International Journal of Project Management 20 (2002) 253–262

www.elsevier.com/locate/ijproman

Integrating supply chain and critical chain concepts

in engineer-procure-construct (EPC) projects
K.T. Yeo*, J.H. Ning
Centre of Engineering and Technology Management, Division of Systems and Engineering Management,
School of Mechanical and Production Engineering, Nanyang Technological University, Nanyang Avenue, Singapore

Received 21 September 2000; received in revised form 28 November 2000; accepted 2 March 2001

Abstract
The present practice of Engineer-Procure-Construct (EPC) projects in the engineering and construction industry receives many
criticisms and requires improvement. This paper examines the nature and characteristics of EPC projects with special interest in
project procurement management. An enhanced framework for procurement is proposed by coupling the concepts of Supply Chain
Management and Critical Chain Project Management, with the latter drawing ideas from the Theory of Constraints. The proposed
framework broadly embraces three streams of approaches namely, cultural, process and technological. Special attention is given to
a systems approach of buffer management as a mechanism to improve the management of uncertainty in procurement. # 2002
Elsevier Science Ltd and IPMA. All rights reserved.
Keywords: Supply Chain; Critical Chain; EPC projects; Procurement; Uncertainties

1. Problematic engineering and construction industry
The engineering and construction industry faces for-
midable challenges. As a whole, the industry worldwide
continues to perform unsatisfactorily. It suffers from
low profit margin, persistent project overruns in sche-
dule and budget, and is plagued with claims and coun-
ter-claims. A recent UK construction industry survey
showed that the profit margin on construction work is
1–2% [1]. American Construction Industry Institute
(CII) finds that approximately one-third of the projects
miss cost and schedule targets [2]. A critical aspect of
project failure is construction delay, which often results
in construction claims. Another survey in UK shows
that 52% of UK construction projects end up with
claims of some type [3].
The construction industry receives many criticisms.
Mohamed [4] claims that the current practices and
mechanisms of the construction industry are inherently
inefficient, which inevitably leads to wastes [4]. Lim’s [5]
study on construction productivity in Singapore shows
that the industry is perceived as a low-productivity sector.
De la Garza [6] thinks that the construction industry
productivity has been static for almost two decades. An
investigation on time waste reveals that the site work-
force spends a considerable amount of time waiting for
approval or for materials to arrive on site. The amount
of work on non-value-adding activities was found to be
as high as 40% of the overall project duration from
inception to completion [4].
The CII in the US, in their industry-wide investiga-
tion, concludes that project performance, measured in
terms of cost, schedule, technical, quality, safety, and
profit objectives, has room for substantial improvement
for the industry as a whole [2]. The Construction
Industry Board (CIB) of the UK specifically suggested
that the construction industry should be more competi-
tive and aim at reducing construction costs by 30% [7].
Mohamed [4] reckoned that 25% time saving is achiev-
able in a typical construction work package without
increasing allocated resources.
2. Integrated EPC activities

* Corresponding author. Tel.: +65-799-5502; fax: +65-791-18-59. An EPC project can be a complex one-of-a-kind
E-mail address: mktyeo@ntu.edu.sg (K.T. Yeo). product development, made up of a large number of
0263-7863/02/$22.00 # 2002 Elsevier Science Ltd and IPMA. All rights reserved.
PII: S0263-7863(01)00021-7
254 K.T. Yeo, J.H. Ning / International Journal of Project Management 20 (2002) 253–262
interconnected subsystems and components, requiring
considerable human efforts and financial commitment.
The EPC activities are time-phased according to specified
precedence and resource requirements and constraints.
Engineering/Design (E) is the process by which the
needs, wishes, and desires of an owner or developer are
defined, quantified, qualified into clear requirements which
will be communicated to the builders or contractors.
The engineering/design phase has the highest level of
influence of the project, as many key decisions will be
made during the pre-project planning and engineering
phases. These decisions will lead to the commitment of a
large sum of the funds and other resources necessary for
the successful implementation and completion of the
project. The design of an engineering system is usually
accomplished through a series of steps to include con-
ceptual design, preliminary design and detail design [8].
The engineering and design phase is closely followed
by the procurement (P) phase. A contractor begins to
procure project equipment and construction materials
upon receipts of engineering drawings, specifications
and other relevant documents. The main procurement/
logistics activities include sourcing, purchasing, contract-
ing, and on-site materials management. A contractor
begins to construct specified facilities in construction
(C) phase according to work packages prepared during
the engineering phase, and use equipment and materials
obtained in the procurement phase. The sequencing of
construction will be initially planned to reflect the most
logical and cost-effective approach to meet startup and
handover dates [9].
3. Challenges of EPC projects
EPC projects face a number of challenges namely, inter-
dependence of activities, phase overlaps, work fragmen-
tation, complex organizational structure, and uncertainty
in accurate prediction of desired outcomes. In the engi-
neering and construction industry, larger firms usually
use matrix organisation for the management of projects.
Matrix organisation remains a complex structure.
Project activities are highly inter-dependent as they
are intricately connected and have a complex process
relationship. For example, it is not only upstream
activities, which affect the downstream activities, but the
reverse is also true. Austin [10] gives an example on the
interdependence of the design activities, as illustrated in
Fig. 1. Thousands of these interdependent activities
make up an intricately linked human activity system, in
the case of a large engineering project. Information
transfer is essential and iterations typical [11].
De la Garza [6] considers work fragmentation invol-
ving multiple organisations, a major challenge [6].
Owners, design firms, construction firms, equipment
and material suppliers, bankers, lawyers, government
agencies, end users, facility operators, maintenance
teams and demolition firms are some of the participants
involved in the life cycle of any constructed facility. The
large number of participants in the project causes the
problems of fragmentation. Project participants exchange
information back-and-forth at all times. Adversarial
relationships between organisations may also arise due
to work fragmentation.
The duration of some activities is unpredictable, espe-
cially in negotiation, obtaining approval from autho-
rities, and in international materials procurement and
supplies. Capital equipment from international suppliers
usually has longer lead-time, and hence, higher uncer-
tainty in timely arrival on site. The need to exchange
information and drawings between suppliers may fur-
ther delay the procurement time. The technical specifi-
cations of capital equipment may interrelate with other
equipment and subsystems from different suppliers [12].
Phase overlaps of engineering/design, procurement
and construction as shown in Fig. 2 increase the risk of
project overruns in schedule and cost, due to the lack of
complete information and frequent changes, especially
those attributed to external factors.
Surveys by Ogunlana [13] and Chan [14] demonstrate
that the project changes and variations are critical fac-
tors that cause project delay and failure. It is generally
perceived that the engineering construction industry has
become inflexible and unresponsive to the needs of its
customers, which caused project changes and rework. It
has been estimated by the US’s Construction Industry
Institute that rework constitutes 12.4% of the total
installed-project cost in industrial projects [15].
Fig. 1. Interdependence of activities.
Fig. 2. Phase overlaps [9].
 K.T. Yeo, J.H. Ning / International Journal of Project Management 20 (2002) 253–262
These project challenges always act together, and fur-
ther complicate the project execution. The management
of interdependence of project activities will become
increasingly critical as the phases are extensively over-
lapped in order to compress schedule. Fig. 3 lists the
present practice of EPC project as an ‘As Is’ model.
4. Ways ahead to better performance
There has been no lack of effort to improve the per-
formance of engineering projects. ‘New’ models abound.
Fast-track, Concurrent Engineering, JIT Logistics
Management, Business Process Re-engineering and
Partnering are well known examples. Each model has its
own focal point and emphasis on how higher perfor-
mance can be achieved. The following is a sample list of
such proposals to improve project performance.
. Use or re-use proven and conservative design to
reduce risk of engineering changes.
. Select and use familiar and reliable vendors to
simplify and shorten procurement process and to
cut project duration [16].
. Involve the downstream participants to play a more
active role in upstream activities to reduce the problems
of design iterations and rework. Encourage project
team members to work together at an early stage to
help avoid and resolve conflicts at later stage [17].
. Emphasise closer co-operation between the pro-
curement and construction functions to enable a
direct receipt of materials from suppliers to con-
struction site as work-in-progress (WIP) [1,18].
. Re-organise the business processes and the flow of
project activities and information. Minimise or
eliminate non-value-adding processes. Employ
information technology to improve the informa-
tion storage, retrieval and processing [4].
Fig. 3. An EPC process model.
255
. Use partnering as a way to deal with the problems
of work fragmentation, lack of integration and
adversarial relationship.
. Break down the boundaries between project func-
tions to improve communication, coordination
and collaboration [19].
5. Focus on procurement
Different researches focus on different aspects of
improvement to EPC projects. This paper gives emphasis
on the importance of procurement and logistics to meet
on-site requirements as a major area of constraint and
opportunity, which can be exploited to dramatically
improve the overall performance of project delivery.
Engineering project procurement covers bulk construc-
tion materials, major equipment and services. The critical
importance of procurement is due to the following facts:
1. it is a connecting function between engineering
and construction. Procured materials are the
foundation of constructed facilities;
2. material costs represent a major portion of total
costs in EPC projects;
3. it is highly dependent on external companies, who
are the suppliers and subcontractors;
4. procurement needs more communication and
negotiation with these external parties;
5. the control is not as strong as in the case of engi-
neering and construction, especially in outsourcing
and purchasing long lead-time equipment;
6. unlike the manufacturing industry, neither the
major equipment suppliers nor the client keeps
buffer inventory for the project;
7. the capital equipment is very costly and requires
long lead-time to manufacture;
256 K.T. Yeo, J.H. Ning / International Journal of Project Management 20 (2002) 253–262
8. suppliers and prime contractors separately use
time buffers to protect themselves from uncer-
tainty due to unforeseen circumstances; and
9. successful procurement management can lead to
superior performance in overall project cost and
delivery.
Each engineering project is unique even if similar
design is involved. Procurement planning is unique for
each project. A new site condition, a new client in a
different country or new suppliers can lead to new pro-
ject requirements. The considerable overlaps of engi-
neering/design phase with the procurement phase
increase uncertainties. The procurement decisions on
long lead-time items are usually made soon after the
preliminary designs are finished and before the con-
struction designs and drawings are completed. The
uncertainty of procurement may affect the entire con-
struction process and overall project schedule.
6. New management paradigms
The profit margins in construction are extremely
squeezed often to a mere few percentages, due to fierce
competition through price-cutting among the con-
tractors. A few percentage-point improvements in pro-
curement costs can go a long way to improve the overall
profitability of the construction industry. Such improve-
ment is achievable if some of the currently available
management paradigms can be exploited for the
management of uncertainties in project procurement.
We will just concentrate on the relevance and cou-
pling of two related ideas of supply chain manage-
ment (SCM) and critical chain project management
(CCPM).
6.1. SCM
6.1.1. The essence of SCM
SCM is the process of strategically managing the
movement and storage (if necessary) of materials, parts
and finished product from supplies, through the manu-
facturing process and on to customers or end user, as
well as the associated information flows. SCM is prob-
ably the latest procurement and logistics philosophy
being adopted. Initially, the objective of logistics is to
reduce the procurement cost. Now the objective is being
extended to build logistics as a strategic corporate com-
petence. Further objectives of logistics include
improvement of production flexibility, order fill rate and
reduction of order fulfilment lead-time. The strategy is
to integrate core logistics functions with marketing,
production and financial functions. The SCM approach
advocates that a company should extend its internal
focus to suppliers and supplier’s suppliers [20]. The
essences of supply chain management are [21]:
1. enhancing trust among supply chain members;
2. re-engineering the business process to build a net-
worked enterprise model; and
3. employing IT/IS to accelerate information flowing
in both intra and inter organisations.
SCM is the integration of all activities across the
supply chain through improved supply chain relation-
ships, to achieve a sustainable competitive advantage.
SCM has three components: information system man-
agement, strategic material management and managing
supply chain relationships. The drivers of supply chain
management are hence:
1. real time information sharing;
2. co-ordinated procurement process in the whole
chain; and
3. collaborative attitude among all of the chain
members.
The more advanced level of the supply chain system is
an outward-looking, extended and networked constella-
tion that span across traditional organisational bound-
aries; leverage on and link together critical competencies
of supply chain partners. Poirrer [22] gives a laconic on
the essence of SCM, that future success belongs to the
best value chain constellations, not individual corpora-
tions. The real power of SCM lies with its ability to
provide today’s enterprise with radically new opportu-
nities to create marketplace advantage by leveraging
supply channel partnerships, information and commu-
nication technologies, and the knowledge and innovative
capabilities of the entire chain’s resources.
6.1.2. Some lessons for project procurement
The following are some of the lessons learned in
manufacturing based SCM and adapted as appropriate
for project procurement:
1. treat procurement as a strategic link in the project
delivery value chain, in the context of a single
extended virtual enterprise, and use it to maximise
stakeholders’ value;
2. develop strategic and tactical plans to ensure
timely delivery of materials and equipment to
protect project completion date;
3. develop a networked information system to ensure
timely information on project schedule, site
requirements, tracking material movement, and
the latest promised delivery dates;
4. business process redesign to reduce administrative
delays by streamlining or eliminating paperwork
and non-value-adding procedures;
5. process redesign to reduce the length of the pro-
curement pipeline;
6. continuously improve to remove process bottlenecks
or constraints and to increase project throughput, by
eliminating supply and demand uncertainties;
 K.T. Yeo, J.H. Ning / International Journal of Project Management 20 (2002) 253–262 257

7. push procurement of non-critical materials as late
as possible, while executing order placement of
critical items as early as possible;
8. achieve JIT logistics for on-site material delivery
to avoid temporary on-site storage, double hand-
ling, and maintenance;
9. improve supply chain relationship management:
select reliable and quality supply chain partners
who have the capabilities and commitment; pro-
tect the partners’ interests and be sensitive to their
needs, and demand the same of your partners if
necessary.
6.1.3. The SCOR model for project procurement
The Supply Chain Operations Reference (SCOR)
model is developed by the Supply Chain Council, to
describe the business activities associated with all phases
of satisfying a customer’s demand. It integrates the well-
known concepts of business process reengineering
(BPR), Benchmarking and Best Practice Analysis into a
cross-functional framework [23]. SCOR model spans all
customer interactions, from order entry through paid
invoice; all physical material transactions, from suppli-
er’s supplier to customer’s customer; and all market
interactions, from the understanding of aggregate
demand to the fulfilment of each order. The SCOR
model consists of a series of Plan-Source-Make-Deliv-
ery functions by an extended supply chain constellation
as illustrated in Fig. 4.
Translate the SCOR model for engineering procure-
ment, and the sequence is similar to that stipulated in
PMBOK’s project procurement processes [24], which
can be combined as shown in Table 1.
The SCOR model suggests that the Plan-Source-
Make-Deliver building blocks can be used to describe
supply chains that are very simple or very complex
using a common set of definitions. Consequently, dis-
parate industries can be linked to describe the depth and
breath of virtually any supply chain. The SCOR model
has been able to provide a basis for supply chain
improvement for global projects as well as site-specific
projects.

Table 1
The Plan-Source-Make-Deliver model of project procurement management

Plan Source Make Deliver

Procurement planning Source selection Contract administration Transportation and installation

Understand project needs, supplier
availability and market conditions;
make-or-buy decision; contract
type.
Contract negotiation according to
organisation’s procurement policies;
screening, weighting, and evaluation
systems
Systems and processes for quality
control, engineering and contract
change control, performance
(expediting) reporting, and
payment
Management of traffic, freight,
import/export requirements,
installation schedule,
temporary storage

Solicitation planning
Prepare tender or bid documents,
supply chain configuration.

Solicitation Placement of orders Final contract close-out

Bidders conference or briefing (if documentation
necessary), advertising or soliciting Procurement audits, close-out
contract file and Formal
acceptance and closure

Fig. 4. SCOR model [22].

258 K.T. Yeo, J.H. Ning / International Journal of Project Management 20 (2002) 253–262

6.2. Critical chain method Law strikes, the deadline is missed. If he crashes
the task, quality would likely be compromised.
Goldratt [25] proposes a Critical Chain Project Man- 2. Parkinson’s law: work expands to fill the time
agement (CCPM) method, to overcome some of the available due to the ‘‘padded’’ due dates.
problems inherent in the traditional project planning 3. Multi-tasking: the effect of multitasking is that
and scheduling methods, notably the basic Critical Path fragmentation of task and equipment’s set up time
Method (CPM). The critical chain method, applying the would cause tasks to delay due to loss of con-
Theory of Constraints (TOC), offers an enhanced centration. The impact is more serious when deal-
approach to manage the associated risk and uncertainty ing with creative work.
in the project value chain and to achieve improved per- 4. Merging events: because tasks can have multiple
formance in project time management. necessary predecessors, delays are usually passed
on, while gains are not. In a dynamic situation,
6.2.1. Theory of Constraints subcritical project paths may turn into a critical
Theory of Constraints (TOC) is a common-sense way path when they slip.
of understanding a system’s performance. TOC states
that, ‘‘Any system must have a constraint that limits its
output.’’ The system’s constraint is like the weakest link
of a chain. No matter what you do to improve other
links in the chain, the chain does not become stronger
until you improve the strength of the weakest link [26].
Goldratt proposes a five-step process to achieve con-
tinual improvement and to get the most out of a pro-
ductive system, in relation to the stated system goal.
Fig. 5 illustrates the sequence of the five steps.

6.2.2. Uncertainties in project chain

Goldratt reckons that there are three kinds of uncer-
tainties in project planning and scheduling namely,
‘‘task time uncertainty’’, ‘‘path time uncertainty’’, and
‘‘resource uncertainties.’’ Generally, when a project
planner making a schedule, he would add a ‘‘safety’’
allowance or ‘‘padding’’ in his time estimation to pro-
vide localised protection to a task [25].
For illustration as shown in Fig. 6, each activity is
assigned a segment of time tg, the target time. The pos-
sibility of the activity executor to finish the activity by tg
is, for an example, 80%, which is 30% above the mean
time, tm. The problem is that, in practice, not all activities
need tg to finish. The activity executor may well finish
the activity in less than tg or even tm. However, the
executor will only submit his work at tg, which was the
estimated ‘‘due date’’. Therefore, Goldratt opposes the
idea of paying too much attention to intermediate ‘due
dates’ as this encourages the wasting of time. The time
Fig. 5. Five steps in TOC approach [26].
wastage is due to a number of causes, which include:
1. Student’s Syndrome: once a resource has nego-
tiated a tg, which contains ‘‘safety’’ margin which
is viewed as a ‘‘padding’’, the executor re-evaluates
the task and decides how long it will most likely
take, say tm. Then he gets caught up working on
other tasks, knowing he has built-in ‘‘safety’’.
When he realises the remaining duration is squeezed
to become just enough to meet the due date, he
quickly ramps up the effort level. At that point, if
he encounters an unexpected problem as Murphy’s
Fig. 6. Activity time uncertainity.
 K.T. Yeo, J.H. Ning / International Journal of Project Management 20 (2002) 253–262
6.2.3. Critical chain approach
In CCPM, Godratt suggests that when making plan
and schedule, the planner, firstly, assumes that each
activity executor finishes his task at the mean time tm.
All the ’paddings’ in activities should be removed [25].
Further suggestion is made that for a 95% level of con-
fidence (that the estimate will not be exceeded) estimation,
all the originally padded time estimates could be cut by
half to obtain the mean time estimates (Fig. 7) [27].
6.2.3.1. Project buffer. After the cut in time duration,
the planner would then add a dynamic project buffer at
the end of the project for overall schedule protection. If
an activity is finished earlier than scheduled, the next
activity will start earlier. If a critical activity is finished
latter than its scheduled due date, the project buffer will
absorb it (Fig. 7a,b)
6.2.3.2. Feeding buffers. For non-critical chains, nota-
bly the sub-critical chains, an appropriate amount of
‘‘feeding buffer’’ will be inserted at the end of each of
these non- or sub-critical chains in order to protect the
longest path, which is the critical chain, from being
‘‘penetrated’’. Any slip in a sub-critical chain will be
absorbed by the feeding buffer (Fig. 7b).
6.2.3.3. Buffer estimates. By the random number
Aggregation Theory, the overall variance of a project
Fig. 7. Critical Chain Schedule [27].
259
chain, critical or non-critical, will be considerably less
than the sum of all the individual variances for tasks on
the project chain. In other words, the amount of buffer
necessary to protect a project chain would be much less
than the summated safety paddings removed from the
individual tasks. Goldratt makes the following impor-
tant recommendation that the originally aggregated
buffer is to be cut by half (Fig. 7c). This recommenda-
tion is of course arbitrary and needs further validation.
6.2.3.4. Resource de-conflict. In Fig. 7d, a critical
resource ‘‘B’’ is simultaneously deployed in more than
one path, and it has to be ‘‘de-conflicted.’’ The resource
de-conflict is necessary due to critical resource con-
straint and, as a result, it may cause the critical chain to
shift and extend.
7. Framework for improved engineering procurement
This paper proposes an enhanced framework for
improved project procurement by incorporating both
the supply chain and critical chain concepts.
7.1. Importance of ‘‘partering’’ relationship
A positive partnering relationship requires carefully
pre-qualifying and the selection of reliable materials and
260 K.T. Yeo, J.H. Ning / International Journal of Project Management 20 (2002) 253–262
equipment suppliers. The supply chain can be extended
and built around them. Such a partnering relationship
may be selectively cultivated in which partners can
negotiate and make strategic contracts flexibly and
rapidly. Purchasing commiment may be negotiated and
made even before a project starts.
In the networked enterprise, information systems may
be extended and linked so that information flows in and
among organizations are enabled, especially through
Internetworking.
Upon building the trust and information systems inte-
gration among the partners, certain intermediate pro-
cesses can be eliminated or simplified. For example, the
sourcing, negotiating and contracting procedures may be
streamlined and made simple. Suppliers will be in a better
position to provide inputs to project planning and
improve the planning efficiency and project performance
due to timely availability of more accurate information.
The partnering relationship with the vendors and sub-
contractors allows and enables the inplementation of the
Critical Chain methodology. The uncertainty in time esti-
mation can be reduced due to focus on task execution and
improved confidence in estimation. ‘Padding’, a local pro-
tection for procurement activities may be removed. The
procurement/logistics schedule can be made ‘tighter.’’ Stu-
dent syndrome and multi-tasking will be discouraged.
Activitiess are more likely to be completed in the reduced
mean time. Partnering helps to cut short the procurement
pipeline, and reduces sources of variations and uncertainty.
Fig. 8. Buffer management in procurement.
7.2. Feeding buffers for procurement uncertainties
Though each procurement activity individually does
not have padding, there is still a project buffer to protect
the required project completion date. The enhanced
framework proposes that discrete ‘feeding’ buffers be
added to all major materials and equipment procure-
ment parallel chains, which have been already tightened
considerably, to provide ‘protection’ so that the critical
chain for construction can be protected.
Fig. 8 shows an improved procurement performance
using buffer management under the new framework.
For the procurement of the major equipment, the two
important control dates are ‘Promised Delivery (PD)’
dates by the equipment vendors and the ‘Required-on-
Site (ROS)’ dates according to the master project sche-
dule. Between these two dates, an appropriate amount
of feeding buffer is inserted. Estimation of the buffers is
based on a careful and systematic classification of per-
ceived risk and uncertainties associated with the entire
procurement and logistics process for each major pro-
curement item. The risk identification and assessment
will be conducted in the procurement planning stage
based on past experience, historical data, supplier’s
inputs, and current market forecast.
In the critical chain management, project activities
including those of procurement are to be made critical on
a ‘‘tight’’ 50/50 even-chance time estimates. Unnecessary
early placement of orders for non-critical materials and
 K.T. Yeo, J.H. Ning / International Journal of Project Management 20 (2002) 253–262 261

equipment is to be avoided, while advanced materials
planning is, however, necessary for long lead-time critical
equipment from overseas manufacturers. Goldratt sug-
gests that non-critical paths should be started as late as
possible (ALAP), but it should be protected with feeding
buffers to prevent any delay from passing on to the cri-
tical chain thus causing project schedule overrun [25].
Based on TOC, major constraints and bottlenecks will
be continually identified, exploited, removed or elevated
as appropriate, in the entire procurement chain, in a
continuous process improvement effort. The strategically
inserted feeding buffers will be simultaneously and jointly
planned, tracked and managed by both the contractor
and vendors concerned. The critical chain approach,
provides a powerful basis for raising the criticality and
performance of procurement. The outcome will be fur-
ther enhanced with the supply chain system, process,
and IT infrastructure as well as a partnering mindset

Fig. 9. From‘‘As-Is’’ to ‘‘To-Be’’ EPC project performance.

262 K.T. Yeo, J.H. Ning / International Journal of Project Management 20 (2002) 253–262
that encourages the leveraging on external partners’
resources and strengths.
7.3. From ‘‘As Is’’ to ‘‘To Be’’ project performance
Fig. 9 illustrates a shift from an ‘‘As Is’’ situation to that
of a ‘‘To Be’’ scenario with significantly improved out-
comes, as enabled by the twinning of the concepts of supply
chain management and critical chain project management.
The proposed framework though largely conceptual,
promises great potentials for achieving practical improve-
ment in EPC projects in general and procurement in
particular. The twin concepts of SCM and CCPM pro-
vide both the logic and culture needed for enhanced
project performance.
8. Conclusions
Performance in terms of productivity and profitability of
engineering and construction projects has not been satis-
factory. There is a strong belief that there is room for fur-
ther improvement. This paper proposes the joint
application of SCM and CCPM concepts and methods for
the management of risk and uncertainty of EPC projects
with special focus on procurement. The broad proposals
have three streams of approach namely, cultural, process,
and technology (IT). Culturally, the proposal hinges on the
management of partnering and trusting relationships with
the project stakeholders, particularly vendors and sub-
contractors in supplies and supports of equipment/materi-
als and services. The emphasis is to create an outward-
looking and extended value system that leverages on the
resources and strengths of the external partners. It requires
a major change in the corporate mindset. Systemically, it is
to take a holistic view of the project chain as a process with
associated risk and uncertainties caused by time and
resource constraints. The Theory of Constraints is to give
focus on the constraints or bottlenecks, and bring dis-
cipline in planning and execution of EPC projects. Tech-
nologically, information and communication technologies,
especially Internet technology and related e-commerce,
should be exploited to elevate or overcome major systemic
constraints. E-procurement and collaborative project
management are some of the recent trends in leveraging
Internet technology. This is an exploratory and conceptual
paper and we believe more research and development can
and should be conducted in these areas, particularly in the
coupling of SCM and CCPM.
References
[1] Agapiou A. The changing role of builders merchants in the con-
struction supply chain. Construction Management and Econom-
ics 1998;16:351–61.
[2] Anderson SD. Assessment of construction industry project man-
agement practices and performance. Spec. Publ. Austin, Tex:
Construction Industry Institute, 1990.
[3] Conlin J. The application of project management software and
advanced IT techniques in construction delays investigation.
International Journal of Project Management 1997;15(2):107–20.
[4] Mohamed S. Options for applying BPR in the Australian con-
struction industry. International Journal of Project Management
1996;14(6):379–85.
[5] Lim X. Construction productivity issues encountered by con-
tractors in Singapore. International Journal of Project Manage-
ment 1995;13(1):51–8.
[6] De la Garza JM. Value of concurrent engineering for A/E/CiIn-
dustry. Journal of Management in Engineering, May/June1994
[7] Garnett N. Benchmarking for construction: theory and practice.
Construction Management and Economics 2000;18:55–63.
[8] Blanchard BS, Logistics engineering and management, Prentice
Hall, Upper Saddle River, NJ, 1998.
[9] Nethery SK, Model planning and controlling system for engineer-
ing, procurement and construction of industrial projects, 1989.
[10] Austin S. Manipulating the flow of design information to
improve the programming of building design. Construction
Management and Economics 1994;12:445–55.
[11] Breuer J. Managerial aspects of information-technology strate-
gies for A/E/C firms. Journal of management in engineering,
July/August 1994:52–9
[12] Baily P, Purchasing principles and management, 6th ed, Pitman,
London, 1990.
[13] Ogunlana X. Construction delays in a fast growing economy:
comparing Thailand with other economies. International Journal
of Project Management 1996;14(1):37–45.
[14] Chan DWM, Kumaraswamy MM. A comparative study of cau-
ses of time overruns in HongKang construction projects. Inter-
national Journal of Project Management 1997;15(1):55–63.
[15] CII, Costs of quality deviations in design and construction. Publ.
10-1, Construction Industry Institute, Quality Management Task
Force, Austin, Texas, 1989.
[16] Williams GV, Fast track pros and cons: considerations for
industrial projects. Journal of Management in Engineering, Sep-
tember/October 1995; 24.
[17] Love PA. Concurrent engineering: a strategy for procuring con-
struction projects. International Journal of Project Management
1998;16(6):375–83.
[18] Caron F. Project logistics: integrating the procurement and con-
struction processes. International Journal of Project Management
1998;16(5):311–9.
[19] Bresnen M. Partnering in construction: a critical review of issues,
problems and dilemmas. Construction Management and Eco-
nomics 2000;18:229–37.
[20] Ross DF, Competing through supply chain management, Chap-
man & Hall, New York, 1998.
[21] Handfield R, Introduction to supply chain management, Prentice
Hall, Upper Saddle River, NJ, 1998.
[22] Poirrier CC, Advanced supply chain management, Berrett-
Koehler Publishers, San Francisco, 1999.
[23] Supply Chain Council (SCC), Available at: http://www.supply-
chain.org 2000.
[24] Project Management Institute (PMI) Standards Committee, A guide
to the project management body of knowledge (PMBOK), 1996.
[25] Goldratt, EM, Critical chain, the north River Press, Great Bar-
rington, MA: 1997.
[26] Leach LP, Critical chain project management, Artech House Inc,
Boston, 2000.
[27] Cook SC, Applying critical chain to improve the management of
uncertainty in projects, MBA & MS Thesis, MIT, 1998.