Construction Management and Economics (January 2010) 28, 35–49 Construction Management and Economics ISSN 0144-6193 print/ISSN 1466-433X online © 2010 Taylor & Francis http://www.informaworld.com DOI: 10.1080/01446190903365632 Simulating the impact of supply chain management practice on the performance of medium-sized building projects JATI UTOMO DWI HATMOKO 1 * and STEPHEN SCOTT 2 1 Department of Civil Engineering, Diponegoro University, Semarang, Indonesia 2 Department of Civil Engineering, University of Newcastle upon Tyne, UK Taylor and Francis Received 23 December 2008; accepted 25 September 2009 10.1080/01446190903365632 Construction supply chains encompass the flows of materials, labour, information, plant, equipment and temporary works that originate from a variety of different parties. The impact of various supply chain management practices on project performance has been measured, through a combination of a survey and the development of simulation models. Preliminary investigations were carried out by visiting two medium-sized building projects regularly over a period of six months to gain an understanding of the ways in which delays on supply chains impact on project performance. This was followed by the main survey which was designed to collect data required for developing the simulation models. These models were developed using Pertmaster Risk Expert TM software and incorporated supply chain delays applied to a CPM network of a typical medium- sized building project of 300 days’ duration. The results of the simulation showed that the project’s median delay was 67 days (22% of the project duration). The use of subcontractors in the project reduced this delay by approximately 45%. It was also learned that delays in material flow caused the biggest impact on the project, followed by labour flow, information flow and ‘plant, equipment and temporary work’ flow. These findings are an important measure of how much supply chain delays impact on project performance. Keywords: Supply chain management, supply chain delays, project performance, simulation, risk. Background While supply chain management (SCM) in the manu- facturing industry has developed and been widely understood for a number of decades, in the construction industry this approach is a much more recent area of interest. People in construction, i.e. clients, contractors, suppliers and subcontractors, are still exploring what SCM is, how it works to increase competitive advantage and what are its dynamics (Arbulu and Ballard, 2004). Supply chains in the construction industry can be very complex. Large numbers of subcontractors and suppliers may be involved, especially in a large-scale project. In a construction project, any delay of the mate- rials delivery may have knock-on effects on delaying the works and, if they are critical, the project will likely be delayed as a consequence. The same situation will also happen for the late completion of the subcontractors’ works. At a corporate level, the number of parties involved in the supply chain may increase to thousands for the whole year. Current research related to SCM in a construction context is looking at the issues of: relationships between contractor, subcontractor and supplier (Kadeforsi, 1999; Greenwood, 2001; Kale and Arditi, 2001), subcontractor and supplier selection (Kumaraswamy and Matthews, 2000), organizational perspectives/ network alliances in SCM (London, 2001; Love et al., 2002), just-in-time (JIT) practice (Akintoye, 1995; Tommelein and Li, 1999; Tommelein and Weissen- berger, 1999), construction processes (Nicolini et al., 2001; Roy et al., 2003), industrial/economic perspective of SCM (London and Kenley, 2001), communication and information technology in SCM (Marsh and Finch, 1999; Edum-Fotwe et al., 2001; O’Brien, 2001), risks in SCM (Tah and Carr, 2001), partnering (Larson, * Author for correspondence. E-mail: jati.hatmoko@undip.ac.id Downloaded By: [Hatmoko, Jati Utomo Dwi] At: 01:48 17 February 2010