The Study Of Material Inventory Management On Project

Over the recent years, as the real estate market continues to heat up in China, the number and size of Chinese construction companies are expanding rapidly. It is followed by increasingly fierce competition between construction enterprises in the construction market. At present, the domestic construction market is gradually well regulated. Most of the constructions are carried out through open competitive bidding approach, which is used by owners to control the cost of investment. For a construction company to win in a bidding process, a key is to control the construction cost, especially the cost of construction materials that may account for half of total construction expenses. Cost of materials includes purchase cost and inventory cost. In today’s fully competing market, material purchase cost is relatively transparent, with little margin. Therefore, reduction potential for inventory cost is a focus for construction enterprises. This thesis aims to have in-depth analysis on better construction project material inventory management.This thesis, based on author’s practical experiences in construction companies, firstly reviewed and analyzed optimal inventory management and its impact on the construction management, especially on project progress, quality management, and cost control. From this analysis we can see that good level of construction material inventory is critical to improve a project developer’s performance and market competitiveness. Therefore, it is important to optimize construction material inventory. However, this is not fully recognized by some Chinese construction companies. Along with competing construction market in China, we believe the importance of inventory management will be realized in the construction sector.Secondly, this thesis investigated how to optimize construction project material inventories, in two aspects:1) optimize inventories for a group of construction projects developed by a company. This analysis analyzed characteristics of group project management and proposed an approach for supplier selection. A joint inventory management approach was suggested and its implementation feasibility was analyzed.2) Optimize inventories for a construction project, which is more popular to current project development practice. Using practical data, construction materials were classified. ABC and CAV inventory management methods were used to estimate required quantity of each construction material class. Inventory Quantities of the materials were analyzed. For special purpose construction materials, inventory requirement was described.Finally, a construction project case was studied using the above method. The case project is from author’s practical work experience. Using the actual operating data from the company’s business department, inventory optimization theories were applied for material inventory management.In summary, the material inventory management is an increasing importance of construction enterprise cost control. The study result of this thesis is expected to provide some reference value for construction material inventory management practice in China.