Construction Logistics Solutions in Urban Areas

Linköping Studies in Science and Technology. Thesis No. 1806 Licentiate Thesis

Linköping Studies in Science and Technology, Thesis No. 1806, 2018 Department of Science and Technology Linköping University SE-601 74 Norrköping, Sweden

Mats Janné

FACULTY OF SCIENCE AND ENGINEERING

www.liu.se

Construction Logistics Solutions in Urban Areas

Construction Logistics Solutions in Urban Areas Mats Janné

2018

Linköping Studies in Science and Technology. Thesis No. 1806

Licentiate Thesis

Construction Logistics Solutions in Urban Areas

Mats Janné

Construction Logistics Solutions in Urban Areas Mats Janné Linköping Studies in Science and Technology. Licentiate Thesis No. 1806 Copyright ©, Mats Janné, 2018, unless otherwise noted. This is a Swedish Licentiate Thesis. The Licentiate degree comprises 120 ECTS credits of postgraduate studies. ISBN 978-91-7685-290-3 ISSN 0280-7971 Linköping University Department of Science and Technology SE-601 74 Norrköping, Sweden Printed by LiU-Tryck, Linköping, Sweden, 2018

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Abstract More and more people are living in, or moving to, urban areas than ever before. This attraction to urban areas means that new houses and workplaces are needed. Building new houses or renovating older housing stock is a natural way for a city to evolve. However, the end products of construction projects are produced at their place of consumption. This means that a multitude of materials and resources need to be delivered to, and removed from, each construction site. This leads to new transport flows being created in urban areas. In urban areas, these transports are subjected to space limitations, environmental demands, accessibility demands and noise restrictions. This has led to a situation where material deliveries to construction sites needs to be coordinated and managed in ways that reduce their impact on the urban transport system and at the same time ensuring efficient construction projects. In essence, construction in urban areas faces two problems; the urban transport problem and the problem of coordinating multiple construction stakeholders. One way to address these problems is through the use of construction logistics solutions such as terminals (e.g. construction logistics centres) and checkpoints. The aim of both types of solutions is to control and coordinate construction transports. In the construction industry, these solutions are however, still a rather new phenomenon. This means that how these solutions are perceived by different stakeholders, and the effect the solutions have on material flows and costs, needs to be explored further. The purpose of this thesis is to explore how construction logistics solutions can be used as a means to coordinate material flows to ensure efficient construction and reduce disturbances on the urban transport system. To achieve this purpose, the following research questions have been addressed: RQ1: How are different stakeholders in the construction industry affected by construction logistics solutions? RQ2: How will the use of construction logistics solutions affect material flows and costs in urban construction projects? To answer the research questions two main methodologies have been used; case study research for the empirical studies and literature reviews for the analysis of the case studies as well as for understanding how supply chain management, logistics, and third-party logistics affects the inter-organizational relationships of the construction industry.

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The main findings of the research are firstly that construction logistics solutions do have a role to play in the coordination of different construction stakeholders. Adding this new node will force construction stakeholders to address coordination issues in order to ensure that material deliveries arrive to construction sites on time. This also implies that new interorganizational relationships will evolve, where communication is key. However, this may not be an easy task as it will call for an attitude adjustment towards a more open and collaborative environment. Secondly, adding a construction logistics solution can reduce some unnecessary friction between construction stakeholders and third parties. Coordinated material flows can lead to a reduction in the amount of material delivery vehicles that travels to site, thus alleviating some of the congestion in the urban transport system. This will not reduce all friction between construction projects and third parties, but it is a step in the right direction. Thirdly, a construction logistics solution must come with a set of regulations and a governance strategy from the initiator of the solution. This governance strategy must be clearly stated and communicated to the affected stakeholders. To alleviate animosity towards the solution, flexibility and stakeholder involvement is key. If the directly affected stakeholders are consulted on the function, chances are that they will be more accepting of the solution.

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Populärvetenskaplig sammanfattning Fler människor lever i eller flyttar till städer och urbana områden än någonsin tidigare. Denna dragning till städer innebär ökade behov av hus och arbetsplatser. Att bygga nya hus eller renovera äldre bostadsbestånd är ett naturligt sätt för en stad att utvecklas. Dock karaktäriseras byggprojekt av att slutprodukten produceras på dess konsumtionsplats. Det innebär att stora mängder material och resurser måste levereras till och forslas bort från varje byggarbetsplats. Detta leder i sin tur till att nya transportflöden skapas i städerna. Byggtransporter utgör cirka 20 procent av allt godstransportarbete i Sverige. I städerna påverkas dessa transporter av utrymmesbegränsningar, miljökrav, tillgänglighetskrav och bullerbegränsningar. Detta innebär att materialleveranser till byggarbetsplatser måste samordnas och hanteras på ett sätt som minskar deras inverkan på tredje part samtidigt som de säkerställer effektiva byggprojekt. Detta leder till att byggindustrin står inför två problem i stadsområden; problemet med stadstransport och problemet med att koordinera byggaktörer. Ett sätt att hantera dessa problem är genom användningen av bygglogistiklösningar såsom terminaler (bygglogistikcenter) och checkpoints. Målet för båda typerna av lösningar är att styra och samordna byggtransporter. I byggbranschen är dessa lösningar dock ett relativt nytt och outnyttjat fenomen. Det innebär att hur dessa lösningar uppfattas av olika intressenter och vilken effekt lösningarna har på materialflöden och kostnader behöver undersökas ytterligare. Forskningen som presenteras i den här avhandlingen har syftat till att undersöka hur bygglogistiklösningar kan användas för att samordna byggaktörer och materialflöden till byggarbetsplatser samt hur man kan styra stadstransporter för att säkerställa effektivt byggande och minska störningarna mot tredje part. Forskningen har bedrivits genom att bland annat studera bygglogistikcenter i Norra Djurgårdsstaden samt ett stort kontorsbyggnadsprojekt i Solna där en liknande bygglogistikcenterlösning har använts. Forskningsresultaten visar på att bygglogistiklösningar har en roll att spela i samordningen av olika byggaktörer. Den nya noden som läggs till tvingar byggaktörer att ta itu med samordningsfrågor för att säkerställa att materialleveranser når fram till byggarbetsplatser i tid. Detta innebär också att nya interorganisatoriska relationer kommer att uppstå, där kommunikation är en nyckelfaktor. En bygglogistiklösning kan också minska onödig friktion mellan byggaktörer och tredje part. Koordinerade materialflöden kan leda till en minskning av mängden fordon som färdas till byggarbetsplatsen och därigenom minska trafikstockningarna i det urbana transportsystemet.

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Slutligen visar forskningen på att en bygglogistiklösning måste introduceras med en uppsättning bestämmelser och en styrstrategi från den som initierar lösningen. Dessa bestämmelser och styrmedel måste vara tydliga och kommuniceras till berörda aktörer. För att minska motsättningar mot lösningen måste flexibilitet och intressentengagemang vara ledord. Om de direkt berörda aktörerna konsulteras om hur lösningen ska fungera ökar chansen att de kommer att acceptera lösningen.

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Foreword This journey that I am on, chasing that illusive PhD, is something that I have wanted to embark on for such a long time. Being here now, halfway through the PhD process, is something that would not have been possible without the support of the people around me. These few humble lines are dedicated to those persons. First and foremost, I want to thank my amazing superhero supervisor team, Martin Rudberg and Anna Fredriksson. Working with the two of you is a pleasure, I could not have asked for better people to guide me through this journey. I honestly do not think that this thesis would have turned out as well as it did without your scrutineering and support. Secondly, I want to give my special thanks to my colleagues in the construction logistics group, past and present, Andreas Ekeskär, Henric Jonsson, and Micael Thunberg. You are more than just colleagues to me, you are my dear friends. I cannot thank you enough for all the laughter, and occasional serious discussions we have had through the years. Thank you also for taking the time to read and comment on this thesis. Thirdly, I want to thank all my colleagues at the division of Communications and Transport Systems, this place would not be the same without you. A special thank you to Viveka Nilsson, your help with, well, everything is invaluable. I promise to (try to) become better at handing in my travel orders on time. J Finally, my thanks (and love) go out to my friends and family. I know that you may not always understand why I spend most of my time working or taking photos of cranes and construction sites, but you know that it is important to me and you always back me up in my shenanigans or force me to take a break when you see that I need it (even though I rarely want to). Thank you!

Mats Janné Jursla, April 2018

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Acknowledgement There are a number of people that have contributed to this research that I wish to thank. I am very grateful to Sandra Lasson, Ronny Strigell, Johan Reichelt, Fredrik Bergman, Robin Billsjö, Anders Ivarsson, Abdinasir Osman, Daniel Eriksson, Per Bramfalk, Camilla Einarsson, Johan Danielsson, Arvid Westin, Rasmus Linge, Jihad Ghaziri, Tommie Valkeaniemi, Björn Ribbhagen, Christer Källström, Malin Lindskog, Monica Billger, Kajsa Hulthén, Maria Oscott, Lovisa Westblom, Eric Sens, Michael Berden, Marie Morel, Susanne Balm, Walther Ploos van Amstel, Pamela Nolz, Tom van Lier, Robert Larsson, and Antti Peltokorpi. Thank you all for great discussions and input to the research project. I would also like to extend my gratitude to the Development Fund of the Swedish Construction Industry SBUF, as well as Sweden’s Innovation Agency VINNOVA/JPI Urban Europe, for financing this research.

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Thesis outline This licentiate thesis is of a compilation character (thesis by publication), comprising four articles; one under review in Construction Innovation, and two working papers being developed from their previous conference paper versions. The final paper is to be presented at the 30th NOFOMA conference in Kolding, DK. The thesis is titled Construction logistics solutions in urban areas and consists of two parts. The introductory chapters in this thesis set out to describe the background to why the work is deemed necessary, together with the purpose and research objectives. It will also guide the reader in the current literature and what each paper in the thesis concerns. Finally, the first part will answer the research questions and present the conclusions. It will also pinpoint the contributions and present ideas on future research. The second part consists of the four papers that the research rests upon. These are listed below. Paper 1 Janné, M. (2018). “Supply chain management, logistics, and third-party logistics in Construction – A literature review”. Working paper. Previously presented as a conference paper at the 3rd VREF Conference on Urban Freight in 2016. Paper 2 Janné, M. and Fredriksson, A. (2018). “Construction logistics solutions in city development projects”. Under review in Construction Innovation. Previously presented as a conference paper at the 29th annual NOFOMA Conference in 2017. Paper 3 Janné, M. and Rudberg, M. (2017). “Costs and benefits of logistics solutions in construction”. Working paper. Previously presented as a conference paper at the 24th annual EurOMA Conference in 2017. Paper 4 Janné, M. and Fredriksson, A. (2018). “Cost modelling construction logistics centres”. Conference paper. To be presented at the 30th annual NOFOMA Conference in 2018.

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“The difficulty lies not so much in developing new ideas as in escaping from old ones.” ― John Maynard Keynes (1936)

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Table of contents 1. Introduction................................................................................................................. 1 1.1 Background ........................................................................................................... 1 1.2 Purpose and scope ................................................................................................. 4 1.3 Disposition ............................................................................................................ 5 2. Theoretical foundation................................................................................................. 7 2.1 Construction industry context ................................................................................ 7 2.2 Construction logistics ............................................................................................ 8 2.2.1 The urban transport problem ........................................................................... 9 2.2.2 Construction logistics solutions ..................................................................... 10 2.2.3 Third-party logistics ...................................................................................... 13 2.2.4 Logistics costs .............................................................................................. 14 2.3 Inter-organizational relationships and governance................................................ 15 2.3.1 Control mechanisms and governance enablers............................................... 16 3. Research design and method...................................................................................... 17 3.1 Research design ................................................................................................... 17 3.2 Research process ................................................................................................. 17 3.3 Choice of method ................................................................................................ 19 3.3.1 Analytical research through literature reviews and conceptual modelling ...... 19 3.3.2 Empirical research through case studies ........................................................ 20 3.3.3 Paper 1 - Understanding logistics issues in the construction supply chain...... 21 3.3.4 Paper 2 - Experiences of construction logistics centres in urban development 23 3.3.5 Paper 3 - Finding cost effects and benefits of construction logistics solutions 24 3.3.6 Paper 4 - Determining the cost of construction logistics centres .................... 26 3.4 Research quality .................................................................................................. 28 3.4.1 Research quality in content analysis-based literature reviews ........................ 28 3.4.2 Research quality in case study research ......................................................... 31 3.5 Authors statement ................................................................................................ 33 4. Summary of papers.................................................................................................... 35 4.1 Summary of paper 1 ............................................................................................ 35 xv

4.2 Summary of paper 2 ............................................................................................. 36 4.3 Summary of paper 3 ............................................................................................. 37 4.4 Summary of paper 4 ............................................................................................. 39 5. Results ....................................................................................................................... 41 5.1 Answering the research questions ......................................................................... 41 5.2 Discussing the purpose ......................................................................................... 44 6. Contribution and future research ................................................................................ 47 6.1 Contribution ......................................................................................................... 47 6.2 Future research ..................................................................................................... 48 References ..................................................................................................................... 51 Paper 1 - Supply chain management, logistics, and third-party logistics in construction - A literature review Paper 2 - Construction logistics solutions in city development projects Paper 3 - Costs and benefits of logistics solutions in construction Paper 4 - Cost modelling construction logistics centres

List of figures and tables Figure 1 - Material flows in urban areas are subjected to the urban transport problem ......2 Figure 2 - The construction industry structure of tight and loose couplings.......................3 Figure 3 - Coordinating and controlling the urban transport problem and construction industry issues through construction logistics solutions ....................................................3 Figure 4 - Scope of research .............................................................................................5 Figure 5 - The functionality of construction logistics centres .......................................... 11 Figure 6 - The functionality of the checkpoint ................................................................ 12 Figure 7 - Relation between research design, research questions, and research scope ..... 17 Figure 8 - The research process ...................................................................................... 18 Figure 9 - A continuum of literature review research approaches (Jesson, et al., 2011, p. 11) ...................................................................................................................................... 20 Figure 10 - Focus of paper 1........................................................................................... 21 Table 1 - Categorization of articles in paper 1 ................................................................ 22

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Figure 11 - Focus of paper 2 .......................................................................................... 23 Figure 12 - The logistics processes studied in paper 2.................................................... 24 Figure 13 - Focus of paper 3 .......................................................................................... 25 Figure 14 - The logistics solution studied in paper 3 ...................................................... 25 Figure 15 - Focus of paper 4 .......................................................................................... 26 Figure 16 - The delivery processes studied in paper 4 .................................................... 27 Table 2 - Milestones for content analysis in literature reviews (Seuring and Gold, 2012, p. 552) .............................................................................................................................. 29 Table 3 - Means to ensure research quality (Yin, 2014, p. 45)........................................ 31 Figure 17 - The stakeholder experiences of utilizing a CLC ........................................... 37 Table 4 - The identification of benefits, issues, and cost effects of CLS's ....................... 38 Table 5 - Identified activities and resources in the material delivery process using a CLC ...................................................................................................................................... 40 Figure 18 - ABC breakdown of utilizing a CLC ............................................................ 44

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1. Introduction In this chapter, the underlying problems that motivate this doctoral research project are described. The purpose of the project is presented alongside the research questions in focus and the research scope.

1.1 Background This research is part of a doctoral research project focusing on construction logistics solutions (CLS’s) and their role in governing and coordinating material flows and stakeholders in urban development projects. This licentiate thesis seeks to highlight how a CLS can ensure efficient material flows to construction sites and reduce disturbances within the urban transport system. The reason for focusing on construction in urban areas is the on-going urbanisation trend. In 2007 the global urban population exceeded the rural population for the first time in history (United Nations, 2015, p. 7). In Europe, approximately 75 per cent of the population was living in urban areas in 2014, and in Sweden the corresponding figure was 85,8 per cent (United Nations, 2015, p. 209). The urban population in Sweden is predicted to rise to 90,3 per cent by 2050 (United Nations, 2015, p. 209). This attraction to cities and urban areas means that new houses, apartment buildings, office complexes, hospitals, schools and infrastructure need to be constructed. Building new houses or renovating older housing stock is a natural way for a city to evolve. However, construction projects are producing the end product (houses or infrastructure) at the place of consumption (cf. Ekeskär and Rudberg, 2016), meaning that a multitude of materials and resources need to be delivered to, and removed from, each site at the correct time (cf. Josephson and Saukkoriipi, 2007; Lindén and Josephson, 2013). This leads to additional transport flows being created, competing for the existing infrastructure with other traffic users. Construction transports represent approximately 20 per cent of all goods kilometres driven in Sweden (Sveriges Byggindustrier, 2010). In urban areas, these transports are subjected to the urban transport problem, i.e. space limitations, municipal demands to reduce environmental impact, as well as demands from residents and shop-owners on accessibility and noise restrictions (Carlsson and Janné, 2012; Dablanc, 2007). This implies that material deliveries to construction sites need to be coordinated and managed in a way that reduces their impact on the urban transport system, while at the same time ensuring that construction can proceed without reduced efficiency on site due to missed or delayed material deliveries. Figure 1 schematically positions the material flow of construction logistics within the urban transport system.

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Construction logistics solutions in urban areas

• • • •

Urban transport system

Space limitations Environmental concerns Noise restrictions Accessibility

Suppliers

Material flow

Construction sites

Information flows Material flows

Figure 1 - Material flows in urban areas are subjected to the urban transport problem

Adding to the transport related coordination problems of urban construction, is the interorganizational relationships within the construction industry itself. Construction in general is produced on a project basis in temporary organizations, where the project organizations often become disconnected from the company level and hard to manage and integrate (Dubois and Gadde, 2000, 2002; Karrbom Gustavsson and Gohary, 2012; Karrbom Gustavsson and Hallin, 2015). Dubois and Gadde (2002) argue that within construction projects, the couplings between different stakeholders and activities on-site are characterized as tight, meaning that within a project each stakeholder and activity is dependent on one another. At the same time, the construction projects are managed from the project organization and the parent company has little control over the everyday operations of the project, i.e. the couplings between parent companies and construction projects are loose (Dubois and Gadde, 2002). The tight and loose couplings are illustrated in Figure 2. The temporary nature of construction projects also means that different contractors, sub-contractors, consultants and builders’ merchants need to be tendered and procured every time a new construction project is launched (Dubois and Gadde, 2000, 2002; Kristiansen, et al., 2005). Dubois and Gadde (2000) highlight that as much as 75 per cent of the product value is added by sub-contractors and suppliers. With the temporary nature in mind, the industry has struggled to find good forms of long-term collaborative relationships (Fernie and Thorpe, 2007; Green, et al., 2005; Kristiansen, et al., 2005). Instead adversarial contracts and arm’s length relationships seem to be the preferred way of managing relationships (Fernie and Thorpe, 2007; Green, et al., 2005; Kristiansen, et al., 2005). This of course also affects how logistics and material deliveries are managed. Different stakeholders can e.g. place different demands and considerations on how construction logistics is to be carried out. Managing projects under these complex conditions is difficult due to high levels of uncertainty, as well as a mixture of organizations (Locatelli, et al., 2014).

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1. Introduction Construction industry Main contractor

Developer

Individual project

Individual project

Site organisation

Site organisation

Subcontractors

Construction suppliers

Subcontractors


Tight coupling Loose coupling

Figure 2 - The construction industry structure of tight and loose couplings

In essence, construction in urban areas faces two problems; the urban transport problem and the problem of coordinating multiple construction stakeholders (see Figure 3). One way to address these problems is through the use of CLS’s such as terminals (e.g. construction logistics centres) and checkpoints. The aim of both types of solutions is to control and coordinate construction transports, but through different means. The aim of the construction logistics centre (CLC) is to consolidate goods, thus reducing traffic to site (cf. Hamzeh, et al., 2007; Transport for London, 2013), whereas the checkpoint aims at coordinating just-in-time (JIT) deliveries to site through planning efforts (cf. Ekeskär and Rudberg, 2016). Logistics solutions can be initiated and designed by different stakeholders; i.e. the developer (Ekeskär and Rudberg, 2016), the municipality (Transport for London, 2013), a main contractor (Lindén and Josephson, 2013), or the individual projects (Lindén and Josephson, 2013). Construction industry

• • • •

Urban transport system

Main contractor


Suppliers


Material flow

Developer

Individual project

Individual project

Site organisation

Site organisation

Construction sites Construction suppliers

Subcontractors


Subcontractors

Tight coupling Loose coupling

Coordination and control of the dual problems through construction logistics solutions

Figure 3 - Coordinating and controlling the urban transport problem and construction industry issues through construction logistics solutions

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Construction logistics solutions in urban areas Previous research has focused on the effect of CLS’s or third-party logistics (TPL) in construction from either a supply chain management (SCM) perspective (cf. Ekeskär, 2016), the effect that these concepts have on the construction site (cf. Lindén and Josephson, 2013), or from a city logistics perspective (cf. Transport for London, 2013). In the construction industry, these solutions are still a rather rare phenomenon (cf. Langley, 2016; Ekeskär, 2016), especially when proposed as joint solution for multiple construction stakeholders and projects. The rarity of these solutions indicates that there is a research gap in how these construction logistics solutions affect material flows and costs, as well as how they are perceived by different stakeholders. This research contributes by addressing both the urban transport problem and the coordination problem by investigating how CLS’s can be used to coordinate material flows in urban construction logistics.

1.2 Purpose and scope The purpose of this thesis is to explore how construction logistics solutions can be used as a means to coordinate material flows to ensure efficient construction and reduce disturbances on the urban transport system. To fulfil this purpose, the following research questions will be addressed: RQ1: How are different stakeholders in the construction industry affected by construction logistics solutions? RQ2: How will the use of construction logistics solutions affect material flows and costs in urban construction projects? The scope of this research is on material deliveries in urban construction, the transport flows they generate, and the stakeholders affected by these transports. Specifically, the use of CLS’s and how they affect construction material flows are in focus. This focus has been divided into two parts; the first part investigates what the coordination issues are in the construction industry and how construction logistics solutions can help in coordinating different construction stakeholders. This is studied through a literature review and one empirical study of a municipality initiated CLC. This part helps in answering research question 1. The second part explores the effect CLS’s can have on material flows in urban construction. This is studied through two empirical studies; one study of a contractor initiated CLC for a large office complex project, and one study of a municipality initiated CLC for a large urban development project. This part corresponds to research question 2. The unit of analysis in this thesis is the CLS and the effect it has on the main stakeholders connected to it. The context of the research is construction in the urban environment. To provide an understanding of how CLS’s affect different stakeholders in urban areas, different stakeholder perspectives needs to be taken into account. Figure 4 shows the scope of the thesis and the primary stakeholders of urban construction, i.e. municipalities, developers, contractors, suppliers, and logistics service providers (represented by the CLS).

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1. Introduction Construction in an urban context

Municipality

Developer

Construction logistics solution

Supplier

Contractor

Delivery

Construction site


Figure 4 - Scope of research

1.3 Disposition The first chapter gives a brief introduction to the problems that have been studied in this research project and introduces the purpose and research questions of the project. To address the purpose and answer the research questions, a literature review has been carried out. This is presented as a theoretical foundation in chapter 2. This licentiate thesis is the result of a three-year research project, the design and methodology of which is presented in chapter 3. This chapter also describes and motivates the entire research process and highlights how the different studies in the project are linked to one another. Chapter 4 summarizes the papers that this thesis is built upon and chapter 5 analyses them jointly to provide answers to the research questions of the thesis as well as fulfilling the thesis purpose. The contributions of the thesis are presented in chapter 6 alongside suggestions for future research.

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2. Theoretical foundation This chapter sets out to describe the theoretical foundations on which this thesis rests. As described previously, the widespread utilization of CLS’s is still in its infancy, and the understanding of these concepts is limited. To get to the heart of the utilization of CLS’s, three theoretical areas needs to be considered; the construction industry context, construction logistics, and inter-organizational relationships and governance.

2.1 Construction industry context One of the main characteristics of the industry is that it first and foremost is built around temporary organizations and relationships. Different contractors, sub-contractors, consultants, builders’ merchants and logistics operators need to be tendered and procured every time a new construction project is launched, making long-term relationships difficult to achieve. As discussed by Dubois and Gadde (2000), the construction industry is characterized with high levels of resource dependency (cf. Penrose, 1959; Yuchtman and Seashore, 1967) and utilizes temporary network structures to ensure that this resource dependence can be met. Construction project organizations thus often become disconnected from the company level and hard to manage and integrate throughout the process, from drawings to finished building. (Dubois and Gadde, 2000, 2002; Karrbom Gustavsson and Gohary, 2012; Karrbom Gustavsson and Hallin, 2015; Kristiansen, et al., 2005; London and Kenley, 2001) Dubois and Gadde (2002) characterizes the network structure of the construction industry as two-fold; the industry has tight relationship networks within the projects, and a much looser network structure between the parent companies and projects and between different construction stakeholders. This means that within a project each stakeholder and activity is dependent on one another. Activities often have to be performed in sequence and if one activity is delayed, all the following activities will also be delayed (Dubois and Gadde, 2002). Similarly, workers and installers need to have materials in place and if deliveries are delayed the whole project can be delayed. Thus, there is a need within the project environment for tight couplings between stakeholders in order to move the project forward at the established pace. At the same time, they acknowledge that the couplings between the project and company levels are loose. The construction projects are managed from the project organization and the parent company has little control over the everyday operations of the project (Dubois and Gadde, 2002). Within these network structures, the bigger stakeholders have bargaining power due to their size and central position, whereas smaller, more specialized stakeholders have bargaining power through their asset specificity (cf. Benson, 1975, p. 233). 7

Construction logistics solutions in urban areas Even though one of the main criticisms towards the construction industry is an unwillingness to change, Kristiansen, et al. (2005) point out that the industry has in fact experienced substantial changes through mergers and acquisitions. Large main contractor companies have grown bigger and sub-contractors, suppliers and builders’ merchants have had to adopt their business models in order to ensure a continued workload (Kristiansen, et al., 2005; Agapiou, et al., 1998b). Sub-contractors are specializing in certain business segments whereas builders’ merchants and suppliers are entering international markets in order to increase their market segments (Kristiansen, et al., 2005; Agapiou, et al., 1998b). The specialists provide asset specificity to those who do not possess the sought-after assets themselves, and in doing so, they hold the bargaining power (cf. Wilkins and Ouchi, 1983; Williamson, 1979; Klein, et al., 1978; Zajac and Olsen, 1993; Boissinot and Paché, 2011). At the same time, the specialized sub-contractors and builders’ merchants are also dependent on the large contractors for work. Overall, these tendencies have led to a fragmented industry where highly specialized companies are focused primarily on their own survival and cooperation amongst companies is at its best rare (Agapiou, et al., 1998b; Bankvall, et al., 2010; Dubois and Gadde, 2000, 2002; Fernie, et al., 2006; Fernie and Tennant, 2013; Fernie and Thorpe, 2007). This leads to a situation where adversarial contracts and arm’s length contractual relations outweighs management of processes and relationships (Dubois and Gadde, 2002; Fernie and Tennant, 2013; Green, et al., 2005; Kristiansen, et al., 2005; Fernie and Thorpe, 2007). The fragmentation of the industry is however, not only disadvantageous. Several researchers highlight that the fragmented nature of the construction industry also allows for great flexibility at the project level, allowing for local adaptations and problem solving, but also as a means to handle the complexity of the industry (Dubois and Gadde, 2000, 2002; Egan, 1998; Fernie, et al., 2006; Green, et al., 2005). At the same time, there is a call for the industry to move away from adversarial relationships towards more collaborative working practices and long-term commitment (Egan, 1998; Josephson and Saukkoriipi, 2007; Latham, 1994; Strategic Forum, 2002). It is fair to assume that due to the industry structure and fragmentation mentioned, the contractors, sub-contractors, builders’ merchants and logistics operators have their own view as to how to manage their respective trades and logistics setups, and even what their work entails. However, the sought-after coordination and collaboration with channel partners do not necessarily occur in this environment if not all partners are striving towards the same supply chain goals (Mentzer, et al., 2001). With the temporary nature of construction projects and temporary supply chains, long-term knowledge exchange from project to project is also difficult to achieve.

2.2 Construction logistics The goal for any construction project is to deliver the project on time and on cost to the stipulated quality The construction industry is producing its end products (the house or infrastructure) from vast amount of materials that have to be delivered to the place of consumption (Ekeskär and Rudberg, 2016; Lindén and Josephson, 2013; Thunberg and 8

2. Theoretical foundation Persson, 2014; Thunberg, et al., 2017). Thus, the construction industry is greatly dependent on materials arriving to site when needed (Josephson and Saukkoriipi, 2007; Lindén and Josephson, 2013). The process of managing these material flows is called logistics and can be defined as: “Logistics is the process of strategically managing the procurement, movement and storage of materials, parts and finished inventory (and the related information flows) through the organization and its marketing channels in such a way that current and future profitability are maximized through the costeffective fulfilment of orders” (Christopher, 2011) In a construction setting, this is referred to as construction logistics and can be defined as dealing with supplying the right materials to the correct customer and construction site to meet customers’ requirements. In urban construction areas, the urban context set limitations on how construction logistics can be carried out. The following sections presents the urban transport problem and how the construction industry can work to coordinate their material flows within the urban context through utilizing CLS’s and third-party logistics. Finally, this section discusses the cost of logistics and how to analyse these. 2.2.1 The urban transport problem Goods transports play an important role in the prosperity of the urban environment (cf. Anderson, et al., 2005; Bretzke, 2013; Lindholm, 2010), but they also affect the urban environment negatively (cf. Bretzke, 2013; Dablanc, 2007; Lindholm, 2010). Issues such as emissions, congestion, noise and accidents are frequently attributed to urban transport in general and urban goods transport in particular (cf. Anderson, et al., 2005; Behrends, et al., 2008; Bretzke, 2013; Dablanc, 2007, 2008). These issues impact the urban environment on social, economic and ecological levels (Anderson, et al., 2005). Emissions can cause numerous health problems and affect the quality of life for inhabitants (Dablanc, 2008) while at the same time contributing to global environmental impact through the emission of greenhouse gases (Anderson, et al., 2005). Economically, the costs incurred through congestion affects inhabitants as well as companies (Bretzke, 2013; Russo and Comi, 2010), and here in lies the main problem of the urban transport system; it is a complex transport system where goods and passengers utilize the same, limited infrastructure (Carlsson and Janné, 2012; Dablanc, 2007; Russo and Comi, 2010). Additionally, the transport system is populated by a combination of different vehicle types and road users, increasing the risk of accidents (Carlsson and Janné, 2012; Russo and Comi, 2010). This leads to the urban goods transport system not being as efficient as it could be (Lindholm, 2012). As noted, an efficient goods transport system is a necessity for the urban economy (Anderson, et al., 2005; Lindholm, 2012) and should be a priority for cities, inhabitants and companies alike (Lindholm, 2012). Urban transport systems are subjected to a vast amount of regulations (Carlsson and Janné, 2012; Ballantyne, et al., 2013) regardless of if it is goods or people being transported.

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Construction logistics solutions in urban areas However, previous studies have noted that cities and authorities traditionally have not focused on strategies for urban goods transports or coordinating efforts among different urban transport stakeholders (Ballantyne, et al., 2013; Fossheim and Andersen, 2017; Lindholm, 2012). Goods transports and logistics has been treated as a problem for the logistics industry to solve (Ballantyne, et al., 2013). This lack of clarity and focus on goods transports adds to the complexity of the urban transport system. 2.2.2 Construction logistics solutions As noted earlier, approximately a fifth of all goods transports in Sweden deliver materials to and from construction sites (Sveriges Byggindustrier, 2010). With the ongoing urbanisation trend, this means that a large proportion of these transports take place in the complex urban transport system. To manage the material deliveries to these urban construction sites, there is a need to improve how construction logistics is controlled, coordinated and executed. Agapiou, et al. (1998a) highlight that the focus of any construction logistics setup must be to improve coordination and communication between project stakeholders, and that the solution must be designed from a holistic view to create the best possible material flows to and from site. A construction logistics solution can range from just a small change in working practices (Aguirre, et al., 2010; Gajendran, et al., 2013; Perttula, et al., 2006; Tanskanen, et al., 2015), implementing planning systems and ICT tools (Fadiya, et al., 2015; Hadaya and Pellerin, 2010; Titus and Bröchner, 2005), to largescale terminal networks structures (Lundesjo, 2011; Transport for London, 2013) or justin-time solutions (Ekeskär and Rudberg, 2016; Sundquist, et al., 2017; Transport for London, 2013). Lately, the construction industry has started to look at how urban goods transport in general is managed (cf. Langley, 2016; Lundesjo, 2011; Sundquist, et al., 2017). One popular suggestion for reducing the impact of urban goods transports has been to employ urban consolidation centres (UCC’s) (Allen, et al., 2014; Björklund, et al., 2017; Browne, et al., 2005). By consolidating goods from multiple suppliers into one shipment, the amount of goods movements within cities can be reduced (Browne, et al., 2005; Gammelgaard, 2012; van Rooijen and Quak, 2010). The idea of consolidating goods to reduce the number of goods movements has now received attention in the construction industry as well, paving the way for construction logistics centres (CLC’s) (Lundesjo, 2010, 2011; Transport for London, 2013; Brunge, 2013). The aim of the CLC is to coordinate deliveries to multiple construction sites within an urban area (Lundesjo, 2010, 2011; Transport for London, 2013; Brunge, 2013). Instead of the traditional situation where many deliveries come to construction sites without any coordination, the use of a CLC can reduce the number of deliveries to site, thus reducing the number of times on-site personnel has to receive and handle materials (Lundesjo, 2010, 2011; Transport for London, 2013; Brunge, 2013). Figure 5 shows a schematic overview of the functionality of a CLC. The most common procedure is that contractors place orders with their suppliers and these orders are fulfilled either as a direct delivery to site or delivered to the CLC (Brunge, 2013; Lundesjo, 2010, 2011). At the same time, the contractor places a delivery booking in a joint planning system run by the CLC operator for the materials delivery (Lundesjo, 2010, 2011). Materials arrive 10

2. Theoretical foundation from different suppliers to the CLC, where the materials are received, controlled, registered and put away for storage (Lundesjo, 2010, 2011; Transport for London, 2013). When the materials are needed on the construction site, the contractor call off materials that are picked, packed and delivered (Lundesjo, 2010, 2011; Transport for London, 2013). Often, CLC’s also offer value-adding services that can be performed before delivery to site (Lundesjo, 2010). An example can for instance be room, apartment, or house kitting, where materials are combined into a full bill-of-materials for the installation spot (Lundesjo, 2010). Materials are then consolidated into a milk-round delivery where the CLC operator services multiple construction sites within the development area (Brunge, 2013; Lundesjo, 2010, 2011). Order

Contractor Booking and confirmation Waste and returns

Supplier

Delivery

CLC

Consolidated delivery

Construction site

Direct delivery


Figure 5 - The functionality of construction logistics centres

In theory, utilizing a CLC can alleviate some of the issues faced in the urban transport system such as reducing congestion, emissions, noise and accessibility issues, but utilizing the CLC can also reduce some on-site issues such as having too much materials on site (Transport for London, 2013; Ekeskär and Rudberg, 2016; Lindén and Josephson, 2013). By coordinating the construction sites’ materials bookings through joint IT platforms, contractors can plan material flows in accordance with demand (Brunge, 2013; Lundesjo, 2010, 2011). This also allows the operator of the CLC to manage material and resource flows to and from multiple sites in the development area, thus allowing them to act as systems coordinators within the development area (cf. Ekeskär and Rudberg, 2016; Segerstedt and Olofsson, 2010). By having the CLC as a coordinating contact point, main contractors can focus on their operations rather than on establishing contacts and coordinating deliveries with multiple other contractors within the same construction area (cf. Sundquist, et al., 2017; Lindén and Josephson, 2013). CLC’s are often located in close proximity to the construction area, but they can also be in the form of a warehouse solution further from the construction area (Lundesjo, 2011; Transport for London, 2013). In these instances, CLC’s are normally combined with a checkpoint at the construction site (Lundesjo, 2011; Transport for London, 2013). A checkpoint can be used as a standalone CLS as well. Figure 6 gives a schematic overview of how a checkpoint works. As is the case with the CLC, the delivery process in the 11

Construction logistics solutions in urban areas checkpoint case starts when the contractor places an order with a supplier. At the same time, the contractor makes a delivery booking in the checkpoints ICT tool (Sundquist, et al., 2017; Ekeskär and Rudberg, 2016). In this type of system, time-slots for deliveries are booked and specified with information on sort of materials, type of vehicle, goods volumes and if any specific handling equipment is needed (Sundquist, et al., 2017). Once the supplier has the shipment ready, a delivery announcement is sent from the supplier to the contractor and the checkpoint operator and the shipment is delivered to the physical checkpoint (Ekeskär and Rudberg, 2016). Here the delivery may have to wait for its allotted time-slot before the final delivery to the construction site is carried out (Ekeskär and Rudberg, 2016). Order

Contractor Booking and confirmation Waste and returns

Supplier

Delivery

Checkpoint Delivery allocation

Delivery

Construction site


Figure 6 - The functionality of the checkpoint

The main difference between CLCs and checkpoints when it comes to material deliveries is in how the deliveries are planned and carried out. The focus of a CLC is largely on the consolidation of deliveries, whereas the checkpoint takes it point-of-departure in JIT deliveries (cf. Brunge, 2013; Ekeskär and Rudberg, 2016; Lundesjo, 2011; Sundquist, et al., 2017; Transport for London, 2013). Both types of CLS’s can also add additional services to their respective service offerings by providing contractors with e.g. supplying and maintaining loading and unloading zones (Transport for London, 2013), warehousing on-site or off-site (Lundesjo, 2010, 2011), logistics-based site plans (Josephson and Saukkoriipi, 2007; Transport for London, 2013), materials handling on-site and off-site (Ekeskär and Rudberg, 2016; Lindén and Josephson, 2013), joint planning systems (Thunberg and Persson, 2014; Thunberg and Fredriksson, 2018), and site coordination (Ekeskär and Rudberg, 2016; Segerstedt and Olofsson, 2010; Josephson and Saukkoriipi, 2007; Sundquist, et al., 2017; Transport for London, 2013). Of interest is also who initiates, designs and operationalizes the CLS. Different stakeholders can be initiators; e.g. the developer (Ekeskär and Rudberg, 2016) or the municipality (Transport for London, 2013). In some cases, main contractors have also been the ones to decide upon and initiate the use of CLS’s in order to coordinate their logistics processes to multiple projects (Danielson, 2007) or to streamline the on-site logistics process (Ek, 2008). 12

2. Theoretical foundation 2.2.3 Third-party logistics Third-party logistics (TPL) can essentially be said to be the outsourcing of a company’s logistics function to an external logistics service provider, a “third party”, that acts as an intermediary between two supply chain companies (Marasco, 2008; Hertz and Alfredsson, 2003), at least managing and executing transportation and warehousing (Berglund, et al., 1999). Selviaridis and Spring (2007) adds some nuance, saying that TPL is usually associated with offerings that encompasses more services than just transport or warehousing functions. These characteristics, outsourcing logistics functions and offerings of additional services, is something that many contemporary scholars highlight in their works (cf. Maloni and Carter, 2006; Marasco, 2008; Selviaridis and Spring, 2007; Stefansson, 2006; Berglund, et al., 1999). Adding to this, the service offerings must include multiple, bundled services and the relationship between service client and TPL provider should be contractually stipulated over a longer time period for the arrangement to be considered a TPL arrangement (Selviaridis and Spring, 2007; Lai, et al., 2004; SkjoettLarsen, et al., 2006). The reason for using a TPL provider will inevitably affect the relationship between the service client and the provider. Cost reasoning have a tendency to lead to more arm’s length relationships whereas knowledge-seeking reasons normally leads to closer relationships (Bolumole, 2001). Through these relationships, the service client and the TPL provider can reach a level of trust that differs from the more adversarial arm’s length agreements of sourcing transportation and warehousing on the spot-market (Berglund, et al., 1999). Based on the description above, TPL can be defined as; “Third-party logistics offers multiple, bundled, value-adding services to customer companies over a contractually established time-period.” (cf. Maloni and Carter, 2006; Marasco, 2008; Selviaridis and Spring, 2007) The bundled services mentioned can be comprised of services such as transport, warehousing, inventory management, value-adding activities such as kitting and assembly work, information activities such as tracking and tracing materials, as well as supplying ICT tools for planning, and reverse logistics (Hertz and Alfredsson, 2003; van Laarhoven, et al., 2000; Shaharudin, et al., 2014). Another important aspect of TPL is the adaptability and level of customization that the TPL service can offer (Stefansson, 2006; Hertz and Alfredsson, 2003). Developing niche offerings (e.g. industry segments or products managed) can be used as a way to increase customer adaptations for TPL (Hertz and Alfredsson, 2003). This is also a way for the TPL provider to widen their overall knowledge, as well as developing the specific knowledge needed for a certain customer or niche (Hertz and Alfredsson, 2003). The challenge for the TPL service provider thus becomes one of balance; how should the service offerings be adapted so as to provide a high level of customization to individual customers and still retain flexibility enough to provide services to multiple customer segments (Stefansson, 2006; Hertz and Alfredsson, 2003)? One such niche market that has arisen lately is that of construction logistics. Regardless of the CLS chosen, the solutions are often run by TPL service providers (Ekeskär and Rudberg, 2016; Lindén and Josephson, 2013; Lundesjo, 2011; Sundquist, et al., 2017). 13

Construction logistics solutions in urban areas Partly this is due to a lack of logistics know-how from contractors (Ekeskär and Rudberg, 2016), and partly due to TPL providers having a more neutral role to play when it comes to planning, coordinating, executing and controlling the fragmented operations in construction (Segerstedt and Olofsson, 2010; Ekeskär and Rudberg, 2016). The TPL provider can thus act as a systems coordinator for the material and resource flows (Segerstedt and Olofsson, 2010; Ekeskär and Rudberg, 2016) within (e.g.) an urban development project. 2.2.4 Logistics costs Construction is a very cost oriented industry, where an ever-present goal is to reduce costs and increase profits (Shakantu, et al., 2003). The cost side has often been targeted through the sub-contractor and supplier selection processes, where the lowest bid has outweighed performance and management skills (Shakantu, et al., 2003; cf. Dubois and Gadde, 2002; Kristiansen, et al., 2005). With the material intensity of the construction industry, material costs amount to approximately 65 per cent of total construction costs (Fang and Ng, 2011). Reducing the cost of materials through selecting a cheaper supplier thus seems to make some sense. Over the past decades however, the interest for lowering costs by focusing on logistics has increased (cf. Polat, et al., 2006; Said and El-Rayes, 2011). Grawe (2009) highlight that cost efficiency is a “necessity” in logistics and that many practitioners rate cost control and cost reduction as their main priority. The same point is also put forth by e.g. Varila, et al. (2007), Ellram (1995), and Everaert, et al. (2008). Delivering materials to urban construction sites is of course costly. Vidalakis, et al. (2011) highlight that transport costs can amount to as much as 50 per cent of the materials purchase price, and that these costs can vary over time with fluctuating materials demand (Vidalakis, et al., 2011; Vidalakis, et al., 2013). Logistics activities are often seen as “unnecessary” costs, making them even more of a target for cost reduction efforts (Fang and Ng, 2011; Polat, et al., 2006; Shakantu, et al., 2003; Sobotka, 2000). However, logistics costs are to some extent also intangible, as construction materials often are quoted “as delivered” (Ying, et al., 2014, p. 274). Without understanding logistics costs there is a risk for suboptimising the logistics process. In the long run this can even lead to increased overall logistics costs. Storage costs for instance, can increase if more materials than needed is purchased due to targeting i.e. purchasing costs (Shakantu, et al., 2003). The reasoning behind this cost focus in logistics is twofold; firstly, if costs are reduced and managed, the cost savings can be re-invested in better equipment or materials (Fang and Ng, 2011). Secondly, cost savings can help in increasing a company’s return on investment and thus increase shareholder value (Christopher, 2011). In traditional supply chains, logistics costs are normally seen as indirect costs (Harrison and van Hoek, 2011; LaLonde and Pohlen, 1996). This means that logistics costs are seen as costs incurred through joint usage for different outputs, making the costs difficult to allocate to a specific cost centre. Traditionally, logistics costs are thus allocated to products based on the logistics function that the product utilizes (Harrison and van Hoek, 2011; LaLonde and Pohlen, 1996). These logistics functions also gave way for the initial logistics function-based cost centres such as transport, warehousing, inventory carrying, and 14

2. Theoretical foundation administration costs (Heskett, et al., 1973). Over time, they have evolved to also include order processing, information and ICT systems, and transport packaging (Stock and Lambert, 2001; Engblom, et al., 2012). Depending on the context of the logistics systems studied, other cost components can also be of importance when evaluating the logistics costs. Some examples can for instance be risk and damage costs, as well as customs and material handling systems (cf. Zeng and Rossetti, 2003; Shakantu, et al., 2003). On a more general level, logistics costs can be classified into one or more of the following cost centres; transport, warehousing, inventory carrying costs, administration, indirect costs, and procurement (cf. Zeng and Rossetti, 2003; Shakantu, et al., 2003; Engblom, et al., 2012; Stock and Lambert, 2001; Lin, et al., 2001). In reality, what constitutes logistics costs is dependent on the logistics system being studied and the relevant cost components needs to be identified within this context (Fang and Ng, 2011; Harrison and van Hoek, 2011; Shapiro, 1992). When analysing logistics costs, one must keep in mind that all logistics cost elements are made up of fixed and variable costs. This means that there will be a fixed cost for the physical infrastructure and resources used, but also a variable cost for e.g. time and salary costs. Site storage for instance, can be comprised of receiving and unloading materials, moving them to on-site storage, registering the location of the materials, the cost of storage, etc. (cf. Everaert, et al., 2008; Fang and Ng, 2011). It is thus of great importance to keep track of the actual logistics setup and to map out the cost centres and activities in order to find the most important logistics costs. The key to finding out the composition of the different cost elements lies in identifying the cost drivers for each activity in the logistics process (Vasiliauskas and Jakubauskas, 2007; LaLonde and Pohlen, 1996; Lin, et al., 2001). These are the factors that cause cost changes in the process (Vasiliauskas and Jakubauskas, 2007; LaLonde and Pohlen, 1996; Lin, et al., 2001).

2.3 Inter-organizational relationships and governance As discussed previously, the construction industry is dependent on multiple relationships in order to produce the buildings and infrastructure we use daily. We may hope that social norms and exchanges can allow for these relationships to form a sort of self-governing system (cf. Emerson, 1962; Homans, 1958), but reality can often be quite different and regulatory agreements may be needed. The process of setting up these regulations is dependent on the ruling governance strategy. Hufty (2011, p. 405) define governance as “the processes of interaction and decision-making among the actors involved in a collective problem that lead to creation, reinforcement or reproduction of social norms and institutions”. Boissinot and Paché (2011) highlight that governance can be used as a means to monitor, select, incentivize or socialize a relationship amongst stakeholders with a general purpose of aligning interests and reduce information asymmetry. Governance strategy can thus be seen as the strategy for how social and economic coordination should take place within a specific area (Williamson, 1999; Jereb, 2017).

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Construction logistics solutions in urban areas Klakegg (2009) point out that governance includes “developing visions and strategy, establishing frameworks for business, making decision and giving priority, empowering and maintaining follow-up of management, and confirming compliance with requirements (Klakegg, 2009, p. 4). This can be translated into three levels of governance; strategic, tactical and operational governance (Boissinot and Paché, 2011). The strategic level sets the long-term goals and guidelines of the governance solution, the tactical deals with how the long-term goals can be achieved through regulations and incentives, and the operational governance sets the rules for the daily activities (Schmidt and Wilhelm, 2000; Boissinot and Paché, 2011). It is also important to note that different stakeholders have different drivers and needs from a governance strategy; private actors are driven by financial consideration whereas public authorities and companies are driven by providing public values (Caldwell, et al., 2009; Teisman and Klijn, 2004). Friction and challenges between the public and the private will occur (Norrman and Henkow, 2014) so the different perspectives need to be consolidated into a joint, or at least accepted, vision for the governance strategy to be successful (Klakegg, 2009). Finding the right governance enablers is thus important in facilitating decision making and operations when setting up a governance strategy (cf. Jereb, 2017; Norrman and Henkow, 2014). 2.3.1 Control mechanisms and governance enablers Regardless of how the utilized governance strategy is set up, some control mechanisms must be in place to ensure that stakeholders adhere to the set regulations and do not act opportunistically (Caldwell, et al., 2009). Depending on the relationship between the different stakeholders, both formal and informal control mechanisms can be suitable (Boissinot and Paché, 2011; Caldwell, et al., 2009). Formal control is often applied as contractually stipulated regulations (Caldwell, et al., 2009; Williamson, 2008). This often leads to an adversarial relationship between the governing, and the governed, entities in the relationship (Boissinot and Paché, 2011; Winch, 2001) with a lower level of trust between them (Boissinot and Paché, 2011; Vivek, et al., 2009). Contracts are often used as a control mechanism early on in a relationship, but is not always the best alternative. Norrman and Henkow (2014, p. 755) for instance, highlight that traditional contracts and regulations may not cater to a more innovative relationship where responsibilities are divided in new ways. In these cases, it may be that control mechanisms needs to be more informal and based on “soft” values such as trust, commitment, and information exchange (Caldwell, et al., 2009; Williamson, 2008). These are, however, not to be seen as an “easy way out” but are often time-consuming and resource demanding in order to work properly (Caldwell, et al., 2009; Williamson, 2008). Choosing control mechanisms are important, and the urge to “hedging one’s bets” on multiple control mechanisms can often arise. It must however be recognized that multiplication of control mechanisms does not necessarily give added value in terms of more control and saved costs (Boissinot and Paché, 2011).

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3. Research design and method This chapter describes the overall research design and motivates the choice of research methods. It also describes how the research in each paper was conducted.

3.1 Research design To fulfil the purpose of this thesis, two research questions were put forth in chapter 1. Introduction. The first RQ deals with the coordination of different stakeholders and how they are affected when a CLS is utilized. The second RQ explores how material flows and costs in urban construction projects are affected by a CLS. As such, it goes into a more technically detailed level than the previous one. The two research questions also reflect the research design of this thesis project; the first part of the project aimed at investigating stakeholder experiences of inter-organizational relationships and construction logistics solutions. This was followed by more technically oriented studies where material flows, and costs were in focus. Figure 7 shows how the research design and RQ’s relate to the research scope of the thesis. RQ1

Construction in an urban context

Municipality

Developer

Contractor

RQ2

Supplier


Delivery

Construction site


Figure 7 - Relation between research design, research questions, and research scope

3.2 Research process The research process of this thesis project consists of four studies that were conducted over the course of approximately three years within two research projects; the Development

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Construction logistics solutions in urban areas Fund of the Swedish Construction Industry (SBUF) financed Total cost analysis of logistics solutions in the construction supply chain (TCA) and the JPI Urban Europe/Sweden’s Innovation Agency (VINNOVA) funded project Construction In Vicinities: Innovative Cocreation (CIVIC). The TCA project aims at analysing the impact that the use of innovative logistics services has on productivity, efficiency and overall costs of the construction process, whereas the aim of the CIVIC project is to facilitate and support transports to and from construction sites in a way that minimizes disruptions to the surrounding society. The four studies are presented as papers (see Figure 8) and each of these help in answering the research questions of this thesis. One of the papers is a literature review, conducted with a systematic approach. Papers 2 and 3 are exploratory single case studies with descriptive elements, and paper 4 is a descriptive embedded single case study. Figure 8 depicts the overall research process. Thesis project Literature review Understanding the construction supply chain issues

Case study Experiences of construction logistics centres

Case study Costs and benefits of logistics solutions in construction

Case study The cost of construction logistics centres

2015-2018

2016-2018

2016-2018

2017-2018

Conference paper 2016




Paper 1 RQ1

Paper 2 RQ1

Paper 3 RQ2

Paper 4 RQ2

Licentiate thesis

Figure 8 - The research process

The research process is based on gathering initial knowledge before collecting empirical data, i.e. a deductive approach. In the first phase, a comprehensive literature review (paper 1) was conducted, and the author gained insight into the mechanisms and interorganizational relationships of the construction industry. However, during this phase, the author also had to revisit literature in an inductive manner to allow for a deepening of the synthesis and analysis, resulting in a deductive-inductive approach in paper 1. This approach was carried over to the empirical studies, where literature reviews were conducted as preparation for the empirical data collection as well as to provide analytical frameworks for the studies (paper 2, 3, and 4). Papers 2 and 3 have also been developed from their prior conference versions through deepening of the literature reviews, as well as through additional empirical data collection.

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3. Research design and method 3.3 Choice of method Theory building research is important in that it can add new insights as to how real-world problems can be tackled (Wacker, 1998; Meredith, 2001). Furthermore, theory building research can lead to these new insights being analysed and tested in a real-world context from where the insights were derived, or in a similar context to test the new theory (Wacker, 1998; Meredith, 2001). To cement the theory building effort, the novel theories must of course be tested and validated in other real-world contexts (Wacker, 1998; Meredith, 2001). According to Wacker (1998) and Meredith (1993; 2001), theory building is an iterative process that follows the general steps of description, explanation, and testing. This research project is primarily explorative, investigating how CLS’s can be used as a means to coordinate and govern construction material flows in urban areas. As such, it can be said to be, to some extent, theory building (Voss, et al., 2002; Meredith, 2001), albeit not necessarily theory testing, an aspect that (Meredith, 1993) highlight as equally important in developing new theories. Theory building research can be divided into two main categories, i.e. analytical research and empirical research (Wacker, 1998). This thesis consists of both types; paper 1 is a literature review with a systematic approach, and as such it falls into the realm of analytical research (Wacker, 1998). Papers 2 and 3 are explorative case studies with descriptive elements, whereas paper 4 is a descriptive case study. All three are thus empirically based (Wacker, 1998). More on how the studies were carried out can be found in sections 3.3.3 – 3.3.6 below. 3.3.1 Analytical research through literature reviews and conceptual modelling As described by Wacker (1998), theories can be built from analytical research, which can be further divided into conceptual, mathematical, or statistical analysis (Wacker, 1998, p. 378). This section is dedicated to analytical research through conceptual analysis and the role literature reviews play in this process. The purpose of analytical conceptual research is to add new insights into traditional problems (Wacker, 1998). From this, interpretations can be derived to add insights and develop theories (Wacker, 1998; Meredith, 1993). This is done through the logical development of relationships between different concepts into a comprehensive theory (Wacker, 1998). Meredith (1993) adds to this by further differentiating how conceptual research can be performed, namely through conceptual modelling or development of conceptual frameworks. A conceptual model can be defined as a set of concepts used to describe an event, object, or process, whereas conceptual frameworks can be defined as a collection of two or more interrelated propositions that try to explain and provide understanding of an event, object, or process (Meredith, 1993). A literature review is conducted in order to obtain knowledge about research gaps, analyse current state of knowledge in a particular field, and to synthesize the findings to produce new knowledge (Jesson, et al., 2011). In that sense, literature reviews fall under the categorization of analytical conceptual research (Jesson, et al., 2011; Wacker, 1998;

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Construction logistics solutions in urban areas Meredith, 1993). A literature review can range from a traditional scoping review to a systematic review with various degrees of systemic influences throughout (see Figure 9). Traditional review

Systematic review

Narrative review Variety of styles No defined method No specified analysis

Systematic review Structured approach Rigorous method Synthesis, meta-analysis

Figure 9 - A continuum of literature review research approaches (Jesson, et al., 2011, p. 11)

This research project contains conceptual analysis through traditional literature reviews (papers 2, 3, and 4), conceptual modelling through synthesizing literature and empirical data (paper 4), and a systematic literature review (paper 1). 3.3.2 Empirical research through case studies As mentioned above, Wacker (1998) divides theory building research into two categories; i.e. analytical and empirical research. This section is dedicated to empirical research through case studies. Case study research has become a well-established research methodology for obtaining empirical results within qualitative research (Yin, 2014). The upwards trend of using this methodology however, is not necessarily an indication of how good case studies are performed or if they conform to the general case study methodology. A common critique against case study research in general and single case study research in particular is that it is difficult to generalize and build theory from case research, owing to the specific nature of a case (Eisenhardt, 1989; Flyvbjerg, 2006). Depending on how the case is chosen, either randomly or information-oriented, the possible generalizability may be affected. By taking an information-oriented stance in case selection, a researcher may be able to increase the possibility of obtaining as much valuable information as possible (Flyvbjerg, 2006). It is true that generalization based on a single case study can be difficult to achieve as it only gives a snapshot of one specific case (cf. Eisenhardt, 1989; Flyvbjerg, 2006). It does however, enable in-depth understanding of the phenomenon’s underlying mechanisms (Yin, 2014). As such, case study methodology is a valid choice for theory building research. Eisenhardt (1989) also discusses the theory building qualities and abilities of case study research and derives at a conceptual framework for theory building through case study research. The framework consists of eight steps with an emphasis on the preparation of the research team and getting access to case study objects (Eisenhardt, 1989, p. 533). Flyvbjerg (2006) challenges the non-applicability of case studies in theory building, and argues that case study research can be used to build deep, context-dependent knowledge in a way that “heavy” theories and quantitative knowledge cannot (Flyvbjerg, 2006). He goes on to argue that case study research can develop scientific knowledge through generalization of single case studies as well as generate and test hypotheses (Flyvbjerg, 2006). Further he argues 20

3. Research design and method that case study as a research methodology does not contain a greater verification bias than other scientific methods and that it is not difficult to summarize due to case study as a method, but rather due to the context and properties of the case studied. (Flyvbjerg, 2006) The empirically based part of this research project is grounded in case studies; two explorative single case studies at two different development projects, and one descriptive embedded single case study at one of the previously mentioned development projects. The two explorative single case studies allowed for depth in the in-case analysis whereas the embedded single case study also gave the opportunity to analyse different units within the same main case. 3.3.3 Paper 1 - Understanding logistics issues in the construction supply chain The overall purpose of paper 1 is to unravel issues related to logistics and relationships in the construction supply chain and to give further insights into why the full potential of logistics and supply chain management are not yet reached. As such, the focus of this individual study is on the wider aggregation level (see Figure 10), taking in a holistic view of the construction context. P1

Construction in an urban context

Municipality

Supplier

Developer


Contractor

Delivery

Construction site


Figure 10 - Focus of paper 1

The purpose of the study is fulfilled through a literature review. The review has been conducted through a systematic approach and by performing content evaluation and synthesis of the findings (Seuring and Gold, 2012; Seuring and Müller, 2008). In order to provide as much rigor as possible, the methodology used in the review process was adapted from the frameworks of Seuring and Müller (2008), and Evangelista and Durst (2015). The methodology followed the following four steps; (1)

Material collection: A search strategy was designed, and material was retrieved in accordance with the strategy’s inclusion and exclusion criteria (Evangelista and Durst, 2015). Literature searches were conducted in the Emerald Insight (www.emeraldinsight.com) and SCOPUS (www.scopus.com) databases using combinations of the keywords construction, supply chain management, logistics, 21

Construction logistics solutions in urban areas and third-party logistics in titles, abstracts and keywords. The inclusion and exclusion criteria were set to include only published, peer-reviewed scientific journal articles. The searches were conducted in November and December 2015, allowing for articles published early in 2016 to be included. No other delimitations were set regarding time-period of publication. The unit of analysis was defined as the individual article and a collection of articles formed the output (Seuring and Müller, 2008; Evangelista and Durst, 2015). In total, the described searches yielded 3230 published journal articles. Each abstract was read to assess whether the article was within scope of the study. Based on the abstracts, 494 of the articles were selected for further evaluation and coding. An additional read-through of abstracts, introduction and conclusions yielded a final selection of 142 articles. (2)

Category selection: To allow for a deeper analysis of the selected articles, further classification of the material was needed (Seuring and Müller, 2008; Evangelista and Durst, 2015). Initially, theory-based classifications were made as this helps in ensuring the validity of the review (Seuring and Gold, 2012). This also allows for having a baseline structure for the themes within the review. As the review progressed, the categories were revised to better suit the studied material. The final categorizations are shown in Table 1. These analytic categories were applied as a means to structure the material and answer the research questions. Table 1 - Categorization of articles in paper 1

Main category Supply chain management

Logistics Third-party logistics

Subcategories SCM principles, modularization and industrial housebuilding, information and communications technology, relationship management Logistics management, information and communication technology, performance, procurement, reverse logistics Performance, project management

(3)

Descriptive analysis: The collected material was analysed from formal aspects such as distribution of articles over time, methodology, and categories within the three fields of SCM, logistics and TPL in construction (Seuring and Müller, 2008; Evangelista and Durst, 2015). This step was essential in highlighting how the interest for SCM, logistics and TPL in construction has grown.

(4)

Material analysis: The material was analysed in an inductive manner within the topical categories identified in step 2 (Seuring and Müller, 2008; Evangelista and Durst, 2015). The articles were read thoroughly, important passages were underlined, and notes were taken with the purpose of extracting the important findings from each of the articles in the sample. Short summaries of the articles were written, providing input to the material analysis.

22

3. Research design and method While assembling the results of the review, the findings from the different categories were grouped together and a descriptive representation of SCM, logistics, and TPL in construction took form. This type of synthesis can be likened to synthesis by interpretation described by Rousseau, et al. (2008, p. 496), where the goal of the synthesis is to translate key interpretations from one study to another. As such it was deemed as the most appropriate form of synthesis for this literature review. This step was crucial to fulfil the purpose of paper 1. An early version of paper 1 was presented at the 3rd VREF Conference on Urban Freight in 2016. The paper is currently under revision as a working paper, to be submitted to journal. 3.3.4 Paper 2 - Experiences of construction logistics centres in urban development The purpose of paper 2 is to develop guidelines for how to set governance strategies for construction logistics centres in urban development projects. When implementing a CLS, different stakeholders will be affected. As such it is vital to investigate the different stakeholder perspectives affected. The focus of paper 2 is thus on the main stakeholders identified and the CLC. The paper also takes the urban context into consideration (Figure 11). Construction in an urban context P2 Municipality

Supplier

Developer


Contractor

Delivery

Construction site



To be able to provide guidelines for how to set up the governance strategies connected to a construction logistics centre, the authors opted for an exploratory single case research design with descriptive elements (Yin, 2014). Four different perspectives of the CLC within Stockholm Royal Seaport (SRS) have been studied, i.e. the municipality in the form of the city of Stockholm, the TPL provider operating the CLC, three main contractors building within the SRS area, thus utilizing the CLC services, and two developers. The city of Stockholm is responsible for the development project and has a development office in the SRS area. The TPL provider is an experienced TPL provider from mechanical industry that entered into the world of construction logistics with the CLC in the SRS area. The main contractors are building between one and three apartment buildings within the SRS area, with time frames for the 23

Construction logistics solutions in urban areas projects of between 23 and 33 months. Developer 1 is a municipal housing company and frequently source their contractors on turn-key contracts. Developer 2 is a private housing company that produce all their projects with in-house personnel. Figure 12 shows the logistics process studied in paper 2.

Contractor

(> 5 m3) < 5 m3

Supplier

Transport to CLC

CLC operations

CLC

Waste and returns

Transport from CLC

Construction site

> 5 m3

Direct transport Information flows Material flows

Figure 12 - The logistics processes studied in paper 2

The case study was conducted through an iterative process based on Yin (2014). The case study was firstly prepared through a comprehensive literature review. As preparation, interview guides and case study protocols were developed. These were revisited continuously to improve the data collection process. Data was collected during 2016 and 2017 through, in total, eleven semi-structured interviews, seven on-site observations, and taking part of multiple project documents and site layout plans. The authors have also participated in the education given by the TPL provider to all those who work within the SRS area. A literature review of CLC’s and governance strategies was conducted and summarized into an analytical framework. This framework was thereafter used to structure the analysis. The collected experiences of the different stakeholders were compared to the analytical framework to provide the guidelines for how to set governance mechanisms and fulfil the purpose of the study. An earlier version of paper 2 has been presented as a conference paper at the 29th annual NOFOMA Conference in 2017. The paper is currently submitted for review in Construction Innovation. 3.3.5 Paper 3 - Finding cost effects and benefits of construction logistics solutions Employing CLS’s often leads to logistics costs becoming visible through the invoices sent by the operator, whereas the benefits are hard to quantify. Thus, the use of CLS’s is still met with a level of scepticism. The purpose of paper 3 is to investigate what possible benefits, alongside with the effect on costs, can be realized when employing a CLS. As such, the focus of paper 3 is on the CLS, taking in the perspectives of the operator and the contractors of a large construction project that has implemented and used a TPL solution (see Figure 13).

24

3. Research design and method Construction in an urban context Municipality

Developer

P3 Contractor

Supplier


Delivery

Construction site



The case study in paper 3 investigates the logistics operations of a large office building project where a construction management (CM) company has developed and implemented a CLS. The logistics solution studied consists of three main areas; a consolidation terminal where materials are re-routed if the deliveries are not made with sufficient fill rates, an onsite materials handling team that receives and distributes materials at the construction site, and a standardized planning system and process. Figure 14 illustrates the logistics solution studied in paper 3. Planning system and process

Sub-contractors

Returns

Suppliers

Terminal

Direct delivery


Construction site On-site materials handling

CM company


Figure 14 - The logistics solution studied in paper 3

To allow for a focused and in-depth approach, the research design builds upon four activities (Yin, 2014); preparation, data collection, analysis, and dissemination. The research design is iterative, indicating that each step has been revisited over the course of the research project. This allowed the authors to get the best possible insight and result from the study. The study was planned for in collaboration with the CM company. This ensured that the research team had access to the right people and data sources. The case study was prepared through a literature review regarding SCM, logistics and the use of TPL in construction. Data collection was prepared and revisited throughout the research process.

25

Construction logistics solutions in urban areas Before each interview or site visit, the researchers prepared by discussing the purpose and goal of the exercise. Data was collected through eight semi-structured interviews with logistics representatives from the CM company, two on-site visits at the construction site, and one visit to the logistics terminal. The authors also reviewed project documents and the CM company’s project planning tool. The final phase of the research process is based on analytical and conceptual reasoning (Wacker, 1998), grounded in the results from the literature review and the case study. Paper 3 has previously been presented as a conference paper at the 24th annual EurOMA Conference in 2017. The paper is currently under revision as a working paper, to be submitted to journal. 3.3.6 Paper 4 - Determining the cost of construction logistics centres The purpose of paper 4 is to propose a model for calculating the costs of a CLC by analysing what activities and costs a CLC entails. The focus of the paper is on the activities in, and surrounding, the CLC with regards to material deliveries to site (see Figure 15). Construction in an urban context

Municipality

Developer

Contractor

P4 Supplier


Delivery

Construction site



The case in paper 4 is a development of the case studied in paper 2. The main difference is in the case boundaries set in the two papers; in paper 4, the case is delimited to only include the delivery processes to construction sites in SRS and has been divided into four subprocesses; direct delivery to site, delivery to CLC, operations within the CLC, and transport from the CLC to site (see Figure 16). Apart from the CLC itself, three projects in SRS that utilizes the CLC have been studied. By embedding and analysing three individual cases within the main case, the authors add to the generalizability of the main case (Yin, 2014).

26

3. Research design and method

Contractor

(> 5 m3) < 5 m3

Supplier

Delivery to CLC

CLC operations

CLC

Waste and returns

Delivery from CLC

Construction site

> 5 m3

Direct delivery Information flows Material flows

Figure 16 - The delivery processes studied in paper 4

To fulfil the purpose, an activity-based costing (ABC) approach has been utilized in setting the relevant costs. ABC is a cost accounting technique that highlights relationships between activities and resource consumption (Cooper and Kaplan, 1991; Gríful-Miquela, 2001). The ABC modelling is based on the material and information flows of the SRS CLC as presented in Figure 16. This representation is based on the information obtained through interviews and project documentation that form the base of the case study. As the purpose of paper 4 is to find a feasible way to cost model the CLC, activities at the suppliers and on the construction sites, are delimited from the ABC modelling and subsequent analysis. The ABC analysis follows the seven-step process outlined below (based on LaLonde and Pohlen, 1996; Lin, et al., 2001; Gríful-Miquela, 2001); (1)

Determine the process of interest and set system boundaries: The process chosen in paper 4 is the delivery process of the SRS CLC. This was further divided into the four sub-processes identified and described above; direct delivery to site, delivery to CLC, operations within the CLC, and transport from the CLC to site.

(2)

Break down the chosen processes into activities: The breakdown of the subprocesses into activities was performed with the aid of the CLC operator and observations during site visits.

(3)

Identify the resources consumed in these activities: The identification of resources was performed with the aid of the CLC operator and observations during site visits.

(4)

Identify cost drivers for the activities: The cost drivers were identified based on logistics cost drivers found in literature (cf. Everaert, et al., 2008; Fang and Ng, 2011; Gríful-Miquela, 2001; Schniederjans and Garvin, 1997) and the activities and resources identified in the four sub-processes.

(5)

Gather cost data: Cost data was collected with the aid of the CLC operator and comprised the invoice data for all projects in the SRS area during the time-period 2013-2016.

(6)

Allocate costs to the activities: This was performed in accordance with the activity and resource breakdown performed in steps (2) – (4). 27

Construction logistics solutions in urban areas (7)

Analyse the cost information from a total cost perspective: This step summarized the activity costs into five cost equations; one total cost equation comprised of cost equations for each of the four sub-processes. These equations then formed the base for the cost calculations for the three studied construction projects.

Paper 4 is a conference paper, scheduled to be presented at the 30th annual NOFOMA Conference in June 2018.

3.4 Research quality In order to develop relevant, valid, and testable new theories, Eisenhardt (1989) argues that previous literature needs to be combined with new empirical evidence. This does however, imply that in order for the new theory to be sound, some measures of research quality must be in place (Eisenhardt, 1989). Regardless of the type of research conducted, producing results that can be trusted to be valid and reliable is of great importance (Karlsson, 2009; Eisenhardt, 1989). This means that the researcher must be transparent regarding how the research has been conducted and how the researcher has addressed the issues of validity and reliability (Karlsson, 2009; Yin, 2014). The following sections discuss how to ensure research quality for the two chosen research methods, and how this has been tackled in the studies of this thesis. 3.4.1 Research quality in content analysis-based literature reviews Depending on the goal of the literature reviews, different review approaches can be adopted. A traditional review can be said to be a gap analysis whereas a conceptual review aims to synthesize areas of conceptual knowledge to further the understanding of a certain issue (Jesson, et al., 2011, p. 15). The systematic review on the other hand, applies more rigorous methodology to the review, and thus can give greater insight into a problem area (Cronin, et al., 2008; Jesson, et al., 2011). Regardless of the approach chosen, literature reviews should take a critical approach (Jesson, et al., 2011; Cronin, et al., 2008). It should be noted that literature reviews should be conducted by multiple researcher to reduce interpretation bias from a single researcher (Seuring and Gold, 2012; Rousseau, et al., 2008). Even though traditional and conceptual reviews rarely provide a deep methodology description, it can be helpful for the author to adopt and follow certain methodological approaches, e.g. taking notes on the papers read, looking out for bias in the own writing, find materials that are in opposition or brings forth other viewpoints than that of the author, etc. (Jesson, et al., 2011). This will help in improving validity and reliability of the review (Jesson, et al., 2011). In systematic reviews, it is of great importance to show the methodology used and how it has been followed (Jesson, et al., 2011; Cronin, et al., 2008). A rigorous description of how the collection of literature was made will enhance the validity and reliability of the review (Jesson, et al., 2011; Seuring and Gold, 2012; Rousseau, et al., 2008). Seuring and Gold (2012) proposes four milestones for conducting content analysis-based literature reviews; material collection, descriptive analysis, pattern of analytic categories, and material evaluation and research quality (see Table 2). As paper 28

3. Research design and method 1 in this research is a content analysis-based literature review with a systematic approach, this milestone model will be used to discuss how and if research quality has been ensured. Table 2 - Milestones for content analysis in literature reviews (Seuring and Gold, 2012, p. 552) Milestones Material collection

Critical considerations Defining and delimiting material Specifying the topic: suitable keywords for database search Scope of journals: selective or general Defining unit of analysis Consistent throughout the analysis Mind bias from similar papers by same group of authors

Descriptive analysis

Distribution over time period Distribution over publication outlets (particularly journals)

Pattern of analytic categories

Deductive versus inductive category building (corresponds to theoretically grounded versus explorative research approaches) Default two-step approach: 1. Deductive category building, 2. Iterative cycles of inductive category refinement while coding

Material evaluation and research quality

Need of iterative coding cycles in case of inductive category refinements or deficient inter-rater reliability Transparency and objectivity (clear coding rules from outset) Reliability (particularly inter-rater reliability): at least two coders, cross-coding for testing agreement or aligning mental schemes Validity (theoretical foundation, specific inductive refinements)

In the material collection phase, the following steps were undertaken to provide rigour in the literature review process: •

• •

•

• •

A search strategy was designed based on keywords pertaining to the research areas of interests; construction, supply chain management, logistics, and third-party logistics. These keywords were discussed with the author’s supervisors and deemed to be sufficiently precise, while still allowing for a wide collection of articles. Delimitations were set to include only peer reviewed journal articles from two databases (SCOPUS and Emerald Insight). Searches within these databases were general and non-discriminatory to allow for articles published in non-traditional construction management journals to be part of the sample. Searches were made in titles, abstracts and keywords to retrieve the most suitable articles. No delimitations were set regarding time-period of publication, allowing for a wide selection of articles that would represent the development of the research area in the descriptive analysis. The unit of analysis was defined as the individual article. Abstracts were read carefully from a content point-of-view to find the articles suitable for the review, and for further classification.

29

Construction logistics solutions in urban areas •

All searches and articles were recorded in an electronic database for transparency.

In the descriptive analysis, the analysis itself is less susceptible to issues in validity and reliability as it deals with aspects such as publication time, methodology, and journal of publication. However, paper 1 also highlights what category the different articles have been classified as in the descriptive analysis. In order to provide rigour in the descriptive analysis, the following measures have been taken: •

•

The collected material was analysed from formal aspects such as distribution of articles over time, journal, and methodology. Articles over time was decided based on year of publication. Methodology was based on the description of methodology in the articles themselves, thus being an objective measure. The classification of articles is the part of the descriptive analysis that is most susceptible to interpretation bias. The classification is however based on deductiveinductive theoretical reasoning (see below)

To allow for a deeper analysis of the selected articles, classification of the material is vital. Seuring and Gold (2012) recommends theory-based classifications as this helps in ensuring the validity of the review while also allowing for having a baseline structure for the themes within the review. The following steps were undertaken during the pattern of analytic categories phase to ensure rigour: •

The initial category classifications were theory-based. As the author is the sole author of paper 1, these classifications were discussed with the author’s supervisors. This reduced some of the interpretation bias.

In the material evaluation and research quality phase, the following steps were taken. •

•

As the review progressed, the categories described above were revised to better suit the studied material. This deductive-inductive approach allowed for some flexibility while still being based on a theory-based classification. This iterative process can, according to Seuring and Gold (2012), enhance the validity of the study further as the analysis is based on existing theory while still being adjusted to the specific sample. The coding and evaluation was discussed with the authors supervisors and other colleagues in order to reduce interpretation bias. The paper was also presented as a conference paper and was revised after comments from knowledgeable conference participants. This can, to some extent, be likened to “discursive alignment of interpretation” as discussed by Seuring and Gold (2012), as it allowed the author to align his interpretations to those of more senior researchers.

Finally, to reduce any question marks regarding the research quality of paper 1, the author has provided a detailed methodology section in the final paper in order to ensure transparency in the overall research process.

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3. Research design and method 3.4.2 Research quality in case study research With the criticism against using case studies as a theory building research method due to the specificity of each case, showing the research quality through validity and reliability of the research is especially important (Yin, 2014; Voss, 2009). This can be done through the four case study tactics described by (Yin, 2014) in which these tactics test construct validity, internal validity, external validity, and reliability as shown in Table 3. Table 3 - Means to ensure research quality (Yin, 2014, p. 45) Tests

Case study tactic

Construct validity

Use multiple sources of evidence Establish chain of evidence Have key informants review draft case study report

Phase of research in which tactic occurs Data collection Data collection Composition

Internal validity

Do pattern matching Do explanation building Address rival explanations Use logic models

Data analysis Data analysis Data analysis Data analysis

External validity

Use theory in single case studies Use replication logic in multiple case studies

Research design Research design

Reliability

Use case study protocol Develop case study database

Data collection Data collection

The concept of construct validity can be defined as identifying the correct operational measures for the studied objects (Yin, 2014; Gibbert, et al., 2008). The following measures have been taken to ensure construct validity in this research: •

•

•

•

For all three case studies (papers 2, 3, and 4), multiple sources have been used for data collection. Interviews, observations, project documentation, audit reports, project management tools, statistics and company websites have been used as data sources. All three case studies have followed an iterative process where literature has been reviewed prior to empirical data collection and revisited afterwards, to ensure that enough and correct data was collected as well as to help in the analysis. This iterative process should strengthen the construct validity. The literature has also helped in validating findings from the empirical data. The empirical data on the other hand has revealed the need to deepen the literature review in papers 2 and 3. Interview protocols and notes from documentation reviews have been discussed with respondents and project officials in order to validate the understanding of documents and interview responses. Draft case study reports have been sent to key informants for review.

Internal validity refers to whether the relationship between cause and effect can be ensured (Yin, 2014; Voss, 2009; Karlsson, 2009; Gibbert, et al., 2008). According to Yin (2014), internal validity is more of a concern when it comes to explanatory case studies. Two of

31

Construction logistics solutions in urban areas the three case studies reported in this research project are exploratory case studies and the third is a descriptive case study, hence the internal validity is of lesser concern. Regardless, the following measures could be argued to strengthen the internal validity of the research: •

•

All three case studies in this thesis were written by two authors. Throughout all the phases of the studies, the authors have collaborated closely and discussed any unclear aspects of data collection, data collected, statements in literature, or findings. Multiple data sources and data collection methods have been used, allowing for triangulation of results.

External validity is defined as how generalizability of the case study results is ensured (Yin, 2014; Voss, 2009; Karlsson, 2009; Gibbert, et al., 2008). The three case studies in this thesis are conducted at a large urban development project in Stockholm, Sweden, and a large construction project in the Swedish municipality Solna. All the companies and municipal representatives participating in these case studies operate in Sweden. This fact does have implications on the generalizability of the results. The following measures have been taken to ensure external validity: •

•

• •

Extensive literature reviews have been undertaken in all three case studies and some of the findings from the case studies have also been seen in examples in literature. This increases the likelihood of the results being generalizable. As research findings are analysed with the aid of an international literature base, the case studies offer some directions for companies and municipalities in contexts similar to the Swedish one. By embedding and analysing three individual cases within the main case in paper 4, the authors add to the generalizability through replication logic. Data has been collected through different methods and from different sources, thus allowing for some triangulation to be undertaken.

Reliability is the extent to which a study can be repeated by another researcher and still reach the same conclusion (Yin, 2014; Voss, 2009; Karlsson, 2009). Reliability is a difficult measure as data collection and analysis is carried out by individuals, and some involuntary bias may be present (Yin, 2014; Voss, 2009). However, treating data and applying a structured methodology can increase reliability (Yin, 2014; Voss, 2009; Gibbert, et al., 2008). In this research, reliability has been ensured through the following measures: • •

Well-structured interview guides and research protocols have been used in the data collection phases of the three case studies. Drafts and notes from interviews and observations have been stored electronically and as hardcopies. This allows for case study material to be reviewed and controlled if necessary.

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3. Research design and method 3.5 Authors statement The literature review (Janné, 2018), in this thesis referred to as paper 1, was authored solely by the thesis author. However, both supervisors have been supporting the thesis author throughout the research process of paper 1, through feedback and ideas in their respective roles as supervisors. An early version of this paper was presented at the 3rd bi-annual VREF Conference on Urban Freight in 2016. The paper is currently under revision as a working paper. In paper 2 (Janné and Fredriksson, 2018a), the thesis author collaborated with the authors co-supervisor. Both authors contributed equally to the paper throughout the study. An earlier version of this paper has previously been presented as a conference paper at the 29th annual NOFOMA Conference in 2017. The paper is currently submitted for review in Construction Innovation. In Janné and Rudberg (2017), in this thesis referred to as paper 3, the author collaborated with his main supervisor. Both authors contributed equally to the paper in all stages of the research process. Paper 3 has previously been presented as a conference paper at the 24th annual EurOMA Conference in 2017. The paper is currently under revision as a working paper. In Janné and Fredriksson (2018b), referred to as paper 4 in this thesis, the author collaborated with his co-supervisor. Both authors contributed equally to the resulting paper. This paper is to be presented at the 30th annual NOFOMA Conference in June 2018.

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34

4. Summary of papers This chapter aims to summarize the four papers contributing to this thesis. The summary is organised by first describing the purpose and research questions of each paper, followed by a description of the findings of the paper and how it contributes to the thesis.

4.1 Summary of paper 1 The purpose of paper 1 is to investigate the state of SCM, logistics and TPL in construction and give new understanding of why the full potential of the concepts are not yet reached. This is achieved through a systematic literature review and by answering the following research questions: RQ1: How has research on SCM, logistics and TPL in the construction industry evolved over time? RQ2: How has SCM, logistics, and TPL been utilized in the construction industry? RQ3: Why has the adoption of SCM, logistics, and TPL not reached its full potential in construction? Paper 1 also strives to highlight how to reach further in the adoption of SCM, logistics and TPL in construction by answering the following research question: RQ4: What is needed in order for the construction industry to reach further in adopting SCM, logistics, and TPL? Through the extensive investigation of literature on SCM, logistics, and TPL in the construction industry, paper 1 has provided insight into how the interest in SCM and logistics in construction has increased. However, paper 1 also shows that there is confusion as to what SCM and logistics entail and how the concepts differ. Practitioners use supply chain vocabulary but are often talking about operational logistics in doing so. This implies that there is some supply chain awareness, but that supply chain maturity is still not widespread in the industry, making SCM difficult to adopt. The key to reaching more supply chain maturity is to ensure that knowledge and information is shared amongst the stakeholders. This is where TPL can play a part. TPL providers are specialists in logistics and the construction industry can benefit from their logistics knowledge while at the same time sharing their construction knowledge with TPL providers. The contribution from paper 1 to the thesis lies primarily in the identification of the interorganizational issues of the construction industry with its temporary supply chains and that

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Construction logistics solutions in urban areas this leads to difficulties in adopting the long-term aims of SCM. The paper also shows that there is a non-conformity regarding what the concepts SCM and logistics entail, thus adding to the difficulty in how these concepts can be adopted to the construction industry context. Furthermore, paper 1 contributes by acknowledging that it may not be possible to go for a full adoption of SCM, but rather that implementing logistics initiatives, e.g. TPL can be a way for the industry to move towards SCM.

4.2 Summary of paper 2 In many large urban development projects, the use of CLS’s is needed in order to alleviate some of the difficulties found in the urban transport system, e.g. shared infrastructure leading to congestion, pollution and noise restrictions, and accessibility issues. There is however, a lack of research regarding governance strategies for CLS’s. The studies that exist have all been of an explorative nature, not providing suggestions of how to organize construction logistics in urban development projects, i.e. governance strategy guidelines considering different stakeholder perspectives. Therefore, the purpose of this paper is to develop such guidelines. To respond to the purpose two research questions are put forward: RQ1: What are the experiences of different stakeholders (the municipality, the developers, the TPL provider and the main contractors) of using a CLC in a large urban development project? RQ2: Based on the experiences of the different stakeholders, what are important aspects to consider when developing construction logistics governance strategies in urban development projects? One of the main contributions of the paper is that even with the best intentions, a CLS is more likely to be perceived as a good solution if the perspectives of the users are considered early on in the governance strategy design process. Paper 2 also shows that in order for a CLS to work properly, the responsibility of all stakeholders needs to be clearly stipulated and communicated to the right stakeholders. Regulations developed on the strategic level early on in the project, need to be flexible to handle the operational reality later in the project. All stakeholders realize that some sort of joint CLS is likely to be an everyday occurrence in urban development projects in a not so distant future. How this solution is set up however, will affect the users attitude towards it. If flexibility and dialogue is part of the process, chances are that the solution is perceived as a help, rather than a hindrance. Paper 2 contributes to the thesis by investigating stakeholder experiences connected to the utilization of a CLS in a large urban development project. Figure 17 highlights the experiences found in paper 2.

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4. Summary of papers URBAN CONTEXT • • • •


CITY OF STOCKHOLM EXPERIENCES

+ Consolidation effect + Control of materials in SRS area - Long information chains - Poor knowledge transfer from developers/clients - Reluctance to use CLC from developers/clients and contractors

TPL EXPERIENCES

+ Consolidation effect + Control of materials in SRS area - Contractors not complying with transport time windows - Apprehensive contractors - Difficult to show value of additional services

CONSTRUCTION LOGISTICS SOLUTION

MC EXPERIENCES

+ Consolidation effect + Increased and better planning + Smoother delivery process with call-offs from CLC + Coordination - CLC sold in as cost saving, yet logistics costs are increased - Longer lead-times - Early delivery issues - CLC not suited for large materials - Poor knowledge transfer from developers/clients - Poor construction knowledge from city

DEVELOPER EXPERIENCES

+ Coordination effect + Good contact with city and TPL with learning from experience - Issues with information and knowledge exchange - Poor construction knowledge from city and TPL provider - Unfeasible regulations connected to the CLC - Development of CLC and regulations did not consider users

Figure 17 - The stakeholder experiences of utilizing a CLC

4.3 Summary of paper 3 The purpose of paper 3 is to investigate the possible benefits, alongside with the effect on costs, that can be realized when employing CLS’s. This is achieved through a case study of a large construction project that has implemented and used a CLS. The purpose is met through answering the following research questions: RQ1: What benefits are realized when utilizing a TPL solution? RQ2: What costs are affected by the use of a TPL solution? RQ3: How does the logistics maturity of supply chain members affect the implementation of TPL? The paper shows that adding a TPL solution can streamline the logistics process for urban construction projects. One of the goals in utilizing a TPL solution is to reduce the delivery traffic to the construction site by consolidating smaller deliveries. A terminal-based solution can achieve this. A terminal also provides the possibility to reduce material stored at site, reducing the number of material related incidents and accidents. However, adding a new node in the delivery network that also acts as a storage point will add costs for warehousing, storage, handling, and administration. The key is to offset the additional costs against the efficiency gains. The implementing party needs to show benefits from the solution and work to increase the logistics knowledge for the suppliers and sub-contractors that are part of the construction project. Otherwise, they stand the risk of adding costs to 37

Construction logistics solutions in urban areas the project without being able to harvest the benefits and thereby being able to reduce the total cost of the project. The main contribution to the thesis from paper 3 is in the identification of possible benefits and issues, and what costs are affected by the introduction of a CLS. Table 4 highlights the contribution of paper 3 to the thesis. Table 4 - The identification of benefits, issues, and cost effects of CLS's Benefits - Some consolidation and coordination of deliveries - Fewer third-party disturbances - Less material on-site - Material buffer to cope with production changes - Option to call off JITdeliveries

Issues - Terminal layout not suited for construction materials - Added a node in the delivery network - Unfamiliar concept in the construction context - Non-standardised labelling

Cost effect Added: - Increased cost for materials relocation - Cost for additional delivery node added to project budget Reduced: - Possible reduction in transport costs

On-site materials handling

- Dedicated personnel for materials receiving - Better utilization of the construction site and equipment with materials handling off-hours. - Time freed up for craftsmen - Material available for craftsmen when needed - Cleaner and more structured construction site - Fewer work-related accidents - Follow-up of deliveries and delivery deviations

- Increased planning and coordination - Unfamiliar concept in the construction context - Non-standardised labelling - Planning documentation not always correct - Process and equipment related deviations add to work-load for on-site materials handling team

Added: - Difficult to offset costs for materials handling in subcontractor agreements - Planning documentation and labelling issues leads to extra work and added costs Reduced: - Possible reduction in materials handling costs - Increased productivity reduces cost of operations

Planning system and process

- Standardised process - Cloud-based system granting easy access for all parties - Visibility of all planned deliveries - Coordination of all materials stakeholders - More proactive planning

- Unfamiliar process for sub-contractors - Initial issues with functionality - Process not adhered to by all, leading to issues on-site

Added: - Initial investment for planning system - Administrative costs increase as process is dependent on updated delivery plans Reduced: - Reduces costs for tracking and tracing deliveries and materials

Terminal

38

4. Summary of papers 4.4 Summary of paper 4 When a CLC is introduced into the material flow, the cost for this additional node becomes visible through the invoices sent by the TPL provider. This is a new situation for developers and contractors that they are not used to budget for. To make construction logistics costs tangible, an activity-based costing (ABC) approach can be adopted. However, this approach has not yet been utilized in the cost analysis of CLS’s. The purpose of this paper is thus to analyse what activities and costs a CLC entails in order to propose a model for calculating said costs and discussing how the inclusion of a CLC affects site organisations and logistics activities carried out within the construction project. The purpose is fulfilled with the aid of the following research questions: RQ1: How can activity-based costing be used to model the main contractors cost of utilizing a construction logistics centre? RQ2: How do the average CLC costs of three projects with different levels of logistics organization compare to the average costs of utilizing the CLC in Stockholm Royal Seaport? Paper 4 makes a contribution in presenting an ABC breakdown of the use of a CLC in a construction supply chain (Table 5) as well as calculating the cost of using the services of a CLC in relation to project cost. One conclusion is that it is possible to develop an ABC model for CLS’s and that it is possible to show a cost of utilizing the studied solution. What the ABC breakdown shows is that the CLC add a number of cost driving activities to the construction supply process, that would not have been there if direct deliveries were used, i.e. transport to CLC, operations in CLC and transport from CLC. Paper 4 contributes to thesis through the ABC modelling by showing that the method is valid for making construction logistics costs tangible. Furthermore, the paper has shown that the overall cost of utilizing a CLC is very small compared to the total project cost. Paper 4 also contributes through the discussion regarding how the site organization impacts the possibilities of utilizing the CLS and thereby the cost of using the solution.

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Construction logistics solutions in urban areas Table 5 - Identified activities and resources in the material delivery process using a CLC Logistics process Direct transport

Activity Transport

Resources Lorry driver Lorry Stow materials Administrative labour

Piloting Transport to CLC

Loading

Administrative labour Handling labour Handling equipment Lorry driver Lorry Stow materials

Transport

CLC operations

Warehousing

Cost of rent Capital cost Handling labour Handling equipment Inspection labour Administrative labour Handling labour Handling equipment Storage cost Opportunity cost loss Handling labour Handling equipment Administrative labour Handling labour Handling equipment Handling labour Handling equipment

Receiving Quality Registration Storing

Relocation Planning Picking Sequencing Transport from CLC

Loading

Administrative labour Handling labour Handling equipment Administrative labour Lorry driver Lorry Stow materials

Announcing Transport

40

5. Results This chapter provides answers to the research questions, as well as a discussion on the purpose of the thesis. Finally, some summarising propositions are put forth.

5.1 Answering the research questions How are different stakeholders in the construction industry affected by construction logistics solutions? When CLS’s are introduced in e.g. urban development projects, different stakeholders will inevitably be affected in different ways (Caldwell, et al., 2009; Teisman and Klijn, 2004). From an inter-organizational point-of-view, what CLS’s do is that they break up old structures of coordination by adding an additional node and stakeholder into the supply chain. What paper 1 highlights is that the construction industry is characterized by temporary supply chains along with loose and tight couplings (see Figure 2) (Bankvall, et al., 2010; Dubois and Gadde, 2002; London and Kenley, 2001) . These characteristics have led to difficulties for the industry to wholly adopt SCM and logistics (Bankvall, et al., 2010; Fernie and Tennant, 2013; Fernie and Thorpe, 2007). Similarly, one finding from paper 2 is that the studied stakeholders are unsure of how to relate to and utilize the logistics solution (cf. Fernie and Tennant, 2013; Fernie and Thorpe, 2007). Partly this is due to the poor knowledge transfer found amongst the stakeholders of the CLS (see Figure 17). To reduce this information asymmetry, the initiating party needs to align the interests of different stakeholders (Boissinot and Paché, 2011) through clearly designed and communicated governance strategies for how the CLS is to be utilized (Williamson, 1999; Jereb, 2017). Without properly explaining the solution and its goal, adding the CLS into the construction supply chain will, as found in paper 2, lead to apprehensiveness in utilizing the solution. There is also an increased risk for conflicts and non-compliance with the regulations set (cf. Norrman and Henkow, 2014). One such example from paper 2 is the avoidance strategies utilized by some contractors to get around mandatory planning and gate passage bookings. The major drawback with the introduction of the CLS in paper 2 seems to be the nonalignment of stakeholder goals and the CLS’s goal. From the municipal perspective, the CLS has decreased disturbances on the urban transport system which was a major goal (cf. Carlsson and Janné, 2012; Dablanc, 2007; Russo and Comi, 2010). The contractors on the other hand, wants a smooth delivery process (cf. Ekeskär and Rudberg, 2016; Lindén and Josephson, 2013) and by adding this new node in the delivery system, they experience that deliveries are slower and costlier. This adds an apprehensiveness in utilizing the CLS from

41

Construction logistics solutions in urban areas the contractors’ side. If done correctly however, the utilization of CLS’s can reduce the number of interruptions for craftsmen who have to receive material deliveries as part of their work tasks (cf. Ekeskär and Rudberg, 2016; Lindén and Josephson, 2013). Paper 2 also shows that one of the main benefits experienced by the stakeholders is the coordination of material deliveries. The stakeholders in paper 2 are expecting CLS’s to be an everyday occurrence in future urban development projects. In essence, this implies that in the long run the context in which they work will change as CLS’s become more widespread. This means that, providing these predictions come true, construction stakeholders will be “forced” to address coordination through CLS’s in order to ensure efficient material deliveries. This can open up for more acceptance and understanding of logistics and SCM in construction (cf. Fernie and Tennant, 2013; Fernie and Thorpe, 2007). To summarize; • • •

• •

The stakeholders studied in paper 2 experience that coordination of material deliveries has improved compared to traditional construction projects. Introducing a CLS will however add a new node and stakeholder to whom the existing stakeholders must relate and plan for. One problem has been in the inter-organizational relationships with the new stakeholder/node introduced into the supply chain as the different stakeholders have been unsure of how to relate to and utilize the logistics solution. The utilization of CLS’s can reduce the number of interruptions for craftsmen who have to receive material deliveries as part of their work tasks. In the long run, the effect that CLS’s have on construction stakeholders is that they are preparing for a new future context in urban construction. This preparation can in turn lead to more acceptance and understanding of logistics and SCM in the construction industry context.

How will the use of construction logistics solutions affect material flows and costs in urban construction projects? Utilizing CLS’s can improve how construction logistics is managed, coordinated and executed (Agapiou, et al., 1998a). Depending on the CLS used, however, the material flows will be affected differently (cf. Lundesjo, 2011; Sundquist, et al., 2017). From papers 3 and 4, it is evident that introducing a terminal-based CLS into the construction supply chain will, in effect, add a new node that comes with a cost but also with some benefits. The consolidation effect is of course a benefit of the terminal-based CLS (cf. Browne, et al., 2005; Lundesjo, 2011). In the cases reported in papers 3 and 4, the CLS’s also offered the opportunity of storing materials for later delivery. These aspects lead to greater control of material flows (cf. Brunge, 2013; Lundesjo, 2010, 2011). In the terminal case, deliveries are re-routed to the terminal for consolidation (cf. Browne, et al., 2005; Lundesjo, 2011), but also for coordinating when and how the final delivery to site is performed (cf. Sundquist, et al., 2017; Lindén and Josephson, 2013). With a checkpoint-style CLS, the consolidation effect is lacking as the whole concept builds on just-in-time deliveries that must be planned for and coordinated accordingly (cf. Sundquist, et al., 2017; Lindén and Josephson, 2013; 42

5. Results Ekeskär and Rudberg, 2016). A big drawback seen in papers 3 and 4 is that when this new node is added, delivery times are prolonged as the deliveries have to go through the new node where materials are received, handled, re-loaded, and then delivered to site. Again, this demands more and better planning of material flows (cf. Ekeskär and Rudberg, 2016; Sundquist, et al., 2017; Thunberg and Fredriksson, 2018; Thunberg and Persson, 2014). Thus, one of the great effects of CLS’s is that construction companies, i.e. contractors and installation firms, have to start planning their material deliveries more carefully. In the long run this leads to better control of material deliveries. When it comes to the cost aspects, adding these CLS’s will come with a cost that someone eventually will have to pay for. In paper 3, the costs that were affected by the CLS were identified, and the major change in cost structure for contractors were the cost of the terminal and its warehousing function (cf. Zeng and Rossetti, 2003; Shakantu, et al., 2003; Engblom, et al., 2012; Stock and Lambert, 2001). However, there were indications that the cost for transports could actually be lowered as instead of multiple vehicles arriving to site, one consolidated delivery could take care of the last leg of the journey (see Table 4) (Ying, et al., 2014; Vidalakis, et al., 2011; Vidalakis, et al., 2013). On site, this can reduce the cost of non-productive time as deliveries are coordinated and consolidated, meaning that the craftsmen will not be interrupted as often to receive materials as in the traditional setup (cf. Ekeskär and Rudberg, 2016; Lindén and Josephson, 2013). However, the costs of implementing and utilizing CLS’s are still a source of worry for many construction companies as the logistics costs are to a large extent intangible (Ying, et al., 2014; Fang and Ng, 2011). Paper 4 provides an initial cost modelling effort through activity-based costing (see Table 5, Figure 18), and from this it was shown that there is a way to take control of the costs of CLS’s. Identifying the cost drivers allow construction companies the chance of seeing where costs occur, and to plan for the logistics costs already when planning the construction project (Vasiliauskas and Jakubauskas, 2007; LaLonde and Pohlen, 1996; Lin, et al., 2001). To summarize; • • • • •

A terminal-based CLS allows for a consolidation effect but also for storage of materials. However, terminal-based CLS’s also leads to prolonged delivery times due to the rerouting of deliveries through the terminal. CLS’s forces construction companies, i.e. contractors and installation firms, to plan their material deliveries more carefully, leading to better control of material deliveries. Adding a CLS into the construction supply chain will add costs for administration, material handling, and planning. One way of identifying the CLS costs is through ABC modelling of the material flow when utilizing CLS’s. This can help the construction companies take control of costs and more importantly, plan for the costs of logistics in construction projects.

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Construction logistics solutions in urban areas Information flows Material flows

Contractor

(> 5 m3) < 5 m3

Supplier

Transport to CLC >5m

CLC operations

CLC

Waste and returns

Transport from CLC

Construction site

3

Direct transport Planning

Transport

Warehousing

Transport

Planning

Picking

Piloting

Receiving

Receiving

Packing

Quality

Handling

Labelling

Registration

Relocation

Handling

Storing

Storage

Loading

Relocation

Announcing

Planning Picking Sequencing Loading Announcing Handling

Figure 18 - ABC breakdown of utilizing a CLC

5.2 Discussing the purpose The purpose of this thesis is to explore how construction logistics solutions can be used as a means to coordinate material flows to ensure efficient construction and reduce disturbances on the urban transport system. This thesis’ contextual considerations are the construction industry context as well as the urban environment and transport system. As noted previously, goods transports and logistics in the urban transport system has been treated as a problem for the logistics industry to solve (Ballantyne, et al., 2013). By introducing CLS’s, the construction industry and cities are taking a greater responsibility for the impact of these deliveries than before. However, when introducing a CLS in an urban construction or development project, it is inevitably going to affect the urban transport system (cf. Carlsson and Janné, 2012; Dablanc, 2007; Russo and Comi, 2010; Caldwell, et al., 2009). The urban transport system today needs to cater to public and private transport, goods deliveries, and of course construction material flows (cf. Carlsson and Janné, 2012; Dablanc, 2007; Russo and Comi, 2010). Construction in urban areas can disrupt the balance of the urban transport system both through the actual construction site, but also through the construction material flows. This can lead to disturbances and unnecessary friction with residents and businesses, i.e. third 44

5. Results parties, in that the risk for congestion, noise, pollution and accidents increase (cf. Anderson, et al., 2005; Behrends, et al., 2008; Bretzke, 2013; Dablanc, 2007, 2008). The goal must thus be to allow everyday urban life to continue in an as normal way as possible, as well as ensuring that construction materials reach its destination in a satisfactory way. In paper 2 it was found that one of the main benefits experienced was the coordination of deliveries and stakeholders connected to the CLS. By employing a CLS in the urban transport system, third-party disturbances from construction material deliveries can be reduced as the coordination and possible consolidation of material flows can reduce the number of delivery vehicles going to site (cf. Anderson, et al., 2005; Behrends, et al., 2008; Bretzke, 2013; Dablanc, 2007, 2008). The consolidation effect of the CLS in paper 2 was estimated to be some 40-60 per cent of the deliveries of traditional construction projects. This implies that the reduction in number of delivery vehicles should also be noted in the urban transport system. However! This is true, provided that the context of the urban environment has been taken into consideration when planning for and designing the CLS (cf. Lundesjo, 2010, 2011). As was found in paper 2, the location of the CLS affects the outcome of the solution. If a terminal-based CLS is located next to the construction site, the consolidation effect may to some extent be lost for the urban transport system as delivery vehicles still have to travel to the CLS. If it is located further away from the construction site, chances are that deliveries to the CLS can be routed away from the city, thus adding to the reduction of stress put on the urban transport system. Whether it is a consolidated delivery, or a directly routed just-in-time delivery is in a coordinative sense of less importance; both types have to be planned as to allow for materials to be at site when needed (cf. Ekeskär and Rudberg, 2016; Sundquist, et al., 2017; Thunberg and Fredriksson, 2018). This, however, also implies that the recipients of the deliveries have to plan material deliveries, i.e. their procurement, in advance as adding a new node in the supply chain will lead to prolonged delivery times (cf. Thunberg and Fredriksson, 2018; Thunberg and Persson, 2014). Paper 2 and 3 find however, that if setup correctly, the utilization of CLS’s can reduce the number of interruptions for craftsmen who have to receive material deliveries as part of their work tasks (cf. Ekeskär and Rudberg, 2016; Sundquist, et al., 2017). This can in a wider perspective also lead to better time keeping in construction projects (cf. Ekeskär and Rudberg, 2016; Sundquist, et al., 2017). When designing the CLS, the industry context with temporary supply chains with many individual stakeholders (Dubois and Gadde, 2002; Karrbom Gustavsson and Hallin, 2015; London and Kenley, 2001; Segerstedt and Olofsson, 2010) must also be taken into consideration. For many of the stakeholders in the construction supply chain, the use of a CLS is something novel that they are unfamiliar with. As seen in papers 1 and 2, if the CLS is not properly introduced and explained early on in the construction project, adding a new logistics practice into the supply chain can increase the uncertainty and apprehension of different stakeholders. Here it is also important to consider the different interorganizational couplings of the construction industry (Dubois and Gadde, 2002). It is not necessarily so that the parent company level is the correct level to communicate the CLS and its corresponding governance strategy to (Dubois and Gadde, 2002). To some extent,

45

Construction logistics solutions in urban areas it is the project level that holds the greater power in the company-project relationship and it is the project that will be subjected to the CLS. As papers 2 and 3 highlight, it is of great importance that the initiator of the CLS takes the lead and creates an environment where all users of the solution are striving towards the same goal (Mentzer, et al., 2001). Thus, when designing the CLS, it is important to involve representatives from the project level to solidify the understanding from those stakeholders who will utilize the CLS on an operative level (Boissinot and Paché, 2011; Caldwell, et al., 2009). This would also allow the initiator to take the needs of the specific projects into consideration. The CLS must be associated with some sort of control mechanisms in order to align the practices of the different users (Caldwell, et al., 2009). In the case of CLS’s, formal control mechanisms are needed, stipulating the utilization of the CLS in contractual agreements. Here it is vital that the initiating stakeholder clearly states what the goal of the CLS is and how the associated governance strategy will help in achieving this goal (Boissinot and Paché, 2011; Caldwell, et al., 2009). As a summary, the research in this thesis has shown that; •

•

•

•

•

CLS’s have a huge role to play in the coordination of different construction stakeholders. This new node will “force” stakeholders to address coordination issues to ensure efficient material deliveries. It is however of great importance that the initiator of the solution creates understanding amongst stakeholders so that all stakeholders strive towards the same goal. This will take an attitude adjustment towards more collaboration in the supply chain. By introducing a CLS into the construction supply chain, the initiator adds a new node that the stakeholders have to take into consideration when planning for construction projects or material flows. This will to some extent prolong the material delivery planning horizon for the contractors as a new node will add to the delivery time. Urban construction affects the everyday urban life both through the construction site, and the material flows. Adding a CLS can reduce unnecessary impact on other stakeholders in the urban transport system in that coordinated material flows can lead to a reduction in the amount of material delivery vehicles that travels to site. When designing the CLS and the corresponding governance strategy, the initiator must take the construction industry context into consideration. The temporary nature of the construction supply chain means that the initiator must strive to create a stable solution that takes different stakeholder needs into consideration as they enter the supply chain. The initiator must make sure to set clear regulations for the CLS early on to reduce apprehensiveness from the users of the CLS. If users are consulted on the function, they are more likely to be more accepting of the solution.

46

6. Contribution and future research This final chapter presents the thesis’ scientific and practical contributions, as well as suggestions for future research.

6.1 Contribution The four papers in this compilation thesis together make up the conclusions and contributions of the thesis. This research has been of an explorative nature in that it investigates CLS’s in urban areas. However, this thesis is far from all-encompassing when it comes to CLS’s in urban areas. The research presented in this thesis do provide insights into how CLS’s can be used to coordinate construction stakeholders and material flows to construction sites and govern urban transport flows. It also provides some insight into interorganizational considerations to take when initiating these CLS’s. The main contribution of this thesis lies in the exploration of how dedicated CLS’s can be used as a means to coordinate material flows to ensure efficient construction and reduce disturbances on the urban transport system. This study has shown that the use of CLS’s will “force” stakeholders to address coordination issues to ensure efficient material deliveries. As such, the main coordinative effect resides in the governance strategy and mechanisms that are connected to the CLS. However, as CLS’s are a rare phenomenon in construction, the contribution of this thesis to the governance of CLS’s should be seen as a first step towards creating a wider understanding of how, why and through what measures the CLS governance should be developed. This thesis shows that if the regulations set for the CLS makes it difficult to utilize the CLS, chances are that some stakeholders will try to bypass the rules. Here it is vital that the initiating stakeholder clearly states what the aim of the CLS is and creates an environment in which all stakeholders strive towards the same goal. This thesis further contributes by highlighting what the effects of CLS’s are on material flows and logistics costs. As discussed in chapter 5.1, introducing a CLS can give a multitude of benefits such as better control of material flows and coordination, as well as prerequisites for a more collaborative construction environment. With a terminal-based CLS, the main benefits lie in the consolidation effect and the opportunity of storing materials for later call-offs, giving better control of how and when materials are delivered to site. The checkpoint solution lacks these benefits but provides the coordinating effect of the how and why as it is based on just-in-time deliveries. The thesis also discusses some drawbacks of CLS’s in that they demand more planning, i.e. administrative time. The major drawback found however, is that of the prolonged delivery time in the terminal-based CLS case. Adding a compulsory node for materials to pass through will add to the total delivery

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Construction logistics solutions in urban areas time. Here the thesis contributes by suggesting that CLS users must adapt to this situation and start planning their material flows with longer planning horizons. Furthermore, the research contributes by investigating how to allocate costs of CLS’s and make them tangible. By utilizing a well-known technique, i.e. activity-based costing, the research adds to the applicability of ABC, as well as opening up opportunities for further studies of the identified CLS cost components. The research presented in the thesis suggests that utilizing CLS’s in reality divides the material delivery process into four subprocess and provides an initial ABC modelling effort of the four identified sub-processes (see Table 5 and Figure 18). This thesis also shows through the studied cases that the contribution of a CLS to the overall cost does not necessarily have to be that big. When developing or implementing a CLS however, the cost should be discussed in conjunction with the potential benefits of the solution and a plan for offsetting the added costs of CLS’s against the potential benefits needs to be developed. Finally, the research in this thesis finds that the utilization of a CLS can reduce the negative impact from construction material flows on the urban transport system through the coordination effects that arise. This is, however, under the prerequisite that the solution is designed with this in mind and takes the urban transport system context into consideration. If a CLS is located next to the development area or construction site, there is a risk that the sought-after effect of reducing disturbances on the urban transport system is lost. The coordination within the construction project or development area may still occur, but as material deliveries still pass through the city to get to the CLS, the sought-after benefits are to some extent lost. The governance strategy connected to the CLS should in these cases also specify which routes are unsuitable to use. This again place demands on collaboration amongst municipal administrations, developers, contractors, and CLS operators in order to ensure that the disturbances to the urban transport system are reduced.

6.2 Future research This licentiate thesis is part of doctoral research project focusing on construction logistics solutions and their role in governing and coordinating material flows in urban development projects. Being primarily based on single case study research, this thesis does not offer an all-encompassing view of CLS’s. It does however, provide interesting insights into how CLS’s can affect the urban transport system and the material flows to construction sites. As such, this thesis is to some extent a way to draw up directions for the future of this research project. Listed below are suggestions for future research. Some of these suggestions will be carried out within the continuation of the doctoral project, whereas some suggestions are left to other researchers to address. •

Currently, there are question marks regarding who the initiating party of CLS’s should be. In this research, examples are given on both municipality and construction company initiated CLS’s. Both examples have had similar goals and results, but are these solutions developed in a similar vein as this is the most common way of doing it? As is discussed in chapter 5.1, different stakeholders have different interests and goals with 48

6. Contribution and future research

•

•

•

•

their operations in connection to the CLS. Thus, it would be of interest to investigate how different construction industry stakeholders can have varying goals with a CLS and how the goals affect the CLS being developed. It would also be of interest to look into what stakeholder should have the operative responsibility for running a CLS. A framework for how CLS’s are developed could be a good outcome. Developing a CLS is only the start, it also has to be implemented. How can construction industry stakeholders come together with a common vision for the CLS? This research should include identification of important stakeholders and suggest how they can be brought together early on in the process as it has been shown in this thesis that the early involvement has been lacking. What incentives are needed in order to bring stakeholders together? This research direction should also look into what governance measures are needed. How can the governance strategy take into consideration that different contractors have different needs during different construction phases? Without rules and regulations, the CLS may not achieve the coordination effect needed. What type of inter-organizational relationships and/or agreements are needed? Another suggestion is to look at the more technical aspects of introducing a CLS. What different types of CLS’s are there? Are all types of CLS’s suitable for all construction contexts? What different effects will different CLS’s bring for the construction industry as well as the surrounding society? This research direction should look deeper into the effect that different CLS’s have on material flows. This thesis primarily discusses CLC’s and as such, the conclusions regarding the prolonged planning horizons, added costs, and material control found in chapter 5.1 and 5.2 are strongly linked to terminalbased solutions. Are the effects similar for other types of CLS’s? Another important aspect of CLS’s that needs to be developed further is the effect that construction material deliveries have on the urban transport system. In this thesis, the urban transport system has been treated as a contextual factor, but it is important to dig deeper into this context and investigate how material delivery transports affect other urban transports. One proposal is to look into traffic-flow modelling to investigate the effect that CLS’s and their location has on urban traffic. This research project has taken four different stakeholder perspectives into consideration; contractors, developers, municipalities, and CLS operators. Future research should take other stakeholder perspectives into considerations as well. Some suggestions are construction material suppliers, transporters, and residents. This would create a wider understanding for how CLS’s affect the urban environment.

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Paper 1

Supply chain management, logistics, and third-party logistics in construction – A literature review Mats Janné Working paper

Supply Chain Management, Logistics and Third-party Logistics in Construction – A Literature Review Mats Janné Dep. of Science and Technology, Linköping University, Norrköping, Sweden E-mail: [email protected] Tel: +46-(0)11-36 32 92

Abstract

1. Introduction

The construction industry has often been described as suffering from inefficiencies in project delivery processes, materials management issues, and poor logistics. Since the mid 1990’s, the predominant solution to solve these issues has been to advocate supply chain management (SCM) and construction logistics initiatives. Lately, third-party logistics (TPL) has been introduced as a means to reduce some of the construction logistics issues. However, the potential efficiency gains that SCM, logistics and TPL can bring, are not yet fully realised. This article aims to investigate how SCM, logistics, and TPL has been utilized in the construction industry, and why they have not reached their full potential. This is done through a systematic literature review. A total of 142 articles were identified, synthesised and analysed to highlight what the current discourse is, and to show a way forward to reach further in implementing SCM, logistics and TPL in construction. This review highlights the importance of context, and that the way forward in adopting SCM is through knowledge exchange and working more with logistics and TPL. By introducing these concepts and working incrementally to improve logistics operations, the construction industry can increase awareness and supply chain orientation. Keywords: construction logistics; supply chain management; third-party logistics; literature review; content analysis

During the 1990’s and early 2000’s, the construction industry’s need to increase efficiencies and decrease build-times were highlighted in numerous reports and research articles (cf. Egan, 1998; Josephson and Saukkoriipi, 2007; Strategic Forum, 2002; Nicolini, et al., 2001). Part of the criticism against the construction industry is based on issues related to material flows, cost performance, and build-time overruns (cf. Fulford and Standing, 2014; Josephson and Saukkoriipi, 2007). Vrijhoef and Koskela (2000) noted for instance that construction costs were increasing at the same time as productivity was decreasing. One solution proposed to combat the inefficiencies of the construction industry was supply chain management (SCM) (Egan, 1998; Josephson and Saukkoriipi, 2007; Strategic Forum, 2002). The aim of SCM is to bring together different supply chain actors in order to enhance cooperation and communication, thus reducing material flow and planning inefficiencies (Mentzer, et al., 2001). SCM has however, not had quite the impact on the construction industry that those advocating it would have hoped (cf. Agapiou, et al., 1998a; Dainty, et al., 2001b; Vrijhoef and Koskela, 2000). Instead of focusing on how to increase productivity through collaboration between companies, the discourse often shifts towards increasing project efficiency by reducing costs, primarily 1

logistics and purchasing costs (cf. Abduh, et al., 2012; Sobotka, 2000). Other studies focus on performance measures and performance improvement of existing logistics setups (cf. McCord, et al., 2015; Russell, et al., 2014). Lately, the interest for third-party logistics (TPL) to manage construction material flows has also increased (cf. Ekeskär and Rudberg, 2016; Lindén and Josephson, 2013). Research is however, lagging behind in this field. Previous literature reviews encountered in this study have all focused on either defining SCM or logistics in construction (cf. Behera, et al., 2015; Prakash and Mohanty, 2015), or on specific issues related to SCM and logistics in construction such as reverse logistics (cf. Hosseini, et al., 2014), sustainability (cf. Mokhlesian and Holmén, 2012; Ofori, 2000), or economic logic of the industry (cf. Bygballe, et al., 2013; Dubois and Gadde, 2002; London and Kenley, 2001). One review (Fernie, et al., 2006) challenges the change movement based on contextual considerations, but focus solely on best practices and SCM. In fact, none of the reviews has taken a holistic view of the entire field of SCM and logistics in construction and no review has focused on TPL. SCM is often discussed on a higher, more overarching level whereas logistics and

TPL often goes into more details. Combining these fields can thus give further insights into the state of SCM, logistics and TPL in construction and give new understanding of why the full potential of the concepts are not yet reached. The aim of this paper is to provide such an insight through a systematic literature review and by answering the following research questions: RQ1: How has research on SCM, logistics and TPL in the construction industry evolved over time? RQ2: How has SCM, logistics, and TPL been utilized in the construction industry? RQ3: Why has the adoption of SCM, logistics, and TPL not reached its full potential in construction? This paper also aims to highlight how to reach further in the adoption of SCM, logistics and TPL in construction by answering the following research question: RQ4: What is needed in order for the construction industry to reach further in adopting SCM, logistics, and TPL? 2. Terminology This section defines SCM, logistics and TPL and how they relate to each other in this study (see Figure 1).

Supply Chain Management Logistics Thirdparty logistics Figure 1 - How SCM, logistics, and TPL related to each other

2

contemporary scholars also highlight in their works, adding that it needs to be a contractually stipulated agreement between the buyer and TPL provider (cf. Maloni and Carter, 2006; Marasco, 2008; Selviaridis and Spring, 2007).

2.1 Supply chain management “Supply chain management is the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole.” (Mentzer, et al., 2001) From this definition, one can deduce that a major aspect of SCM is the relationship between different supply chain actors to increase performance throughout the whole supply chain.

3. Methodology

2.3 Third-party logistics

This review has been conducted through a systematic approach and by performing content evaluation and synthesis of the findings (Seuring and Gold, 2012; Seuring and Müller, 2008). Normally a systematic review is conducted by two or more researchers, and as such, this review cannot claim to be fully systematic as it is conducted by a sole author. In order to provide as much rigor as possible, this review has followed the steps of systematic reviews outlined by, amongst others, Seuring and Müller (2008) and Evangelista and Durst (2015). Classification of articles has been made, notes have been taken for each article read, and the author has discussed any unclear statements with colleagues and senior researchers as well as presenting a conference version of the article. This continuous process and feedback received after the conference resulted in a major revision of the literature review. The methodology used in the review process was adapted from the frameworks of Seuring and Müller (2008) and Evangelista and Durst (2015), and comprised the following four steps;

“Third-party logistics offers multiple, bundled, value-adding services to customer companies over a contractually established time-period.” (cf. Maloni and Carter, 2006; Marasco, 2008; Selviaridis and Spring, 2007) Selviaridis and Spring (2007) argue that TPL needs to offer more services than just transport or warehousing These characteristics are something that many

1. Material collection: A search strategy was designed and material was retrieved in accordance with the strategy’s inclusion and exclusion criteria (Evangelista and Durst, 2015). The unit of analysis (the single article) was defined and a collection of articles formed the output (Evangelista and Durst, 2015; Seuring and Müller, 2008). The

2.2 Logistics in construction “Logistics is the process of strategically managing the procurement, movement and storage of materials, parts and finished inventory (and the related information flows) through the organisation and its marketing channels in such a way that current and future profitability are maximised through the cost-effective fulfilment of orders” (Christopher, 2011) Logistics management can, based on this definition, be considered as a part of SCM, but on an operative level. In a construction context, logistics can be said to deal with supplying the right materials and machinery to the correct customer and construction site to meet customers’ requirements.

3

material collection process is further explained below. 2. Category selection: Structural dimensions and related analytic categories were selected (Evangelista and Durst, 2015; Seuring and Müller, 2008). These analytic categories were then applied as a means to structure the material and to help answer the research questions. The category selection process is further explained below. 3. Descriptive analysis: The material collected has been analysed from formal aspects such as distribution of articles over time, methodology, and categories within the three fields of SCM, logistics and TPL in construction (Evangelista and Durst, 2015; Seuring and Müller, 2008). This step was essential in answering RQ1. 4. Material analysis: The material was analysed in an inductive manner within the topical categories identified in step 2 (Evangelista and Durst, 2015; Seuring and Müller, 2008). The articles were read thoroughly, important passages were underlined, and notes were taken with the purpose of extracting the important findings from each of the articles in the sample. After the articles had been read through, short summaries of the articles were written. These summaries acted as memos and provided valuable input to the material analysis. As the results of the review was assembled, the findings from the different ingoing categories were grouped together and a descriptive representation of SCM, logistics, and TPL in construction took form. This type of synthesis can be likened to synthesis by interpretation described by Rousseau, et al. (2008:496). The goal of this type of synthesis is to translate key interpretations from one study to another (Rousseau, et al.,

2008:496), and as such it was deemed as the most appropriate form of synthesis for this literature review. The purpose of this step was to identify relevant issues to be able to answer RQ2, RQ3, and RQ4. 3.1 Material collection Literature searches were conducted in the Emerald Insight (www.emeraldinsight.com) and SCOPUS (www.scopus.com) databases using combinations of the keywords construction, supply chain management, logistics, and third-party logistics in titles, abstracts and keywords. Thirdparty logistics could have been part of the logistics category, especially as searches containing third-party logistics rendered several hits that had little or nothing to do with TPL, but rather with logistics. As a current trend has been to outsource construction logistics activities to be performed in a more efficient way by TPL providers (cf. Ekeskär and Rudberg, 2016; Lindén and Josephson, 2013), it was however considered important to let TPL stand on its own. The inclusion and exclusion criteria were set to include only published, peerreviewed scientific journal articles, allowing however for books, conference articles and proceedings to be used for motivating the research. The searches were conducted in November and December 2015, allowing for articles published early in 2016 to be included. No other delimitations were set regarding time-period of publication. In total, the described searches yielded 3230 published journal articles. Each abstract was read to assess whether the article had any bearing on this literature review. Based on the abstracts, 494 of the articles were selected for further evaluation and coding. A more careful read-through of abstracts, introductions and conclusions led to the final selection of 142 articles that were focusing on 4

SCM, logistics, or TPL in construction setting (see Table 1).

the

Table 1 - Material collection and categorisation Category Papers Authors Supply chain 85 Agapiou, et al. (1998b); Akintoye, et al. (2000); Aloini, et al. (2012); management Arantes, et al. (2015); Bankvall, et al. (2010); Barker and Naim (2008); Behera, et al. (2015); Bildsten (2014); Blaževska-Stoilkovska, et al. (2015); Briscoe, et al. (2001); Briscoe, et al. (2004); Bygballe, et al. (2013); Bygballe and Jahre (2009); Bygballe, et al. (2010); Cheng, et al. (2010); Childerhouse, et al. (2003); Dainty, et al. (2001a); Dainty and Brooke (2004); Dainty, et al. (2001b); Davis (2008); Donato, et al. (2015); Doran and Giannakis (2011); Dubois and Gadde (2000; 2002); Edum-Fotwe, et al. (2001); Errasti, et al. (2009); Fernie, et al. (2006); Fernie and Tennant (2013); Fernie and Thorpe (2007); Fulford and Standing (2014); Gosling, et al. (2013); Gosling, et al. (2015a); Gosling, et al. (2015b); Green, et al. (2005); Hadaya and Pellerin (2010); Hatmoko and Scott (2010); Hong-Minh, et al. (2001); Isatto, et al. (2015); Jeong, et al. (2006); Jeong, et al. (2013); Karim, et al. (2006); Ke, et al. (2015); Khalfan, et al. (2010); Khalfan and Maqsood (2012); Khalfan, et al. (2014); Khalfan, et al. (2008); Kim, et al. (2016); Kristiansen, et al. (2005); Kumaraswamy, et al. (2000); Lam and Lai (2007); Lessing, et al. (2015); Ling, et al. (2014); London and Kenley (2001); Lönngren, et al. (2010); McAdam, et al. (2011); Meng (2012; 2013); Min and Bjornsson (2008); Mohamed (2003); Mokhlesian (2014); Mokhlesian and Holmén (2012); Naim and Barlow (2003); Nicolini, et al. (2001); Ofori (2000); Pala, et al. (2014); Papadonikolaki, et al. (2015); Pero, et al. (2015); Prakash and Mohanty (2015); Roy, et al. (2003); Saad, et al. (2002); Sandberg and Bildsten (2011); Setijono (2010); Smyth (2005); Tennant and Fernie (2013); Tookey, et al. (2005); Van Lith, et al. (2015); Voordijk, et al. (2006); Vrijhoef and Koskela (2000); Xue, et al. (2005); Yeo and Ning (2002); Ying, et al. (2015); Zou and Couani (2012); Zulhumadi, et al. (2013); Zuo, et al. (2009) Construction 53 Abduh, et al. (2012); Agapiou, et al. (1998a); Aguirre, et al. (2010); logistics Aidonis, et al. (2008); Caron, et al. (1998); Chan, et al. (1999); Chileshe, et al. (2016a); Chileshe, et al. (2015); Chileshe, et al. (2016b); Chinda and Ammarapala (2016); Fadiya, et al. (2015); Fang and Ng (2011); Fernández-Solís, et al. (2015); Gajendran, et al. (2013); Guffond and Leconte (2000); Halman and Voordijk (2012); Hosseini, et al. (2014); Hosseini, et al. (2015); Ison, et al. (2004); Kim, et al. (2011); Liu, et al. (2015); McCord, et al. (2015); Navon and Berkovich (2005); Ng, et al. (2008); Ng, et al. (2009); Perttula, et al. (2006); Pheng and Hui (1999); Pheng and Shang (2011); Polat, et al. (2006); Polat, et al. (2007); Russell, et al. (2014); Said and El-Rayes (2011); Shakantu, et al. (2008); Shakantu, et al. (2003); Sobotka (2000); Sullivan and Harris (1986); Tanskanen, et al. (2015); Thunberg and Persson (2014); Tischer, et al. (2014); Titus and Bröchner (2005); Tserng, et al. (2006); Vidalakis and Sommerville (2013); Vidalakis, et al. (2011a); Vidalakis, et al. (2013); Vidalakis, et al. (2011b); Voordijk (1999; 2000); Wan and Kumaraswamy (2009); Wickramatillake, et al. (2007); Xanthopoulos, et al. (2009); Xue, et al. (2011); Ying, et al. (2014); Young, et al. (2011) Third-party 4 de Almada Garcia and Sant'Anna (2015); Huttu and Martinsuo (2015); logistics Lindén and Josephson (2013); Sobotka and Czarnigowska (2005)

5

communications technology (ICT). Within the construction context, a lot of emphasis has been put on the construction industry to implement SCM as a package solution, giving the subcategory SCM principles (SCM). Finally, using modularisation and industrial house-building (IHB) is also highlighted in literature as a means to make supply chains more efficient. Next, logistics was classified into subcategories. According to the definition (Christopher, 2011), logistics is the part of supply chain management that deals with efficient and effective material flows and storage of goods, services and related information. From this, four of the subcategories were derived; procurement, logistics management (LM), performance, and information and communication technology (ICT). Adding to this categorization, the Council of Supply Chain Management Professionals (2016) suggest that logistics also encompasses the management of reverse flows, rendering a fifth category; reverse logistics (RL). Finally, TPL was categorized. Based on the definition of TPL proposed earlier and the initial review of abstracts, the categories performance, and project management (PM) were derived. The final subcategories for all three main categories are highlighted in Table 2.

3.2 Category selection To allow for a deeper analysis of the selected articles, further classification of the material was needed. Seuring and Gold (2012) highlights the necessity of defining the categories based on theory, as this helps in ensuring the validity of the review. Initially, theory-based classifications were made to have a baseline structure for the themes within this review. As the review progressed, some of these categories have been revised to better suit the material studied. This deductive-inductive approach allowed for some flexibility while still sticking to a theory-based classification. This iterative process can, according to Seuring and Gold (2012), enhance the validity of the study further as the analysis is based on existing theory while still being adjusted to the specific sample. As this review has three main categories (SCM, construction logistics, and TPL), the subcategories were derived from these themes. Based on the definition of SCM (Mentzer, et al., 2001), it is evident that a significant part of SCM is relationship management, and as such this is one of the categories. Relationship management within the supply chain also means that communication is important and the next category in SCM is therefore information and

Main category Supply chain management Construction logistics Third-party logistics

Table 2 - Category selection Subcategories SCM principles (SCM), modularisation and industrial house-building (IHB), information and communications technology (ICT), relationship management (RM) Logistics management (LM), information and communication technology (ICT), performance, procurement, reverse logistics (RL) Performance, project management (PM)

6

Research on construction logistics got off to a slower, albeit earlier start. The trend is similar to that of SCM in construction in that an increase in publications can be seen in the early 2000’s, but overall the publication increase has been slower than that of SCM. The overall trend however, seems to be increasing, as it is for SCM in construction. The use of TPL in construction is a new phenomenon which is also evident in the figure. The sample only contained four articles on TPL in construction, and as is seen in Figure 2, the first of these articles was published in 2005, seven years after Egan (1998) released Rethinking construction. No clear conclusion regarding TPL can be drawn based on the sample, more than that there may be a need for further research on TPL in the construction industry context.

4. Descriptive analysis The interest in research on logistics and SCM in the construction industry came from the governmental reports of the mid 1990’s and early 2000’s (cf. Egan, 1998; Strandberg and Josephson, 2005; Strategic Forum, 2002), highlighting the need for the industry to move towards new working practices. As such, it can be expected that research in the area would take off in early 2000’s. In Figure 2 below, the number of articles per year and main category is visualized and these metrics support this notion (note: the figure only shows number of articles up until 2015 to give a fair representation of research trends). The figure shows a rapid increase in research on SCM in construction in the early 2000’s, only to have a temporary decline and then gain momentum again. The trend is increasing, showing that interest in researching SCM in construction is high.

Number of articles per year and main category 14 12 10 8

Supply Chain Management Construction logistics

6

Third-party logistics

4 2

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1986

0

Figure 2 - The distribution of articles per year and main category

To investigate what kind of impact SCM, logistics, and TPL in construction has on the research community, an analysis of what journals publishing the most number of articles was performed. In Table 3, the ten largest journals are presented, along with the number of articles published therein. Out of the 142 articles in the review sample, 86 are

published in these ten journals. In total, 53 journals are represented in the sample, meaning that 60 per cent of the articles are published in 18 per cent of the journals. From the metrics in Table 3, it is evident that research on SCM and logistics in construction has reached beyond the borders of construction management 7

(CM); the largest contributing journal is Construction Management and Economics (CME), but the next biggest journal is Supply Chain Management: An International Journal (SCM:IJ). Other prominent non-CM journals such as Journal of Purchasing & Supply Management (JPSM) and International Journal of Operations and Production Management (IJOPM) are represented.

This suggests that research on managing construction logistics and construction supply chains reach a broad audience, and that there is an interest in construction related issues also outside of the CM community. However, 60 of the 86 articles in Table 3 are published in construction management journals, showing that the interest is strongest within the CM community.

Table 3 - Number of articles in the ten most represented journals Journal Number of articles Construction Management and Economics (CME) 23 Supply Chain Management: An International Journal (SCM:IJ) 11 Engineering, Construction and Architectural Management (ECAM) 11 Journal of Purchasing & Supply Management (JPSM) 8 Journal of Construction Engineering and Management (JCEM) 8 Construction Innovation (CI) 7 International Journal of Project Management (IJPM) 6 Journal of Engineering, Design and Technology (JEDT) 5 International Journal of Operations and Production Management (IJOPM) 4 Production Planning and Control (PPC) 3

Methodology wise, there is a wide spread, ranging from theory-based literature reviews to modelling and empirical studies in the form of case studies, action research, focus group studies, survey studies, and interview studies (see Table 4). Eleven of the modelling studies are also empirically

SCM Log. TPL Total:

Action research 3 3

Case study 38 24 3 65

based. Case study research is by far the most common research method in investigating SCM, logistics and TPL in construction. Case studies alone comprise 46 per cent of the studies in this sample, with empirical studies in total comprising 74 per cent of the studies.

Table 4 - Methodological approaches Focus Grounded Interview Literature group theory study review 1 3 18 1 1 6 1

1

4

8

24

Modelling

Survey

6 17 1 24

16 4 20

2013). Barker and Naim (2008) highlight that if change is to be accomplished, SCM must be embraced on a managerial level and diffused from the top down. Ofori (2000) however, highlights the difficulty in adopting new management paradigms, calling for gradual implementation of SCM. Nicolini, et al. (2001) on the other hand call for more radical changes, advocating collaborative clustering as a good way to reach SCM. Without taking the context of temporary project organisations (Dubois and Gadde, 2002) into consideration, it is understandable that the criticism against the construction industry as slow to adopt SCM has appeared. The problem is that the models adopted are often general (Vrijhoef and Koskela, 2000) but none seem to capture the nature of the construction industry (Bygballe, et al., 2013). As described by Dubois and Gadde (2002), the construction industry is comprised by both loosely and tightly coupled systems. Within the projects, couplings are tight, meaning that organisations and activities are interdependent and affect each other (Dubois and Gadde, 2002). Between projects and central organisations however, the couplings are loose in that the central organisations may not be able to wholly control the projects on more than an overall level (Dubois and Gadde, 2002). This latter structure is often targeted by the change-movement, promoting cooperation and crossorganisational relationships between supply chain stakeholders (cf. Childerhouse, et al., 2003; Davis, 2008; Zulhumadi, et al., 2013). Kristiansen, et al. (2005) highlight that the construction industry has experienced substantial changes through mergers and acquisitions, creating large main contractors, forcing subcontractors and installation companies to position themselves as specialised actors. This is the reason for the construction industry

5. Content analysis In this section, an in-depth analysis of the articles is presented. The analysis is built around the three main themes identified; SCM, construction logistics, and thirdparty logistics. 5.1 SCM in construction 5.1.1 SCM principles Making the case for SCM in construction, researchers often highlight inefficiencies and unwillingness to change as motivation for SCM. The culture and attitude of the construction industry as well as a lack of understanding for SCM is seen as hindering its widespread adoption (cf. Aloini, et al., 2012; Briscoe, et al., 2001; Dainty, et al., 2001a; Dainty, et al., 2001b; Fernie and Tennant, 2013; Khalfan, et al., 2014; Lam and Lai, 2007; Saad, et al., 2002; Smyth, 2005). SCM has been used to great effect in many industries (Akintoye, et al., 2000) and Gosling, et al. (2015b) find that SCM principles can be applied in construction, but that they need to be adapted to fit the industry. One challenge for adopting SCM however, lies in changing the mind-set of the industry (Hong-Minh, et al., 2001). Similarly, Gosling, et al. (2013) conclude that the biggest barrier to integration in the construction supply chain is giving up control. Zuo, et al. (2009) highlight soft values such as stakeholder engagement, communication, and resource and risk management, whereas Zou and Couani (2012) cite lack of information and commitment as barriers to SCM. One way to combat these barriers is to first establish the supply chain and then work to improve it through knowledge sharing (Agapiou, et al., 1998b; Khalfan, et al., 2010; Khalfan and Maqsood, 2012; Mokhlesian, 2014; Tennant and Fernie, 9

being labelled as “fragmented” and why loose and tight couplings are so profound in the industry (Setijono, 2010). It is understandable when seeing this industry structure that voices are raised in favour of more collaborative practices such as SCM. Fernie and Thorpe (2007:327) however, argue that the change-movement has little understanding for construction context when suggesting that the industry adopts long-term strategic network business models, as practitioners generally base their understanding of collaboration on how their organisations position themselves on the market (cf. Fernie and Tennant, 2013; Fernie and Thorpe, 2007; Green, et al., 2005). Fernie and Tennant (2013), Tennant and Fernie (2013), and Ying, et al. (2015) set out to investigate how SCM is diffused in the industry and what it means for practitioners. In broad terms, there is awareness of SCM and practitioners use terms such as “supply chains”, “collaboration”, and “integration” when describing SCM (Fernie and Tennant, 2013; Ying, et al., 2015), implying that the terminology of SCM has reached practitioners. When describing what SCM implies however, practitioners do not necessarily distinguish between SCM and partnering (Fernie and Tennant, 2013:1049; Ying, et al., 2015:526); SCM is primarily perceived as another word for partnering (Fernie and Thorpe, 2007). Neither “long-term relationships”, nor “holistic perspective” is mentioned as important for the practitioners, and “supply chain management”, “supplier management” and “partnering” are used interchangeably, leading researchers to conclude that there is a “non-adoption” of SCM in construction (Fernie and Tennant, 2013; Fernie and Thorpe, 2007; Arantes, et al., 2015; Saad, et al., 2002; Khalfan, et al., 2014; Dainty, et al., 2001a). Fernie, et al. (2006) and Mouritsen, et al. (2003) however, note

that disintegration and adversarial relationships may in fact be a valid way to manage supply chains in certain contexts. One urgent question to be answered is thus whether the industry is culturally prepared to move towards SCM and in that case how (cf. Dainty and Brooke, 2004). 5.1.2 Relationship management Construction projects often suffer from delays due to tendering processes and badly prepared contracts (Prakash and Mohanty, 2015:421). This problem is also mentioned by London and Kenley (2001) as they discuss the pooling of suppliers and subcontractors through category management. Both studies are concerned with the effect that transparency and market interactions have on the relationships between contractors, suppliers and subcontractors (London and Kenley, 2001; Prakash and Mohanty, 2015). Involving different stakeholders early in the process is important (Tookey, et al., 2005), and how relationships are approached will set the tone for projects (Donato, et al., 2015). Hatmoko and Scott (2010) find that some of the risks in construction can be alleviated through the use of subcontractors, so typical for the construction industry whereas Behera, et al. (2015) highlight that this adds complexity to the industry. Prakash and Mohanty (2015) thus advocate construction supply chain specific information systems, and London and Kenley (2001) call for more research on vertical and horizontal integration between firms. Zulhumadi, et al. (2013) investigate how well the industry has accepted customer management, supplier management, relationship development, management leadership and information, all pre-requisites for vertical and horizontal integration of construction partners. An argument against this is that reciprocal interdependencies between activities 10

cannot be managed sequentially, leading to a need to buffer materials and resources on site (Bankvall, et al., 2010). Lönngren, et al. (2010) as well as Dainty, et al. (2001a) highlight that strategic partnerships and alliances can contribute to optimising the logistics and supply chain activities in construction. Gosling, et al. (2015a) find that the stronger a relationship is, the better and less volatile the performance of the supply chain, something also put forth by Meng (2012). Partnering can according to Yeo and Ning (2002) be a good first step towards SCM, moving relationships from a temporary nature to a longertermed practice (Bygballe, et al., 2010). Dubois and Gadde (2002) argue that the construction industry can learn from other industries that have improved operations through strategic partnerships. Kim, et al. (2016) argue that relationships are built on understanding and using stakeholders’ capabilities. This is echoed by Errasti, et al. (2009) who found that value chain analysis can help in developing manufacturing performance, laying the foundation for SCM. Dainty, et al. (2001b), Kim, et al. (2016) and Karim, et al. (2006) further stress that larger stakeholders need to help smaller stakeholders in enhancing capabilities and move towards partnering and SCM. Briscoe, et al. (2004) call for clients to take the lead in integration initiatives to achieve SCM, as do Khalfan, et al. (2008) and Meng (2013). The situation with many specialist firms and a few larger main contractors has led to a situation where adversarial contracts and arms-length relations outweighs management of processes and relationships (Green, et al., 2005; Kristiansen, et al., 2005; Fernie and Thorpe, 2007). The long-term perspective on the other hand, aims at creating tight connections between the stakeholders by building trust and

commitment, thus facilitating good business relationships (Davis, 2008; Fulford and Standing, 2014). Lönngren, et al. (2010) stresses that contractual commitment to long-term strategic alliances are vital in establishing partnering relationships. This is developed further by Ke, et al. (2015) and Khalfan, et al. (2014) who conclude that contractual agreements affect performance and that good governance leads to trust and commitment. Moving from lowest bidder to long-term relationship can thus be a way to add to the SCM maturity within the industry (McAdam, et al., 2011). 5.1.3 Information and communication technology Isatto, et al. (2015) highlight communication and commitment as key drivers in achieving SCM, as does Blaževska-Stoilkovska, et al. (2015) who find that ICT can help in achieving better supply chain communication. This is echoed by amongst others Min and Bjornsson (2008) and Edum-Fotwe, et al. (2001) who stress that information can remove barriers in the supply chain. Bygballe and Jahre (2009) find that the context of the construction industry means that different industry logics have to be considered compared to other industries. From an ICT point-of-view, this structure can be seen as highly problematic as investing in ICT solutions needs long-term dedication and continuous organizations (Cheng, et al., 2010; Papadonikolaki, et al., 2015; Mohamed, 2003). Cheng, et al. (2010:245) for instance, say that supply chain integration within the construction industry is technically challenging due to the high fragmentation of the industry and that the construction supply chain actors seldom have compatible hardware and software capabilities. Different ICT solutions for combatting the noncompatibility amongst construction stakeholders are proposed, such as 11

portal-based internet solutions (Cheng, et al., 2010; Hadaya and Pellerin, 2010), agent-based decision systems for activity coordination (Xue, et al., 2005), and finally BIM as integrative solution (Papadonikolaki, et al., 2015; Van Lith, et al., 2015). Further development is needed before these solutions can act as supply chain integration systems (Cheng, et al., 2010; Papadonikolaki, et al., 2015; Xue, et al., 2005), but ICT systems can bridge the gaps of the industry, thus improving cooperation and coordination (cf. Kumaraswamy, et al., 2000; Ling, et al., 2014; Pala, et al., 2014; Fulford and Standing, 2014).

2015). Stretching the supply chain and blurring the inter-organisational boundaries (Sandberg and Bildsten, 2011) creates a greater need for SCM (Vrijhoef and Koskela, 2000; Roy, et al., 2003). This means that relationships will be of the utmost importance in the IHB supply chain (Doran and Giannakis, 2011; Jeong, et al., 2013) and that these relationships have to be managed differently depending on the degree of industrialisation (Bildsten, 2014). If managed correctly however, IHB and modularity can allow the industry to take further steps towards the visions of Latham (1994) and Egan (1998) (Lessing, et al., 2015).

5.1.4 Modularisation and industrial house-building

5.1.5 Summary

SCM is constantly evolving, and each “state of SCM” has seen responsiveness towards supplier and customer needs as vital for integrated operations (Childerhouse, et al., 2003). Naim and Barlow (2003) argue that combining the best parts of different management strategies can lead to an overall improvement of the industry. Childerhouse, et al. (2003) highlights that the construction industry has not been at the forefront of supply chain integration activities, and Mokhlesian and Holmén (2012) adds to this by stating that changes in supply chain setups can change business models, inevitably affecting supplier relations. One such change to the supply chain setup is modularisation and industrialisation of house-building (IHB) (cf. Bildsten, 2014; Voordijk, et al., 2006; Vrijhoef and Koskela, 2000; Yashiro, 2014). Modularity provides flexibility, allowing contractors to serve various customer needs (Voordijk, et al., 2006) whereas IHB can alleviate some of the on-site problems of traditional housebuilding (Jeong, et al., 2006; Roy, et al., 2003). It is however argued, that the higher the modularity, the less integrated the supply chain becomes (Pero, et al.,

SCM is often seen as the “prescribed remedy” for the construction industry to move away from the prevailing disintegration. This place demands on good relationship management and communication, aspects that may be considered difficult to achieve in the construction industry. In order to reach SCM, the context of temporary organisations and projects have to be acknowledged and managed. One way to move towards SCM could be to move some of the value-adding activities upstream and work with modularisation and IHB. However, this does not necessarily alleviate the industry from the problems with fragmentation and loosely coupled systems, it may even enhance the effects of this disintegration and place even further demands on collaboration. One finding is that SCM is often considered on a very aggregated, almost binary, level where the discussion is either for, or against, SCM. 5.2 Logistics in construction 5.2.1 Logistics management Agapiou, et al. (1998a) highlight that the focus of a logistics solution must be to improve coordination and 12

communication between project stakeholders, and that the solution must be designed from a holistic view. The logistics solution can however be just a small change in working practices, but with the goal of improving the overall construction logistics process (Aguirre, et al., 2010; Gajendran, et al., 2013; Perttula, et al., 2006; Tanskanen, et al., 2015). Navon and Berkovich (2005) highlight that factors affecting the logistical efficiency are either overlooked or inadequately managed. Agapiou, et al. (1998a) and Vidalakis, et al. (2011a), warn that if the holistic view is missing, the solution will not be successful. Most articles in the sample call for action on construction logistics efforts, and Chan, et al. (1999) call for a “construction process re-engineering” (CPR) to come to grips with the costly project delivery process. Commonly, materials have been ordered in bulk and stored on site (cf. Shakantu, et al., 2003). To come to terms with this practice, justin-time (JIT) and just-in-case (JIC) techniques can be applied, reducing tiedup capital on site and improving productivity (Pheng and Hui, 1999; Ng, et al., 2008; Ng, et al., 2009; Polat, et al., 2007). One suggestion brought forth by Tserng, et al. (2006) and Said and ElRayes (2011) is dividing the inventory cost amongst supply chain partners, reducing the overall inventory levels and holding and storage costs. Xue, et al. (2011) mean that with the correct information exchange, storage can be optimised under different inventory policies, thus reducing storage costs. Voordijk (2000) concludes that depending on the value and complexity of the materials, the effect on logistics activities will differ.

based on the lowest possible price (Shakantu, et al., 2003) and not on performance or management skills (cf. Dubois and Gadde, 2002; Kristiansen, et al., 2005). Fadiya, et al. (2015) however, highlight that many construction firms have started to identify the importance of effective materials tracking and management. Unfortunately, they also note that current praxis is still to plan and procure materials management ad-hoc (Fadiya, et al., 2015). Thunberg and Persson (2014) conclude that delivery problems often can be attributed to a lack of specified procedures and poor system support, i.e. systems for tracking delivery performance. Caron, et al. (1998) adds to this by highlighting that deliveries and procurement are influenced by the deadlines for construction activities set during the scheduling phase, yet procurement and deliveries occur much later in the process (Caron, et al., 1998). 5.2.3 Information and communication technology Voordijk (1999) claims that logistics networks cannot exist without good communication tools. Fadiya, et al. (2015) and Wan and Kumaraswamy (2009) highlight that ICT-based tracking systems can increase visibility, thus helping in achieving logistical efficiency. This is also brought forth by Titus and Bröchner (2005) as well as Young, et al. (2011) who argue that the quality, timeliness and costeffectiveness of information has a huge impact on the efficiency of a construction project. Fernández-Solís, et al. (2015) even argue that information drives construction. This information need calls for tighter relationships between supply chain partners, and highlights the importance of planning procurement and storage with the goal of reducing the overall logistics costs (Liu, et al., 2015; Russell, et al., 2014). Guffond and Leconte (2000) draw a

5.2.2 Procurement One goal in the construction industry has been to lower construction costs by choosing subcontractors and suppliers 13

similar conclusion, adding communication as key for efficient logistics.

(Vidalakis, et al., 2011b; Vidalakis, et al., 2013). To make logistics costs visible, an activity-based costing (ABC) approach to setting the costs is proposed (Abduh, et al., 2012; Kim, et al., 2011; Polat, et al., 2006; Sobotka, 2000).

5.2.4 Performance The performance of construction projects is dependent on the collaboration and cooperation between different construction project participants. Sullivan and Harris (1986) calls for more collaboration and integration amongst partners, as a strategy for dealing with performance issues in the industry. Halman and Voordijk (2012) highlight the need to measure the performance of the entire supply chain. This is echoed by McCord, et al. (2015) who note that the interdependence between the construction industry and other industry segments calls for seeking efficiencies and performance improvements across a wider value system, i.e. the supply chain. McCord, et al. (2015) also adds another layer to the debate by acknowledging that some of the performance issues may be due to local conditions and legislation (McCord, et al., 2015:288), something also mentioned by Pheng and Shang (2011) and Ison, et al. (2004). The articles in the sample often come back to the cost of logistics. Fang and Ng (2011) notes that even though the materials cost amounts to approximately 65 per cent of the total construction costs, cost reductions are often sought through targeting logistics activities that are seen as “unnecessary” costs (Fang and Ng, 2011; Polat, et al., 2006; Shakantu, et al., 2003; Sobotka, 2000). In part, this is explained by construction stakeholders being unaware of logistics costs as material costs normally are quoted “as delivery” (Ying, et al., 2014:274). Vidalakis, et al. (2011b) however, highlight that transport costs can amount to as much as 50 per cent of the materials purchase price and that transportation costs can vary over time with dynamic materials demand

5.2.5 Reverse logistics As part of the increased interest for construction logistics, the removal of construction and demolition waste (CDW) has also come into focus, placing further demands on efficient material and information flows (cf. Aidonis, et al., 2008; Chileshe, et al., 2016a; Chileshe, et al., 2015; Chileshe, et al., 2016b; Chinda and Ammarapala, 2016; Hosseini, et al., 2014; Hosseini, et al., 2015; Shakantu, et al., 2008; Tischer, et al., 2014; Xanthopoulos, et al., 2009). Utilizing the same trucks that deliver materials to site for removing CDW, could increase overall fill-rates (Vidalakis and Sommerville, 2013). It does however, call for straightforward governance of the reverse logistics process (Hosseini, et al., 2014) as some CDW cannot be transported by regular vehicles. 5.2.6 Summary Managing the forward and reverse logistics flows call for holistic thinking and systems support, but there are clearly some issues in setting up holistic construction logistics systems. The primary target of these logistics efforts must be efficient materials flows to and from the construction site. This will place demands on information and communication systems as well as performance monitoring systems and routines in order to ensure the best possible conditions and development opportunities. Logistics costs are often targeted, but in doing so, procurement should be based on effective materials flows rather than lowest cost. Unlike the discussion on SCM, logistics research has often been conducted on a more 14

detailed level, considering either performance or costs, reverse logistics, ICT or procurement. This detailed level can solve some specific issues, but the holistic view advocated is sometimes lost in the process.

manage on-site materials handling is offset by the added safety that comes with external materials handlers and the possible productivity increase of having materials available when needed. de Almada Garcia and Sant'Anna (2015) look into using external transport providers as opposed to internal, whereas Sobotka and Czarnigowska (2005) indicate that using TPL providers to manage logistics in construction can lower overall logistics costs.

5.3 Third-party logistics in construction 5.3.1 Performance Coming to terms with all the issues in the construction logistics chain evidently comes with a set of barriers and challenges as highlighted above. One way to manage similar challenges in other industries has been to outsource logistics functions to TPL providers (cf. van Laarhoven, et al., 2000; Maloni and Carter, 2006). Up until recently, this trend has not been as evident in the construction industry. However, outsourcing logistics activities in construction can free up time from craftsmen and site management, and indications are that the interest for TPL in construction is increasing (cf. Huttu and Martinsuo, 2015; Lindén and Josephson, 2013; Vidalakis, et al., 2013). Huttu and Martinsuo (2015) address the “bundled value-adding services” from a material supplier perspective, arguing that some of the value-adding services that are carried out by craftsmen and TPL providers today (e.g. kitting, sequencing, delivery tracking, etc.) could be performed by suppliers at manufacturing plants (Huttu and Martinsuo, 2015). Their study also indicate that there is opportunity for suppliers and TPL providers to establish cooperative relationships to increase their service offerings to contractors (Huttu and Martinsuo, 2015). Other activities cannot be performed anywhere but on site, such as on-site materials handling. Lindén and Josephson (2013) investigate whether the cost of letting a TPL provider

5.3.2 Project management What these articles have in common is that they come to a conclusion that indicates that using TPL can save both cost and time (de Almada Garcia and Sant'Anna, 2015; Huttu and Martinsuo, 2015; Lindén and Josephson, 2013; Sobotka and Czarnigowska, 2005). Lindén and Josephson (2013:103) as well as Sobotka and Czarnigowska (2005:80) however, highlight the importance of seeing to the specific project for which TPL is considered, it cannot be seen as a universal fix. Huttu and Martinsuo (2015) adds to this by identifying that communication within the project regarding the use of TPL and what can be expected, is a pre-requisite for success. 5.3.3 Summary Utilizing TPL in construction is a new phenomenon, but it can help the industry in streamlining construction logistics, saving both cost and time. A TPL provider can contribute with both knowledge and operational logistics and help contractors to become more aware and supply chain oriented. When introducing TPL, it is however important to see to the specific project for which TPL is considered.

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projects. A conclusion to be made here however, is that construction logistics rapidly becomes a complex affair, and that managing the logistics flows call for holistic thinking and systems support as well as communication and knowledge exchange.

6. Concluding discussion 6.1 The evolution of SCM, logistics and TPL in construction research The main contribution of this article is in the extensive investigation of SCM, logistics, and TPL in the construction industry. As such it has provided insight into how these research areas have grown since the reports of Latham (1994) and Egan (1998). The interest in SCM and logistics in construction has increased after these reports, and the trend is still rising. With publications in journals such as CME, SCM:IJ, and IJOPM, it is evident that there is an interest for construction related issues from the research community both within and outside of the construction management realm.

6.3 The potential of adopting SCM, logistics, and TPL in construction Even though the adoption of SCM is debated, there is no shortage of good intentions as to how to move towards more integration amongst construction supply chain stakeholders. One side of the research community favours full adoption of SCM, whereas the other argue that this is not possible due to the contextual conditions of the industry. Regardless of whether context is considered or not, the main aim for both sides is improving the industry’s performance. So why has the adoption of SCM, logistics and TPL not come further? Perhaps the answer can be found if one considers what the adoption of SCM truly is; a structural change of the industry. One of the main points of SCM is to build long-term relationships that seeks to improve overall performance of the supply chain. The construction industry is however typically characterized by temporary supply chains with new stakeholders in each new project (cf. Dainty, et al., 2001a; Fernie and Tennant, 2013). Another possible answer is that SCM has often been discussed on an aggregated level. Comparing SCM research to logistics and TPL research in construction, the latter two are on a more detailed level, giving practitioners clear propositions as how to implement solutions. This is difficult to achieve when proposing a structural change of the industry.

6.2 Utilizing SCM, logistics and TPL in construction There is a great will and need to improve the construction industry’s performance, and the pre-dominant solution has been prescribing SCM. However, as discussed by amongst others Fernie and Tennant (2013), Khalfan, et al. (2014), and Dainty, et al. (2001), there is confusion as to what SCM and logistics entail and how the concepts differ. Practitioners use supply chain vocabulary but are often talking about operational logistics in doing so. This implies that there is some supply chain awareness, but that supply chain maturity is still not widespread in the industry. A big part of the sample in this article has been related to construction logistics. Primarily the discussion turns to the performance of the construction projects and how logistics can be used to improve operations. There seems to be consensus in that the primary target must be efficient material flows to and from the construction site. All in all, the predominant notion is that construction logistics is important, and that it needs to become a natural part of construction 16

challenges of construction has not been taken into consideration. To come to terms with this issue, future research should delve deeper into how SCM principles can be adapted to fit the complex construction industry. Moreover, research should focus on the role of logistics and TPL as enablers for construction to reach a higher level of supply chain maturity and orientation. By working with construction logistics issues, the industry can gradually work towards a more long-term collaborative practice as maturity increases, but the link between logistics and SCM needs to be further developed and explained. In the future, longitudinal studies or action research on incremental implementation of logistics and TPL can help the industry and research community to clarify this link and in the long run establish how adoption of SCM principles should be performed.

6.4 Adopting SCM, logistics, and TPL Accepting new management paradigms is difficult and can either be achieved through gradual or radical adoption. This is exemplified by Nicolini, et al. (2001) who calls for a radical implementation of SCM whereas Ofori (2000) calls for gradual adoption. By working incrementally with the development of construction logistics practices, the industry can move towards more supply chain orientation (cf. Mentzer, et al., 2001). Inter-organizational and industryspecific contextual factors must however be considered when adapting SCM and logistics concepts for construction. Logistics can give a company a competitive edge, which has inspired practitioners and researchers alike to explore how to increase efficiency and performance of traditional construction logistics activities (cf. Agapiou, et al., 1998a; Vidalakis and Sommerville, 2013). Working to develop construction logistics further by introducing e.g. planning systems or working with onsite materials handling can increase logistics maturity and supply chain orientation and make the industry more susceptible to embrace SCM. The key is to ensure that knowledge and information is shared amongst the stakeholders, and this is where TPL can play a part. TPL providers are specialists in logistics and the construction industry can benefit from their logistics knowledge while at the same time share their construction knowledge with TPL providers. Through this exchange, another step towards understanding and accepting SCM can be taken.

Acknowledgments The author would like to thank SBUF, the Development Fund of the Swedish Construction Industry, for financing this research. The author would also like to extend his gratitude to the reviewers of this article, your comments helped in adding to the quality of this article. References Abduh, M., Soemardi, B. W. & Wirahadikusumah, R. D. 2012. Indonesian construction supply chains cost structure and factors: A case study of two projects. Journal of Civil Engineering and Management, 18, 209216. Agapiou, A., Clausen, L. E., Flanagan, R., Norman, G. & Notman, D. 1998a. The role of logistics in the materials flow control process. Construction Management and Economics, 16, 131-137. Agapiou, A., Flanagan, R., Norman, G. & Notman, D. 1998b. The changing role of builders merchants in the construction supply chain. Construction Management and Economics, 16, 351-361.

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Paper 2

Construction logistics solutions in city development projects Mats Janné and Anna Fredriksson Construction Innovation (Under review)

Construction Logistics Solutions in Urban Development Projects Mats Janné Dep. of Science and Technology, Linköping University, Norrköping, Sweden E-mail: [email protected] Tel: +46-(0)11-36 32 92

Anna Fredriksson Dep. of Science and Technology, Linköping University, Norrköping, Sweden E-mail: [email protected] Tel: +46-(0)11-36 33 08 Research implications: In this study, conflicting goals of CLC’s are identified and discussed. It also shows the need of further multi-stakeholder analysis of construction logistics solutions. Practical implications: The experiences from the studied case are developed into practical guidelines to be used in the design of construction logistics solutions in development projects. Originality/value: This study contributes by taking a multi-stakeholder perspective on CLC’s and providing guidelines to be used in the design of construction logistics solutions in development projects. Keywords: construction logistics; construction logistics centres; thirdparty logistics; governance; stakeholders

Abstract Purpose: There is a lack of research regarding governance strategies for construction logistics solutions. Previous research has been descriptive, not providing suggestions of how to organise construction logistics in urban development projects, i.e. construction logistics governance strategy guidelines considering different stakeholder perspectives. Therefore, the purpose of this paper is to develop such guidelines. Design/methodology: An exploratory single case research design was used. Data was collected through interviews, site visits, observations and documentation from four stakeholder groups. Findings: This study shows that there is potential in utilizing construction logistics centres (CLC) in development projects, with positive effects such as consolidation effects and enhanced planning. What is evident however, is that the design and implementation of CLC’s must be based on comprehensive stakeholder analysis as there are conflicting goals between stakeholders. Governance strategies including flexibility to allow for a working construction process of the main contractors as well as clearly stated roles, responsibilities and communication ways need to be developed to further improve the potential.

1. Introduction In many large urban development projects, the use of some type of construction logistics solution is necessary to deal with demands such as limited space, reduction of environmental impact, improved accessibility and noise restrictions (Carlsson and Janné, 2012; Dablanc, 2007). One solution is construction logistics centres (CLC), which is often run by a third-party logistics (TPL) provider (cf. Ekeskär and Rudberg, 2016; Lindén and Josephson, 2013). One of the main potentials is that the CLC and 1

the TPL provider can act as systems integrators, coordinating materials and resource deliveries to sites within the development area and thereby allowing for fewer transports and improved efficiency (cf. Ekeskär and Rudberg, 2016). Logistics solutions can be initiated and designed by different stakeholders; e.g. the developer (Ekeskär and Rudberg, 2016) or the municipality (Transport for London, 2013). How the solution is initiated and designed depends on the governance strategy applied. Governance strategy is dealing with how social and economic coordination should take place within a specific area (Williamson, 1999). There is however, a lack of research regarding governance strategies for construction logistics solutions. Ekeskär and Rudberg (2016) and Sundquist, et al. (2017) have both studied CLC’s and its governance impact in specific projects. There are also some reports and thesis work investigating the use of CLC’s in for example London and Stockholm (cf. Lundesjo, 2010, 2011; Brunge, 2013). However, these studies have all been of a descriptive nature and from one or two stakeholder perspectives, not providing suggestions of how to organise construction logistics in urban development projects, i.e. governance strategy guidelines considering different stakeholder perspectives. Therefore, the purpose of this paper is to develop such guidelines. The research is based on a case study of a CLC and its utilization in a major urban development project in Sweden. Data is collected through semi-structured interviews with the TPL provider, the municipality, three different main contractors, two developers, as well as through project documentation. To respond to the purpose two research questions are put forward:

RQ1: What are the experiences of different stakeholders (the municipality, the developers, the TPL provider and the main contractors) of using a CLC in a large urban development project? RQ2: Based on the experiences of the different stakeholders, what are important aspects to consider when developing construction logistics governance strategies in urban development projects? 2. Methodology The authors selected an exploratory single case research design as it allows for in-depth understanding of mechanisms (cf. Eisenhardt, 1989; Flyvbjerg, 2006). The studied case and the unit of analysis is the CLC within the Stockholm Royal Seaport (SRS). Four perspectives of the CLC have been studied, i.e. the city of Stockholm, the operating TPL provider, three main contractors, and two developers. The relations between the actors are presented in Figure 1. The city of Stockholm has a development office in the SRS area, responsible for the development project. The TPL provider is an experienced TPL provider coming from mechanical industry. SRS was, however, one of their first construction related projects. The three main contractors are building between one and three apartment buildings within the SRS with time frames for the projects between 23 and 33 months. Developer 1 (D1) is a municipal housing company and frequently source their contractors on turn-key contracts. Developer 2 (D2) is a private housing company that produce all their projects with in-house personnel.

2

CITY OF STOCKHOLM

TPL PROVIDER / CONSTRUCTION LOGISTICS CENTRE

DEVELOPER 1

DEVELOPER 2

DEVELOPER 3

MAIN CONTRACTOR 1

MAIN CONTRACTOR 2

MAIN CONTRACTOR 3

Figure 1 - The relationship between the studied stakeholders'

The case study was conducted through an iterative process based on Yin (2014) where the case was prepared through a comprehensive literature review. Interview guides and case study protocols were developed and revisited continuously during the study to improve the data collection process. Data was collected during 2016 and 2017 through semi-structured interviews, on-site observations and documents. In total eleven interviews have been conducted with the actors. The CLC has been visited four times and the construction sites have been visited once each. Documents such as CLC evaluation reports, price lists, project documents, and site layout plans have been collected. The first research question was answered based on the experiences of the different stakeholders. To answer the second research question, a literature review of CLC’s and governance strategies was conducted, allowing the authors to compare stakeholder experiences in a structured way.

3. Literature review 3.1 Construction logistics Construction projects demands a multitude of materials and resources, which needs to be delivered to the place of consumption (cf. Lindén and Josephson, 2013; Thunberg and Persson, 2014). Construction logistics can thus be seen as all activities that deals with supplying the right materials and resources to the correct customer and construction site to meet customers’ requirements. For example planning (Thunberg and Persson, 2014), supplying and maintaining loading and unloading zones (Transport for London, 2013), warehousing on-site or off-site (Lundesjo, 2010, 2011), and materials handling on-site and off-site (Ekeskär and Rudberg, 2016; Lindén and Josephson, 2013). Construction logistics is however complicated by the construction industry’s characteristics. Construction in general is produced on a project basis in temporary organisations, where for each new project, different contractors, sub-contractors, consultants and builders’ merchants are tendered and 3

procured (Dubois and Gadde, 2002). This leads to new temporary supply chains where each construction site requires a new setup regarding logistics as the location is unique. Construction activities often have to be performed in sequence and if one activity is delayed, all the following activities will also be delayed (Dubois and Gadde, 2002).

can also be performed beforehand, e.g. kitting, where materials for a room or apartment are combined into a full billof-materials for an installation spot (Lundesjo, 2010). This can alleviate some issues on-site; having only the materials needed for installation reduces congested sectors and the risks that this entails (Ekeskär and Rudberg, 2016; Lindén and Josephson, 2013). Another value adding activity of CLC’s is the coordination of bookings through joint IT platforms (Brunge, 2013; Lundesjo, 2010, 2011). This forces contractors to plan their material flows in accordance with when they need materials and allows the TPL provider to manage and control material flows on-site. One of the main features of the operating TPL provider is to act as a systems coordinator regarding materials and resource flows (Segerstedt and Olofsson, 2010; Ekeskär and Rudberg, 2016). This allows MC’s to have one coordinating contact, rather than multiple.

3.2 Construction logistics centres Urban consolidation centres (UCC’s), as well as construction logistics centres (CLC’s), consolidates goods from multiple suppliers into one shipment, thus reducing the amount of freight movements within the cities (cf. van Rooijen and Quak, 2010; Brunge, 2013; Lundesjo, 2010, 2011; Transport for London, 2013). CLC’s are either located in close proximity to the construction area or as a warehouse solution with a check-point at the construction site (Lundesjo, 2011; Transport for London, 2013). The main differences between UCC’s and CLC’s lies primarily in what types of materials they are handling as well as the volumes managed. Where UCC’s often are utilized in consumer goods markets in smaller volumes (cf. van Rooijen and Quak, 2010), the CLC’s handle construction materials such as plasterboard, rafters, etc. (cf. Lindén and Josephson, 2013; Lundesjo, 2010). Both UCC’s and CLC’s are often run by thirdparty logistics (TPL) service providers (Ekeskär and Rudberg, 2016; Lindén and Josephson, 2013) who offer multiple logistics services over a contractually fixed time-period (Selviaridis and Spring, 2007). The most common procedure in CLC’s is that materials arrive from different suppliers to the CLC where they are received, controlled, registered and put away for storage (Lundesjo, 2010, 2011). When a construction site calls off materials the materials are picked and sent to site. Some value adding services

3.3 Governance Managing projects in complex environments is difficult due to high levels of uncertainty as well as the mixture of stakeholders (Locatelli, et al., 2014). Thus, it is important to take different stakeholder concerns into consideration at an early stage of the process (Ballantyne, et al., 2013; Dablanc, 2007; Jereb, 2017). For a CLC to be efficient, regulations must be agreed upon among the involved stakeholders (Lundesjo, 2011; Transport for London, 2013; Boissinot and Paché, 2011). Setting these regulations is however, dependent on the ruling governance strategy. Hufty (2011:405) define governance as ‘the processes of interaction and decision-making among the actors involved in a collective problem that lead to creation, reinforcement or reproduction of social norms and institutions’. Boissinot and Paché (2011) highlight that governance 4

can be used as a means to monitor, select, incentivize or socialize relationships amongst stakeholders with the purpose of aligning interests and reduce information asymmetry. Governance strategy can thus be seen as the strategy for how social and economic coordination should take place within a specific area (Williamson, 1999; Jereb, 2017). This can be translated into three levels of governance; strategic, tactical and operational (Boissinot and Paché, 2011). The strategic level sets the longterm goals and guidelines, the tactical level deals with how to achieve the longterm goals through regulations and incentives, and operational governance sets the rules for the daily activities (Schmidt and Wilhelm, 2000; Boissinot and Paché, 2011). Regardless of how the governance strategy is designed, some control mechanisms must be in place to ensure that stakeholders adhere to the set regulations and do not act opportunistically (Caldwell, et al., 2009). Formal control is often applied as contractually stipulated regulations (Caldwell, et al., 2009), leading to an adversarial relationship between the parties in the relationship (Boissinot and Paché, 2011; Winch, 2001). It is important to note that different stakeholders have different drivers and needs from a governance strategy; private actors are driven by financial consideration whereas public authorities are driven by providing public values (Caldwell, et al., 2009; Teisman and Klijn, 2004). As friction and challenges

between the public and private sectors will occur, the right governance enablers are important in facilitating decision making and operations when setting up a logistics solution (Jereb, 2017; cf. Norrman and Henkow, 2014). 3.4 Conceptual summary The experiences of the CLC are dependent on both the specific logistics solution as well as the governance strategy (Caldwell, et al., 2009), as there is an interplay between these two and a mutual understanding of the governance strategy and the design of the solution is important. To find an optimal governance strategy is difficult within urban development projects, as it is a trade-off between control and commitment (van Marrewijk, et al., 2008; Carlsson and Janné, 2012) and each project in some way requires a unique organisation (Flyvbjerg, 2007). Depending on the aim of the construction logistics solution, its location and stakeholders involved, different logistics alternatives can fulfil the aim of the solution through different services provided. Figure 2 highlights the importance of evaluating the logistics solution and governance mechanisms on a strategic, tactical and operational level (Schmidt and Wilhelm, 2000; Boissinot and Paché, 2011) to capture the relationship between the design decisions early in the project, with the actual operations of the construction logistics solution during construction later in the project.

5

CONSTRUCTION LOGISTICS SOLUTION • Type of solution • Operator • Stakeholders • Location • Services provided

Strategic Tactical Operational

• • • • • •

GOVERNANCE STRATEGY Aim of solution Initiator Regulations Contractual agreements Relationships Information exchange

ANALYTICAL FRAMEWORK • Stakeholders views • Services utilised • Result of implementation

Figure 2 - Analytical framework

agreements between the city of Stockholm, the TPL providers, the developers, and the contractors. It is stipulated in the land allocation agreements that developers are required to inform their contractors of the CLC and the mandatory use of the basic services offered in the solution. The CLC solution consists of four parts; the terminal and its operations, traffic piloting, education, and perimeter fencing and security. The CLC is largely funded by the connection fee paid by developers, as well as through the different service charges. All services are stipulated in a price list available at the CLC’s website. The CLC has 2200 m2 climate-controlled terminal tent, 230 m2 cold terminal tent, 1000 m2 waste management area, 70 m2 office space, and 3000 m2 of outside space. Delivery coordination is performed through bookings in the TPL service provider’s IT system. The contractor places an order at the supplier at least four days prior to the demand at site, either directly or through a delivery plan with call-off points. Simultaneously, the contractor books a time-slot in the CLC planning tool. The CLC generates a gate code for the delivery, active during the booked timeslot. Each construction site has their own unloading zone, specified in the booking system. It is also possible to book unloading machinery through the TPL

4. Case description: The Stockholm Royal Seaport CLC In Stockholm Royal Seaport (SRS), 12000 new homes and 35000 new workplaces are to be built. The development area spans 236 hectares in total with a total investment in SRS approximated to €2.2 billion. Planning work for the development project started in the early 2000’s and ground was broken in 2011 with planned completion in 2030. 4.1 The SRS CLC In 2009 Stockholm city council decided that SRS was to become one of four new sustainable areas within the city. One goal was to reduce the amount of construction traffic in the area and allow for sustainable transport solutions. Based on a logistics analysis in 2011, a CLC close to the development area was selected to be implemented. The CLC opened for operations in 2013. Operations of the CLC is jointly carried out by two TPL service providers, where one is managing the CLC and its development and the other carries out the everyday operations with regards to transports, warehousing, and gate keeping. The CLC has mandatory accession for contractors and developers acting within SRS and is governed through contractual 6

provider. If the delivery is larger than 5 m3 it can be delivered directly to the construction site during the time-slot, however, it can also be delivered to the terminal based on the wish of the contractor. Deliveries smaller than 5 m3 must be delivered to the terminal, unloaded, consolidated and re-loaded for delivery on a milk-round in the development area. When materials are called off from the CLC, they are delivered next day. The CLC offers the opportunity to store materials, where less than a fortnight is free.

with the developers. Developers should then communicate this to the contractors who in turn should inform their subcontractors. The city of Stockholm experiences that the developers have been passive in their communication of the demands to the contractors. The developers have experienced some animosity from contractors who feel that they have not been properly introduced to the CLC and its working practices. According to the city of Stockholm, the CLC needs to be financed through the services it provides. At the same time developers and contractors have been reluctant to use the CLC to a greater extent than the mandatory basic services.

4.2 City of Stockholm perspective The city decided to set rules for how the CLC should work;

4.3 The TPL service provider’s perspective

1. Mandatory accession to the CLC regulated in the land allocation agreement 2. All incoming transports must be booked into a transport booking system 3. No material storage on-site 4. Common waste disposal with smaller waste containers on-site 5. Common perimeter fencing with gates 6. Consolidation of all material deliveries under a certain volume 7. Vehicles larger than 12 metres must have a special permit to enter construction sites

By consolidating smaller transports, and with help of the planning tool and issuing gate codes, goods movements have been kept under control within the development area. There have been problems though, where contractors booked entire days for direct deliveries, rather than the time needed for delivering and unloading goods on-site. According to the TPL provider this is partly due to the difficulties of selling the overall solution to contractors. The TPL provider wishes to provide a good overall experience to the contractors when building in SRS. However, contractors have been reluctant to use the solution. For example, few contractors have bought other services than the mandatory basic services. Over time, the CLC setup has changed to better comply with the needs of the contactors working in SRS. One such example is going from an activity-based pricing model to hourly rates. This was in reply to criticism from MC’s who experienced that e.g. unloading at their site was less timeconsuming than at other sites. The TPL provider see a potential for developing the CLC further to better meet the demands of the contractors. For

The CLC has decreased environmental impact of construction logistics. The city estimates that there have been consolidation effects of 40-60% compared to traditional construction projects. However, these effects could have been larger if not unnecessary direct transports, tail-gating and other avoidance strategies from the users had been used to some extent. The main issue in the CLC setup has been to ‘sell’ the setup to all parties. The city of Stockholm includes the demands regarding the mandatory accession of the CLC in the land allocation agreements 7

example, the TPL provider is considering having trucks and machinery on-site to allow for contractors to rent the machinery for the time they need it, rather than for full days. At the same time the TPL provider is trying to tighten up time window requirements on entry and unloading in the development area to improve the control of the traffic flows within SRS. The TPL provider is aware of that contractors wish the CLC to be able to handle large and heavy materials as well.

materials through the CLC. MC1 also acknowledges that the TPL provider has tried to be as flexible as possible towards contractors. For instance, the stipulated one-week planning window has been reduced to 2 – 3 days for MC1 in some cases. MC1 however, highlights that in the early days of the CLC, there were many problems. They attribute this to the TPL provider being new to the construction context. From MC3’s perspective, the governance and logistics in SRS has been troublesome. Located at the end of an enclosed block, MC3’s construction site was last in line for deliveries while at the same time being next to residents in already completed phases. Due to their location, MC3’s concrete trucks and other deliveries had to pass several other unloading zones that from time to time blocked the road. To deal with this, MC3 suggested that a new gate should be established closer to their construction site, but this solution was not allowed by the city. Furthermore, MC3 needed more unloading zones which took a long time to negotiate. This delay impacted the construction work, especially during the framing process. Overall MC3 feels that the city of Stockholm lacked understanding of construction in general and flexibility to deal with troublesome situations. MC3 mentions that there is also an information sharing problem from developers to MC’s. In their case, site management knew all conditions and rules of the CLC first as work commenced. At the same time, MC3 also think that the information cannot be shared too early in the process as the implications are too abstract to grasp before the physical site conditions are known. Furthermore, MC3 highlight that allowing all contractors to access their construction sites at the same time has proven problematic. All three MC’s are convinced that it would have been impossible to work in SRS had there not been a logistics

4.4 The three main contractors’ perspective Main contractor 1 (MC1) has been operating in the SRS area since before the CLC solution was launched. With their experience, they deemed it necessary to have a logistics manager on site to coordinate with the CLC. Main contractor 2 (MC2) used the CLC as much as possible as it was stipulated from their client. MC2 also used a logistics manager on site. Main contractor 3 (MC3) on the other hand, divided the role of logistics manager between different site managers and foremen. MC3 used the CLC to a minimum, partly due to their in-house logistics concept and partly because using the CLC was not prioritized by management. Overall, it was not until the construction entered the interior phases that MC3 saw the potential of the CLC. Both MC2 and MC3 would have liked to be able to store larger elements and materials at the CLC, which was not possible due to size restrictions. There has been some flexibility in the relationship between MC2 and the TPL provider, especially when it comes to gates and boundary fencing. Initially, there were some issues with gate codes not working and MC2 thus asked to have the same code one week at the time, which the TPL provider allowed. Thanks to this good relationship, most of MC2’s larger subcontractors directed all their 8

solution of some sort. MC3 believes that the thought behind the CLC and the governance of material flows within SRS is good, and from a micro-perspective it has worked. The number of smaller vehicles has been radically reduced in comparison to other projects, making it easier, traffic-wise, to receive larger deliveries at site. MC3 also see that consolidation from the CLC to site has worked well, as has the TPL providers waste management. MC2 sees the consolidation effect and the possibility to store materials and call it off in smaller batches as positive, as well as the activity coordination meetings held by the TPL provider. According to MC1 it has also, to some extent, lead to a smoother delivery process of materials. The overall impression of MC3 is that the CLC and governance model has not been beneficial for main contractors. MC2 is critical of how the solution was sold to them; as cost saving. The reality was, however, that deliveries from wholesalers became more expensive as the CLC charged the contractors for unloading, handling, loading and transport from the CLC to site. MC2 would like to see a solution where the gate passages are free but limited to a fixed amount of passages per week. They also see a need for the pricing of services to come down to a more reasonable level, at the moment the contractors pay double the usual amount per transport. All MC’s mention that much time have been allocated to planning and booking. Furthermore, the lead time of deliveries increases by a full day by passing the CLC. According to MC1 it has been difficult to convince all craftsmen as well as subcontractors to start communicating material demands to foremen earlier than in traditional projects. At the same time, MC1 admits to becoming better at planning and that the perceived issue with the longer planning fences might have been due to lack of experience. According to MC3 the fixed delivery

windows of the CLC were almost impossible to work with; two hours’ delivery windows are not enough as deliveries have to pass through Stockholm to get to the SRS area. 4.5 Two developers’ perspectives The two developers (D1 and D2) are both experienced and have been operating in the SRS area since before the CLC solution was introduced. However, as the CLC was introduced as a mandatory solution, both developers experienced difficulties in setting a budget for the utilization of the service. D1 decided to take all costs for the utilization of the CLC and the basic services directly and added an additional €100000 for the contractors to utilize the value-adding services of the CLC. D2 on the other hand, struggled with the budgeting, but decided to allocate an undisclosed sum for the logistics activities and evaluate the economics ongoing. Both developers highlight the information exchange as troublesome. One issue in the beginning was that the city and the TPL provider did not have enough knowledge regarding construction so some of the regulations set were theoretically developed, and from the developers point-of-view, unfeasible. Both developers had a lot of contact with the city and the TPL provider, and the parties learned how to work with each other and to develop the regulations. For the latest projects, both developers demanded that the contractors allocated personnel resources to manage logistics at their respective sites. Both D1 and D2 highlight that without having allocated logistics managers on site, the projects would have been more difficult to manage. Neither believe that it would have been possible to build in the SRS area without a logistics solution. Both also recognize that as more housing projects will take 9

place in cities, the industry has to accept that construction logistics solutions are going to be their everyday reality. Both D1 and D2 highlight the need to establish the concept with the ones using it, namely the contractors and to do so early on in the process so all stakeholders know how the solution works, why it is implemented, and how it is governed. D2 believe that the information responsibility can reside with the developers. Who should initiate the solution however, is not as clear. D2 points out that it ultimately will depend on land ownership, but also what the goal of the solution is. D1 sees that the city has a big responsibility in setting up construction logistics solutions; it is difficult to coordinate 30 developers and URBAN CONTEXT • • • •


contractors without a ‘higher power’ governing them. Important is that the solution works for all construction phases, and to show its benefits. 5. Analysis 5.1 Stakeholder experiences of using a CLC To answer RQ1, Figure 3 summarizes the positive and negative experiences of the stakeholders studied. Noticeable is that all stakeholders saw a consolidation or coordination effect, and that the major issues were perceived to be information and knowledge exchange between stakeholders.

CITY OF STOCKHOLM EXPERIENCES

+ Consolidation effect + Control of materials in SRS area - Long information chains - Poor knowledge transfer from developers/clients - Reluctance to use CLC from developers/clients and contractors

TPL EXPERIENCES

+ Consolidation effect + Control of materials in SRS area - Contractors not complying with transport time windows - Apprehensive contractors - Difficult to show value of additional services

CONSTRUCTION LOGISTICS SOLUTION

MC EXPERIENCES

+ Consolidation effect + Increased and better planning + Smoother delivery process with call-offs from CLC + Coordination - CLC sold in as cost saving, yet logistics costs are increased - Longer lead-times - Early delivery issues - CLC not suited for large materials - Poor knowledge transfer from developers/clients - Poor construction knowledge from city

DEVELOPER EXPERIENCES

+ Coordination effect + Good contact with city and TPL with learning from experience - Issues with information and knowledge exchange - Poor construction knowledge from city and TPL provider - Unfeasible regulations connected to the CLC - Development of CLC and regulations did not consider users

Figure 3 – Different stakeholder experiences with regards to the CLC at SRS

10

argued that the inexperience of the operator meant that the CLC did not work as expected. However, when the operator was selected, very few TPLproviders with knowledge of both logistics and construction existed in Sweden. Thus, it was a choice of either logistics or construction knowledge, and since a CLC is mainly a logistics solution the selection of an experienced TPL provider can be seen as justified. Furthermore, how the MC’s organize themselves in a project such as SRS have to be analysed. MC1 and MC2 had dedicated logistics managers and both developers perceive that a dedicated logistics manager on site can help MC’s in coordinating with, and utilizing, the CLC in a better way. Both MC1 and MC2 were more prone to utilize the CLC as short-term storage and saw it as a means to achieve better control of deliveries. That logistics managers on site improve the experience of the CLC can be due to the site organisations having knowledge and understanding for logistics, but also due to the logistics managers having the time and resources to deal with logistics related issues (cf. Lundesjo, 2010; Transport for London, 2013). One suggestion is that the city, and subsequently developers, should start specifying in land allocation agreements and tendering documents that the site organisation must include a logistics manager. This would allow MC’s to bring in logistics competence early on in construction projects, allowing for more stable logistics processes.

5.2 Aspects to consider when developing construction logistics strategies in urban development projects The second research question is answered based on the analytical summary described previously. 5.2.1 The construction logistics solution A terminal solution, such as the studied one, implies increased handling and prolonged delivery times for the MC’s at the same time as opening up possibilities of warehousing close to the site. There have been difficulties in diffusing the positive aspects and the potential of the CLC and its utilization to the MC’s, and it is not until the later stages of the construction process that the MC’s see the potential of the CLC. This indicates that the CLC and the regulations set for gate passages, un-loading zones, etc. cannot be the same throughout the construction project and instead they should be adapted to the different materials during different project phases. This is also an issue raised by the MC’s, that the CLC couldn’t handle large materials of the early phases such as concrete elements. In the studied case, the physical location of the CLC was an important aspect. The demands of the city to have the terminal close to the construction site is from a logistics point of view counterintuitive, having the goal of decreased environmental impact in mind. By this location the transports have to pass through the city before they can be consolidated, which complicated time bookings according to MC3. However, the location of the terminal has improved the coordination between the TPL provider and the MC´s as well as opening up for renting out machinery. The selection of a TPL-provider with limited construction industry experience created unnecessary resistance and lack of collaboration among the MC’s who

5.2.2 The governance strategy The solution was initiated by the city of Stockholm as a result of their aim to reduce the impact on third parties and to increase environmental sustainability of urban development projects. Thus, the solution was initiated from a top level in relation to bargaining power, i.e. the city has a possibility to enforce their 11

solutions on the developers and force the developers to enforce the solution on the main contractors. The aim of the solution for the city of Stockholm have been clear from the beginning. Though, the MC’s and the developers were told that the use of the CLC would save them costs, i.e. their goal of using a construction logistics solution. The city of Stockholm thus tried to get the users of the solution to accept the solution by presenting a goal that should be of interest to them. However, because of the solutions design, the MC’s goal was not fulfilled creating disappointment. The MC’s and developers all understand the need of a solution within large urban development projects. Had the city of Stockholm provided an explanation relating to the city’s original goals of the CLC, the acceptance of the solution could have been improved. To summarize, if the initiation and enforcement is top-down, being open from the initiator side regarding goals, benefits of third parties, and an overall perspective of the solution, may increase acceptance among the users. The solution was on a strategic level designed by the city of Stockholm, focusing on governing through contractual agreements with detailed regulations. In the SRS case, there are many stakeholders involved and the contractual relationships are complicated. Contractually, the city acts as both customer and employer of the TPL provider. The developers are suppliers to the city and customers to the TPL provider as well as customers of the MC’s. Finally, the MC’s are customers of the TPL provider and suppliers to both the city and the developers. The city sets the regulations for the TPL provider, the developers, and the MC’s. The TPL provider has, because of this setup been stuck in the middle. Having low authority towards MC’s to whom they should enforce the use of the solution on an operational level, at the same time

having small possibilities to affect the setup of the CLC on a strategic/tactical level. Another problem here was that it was unclear who’s the customer. This should be clarified already at a strategic level when designing the CLC. This will facilitate information sharing between stakeholders on a tactical level and prioritization between stakeholder demands by the TPL provider on an operational level. As it was now, the developers were expected to transfer knowledge from the city to the MC’s. However, both the city and the MC’s have expressed concerns regarding poor information sharing from the developers. This implies that the developers do not fully understand their role. This has also, as mentioned by the city, prevented the city from explaining the purpose of the CLC to the MC’s as well as making it difficult for the TPL provider to explain their operations directly to the MC’s. Another way of organising the governance with more autonomy of the TPL-provider could have opened up for improvements of the CLC operations, based on the relationship between the MC’s and the TPL provider. This can be seen in the relations between MC1 and MC2 and the TPL provider, where flexibility was shown if possible, making the experience more positive from the MC´s side. The detailed regulations in SRS was set early by the city, i.e. on a strategic level. This was done to have the regulations set before the land agreement was signed between the city and the developers, thereby making the demands known from the beginning. However, the detailed regulations have been obstructive to the work of the TPL provider and the MC’s on an operational level. MC3 for example considers the city to have poor knowledge of construction processes as e.g. the unwillingness from the city to adapt regulations based on the location of the construction site within the area, as well 12

as to construction methods. Both the TPL provider and the city has expressed concerns that MC’s are reluctant to fully utilize the CLC. In their view, the CLC was there to facilitate an efficient construction process, whereas the MC’s initially seem to regard the CLC mainly as an additional and unnecessary step in the delivery process. Thus, if detailed regulations are set early on a strategic level, there has to be flexibility within the operational level for adaptations when the actual work commences, and all requirements are known. Otherwise acceptance becomes low. Furthermore, the communication regarding the design of the CLC has been one-way, where the MC’s have not been given the possibility to provide input regarding services needed. This has led to low mutual understanding among the stakeholders. Alternatively, general rules can be set on a strategic level early on in the project, and thereafter more detailed regulations can be developed on a tactical level once affected stakeholders are identified. This would allow for stakeholder involvement and alignment between strategic and operational design levels.

deliveries to site, thus also reducing the number of times that goods had to be handled by craftsmen and other resources. The developers addressed this as a coordination effect. However, the analysis also identified some issues, below developed into guidelines. •

•

•

6. Discussion and Conclusions The purpose of this paper was to present guidelines on how to develop governance strategies within large city development projects, based on different stakeholder perspectives. To summarize, this study has shown that there is great potential in developing and utilizing a CLC in urban development projects. From the analysis, it is evident that the city, the main contractors and the TPL provider all find the consolidation effect to be positive. From the city’s and the TPL provider’s perspective this manifests itself as a reduction in heavy goods vehicles in and around the SRS area, reducing traffic and disturbances on third-parties, i.e. residents. For the MC’s it is a matter of reducing the number of 13

Different goals between stakeholders. If the initiator of the solution states the goals clearly, the risk of creating false hope regarding benefits of the solution is minimized. This creates an understanding of any increased costs and nuisances and allows stakeholders the possibility to plan for utilizing the solution. Information is also key in setting the correct expectations regarding the effects of the CLC for the users, i.e. contractors. This information needs to be given directly to the correct stakeholders, thus reducing the risk of information sharing problems. This also calls for clarity regarding the stakeholder relations and responsibilities and mandates. To improve the positive experiences of a CLC by the users, regulations developed on the strategic level early on in the project, needs to be flexible to handle the operational reality later in the project. If issues arise in the utilization of the CLC due to regulations, the governing party must be flexible enough to evaluate the regulations and allow the CLC to evolve to the best possible solution for all stakeholders. Some main contractors may also have their own logistics solution that may not be compatible with a firmly governed CLC, here it is however, also a lack of knowledge of how to combine different solutions. When developing a CLC, a multi-stakeholder logistics analysis must thus be part of the decision-making process in order to find a solution that can also cater to already existing solutions in the stakeholder network.

•

•

Finally, the authors extend their gratitude to the reviewers of this article, your comments helped in adding to the quality of this article.

The responsibility of all stakeholders should be clearly stipulated in contracts without losing sight of the relationship aspects between operators and customers. One issue in SRS was the perceived apprehensiveness of the MC’s to utilize the CLC, but this was partly due to the MC’s not seeing the benefits of the solution. This can be solved by utilization-based incentive schemes in the contract.

References Ballantyne, E. E. F., Lindholm, M. & Whiteing, A. 2013. A comparative study of urban freight transport planning: addressing stakeholder needs. Journal of Transport Geography, 32, 93101. Boissinot, A. & Paché, G. 2011. Opportunism control in exchange relationships: Lessons from the French logistics industry. Problems and Perspectives in Management, 9, 71-77. Brunge, K. 2013. Förbättrad logistik för byggmaterial i Norra Djurgårdsstaden. Master of Science Master of Science, Royal Institute of Technology. Caldwell, N. D., Roehrich, J. K. & Davies, A. C. 2009. Procuring complex performance in construction: London Heathrow Terminal 5 and a Private Finance Initiative hospital. Journal of Purchasing and Supply Management, 15, 178186. Carlsson, C.-M. & Janné, M. 2012. Sustainable Urban Distribution in the Øresund Region. In: Carlsson, C.-M., Emtairah, T., Gammelgaard, B., Vestergaard Jensen, A. & Thidell, Å. (eds.) Rethinking Transport in the Øresund Region: Policies, Strategies and Behaviours. Lund: Lund University. Dablanc, L. 2007. Goods transport in large European cities: Difficult to organize, difficult to modernize. Transportation Research Part A: Policy and Practice, 41, 280-285. Dubois, A. & Gadde, L.-E. 2002. The construction industry as a loosely coupled system: implications for productivity and innovation. Construction Management and Economics, 20, 621-631. Eisenhardt, K. M. 1989. Building Theories from Case Study Research. The Academy of Management Review, 14, 532-550. Ekeskär, A. & Rudberg, M. 2016. Third-party logistics in construction: the case of a large hospital project. Construction Management and Economics, 34, 174-191. Flyvbjerg, B. 2006. Five Misunderstandings About Case-Study Research. Qualitative Inquiry, 12, 219-245. Flyvbjerg, B. 2007. Megaproject Policy and Planning: Problems, Causes, Cures. PhD, Aalborg University. Hufty, M. 2011. Investigating Policy Processes: The Governance Analytical Framework (GAF). In: Wiesmann, U. & Hurni, H. (eds.) Research

Finding the right operator is of great importance. The best alternative would be to find an operator knowledgeable in both construction and logistics, but if that is not an option, the aim of the solution should be used to indicate what competence is most important. At the same time, the solution should also place a demand on main contractors to have logistics competence within their site organisation to ease the coordination between construction sites and the CLC.

The authors believe that the findings from this single case study are valuable as a starting point for further studies. Other projects using CLC and governance solutions should be investigated to explore whether similar findings can be found, but other logistics and governance solutions would also be possible to study. Two important stakeholder perspectives are transporters and suppliers, whose perspective also need to be studied. Acknowledgments The authors would like to thank Sweden’s Innovation Agency VINNOVA/JPI Urban Europe, as well as SBUF, the Development Fund of the Swedish Construction Industry, for financing this research. The authors would also like to extend their gratitude to the case company respondents. 14

for Sustainable Development: Foundations, Experiences, and Perspectices. Bern, Switzerland: University of Bern. Jereb, B. 2017. Mastering logistics investment management. Transformations in Business and Economics, 16, 100-120. Langley, C. J. 2016. 2016 Third-Party Logistics Study: The State of Logistics Outsourcing. Lindén, S. & Josephson, P. E. 2013. In-housing or out-sourcing on-site materials handling in housing? Journal of Engineering, Design and Technology, 11, 90-106. Locatelli, G., Mancini, M. & Romano, E. 2014. Systems Engineering to improve the governance in complex project environments. International Journal of Project Management, 32, 1395-1410. Lundesjo, G. 2010. Barts Hospital, London. Banbury, Oxon, Great Britain. Lundesjo, G. 2011. Using Construction Consolidation Centres to reduce construction waste and carbon emissions. Banbury, Oxon, Great Britain: Waste & Resources Action Programme. Norrman, A. & Henkow, O. 2014. Logistics principles vs. legal principles: frictions and challenges. International Journal of Physical Distribution & Logistics Management, 44, 744767. Pfeffer, J. & Nowak, P. 1976. Joint Ventures and Interorganizational Interdependence. Administrative Science Quarterly, 21, 398-418. Schmidt, G. & Wilhelm, W. E. 2000. Strategic, tactical and operational decisions in multinational logistics networks: A review and discussion of modelling issues. International Journal of Production Research, 38, 1501-1523. Segerstedt, A. & Olofsson, T. 2010. Supply chains in the construction industry. Supply Chain Management: An International Journal, 15, 347353. Selviaridis, K. & Spring, M. 2007. Third party logistics: a literature review and research agenda. The International Journal of Logistics Management, 18, 125-150. Sundquist, V., Gadde, L.-E. & Hulthén, K. 2017. Reorganizing construction logistics for improved performance. Construction Management and Economics, 1-17. Teisman, G. & Klijn, E. H. 2004. PPPs: torn between two lovers. EBF Debate, 18, 27-29. Thunberg, M. & Persson, F. 2014. Using the SCOR models performance measurements to improve construction logistics. Production Planning and Control, 25, 1065-1078. Transport for London 2013. Construction Logistics Plan Guidance for Developers. Windsor House, London: Transport for London. van Marrewijk, A., Clegg, S. R., Pitsis, T. S. & Veenswijk, M. 2008. Managing public–private megaprojects: Paradoxes, complexity, and

project design. International Journal of Project Management, 26, 591-600. van Rooijen, T. & Quak, H. 2010. Local impacts of a new urban consolidation centre – the case of Binnenstadservice.nl. Procedia - Social and Behavioral Sciences, 2, 5967-5979. Vivek, S. D., Richey, R. G. & Dalela, V. 2009. A longitudinal examination of partnership governance in offshoring: A moving target. Journal of World Business, 44, 16-30. Wilkins, A. L. & Ouchi, W. G. 1983. Efficient Cultures: Exploring the Relationship Between Culture and Organizational Performance. Administrative Science Quarterly, 28, 468-481. Williamson, O. E. 1979. Transaction-Cost Economics: The Governance of Contractual Relations. The Journal of Law and Economics, 22, 233-261. Williamson, O. E. 1999. Strategy research: governance and competence perspectives. Strategic Management Journal, 20, 1087-1108. Winch, G. M. 2001. Governing the project process: a conceptual framework. Construction Management and Economics, 19, 799-808. Yin, R. K. 2014. Case Study Research: Design and Methods, Thousand Oaks, California, SAGE Publications, Inc.

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Paper 3

Costs and benefits of logistics solutions in construction Mats Janné and Martin Rudberg Working paper

Costs and Benefits of Logistics Solutions in Construction Mats Janné Dep. of Science and Technology, Linköping University, Norrköping, Sweden E-mail: [email protected] Tel: +46-(0)11-36 32 92

Martin Rudberg Dep. of Science and Technology, Linköping University, Norrköping, Sweden E-mail: [email protected] Tel: +46-(0)13-28 15 66 one-off projects, tendering and procuring contractors, sub-contractors and suppliers each time a project is launched (Dubois and Gadde, 2000, 2002; Kristiansen, et al., 2005), making logistics management more challenging. This has also led to a situation where the projects are managed locally, and project management thus becomes disconnected from the company level (cf. Dubois and Gadde, 2000, 2002; Kristiansen, et al., 2005). This also affects how logistics within construction projects are managed, and the lack of effective logistics has been reported frequently in literature. Lately, the interest in logistics management has gained momentum in the construction industry and one solution that has been employed is the use of third-party logistics (TPL) (cf. Ekeskär and Rudberg, 2016; Lindén and Josephson, 2013). The use of TPL can be initiated either by an external party or internally (by the project or from the company level). Irrespectively of how initiated, employing TPL often leads to that the logistics costs are made visible, whereas the benefits are hard to quantify. Thus, the use of TPL, or similar logistics solutions, in construction is still met with some scepticism. The purpose is therefore to investigate the possible benefits, alongside with the effect on costs, that can be realized when employing logistics solutions in construction. This is done through a case

Abstract Third-party logistics (TPL) solutions are becoming a regular occurrence in urban construction projects. The industry is, however, still apprehensive regarding the benefits and costs of TPL solutions. The purpose of this study is therefore to investigate TPL benefits, costs, and what is needed in terms of supply chain management (SCM) maturity to realize these effects. This is done through an explorative case study at a large building project employing an in-house TPL solution. Results show that benefits can be realized, but that they come at a cost and that the main challenge is to reach a higher level of SCM maturity. Keywords: construction management, supply chain management, logistics, third-party logistics, case study 1. Introduction Construction projects are temporary organisations that demands a multitude of materials and resources that must be delivered on-time, to the correct site and according to rules set by site management (cf. Josephson and Saukkoriipi, 2007; Lindén and Josephson, 2013; Thunberg and Persson, 2014). Where traditional manufacturing industries can achieve long-term relationships and economies of scale in rather stable environments, the construction industry is characterized by 1

study of a large construction project that has implemented and used a TPL solution. In doing this, the following research questions are addressed;

introduced in the theoretical background and from this conclusions in relation to the research questions and purpose are drawn. Finally, conclusions are derived, and based on that areas for further research are suggested.

RQ1: What benefits are realized when utilizing a TPL solution? RQ2: What costs are affected by the use of a TPL solution? RQ3: How does the logistics maturity of supply chain members affect the implementation of TPL?

2. Research design The primary research method is a single case study. The logistics operations of a large construction project have been studied, where a construction management (CM) company internally has developed and implemented a TPL solution for a large office building project. The use of TPL in construction is still a new phenomenon, and as such, case study is regarded as a suitable method (cf. Yin, 2014; Eisenhardt, 1989) to explore the impact that the utilization of TPL has on a construction project. To allow for a focused and in-depth approach, the research design builds upon four activities (based on Yin (2014)): preparation, collection, analysing, and finally dissemination. The research design is iterative, indicating that each step has been revisited over the course of the research project to get the best possible result. Planning for the study was performed in collaboration with the CM company, also ensuring that the research team had access to the right people and data sources. The case study was prepared through reviewing relevant literature regarding SCM, logistics and the use of TPL in construction. Preparations regarding how data was collected was also undertaken and revisited throughout the research process. Before each interview or site visit, the researchers prepared by discussing the purpose and goal of the exercise. Data was collected through semistructured interviews with logistics representatives from the CM company (eight interviews à 2 hours with logistics coordinators on site, operators at the

The first question investigates the possible benefits a TPL solution can provide, but also the possible concerns and negative effects that might come to light. The second question relates to the uncertainty regarding the costs of utilizing TPL solutions in construction projects and it will be analysed by mapping the logistics process and cost elements of the TPL solution in the case study. The final question relates to both organisational and process related questions that have arisen during the case study. Knowing the cost elements and benefits associated with a TPL solution is a first step towards logistics awareness, but it does not lead to supply chain orientation (SCO) as discussed by Mentzer, et al. (2001). The final research question thus seeks to answer what prerequisites there are for the successful implementation of a TPL solution in construction and is answered by analysing the results of the case study through the lenses of a literature review. After this introduction follows an account on the research design of this study. Thereafter the theoretical background for the study is presented, focusing on SCM and logistics in general and logistics solutions in construction in particular. The case study is then introduced by describing the development and application of the construction logistics solution investigated in this study. The results of the case study are thereafter analysed using the theoretical constructs 2

terminal and managers at the CM company (logistics, purchasing, planning)), on-site visits at the construction site (twice) and the logistics terminal (once), review of project documents and through a students’ project supervised by the researchers involved in the study. Furthermore, the researchers had full access to a set of IT tools used in the project, including: the CM company’s project planning tool, the cloud-based supply chain planning system used in the case project, and the business intelligence system that was supplied by the software provider. The final phase of the research process is based on analytical and conceptual reasoning (Wacker, 1998) grounded in the results from the literature review and the case study. In conceptual research approaches, analytical and empirical methodologies are typically combined to provide new insights into a new phenomenon through logical reasoning (Meredith, 1993; Wacker, 1998). In the analysis, the logistics solution of the CM company is considered the unit of analysis. Hence, the analysis and the conclusions in this study are based on a perspective centred around the construction logistics solution.

chains (cf. Christopher and Holweg, 2011; Lambert and Cooper, 2000; Mentzer, et al., 2001). This has shifted companies’ focus from keeping suppliers and customers at an armslength distance, to working in closer collaboration with suppliers and customers. Mentzer, et al. (2001) propose the following definition of SCM: “the systemic, strategic coordination of the traditional business functions and the tactics across these business functions within a particular company and across businesses within the supply chain, for the purposes of improving the long-term performance of the individual companies and the supply chain as a whole.” From this definition one can deduce that a major aspect of SCM is the relationship between different supply chain actors. If these relationships are nurtured, the goal of long-term performance improvements can be met. However, as Mentzer, et al. (2001) point out, the full potential of SCM can only be achieved if all participating supply chain actors strives towards a joint supply chain orientation (SCO), as visualized in Figure 1. To become SCO, the following issues needs to be addressed; trust, commitment, interdependency, organizational compatibility, agreed SCM visions and key processes, top management support, and acceptance of taking a leading role in the supply chain (Mentzer, et al., 2001; Ekeskär and Rudberg, 2016), which could be regarded as the level of supply chain maturity amongst the supply chain actors. If some supply chain actors fail to address these issues there will be a lack of SCO, leading to that the whole supply chain will suffer and it will be hard to reap the positive effects of SCM.

3. Logistics solutions in construction 3.1 SCM Supply chain management has become one of the leading management movements in practice as well as in academia. The thought behind SCM is that individual businesses no longer compete as autonomous entities, but rather as an interlinked unit with customers and suppliers, i.e. their supply

3

Supply Chain Orientation (SCO)

Results Supply Chain Management (SCM)

Single Company Supply Chain Maturity

Lower costs, improved delivery service, increased competitiveness, etc.

Figure 1 - The results of SCM are dependent the supply chain orientation

One way to approach SCM is a stepwise approach clearly addressing different parts of the supply chain. Vrijhoef and Koskela (2000) describe four different roles that SCM can play depending on which part of the supply chain that is currently addressed. Ekeskär and Rudberg (2016) introduce a new role, extending Vrijhoef’s and Koskela’s (2000) work to five roles (Ekeskär and Rudberg, 2016), visualized in Figure 2: 1) focus on clarifying the interface between the supply chain and site activities, 2) focus on improving the supply chain, 3) focus on improving logistics at the construction site, 4) transferring activities from the site to the supply chain, and 5) manage the site and the supply chain as an integrated domain. The first four roles could be regarded as concerning logistics management, whereas the fifth role is the only one concerning SCM according to the definition by, e.g., Mentzer, et al. (2001). No matter which of the roles that are addressed, the participating supply chain actors must be supply chain oriented for the results of SCM to materialize.

3.2 SCM in construction The temporary nature of construction projects means that different contractors, sub-contractors, consultants and builders’ merchants need to be tendered and procured every time a new construction project is launched (Dubois and Gadde, 2000, 2002; Kristiansen, et al., 2005). This means that every time a construction project is launched, a new supply chain is created. The coordination across businesses, that Mentzer, et al. (2001) highlight as an important aspect of SCM, is thus more difficult to achieve in a construction setting. When new partners are procured every time, it is also difficult to achieve overall SCO, regardless of if the different supply chain actors in themselves are SCO. The overall joint goal and SCM vision needs to be re-established repeatedly (Dubois and Gadde, 2002; Green, et al., 2005). This disconnect between supply chain actors leads to a situation where adversarial contracts and lowest price makes SCO difficult to achieve (Dubois and Gadde, 2002; Fernie and Tennant, 2013; Green, et al., 2005).

4

Role 2: Streamline the supply chain

Role 1: Clarify “the interface”

Role 5: Integrate the supply chain with the construction site ”Supply chain management” (SCM)

Role 4: Move value adding tasks from the construction site to the supply chain

Role 3: Streamline the construction site

Figure 2 - The five roles that logistics and SCM can play for construction (based on Ekeskär and Rudberg, 2016; Vrijhoef and Koskela, 2000)

been employed, especially when it comes to large construction projects in urban areas. Marasco (2008) defines TPL as “an external organization that performs all or part of a company’s logistics function”, and Selviaridis and Spring (2007) add to this that TPL is usually associated with the offering of multiple, bundled services, rather than just isolated transport or warehousing functions. TPL arrangements are also based on formal contractual relations, as opposed to spot purchases of logistics services (Lai, et al., 2004).

3.3 Logistics in construction and thirdparty logistics The goal for any construction project is to deliver the project on time and on cost to the stipulated quality. This is however, dependent on materials arriving to site at the correct time and place, with correct quality and at the correct quantity. Material deliveries should also be announced ahead and according to any rules set by site management (cf. Josephson and Saukkoriipi, 2007; Lindén and Josephson, 2013). In this respect, construction logistics is no different from logistics in other industry segments. What makes it more difficult however, is the above described fragmented nature of the industry and the construction supply chain. Logistics management is a part of SCM (Council of Supply Chain Management Professionals, 2016) focusing on the operational management of the supply chain. Seen in a construction context, logistics can be said to deal with supplying the right materials and machinery to the correct customer and construction site to meet the project’s requirements. As part of many SCM and logistics management initiatives, logistics solutions, such as TPL, have

3.4 Evaluating logistics performance and logistics costs Receiving an invoice from a logistics service provider is an easy way to see what a service provider charges for their services, but it does not necessarily show the actual costs or cost savings, nor the possible gains of the services used. Neither does it show the effect on construction efficiency for the contractor. As the construction industry faces changes in logistics structures through new construction logistics service offerings, there is a need to investigate how the stakeholders are affected by these changes. One possible 5

way to evaluate this is through logistics cost analysis. Fang and Ng (2011) break down the composition of construction logistics cost elements, based on a prior study on the flow of precast elements (see Fang and Ng, 2008). From this they define the basic cost elements of the construction logistics flow to include inventory cost (IC), transportation cost (TC), site storage cost (SC), and procurement costs (PC). Analysing logistics costs, one must keep in mind that all cost elements are made up of fixed and variable costs. Site storage for instance, can be comprised of receiving and unloading the materials, moving them to on-site storage, registering the location of the materials, the cost of storage, etc. (cf. Everaert, et al., 2008; Fang and Ng, 2011). The key to finding the actual composition of the different cost elements lies in identifying the cost drivers for each activity in the logistics flow, i.e. factors which cause a change in the costs of work performed in the process (Vasiliauskas and Jakubauskas, 2007). The actual effect on cost is however only one area that is of interest when analysing the effects of construction logistics solutions. Hence, evaluating logistics performance includes different perspectives and, in this study, Selviaridis’ and Spring’s (2007) division between strategy-, finance- and operations-related issues for evaluating the effects of the construction logistics solution in use. Besides cost (financerelated issues) Selviaridis and Spring (2007) also argue for an evaluation from a strategic perspective, i.e. how the logistics solution can be a mean for reaching corporate objectives and business goals, and from an operational perspective, i.e. how the logistics solution affects the day-to-day operations.

4. Case study 4.1 Background The CM company focuses on urban construction projects, primarily hotels and office buildings, located in inner-city blocks. Building and refurbishing in such environments pose challenges for the logistics operations, as inner-city areas are often dense with limited space and shared infrastructure with commuters as well as other freight transports. This was the motivation for the CM company to start working more intensely with logistics management. Originally, the CM company bought services from a TPL provider that helped streamline their logistics operations by utilizing a consolidation terminal. This alleviated some of the problems with getting the correct materials to site at the correct time, but logistics on site was still problematic. Each construction project tendered its own logistics setup from the TPL provider, leading to a nonstandardised process. Eventually the CM company employed a logistician to work full-time in the projects, giving the CM company more of an insight into the logistics operations and problems encountered. Based on the learnings from a handful of projects with the external TPL provider, the CM company decided to develop its own logistics solution, i.e. an in-house standardised TPL setup that ultimately should be employed by all projects. 4.2 The in-house logistics solution The in-house logistics solution is a profit unit of its own with three employees and is treated as an in-house TPL provider. Since the CM company runs large innercity construction projects, they decided that one of the key features of their logistics solution was to have a terminal setup to gain consolidation effects in the material flow. Besides the terminal, the main pillars of the logistics solution are an on-site materials handling team and a 6

planning system with related planning process. The structure of the logistics

solution, with the three main pillars, is visualised in Figure 3.


Sub-contractors

Returns

Suppliers

Terminal


Direct delivery

Construction site On-site materials handling

CM company


Figure 3 - Logistics solution

The logic behind re-routing material flows via the terminal is to reduce the number of deliveries to site by consolidating materials and to reduce materials handling related disruptions on-site. A hauler company is contracted to carry out the day-to-day terminal operations and transports between the terminal and the construction site, and the hauler company has four employees dedicated to working with the CM company’s logistics solution at the terminal. The current terminal consists of approximately 2,500 m2 of warehouse area divided over four terminal buildings and another 2,000 m2 of outdoor space. Due to the design of the terminal, a lot of the available space is needed to manoeuvre trucks and material handling equipment. The on-site materials handling team, supplied by another external TPL provider, should free up time for the craftsmen, allowing them to focus on their core competence: producing houses. The on-site materials handlers receive and record materials and move them to the correct materials zone on-site after hours, allowing for materials to be

at the correct place when craftsmen need them. Finally, the planning system is a commercial off-the-shelf, cloud-based, system designed specifically for the construction industry. All material deliveries are planned and called-off in the system and all main actors have a role-based access to the system. As such, it facilitates visibility in the logistics process and it is the main integrative tool between the CM company, the in-house logistics solution, the sub-contractors, and the suppliers in the project organisation. When a new construction project is initiated, a logistics start-up meeting is held with the sub-contractors and suppliers, highlighting the logic and the policies of the logistics solution. The sub-contractors are then tasked with setting up a delivery plan together with their suppliers, taking the logistics solution into account. All delivery plans are discussed with the CM company for approval. Once approved, the plans are fed into the planning system, detailing when material deliveries are to be made to either the terminal or the construction site. Direct deliveries are allowed if a 7

sub-contractor can motivate why they need direct deliveries. As far as possible, deliveries should, however, go via the terminal.

receives goods and sends a notification of receipt to the supplier. When materials are called-off by a sub-contractor, the terminal crew notifies the construction site that delivery is forthcoming, and the terminal crew plans the delivery together with the on-site materials handling personnel. When materials arrive at the construction site, the on-site materials handlers receive the goods and delivers it to the stipulated delivery zone. Finally, material handlers notify both the terminal and the sub-contractor that the material is received. All planning and execution information is fed into/by the planning system. The material handlers also fill out delivery reports, indicating deviations from plans and other material delivery related problems that might occur.

4.3 Employing the in-house logistics solution in the construction project Recently, the in-house logistics solution was piloted at a large office complex project that the CM company is managing. The project is a new build, located in a busy and dense urban area adjacent to other office buildings, a large football stadium, a large supermall, residential housing, and a railway station. The project consists of three house blocks varying from seven to fourteen stories with 90,000 m2 floor space, a large garage, and an employee recreation centre. The office complex is set to house 4,400 employees, 600 conference rooms and space for temporary employees and visitors. The office complex is built as a turn-key contract with partnering and the total contract sum is M€ 170. Based on the logistical challenges of the area, the CM company decided that their in-house logistics solution should be used and evaluated as a pilot. Organisationally, the CM company is hierarchically situated below the property developer and employs sub-contractors to perform all trades. The logistics solution is contractually treated as a sub-contractor, with the terminal and transportation crew and the on-site material handlers as service suppliers to the in-house logistics solution. In the stipulated logistics process (cf. Figure 3), the sub-contractors signal their suppliers and the terminal with regards to when materials are needed and how they are to be delivered; either directly, via the terminal for warehousing and calloff, or consolidation with other materials. The supplier acknowledges the delivery and notifies the terminal, or the construction site, of when materials leave the suppliers’ site. The terminal

4.4 Results of the in-house logistics solution The 3.5-year office building project is finalized, and the CM company is currently evaluating the results of the pilot project, with the aid of the researchers involved in this study. The total cost for the logistics solution throughout this project approximates 3 % of the construction costs on site, and 1.4 % of the total development and production cost for the whole project. As for the terminal, the cost of operations has been higher than expected. This is partly due to that the terminal structure originally was designed as a train depot and not for warehouse operations. This has resulted in a lot of materials relocation to be able to facilitate storage and to be able to efficiently load delivery vehicles. Furthermore, the terminal seems to have been used more as a buffer, rather than as a consolidation point. Factors showing this is that there are approximately as many deliveries to the terminal as there are outgoing deliveries from the terminal, that the average number of parcels per delivery to site is four 8

(indicating low fill rates of the outbound transportation from the terminal), and that the average storage time in the terminal was 14.7 days, to be compared with the initial target of around 5 days storage time in the terminal. At the construction site the on-site materials handlers have tracked and reported all deliveries after each shift and highlighted any delivery deviations. In total there were 14 700 deliveries during the analysed period (averaging to some 25 deliveries per day) and they were distributed evenly between the five working days of the week. However, 75 % of the deliveries were registered daytime working hours, contrary to the goal of having most deliveries after working hours. Hence, the on-site materials team had to work more during daytime operations, sharing the work space and resources with the construction workers. As for the delivery reports, 223 delivery reports were filed over the period analysed. Of the reported work shifts, approximately 83 per cent had one or more delivery deviations, and on average each delivery had 3.9 deviations. The five largest sources of deviations are errors in delivery quantity (256), communication & planning (162), delivery quality (102), administration (97), and equipment failure (90). This of course affects the total costs of the logistics solution negatively. Delivery quantity and quality relates to the performance of subcontractors, communication & planning and administration relates to deviations related to the planning system and the planning process, whereas equipment failure relates to the resources on site and provided by the materials-handling team themselves. As for the planning system, it has, in general, worked satisfactory. Initially there were some issues as the planning system did not allow for the two delivery addresses needed (i.e. the terminal and the site) when routing materials through

a terminal. The same was the case with the double delivery dates needed. These issues were alleviated through a development dialogue with the systems provider. In total, there were 73 suppliers and 71 sub-contractors registered as users in the planning system. The planning issues that have occurred, are more connected to the planning process that some sub-contractors and suppliers were unfamiliar with. For example, only just above 7,000 out of the 14,700 recorded deliveries were entered into the system as a delivery plan and had to be registered manually into the system. Changes to the delivery plans and the actual call-offs were stipulated to be done 5 days prior to delivery, but data shows that 23 % of the deliveries were logged the same day as delivery, 24 % 1 day ahead of delivery, 33 % 2-4 days ahead of delivery, and only some 30 % as the stipulated 5 days ahead of delivery. 5. Analysis When analysing the case to answer the three research questions, Selviaridis and Spring (2007) division between operational, financial and strategic issues of TPL will be used as a foundation. RQ1 in this study relates to the operational issues, RQ2 to the financial issues, and RQ3 to the strategic issues. The logistics solution of the CM company is the unit of analysis, and as such the analysis is focused on the three main pillars of the logistics solution: the use of a terminal, an on-site materials handling team, and the planning system and related planning process. 5.1 Realised benefits and effects on total costs Table 1 summarizes the key points regarding the realized benefits (RQ1) and the effects on costs (RQ2) of the implemented logistics solution. As for 9

the operational effects, not all could be considered benefits wherefore also the major issues that was raised against the logistics solution has been revealed. The use of a terminal as a construction consolidation centre has led to fewer deliveries to site and the temporary storage of materials has shifted from the site to the terminal. Having a terminal storage has also opened the possibility to use the terminal as a buffer to cover for unplanned changes in the production schedule and to be able to call-off JITdeliveries when needed. When it comes to effects on costs, a terminal is an extra node in the supply chain and the extra warehouse, handling, and personnel, naturally leads to extra costs. These are however, to be offset by less and more efficient logistics operations at the site, if operations are adjusted to use the terminal as a lever to excel productivity at site. The fewer deliveries that the consolidation effect of the terminal leads to, should lead to reduced transportation costs and less disturbance, both for the ongoing construction operations and for third parties. On the downside, the most common issues raised are that an extra node in the network adds to the administration and that the suppliers and sub-contractors are not used to working with a logistics solution and a consolidation terminal, leading to some confusion on how to label, pack and deliver the materials. In this specific case, also the poor layout of the terminal has affected its efficiency, hence leading to negative effects on costs. The on-site materials handling team is dedicated to their task, prepared when a delivery arrives and relieve work from the craftsmen, making on-site operations more efficient so that costs can be reduced concerning materials handling. Limiting the amount of materials stored at site, and delivering materials after hours to designated materials zones, not only makes materials available for production when needed but also

provides a more structured, clean and tidy production environment. This increases productivity, reduces work accidents and by that also reduces the total cost of operations. The negative effects that have been highlighted during the study often relates to that the subcontractors and suppliers are not used to adhere to structured logistics solutions, leading to increased planning and coordination, mistakes in labelling of goods and in the planning documents. This in turn leads to extra work at site with unclear work instructions, missing materials, early deliveries with return flows as a consequence, etc. All these issues lead to extra costs, which makes it hard to exploit the benefits and to offset the extra costs that comes with the terminal and the logistics solution. Add to this that there have been some issues with material handling equipment, delivery errors and that the materialshandling team naturally is an extra cost, and one realizes that the total cost equation might be tough to balance. The planning process and the use of a cloud-based planning system, standardises the planning of material deliveries, introduces stipulated planning time fences, allocates resources to deliveries and offers easy access for all project participants. As such, it creates visibility in the supply chain and all materials and deliveries can be coordinated more effectively, which in turn reduces costs for tracking and tracing and offers the possibility to plan operations more proactively. On the downside, there were some issues with regard to functionality in the beginning of the project and since the subcontractors and suppliers were not used to work in the system, the standardised process was not adhered to by all parties. This added some extra administrative costs and since the system was piloted in this project there were also costs regarding the initial investment of setting

10

up the system to work with the stipulated process in the logistics solution. Table 1 - Benefits and issues (RQ1) as well as resulting cost effects (RQ2) of the TPL solution Terminal

On-site materials handling


Benefits - Some consolidation and coordination of deliveries - Fewer third-party disturbances - Less material on-site - Material buffer to cope with production changes - Option to call off JITdeliveries

Issues - Terminal layout not suited for construction materials - Added a node in the delivery network - Unfamiliar concept in the construction context - Non-standardised labelling

Cost effect Added: - Increased cost for materials relocation - Cost for additional delivery node added to project budget Reduced: - Possible reduction in transport costs

- Dedicated personnel for materials receiving - Better utilization of the construction site and equipment with materials handling off-hours. - Time freed up for craftsmen - Material available for craftsmen when needed - Cleaner and more structured construction site - Fewer work-related accidents - Follow-up of deliveries and delivery deviations - Standardised process - Cloud-based system granting easy access for all parties - Visibility of all planned deliveries - Coordination of all materials stakeholders - More proactive planning

- Increased planning and coordination - Unfamiliar concept in the construction context - Non-standardised labelling - Planning documentation not always correct - Process and equipment related deviations add to work-load for on-site materials handling team

Added: - Difficult to offset costs for materials handling in subcontractor agreements - Planning documentation and labelling issues leads to extra work and added costs Reduced: - Possible reduction in materials handling costs - Increased productivity reduces cost of operations

- Unfamiliar process for subcontractors - Initial issues with functionality - Process not adhered to by all, leading to issues on-site

Added: - Initial investment for planning system - Administrative costs increase as process is dependent on updated delivery plans Reduced: - Reduces costs for tracking and tracing deliveries and materials

11

this to happen, the CM Company would have to play a more active role in getting key suppliers and sub-contractors to address the issues making an organisation supply chain oriented: trust, commitment, interdependency, organizational compatibility, agreed SCM visions and key processes, top management support, and acceptance of taking a leading role in the supply chain (Mentzer, et al., 2001; Ekeskär and Rudberg, 2016). In this pilot project the CM company, the team of the in-house logistics solution, the terminal team and the on-site team, all bought in to a vision of enhancing logistics operations, but not necessarily the same SCM vision. Also, the suppliers and sub-contractors were largely put aside when it comes to establishing SCO within the project. Hence, they did not understand the strategic intent of the CM company and often acted in a way that was counterproductive for the SCM vision that underpins the logistics solution employed.

5.2 Supply chain maturity and the level of SCO According to (Mentzer, et al., 2001), all eight antecedents of SCO have to be addressed in a systemic and strategic way by all the participating companies in the supply chain to be truly supply chain oriented. As such, the level of SCO is hard to evaluate in this study, due to the narrow focus on the in-house logistics solution and the CM company. Therefore, RQ3 addressing the logistics maturity of the supply chain members and how they affect the implementation of TPL will be judged from the perspective of the CM company, the logistics solution, and the effects on operations at site. Many of the negative effects relates to that suppliers and sub-contractors do not fully understand, or buy-in to, the logistics concept. This can be due to that the CM company has not put enough effort into explaining how the concept is supposed to work and what is required from suppliers and sub-contractors, or that the maturity of the suppliers and sub-contractors is not high enough to work as planned for. Visible examples of this are errors in when and how materials are packaged, labelled and delivered from suppliers, both to site and to the terminal. Furthermore, sub-contractors and suppliers neglect to enter necessary information, and sometimes also enters wrong information, in the planning system. Also, sometimes material arrive to both the site and the terminal that has not been ordered, or have been ordered, but manually and not through the planning system. When analysing how the suppliers, the sub-contractors, the terminal, the on-site team and the CM company work with the logistics solution, one can conclude that they all need to increase their level of knowledge when it comes to logistics and SCM. As part of this they need to increase their level of maturity in terms of SCO. For

6. Discussion This case study set out to investigate how a large office building project managed the logistics operations through an internally developed TPL solution, with the purpose of adding to the current knowledge of benefits, issues and costs that occur when utilizing TPL in construction. Based on the case study, findings indicate that there are benefits to be realised, but that they come with a cost and they need to be based on supply chain maturity and a willingness to offset costs against efficiency gains. The construction logistics solution in this study is based on three pillars (see Figure 3): a terminal, an on-site materials handling team, and a planning process supported by a planning system. As such these three pillars address different parts of the supply chain. Using the five roles in Figure 2 identified by Ekeskär and 12

Rudberg (2016) it can be argued that the main focus of the terminal is to improve the supply chain operations (role 2), whereas the focus of the on-site material handling team is on improving site operations (role 3) and to some extent moving activities from site upstream in the supply chain (role 4). The stipulated planning process and planning system mainly focus on establishing a clear interface between the site and the supply chain (role 1), but also provides the ground work for possible supply chain integration (role 5). Hence, the construction logistics solution analysed in this research embraces all the identified roles that SCM can play for construction, yet it fails to deliver the results promised by SCM (see Figure 1). Hence, from a strategic perspective (Selviaridis and Spring, 2007) the CM company fails to establish an SCO amongst the key actors in the supply chain From a financial perspective and operational perspective (Selviaridis and Spring, 2007), the case analysis shows that by introducing a terminal, the on-site materials handling team, and a planning system, extra costs are added to the total construction cost (see Table 1). The question that then arises is if the extra costs added have been off-set by more efficient operations. Adding a TPL solution, such as the one in this case, can in fact streamline the logistics process for urban construction projects. One of the goals in utilizing a TPL solution is to reduce the delivery traffic to the construction site by consolidating smaller deliveries and a terminal-based solution can achieve this. Thereby fewer transports to site is needed, which both reduces the transport cost per se, but also the cost for receiving, off-loading and handling material at site. A terminal also provides the possibility to reduce material stored at site, reducing the number of material related incidents and accidents. The on-site material handling

team means moving logistics and materials handlings activities from craftsmen to the TPL provider, leading to that the craftsmen can focus on their trades and thus increase the value-adding time in the project. Also, using skilled material handlings personnel with proper equipment, doing their work at times when the craftsmen are not around, should increase the material handling efficiency and also offer the possibility to exploit the construction site at times were the site is normally idle. Taking the perspective of the CM company, who initiated the use of their construction logistics solution in this project, they have invested a lot of time and effort into designing the TPL solution and in making it operational. Nevertheless, even though the solution incorporates the necessary ingredients, the CM company falls through in getting the supply chain actors to use the full potential of the solution. Mainly due to the fact that the CM company failed in directing their efforts towards the SCO of their supply chain partners. 7. Conclusion and further research Many of the issues encountered in this case study, can be traced back to the lack of understanding of, and non-adherence to, the regulations set in the logistics solution and the use of the planning system and process. This lack of SCM maturity leads to deviations in e.g. delivery quantities and documentation. One structural issue here is that TPL is a new phenomenon in construction, and construction stakeholders are still asking themselves why they should pay for these services. In part, this is explained by the predominant temporary structure of the industry, where arms-length relationships are still the norm as discussed by e.g. Fernie and Tennant (2013). Looking at other industries implementing TPL (van Laarhoven, et al., 2000), one can conclude that it does 13

take some time to get TPL running the way it was planned to run, and that one needs to work long-term and purposefully with TPL to be able to reap the full potential of the concept. Hence, the CM company needs to take a leading role, evaluate the current logistics solution and work hard to increase the logistics knowledge and the level of SCO maturity for the suppliers and subcontractors they will work with in future projects. Otherwise, they stand the risk of adding costs to the project without being able to harvest the benefits and thereby being able to reduce the total costs of the projects. This also opens up for further research. A longitudinal study analysing TPL solutions over a series of projects would be much needed. What can be learnt from other industries is that the renewal rate for TPL contracts is high (indicating that most companies are satisfied with the TPL solution) and that substantial cost reductions and service improvements could be attributed to the TPL partnership (van Laarhoven, et al., 2000). Yet, as in this study, also in other industries the participating companies found it hard to quantify the improvements and cost reductions of a TPL solution. Hence, it would be desirable to design a study that carefully measures the performance of a construction logistics solution and benchmark the operations with projects running without a TPL solution. Thus, it would be possible not only to find out the true cost of the construction solution, but also what is gained in terms of productivity improvement and waste reductions in the construction operations.

extend their gratitude to the case company respondents. References Christopher, M. & Holweg, M. 2011. “Supply Chain 2.0”: managing supply chains in the era of turbulence. International Journal of Physical Distribution & Logistics Management, 41, 6382. Council of Supply Chain Management Professionals. 2016. CSCMP Supply Chain Management Definitions and Glossary [Online]. CSCMP. Available: www.cscmp.org [Accessed 2017-05-27 2017]. Dubois, A. & Gadde, L.-E. 2000. Supply strategy and network effects - Purchasing behaviour in the construction industry. European Journal of Purchasing and Supply Management, 6, 207215. Dubois, A. & Gadde, L.-E. 2002. The construction industry as a loosely coupled system: implications for productivity and innovation. Construction Management and Economics, 20, 621-631. Eisenhardt, K. M. 1989. Building Theories from Case Study Research. The Academy of Management Review, 14, 532-550. Ekeskär, A. & Rudberg, M. 2016. Third-party logistics in construction: the case of a large hospital project. Construction Management and Economics, 34, 174-191. Everaert, P., Bruggeman, W., Sarens, G., Anderson, S. R. & Levant, Y. 2008. Cost modeling in logistics using time-driven ABC: Experiences from a wholesaler. International Journal of Physical Distribution & Logistics Management, 38, 172-191. Fang, Y. & Ng, S. T. 2011. Applying activitybased costing approach for construction logistics cost analysis. Construction Innovation, 11, 259281. Fang, Y. & Ng, T. S. T. 2008. Optimising time and cost in construction material logistics. Proceedings of the BuHu 8th International Postgraduate Research Conference 2008: Prague, Czech Republic, June 26th-27th 2008. Czech Technical University, CTU Publishing House. Fernie, S. & Tennant, S. 2013. The non-adoption of supply chain management. Construction Management and Economics, 31, 1038-1058. Green, S. D., Fernie, S. & Weller, S. 2005. Making sense of supply chain management: a comparative study of aerospace and construction. Construction Management and Economics, 23, 579-593. Josephson, P.-E. & Saukkoriipi, L. 2007. Waste in Construction Projects: Call for a New

Acknowledgments The authors would like to thank SBUF, the Development Fund of the Swedish Construction Industry, for financing this research. The authors would also like to 14

Approach. Gothenburg, Sweden: The Centre for Management of the Built Environment, Chalmers University of Technology. Kristiansen, K., Emmitt, S. & Bonke, S. 2005. Changes in the Danish construction sector: the need for a new focus. Engineering, Construction and Architectural Management, 12, 502-511. Lai, K.-h., Edwin Cheng, T. C. & Yeung, A. C. L. 2004. An Empirical Taxonomy for Logistics Service Providers. Maritime Economics & Logistics, 6, 199-219. Lambert, D. M. & Cooper, M. C. 2000. Issues in Supply Chain Management. Industrial Marketing Management, 29, 65-83. Lindén, S. & Josephson, P. E. 2013. In-housing or out-sourcing on-site materials handling in housing? Journal of Engineering, Design and Technology, 11, 90-106. Marasco, A. 2008. Third-party logistics: A literature review. International Journal of Production Economics, 113, 127-147. Mentzer, J. T., DeWitt, W., Keebler, J. S., Min, S., Nix, N. W., Smith, C. D. & Zacharia, Z. G. 2001. Defining Supply Chain Management. Journal of Business Logistics, 22, 1-25. Meredith, J. 1993. Theory Building through Conceptual Methods. International Journal of Operations & Production Management, 13, 311.

Selviaridis, K. & Spring, M. 2007. Third party logistics: a literature review and research agenda. The International Journal of Logistics Management, 18, 125-150. Thunberg, M. & Persson, F. 2014. Using the SCOR models performance measurements to improve construction logistics. Production Planning and Control, 25, 1065-1078. van Laarhoven, P., Berglund, M. & Peters, M. 2000. Third-party logistics in Europe – five years later. International Journal of Physical Distribution & Logistics Management, 30, 425442. Vasiliauskas, A. V. & Jakubauskas, G. 2007. Principle and benefits of third party logistics approach when managing logistics supply chain. Transport, 22, 68-72. Vrijhoef, R. & Koskela, L. 2000. The four roles of supply chain management in construction. European Journal of Purchasing & Supply Management, 6, 169-178. Wacker, J. G. 1998. A definition of theory: research guidelines for different theory-building research methods in operations management. Journal of Operations Management, 16, 361385. Yin, R. K. 2014. Case Study Research: Design and Methods, Thousand Oaks, California, SAGE Publications, Inc.

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Paper 4

Cost modelling construction logistics centres Mats Janné and Anna Fredriksson Working paper

Cost Modelling Construction Logistics Solutions Mats Janné Dep. of Science and Technology, Linköping University, Norrköping, Sweden E-mail: [email protected] Tel: +46-(0)11-36 32 92

Anna Fredriksson Dep. of Science and Technology, Linköping University, Norrköping, Sweden E-mail: [email protected] Tel: +46-(0)11-36 33 08 studied cost aspects of CLCs and by providing knowledge about the rarely used phenomenon of CLCs in construction. Keywords: construction logistics; third-party logistics; construction logistics centres; cost modelling; logistics costs; activity-based costing

Abstract Purpose: Construction logistics centres (CLC) are decreasing disturbances to the surrounding society through improved logistics flows and are a novelty within construction supply chains as they have been rarely used. Therefore, the knowledge of how to budget for the use of a CLC within the logistics flows is lacking among clients and main contractors. Thus, the purpose of this paper is to analyse what costs a CLC entails and to propose a model for calculating these costs Design/methodology: The cost for a contractor of utilizing a CLC has been studied based on the services invoiced to contractors over a time period of three years (2013 – 2016). From this, cost modelling for the most common services provided in CLC’s has been conducted. Findings: The study proposes an activity-based cost model for CLC’s and indicates the level of these costs compared to the total project size. Research implications: Through the cost model for determining the cost of CLC’s, this paper contributes to reducing the barriers towards construction logistics solutions by clarifying the costs in relation to possible benefits. Practical implications: Contractors, LSP’s and municipalities can find support on how to calculate the costs of utilizing a CLC and also how to develop business models of setting up CLC´s. Originality/value: This paper contributes by exploring the important

1. Introduction The construction industry is characterised by the production of endproducts (houses or infrastructure) at the place of consumption (Ekeskär and Rudberg, 2016; Lindén and Josephson, 2013; Thunberg, et al., 2017). This implies that vast amounts of materials have to be delivered to the place of consumption when needed (Josephson and Saukkoriipi, 2007; Lindén and Josephson, 2013). Coordinating these material flows is complicated even under non-complicated conditions. When construction is performed in urban development areas, this is further complicated by limitations in space and infrastructure and the shared use of these crucial resources with other road users (Behrends, et al., 2008; Dablanc, 2007). Lately, one solution to manage urban construction logistics flows has been to employ logistics solutions such as a construction logistics centres (CLC) (cf. Brunge, 2013; Goldman and Gorham, 2006; Lundesjo, 2011). These solutions are often run by a third-party logistics (TPL) provider (cf. Ekeskär and 1

Rudberg, 2016; Sundquist, et al., 2017) which in the construction setting is a rather new phenomenon as implementations have been lacking (Langley, 2016). Furthermore, in many urban construction projects the use of some type of CLC is necessary (cf. Janné and Fredriksson, 2017). The driving forces behind the implementation of CLC’s can differ but a main aim of a CLC is often to coordinate and control material flows to and from construction sites and thereby decrease the number of transports going in and out (cf. Lundesjo, 2011; Ekeskär and Rudberg, 2016). The increased adoption of TPL in construction implies that the construction industry has started to see the potential of logistics (Ekeskär and Rudberg, 2016; Langley, 2016; Sundquist, et al., 2017). Previous research has shown that the benefits of construction logistics centres are decreased disturbances to the surrounding environment and improved logistics flows and planning possibilities for material deliveries (cf. Janné and Fredriksson, 2017; Lundesjo, 2011; Sundquist, et al., 2017). However, these benefits come with a cost that is often allocated to developers and contractors. Construction materials are often quoted ‘as-is’ meaning that logistics costs are to some extent invisible (Fang and Ng, 2011). When a CLC is introduced into the material flow, the cost for this additional node becomes visible through the invoices sent by the TPL provider (Janné and Fredriksson, 2017). This is a new situation for developers and contractors that they are unaware of how to budget for (Janné and Fredriksson, 2017). To make construction logistics costs tangible, researchers often recommend an activity-based costing (ABC) approach (Kim, et al., 2011; Sobotka, 2000). ABC provides a good mechanism for allocating both direct and indirect costs of logistics to the activities consuming the logistics resources (cf.

Fang and Ng, 2011; LaLonde and Pohlen, 1996). The ABC approach means identifying the relevant logistics tasks and breaking them down to the activities of each task as well as identifying the cost drivers affecting the overall logistics costs (cf. Fang and Ng, 2011; Gríful-Miquela, 2001; LaLonde and Pohlen, 1996). However, to our knowledge, this approach has not yet been utilized in the cost analysis of CLC’s. The purpose of this paper is thus to analyse what activities and costs a CLC entails in order to propose a model for calculating said costs and discussing how the inclusion of a CLC affects site organisations and logistics activities carried out within the construction project. The purpose is fulfilled with the aid of the following research questions; RQ1: How can activity-based costing be used to model the main contractors cost of utilizing a construction logistics centre? RQ2: How do the average CLC costs of three projects with different levels of logistics organisation compare to the average costs of utilizing the CLC in Stockholm Royal Seaport? The research questions are answered through a case study of a CLC and its utilization in a major urban development project in Sweden. Data is collected through semi-structured interviews with the TPL provider, the municipality, three different main contractors two developers, and through project documentation and invoice data over the time period 2013 – 2016. 2. Literature review 2.1 Construction logistics centres The aim of CLC’s is to coordinate deliveries to multiple construction sites within an urban area, instead of the traditional situation where many deliveries are sent to the different construction sites without any 2

coordination (Brunge, 2013; Lundesjo, 2010, 2011; Transport for London, 2013; Janné and Fredriksson, 2017). CLC’s are normally located in close proximity to the construction area or as a warehouse solution with a check-point at the construction site (Lundesjo, 2011; Transport for London, 2013; Janné and Fredriksson, 2017). The most common procedure in CLC’s is that materials arrive from different suppliers to the CLC, where the materials are received, controlled, registered and put away for storage (Lundesjo, 2010, 2011). The materials are then called off from the actual construction site and the materials are picked, packed and delivered. If wanted, value adding services can also be performed before sending to site (Lundesjo, 2010; Janné and Fredriksson, 2017). One example mentioned by Lundesjo (2010) is kitting, where materials for a certain room, apartment or house are combined into a full bill-ofmaterials for the installation spot. The utilization of CLC’s can reduce some onsite issues such as having too much materials at the place of consumption (Ekeskär and Rudberg, 2016; Lindén and Josephson, 2013). By coordinating the construction sites’ materials bookings through common IT platforms, contractors can plan their material flows in accordance with demand (Brunge, 2013; Lundesjo, 2010, 2011). This allows the operating TPL provider to manage and control material and resource flows to and from different sites in the development area, thus acting as systems coordinator (cf. Ekeskär and Rudberg, 2016). By having one coordinating contact point, main contractors can focus on their operations rather than on having multiple contacts with other contractors within the same construction area (cf. Sundquist, et al., 2017; Lindén and Josephson, 2013).

2.2 Logistics costs Construction is a very cost oriented industry with an ever-present focus on reducing costs to increase profits (Shakantu, et al., 2003). Often these costs have been targeted by selecting sub-contractors and suppliers based on the lowest possible cost (Shakantu, et al., 2003) and not on performance or management skills (cf. Dubois and Gadde, 2002; Kristiansen, et al., 2005). Over the past decades however, the interest from academia and practice for lowering costs through sound construction logistics has steadily increased (cf. Polat, et al., 2006; Said and El-Rayes, 2011). With the material intensity of the construction industry, material costs amount to approximately 65 per cent of total construction costs. Delivering these materials to the construction site is of course costly; Vidalakis, et al. (2011) highlight that transport costs can amount to as much as 50 per cent of the materials purchase. This has led to a situation where cost reductions often are sought through targeting logistics activities as these activities are seen as “unnecessary” costs (Fang and Ng, 2011; Polat, et al., 2006; Shakantu, et al., 2003; Sobotka, 2000). The cost of logistics should be transferred to the project owner, i.e. the developer through contractual agreements (Fang and Ng, 2011). However, logistics costs are to some extent intangible (Fang and Ng, 2011) as construction materials often are quoted “as delivered” (Ying, et al., 2014 p. 274). Not knowing what goes into logistics costs can under these circumstances seem natural, but without understanding logistics costs there is a risk for suboptimising the logistics process by cutting the wrong logistics costs or even raising e.g. storage costs due to having purchased more materials than needed. In the long run, this can substantially increase the cost of materials used in the 3

construction industry (Shakantu, et al., 2003). Logistics costs can be seen as indirect costs in a traditional supply chain, and are traditionally allocated to products based on the logistics function that it utilizes (Harrison and van Hoek, 2011; LaLonde and Pohlen, 1996). Over the years, these function-based cost centres have evolved from transport, warehousing, inventory carrying costs and administration (Heskett, et al., 1973) to also include order processing, information systems (Stock and Lambert, 2001) transport packaging and indirect costs (Engblom, et al., 2012). Depending on researcher and context of the study, other cost components such as risk and damage costs, customs and material handling systems can also be included (cf. Zeng and Rossetti, 2003; Shakantu, et al., 2003). Generally speaking, logistics costs can be classified in one of the following cost centres; transport, warehousing, inventory carrying costs, administration, indirect costs, and procurement (cf. Zeng and Rossetti, 2003; Shakantu, et al., 2003; Engblom, et al., 2012; Stock and Lambert, 2001; Lin, et al., 2001). In reality, what constitutes logistics costs is dependent on the logistics system being studied and the relevant cost components needs to be identified within this context (Fang and Ng, 2011; Harrison and van Hoek, 2011; Shapiro, 1992).

(LaLonde and Pohlen, 1996) and allows managers to tackle any resource utilization issues that are found (Silva, et al., 2014; LaLonde and Pohlen, 1996). By allocating each performed activity a cost based on cost-drivers, ABC separates quantities from activity (Everaert, et al., 2008). Cost drivers are the factors that have a cause-effect relationship with costs and helps in creating a better understanding of how costs are affected by every activity in a process (Schniederjans and Garvin, 1997). In traditional cost accounting, indirect costs are assumed to vary proportionally with volume, but this may not be the case (LaLonde and Pohlen, 1996). ABC gives a fairer representation of e.g. a customer order in terms of direct and in-direct costs (Everaert, et al., 2008) and in the longer run also the profitability of servicing a certain customer (Lin, et al., 2001). When performing an ABC analysis, the process of interest first needs to be determined and system boundaries set (cf. LaLonde and Pohlen, 1996; Lin, et al., 2001; Gríful-Miquela, 2001); are we interested in analysing the entire supply chain or just a certain process within a factory or warehouse? The chosen processes are then broken down into activities and the resources consumed in these activities are identified (cf. LaLonde and Pohlen, 1996; Lin, et al., 2001; Gríful-Miquela, 2001). Cost drivers for the activities are identified (cf. LaLonde and Pohlen, 1996; Lin, et al., 2001). Cost data is gathered (GrífulMiquela, 2001) and the activities are allocated their costs (cf. LaLonde and Pohlen, 1996; Lin, et al., 2001; GrífulMiquela, 2001). Finally, the cost information is analysed from a total cost perspective (cf. LaLonde and Pohlen, 1996; Lin, et al., 2001; Gríful-Miquela, 2001).

2.3 Activity-based costing To make logistics costs tangible, an activity-based costing (ABC) approach can be utilized in setting the relevant costs (Fang and Ng, 2011; GrífulMiquela, 2001). ABC is a cost accounting technique that highlights the relationships between activities and resource consumption (Cooper and Kaplan, 1991; Gríful-Miquela, 2001). ABC assigns both direct and indirect costs to each activity, creating greater traceability of resource utilization 4

protocols were developed. Throughout the data collection process, these were revisited continuously to improve the data collection process. Data was collected during 2016 and 2017 through semi-structured interviews, on site observations and documents. During this time period, eleven interviews were conducted with the TPL providers CLC manager, the three projects site managers and/or logistics managers, two developers and the SRS development responsible from the city of Stockholm. The CLC has been visited six times and the construction sites have been visited once each. The authors have also participated in the education given by the TPL provider to all actors who are to work within the SRS area. Finally, documents such as evaluation reports of the CLC, information, price lists, invoice data over the time period 2013 – 2016, project documents, and site-layout plans have been collected from project portals and the city of Stockholm.

3. Methodology 3.1 Case study As the use of CLC’s in urban construction areas is a rarely studied phenomenon, the authors selected an exploratory, embedded single-case research design to explain this phenomenon (Yin, 2014). When context and experiences are critical to forming a comprehensive understanding of a phenomenon, the case study methodology is a valid and suitable choice of research methodology. However, generalization based on a single-case study is hard to achieve (cf. Eisenhardt, 1989; Flyvbjerg, 2006). A single-case study only gives a snapshot of one specific case, but it does give an in-depth understanding of the mechanisms of the studied phenomenon (cf. Eisenhardt, 1989; Flyvbjerg, 2006). The studied case and unit of analysis in this paper is the CLC within the Stockholm Royal Seaport (SRS) area. Apart from the CLC itself, three projects in SRS that utilizes the CLC have been studied. The choice of three embedded units was made as the authors had a longstanding insight into these particular cases and their utilization of the CLC, allowing for possibilities to analyse the utilization of the CLC as a factor in RQ2. The three projects differ in size and scope, allowing for interesting discussions regarding utilization and cost of utilization for the CLC in comparison to the overall project costs. By embedding and analysing the three individual cases within the main case, the authors also add to the generalizability of the main case. The case study was conducted through an iterative process adapted from Yin (2014). To allow the authors to enter the field with a good understanding of the problem, the case study was prepared through a comprehensive literature review. In the preparation phase, interview guides and case study

3.2 Activity-based cost modelling The ABC modelling is based on the material and information flows of the SRS CLC as presented in Figure 2. This representation is based on the information obtained through the interviews and project documentation that form the base of the case study. From the process mapping, the activities and resources have been identified, and these have been verified by the TPL provider’s representative. As the purpose of the study is to find a feasible cost model for the CLC, activities at the suppliers and on the construction sites are delimited from the ABC modelling and subsequent analysis. This means that the system boundaries are set to include the gate passage of direct deliveries and milk-round deliveries but excludes order handling at supplier’s warehouses and material handling on site. The ABC analysis follows the seven-step process (based on LaLonde and Pohlen, 5

1996; Lin, et al., 2001; Gríful-Miquela, 2001) as described in section 2.3 and further outlined below;

4.1 The urban development project Like many other European cities, Stockholm needs to grow in order to accommodate for the urbanisation trend in the region. One step in assuring housing in Stockholm is the construction of SRS, east of the city centre (see Figure 1), where an old, city adjacent, petrochemical industrial area is being transformed into 12000 new homes and 35000 new workplaces. The development area spans 236 hectares in total, and as such, this is one of the largest singular urban development projects ever to take in place in Stockholm and Sweden. Situated on the waterline of the Baltic sea to one side, on the border of the national city park on one side and bordering the already dense city centre on a third side, the development area is limited in its access routes. This places great demand on how materials are delivered to and from the construction sites within the area. The total investment in the development project is approximated to €2.2 billion. Planning work for the development project started in the early 2000’s and ground was broken on the first phase in 2011. The entire development project is predicted to be completed around 2030. This means that while construction is ongoing in some phases, new residents and companies will have already moved into the area. As part of the Stockholm city councils plan for a sustainable urban city, the SRS project is to be completed with minimum impact of the environment and surrounding residential and working areas. Property developers, clients, and contractors in the SRS area must adhere to strict sustainability targets set out by the city council. As part of these targets, the city of Stockholm has implemented a mandatory CLC solution for all contractors and clients building in the SRS area. The aim of the CLC solution is to minimise unnecessary construction freight transports within the development area and thus facilitate

1. Determine the process of interest and set system boundaries 2. Break down the chosen processes into activities 3. Identify the resources consumed in these activities 4. Identify cost drivers for the activities 5. Gather cost data 6. Allocate costs to the activities 7. Analyse the cost information from a total cost perspective Chapter 5 describes the ABC analysis with the initial process identification and systems boundaries. In chapter 5.1, the process is broken down further to activities and resources as described above in step two and three. The cost drivers were identified based on logistics cost drivers found in literature (cf. Everaert, et al., 2008; Fang and Ng, 2011; Gríful-Miquela, 2001; Schniederjans and Garvin, 1997) and compared to the observations made at the studied CLC. The cost data utilized in this study is based on the invoice data from the CLC. This has been used in conjunction with the identified process to allocate the activity costs for the different construction projects and main contractors. The cost of the CLC is then compared to the overall cost of construction for the three projects. 4. The Stockholm Royal Seaport CLC In this section, the case of the CLC operating in the urban development project Stockholm Royal Seaport (SRS) is presented. Firstly, the development project is presented followed by the CLC setup. Thereafter the three projects investigated in this paper are briefly introduced.

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smoother material deliveries to the different construction sites.

Figure 1 - Stockholm Royal Seaport (City of Stockholm, 2015)

2. All incoming transports must be booked into a transport booking system 3. No material storage on-site 4. Common waste disposal with smaller waste containers on-site 5. Common perimeter fencing with gates 6. Consolidation of all material deliveries under a certain volume 7. Vehicles larger than 12 metres must have a special permit to enter construction sites The CLC solution can be said to be made up from four parts; the terminal and its operations, traffic piloting, education, and perimeter fencing and security. All four parts are mandatory to use or attend to operate within SRS. The CLC oversees all perimeter fencing and all gates and provide the security guards during off-hours. The education is given on three different levels where the basic level is given to contractors and craftsmen working less than five days within SRS, the normal level for all those working more than five days within SRS and the expert level for all who work with the IT tools connected to the CLC solution. Education time ranges from 20 minutes (basic) to 1.5 hours (normal and expert) and can be provided in different languages through videos.

4.2 CLC setup The CLC in SRS opened for operations in 2013. One problem to tackle was to decide on the size of the CLC and how it was to operate. The current CLC has 2200 m2 climate-controlled terminal tent, 230 m2 cold terminal tent, 1000 m2 waste management area, 70 m2 office space, and 3000 m2 of outside space. As the city of Stockholm is a governmental organisation, it had to tender for a suitable operator on the market. This was performed as a qualified tendering process where six different TPL service providers were invited to submit their offers. These were evaluated, and the final selection was made. One of the main issues was how to motivate the use of a CLC to contractors and developers who have been used to working with logistics in their own respective way. The city decided to set rules for how the CLC should service contractors and how to make contractors use the CLC and to include the accession to CLC in the land allocation agreements between the city and the developer/client. The governance model decided upon was the following; 1. Mandatory accession to the CLC regulated in the land allocation agreement 7

The traffic piloting is performed through booking in the TPL service provider’s IT system in order to coordinate when materials arrive to the development area as to not create too much traffic within the area. Every transport must be booked into the planning system a minimum of four days before delivery to SRS. The transports are given a time slot and code to pass through the gates into the development area. Each construction site has their own unloading area, and these are also specified in the booking as to show that they will be occupied during the specified time. In this part of the CLC solution it is also possible to book unloading machinery through the TPL provider if necessary. All material deliveries must be booked into the IT system in order to enter the development area, but if deliveries are smaller than 5 euro pallets or 5 m3, the material has to be delivered to the

terminal and be unloaded there for consolidation before being delivered to the construction sites within SRS. This adds another day to the previous transport booking procedure. The CLC offers the opportunity to store materials short-term at the terminal. If materials are stored less than a fortnight, the storing is free of charge. If longer storage is needed, a fee is charged per square metre and day stored. As the terminal is limited in size, the TPL provider also offers an external warehousing solution outside of Stockholm for larger elements and materials. Within the terminal operations, the TPL provider also offers different value-adding services such as kitting and on-site materials handling. Table 1 below shows the services provided by the TPL provider running the CLC.

Table 1 - Services provided by the CLC TPL provider Core services Traffic piloting Short-term storage Transport consolidation Road maintenance Mass handling Return transport Education Joint geographical information systembased site-layout plans Information to sheds Perimeter fencing Security Material ordering system Waste management Cleaning and sanitation

Additional services On-site materials handling Logistics coordination External long-term storage Kitting On-site waste management Loading, unloading, and lifting vehicles Special vehicles

As all material deliveries must be registered in the planning system at least four working days before delivery, the contractor has to send information to both their suppliers and the CLC at the same time. The contractor places an order at the supplier at least four days prior to the demand at site, either directly or through a delivery plan with call-off points. At the same time the contractor

books a time-slot in the IT planning tool of the CLC. The CLC generates a gate code for the delivery, active during the booked time-slot. If the delivery is larger than 5 m3 it can be delivered directly to the construction site at day four during the booked time-slot. If the contractor wants to have it delivered to the terminal instead, the supplier will deliver there directly. This can be in cases when the 8

contractor wants to have materials nearby and call them off in smaller batches instead of having all materials at their construction site. When materials are called-off from the CLC, they are delivered next day via milk-round delivery in the morning or afternoon, depending on when the call-off is made As mentioned above, in the case where a delivery is smaller than 5 m3, the materials must be delivered to the terminal, unloaded, consolidated and reloaded for delivery on a milk-round in the development area by the TPL provider. The goal of the mandatory consolidation of deliveries smaller than 5 m3 is to reduce the amount of delivery vehicles within the SRS area by 30-40%. It does however add more materials handling and an extra transport compared to the traditional case where all materials are delivered directly to the construction site and this is paid for by the contractors using this option. Operating the CLC is largely funded by the connection fee paid by developers/clients as well as through the different charges from the TPL provider imposed on the contractors working in the SRS area. Each gate passing, for instance, is charged to the contractor at a standard price of approximately €14 and the milk round transports costs approximately €107 per hour. All services are stipulated in a price list available at the CLC’s website.

apartment buildings, and all three projects also included construction of garage areas. P1 had a project cost of approximately M€46.3, P2 M€36.6 and P3 M€17.3. The time frames for the projects were between 23 and 33 months. P1 and P2 had dedicated logistics managers at site whereas that task fell on the site-management in P3. P1 and P2 had directives from their respective developers to utilize more than just the core services, whereas P3 tried to add as little extra costs for additional services as possible. 5. ABC analysis This section answers the research questions, RQ1 is answered by 5.1 and. 5.2 and RQ2 is answered by 5.3. As explained in chapter 3.2, activities at the suppliers and on the construction sites are delimited from the ABC modelling and analysis. The system boundaries are set to include the gate passage (“traffic piloting”) of direct and milk-round deliveries but excludes order handling at supplier’s warehouses and material handling on site. The process of interest is thus comprising the transport from suppliers loading bay to construction site via CLC or direct. This includes activities within the CLC as well as the return and waste flows from site to CLC (see Figure 2). This overall logistics process is divided into four subprocesses; direct transport to site, transport to CLC, CLC operations, transport from CLC.

4.3 Three projects Three of the projects in SRS have been studied (P1, P2, P3). These projects were building between one and three

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Contractor

CLC operations

(> 5 m3) < 5 m3

Delivery to CLC

Supplier

CLC

Waste and returns

Delivery from CLC

Construction site

> 5 m3

Direct delivery Information flows Material flows

Figure 2 - Analysed process

then identified based on logistics cost drivers found in literature (cf. Everaert, et al., 2008; Fang and Ng, 2011; GrífulMiquela, 2001; Schniederjans and Garvin, 1997) and the identified activities and resources in the four subprocesses. The identified cost drivers are deemed to be the ones that are the most important factors affecting the logistics costs of the four sub-processes.

5.1 ABC breakdown The four sub-processes of material deliveries mentioned above are broken down into their corresponding activities, utilized resources and cost drivers in Table 2 below. The activities and resources were identified with the aid of the TPL provider and observations during site visits. The cost drivers were

Table 1 - ABC breakdown of the four logistics processes of a CLC Logistics process Direct transport

Activity Transport

Resources Lorry driver Lorry

Piloting Transport to CLC

Loading

Stow materials Administrative labour Administrative labour Handling labour Handling equipment

Transport

Lorry driver Lorry Stow materials

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Cost drivers No. of stops Drive time Time to identify recipient Distance Drive time Depreciation rate No. of stowage points Administration time No. of gate passages No. order lines No. of packages Time No. of packages No. of relocations on lorry Depreciation rate No. of stops Drive time Time to identify recipient Distance Drive time Depreciation rate No. of stowage points

CLC operations

Warehousing Receiving

Cost of rent Capital cost Handling labour Handling equipment

Quality

Inspection labour

Registration

Administrative labour

Storing

Handling labour Handling equipment Storage cost

Relocation

Opportunity cost loss Handling labour Handling equipment

Planning


Picking

Handling labour Handling equipment

Sequencing

Handling labour Handling equipment

Transport from CLC

Loading

Administrative labour Handling labour Handling equipment

Announcing


Transport

Lorry driver Lorry Stow materials

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Rental rate Depreciation rate No. of packages Handling time No. of packages Depreciation rate No. of packages Time for inspection No. order lines Administration time No. of packages Handling time No. of packages No. of relocations Depreciation rate Storage space utilization Time for storage Opportunity cost rate No. of packages Handling time No. of packages No. of relocations Depreciation rate No. order lines Administration time No. of packages Handling time No. of packages No. of relocations Depreciation rate No. of packages Handling time No. of packages No. of relocations Depreciation rate No. order lines No. of packages Time No. of packages No. of relocations No. order lines Administration time No. of stops Drive time Time to identify recipient Distance Drive time Depreciation rate No. of stowage points

5.2 Cost of CLC Based on the above ABC breakdown (Table 2), the cost of material deliveries

when utilizing a CLC (CL) can be formulated as follows;

C# = C&' + C') + C)#) + C*) (1)

where;

C&' = Cost of direct transports = C#:;? + C@ + CB=C:D=>? (2) C') = Cost of transport to CLC = C#:;? + C'G;>HI:GD (3) C)#) = Cost of CLC operations = CK;GLM:NH=>? + COLPL=Q=>? + CR>HILPD=:> + COL?=HDG;D=:> + CSD:G=>? + COLC:P;D=:> + CBC;>>=>? + CB=PT=>? + CSLUNL>P=>? (4) C*) = Cost of transport from CLC = C#:;? + C@>>:N>P=>? + C'G;>HI:GD (5)

These cost equations (1-5) in combination with the detailed breakdown can be used to gain a greater insight into what the costs associated with the CLC process is comprised of. It can further be used as a tool to continuously improve the operations of the CLC setup by analysing the identified cost drivers to see if prices per activity should be updated.

the CLC in their respective phases and overall. The evaluation is based on the invoice data from the CLC, capturing the activities and costs from equations 1-5. It should be noted that the invoice data only includes the core services that all projects within the development area have to utilize. Table 3 compares the three projects. Number of deliveries from CLC had to be approximated from the number of loadings at the CLC. What should be noted here is that P1 and P2 both had logistics managers on site whereas P3 delegated logistics management to the site manager. It should also be noted that the cost of utilizing the CLC ranges from 0.25% to 0.50% of the total project size in €.

5.3 The cost of the CLC process for three projects In this section, three projects will be evaluated based on their cost of the CLC process in comparison to their overall project size. This will be further compared to the average cost of utilizing

Table 3 - Invoiced costs and utilization of the CLC for three projects Project

Project size

P1 P2 P3

M€ 46.3 M€ 36.6 M€ 17.3

Invoiced CLC cost for basic services k€ 116.4 k€ 106.2 k€ 85.8

CLC cost, % of project size 0.25% 0.29% 0.5%

No. gate passages

No. deliveries from CLC

Handling time at CLC

Storage utilization

Area

3620 4479 2508

404 1021 984

521.25 h 819.56 h 840.58 h

20644.77 m2 15505.04 m2 8466.4 m2

A A B

Table 4 below shows the average values for house-building projects in the two development sub-areas A and B as well as for the total development area of SRS. Noticeable is that on average, contractors in sub-area A were invoiced k€ 47.5 for CLC utilization, whereas P1 and P2 where invoiced k€ 116.4 and k€ 106.2

respectively, well over the average. In sub-area B, the average utilization cost invoiced was k€ 79.5 whereas P3 utilized the CLC to a cost of k€ 85.8. It should be noted that all three projects seem to have utilized the CLC to a greater extent than the average project. All three projects have a higher number of deliveries from 12

CLC than average, and P1 and P2 have also utilized the storage and handling at the CLC to a much greater extent than the average project. P3 has utilized the storage possibility to a lower extent than

the average project in sub-area B as well as the average project in the entire development area.

Table 4 - Average invoiced costs and CLC utilization for house-building projects in areas A and B and in total Area A B Total

Average invoiced CLC cost for basic services k€ 47.5 k€ 79.5 k€ 62.7

Average no. gate passages

Average no. deliveries from CLC

2881 3193 3029

200.4 697.0 435.6

Average handling time at CLC 205.7 h 601.3 h 393.1 h

Average storage utilization 5622.53 m2 12175.86 m2 8726.74 m2

theoretical and managerial contributions made.

6. Discussion and conclusions

6.1 Theoretical contribution

The purpose of this paper was to analyse what activities and costs a CLC entails in order to propose a model for calculating said costs and discussing how the inclusion of a CLC affects site organisations and logistics activities carried out within the construction project. As Langley (2016) has pointed out, the use of construction logistics solutions, such as CLC’s is relatively rarely used in construction and can thus been seen as a phenomenon with some level of novelty. Shakantu, et al. (2003) also highlight the cost focus of the construction industry. Thus, this paper makes a large contribution in presenting an ABC breakdown of the use of a CLC in a construction supply chain as well as calculating the cost of using the services of a CLC in relation to project cost. We can conclude, based on the answers to RQ1 and RQ2 in section 5, that it is possible to develop an ABC-model for construction logistics solutions and it is possible to provide a cost of utilizing the studied solution. Even though not all costs were possible to identify from the available data, the numbers still give an indication of the cost level in relation to the project cost. Below the results of the paper are discussed based on the

Theoretically we contribute to the discussion of SCM and logistics in construction. This discussion has been going on for a while, where arguments of both advantages (cf. Ekeskär and Rudberg, 2016; Sundquist, et al., 2017) as well as disadvantages have been brought forward (cf. Fernie and Tennant, 2013; Green, et al., 2005). One of the main complaints of the contractors using the studied CLC has been that the solution was marketed as a cost saving possibility for them. What the answer to RQ1, the ABC breakdown in Table 2, show is that the CLC add a number of cost driving activities to the construction supply process, that would not have been there if direct deliveries were used, i.e. the activities Transport to CLC, Operations CLC and Transport from CLC. However, what can be seen in other studies of the same case, is that the total number of transports to the SRS area have been 60% lower than in comparable cases (Bergman, 2016). Thus, there are positive impacts of using a construction logistics setup including a CLC. Though, the main beneficiaries are not the main contractors, but the city and the society in general who experiences lower emissions, decreased risk of accidents and less congestion because of 13

fewer transports in the vicinity of the construction area. This raises a question for further research, of how to find suitable financing/business models for construction logistics solutions in large city development projects that divide the costs more equally in comparison to benefits. Based on the answer to RQ2, it can in Table 3 be seen that the cost of the services of the CLC in relation to the project cost in total is very small. The cost was 0.25-0.50% of the total project cost in the three studied cases and their costs were above the average cost of all projects in the area (Table 4). The three projects are different in size and extent. However, the cost of the CLC is compared to the cost of the actual project in which the utilization costs occurred. This allows for comparing the three different projects as the differences indicate that the CLC has been utilized differently in the three projects. Though, what we do not know from this study is the total logistics cost of the projects, i.e. what have the costs on site been for the logistics setup used in this case. What we can say from the interviews is that the projects with a logistics manager at site, P1 and P2, have lower cost for the use of the CLC than P3 who did not have a dedicated logistics manager at site. Thus, one hypothesis can be; How the site organisation organise their work impact the possibilities of utilizing the construction logistics solution and thereby the cost of using the solution. Furthermore, what also has not been studied in this paper, which is another important area for further research, is how the use of a construction logistics solution affect the duration of activities at site, especially relating to the delivery to site (Transport from CLC in Table 2). A hypothesis here is that the time spent for deliveries to site is decreased with a structured logistics setup including a site organisation with a logistics manager and thereby the hustles of logistics is

decreased, which should positively impact the productivity of the construction work. This could also be an explanation to the more positive feedback regarding the solution of P1 and P2. 6.2 Managerial contribution Our managerial contribution is that we help to enable a visibility of the logistics costs in construction as asked for by Fang and Ng (2011). We see that activity-based costing can be a tool to increase the understanding of what activities the use of a certain type of logistics solution generates in construction. This is because the activity-based costing approach helps to divide the main processes of the solutions into part activities, which makes them visible to the users. This is an important issue in the construction industry as making efforts to structure and organise the logistics work have been rarely used, though is presently increasing (Sundquist, et al., 2017), and the new processes developed do not always fit with the traditional working methods (Sobotka, 2000). Therefore, to increase the detailed knowledge of the activities taking place in the logistics flow and thereby the cost it generates, is an important issue to enable the identification of traditional activities that have been transferred from the site organisation to the logistics organisation. Because of this identification it becomes possible to remove these activities from the site organisation and thereby improve the productivity within the construction industry as the activities are conducted only once and by dedicated personnel (Ekeskär and Rudberg, 2016; Sundquist, et al., 2017). It should be highlighted though, that the model developed in this paper is only valid for the construction logistics setup studied here. Therefore, in further research it is necessary to develop a number of general scenarios of construction logistics with 14

corresponding ABC models to enable an in-depth discussion of the cost impact of construction logistics solutions already during the design and planning phases of construction projects. Having this in place will improve the likelihood of construction logistics solutions being used, as it will lower the threshold of structured logistics solutions in construction.

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