?

3. What are the effects of material control on project success?

4. What are the existing material control processes?

5. What is the relationship between material control and project success?

6. What are the ways in which material control can aid in project success?   

1.5 RESEARCH HYPOTHESIS

H0: There is no significant relationship between material control and project success.

H1: There is a significant relationship between material control and project success.

1.6 SIGNIFICANCE OF THE STUDY

This study will generate a list of root causes for ineffective material control that can be used as a benchmark to control the existing and future projects. In addition to this how these root causes are related to the current material control practices will make the stakeholders to be aware and more cautious. Furthermore the most concerning issues like cost overrun and delay in terms of project delivery and its relation with the current material control practice will reveal the weakness in the current material control practices to the stakeholders. Apart from this research being useful to the field professionals, this study will be valuable for the academicians too. As this study will serve as a support of what the past researchers have written about material control in project success. Furthermore it will also provide information for further researchers who are willing to investigate on this particular or similar case.

1.7    SCOPE OF THE STUDY 

The study is based on effect of material control on project success, case study of Julius Berger Nig. Plc Lagos State.

1.8 LIMITATION OF STUDY

Financial constraint- Insufficient fund tends to impede the efficiency of the researcher in sourcing for the relevant materials, literature or information and in the process of data collection (internet, questionnaire and interview).

Time constraint- The researcher will simultaneously engage in this study with other academic work. This consequently will cut down on the time devoted for the research work.

1.8 DEFINITION OF TERMS

Material Control: Material control is defined as “The function responsible for the coordination of planning, sourcing, purchasing, moving, storing and controlling materials in an optimum manner so as to provide a pre-decided service to the customer at a minimum cost.”

Project: The accomplishment of a given task measured against preset known standards of accuracy, completeness, cost, and speed. In a contract, performance is deemed to be the fulfilment of an obligation, in a manner that releases the performer from all liabilities under the contract.