Civil Engineering Reference
In-Depth Information
Figure 2.2 gives an example of a single supply chain from client to tier
5. Of course, the supply chain does not necessarily end at tier 5, but
could go beyond that as in the example above to the plant parts manu-
facturer at tier 6 and then on to the parts manufacturer's own supply
chain. The purpose of the diagram is to highlight the complexity, inter-
dependency and diversity of the supply chain.
A private-sector perspective of supply chains is given by Rimmer
(2009), who defi nes the management of the supply chain as the 'manage-
ment of upstream and downstream relationships with clients and sup-
pliers to achieve greater project value at less cost' (Rimmer, p. 153). He
defi nes value and cost from the client's point of view. Value is seen as
any aspect of a project of importance to the client, while cost is the total
amount paid by the client, including interest charges (Rimmer, pp.
138-9). To Rimmer the purpose of supply chain management (SCM)
includes the delivery of value, the elimination of waste and the meas-
urement of performance.
Although there are many exceptions, much of the literature on the
management of construction projects and their supply chains is viewed
from the main contractor's point of view. Even Rimmer's description of
SCM can be seen as referring to upstream and downstream relationships
from the point of view of the main contractor. It is assumed contracts
between buying organisations and tier 1 contractors pass the associated
supply chain risk of their subcontractors to the tier 1 contractors, and
it is therefore their responsibility to manage those risks. Such arrange-
ments often work well on single contracts or one-off projects and some-
times even on portfolios of projects, where the same tier 1 contractor is
engaged to deliver multiple projects for the same client concurrently.
The problem with this approach is that it ignores the role of the client
and their indirect relationship with the tier 2, tier 3 and tier 4 contrac-
tors, often with severe and avoidable consequences affecting the delivery
of a programme.
A large programme of projects over an extended period, using a number
of tier 1 contractors on different projects, raises particular management
and coordination issues. These require meticulous management of
detail, without losing sight of the large scale of the whole programme
and the priorities and aims of the client. Maintaining this balance is the
challenge faced by the client delivery team when managing large con-
struction programmes. Later chapters will provide the tools for dealing
with the issues involved. However, many of the tools and techniques
described and the lessons learned can also be applied to individual
