Building Materials | How to Manage Materials at Construction Site?

Building Materials management can be defined as “the function responsible for the coordination of planning, sourcing, procuring, moving, storing and controlling materials in an optimum manner so as a pre-decided service can be provided at the lowest cost”.

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Here is another definition, “Building materials management can be said to be that process of management which coordinates, supervises and executes the works connected with the flow of materials to, through, and out of an organization in an integrated practice”.

"Lee and Dobler" has to define building materials management as, “a confederacy of conventional materials activities bound by the basic concept – the idea of an integrated management program to planning, acquisition, conversion, flow and delivery of production materials from the raw material stage to the finished product state.”

With the definitions mentioned above, it is clear that the scope of materials management is vast.

It has, directly or indirectly, affect the activities of many related departments in the organization. Mostly, the following can be identified as its main functions:

Building Materials Planning and Control

Based on the sales forecast and production methods, materials planning, and control is done. This involves estimating the specific requirements of parts, making materials statement, determining the levels of inventories, scheduling the orders, and observing the performance concerning production and sales.

Purchasing Process

This includes a choice of sources of supply, finalization of terms of buying, placement of procurement orders, follow-up preservation of smooth relations with suppliers, approval of payments to suppliers, estimating, and grading suppliers.

Stores and Inventory Control

This involves physical control of materials, preservation of stores, minimization of obsolescence, and damage through timely disposal and efficient handling, maintenance of store records, proper location, and stocking. Stores are also responsible for the physical verification of stocks and reconciling them with book figures.

The inventory control covers aspects such as setting inventory levels, ABC analysis, fixing economic ordering quantities, setting safety stock levels, lead time analysis, and reporting.

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Importance of Construction Materials Management

The fast-developing Indian economy has placed before the materials manager a tremendous challenge and responsibility. In many organizations, materials form the largest single expenditure item.

A study of the financial statements of a large amount of private and public sector organizations indicates that materials account for nearly 60% of the total expenditure.

The information on the average materials expenditure for different industry groups is shown in Table 1.

Thus, the point of materials management lies in the fact that any significant contribution given by the materials manager in decreasing materials costs will go a long way in increasing the profitability and the rate of return on investment.

Such an increase in profitability, no doubt, can be affected by increasing sales. But with the increased competition in the market, this alternative is not very easy to manage.

Besides, some increase in the profitability can be achieved by concentrating on the building materials cost, which is typically a major rupee item for most organizations. In fact, as market pressure intensifies, organizations will be forced to cut down the costs, and here, the materials management steps in to play their duties.

Since materials form a significant part of the total cost, these offer a very good scope for the reduction of the whole cost. A small percent of materials cost can occur in a large percentage increase in benefit.

Here is an example,

A small firm has total sales of $ 1000. The total cost is $ 900. You know, the amount of saving is $ 100, which amount to 10% of the sales.

Suppose, out of the total cost of $ 900, the materials cost is $ 600. Now if one percent saving in materials value can be achieved, then the resultant profit is $ 6 (1 percent of 600) which directly adds to the benefit; thus, profit converts $ 106.

So, in the above-mentioned case, we can see that a 1 % saving in materials cost results in a 6% increase in profit.


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Building Materials