OVERCOMING PROJECT MANAGEMENT CHALLENGES THROUGH SUSTAINABLE SUPPLY CHAIN MANAGEMENT IN EAST AFRICA

1. WELCOME TO THE CPD
CERTIFIED WORKSHOP
PROGRAMME
9th NOVEMBER, 2018

2. SPEAKER:
Dr. DAVID KIARIE MBURU,
OPERATIONS MANAGEMENT & SUSTAINABLE SUPPLY CHAIN MANAGEMENT CONSULTANT
Email; dmburu77@gmail.com
TOPIC:
OVERCOMING PROJECT MANAGEMENT CHALLENGES THROUGH
SUSTAINABLE SUPPLY CHAIN MANAGEMENT IN EAST AFRICA
TIME:
13:30 - 14:15HRS

3. Introduction
TEXT HERE
• The performance of construction projects in East Africa especially
in Kenya has been booming. However, they are barred with the
challenge of project implementation that always affects its
completion and success.
• The problem of corruption and unfair distribution of construction
projects is common in the procurement process a situation that
attracts unqualified and incompetent bidders.
Introduction

4. • A typical description of the project manager goal is to bring a project to
completion on time, within the budget cost, and to meet the planned
performance or end-product goals.
• Although planning does not guarantee project success, lack of planning
will probably guarantee failure.
• Poor communication is often a fundamental weakness in the interface
between a project development firm and its supplier; it undermines the
buying firm’s efforts to achieve increased levels of supplier performance.
Introduction……

5. • These challenges are a direct result of project planning, execution
and implementation, while others are a result of indirect, peripheral
activities.
• Some of the project management issues include workforce
considerations, safety, time constraints, and the changing nature of
the work.
• Some projects also overruns past the stipulated completion time,
substandard performance, requests for supplementary budgets to
complete stalled projects or in extreme cases abandoned projects.
Why focus on Project Challenges?

6. • Supply Chain management is the integration and management of supply
chain organisations and activities through cooperative organisational
relationships, effective business processes, and high levels of information
sharing to create high-performing value systems that provide member
organisations a sustainable competitive advantage. Whereas,
• Sustainable supply chain management (SSCM) is the identification of
problematic economic, social and environmental issues throughout the
supply chain; assessment of their potential impact and risks; and
development of measures to enhance impact and mitigate risks.
Why Sustainable Supply chain Management?

7. • Supply chain sustainability is a holistic perspective of supply chain
processes and technologies that go beyond the focus of delivery,
inventory and traditional views of cost which include projects to reduce
energy cost, any form of waste and application of green technologies
within transportation and logistics networks.
• This further relates to managing information systems, inventory
management, warehousing, customer service, and after-market
disposition of packaging and materials as part of the supply chain. The
network of the supplier consists of all organisations that provide inputs,
either directly or indirectly.
Why SSCM…….?

8. • To Incorporate Supply chain sustainability as a business issue affecting an
organisation's project supply chain management in terms of
environmental, risk, and waste costs.
• Since there is a growing need for integrating environmentally sound
choices into supply-chain management, project management therefore
will not be exemption and there is an urgency in such incorporation.
• To enhance the larger shift that involves a deeper level of collaboration
with internal and external supply chain partners to reexamine project
delivery methods, products, packaging and project measurement systems.
Why Sustainable SCM in Construction Projects?

9. • The increased environmental, social and economic impacts of the
construction industry and its products have fuelled the demand for
sustainable construction.
• To achieve corporate sustainability within any organisation, it is essential
that sustainability issues are addressed throughout the organisation’s whole
supply chain, a process referred to as sustainable supply chain management
(SSCM).
• The need to expand traditional performance measures (time, quality and
cost) to include additional factors such as environmental and social
measures.
Why Sustainable SCM in Construction…..?

10. • To understand the importance of suppliers’ sustainability performance
becoming one of the key aspects of tender selection criteria since many
large construction companies are developing a variety of tools, policies and
strategies that measure and demonstrate their performance.
• There is growing awareness that sustainability cannot be achieved by
organisations’ actions in isolation. They need to work in partnership with
other members of the supply chain to develop products and services based
on environmental integrity, social equity and commercial viability.
Why Sustainable SCM in Construction…..

11. • The construction industry is one of the most important sectors for the
human civilization by improving society’s physical environment: its output is
used for production, commerce and shelter, and for providing vital utilities.
• Construction has a significant and irreversible impact on the environment
such as the massive use of natural resources, pollution of the environment,
and high energy consumption which are among the whole supply chain
from production of construction materials to the end user.
• With the increasing need for environmental awareness, ‘sustainable
construction’ is inevitable. Sustainable construction should include ‘cradle
to grave’ appraisal, not only in the serviceability of a building during its
lifetime, but also the recycling of resources to reduce waste stream
associated with the after use.
Why Sustainable SCM in Construction…..?

12. • Material purchasing in the construction industry is the vital process
of supply chain management
• Implementing green supply chain management results in not only
environmental benefits, but can also enhance quality of product,
raise productivity, and reduce the risk of supply chain interruption
or damage to reputation especially in construction industry.
Why Sustainable SCM in Construction…..

13. School of thought A: Operational efficiency and effectiveness by way of
collaboration based on equitable Relationships;
• The general tenet is that integration and cooperation is the solution to
fragmentation, adversarial culture and low profit margins.
• Factors such as trust, commitment and win–win scenarios are very crucial.
Trust in this sense means that parties act towards mutual benefits, while
commitment is based on the belief that the trading partners are willing to
devote energy to sustaining the relationship.
How to Achieve Sustainable SCM in the Construction
Industry (Two Schools of Thoughts)

14. School of thought B: strategic efficiency and effectiveness by way of
collaboration based on power relations;
• Argues that there is a flaw in the assumption that successful SCM, based on
trust and equitable relationships, is achievable in all situations and
amenable to all construction processes.
• It suggests that successful SCM is achieved through collaboration based on
a power regime. This occurs when a dominant player is strategically placed
and creates a structural hierarchy of relatively dependent suppliers who
pose no threat to the flow of value appropriation and are forced to pass
value to the dominant player
How to Achieve Sustainable SCM……

16. • High purchasing power, regularity and predictability of workload and
extensive knowledge of the construction process are significant
factors, which if put into consideration will effectively determine
whether or not proactive SCM approaches in construction projects
can be implemented.
• These factors provide buyers (clients) with power and the ability to
work in a proactive and collaborative manner with trading parties, to
achieve its procurement best-value objectives.
What's the solution?

17. HOW DO WE THEN OVERCOME THESE
CHALLENGES?

18. • Adoption of the three types of construction supply chain:
 The primary supply chain which delivers the material that is
incorporated into the final construction products.
 The support chain which provides equipment and materials that
facilitates construction.
 The human resource supply chain which involves supply of labour.
• Coordination of inter organization’s decision making in construction supply
chain and integration of key construction business processes and key members
involved in CSC, including client/owner, designer, general contractors,
subcontractors, suppliers, etc. the ultimate goal will be to improve
construction performance and client value at less cost.
Overcoming the challenges Through Construction Supply
Chain

19. • Supply chain management has its beginnings in physical distribution and
logistics, and concentrates on close relationships between parties
involved in the flow of goods/materials from the supplier to the
customer. Relationships should extend beyond the exchange of materials
or services for a price towards the alignment of goals.
• Adoption of a supply chain that encompasses all organisations and
activities associated with the flow and transformation of goods from the
raw materials stage, through to the end user, as well as the associated
information flows (up and down the supply chain).
Overcoming the Challenges…………

20. Adoption of a Model of Supply Chain in construction

21. Illustrations
• Information Flow (orders, programs, estimates, procedures, etc.)
• Resources Flow (supplies, finished products, equipment, etc.)
• From the above illustration, it is evident that a construction firm has
as many supply chains as it has construction projects, because for
each project, the clients’ requirements and the project’s
characteristics might be different.

22. 1) Social Responsibility
 Does the firm provide a safe working environment, with appropriate compensation
and benefits?
 Does the firm avoid child labor, forced labor or discrimination in hiring or
promotion?
 Does the firm make a positive contribution to the communities in which it is
located?
2) Environmental Stewardship
 Can the firm avoid depleting resources, prevent pollution, or otherwise reduce its
ecological footprint?
 How is the product able to be reused, recycled or ultimately disposed of?
 Can the total cost of ownership be reduced?
Adoption of the Triple Bottom Line (3BL)

23. 3) Economic Viability
 Is the firm profitable?
 Can the firm be expected to grow and prosper, providing
returns to investors?
A firm deficient in any of these three facets is ultimately not
sustainable
Triple Bottom Line (3BL)…..

24. Adoption of Value Drivers for Sustainable SCM in Projects
Business sustainability;
Environmental impact
Social responsibility
Economic stability
Healthy and safety
Stakeholders interest
Supply Chain Management;
Cost reduction
Process Efficiency
Asset Utilization
Service Reliability
Inventory Optimization
Supply Chain
Alignment
Risk Management
Sustainable
Supply Chain
Management

25. • Supplier Alliance; a shift from intermittent transactions towards longer
relationships with sustainable business partners
• Integrated Supply; a sustainable flow of materials and services integrated
into internal processes and aligned with material and quality standards
• Sustainable Product Quality Standards; Business sustainability standards
prevalent in material selection, manufacturing/construction processes and
product packaging
Adoption of Green Procurement Best Practices

26. • Supplier Compliance; companies work with business partners to meet
specific sustainability targets and assist others that fail but are committed to
make improvement over time.
• Supplier Commitment; suppliers have aligned value for meeting internal
company business sustainability metrics, environmental law and social
expectations
Adoption of Green Procurement Best Practices

27. • The Blockchain Technology is a new way to store and record transactions
(as a peer-to-peer controlled distributed transactional database).
• A digital ledger where different types of agreements (eg contracts,
financial transactions) are recorded and confirmed as completed.
• Its main difference to traditional databases is that it lacks the need for a
central authority. There is no middleman, such as a bank transferring
money or a lawyer to confirm the conditions of a contract. In that sense,
there is no single database or company on which it hinges.
Overcoming the challenges through adoption of
Blockchain Technology for construction

28. • What makes the Blockchain Technology unique, in terms of data safety, is
that every piece of information in this database is “chained” to the rest
through a digital signature. This allows for a faster and more secure way of
data exchange.
• It encourages the exclusion of intermediary parties in a transaction which
takes place between two distinct members of the same peer to peer
network.
• It could help construction and add more transparency to every type of
agreement and transaction in a construction project.
Adoption of Blockchain Tech for construction……

29. Smart contracts; Construction is “the land of disputes” the majority of which
are inextricably connected with payments. The Blockchain technology could
function as a trustworthy contract administrator by introducing an error-free
process based on which the contracts would be both built and monitored.
Improved workflow; The Blockchain could optimise significantly the project
workflow and enhance collaborative working. More analytically, it could
incentivise transparency during the construction process and push project
members to perform better.
What Blockchain could mean for construction

30. Increased transparency signifies increased accountability and a better control
of the project in general. A more open building process will eventually lead to
a better alignment of industry and client interests while minimizing disputes
and risk.
What Blockchain could mean for construction….

31. • Strategy Assessment; Evaluate business needs, market conditions and
sustainability value drivers (research/benchmarking) to improve supplier
relationships or initiating sourcing
• Strategic Sourcing; Improve sustainable material selection as part of
supplier selection criteria
• Supplier Management; establish key supplier performance metrics to
ensure continuous alignment with sustainable project targets
Where do we then Improve?

32. • Procurement Processes; improve transaction efficiency to reduce inventory
and warehousing
• Logistics; optimize outbound and inbound logistics to reduce fuel
consumptions and emissions
• Inventory Management; reduce inventory levels on non-critical supply
resulting in lower carrying costs, wastes and material obsolescence
• Organizational Effectiveness; establish cross-section work-groups to reduce
rework and process waste through early supplier involvement in business
planning
Where do we then Improve? ………

33. • When working effectively and efficiently, modern supply chains will allow
projects to be effectively completed in the right quantities, at the right
places, at the right time and in a cost effective manner.
• The huge fragmentation in the construction process as evidenced by the
lack of integration of its supply chain makes supply chain management a
very appealing approach to achieve integration between internal and
external supplies, designers, contractors, subcontractors and clients.
Conclusion

34. • Adoption of Benchmarking practices as a systematic process of
comparing and measuring the performance of the companies
(business activities) against others, and using lessons learned from
the best to make targeted improvements. This will help to;
 Gauge where the company stand against key competitors, or
 Learn and incorporate successful ideas from best of class
companies
Conclusion……….

35. THANK YOU!