Construction industry in kuwait – an analysis on e procurement-2


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Construction industry in kuwait – an analysis on e procurement-2

  1. 1. International Journal of Management Research andDevelopment (IJMRD), ISSN 2248 – 938X(Print)ISSN 2248 – 9398(Online), Number 1,2, Number 1 (2012)2248 – 9398(Online), Volume 2, Volume July-December IJMRDInternational Journal of Management Research and Development (IJMRD), ISSN 2248 – 938X(Print) ISSNJuly-December (2012), pp. 01-17© PRJ Publication, © PRJ PUBLICATION CONSTRUCTION INDUSTRY IN KUWAIT – AN ANALYSIS ON E-PROCUREMENT ADOPTION WITH RESPECT TO SUPPLIER’S PERSPECTIVE T.Baladhandayutham( 1) Dr. Shanthi Venkatesh (2) Doctoral Research Scholar, Assistant Professor (SG) - Marketing School of Management, SRM University, SRM B School, SRM University, New No.78/1, Mosque Street, Saidapet, No.1, Jawaharlal Nehru Road, Vadapalani, Chennai-600015, India Chennai 600026. INDIA. Mobile: 0091-9444320720 Mobile: 0091- 98400 97489 Shan_venky@yahoo.comABSTRACTInformation technology (IT) has been widely applied in many industrial sectors in order toincrease their profit, competitiveness, and to reduce unnecessary costs. In line with theGlobal Scenario, the procurement concept is also moving ahead from traditional manualpaper-based to electronically-based due to improvement in the Internet. Electronicprocurement (e-procurement) has been widely adopted in various industrial sectors across theGlobe, and as such various aspects of its adoption has been researched. Constructionmaterial procurement is one of the most important sections in the construction projectlife cycle. The possibilities afforded by E- Procurement are evident, but the level ofimplementation and penetration was not as expected within the construction industrycompared to other industrial sectors. The potential benefits for construction are suggestedby the E- Procurement accomplishments in other industries. Yet the adoption of e-procurement in the Construction Industry is not as widespread, especially in Kuwait andother GCC countries in Middle East Region, and accordingly there has been limitedresearch into the factors affecting the adoption of e- procurement, within this context.Consequently, this study, which has been undertaken with quantitative surveyquestionnaires on supplier’s dimensions, aims to add to current published literature, and inparticular provide an understanding of the relationship between the factors identifiedwhich have affected adoption of e-procurement for Construction Industry and MaterialSuppliers in Kuwait.Keywords — e-Procurement, Construction Industry, Kuwait 1
  2. 2. International Journal of Management Research and Development (IJMRD), ISSN 2248 – 938X(Print)ISSN 2248 – 9398(Online), Volume 2, Number 1, July-December (2012) 1. INTRODUCTIONFaced with a challenging economy and a fiercely competitive market environment,corporations around the globe are hard pressed to explore newer and sustainableapproaches of attaining Competitive advantage. The global economy has changeddramatically from an industrial society to an information society. Business has turnedinto e-business. The new world of business with business pressures and increasingbusiness needs forms the driving force for the organizations to take competitiveadvantage using E-commerce. The organizations respond to these business pressures tofulfil their business needs by Adopting strategic systems, Continuous improvementefforts, Business process reengineering (BPR), Business Alliances, and Electroniccommerce. Electronic commerce is driving fundamental changes in the way in whichorganizations buy and sell. Traditionally, high operation and transaction costs andlimited information flows forced most enterprises to adopt one of two procurementoperating models: centralized command and control or highly decentralized operations.Each of these organizational models offered benefits and challenges.Dai and Kaufmann (2000) note that “to buyers in supply chain management,procurement systems and B2B (business to business) electronic markets are perceivedas a new procurement channel enabled by the internet and new technologies of the WorldWide Web. Adoption of these technologies and the corresponding business modelsassociated with them, are of great significance to the success of many businesses in aspectrum of industries”. One important sector that, in recent years, has seriously begun toevaluate and adopt e- procurement technologies is the Construction sector.Construction material procurement is one of the most important sections in theconstruction project life cycle. The procurement concept is moving ahead from traditionalmanual paper-based to electronically-based due to improvement in the Internet. It isnecessary for every construction company to maintain an efficient and effectivematerial procurement to cut administration cost and overcome various marketuncertainties to procure materials at the right price, quality and time.1.1. E-Commerce and E-BusinessIn general, e-business is used in the broadest sense. It includes buying and sellingon-line, but also other aspects of on-line business activity, such as purchasing, trackinginventory, managing production and handling logistics, customer support services, supplychain management and collaborative engineering. Electronic Commerce, or e-commerce,is buying and selling on- line. It is part of the broader term e-business and involvestransactions. 2
  3. 3. International Journal of Management Research and Development (IJMRD), ISSN 2248 – 938X(Print)ISSN 2248 – 9398(Online), Volume 2, Number 1, July-December (2012)In simple words B2B commerce can be defined as "doing business electronically" orbusiness that is conducted over the Internet. . Electronic procurement (E-procurement) isthe application of Internet technology in material procurement. The growth of internethas fuelled the growth of e- procurement. “Today e-Procurement and e- Sourcing are twoof the most useful practices in purchasing. Ten Years ago, those terms were unheard of”(Charles, 2008, p1). 1.2. Procurement in Construction ProjectThe construction industry is faced with the ongoing challenge to enhance current workpractices and become more client-oriented. This trend is influenced by a number offactors, including greater performance expectations by clients, globalization of theeconomy, increased competitions between contractors, continued restructuring of workpractices, industrial relations, and industry’s need to implement information andcommunication technologies.Despite the unique and individual nature of any construction project, it requiresinvolvement by many participants, such as clients, designers, consultants, contractors,subcontractors, and suppliers, as an entity to perform various roles and responsibilities.Today, enterprises are increasingly in need of sustainable, faster and safer methods ofconstruction, innovative project delivery modes and procurement practices, as well asinteroperable standards within the construction industry, which is really a big challengeto their existing supply chain to improve the efficiency and effectiveness. 1.3. Relevance of this Research to KuwaitKuwait’s already buoyant economy is the third largest in the Gulf Cooperation Council(GCC) countries, after Saudi Arabia and the United Arab Emirates, with its real grossdomestic product (GDP) standing at US$32.92 billion in 2002 (UNESCWA, 2003),which is powered by its 10% of world’s oil reserves. Oil production and related industriesdrive the Kuwaiti economy. As estimated by on 29th September 2010 theValue of Construction Projects in GCC stands at US$2.29 trillion. Top 100 projects inGCC region contribute US$ 1.3 trillion and Kuwait contributes more than 25% value.There is a huge scope for efficient Procurement methods and yet the B2B e-Commerce /organizational e-Procurement have not reached their potential utilization as it is practicedin the rest of the developed / developing countries. 3
  4. 4. International Journal of Management Research and Development (IJMRD), ISSN 2248 – 938X(Print)ISSN 2248 – 9398(Online), Volume 2, Number 1, July-December (2012) 2. THE PROBLEM AND RESEARCH QUESTIONSAccording to the existing literature, e-Procurement is likely to increase firm’scompetitiveness through cost reduction and increased efficiency on the inbound logistics.However, even though some construction companies are adopting and using such systems,other firms are not intending to do so. The following problems have been identified to bestudied / analyzed by the way of this ambitious research. a) What are the factors that affect the intention of Construction Material suppliers in Kuwait to adopt e-Procurement? What is their relative relevance? b) What are the benefits / barriers perceived by Construction Material Suppliers for the e-Procurement adoption?In order to ascertain the answers for the questions above, a detailed literature reviewwas conducted to develop a research model containing a set of factors for explaining theconstruction companies’ likelihood to adopt e-Procurement. 3. LITERATURE REVIEWReview of various literatures using a funneling approach of Hofstee (2006) was carriedout. The sources of literature review includes books, management journals, surveyreports, research reports and contemporary articles on the e- Procurement practices insupply chain management in varied industrial sectors including construction industry.Literature Survey broadly covered the Supply Chain Management, Construction SupplyChain Management, Procurement for Construction Projects, B2B e-Commerce, E-Procurement, B2B e-Procurement Applications for Construction Projects, Global E-Commerce Trends, E- Commerce Initiatives in GCC, E-Commerce Initiatives inKuwait. The available / collected literature (more than 200 Nos.) can be broadlygrouped under following categories:• Research prior to Year 2000 = 6%• Research between Year 2000 to 2004 = 42%• Research between Year 2005 to 2010 = 52%It is evident from the literature survey that research on B2B e-Commerce has begunduring late 90’s, gained its momentum during year 2000 to 2004 and the trend continues.Summary of observations made out of the detailed literature survey is given below: 4
  5. 5. International Journal of Management Research and Development (IJMRD), ISSN 2248 – 938X(Print)ISSN 2248 – 9398(Online), Volume 2, Number 1, July-December (2012) 3.1 E-Procurement ProcessE-Procurement can be defined as the “electronic integration and management of allprocurement activities including purchase request, authorization, ordering, delivery andpayment between a purchaser and a supplier” (Chaffey, 2002). Six forms of e-Procurement are described by De Boer et al.(2002); (i) electronic- Maintenance Repairand Operations (e-MRO), (ii) web-based Enterprise Resource Planning (ERP), (iii)electronic-sourcing (e-sourcing), (iv) electronic- tendering (e-tendering) (v) electronic-reverse auctioning (e-reverse auctioning) and (vi) electronic-informing (e-informingResearch of enterprises’ experiences with Internet-based procurement automationtechnologies indicates that companies have been able to achieve significant cost andprocess benefits by automating key procurement activities (Aberdeen, 2001). 3.2 E-Commerce in Relation to ConstructionThe potentials of e-commerce technologies applications in the construction industryinclude: E-marketing; E-selling/e-procurement of goods and services; E-collaboration; E-finance; and E-customer services and relations (Veeramani et al., 2002). Complexity,Strategic Importance, Price and Repeat Purchase are the important dimensions ofProcurement Spend for conducting a Commodity Spend Analysis. Similarly, on-time andon-budget are the most relevant measurements for e-Procurement Implementation (OGC,2002).E-business provides mechanisms for cross-enterprise coordination in name ofconstruction supply chain integration. In order to optimize the entire supply chainsystem cross-enterprise coordination and special business relationship must be establishedamong the organizations along the supply chain (Francisco Loforte Ribeiro and JorgeLopes, 2001). It was felt a more rigorous verification of the application of general e-procurement drivers and barriers to construction e-procurement may provide a clearoutlook for the potential for the advancement of e-procurement in construction. Despitethe benefits of e- commerce technologies to the construction industry, there are manychallenges in its applications (Elliman & Orange 2003). 3.3 E-Procurement models in Relation to Other IndustriesLiterature review reveals that despite the fact several models and varying factors exist,the core of most of the models is the view of management of people, process andtechnology that leads successful implementation of e- procurement. The model proposedby Dooley and Purchase (2006), enforces the view that attitude towards ecommerce canbe tracked using 4 factors namely Internal organization Support, Integration withSupplier, Supplier Willingness, supplier / buyer relationship and PerceivedImprovements to procurement tasks. Boyler and Olson (2002) proposed a model thatfocuses on 5
  6. 6. International Journal of Management Research and Development (IJMRD), ISSN 2248 – 938X(Print)ISSN 2248 – 9398(Online), Volume 2, Number 1, July-December (2012)two broad factors namely Purchasing Company and Internet Factors that predictoutcomes of performance improvements from e-procurement implementation.Vaidiya et al., (2006) proposed a model focusing on factors that impact level of user andsupplier satisfaction leading to e-procurement implementation in public sector. Bingi,Mir, and Khamaleh (2000) found that the major concerns that face electronic commerceadoption are the absence of the technological infrastructure needed to support businessoperations, information security, and privacy of exchange. It is especially evident whensuppliers may be hesitant or even unable to meet business customers’ systems’ integrationrequirements without guarantees of future revenue streams (Sigala 2006). The hesitationto adopt e-procurement, for example, does not stem from expected difficulty orconstraints, but arises due to being unaware of clear anticipated benefits (H. Min andW. P. Galle, 2003 & C. K. Riemen Schneider, D. A. Harrison, and P. Mykytyn, 2003).Business-to-businesses processes differ along several dimensions, such as specificity,structuredness, variation in demand, frequency of orders, value of product, amount ofhuman intervention required, and complexity. The realized value of e-Procurementdepends not just on the complexity of the procurement process, but also on thetransaction volume of this procurement category. Moderately complex items (i.e., MRO,office equipment, software, and services) had the potential to return higher benefits thansimple or more complex items. More complex purchases require more time and effort tobe set up in an e-procurement system, and deciding which item to Web-enable atearlier stages depends on the distribution of transactions of different complexity.(Subramaniam, C. and Shaw, M.J., 2002).Subramaniam and Shaw (2002, 2004) propose that both buyer and seller can achievelower transaction cost and error cost in a web-based e-Procurement environment andalso asserted that the reduction of these costs will have a positive effect on corporateperformance. Past research on the value impacts of e-Procurement has focused on thebenefits for a single company through case studies. This phenomenon can be attributedto the complex inter-organizational environments where loyalty of business partnersmight be questionable and decentralized coordination and decision making mechanismswhich are more susceptible to supply chain uncertainties (Ageshin, 2001; Subramaniamand Shaw, 2002). The literature review revealed a collated set of benefits and barriersto e-procurement as identified in Table 1 and Table 2 respectively. 6
  7. 7. International Journal of Management Research and Development (IJMRD), ISSN 2248 – 938X(Print)ISSN 2248 – 9398(Online), Volume 2, Number 1, July-December (2012) Table – 1 Benefits of e-procurement identified from Literature No Drivers from Literature Referenced in: Knudsen (2003), Minahan and Degan 1 Process cost savings - (Tender / Purchase Process) (2001) 2 Service / Material / Product Cost Savings Minahan and Degan (2001), Martin (2008) Davila et al (2003) and Panayiotou et al 3 Transaction Administration Cost Savings (2003) McIntosh and Sloan (2001), Wong and 4 Increasing Profit Margins Sloan (2003) , Ribeiro (2001) 5 Strategic Cost Savings Knudsen (2003) 6 Enhanced Inventory Management Hawking et al (2004), Martin (2008) Kong (2001), Davila et al (2003), Egbu et 7 Decrease in Costs through reduced staffing levels al (2003) 8 Shortened Overall Procurement Cycle Times Minahan and Degan (2001) 9 Reduction in Evaluation Time Panayiotou et al (2003), Martin (2008) 10 Reduction in Time Panayiotou et al (2003) 11 Reduction in time through increased visibility Kalakota et al (2001) 12 Increased Quality through increased competition Kalakota et al (2001) 13 Increased Quality through Benchmarking Hawking et al (2004) Increased Quality through increased visibility in Minahan and Degan (2001) and Hawking 14 the supply chain et al -2004 Increased Quality through Improved 15 Communication Hawking et al (2004) Table – 2 Barriers of e-procurement identified from Literature No Barriers from Literature Referenced in: 1 Upper Management Support / Lack of Leadership Davila et al (2003), Hawking et al (2004) 3 Resistance to change Davila et al (2003), Martin(2008) 4 Lack of a widely accepted solution Davila et al (2003) , Martin (2008) 5 Magnitude of Change Kheng et al (2002) Lack of a national IT policy relating to e- 6 procurement issues Carayannis et al (2005) 7 Bureaucratic dis-functionalities Carayannis et al (2005) Complicated procedures and extended 8 relationships Carayannis et al (2005) 9 Lack of technical expertise Davila et al (2003), Martin (2008) 10 Company access to the internet Smith (2006) Security the process - Data transmission to the Gebauer et al et al (1988), Kheng et al 11 wrong person (2002) Confidentiality of information - unauthorised Gebauer et al et al (1988),Julia-Barcelo 12 viewing (1999) 13 Enforceability of electronic contracts Jennings (2001), CITE website (2004) Irani and Love (2002),Wong and Sloan 14 Information technology investment costs (2004), Martin (2008) 15 Internal & External Compatibility Davila et al (2003),Boeing (1996)The detailed literature review has helped to identify the following dimensions, whichneeds to the investigated in the research: 7
  8. 8. International Journal of Management Research and Development (IJMRD), ISSN 2248 – 938X(Print)ISSN 2248 – 9398(Online), Volume 2, Number 1, July-December (2012) • Perceived e-Procurement benefits (Opportunity, Time & Cost) • Perceived e-Procurement barriers (Online Crime, Relationship & Internal)Based on previous studies and institutional theory the proposed e-Procurement model canbe defined in terms of Supplier dimensions (Figure 1). Comparability Benefits e-Procurement Adoption Time Benefits Cost Benefits Suppliers Dimensions Internal Barriers External Barriers Technical Barriers Figure 1. Conceptual Model - eProcurement Adoption for Construction Industry in Kuwait 4. RESEARCH GAPS IDENTIFIEDUntil now, not much evident research has been conducted to pursue successfulapplications of e-Procurement to the construction supply chain in GCC Countriesespecially in Kuwait. Although independent studies as specified in the literature havebeen conducted Suppliers benefit/barriers towards adoption of e-Procurementindependently at various industrial sectors, the above aspects have not been studied withcontext to Construction supply chain in a single market. 5. OBJECTIVES & PROPOSED HYPOTHESIS The identified problems have lead to the following objectives of the research:a) To conduct an empirical analysis on the e-procurement process, Commodities, Supply chain partners of construction Industry in Kuwait andb) To identify the benefits / barriers those are affecting the intention of Construction Material Suppliers in Kuwait to adopt e-Procurement. Based on previous studies and institutional theory the proposed e-Procurement model can be defined in terms of Supplier dimensions with the following proposed hypothesis: 8
  9. 9. International Journal of Management Research and Development (IJMRD), ISSN 2248 – 938X(Print)ISSN 2248 – 9398(Online), Volume 2, Number 1, July-December (2012) Hypothesis:- There is no relationship between Construction Material suppliers’ dimensions and e-Procurement adoption among the Construction Material suppliers in Kuwait. 6. SCOPE OF THIS RESEARCHScope of this research is limited to the investigation of e-Procurement adoption forconstruction projects related to the Commercial and Industrial buildings in Kuwait. Thestudy is limited to its applicability to Kuwait and can be extended only to marketshaving similar dimensional perspectives in construction segment. The research appliessimple random sampling as well as convenience sampling method of data collection,and the limits that apply to convenience sampling methods of data collection hold goodfor this study also. The findings of the study can be extended for further researcheson varied perspectives related to construction supply chain. 7. METHODOLOGY & DATA COLLECTIONConsidering the nature of research and based on the various literatures, Quantitativemethods of research have been extensively adopted in this research. The following is abrief methodology of the proposed research: • Area : Kuwait • Industry : Construction Industry (Commercial / Industrial buildings) • Sampling Method: Convenience Sampling o Sample Size: Number of Suppliers = 35 o Instrument used: Online Survey for SuppliersA field survey through interview questionnaire was carried out to conduct thedescriptive study on the Construction Buyer Dimensions. It has been noted that KuwaitConstruction materials are supplied by 165 “Vital” suppliers and a sample of 35suppliers (who are supplying all types of commodities) out of population of 165 “vital”suppliers has been selected and a field survey through online questionnaire was carriedout on the Construction Material Suppliers dimensions (Refer Table 3 for the SurveyQuestionnaire Scaling and Measurement Framework). In addition, Secondary data onvarious commodities procured by the 50 construction companies for the constructionprojects were collected for conducting high level Procurement commodity and Supplierspend analysis. 9
  10. 10. International Journal of Management Research and Development (IJMRD), ISSN 2248 – 938X(Print)ISSN 2248 – 9398(Online), Volume 2, Number 1, July-December (2012)The data collected was subjected to detailed statistical analysis using SPSS 20 toascertain the Supplier Dimensions for e-Procurement adoption in Kuwait ConstructionIndustry. When we have well defined groups of independent and dependent variables wecan use the available data analysis techniques (Sharma, 1996). Statistical tools likeDescriptive Statistics, Chi-Square Test, One way analysis of Variance (ANOVA), Testof Mean differences, Factor Analysis, Reliability Test, Regression analysis andCorrelations analysis have been used in this research. Table – 3 Survey Questionnaire Scaling and Measurement Framework Concept Dimension Scale Suppliers e-Procurement Adoption Intention Perception variable Interval; Likert Supplier e-Procurement benefits / barriers Perception variable Interval; Likert 8. ANALYSIS OF DATAThe results the Statistics table indicates that the 35 respondents indicates that 32% ofthe Construction Material Suppliers in Kuwait are not aware of e- Procurement and68% are having awareness. Out of the Suppliers who have awareness on e-Procurement,88% are using e-Procurement for conducting their business.The frequency distribution of the benefits and barriers of the suppliers indicates that 73%suppliers agreed e-Procurement will result in process cost reduction and 54% expressedtheir agreement for cycle time reduction and 80% were in agreement for the benefit"automation leads to more focus on strategic issues". The frequency distribution of thebarriers perceived by the Suppliers in Kuwait indicates that 40% of them agreed"technical standards not developed", 60% of the Suppliers were in agreement of onlinecrime.The data from 35 respondents were subjected to Chi Square test using SPSS to identifythe relationship between the e-Procurement awareness and e- Procurement adoption. Chi-Square indicates that there is significant difference in the awareness level among theconstruction material suppliers in Kuwait and there is significance relation between e-Procurement awareness and adoption.The data collected from sample survey of 35 respondents who has answered 20statements (10 for benefits and 10 for barriers) was subjected to detailed analysis toarrive at core underlying factor for adoption of e-Procurement by construction materialsuppliers in Kuwait. It can be concluded the “Cost Benefits”, “Time Benefits” and“Opportunity Benefits” are the three common underlying factors which represents theperceived benefits of Construction Material Suppliers in Kuwait. Reliability test to verifythe internal consistency of the 3 major factors which represent 10 variables have beenconducted for “Cost Benefits”, “Time Benefits” and “Opportunity Benefits”. 10
  11. 11. International Journal of Management Research and Development (IJMRD), ISSN 2248 – 938X(Print)ISSN 2248 – 9398(Online), Volume 2, Number 1, July-December (2012)It has been noted that Cronbachs Alpha is > 0.90 for all the three factors, whichindicates high overall internal consistency among the 10 variables representing theperceived benefits of Construction Material Suppliers in Kuwait.It can be concluded the “Crime Barrier”, “Relationship Barrier” and “InternalManagerial Barrier” are the three common underlying factors which represents theperceived barriers of Construction Material Suppliers in Kuwait. Reliability test toverify the internal consistency of the 3 major factors which represent 10 variables havebeen conducted for “Crime Barrier”, “Relationship Barrier” and “Managerial Barrier”.It has been noted that Cronbachs Alpha is > 0.85 for “Crime Barrier” and“Relationship Barrier” and > 0.70 “Internal Managerial Barrier”, which indicates highoverall internal consistency among the 10 variables representing the perceived barriers ofConstruction Material Suppliers in Kuwait.Using the data obtained from through the Factor Analysis from the scores obtained fromthe three factors which represent the perceived benefits of suppliers in Kuwait, aprediction equation has been developed to predict the level of understanding on the e-Procurement Adoption from the perceived benefits and barriers among the suppliers. Priorto regression analysis, the three 20 variables which constitute the three benefit factorsand three factors barrier has been computed in SPSS. Table – 4 Coefficients Table – Supplier benefit dimensions Unstandardized Standardized Collinearity Statistics Model Coefficients Coefficients t Sig. Std. Error B Beta Tolerance VIF 1 (Constant) -.443 .199 -2.224 .034 COSTBEN -.530 .130 7.713 -.293 .129 -2.274 .030 TIMEBEN .293 .127 .527 2.314 .027 .136 7.373 OPPBEN .462 .141 .856 3.271 .033 .133 7.732 a Dependent Variable: e-Procurement AdoptionFrom the Coefficient table (Table 4) it has been noted that “Cost Benefits”, “TimeBenefits” and “Opportunity Benefits” are Significant independent variable (Sig < .05)and accordingly the variable is considered in the prediction equation. The ANOVAindicates that the computed F statistic is 37.8, with an observed significance level ofless than 0.001.Predicted e-Procurement Adoption = -0.433+0.462 (Opportunity Benefit) +0.293 (TimeBenefit) - 0.293 (Cost Benefit). 11
  12. 12. International Journal of Management Research and Development (IJMRD), ISSN 2248 – 938X(Print)ISSN 2248 – 9398(Online), Volume 2, Number 1, July-December (2012) Table – 5 Coefficients Table – Supplier benefit dimensions Unstandardized Standardized Collinearity Model Coefficients Coefficients t Sig. Statistics B Std. Error Beta Tolerance VIF 1 (Constant) .089 .389 .229 .820 CRIMEBAR -.092 .081 -.151 -1.131 .267 .872 1.147 RELABAR -.451 .081 -.702 -5.591 .000 .982 1.018 MANAGBAR .063 .067 .125 .933 .358 .865 1.156From the Coefficient table (Table 4 & 5 it has been noted that “Relationship Barrier”is the only Significant independent variable (Sig <0.05) and accordingly the variable isconsidered in the prediction equation. The ANOVA indicates that the computed Fstatistic is 11.29, with an observed significance level of less than 0.001. Predicted e-Procurement Adoption = 0.089 - 0.451 (Relationship Barrier) Table – 6 Correlation Analysis – e-Procurement adoption Vs Supplier’s dimensions Variable Name Pearson’s Significant / coefficient In-significant 1. Cost Benefits -0.736, P<0.001 Significant 2. Time Benefits 0.839, P<0.001 Significant 3. Opportunity Benefits 0.852, P<0.001 Significant 4. Crime Barrier -0.059, P>0.001 In-Significant 5. Relationship Barrier -0.704, <0.001 Significant 6. Managerial Barrier 0.160, P>0.001 In-significant 8.1 E-Procurement Model based on Research Findings:The purpose of this research was to identify factors that affect the intention ofConstruction Material suppliers including benefits / barriers perceived for the e-Procurement adoption in Kuwait. Based on review of literature and the analysis of data,six significant factors Suppliers’ dimensions were identified that might influence e-procurement adoption for Construction Industry in Kuwait. The significance of thesefactors was then tested in explaining e- procurement adoption in the construction industryof Kuwait and several interesting findings emerged from this research. The findings ofthis research will be a useful reference for the Construction Material Suppliers todevelop appropriate e-procurement strategies in Kuwait. Based on the findings of the analysis, the following e-Procurement adoption Modelhas been evolved for Construction Industry in Kuwait (Refer Figure 2). 12
  13. 13. International Journal of Management Research and Development (IJMRD), ISSN 2248 – 938X(Print)ISSN 2248 – 9398(Online), Volume 2, Number 1, July-December (2012) e-Procurement Adoption Model - Regression Equation Construction Industry in Kuwait -0.530 Cost Benefits e-Procurement e-Procurement Adoption = - Adoption 0.527 0.433+0.462 (Opportunity Time Benefits Benefit) + 0.293 (Time Benefit) - Suppliers 0.293 (Cost Benefit) Dimensions 0.856 Opportunity Benefits -0.702 e-Procurement Adoption = Relationship 0.089 - 0.451 (Relationship Barrier Barrier) Figure. 2. E-Procurement Adoption Model for Construction Industry in KuwaitWe have observed a significant difference in the awareness level of the ConstructionMaterial Suppliers Kuwait (X² <0.5) and there is a significant relationship between e-Procurement awareness and e-Procurement adoption (X²<0.5). It has been noted fromthe outcome of factor analysis that Construction Material Suppliers in Kuwait perceiveCost Benefits, Time Benefits and Opportunity Benefits (Cronbachs Alpha is > 0.90)towards e-Procurement adoption. Detailed statistical analysis indicates that all benefitfactors i.e. Cost Benefits, Time Benefits and Opportunity benefits are the significantfactors driving the intension of Construction Material Suppliers to adopt e- Procurement(F(3,31) =37.005,p < .001).However, it has been noted from further analysis that the beta coefficient of “CostBenefits” is negative (β = -0.530), whereas beta coefficients of “Time Benefit” and“Opportunity benefit” are positive (β = 0.527 / β = 0.856). This signifies that e-Procurement adoption tends to benefit the construction material buyers by increasecompetitiveness through cost reduction and reduce the price of Construction MaterialSuppliers, which supports the theory of A. Soares - Aguiar and A. Palma-dos-Reis(2008). At the same time it has been noted that level of Significance of “OpportunityBenefit" is much stronger than the “Cost Benefit” and “Time Benefit”, which signifiesthat suppliers look for more business opportunities to adopt e-Procurement.It has been noted from the outcome of factor analysis that Construction Materialsuppliers in Kuwait perceive “Crime Barrier”, “Relationship Barrier” and “ManagerialBarrier”. (Cronbachs Alpha is > 0.70, Eigen Values in FA >0.5 for all Factors) foradopting e-Procurement. However, detailed statistical analysis indicates that“Relationship barriers” is the only significant barrier for predicting the e-Procurementadoption of Construction Material suppliers in Kuwait (F(3,46) =11.29, p <0.001), whichis supporting the theory proposed by Ageshin (2001) and Subramaniam, Shaw (2002). 13
  14. 14. International Journal of Management Research and Development (IJMRD), ISSN 2248 – 938X(Print)ISSN 2248 – 9398(Online), Volume 2, Number 1, July-December (2012) 9. CONCLUSIONSConstruction and related Industrial sector is booming in Kuwait with more than USD 300billion worth of construction contracts are being executed in Kuwait. Kuwait is having agood ICT infrastructure to support the B2B e-Commerce and internet users areincreasing in Kuwait.The Survey and subsequent analysis indicate that Construction Material Suppliers inKuwait perceive Cost Benefits, Time Benefits, Opportunity Benefits for e-Procurementadoption. However, detailed statistical analysis indicates that Opportunity benefit is theonly perceived major factor for Construction Material Suppliers to adopt e-Procurementin Kuwait. Also, Construction Project Material Suppliers in Kuwait perceive “CrimeBarrier”, “Relationship Barrier” and “Managerial Barriers” for e-Procurement adoption.However, detailed statistical analysis indicates that “Relationship Barrier” as the onlymajor significant barrier for e-Procurement adoption among the Kuwait ConstructionMaterial Suppliers.An interesting point to be noted that suppliers perceive that e-Procurement will reduce theloyalty and close relationship with the buyers. Considering the market conditionsprevailing in Kuwait this is understandable and this is related to the traditional thinkingrequired to be changed by the Construction Materials Buyers. Supplier adoption Strategyis inextricably linked to the overall procurement strategy of the buyers whenimplementing any e-Procurement solution.This research has helped to identify the prevailing e-procurement adoption scenario forConstruction industry in Kuwait. Opinions of Construction Material Suppliers werecollected to identify e-procurement benefits / barriers for e-Procurement adoption forconstruction project procurement in Kuwait. As e-procurement is still in its infancy stagefor Construction Industry in Kuwait, Suppliers yet to gain experience of perceivedadvantages and benefits.There is a wide scope for conducting further researches to identify the technologicaland cultural changes that are effecting the e-Procurement adoption among all industrialsectors in Kuwait. Similar, researches can focus on other GCC states i.e. United ArabEmirates, Qatar, Saudi Arabia, Bahrain and Oman. Future researchers can also findout the returns on investment associated with the e-procurement adoption and how itmeasures up to the initial investment. REFERENCES[1] A. Davila, M. Gupta, and R. Palmer, 2003, “Moving procurement systems to theinternet: The adoption and use of e-procurement technology models,” Eur. Manage. J.,vol. 21, pp. 11–23.[2] Ageshin, E.A, 2001 e-Procurement at Work: A Case Study. Production and InventoryManagement Journal, 7(1), pp.48-53. 14
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