Managing the Supply Chain is critical to every construction project. ELECTRI International – The Foundation for Electrical Construction, Inc. commissioned research to study the impact of owner-supplied or GC-supplied material and equipment. The investigation for the electrical construction industry, conducted by MCA, Inc., focused on evaluating the value transfer throughout the construction supply chain to the end customers.
The research examined 13 elements of project risk and found that value transfer is highest in terms of time, cost, and quality when subcontractors purchase material and equipment themselves. When the electrical contractor is well-equipped to manage the risks, including various degrees of freedom impacting the jobsites, material purchased through the existing channels will result in the lowest energy and expenditure required to supply the material.
Investigators reported that material cost variation has less impact on the final installed cost of construction and its budget while required services to accommodate late changes and scheduling variations have the highest impact. The final project’s delivery cost is not driven by the profits of each individual profit pool but rather by lack of productivity.