ABSTRACT
This project work titled the effect of purchasing and supply activities
in construction industry. Its main objective is to find out if
purchasing and supply activities affect the construction industry and also to
know if purchasing and supply activities influence another department in the
industry. It is apparent that management of purchasing and materials is a
vitally important activity in the industry. The value of the goods and service
determine the process that the procurement department will follow to create a
purchasing order. A structured
questionnaire was drawn and the staff of the industry understands the items in the
questionnaire which was designed to elicit response with the option of age,
sex, qualification, Yes/No, very satisfactory, not satisfactory etc. It was
discovered from the survey that there is a positive policy between purchasing
departments with other department in the industry. The study concludes that the
company use maximum level in the industry. The study therefore recommends
amongst others that the purchasing officers should be part of the decision and
making process mostly on matters that affect purchasing.
TABLE OF CONTENTS
Title Page i
Certification ii
Dedication iii
Acknowledgements iv
Abstract v
Table of Contents vi
Chapter
One: Introduction
1.1 Background
to the Study 1
1.2 Statement
of the Problem 3
1.3 Research
Questions 4
1.4
Research
Hypotheses 4
1.5 Purpose
of the Study 5
1.6 Scope of
the Study 6
1.7 Significance
of the Study 7
1.8 Limitations
of the Study 8
1.9 Operation
Definition of Term 9
Chapter
Two: Literature Review
2.1 Introduction
to the Study 11
2.2 Current
Literature Review 12
2.2.1 Objective of Purchasing and Supply
Activities 12
2.2.2 Organization of Purchasing and Supply 15
2.2.3 Purchasing Order/Requisition 18
2.2.4 Quotation and Price 21
2.2.5 Procedure and Receipt of Material 26
2.2.6 Relationship between Purchasing Department
and other Department
30
2.3 Relevant Theories of the Review 32
2.4 Summary
of the Chapter 34
Chapter
Three: Research Methodology
3.1 Research
Design 36
3.2 Population
of the Study 36
3.3 Sample/Sampling
Techniques 36
3.4 Instrumentation 37
3.5 Data
Collection/Analysis 37
Chapter
Four: Data Analysis, Interpretation and Discussion
4.1 Presentation
of Data 39
4.2
Analysis of Data 39
4.3 Test of
Hypothesis 42
4.4
Decision
of Findings 48
Chapter
Five: Summary of Findings, Conclusion and Recommendations
5.1 Summary
of Finding 50
5.2 Conclusion
51
5.3 Recommendations
52
References 54
CHAPTER ONE
INTRODUCTION
1.1 Background to the Study
Purchasing
departments play a vital role in the survival and growth of any industry. In
recent time, purchasing department in industries have improve operator
activities due to the high competition in the number of construction industries.
Purchasing department involve procurement, which may appear to be a ‘hidden’
function in many organization. In fact procurement is a highly strategic role,
all industry need inputs in order to be able to operate.
This
might be physical input, such as raw materials, like engine components for a
car. It is therefore, that the intention of this study is to know the effect of
purchasing department in the industry.
In purchasing departments, there are several methods
of acquiring materials, supplies, equipment and service. Purchases are made in
different times and for different purposes. The
materials and quantities to be purchased for
immediate use are not meant for future use or to maintain stock. In
continuous-run-manufacturing, ordering method used and quantities required
depend on planned production schedules.
Some items have longer life shelf than others while
some appreciate value in stock than others. Also, the acquisition of labour and
service is different from that of materials and equipment, hence the
application of different circumstances and times.
Purchasing and supply activities involves the
acquisition of essential materials, supplies, equipment and service in the
right quantity, quality, prices, times and from the appropriate vendor or
supplier. Purchasing simply means the process of buying. In a broader sense
however, purchasing involves the determination of needs, selection of supplier,
determining proper price, condition and terms, issuing the order or contract
and proper follow up to ensure delivery of cargo or service etc.
1.2
Statement of the Problem
An
inherent problem associated with the construction industry of purchasing and
supply department is the cost benefit ratio of such a department when compared
to funds expanding in setting up of a purchasing and supply department as an
unnecessary expenditure which only increase cost not the need for purchasing
activities and only view it as a clerical function, this is a dangerous
position because it gives room for fraudulent practices function and
obligation. A third problem and most relevant is how the firm would have fared
if it did not have a purchase and supply department that is, the fact than an
industry has a purchase and supply department is better placed than similar
firm in the industry.
The
major problems therefore are investigated on the need purchasing department and
determine if it is economically justifying the need for the existence of the
department: Justifying the cost needed to set up and also critically examine
the cost needed to run the department and determine whether such an industry
that has a purchasing and supply department has a comparative advantage towards
optimum profit realization over firms in the industry
1.3 Research Questions
In
view of the subject under study, the research put forward the following
research questions
1.
Do purchasing and supply activity
affect construction industry positively?
2.
Is there any policies between purchasing
and supply departments in the industry?
3.
Does Harland construction company Ltd
effectively use the function of purchasing and supply activities unit in
the industry?
1.4 Research Hypotheses
In
other to validate this study, the following hypotheses were drawn in the
research work.
Hypothesis
One
HO:
There is no significant effect of
purchasing and supply activities in the industry
HI:
There is a significant effect of
purchasing and supply activities in the industry
Hypothesis
Two
HO:
There is no positively policies between purchasing
department in the industry with other department.
HI: There is a positively policies between
purchasing department with other department in the industry.
Hypothesis
Three
HO: Harland Construction company
do not use purchasing and supply unit effectively to acquired material.
HI:
Harland construction company make used of purchasing and supply unit
effectively to bring in material.
1.5
Purpose of the Study
Purchasing
and supply activities was initially regarded as a routine, a clerical function
and a semi-function which is not really important but it is concern itself on
procurement and spending money, that is buying goods and component parts needed
for construction industry.
1.
To find out if purchasing and supply
activities affect the construction industry
2.
To know if purchasing and supply
activities influence
another department in the industry
3.
To show case that Harland construction
company used
purchasing and supply activities to procure material
needed in the industry
1.6
Scope of the Study
This
study is on the effect of purchasing and
supply activities in construction industry, with particular
reference to Harland construction Nigeria Ltd, Auchi. In the light of this, the
study will be limited to the benefits and the setting up maintenance of a purchasing
and supply activities department in a fairly large industry.
The
area covered among others, to justify the reason for the existence of the
purchasing department in an industry.
1.
Objective and analysis of purchasing
and supply activities and the function of a purchasing department
2.
Organization of purchasing procedure
3.
Purchasing requisition and quotation
4.
Relationship between purchasing
department and other department.
1.7
Significance of the Study
Industries
engage in business activities with the aim of optimum profit realization to
obtain this, business has to reasonable price for its products in other attract
and retain repeat buyers because thrives on repeat buying. In construction
industry, profit is aimed by adding value to materials procured before
marketing the product, purchasing plays a good role in playing down the initial
cost of material required for fabrication (add value) as it is crystal clear
that efficient purchasing machines are instrumental to the search for profit
maximization.
The purchasing department is very
significant because purchasing and supply activities looks at end modifies
procurement policies and strategies which develop in conjunction with
technology the meet the increasing activities necessary to keep the industry
continually supplied with needed material, sub-assemblies and component parts
necessary for it to engage in managerial activities.
1.8
Limitations of the Study
In the course of making up an imperative
write up this research, there is no doubt that one is bound to face a lot of
constraints. One obvious limitation of this type of study is the problem of
finance, issuing of questionnaire, poor response to questions and delay in
returning questionnaire.
1.
Finance: This was a major problem in the
course of writing this project. Such expense includes preparation
of questionnaire, distribution of questionnaire, and source of finding
materials and typing/ binding of the project.
2. Issuing
of Questionnaire: This has to do with the truth. It was
difficult to get the industry workers to give true and fair response to the
questions and also recipients give poor feedback to questions asked by creating
a problem to research work.
3.
Delay in returning of Questionnaire: If
a questionnaire is not returned to the stipulated time it will makes the
research work to delay.
1.9
Operation Definition of Term
·
Purchasing:
Purchasing is the process of obtaining the proper equipment, materials,
supplies and service at the right time, at the right price and from the right
source and delivered to the right place (Idogho & Agbaza, 2009)
·
Suppliers:
Suppliers are individual or companies that provide goods or service needed by
producers to produce their goods and service (Igbafe & Aluyor, 2008)
·
Quality:
In
purchasing context, quality refers to the suitability of an item for its
intended purpose. Hence quality here includes the ability and willingness of
the supplier to meet one specification (Hassan, 2009)
·
Industry:
Industries
are the economic activity concerned with the processing of raw materials and
manufacture goods in factories (Romney, 2008)
·
Requisition:
This form is prepared when a department or stores needs a particular items. It
is usually prepared in duplicate, one copy being sent to the purchasing
department as authority to purchase, and the duplicated being retained by the
originating department for reference and follow up (Obomeghie & Ugbana, 2011).
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