Capacity costing approaches for construction supply-chain management

This thesis critiques traditional approaches to construction costing and contributes a revised view of costing that more accurately reflects the impact of changes in schedule and scope on a firm's finite resources. Such a view improves our understanding of the behavior of individual suppliers and subcontractors, as well as our understanding of construction supply-chains. The principal conclusions of this thesis are that site conditions and capacity constraints affect the costs of subcontractors and that capacity constraints affect the costs of suppliers. These conclusions are drawn from case research with eighteen firms, including general contractors, subcontractors and suppliers. These conclusions limit the applicability of construction costing approaches--principally those embodied by the time-cost tradeoff--which consider only the direct cost of a change. The time-cost tradeoff does not consider the interaction between changing site conditions and cost, nor the interaction between changes to a firm's resource allocation and cost. The time-cost tradeoff model does not adequately capture the costs of suppliers and subcontractors when there are changes in project schedule and scope. The contribution of this thesis is to extend the framework of the time-cost tradeoff to account for the costs of both capacity utilization and site conditions. Two specific contributions are claimed: One, the development of a typology of suppliers to give a better understanding of the impact of changes on supplier cost and behavior, and two, a model detailing the interaction between site conditions, resource allocation, and productivity (and hence, cost) for the activities of a subcontractor working on a particular project. These contributions form the basis for understanding the costs of subcontractors and suppliers as well as forming the basis for models of the supply-chain performance. My contributions provide a foundation to help subcontractors and suppliers make decisions on how to allocate their resources across projects while subject to capacity constraints. Moreover, I hope that the understandings of this thesis will help general contractors design better performing systems of supplier and subcontractor production to avoid problems and to mitigate the impact of problems when they do occur.