Developing a framework model of Supply Chain Management : A case study on a Mega construction project in Myanmar.

Transcription

1 Proposal for PhD Research Yadanar Soe ID: Course Title: PhD Research (Construction Management) Lead Supervisor: Dr M An Co Supervisor: Dr J Yang Title Developing a framework model of Supply Chain Management : A case study on a Mega construction project in Myanmar. 1. Background Information Supply-chain management is concerned with strategic internal and external activities in the construction projects. If focuses on the management of the sourcing, acquisition and logistics of resources essential for the transformation process of an organisation to construct a project that adds value for construction organisation. Supply chain management failure to meet targets of time, cost and quality of a project will result project completion delay, overrun budgetary and poor quality. Successful projects can be achieved by evaluating the effectiveness of the use of materials and labour resources continuing developmental and cultural applicability needs. The Myanmar construction industry has structural skills and materials but many of the projects remain unfinished or of substandard quality compared to the original plan due to budgetary constraints. Moreover, cost control and cost savings are also important factors that need to be considered in the supply chain management of the construction organisations. Initially, project managers believed this to be a consequence of a lack of time management. However, literature search indicates that it appears that the primary cause is a lack of management, for example, material deliveries. In Myanmar, managing materials (and/or inflation prices) is key issue as its account for approximately 80% of the total construction cost. Therefore, this research project addresses these issues surrounding the construction projects to develop a supply chain management framework, particularly for Myanmar construction industry. A case study on Thaketa Gas Plant construction project will be used to validate and evaluate the proposed framework modelling. 2. Research Statement

2 1 The changing government will bring unexpected rules and regulations, which will not only affect the country s growing materials market but also the industry s management systems. A unique management system is required to control the growing materials market not only to avoid unforeseen laws but also to improve the construction industry of Myanmar. Myanmar Times reported in an article that the demand for imported cement significantly reduced over the past few years, resulting in a drop in the price of cement. Nationally, construction industry output has grown year-on-year during this period, during which many companies have turned to in-house manufacturing to further reduce costs. The trend has been to move away from an uncompetitive, horizontally separated, chain of buyers and suppliers to a fully vertically integrated relationship. In practice, this can be seen as bringing the uncompetitive supplier s activities under the umbrella of construction companies in Myanmar. This presents the potential not only for product cost improvements, but also quality and time control. Therefore, this choice of importation, local sourcing or in-house manufacturing will be analysed as part of the research. Over the coming decades, it could be expected that the supply chain will continue to evolve. The choice of a suitable partner plays an important role in achieving the gains of SCM (Stadtler, 2008). Suppliers are as important as the manufacturer in developing the supply chain as they must deliver the right resources and tools in time to perform the service (Ritzman etl, 2003). As many companies previously relied on a friendly one-to-one customer-supplier relationship, this inevitably led to low competition in the marketplace. We could view this type of supply chain as vertically integrated, but cost and quality control separated. Now, with the changes occurring which have brought manufacture in-house, supply chains continue to be vertically integrated. Given this change, I predict that the next emergent trend will be the separation of the manufacturing and construction industries into smaller discrete entities in favour of a more efficient, specialised economic environment. This will horizontally and vertically separate the supply chains and offer greater choice to the purchaser within the limitations of free-market capitalism. During my Masters Degree research, I concluded that Myanmar s construction industry is significantly behind in its use of management theories. Late supply of materials was found to be the source of the costs overrun problem, but quantifying the lack of management of a wide range of aspects will be the biggest challenge for the research. Value added per process is a factor that many contractors and manufactures are now paying close attention to, with the aim of generating greater profits. However, the methodology is being used by Giant Bikes in the UK to create an industry leading product, and in combination with others by the C3 Electric Car team as part of an innovative problem solving methodology. This indicates that analysing value added per process during conception to completion of a multi-million pound construction project will be carried out.

3 My research will be comprised of two parts. The main component of the research will be the development of a supply chain framework for multi-million dollar construction projects. Additionally, I will evaluate the potential gains of increased competition within the key market sectors. 3. Case Study Used in the Research Project Thaketa Gas Turbine project will be used as a case study in this research project. The proposed 500MW Thaketa Gas Power Plant project will be the biggest power generation plant ever to be constructed in Myanmar. It is a BOT project and a Joint Venture between the Ministry of Electric Power and private companies; the Ministry is the client and the other companies are responsible for the construction and operation. Usually, reliable and accurate data is difficult to obtain. However, as I am allowed to research the development of the construction phase of this project from inception, a unique opportunity exists to effectively monitor and improve expenditure. My previous research project, undertaken as part of my Master s Degree, identified the main reason for large project failure in Myanmar as the late supply of materials. The most effective way to solve this, I believe, will be through the use of Supply Chain Management (SCM). This will be the very first practice of SCM for a multi-million pound project in Myanmar. Even though SCM theory has been developed for more than a decade, it is not widely practised yet and some parts of the theories are still unsolved. I am confident that introduction of a new method to new people will synergise a new style of SCM in a developing country. For the Gas Plant projects, the main risks predicted by the contractors are the external factors affecting the return on investment, the power purchase agreement and the fuel supply agreement. These risks immediately relate to the supply chain. The opportunity of managing materials to reduce costs and deliver high quality materials to projects is existence. The business of purchasing gas from the Ministry in return for the supply of Power back to the Ministry also attracts me, with lots of unanswered questions, which need to be studied further to find the important link between purchasing and supply. 4. Research Aims The aim of the research is to develop a SCM framework modelling adapted to the suitability of a developing country, Myanmar. Working with different points of view of inexperienced people to SC bringing the new style of management into their civilisation is one of the main reasons for carrying out this research. It is anticipated that this will upgrade the performance of construction industry that may have an economic impact to the country.

4 3 5. Research Objectives The main objectives are: 1. Benchmark current practice in construction industry and in research literature worldwide. This involves benchmarking current practice of supply chain management in the construction industry and conduct literature search for supply chain management developments. 2. To estimate and evaluate the most important factors that affect on the management of the construction projects in the UK and Myanmar. The aim is to find difficulties faced by introduction management theories in a developing country will be analysed and recorded. 3. To develop a SCM framework based on industry data for construction industries. The proposed framework modelling of supply chain management will be evaluated and modified by experienced industry based managers and engineers, which questionnaires and interview survey will be conducted during the project. 4. To develop advanced procedures of supply chain management to minimise the risks of project failure due to the time delay and budget overrun. 5. Case study: The adopted SCM framework model will be applied to 500 MW gas turbine construction in Myanmar to describe effectiveness of cost saving by reducing waste/ inventory. This will also examine the advantage and disadvantages of adopting the SCM framework model. 6. To modify the proposed SCM framework model based on the results of case study and feedback of questionnaire and interview surveys. 7. To provide recommendations for the future development. 6. Research Methodology In general, the research methodology will be composed of six steps 1. Start the proposal and confirm the proposal s aim and objectives 2. Literature Review of SCM for the framework model 3. Develop the SCM framework 4. Refine the framework using industry feedback from questionnaires and interviews 5. Apply the framework to the case study and analyse the resulting data 6. Conclusions and Recommendations 7. Research Questions The research question will be refined after the literature review and baseline study, from the following:

5 What are the main obstacles and opportunities faced by the Myanmar construction industry s business environment when undertaking a detailed assessment? What are the supply chain management principles in Myanmar s business environment? What are the needs of the Myanmar construction industry? How can management principles be involved effectively? What are the implications of industry-standard developments? What are the differences of materials management between the developed countries and the developing countries? 8. Expected Outcomes The intended final outcomes of the research are: 1. Observation of a potential new style of CSCM for developing countries, particularly Myanmar. 2. New approaches to procurement in a rapidly changing market and best practice in partnering/ information sharing in the developing construction industry 3. Capacity building through the quality control process and developing people through introduction of a new theory 4. Cost savings for the Thaketa Gas Turbine project with the practice of Value Management approach 5. Evidence for the development of guidelines for successful projects by practicing SCM in a developing country 6. Evidence for Myanmar s construction industry to enable them to make informed choices about their approach to construction management 9. Information Sources The following range of information sources will be consulted: Printed Journals (e.g. Update Program, Library Trends, Library Review.) Company files; planning and feasibility studies Online Gateways and Databases (e.g. Website) Standard-Making and Regulatory Bodies (e.g. ISO, NEC, UK legislation rules, CDM 2007) Online Journals Government and other regulatory body publications (e.g. Ministry of construction s rules and regulations)

6 5 Books in the context of Construction Supply Chain Management, Materials Management, Business Supply Chain Management, Construction management, Project Management and Best Practice Theories 10. Proposed development Year one: Collect, Analyse and Evaluate previous data. Implement Supply Chain Management Year two: Practice Supply chain Management in Myanmar and collect new data Year three: Compare and analyse the old and the new data. Developing the framework model of SCM. Complete write up

7 Research Plan 1 st Year 2 nd Year 3 rd Year 4 th Year Literature Review General Supply Chain Management Collect, analyse and evaluate the planning data of the 500 MV Gas Turbine Examine the construction and business models of SCM Hierarchy Comparing the develop SCM model with theories Development Work Determining the aims and objectives Analysing the current practice of SCM in Myanmar Developing the SCM model Developing the research methodologies Refining the framework model Applying the framework model to the case study Monitoring and controlling the model to meet the needs of the country Cost saving analysis of the case study Future development and modifying the final SCM model Practical Work Interviews with Managing Directors, Project Managers and Quantity Surveyors from the construction industry Develop the questionnaires survey to refine the models Figure: The simple research plan Using the framework model in the case study to prove the advantage of the SCM model