The Effect of Purchasing and Supply Activities in Construction Industry

The Effect of Purchasing and Supply Activities in Construction Industry

Abstract of The Effect of Purchasing and Supply Activities in Construction Industry

This project work titled the effect of purchasing and supply activities in construction industry. Its main objective is to find out if purchasing and supply activities affect the construction industry and also to know if purchasing and supply activities influence another department in the industry. It is apparent that management of purchasing and materials is a vitally important activity in the industry. The value of the goods and service determine the process that the procurement department will follow to create a purchasing order. Astructured questionnaire was drawn and the staff of the industry understands the items in the questionnaire which was designed to elicit response with the option of age, sex, qualification, Yes/No, very satisfactory, not satisfactory etc. It was discovered from the survey that there is a positive policy between purchasing departments with other department in the industry. The study concludes that the company use maximum level in the industry. The study therefore recommends amongst others that the purchasing officers should be part of the decision and making process mostly on matters that affect purchasing.

Chapter One of The Effect of Purchasing and Supply Activities in Construction Industry

INTRODUCTION

Background to the Study

Purchasing departments play a vital role in the survival and growth of any industry. In recent time, purchasing department in industries have improve operator activities due to the high competition in the number of construction industries. Purchasing department involve procurement, which may appear to be a ‘hidden’ function in many organization. In fact procurement is a highly strategic role, all industry need inputs in order to be able to operate.

This might be physical input, such as raw materials, like engine components for a car. It is therefore, that the intention of this study is to know the effect of purchasing department in the industry.

In purchasing departments, there are several methods of acquiring materials, supplies, equipment and service. Purchases are made in different times and for different purposes. The

materials and quantities to be purchased for immediate use are not meant for future use or to maintain stock. In continuous-run-manufacturing, ordering method used and quantities required depend on planned production schedules.

Some items have longer life shelf than others while some appreciate value in stock than others. Also, the acquisition of labour and service is different from that of materials and equipment, hence the application of different circumstances and times.

Purchasing and supply activities involves the acquisition of essential materials, supplies, equipment and service in the right quantity, quality, prices, times and from the appropriate vendor or supplier. Purchasing simply means the process of buying. In a broader sense however, purchasing involves the determination of needs, selection of supplier, determining proper price, condition and terms, issuing the order or contract and proper follow up to ensure delivery of cargo or service etc.

Statement of the Problem

An inherent problem associated with the construction industry of purchasing and supply department is the cost benefit ratio of such a department when compared to funds expanding in setting up of a purchasing and supply department as an unnecessary expenditure which only increase cost not the need for purchasing activities and only view it as a clerical function, this is a dangerous position because it gives room for fraudulent practices function and obligation. A third problem and most relevant is how the firm would have fared if it did not have a purchase and supply department that is, the fact than an industry has a purchase and supply department is better placed than similar firm in the industry.

The major problems therefore are investigated on the need purchasing department and determine if it is economically justifying the need for the existence of the department: Justifying the cost needed to set up and also critically examine the cost needed to run the department and determine whether such an industry that has a purchasing and supply department has a comparative advantage towards optimum profit realization over firms in the industry

Research Questions

In view of the subject under study, the research put forward the following research questions

1.     Do purchasing and supply activity affect construction industry positively?

2.     Is there any policies between purchasing and supply departments in the industry?

3.     Does Harland construction company Ltd effectively use the function of purchasing and supply activities unit in
the industry?

Research Hypotheses

In other to validate this study, the following hypotheses were drawn in the research work.

Hypothesis One

HO:   There is no significant effect of purchasing and supply activities in the industry

HI:    There is a significant effect of purchasing and supply activities in the industry

Hypothesis Two

HO:   There is nopositively policies between purchasing department in the industry with other department.

HI:    There is a positively policies between purchasing department with other department in the industry.

Hypothesis Three

HO:   Harland Construction company do not use purchasing and supply unit effectively to acquired material.

HI: Harland construction company make used of purchasing and supply unit effectively to bring in material.

Purpose of the Study

Purchasing and supply activities was initially regarded as a routine, a clerical function and a semi-function which is not really important but it is concern itself on procurement and spending money, that is buying goods and component parts needed for construction industry.

1.     To find out if purchasing and supply activities affect the construction industry

2.     To know if purchasing and supply activities influence
another department in the industry

3.     To show case that Harland construction company used
purchasing and supply activities to procure material
needed in the industry