12 HKS 12.04 Identifying Obstacles Against Implementation of Supply Chain Management in Construction Peter Shek Pui WONG 1 , Jessica Nga Yu TSOI 2 and Sai On CHEUNG 3 ABSTRACT The potential benefits offered by adopting Supply Chain Management (SCM) in construction projects may not be materialized if obstacles against implementation are not removed. Despite its importance, not many previous studies on this topic have been reported. This hinders the successful implementation of SCM in construction. This paper reports a study conducted in Hong Kong with the aim to identify the implementation obstacles against SCM. The seriousness of these obstacles is also explored. Data was collected through a questionnaire survey, with the aid of a Principal Component Factor Analysis, 7 major factors obstructing SCM implementation in construction projects are identified. The study suggests that 'Lack of appreciation on others' performance' is the most detrimental factor against SCM implementation. The findings of this study enable a pragmatic approach to be adopted in devising strategies in implementing SCM in construction. KEYWORDS Construction Supply Chain Management, obstacles INTRODUCTION The construction industry is one of the major pillars of the Hong Kong economy. In 2002, the construction industry accounted for 4.4% of the Gross Development Product (GDP) in Hong Kong [C&SD (2004a)]. Totally, more than 230,000 people (equivalent to 6.7% of the total work force) are engaged directly in the construction industry [C&SD (2004b)]. Nevertheless, both the industry's operational efficiency and the quality of the end-product have been subjected to continuous criticism. In fact, the first ever industry review conducted by the Hong Kong Government had urged the industry to take immediate reforms [CIRC (2001)]. The situation has become more acute as the volume of the construction activity declines while competition intensifies. Nonetheless, the construction cost in Hong Kong remains the highest compared within the Asia Pacific regions [Gardiner and Theobald (2004)]. The need for a solution to improve efficiency is both imminent and critical to the long term health of the industry. The problems encountered in Hong Kong are similar to those experienced in other countries. Egan (1998) reported the dissatisfying profitability, poor end- product quality and contractor's performances in his review on the UK construction industry. In response to Egan's finding, Total Quality Management, Lean Construction, Re-engineering, Benchmarking, Partnering, Supply Chain Management and Value Chain Management have been proposed as possible solutions to enhance the viability and the competitiveness of the construction industry [Egan (1998), CBPP (2001), Lindfors (2001), O'Brien et al. (2002)]. Among these management concepts, Supply Chain Management (SCM) has drawn much attention of both practitioners and researchers [O'Brien et al. (2002)]. This is understandable since today's competition in the construction market is no longer confined to that among individual companies but a network of cooperating companies along the entire supply chain [Noble (1997), Vickery et al. (1999), Elmuti (2002), 1,2,3 Construction Dispute Resolution Research Unit, Department of Building and Construction, City University of Hong Kong, 83 Tat Chee Avenue, Kowloon Tong, Hong Kong,(www.cdrru.org). Hong Kong Surveyor Vol 15(2), 12-22 December 2004 ISSN 1812-3953