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USING BUSINESS PROCESS MODELLING TO STREAMLINE OPERATIONS IN SMES: A CASE STUDY APPROACH
A study submitted in partial fulfilment of the requirements for the degree of
Master of Science in Information Management
at
THE UNIVERSITY OF SHEFFIELD
by
KATIE SARGENT
September 2011
Katie Sargent - Student No. 100141128 MSc Information Management
INF6000 - Dissertation
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Acknowledgements
Throughout the duration of my MSc Information Management course I have
received a lot of support and guidance, and I would like to thank for following
people for all their help;
Firstly I would like to thank my personal tutor and dissertation supervisor Dr Miguel
Baptista Nunes for his understanding during my morning sickness and his expert
advice on my dissertation.
I would also like to thank my employers for their financial support, and to the
research participants for taking the time to complete the interviews.
Finally, I would like to thank my family for their emotional support, advice and
encouragement throughout my studies.
Katie Sargent - Student No. 100141128 MSc Information Management
INF6000 - Dissertation
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Structured Abstract
Background
The majority of businesses within the UK are Small Medium Enterprises (SMEs). As
such, they are a vital part of the UK economy. However, they face many challenges
such as limited financial reserves, and a restricted workforce. Therefore, ensuring
that business operations are carried out efficiently is essential for all organizations in
order to retain a competitive edge.
Aims
The overall aims of this report were to develop a streamlined process model for an
SME tendering and estimating process, using Business Process Management. In
addition, the author aimed to establish how Supply Chain Management (SCM)
theory could be implemented within SMEs.
Method
A literature review was carried out and a set of research questions were established.
Qualitative methods were used to investigate these questions. A case study was
carried out at a small specialized civil engineering company. Three employees were
interviewed in order to understand how their tendering and estimating process was
carried out. A structured observation task was also carried out with one participant
and tender documents were examined. Business Process Modelling was used to
analyse the research data.
Results
Literature on SCM and tendering and estimating was mainly aimed at large
companies with an extensive workforce. Although SMEs are able to implement some
of the theoretical methods, they do not have the resources to execute complex and
expensive management systems, such as Enterprise Resource Planning. However,
the author created a list of recommendations in order to improve the case studies
tendering system drawn from the research findings. They also proposed a theory on
SCM within SMEs.
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Conclusion
The author concluded that main principles of SCM can be successfully implemented
within SMEs. Although complex and time consuming methods such as quantitative
forecasting were not financially viable and often unnecessary, customer relationship
development and supplier relationship management and supplier assessment are
useful techniques for maintaining a quality, proficient and competitive service.
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Contents
1. Introduction & Context ........................................................................................ 7
1.1 Background ................................................................................................... 8
1.1.1 Small Medium Enterprise ...................................................................... 8
1.1.2 The Construction Industry.................................................................... 10
1.2 Research Aims & Objectives ...................................................................... 12
1.3 Summary of Methodology ........................................................................... 13
1.4 Benefits & Constraints of this study ............................................................ 14
1.5 Structure of the Dissertation ........................................................................ 16
2. Logistics in Organisations .................................................................................. 16
2.1 Supply Chain Management ......................................................................... 16
2.2 Components of Supply Chain Management ................................................ 18
2.2.1 Customer Relationship Management ................................................... 19
2.2.2 Supplier Relationship Management ..................................................... 20
2.2.3 Procurement – Partnering, Tendering and Supplier Selection ............. 21
2.3 Tendering & Estimating .............................................................................. 26
2.4 Information Systems for Tendering & Estimating ...................................... 33
2.5 Supply Chain Management within SMEs ................................................... 39
3. Methodology ...................................................................................................... 41
3.1 Business Process Management .................................................................... 42
3.2 Case Studies ................................................................................................ 45
3.3 Data Collection Techniques – Interviews, Unobtrusive Measures ............. 45
3.4 Data Analysis - Role Activity Diagrams & RIVA ...................................... 50
4. The Case Study .................................................................................................. 53
4.1 Case study system ....................................................................................... 53
4.2 Theory Vs Practice ...................................................................................... 56
4.3 Recommendations ....................................................................................... 59
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5. Evaluation & Conclusion ................................................................................... 62
5.1 Summary of Findings .................................................................................. 63
5.2 Response to Research Questions ................................................................. 65
5.3 A proposed SME tendering & estimating system ....................................... 68
5.4 Future Work ................................................................................................ 71
6. Bibliography ....................................................................................................... 73
APPENDIX A - INTERVIEW QUESTIONS ........................................................... 84
APPENDIX B – CONTRIVED OBSERVATION TASK LIST ............................... 97
Figure 1 - Tender Process Summaries ....................................................................... 29
Figure 2 - Theoretical Estimating and Tendering Process Model (Brook, 2008 : 4) . 32
Figure 3 - Case Study Tendering and Estimating Process Model .............................. 55
Figure 4 - A Tendering and Estimating Process Model for SMEs ............................ 70
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1. Introduction & Context
For businesses to remain successful they must adapt to change and evolve in
accordance with an increasingly global business environment. The continual pressure
to retain a competitive advantage is augmented by the need to incorporate new
technologies and ensure that operations run as efficiently as possible. Downturns in
the economic climate make it particularly necessary to provide goods or services
cost-effectively and pass on savings to the customer. Concepts such as Total Quality
Management, ISO 9001 and Business Process Re-engineering are all responses from
the industrial and academic world, in order to promote a unified and productive
organisation. Yet, making drastic changes and identifying wasteful operations within
Small Medium Enterprises (SME’s) is especially difficult, as they generally operate
on much smaller resources and often work to their full capacity. In addition,
reorganizing operations within the construction industry is even more complex due
to the wide ranging specialized skills and diversity of companies involved in any
single project (Murdoch & Hughes, 2000 : 1). Furthermore, the implementation of
information technology has been relatively limited in construction works, in favour
of traditional paper based procedures (Anumba & Ruikar, 2002; Noor et al 2003;
Wang et al, 2007). However, with forecasts suggesting that construction is facing “a
7% decline in output over the next three years” (CIOB, 2009 : 1) due to the current
economic crisis, it is now more important than ever that theoretical and empirical
research is carried out into streamlining business operations within construction
SME’s.
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1.1 Background
1.1.1 Small Medium Enterprise
Small Medium Enterprise’s (SME’s) are an extremely important part of Europe’s
economy. The European Union estimate that “SME’s represent more than 99% of all
businesses and employ more than 90 million in Europe” (European Commission,
2011a : 1). In order for a company to be classed as an SME they must fall into the
following categories:
Enterprise
Category
Headcount: Annual
Work Unit (AWU)
Annual
turnover
OR Annual balance
sheet total
medium-sized < 250 ≤ € 50 million ≤ € 43 million
Small < 50 ≤ € 10 million ≤ € 10 million
Micro < 10 ≤ € 2 million ≤ € 2 million
(European Commission, 2011b)
SME’s face many different complex issues in comparison to larger companies. They
usually have limited financial expenditure, which Welsh & White (1981 : 1) refer to
as resource poverty. “Resource poverty results because of various conditions unique
to smaller companies. For one thing, small businesses tend to be clustered in highly
fragmented industries…that have many competitors which are prone to price-cutting
as a way to build revenues”. As a result they have fewer financial reserves and must
manage profit and investments very carefully. Minimal resources also make it
difficult to compete for work as “they are in competition with much larger
organisations where resources are not as constrained” (Mulhaney et al, 2004 : 326).
Their finances are affected further by external forces. “Changes in government
regulations, tax laws, and labour and interest rates usually affect a greater percentage
of expenses for small businesses than they do for large corporations. Such limitations
mean that small businesses can seldom survive mistakes or misjudgements” (Welsh
& White, 1981 : 1). SME’s are greatly affected by external factors such as Value
Added Tax increases, economic recession and late payments. These factors can in
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turn put pressure on them to delay payments to their own suppliers or take out loans
and fall into debt.
Furthermore, SME’s “have CEOs who are more involved in operational decisions,
need their employees to be multi-skilled as they carry on multiple/contradictory
roles, and they frequently have a “production mode” focus at the expense of strategic
planning” (Haug, 2011 : 491). Larger companies are able to have dedicated staff that
can specialise in particular roles, whereas in smaller companies employees have to
take on a number of roles. As a result, employees often have multiple tasks to carry
out within a limited time frame. In order to compete with larger company’s further
pressure is placed on existing employees to work overtime. SMEs “face additional
constraints in the organisation of working time when it comes to extending operating
hours. Longer operating hours require either deeper or wider use of employees”
(Smith & Zagelmeyer, 2010 : 396). Although, this has to be balanced with European
Working Time Directive which introduced minimum requirements for the number of
hours employees can work, rest breaks and annual leave. Due to such limitations on
working time many SME’s operate informal managerial procedures. This “may free
an organisation from bureaucratic rules but may also lead to a reliance on informal
working practices that could limit organisational performance” (Smith &
Zagelmeyer, 2010 : 392). Although few small organizations have the resources to
dedicate to business analysis and process improvements, doing so would create
efficient methods of working in the long term.
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1.1.2 The Construction Industry
The majority of firms within the construction industry are SME’s. During 1997 –
20091 the number of SME’s in the construction industry has increased steadily from
approximately 159,943 to 193,747 private firms (Office for National Statistics,
2010). However, the number of SME’s and large construction firms which have gone
into liquidation during 1996-2009 also increased from 12% to 19.3% (Office for
National Statistics, 2010). Furthermore, the output for small and medium sized
companies saw a larger fall of 9% in output, compared to large companies who saw a
fall of 4.3% during 2010 – 2011 (Office for National Statistics, 2011). These
statistics suggest that construction industry faces increasing competition and
financial difficulties, particularly for SMEs. Such financial constraints have led to a
reduction in levy payments made to the Construction Industry Training Board
(CITB), reducing the amount of funding available for employee training
(Construction Industry Training Board, 2010). This is disappointing considering that
in a report by Hall (1994 : 749) he found that a skilled workforce was key to a
construction companies survival, stating that “a company only ignores the quality of
its workforce at its peril!”. Further setbacks have been caused by the extreme
weather conditions the UK has experienced over the last few years. Flooded
construction sites, delays in transport due to heavy snow and heat waves have all
contributed to delays in works and significant insurance claims (Wedawatta et al,
2011 : 107). In addition, project works are often carried out across the UK or
worldwide. Consequently, construction companies need to communicate over large
distances, making it difficult to share information and knowledge. The “industry’s
frequently adversarial and fragmented nature mitigates the nurturing, sharing and
transfer of knowledge between organizations” (Love et al, 2011 : 195). Advances in
technology have facilitated such problems, for example Intranets which can be
accessed remotely via PDA’s, and other Web 2.0 applications (Grace, 2009).
1 The Construction Statistics Annual for 2011, providing statistics for 2010, is currently
unavailable.
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The construction sector covers a wide range of trades, ranging from plastering to
civil engineering for multi-million pound offshore wind farms. “The industry is
reliant upon virtual teams, fragmented work groups, sub-contracted labour and multi-
organizational project delivery structures” (Dainty et al, 2002 : 334). Due to the
nature of many construction projects, many skilled employees are only required for
the duration of the works and are retained on short-term contracts. As a result, many
employees are self-employed or work for consultancy firms. The construction sector
works on temporary and often unique projects. This method of working presents
many challenges. Projects “are characterized by discontinuous personal
constellations and work contents, a lack of organizational routines, a short-term
orientation and a cross-disciplinary integration of internal and external experts”
(Hanisch et al, 2009 : 148).
Due to such fragmentation, sporadic employment and diversity, a large amount of
research has been carried out into unifying the industry and improving quality. Two
influential reports were published by Latham (1994) and Egan (1998) in order to
advise on improvements the construction industry should make, in order to remain
competitive in a global marketplace, and to provide better customer service. One of
their key recommendations was the importance of improving supply chain
management. Although “the industry is increasingly sceptical about adopting
“management fads” and gimmick technologies that provide no strategic competitive
advantage” (Love et al, 2011 : 194), SCM has been implemented with great success
and is seen by some as an inherent part of running an efficient business (Ross, 2011).
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1.2 Research Aims & Objectives
Aims
• Develop a set of research questions from the literature review.
• Select a theoretical tendering and estimating process model for an SME to
test against.
• Establish the best method for gathering research data.
• Illustrate a real-life tendering business process model provided by data from
the case study.
• Compare the theoretical and real-life business process models and identify
any differences.
• Create a new tendering process model illustrated as a Role Activity Diagram
(RAD).
Objectives
• Provide an accurate description of the universe of discourse and identify any
limitations in its application to SMEs.
• Collect accurate and sufficient data in order to answer the research questions.
• To critically analyse any discrepancies found between the theoretical and
real-life tendering processes.
• To create a set of recommendations for a new streamlined tendering process
in order to resolve conflicts identified following the comparison between
theoretical propositions and the case study results.
• To contribute to Supply Chain Management theory by carrying out empirical
research and by investigating how SMEs can implement such management
practices.
• To create a RAD for a tendering process suitable for SME’s in the
construction industry.
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1.3 Summary of Methodology
In order to complete this study, a number of methods will be used in order to gain
and analyse the research data. Firstly, a literature review will be completed in order
to provide me with a conceptual framework from which I can develop a provisional
research question to test. Therefore I shall follow a deductive process. Initially, I
shall establish a list of “principles…that are then tested through empirical
observation or experimentation. But before such experimentation can take place,
underlying concepts must be operationalized (made measurable) so that they can be
observed to confirm that they have occurred”. (Gray, 2004 : 6).
In order to test my theoretical findings, I shall carry out a case study. “A case study
is an empirical inquiry that investigates a contemporary phenomenon within its real-
life context, especially when the boundaries between phenomenon and context are
not clearly evident” (Yin, 2003 : 13). The company which will be the focus of my
case study is a small specialised civil engineering company.
In order to gain an accurate idea of the current tendering and estimating process
within this company I shall use a range of qualitative data collection techniques. This
will include interviews with key personnel and unobtrusive measures. Unobtrusive
measures will include contrived observation and the selection and review of internal
documentation and client tender documents.
Data analysis will be carried out using a Business Process Management
methodology. BPM standards applied will be those formulated by Martyn Ould
(2005). Data will be represented with Role Activity Diagrams, using the online
Microsoft Office Visio template accessible from Ould’s website
(http://www.veniceconsulting.co.uk/). This diagram will then be compared to the
theoretical tender system diagram and differences will be identified. An analysis will
be completed and recommendations will be identified. Finally, a new streamlined
tendering system will be created using business process modelling.
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1.4 Benefits & Constraints of this study
There are several benefits which this report should achieve. Firstly, in a literature
review carried out by Zellner (2011 : 218), he found that many of the research papers
lacked detail “on the improvement act itself”. By identifying methods for improving
the business process and providing a list of recommendations, this research should
begin to redress this limitation in other research.
Secondly, according to Houy et al (2010 : 628) “empirical research is needed to gain
insight into the actual effects of developed concepts”. Despite this they illustrate that
there is significantly more theoretical research than empirical research on Business
Process Modelling. “Empirical research in BPM has reached top-class journals only
to a moderate extent which also stresses its potential for development” (Houy et al,
2010 : 631). This is emphasised by the fact that the Business Process Management
Conference in Europe 2011 will provide 20 case studies from companies including
the Ministry of Defence, AEGON and Shell, in order to “learn from organizations
who have already implemented world class BPM…approaches and solutions” (BPM,
2011 : 1). This research paper will not only meet this need for further empirical
research, but will also provide insight into a somewhat rare and specialised industry
within the civil engineering sector.
Thirdly, it is important to focus on the construction industry due to “its significant
size and because of its project-based nature, which may inspire other industries that
are increasingly organizing their activities in projects” (Ellegaard et al, 2010 : 219).
Findings from this study may be applicable to other sectors that implement tendering
and estimating procedures, not just the construction industry.
Fourthly, although this report focuses on SMEs, many large organisations are
heavily reliant on SMEs within their supply chain. “With a wish to minimize the
system wide cost large organizations often expects various kinds of changes at the
end of their SMEs supply chain partners” (Thakkar et al, 2008 : 98). Therefore, it is
important for larger organizations that SMEs improve their supply chains as this will
directly affect their own companies. By carrying out research into improving
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business processes within SMEs this should improve their interaction with large
companies and improve their supply chains too.
This study has several constraints which could affect the outcome. Using a small
specialised company for the case study could mean that the findings may only be
useful to a small number of similar companies. However, it is hoped that although
some of the recommendations may not be applicable, the majority of the process
model will be generic and adaptable for other companies to use. Furthermore, it
should provide a unique insight into a specialised industry within which very little
research has been carried out.
Another constraint is the methodology used for this study. All research methods have
their limitations and qualitative methods are no exception. As the case study
company is small and time is limited, only a few key personnel will be interviewed.
This could lead to bias within the findings, as the opinions and actions carried out by
these employees may not be representative of the whole company, or even this sector
of construction. As the researcher has worked for the case study company it could be
argued that this could also result in some subjectivity. The researcher could be
influenced by their own opinions and preconceptions. Their former role within the
company could also influence interviewee’s responses and cause unwillingness to
share information. For example if the researcher was in a managerial role
participants may not want to admit that they don’t follow existing procedures or that
they don’t know how to carry out certain aspects of their role. Alternatively it could
provide a distinctive advantage. The researcher receives “the same socializations as
ordinary members, acquires similar perspectives, and encounters similar experiences.
In this way the scientist acquires some sense of the subjective side of events which
he could less easily infer if he observed without taking part” (McCall & Simmons,
1969 : 5). The researcher is immersed in the culture of the organisation and gains a
far more in-depth understanding of the company, which would be impossible during
a brief visit.
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1.5 Structure of the Dissertation
Business process modelling is an effective method of identifying inefficiencies in
company procedures. For SMEs who operate within restricted time-frames and
limited financial and staff resources, it is essential that non-added value tasks are
limited and if possible eradicated. The construction sector is no exception and, as
such, will be the focus of this study. As an industry which, in 2009, relied on
approximately 1,017,210 SMEs, for nearly 80% share of the industries total
employment (BIS, 2010), construction companies needs to streamline their processes
in order to remain competitive and provide a good quality service. Therefore, it is
valuable to investigate how to streamline one of their key business processes i.e. the
tendering and estimating process.
Within Section 2 literature related to supply chain management, including research
on customer relationship management, partnerships and tendering, will be examined
in detail and a set of research questions will be established. Section 3 will provide an
explanation of the methodology used to gather data. Section 4 will provide an
analysis of the data and analysis of the findings from the case study and constructive
recommendations will be outlined. Section 5 will discuss and illustrate and ideal
tendering and estimating process and conclusions will be drawn.
2. Logistics in Organisations
2.1 Supply Chain Management
Supply chain management (SCM) is an essential element of efficient business
management. Almost all organizations have suppliers and customers. For example,
Robert Thompson’s Craftsmen Ltd is supplied with English Oak and they sell
handcrafted furniture to their customers. Working in harmony with these parties
offers many benefits to all those involved, including cost savings, quicker services
and tailor-made products for all customers.
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There has been a wealth of research carried out into the benefits and weaknesses of
supply chains, and numerous definitions have been provided. Christopher (2005 : 5)
defines the term as follows: “The management of upstream and downstream
relationships with suppliers and customers to deliver superior customer value at less
cost to the supply chain as a whole”. Furthermore, Bozarth & Handfield (2008 : 7)
provide a simplistic but effective representation of the flow of upstream and
downstream processes in SCM, for a beer company;
When specifically applied to the construction industry, Akintoye et al (2000 : 161)
defines SCM as follows:
“Construction SCM may be regarded as the process of strategic
management of information flow, activities, tasks and processes,
involving various networks of organisations and linkages (upstream and
downstream) involved in the delivery of quality construction products
and services through the firms, and to the customer, in an efficient
manner”.
In addition, in relation to SMEs, Thakkar et al (2008 : 98) define SCM as:
“a set of business activities including purchase from open/spotmarket,
manufacturing or processing of subcomponents/subassembly within the
plant and delivery to large enterprises using hired transportation to
enhance value of end product and in-turn to ensure long-term regular
purchase orders”
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There are a variety of reasons for implementing SCM. For some researchers the
ultimate goal of SCM is to “achieve a seamless integration through streamlining
business processes within and across firms” (Salam, 2011 : 359). Conversely, for
other researchers the goal of SCM is for financial gains (Crandall et al, 2010 : 6). Yet
for Ross (2011 : 1) SCM is a fundamental part of running a successful business, “for
corporate survival and competitive advantage”.
As mentioned previously, Latham (1994) and Egan (1998) identified SCM as a key
mechanism for creating efficient business processes. The next section of this report
will outline the key themes within SCM. Section 2.3 will focus on one specific
process within SCM – tendering and estimating. Section 2.4 will discuss the
information systems and technology which support SCM. Finally Section 2.5 will
critically analyse the ways in which the literature on SCM applies to SMEs and a set
of research questions will be established. Overall, Section 2 will fulfil my first two
aims.
2.2 Components of Supply Chain Management
A major company to reap the benefits of successful supply chain management is
IKEA 2. IKEA “does not manufacture its products but uses over 1800 different
worldwide subcontractors and suppliers from countries on every continent, who ship
products to IKEA’s distribution centres for eventual sale” (Waller, 2003 : xxi). If
they didn’t implement strict SCM procedures the company wouldn’t be as successful
as it is today. Unmanaged supply chains would lead to “high costs, long lead times,
and the quality of…products and…services would surely suffer” (Waller, 2003 :
xxi).
2 IKEA is a furniture and accessorise company, with a 23.8 billion EUR turnover in 2010
http://franchisor.ikea.com/showContent.asp?swfId=facts1
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2.2.1 Customer Relationship Management
Over the last few years the focus of supply chains has shifted from managing
suppliers to serving the needs of the customer (Crandall et al, 2010 : 4). Many
researchers term this aspect of focus on the supply chain as the ‘value chain’ (Porter,
1985, Soon & Udin, 2011; Zhang & Gregory, 2011). “The ultimate driving force in a
market-driven firm is to make a satisfactory profit, which implies satisfying the
client…The client should be considered king!” (Waller, 2003 : 5). Quality standards
such as TQM were introduced into the UK from the Japanese in the 1980’s
(Ramasamy, 2005) and, as a result, customers have had higher standards and
expectations. “Customers have become more demanding in terms of the standards of
product quality and delivery service which they now expect, while still looking for
cost and price reductions” (Saunders, 1997 : 12). Rather than focusing on
relationships with suppliers and making a bigger profit, meeting the customer’s
requirements has become the main focus. “Good relationships with profitable
customers pay off in the long run because the cost of retaining customers is much
less expensive than recruiting new customers” (Crandall et al, 2010 : 12).
According to Salam (2011 : 360) Customer Relationship Management (CRM)
“involves identifying key customers and target markets, and developing and
implementing programs with key customers”. A number of methods have been
recommended in SCM literature in order to encourage good relationships with
customers. One such method is Forecasting. This is used to predict a future variable
such as customer demand, future trends, price fluctuations etc. The can be estimated
using quantitative and qualitative techniques (Bozarth & Handfield, 2008). For
example, by using quantitative forecasting techniques in a construction company,
you could examine historical data and calculate how long it took to carry out each
weld on a pipeline and the cost per man hour. This data can then be used to predict
future costs on similar projects. Whereas using qualitative forecasting techniques
you may want to invest in carrying out a survey to discover customer’s future needs
(Crandall et al, 2010), or apply the Delphi method and approach a number of leading
experts in the field of construction and pose a list of questions on future trends in the
industry. By applying forecasting the supplier can predict what the future customer
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will want and reduce its prices to provide the customer with a competitive and
reliable quotation.
Salam (2011) identifies two other methods that are essential to business processes
for successful SCM; Demand Management and Product Development. Demand
Management involves meeting the quantities of products and services needed and
Product Development is where new and improved products are developed in order to
meet the needs of the client. Crandall et al (2010) not only state that CRM is useful
for relationship building, but also expand upon this concept by stating that
Operational CRM (providing help desks for customers, call centres etc.), and
Analytical CRM (capturing and storing customer data), are also useful techniques.
For Lao et al (2011 : 46) in “order to meet the needs of single-period contracted
SMEs, service quality should be emphasised rather than reputation” and “to meet the
needs of long-term contracted SMEs, reputation should be emphasised”. This
concurs with the findings of Egemen and Mohamed (2005 : 270), who discovered
that clients valued the “image and identity of the contractor firm in the market” as
one of the top three criteria during the selection process, whereas consultants rated it
tenth during their selection process.
2.2.2 Supplier Relationship Management
Conversely, ensuring that upstream supply chains are as efficient as possible is still a
major focus within many literary works on SCM. Weele (2010 : 3) uses the case
study of British Airways to demonstrate the benefits of reviewing suppliers within
the supply chain. He explains that the airline made significant savings by trying “to
reduce the number of suppliers to a mere 2000, leading to more business per supplier
and hence increasing value of British Airways as a customer to them”. Suppliers
would remain competitive to win contracts and when successful would produce high
quality goods and services in order to remain a valuable supplier. Crandall et al
(2010 : 278) believe that an effective method for improving the upstream supply
chain is through Supplier Relationship Management (SRM). SRM is a process that
involves developing “relationships with key suppliers to reduce costs, innovate with
new products and create value for both parties based on a mutual commitment to
long-term collaboration and shared success” (Lambert, 2008 : 54). Wisner et al
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(2008 : 95) adds that SRM is supported by “software applications that enable these
processes to be managed for efficiently and effectively”. This method is similar to
Customer Relationship Management and involves developing long-term
relationships with suppliers and exchanging valuable information. In addition, Salam
(2011 : 364) identifies four behavioural aspects of SCM implementation to improve
supply chain processes. These include Continuity “the perception of bilateral
expectation of future interaction”, Communication “the sharing of meaningful and
timely information between firms”, Power “the ability of one individual or group to
get another unit to do something” and finally Trust “the willingness to rely on an
exchange partner in whom one has confidence due to the ability of that partner to
provide expertise, dependability and direction”. If companies believe that they will
be provided with work in the future, they are more likely to provide competitive
prices and high quality service in order to satisfy their buyer. By providing suppliers
with information they can prepare and order in products or services ahead of
schedule, and if the buyer exercises power over the supplier in an effective and
supportive manner, they will develop a greater amount of trust and confidence in
their customer.
2.2.3 Procurement – Partnering, Tendering and Supplier Selection
A key operation within supply chain management is procurement.
“Procurement…refers to the selection and appointment of specialist subcontractors
and suppliers” (Mitchell et al, 2011 : 298). One technique used in procurement is
partnering, and there are numerous articles promote its positive outcomes (Latham,
1994; Egan, 1998; Bennett & Peace, 2006). The Construction Industry Institute
(2011 : 1) defines partnering as follows:
“a long-term commitment between two or more organizations for the
purpose of achieving specific business objectives by maximizing the
effectiveness of each participant’s resources. This requires changing
traditional relationships to a shared culture without regard to
organizational boundaries. The relationship is based upon trust,
dedication to common goals, and an understanding of each other’s
individual expectations and values. Expected benefits include improved
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efficiency and cost effectiveness, increased opportunity for innovation,
and the continuous improvement of quality products and services”.
There are two types of partnering. Firstly, there is project partnering whereby
“partnering is undertaken on a single project. At the end of the project the partnering
relationship is terminated and another relationship may commence on the next
project” (Humphreys, 2003 : 168). The other type is strategic partnering which
“takes place when two or more firms use partnering on a long-term basis to
undertake more than one construction project, or some continuing construction
activity” (Humphreys, 2003 : 168). Wood and Ellis (2005) believe that partnering is
incredibly important for creating successful supply chains as it provides benefits to
all organizations involved. For Crouse (1991 : 6) it “provides access to a larger pool
of talent that one might not otherwise be able to take advantage of”, and enables each
company to specialise in its core competencies whilst offering a broader range of
services. Brook (2008 : 13) also endorses partnering, stating that “contractors have
developed partnering schemes in order to add a powerful ingredient to what may be a
highly competitive bid”. There are however, a number of cynical views in relation to
partnering. A major barrier can be due to “the inherent lack of trust between
potential partnering organisations, especially at the early stages of project
development” (Fortune & Setiawan, 2005 : 182). Furthermore, Chan et al (2003)
identify several reasons for the breakdown of partnerships, including financial
burdens making one party reluctant to commit fully, overdependence on one
company rather than equally sharing the workload, failure to communicate and share
valuable information and lack of support from top management. Partnerships can
also lead to the “increased scope for corruption and the influence of political
interests on decisions, which are thought to accompany partnership relationships,
might have a deleterious effect of the way in which public money is spent”
(Saunders, 1997 : 265). For some projects customers can hold a great deal of power.
“In some cases, the customer selects the manufacturer (contractor), the suppliers of
specialist parts and the material suppliers…Longstanding, efficient supplier-
contractor relationships are vulnerable to disruption in this context” (Akintoye et al,
2000 : 161). For example, if a client has already selected a designer for their project,
the contractor must quickly adapt and work with this company rather than relying on
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a long-term partnership with a preferred designer. The client can also decide if the
contractors chosen subcontractors are suitable to use and prevent them from
appointing their services.
Latham (1994 : 62) points out that a suitable “partner should initially be sought
through a competitive process, which would be necessary to meet EU requirements”.
Within the construction industry EU legislation, in place to promote fair and
competitive trading, reduces the ability to establish long-term partnerships with
clients. The “prevention of unfair discriminatory practices and a predisposition for
the encouragement of competition promote the desirability of operating clearly
specified tendering procedures” (Saunders, 1997 : 264). Tendering involves
requesting a price for carrying out a project. Clients may request prices from a
selected list of suppliers. “The number and size of firms to be invited to tender
should depend on the size and type of contract. The Code of Procedure for Single
Stage Selective Tendering 1989 recommend that the number of tenderers should be
limited to a maximum of six” (Aqua Group, 1992 : 101). Alternatively, the European
Economic Community states that all tenders for public works, supply contracts and
services which are valued above a certain threshold must be advertised in the Official
Journal of the European Communities and TED database3. Such restrictions prevent
clients requesting prices from just one preferred supplier. “Professional purchasers
may find it further odd and counterproductive that poor performing suppliers cannot
be excluded from the (public) tendering procedure” (Gelderman et al, 2006 : 707).
Clients involved in this process may receive many prices from a variety of suitable
and unsuitable companies, making the process of assessing tender submissions costly
and time consuming. As a result, “the culture of construction remains essentially
adversarial with continuing reliance on price competition and firm contractual
arrangements” (Saad et al, 2002 : 175). Like partnering, tendering is also open to
corruption. In 2009 Balfour Beatty, along with over 100 other British construction
companies, was fined for illegal price fixing. They joined a cartel in which
companies would collude to increase prices in tender submissions, forcing the client,
which was generally the government, to accept an inflated price for carrying out the
3 Tenders are advertised on the OJEC website http://ted.europa.eu/TED/main/HomePage.do
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works (Wearden & Webb, 2009). The adversarial nature of tendering can also lead to
companies trying to underbid each other, and offer a lower price by sacrificing
product quality (Crandall et al, 2010). It can lead to companies without the correct
equipment and skills, winning works due to low bids and causing the failure of a
project. Furthermore, the diversely skilled workforce and complexities of each
construction project create a number of variables (Mitchell et al, 2011), so a tender
price submission will never be completely accurate.
According to Saunders (1997 : 255), it would be easy to compare and contrast the
benefits and weaknesses between partnerships and adversarial tendering. Yet he
explains that this “oversimplifies the range of possible sourcing relationships”. By
using a tendering and rigorous selection process to establish a few key suppliers and
subcontractors, it should then be possible to build good relationships and
partnerships with a few companies. Prior to issuing tenders many clients and main
contractors require contractors and suppliers to meet specific criteria, such as
financial turnover, insurance policies and quality procedures. In order to establish if
they meet these conditions they send out a pre-qualification questionnaire. A simple
way to evaluate these questionnaires is by using a Categorical Method. This involves
evaluating suppliers from a range of perspectives and grading them on each
category. For example, one category may be quality systems. If a supplier is ISO
9001 certified they may be allocated 10 out of 10, whereas, if they have insufficient
finances to support their work they may receive 0 out of 10 for this category. The
suppliers with the highest rating are deemed to be the best. More recently a major
criterion for clients is a company’s carbon emissions. “Nowadays, organizations
routinely face queries about how green their manufacturing processes and supply
chains are, how wide the carbon footprint is, how wasteful their packaging is, and
how they will recycle” (Emmett & Sood, 2010 : 5). Due to the governments focus on
reducing carbon emissions and its introduction of the CRC Energy Efficiency
Scheme Order 2010, large company’s have to reduce their carbon emissions and as a
result clients have put greater emphasis on encouraging their supply chain to
consider their own impact to on the environment. Therefore, it has also become a key
criterion in the pre-qualification assessment.
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There are several alternative methods of assessing suppliers and subcontractors
questionnaire responses. According to Ordoobadi and Wang (2011 : 629), using just
one method of analysis could “lead to a biased decision, made with insufficient
information, given the fact that any model has its limitations”. A similar method to
the Categorical Method is the Linear Weighted Average Method. This involves
adding a weighted value to each category (Ordoobadi & Wang, 2011). For example,
for one supplier such as a stationary supplier, product quality and price may be high
priorities whereas insurance may not be as important. Many of the textbooks within
Sheffield University Library recommend this method (Bozarth & Handfield, 2008;
Crandall et al, 2010; Lysons & Gillingham, 2003). Alternatively, an evolutionary
fuzzy-based approach is recommended by several researchers (Ohdar & Ray, 2004;
Jain et al, 2004; Ordoobadi, 2009). It involves changing qualitative supplier
information into qualitative data. An algorithm is then used to calculate the rating of
each supplier. Evaluation of a supplier’s performance at the end of each project is
also an essential tool. “Periodic evaluation of supplier’s quality is carried out to
ensure the meeting of relevant quality standards for all the incoming items, and the
essential requirements advocated for suppliers’ selection are quality, cost, delivery,
flexibility, and response” (Ohdar & Ray, 2004 : 723). Ordoobadi & Wang (2011)
highlight that within an organization there may be two categories of people involved
in supplier selection. Firstly there may be the expert in supplier selection, an expert
in their field and the CEO or high level manager. They propose the experts should
have access to a number of evaluation methods, such as those described above, and
be allowed to choose any method they prefer for each supplier. Results should then
be shared using Web 2.0 technologies such as email, blogs and wikis. They should
then be reviewed by a senior manager for consistencies and discrepancies within the
results and then a final decision should be made by them. They believe that this
would enable knowledge sharing, collaboration and reduce any bias.
Supply Chain Management is an essential part of almost every company.
Researchers have examined the techniques for improving downstream processes and
serving the needs of the customer, including Forecasting, Customer Relationship
Management, Demand Management, Product Development, Analytical CRM and
Operational CRM, as well as emphasising quality and reputation. They have also
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stressed the importance of working towards efficient upstream supply chains by
using techniques such as Supplier Relationship Management, and the necessity to
encourage continuity, communication, power and trust. Furthermore, partnerships
are a popular technique for improving relationships with subcontractors, and
tendering is an excellent, if not essential method of procurement. Ideally it is
suggested that both techniques can be used together if rigorous supplier and
subcontractor selection techniques are also used. Methods such as the Categorical,
Linear Average Weight Method, the more complex evolutionary fuzzy-based
approach and collaborative reviewing techniques are all suggested for evaluating
supplier and subcontractor pre-qualification questionnaires.
2.3 Tendering & Estimating
A core function within all construction companies is the tendering and estimating
process. “The work of civil engineering contractors can be crudely represented as (a)
getting work at the right price; and (b) doing the work within that price.” (McCaffer
& Baldwin, 1986 : 1). An estimating and tendering process is “a purchasing
procedure whereby potential suppliers are invited to make a firm and unequivocal
offer of the price and terms which, on acceptance, shall be the basis of the
subsequent contract” (Lysons & Gillingham, 2003 : 651). A typical tender typically
includes the following requirements:
“- price
- timescale
- technical competence
- previous experience
- reliability
- size, ownership and financial status of suppliers” (Hyman, 1979 : 170).
However, the process of submitting quotations to clients can vary considerably. On
some occasions “bidding can require no more than a short letter in response to a
direct approach from a client. At the other extreme, the process can go through a
number of stages, involving a protracted sequence of documentation on the part of
clients and consultants” (Lewis, 2007 : 2). During a formal process, as discussed in
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section 2.2, contractors may receive a pre-qualification questionnaire to complete, in
order to assess their overall company capabilities. This may be obtained by
requesting the questionnaire for a project advertised in a journal or website such as
the Official Journal of the European Communities, or the client may approach the
contractor directly based on previous experience and partnership agreements.
Then, if suitable, the client will request a quotation, in the form of a tender package,
for carrying out engineering works and/or providing a service. Contractors must then
decide if they would like to provide a quotation.
“[T]he majority of bids are considered on the following commercial
factors: the availability of suitable staff to prepare the proposal; the likely
value of the contract; the size and nature of the competition; the
suitability and availability of products or services to meet the
requirements in the timescale” (Hyman, 1979 : 172).
Once the contractor decides to tender for a project, there is a multifaceted “process
that involves and depends on several different categories of personnel within the
contractor’s organisation as well as essential external contributions by the Engineer’s
staff, material suppliers, plant hire companies and specialist sub-contractors”
(McCaffer & Baldwin, 1986 : 12). Brook (2002 : 2) discusses a number of roles
involved in producing a tender package for a client. A quantity surveyor will
“examine amendments to conditions of contract, prepare bills of quantities, and
identify possible difficulties which have been experienced on previous contracts”.
The type of contract may also involve only construction works or it may be a design-
build contract whereby the contractor is usually provided with a set of preliminary
design sketches and outline “parameters relating to location, size, design and the
desired time of occupancy” (Pratt, 2004 : 8). In addition, a planning engineer will
create preliminary method statements, a programme of works and construction and
site layout designs. In order to prepare an accurate price a buyer will obtain
quotation from approved suppliers and subcontractors as well as maintaining a
library of product literature. “His knowledge of local suppliers and current discounts
is essential” (Brook, 2002 : 7) and enables him to estimate future price changes and
trends. Finally, a Director will make the ultimate decision on the lowest quotation
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the company can offer, after taking into account additional elements such as
company overheads and a desired profit margin. The price requested from the client
may be fixed price, lump sum or cost-reimbursable (Weele, 2010 : 34). During the
construction phase Brook (2002 : 3) adds that site “managers should report on the
technical and financial progress of their projects so the estimator can learn from the
company’s experience on site”.
Given the importance of this process within a business, it is essential that it runs
efficiently in order to remain competitive, whilst creating an impression of
professional expertise to potential clients. However, having reviewed current
literature on tendering there seems to be some irregularity on there the process of
tendering begins and ends. For McCaffer & Baldwin (1986 : 12) it “takes place
between two well defined points, the decision to tender and the submission of the
tender”. Conversely, for Hackett et al (2007), the process begins on receipt of an
initial enquiry and finishes when all tender queries have been resolved, following
submission. The diagram below represents a summary of the differences between
authors description of the tendering and estimating process:
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Bentley (1987)
Brook (2008)
Hackett et al (2007)
Lewis (2007)
McCaffer &
Baldwin (1986)
Preliminary Enquiry Tender announcement
Decision to tender Initial Actions &
Appraisal
Tender documents &
Invitation to Tender
Pre-qualification Decision to tender
Collection of
information
Project appreciation &
Enquiries
Tender period Shortlist Material and sub-
contract enquiries
Resources &
Preparation of the
estimate
Bid specification Project Appraisal,
construction method
& Planning
Preparation of
estimate
Tender adjudication Bid - tender, proposal,
application for funding
Estimates
Tender finalisation
& submission
Tender finalisation &
submission
Tender compliance Evaluation Tender finalisation &
submission
Action with
successful tender
Late tenders Negotiation
Contract Award
Figure 1 - Tender Process Summaries
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As stated in the research aims and objectives, it is necessary to identify an ideal
business process model for a tendering process for an SME from the literature
review. This model will then be compared to the tendering process identified within
the case study and any discrepancies and improvements can be made.
The discrepancies found within the tender process models, summarised in Figure 1,
mean that many are not a reflection of SMEs processes and are therefore not
relevant. Some of the variations between authors are influenced by the perspective
from which they are writing their textbook. Brook (2008 : x) aims to “introduce a
practical approach to estimating and tendering from a contractor’s point of view”,
whereas Hackett et al (2007 : 3) aims to cover aspects from both the client and the
contractor as they believe that it’s “vital that all members of the building team are
fully conversant, not only with their own role but also with the roles of others and
with the interrelationships at each stage of the project”. Although it is necessary to
have an overview of the clients processes, it doesn’t form part of the contractors key
activities or as Ould (2005 : 174) terms them, Essential Business Entities, “the
essence of the organization’s business”, and shouldn’t be included in the process
model. In addition, Lewis (2007 : 21) illustrates a “typical local authority
procurement process for services or consultancy”, and in doing so limits the scope of
this process, so this diagram would not be suitable for a SME construction company
in the private sector.
Furthermore, the employees involved in the process vary between each text. Whilst
some remain generic, the diagram by McCaffer and Baldwin (1986) is aimed at
larger organisations and involve a large team of people, including in-house
designers, planners and buyers. Therefore, this diagram would not be suitable for an
SME to implement and cannot be selected. The number of personnel and roles they
carry out can vary significantly based on the size of the organization. “In a small
firm, the estimator might be expected to carry out some quantity surveying duties
and will be involved in procuring materials and services” (Brook, 2002 : 1). Whereas
in larger companies the estimating team alone will “often comprise of a chief
estimator, senior estimators and estimators at various stages of
training…administrative and estimating assistants” (Brook, 2002 : 2).
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Bentley (1987) illustrates the tendering process by creating an activity schedule.
Although his diagram provides a simple and concise list of activities which are
carried out during the tender process, it doesn’t demonstrate how different activities
can be carried out at the same time. Ould (2005 : 44) states that “organizational
activity is massively concurrent: there are many, many things going on at the same
time”, but by representing activities in a long list, it doesn’t allow for interactions
and relationships between roles. Therefore, this diagram is not an accurate portrayal
of the tendering process.
Conversely, Brook’s (2008) process model (Figure 2) satisfies all of the above
criteria. Not only does he represent the tendering and estimating process for a
medium sized company, it focuses entirely on the organization completing the tender
submission. It also identifies congruent activities, highlighting that multiple tasks
take place at the same time. Therefore, this is the theoretical process model selected
from the literature review for the purpose of this research, as stated in the second aim
within the introduction, and will be compared against the findings from the case
study in Chapter 4.
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Figure 2 - Theoretical Estimating and Tendering Process Model (Brook, 2008 : 4)
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2.4 Information Systems for Tendering & Estimating
The Internet and information technology have transformed the way many business
carry out their daily operations. It has become common practice to communicate
through emails, hold video web conferences, or creating letters, and calculating
complex mathematical equations using Microsoft Office software. As a result,
computers and personal digital assistants (PDAs) have become a fundamental device
within many organizations. Due to the wide ranging benefits and popularity of IT
applications, many software companies and website designers have developed a
range of applications to aid the process of supply chain management. During the late
80s and 90s, Enterprise Resource Planning (ERP) systems became a widely
implemented resource for carrying out a variety of business transactions (Stadtler &
Kilger, 2000). Although in some cases it didn’t transform companies in the way
many expected (Gargeya & Brady, 2005), with the right change management
implementation, staff training and internal process development, such systems can
facilitate daily operations. Procurement methods, including electronic marketplaces,
e-catalogues, e-tendering, Software as a service (SaaS), and radio frequency
identification (RFID) have enabled companies not only to improve their internal
company processes, but have promoted customer relationship management (CRM)
and supplier relationship management (SRM) too.
As mentioned in the introduction, many construction companies are reluctant to
adopt new technology and electronic information systems (Anumba & Ruikar, 2002;
Love et al, 2011). Instead many companies still rely on “mostly manual, and
numerous paper copies of documents and drawings…the management of these loose
documents is often very time consuming and tedious, which reduces the productivity
seriously” (Wang et al, 2007 : 158). Yet there are numerous applications which the
construction sector can benefit from and use to improve their supply chain
management.
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The ultimate supply chain systems is one which aims to help all areas of an
organisation work together, preventing silos of isolated information in each
department and unnecessary duplication of work. It is, what Ross (2011 : 73) terms,
an Enterprise Business System (EBS), as illustrated in his diagram below:
An ideal system brings together all the key functions of a business such as
manufacturing, procurement, finance, logistics, human resources and customer
management, and enables each department to access essential information in order to
provide a better service to their customers. Of course many businesses don’t have all
of these functions. A supermarket, for example, doesn’t manufacture its own food
and drink products and wouldn’t require this application within its information
system. Therefore, systems can be adapted to suit the needs of its users. One of the
best solutions is an Enterprise Resource Planner (ERP), which is used by many
companies today. It operates by “providing a central database that collects
information from and feeds information into all the functional application areas so
that effective transaction management, shared management reporting, and decision-
making can be effectively performed” (Ross, 2011 : 83). In doing so, it offers a
number of benefits to organizations including an increase in inventory turnover,
excellent customer service, improved inventory accuracy, reduced project set up
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times and better quality work (Lysons & Gillingham, 2003). On the other hand,
although SAP (UK) Ltd refuses to provide students with a direct response to their
enquiries and an approximate cost for their systems, literature suggests that the cost
to purchase such a system is too high for many businesses. “[M]any SMEs either do
not have sufficient resources or are not willing to commit a huge fraction of their
resources due to the long implementation times and high fees associated with ERP
implementation” (Buonanno et al, 2005 : 386). They have, however, created a new
solution called SAP Business by Design4, which operates using a cloud computing
system.
“Cloud computing delivers an infrastructure, platform, and software
(applications) as services that are made available to consumers in a pay-
as-you-go model. In industry these services are referred to as
Infrastructure as a Service (IaaS), Platform as a Service (PaaS), and
Software as a Service (SaaS) respectively.” (Beloglazov et al, 2011 : 1).
Cloud computing allows SAP to host their software on their central computer system
and their customers can use the software and store their company’s data. Customers
can connect to SAP’s data store using the Internet. It works in a similar way to
Google’s Gmail which allows users to send emails by logging in to their account on
any computer, but the user doesn’t have to save the emails on their computer. There
basic ERP packages start from £98.00 per user per month, for a minimum of 10 users
(SAP, 2011). Therefore, this system will still require a minimum investment of
£11,760 per year which is still a high cost for software which the company
ultimately does not own. However, it does avoid costs incurred from purchasing
software applications and large data storage devices.
There are, however, many other technology solutions which can assist many other
businesses. Companies such as SAGE and Causeway Technologies offer specific
applications for individual company functions. For example, SAGE 50 Construction
enables managers and accountants to monitor costs throughout the project and
compares them to estimated costs, including labour, plant hire and subcontractor
4 http://www.sap.com/uk/campaigns/businessbydesign/why-sap/index.epx
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charges and timescales. It also enables estimators to produce improved quotations as
they can monitor the progress of these expenditures, access a detailed analysis report
of actual costs for each project which provides valuable feedback for future
estimates, and access a database of supplier details and their quotations (SAGE (UK)
Ltd, 2011). This has the added advantage of transferring quotation details on to
buyers and quantity surveyors, in the form of a tender handover package.
Internet based applications have become an ideal solution for carrying out business
quickly and efficiently with both customers and suppliers. It is commonly referred to
as e-procurement, which is defined by Weele (2010 : 44) as follows: “all web
enabled solutions aimed at supporting the purchasing process and all electronic data
exchange that is needed for efficient transaction processing”. There are a variety of
solutions available to support online transactions. A popular technique is the use of
I-Marketing. Many companies now have websites which have replaced traditional
forms of paper catalogues and company brochures. “Use of I-Marketing browsing
enabled customers to search, view graphical presentations, and read static text about
companies” (Ross, 2011 : 98). Anumba & Ruikar (2002) identified several benefits
including; a decrease in marketing costs, easy access for clients, and business
transparency. Many websites have advanced and now offer Business-to-Consumer
(B2C) services, which is “similar in concept to the traditional method of retailing,
the main difference being the medium used to carry out business – the Internet”
(Anumba & Ruikar, 2002 : 266). There are electronic marketplaces such as ebay,
which enables forward auctions, which are “used to sell products. Different buyers
need to offer their bids to the seller” (Weele, 2010 : 45), and reverse auctions, during
which the “buyer sets a starting price that the supplier needs to meet in order to get
access to the auction” (Weele, 2010 : 44). Electronic catalogues and ordering
systems can also be used to carry out purchasing transactions. Lysons and
Gillingham (2003 : 178) define this solution as a “web page that provides
information on products and services offered and sold by a vendor and supports
online ordering and payment capabilities”. An example is the Health & Safety
Executive publications website; http://books.hse.gov.uk/hse/public/home.jsf, which
allows its customers to access a catalogue of its publications, then select, order and
pay for them online. According to Presutti (2003 : 223), by implementing e-
procurement companies can make great savings. It can reduce “labor costs in the
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purchasing process”, companies are “relieved from the non value-creating effort
required for transaction processing…reducing sourcing cycle times...and time-to-
market”. He also states that inventory levels are reduced as products are sent to
customers quicker.
Radio-frequency identification (RFID) is an effective information technology which
has been increasingly applied within SCM. “RFID systems use small electronic
“tags” to track the position and movement of items” (Bozarth & Handfield, 2008 :
374). Scanners are used to read the electronic data stored in the tags, and this
information can be transmitted back to a central data store. Many companies use
RFID systems for monitoring the location of goods and equipment. “RFID can
reduce information gaps by enabling real-time supply chain visibility, and is useful
in purchasing, product manufacturing, shipping and receiving, storing, and selling”
(Chen et al, 2010 : 13). This technology has been applied within a wide range of
sectors including manufacturing, retail, logistics and information services. For
example, some libraries have added tags to their books in order allow readers to
check out books and return them using self-service machines, and so they can be
sorted automatically (Hamlett, 2007).
“The use of RFID, Bluetooth, global positioning systems (GPS), and
other technologies, working in tandem with cloud computing
environments, Web Portals, and back-end systems to track everything
from apparel, equipment, and appliances to animals and even people is
transforming the information processing capabilities of the supply chain”
(Ross, 2011 : 59).
A company which has fully embraced many of these technologies is the courier
company CitySprint (UK) Limited5. They use GPS to track their fleet of vehicles,
barcode scanning to track the location of parcels and Web Portals to provide their
customers with up-to-date information on the location of their delivery and book and
pay for their services.
5 http://www.citysprint.co.uk/
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Another popular method for carrying our procurement transactions on-line is through
the use of E-tendering. “E-tendering concerns the process of sending requests for
information and prices to suppliers and receiving the responses of suppliers using
Internet technology. Sometimes, e-tendering also includes the analysis and
comparison of responses” (Boer et al, 2002 : 25). Websites such as
https://www.sell2wales.co.uk/ and http://ted.europa.eu/TED/main/HomePage.do
enable companies to advertise projects and search for tender opportunities.
Furthermore, websites such as www.constructionline.co.uk and
www.achilles.com/en//uk offer suppliers and buyers with the opportunity to access
and submit pre-qualification questionnaires, in order to qualify for tenders. It saves
suppliers time by enabling them to complete just one questionnaire, which multiple
clients can access. Plus it allows buyers to access numerous supplier details without
having to send out multiple questionnaires and waiting for responses. Tenders are
often then sent out by email or on CD to qualified suppliers. Sending tenders to
suppliers electronically has many advantages for clients. It “offers significant time
saving by reducing paperwork, postage, and photocopying, which in turn paves way
to a reduction in costs” (Arslan et al, 2006 : 1409). However, there are some
shortcomings for the contractors involved in the process. Printing costs are passed on
to the contractor, presentation of tender documents can be jumbled and badly
referenced, and not all small companies have the software capabilities to access
electronic some documents (Tindsley & Stephenson, 2008). E-tendering promotes
fair and transparent bidding and enable clients to make cost savings, yet it must be
managed in an organized way, in order to prevent delays and perplexity for
contractors.
Of course, technology is rapidly changing and new methods for managing
information are continually occurring. Anumba & Ruikar (2002) suggest that in the
future m-commerce, i.e. commerce via electronic mobile devices, is a possible trend.
The BBC has just implemented QR codes during its cookery program The Good
Cook, to enable watchers to download recipes to their mobile phones6. Perhaps
future programmes and adverts could use the same technology. They also highlight
6 The BBC implements QR codes within its cookery programme The Good Cook:
http://www.bbc.co.uk/pressoffice/pressreleases/stories/2011/06_june/16/cookery.shtml
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the possibilities of ubiquitous computers and intelligent autonomous software agents
which carry out tasks for users when they are not present.
Information systems can be transformed with the assistance of technology. The
ultimate method of managing organizations information is through the use of ERP
systems to share information across all functions within the whole company.
Unfortunately, such systems are inaccessible to many SME’s due to the high
purchasing costs and long time frame for implementation. Yet there are many other
options. Software which manages individual processes in a company offer a more
affordable solution. SAGE estimating facilitates employees providing and analysing
quotations for customers, RFID provides customers with real-time information on
their products, I-marketing promotes organizations to a wider customer base, B2B
services enable rapid financial transactions and e-tendering enables customers and
contractors to exchange prices without the hassle of printing and postage. When used
correctly, these technology solutions can enable companies to effectively manage
their supply chains by integrating internal systems and improving external systems
with suppliers and customers.
2.5 Supply Chain Management within SMEs
The wide variety of literature on supply chain management provides a wealth of
information on how companies can effectively improve this aspect of their business
in order to remain competitive and profitable. However, much of this advice is
limited to large companies, with extensive manpower and financial resources.
Therefore, having carried out a thorough literature review, a number of research
questions have been established.
Forecasting techniques such as industrial expert studies can be very expensive to
fund. Furthermore, the assessment of customer’s future needs using demand
management and CRM can be time consuming given that employees are already
stretched for time with their every day tasks (Smith & Zagelmeyer, 2010). Supplier
Relationship Management is often developed informally within SMEs, rather than
setting clear and focused goals, which again can be considerably time consuming.
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Question 1 – How are relationships with clients and subcontractors developed?
Supplier and subcontractor assessment is a useful way of maintaining quality
services. Yet, within a small team it is unlikely that employees can devote the time
and develop the skills needed to carry out complex assessments such as the
evolutionary fuzzy based approach and developing algorithms.
Question 2 – How do SMEs carry out supplier and subcontractor assessment?
The literature on tendering and estimating provides an excellent discussion on the
number of different employee roles, information resources and activities within this
process. Yet much of this literature focuses on how a large or medium sized
company with extensive financial resources and a large team of staff carry out this
work. Although Brook (2008) acknowledges that small companies distribute
activities within the workforce differently and his process model is simple and
therefore generic, a tailor made solution is not provided. An SME will not have
dedicated employees to carry out each individual set of activities. Tasks will instead
need to be carefully managed and evenly distributed within the workforce. They will
also be restricted by the amount of work they can carry out within a short timeframe,
so some non-essential tasks will not be completed. Therefore, the next question I will
seek to answer within this research report is:
Question 3 - How does a small company with a limited number of employees manage
its work tasks during the tendering and estimating process, and which activities does
the company include within this process?
The literature review also identified a variety of technological solutions for
improving information systems within supply chains. Yet many of these solutions
are costly and time consuming to implement, making them unavailable to SMEs.
This is particularly true of ERP systems. Although the cloud based ERP system may
be within the financial budget of some medium sized company’s, it is unlikely that
many SMEs can afford to spend so much on technology. Other solutions such as E-
procurement are much cheaper and easier to implement. Websites provide an
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excellent way to promote a company and access a multitude of customers. Tendering
websites such as www.selltowales.co.uk have also proved to be a useful method of
advertising work opportunities to a wide audience.
However, additional features such as on-line transactions may be unnecessary for
many SMEs who have a small number of customers and a small number of products
or services to sell. It is interesting to note that many of the electronic commerce
websites identified by Presutti (2003) and Wang et al (2007 : 159), including General
Electric’s (GE’s) Trading Process Network (TPN) and www.bidaec.com, are no
longer in operation, suggesting that the extent of the success of electronic commerce
within the construction industry has been limited. While a lot of literature discusses
the benefits of software for improving information systems, there is little information
on how organizations actually implement a variety of technologies within their
companies, especially within SMEs.
Question 4 – How does an SME with a limited budget for technology, use IT to
facilitate their information systems?
3. Methodology
In order to collect, analyse and represent the data within this report a number of
techniques will be applied. Firstly, I shall use qualitative research techniques in order
to gather data for this study. The benefits of choosing qualitative rather than
quantitative methods for this study are that they “can be said to yield more
contextually detailed data - richer data…along with the data collected, one also gets
a description of what activities were going on around the phenomenon in terms of
time and social circumstances surrounding it” (Glazier & Powell, 1992 : 7). Such
qualitative research methods will include a case study, interviews and unobtrusive
measures, including structured participant observation. Secondly, in order to analyse
this data I shall use business process modelling techniques. This will enable me to
analyse the way in which the case study organization carries out its tendering and
estimating process, and compare it to the process model illustrated by Brook (2008).
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The models will be represented using Role Activity Diagrams, which will provide
clear diagrams of the tendering and estimating process.
3.1 Business Process Management
The importance of managing business processes has been an important area of
research for over 50 years. The focus on processes can be seen in the works of
Feigenbaum’s (1961-1963) “cycle time reduction methodology:
1. Define process.
2. List all activities.
3. Flowchart the process.
4. List the elapsed time for each activity.
5. Identify non-value adding tasks.
6. Eliminate all possible non-value adding tasks.” (Ramasamy, 2005 : 1.10)
However, the adoption of managing business processes didn’t take off in the UK and
USA until the 1980’s with the emergence of Total Quality Management (TQM).7
According to Ramasamy (2005 : 1.3), in “1985, the American Navy coined the term
TQM to represent broadly the Japanese way of quality management”. However,
dissatisfaction with this method led to the popularity of Business Process Re-
engineering (BPR). “Throughout the first half of the 1990s, BPR was one of the
most eagerly embraced management techniques” (Deakins & Makgill, 1997 : 81). It
was developed to revolutionise the concept of improving business processes.
“Whereas TQM was designed to improve existing business processes incrementally,
BPR radically transforms business processes, creating new ones” (Valentine &
Knights, 1997 : 78). However, Davenport (1995 : 1), who was one of the creators of
BPR, admits that the concept was detrimental to many companies; “reengineering
7 According to Hoyle (2001 : 91), TQM originated from the works of Juran and Deming. “Juran wrote
about the universal principles of Breakthrough and Control in 1966 and Deming wrote Out of the
crisis in 1982 addressing the key principles that should be used in organizations to turn around the
flagging economy”.
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has become a word that stands for restructuring, layoffs, and too-often failed change
programs”.
Its focus on IT systems led to analysts treating employees “as if they
were just so many bits and bytes, interchangeable parts to be
reengineered. But no one wants to "be reengineered." No one wants to
hear dictums like, "Carry the wounded but shoot the stragglers" -
language that makes workers feel like prisoners of war, not their
company's most important assets”. (Davenport, 1995 : 1).
Whilst the importance of improving processes within businesses was still seen as an
essential tool for management, they were now fully aware that IT systems and
information management alone is not the key to success.
“But we are now seeing a Third Wave – a term first coined by Howard Smith
and Peter Fingar…a wave driven by the new technology of Business Process
Management (BPM). Finally, the business process has become a first-class
citizen, the one that now determines what information will be kept: process first,
then information” (Ould, 2005 : 2).
Ko et al (2009 : 748) clarifies the differences between the two concepts as follows:
“BPM and BPR are not the same: whereas BPR calls for a radical obliteration of
existing business processes, its descendant BPM is more practical, iterative and
incremental in fine-tuning business processes”. (Ko et al, 2009 : 748). BPM has
moved away from the concepts of modelling processes in flowcharts (as part of the
TQM philosophy) and isn’t restricted by IT systems, such as the notorious ERP
systems. Instead it enables processes to be “visible, changeable, and potentially back
in the hands of the organization, with the result that the organization now has the
power to change how it wants to do its business, and to change it when it needs to”
(Ould, 2005 : 2). BPM not only allows organisations to map the flow of their
processes using information technology applications. It also enables them to identify
where improvements need to be made, and alter their processes to suit their varying
needs. BPM is defined by van der Aalst et al (2003 : 4) as follows; “Supporting
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business processes using methods, techniques, and software to design, enact, control,
and analyze operational processes involving humans, organizations, applications,
documents and other sources of information”. There are a number of benefits for
applying BPM. Within a literature review by Kohlbacher (2010) he found that the
benefits included increased customer satisfaction, improved product quality and
financial performance, quicker activity life cycles and in many cases there was a
reduction in business costs.
The popularity of BPM seems to be on the increase. In a literature review carried out
by Houy et al (2010 : 627) they found that the number of journal articles on BPM
has increased dramatically between 2002-2008. Their findings are represented in the
following diagram:
In line with Ould & Davenport’s theory, the peak in research during 1995 and 1998
was “expedited by the hype on BPR which settled afterwards”. The increase in
research after 2002 demonstrates the increasing popularity of BPM, and with the
publication of:
“specialized journals (e.g. the Business Process Management Journal)
and conferences (e.g.the BPM-Conference…) as well as the
institutionalization of degree programs specialized in BPM at several
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universities evidence that it is not a temporary fashion but an evolving
trend in management science” (Houy, 2010 : 619).
Within this research project BPM will be applied, in order to identify the current
tendering and estimating process within the case study organization. It has been
chosen as a suitable methodology because it enables the researcher to “identify and
improve on bottlenecks and potential fraudulent loopholes in the business processes”
(Ko et al, 2009 : 748), enables processes to be altered quickly and easily illustrated.
3.2 Case Studies
In order to test my theoretical findings, I shall carry out a case study. “A case study
is an empirical inquiry that investigates a contemporary phenomenon within its real-
life context, especially when the boundaries between phenomenon and context are
not clearly evident” (Yin, 2003 : 13). The company which will be the focus of my
case study is a small specialised civil engineering company. It is useful to carry out a
case study when “(1) a large variety of factors and relationships are included, (2) no
basic laws exist to determine which factors and relationships are important, and (3)
when the factors and relationships can be directly observed” (Fidel, 1992 : 37).
Given the diversity of process flows identified within the literature review, and the
variety of job roles each author discussed, there is clearly a lack of basic guidance
for tendering processes within SME’s. Therefore it is necessary to establish the
factors and relationships within this process by observing it in a real-life situation.
3.3 Data Collection Techniques – Interviews, Unobtrusive Measures
Interviews, “are essential sources of case study information” (Yin, 2003 : 89). The
specific interview approach I shall use is a semi-structured interview. I shall prepare
a list of questions based on the literature review and objectives, “but may not deal
with all of them in each interview. Indeed, additional questions may be asked,
including some which were not anticipated…as new issues arise” (Gray, 2004 : 217).
This will give me opportunity to prepare for the interview and identify key aspects
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which must be discussed whilst allowing the flexibility to ask alternative questions
to clarify or request further information on certain aspects.
According to Grummitt (1980 : 2) it “is essential for the interviewer to be well aware
of the objective of the interview to be conducted”. The objective of these interviews
will be to establish how those involved in the tendering and estimating process
perceive their role and the work they carry out.
As the company is an SME and there are just a few personnel involved in the
tendering and estimating process, it will only be necessary to interview a few key
employees. There “is no hard and fast rule for how many people you need to
interview, since it will partly depend on the time available to collect, transcribe and
analyse your data” (Travers, 2001 : 3). Therefore, just three employees will be
interviewed – the Managing Director, the Senior Estimator and the Document
Controller. The Managing Director should provide an insight into the commercial
and business strategy aspects of the tendering process. The Estimator should provide
details on the technical areas of the process. The Document Controller should
provide information on the receipt, control and transmittal of the tender documents.
All three employees should therefore, supply enough information on the entire
process within this organization.
Pyle (2003 : 174) identifies three aspects which the interviewer must consider when
trying to discover the actions involved in a process:
“What?: What is the situation, what’s wanted, what’s going on, what’s
expected? The question at this stage reminds a modeller to focus on
understanding the basic issues, the context, and the situation.
So What?: For each of the “whats,” why do they matter? What impact
does each have on the business situation…
Now What?: What actually needs to be done next as a result of each of
the “so whats”? ”.
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In addition to these key questions it will also be necessary to prepare additional
supporting questions. This should ensure that all the relevant information needed is
obtained. On some occasions participants may want to provide as much information
as possible and this could result in them straying from the original question. During
these instances it may be necessary to ask a re-direction question, which should
divert the conversation back to the relevant topic. Other participants may be reluctant
or evasive in response to some of the questions and it may be necessary to ask
triggering questions in order to encourage a response.
Once all the required information is obtained from the interviewees it will be
necessary to carry out a second informal interview, in order to establish if all the
interpretations made are correct. Travers (2001 : 3) recommends that “if you ask
open-ended questions, follow up particular topics in a second interview, and give the
interviewee the opportunity to comment on your interpretation of the answers, you
are more likely to obtain some rich, original data”. Following the first interview, a
second interview will be arranged and the interviewees will be presented with a
diagram of the tendering and estimating process. They will be asked to comment on
the diagram and identify any errors or omissions. This should ensure that further
information is obtained and will also reassure interviewees that any statements they
make in the first interview will be reviewed in the second, after they have had time
to reflect on their responses.
In addition to interviews, unobtrusive measures will also be used to collect data.
“The term unobtrusive measure has developed in reference to types of observation
which remove the observer from any direct interaction with the people involved in
the behaviour he or she is studying” (Gorden, 1987 : 10). Using this technique
should ensure that richer data is gathered. In a research project carried out on
Burns’s Civil War, Glazier and Powell (1992 : 1) state that if unobtrusive measures
hadn’t been used and a top-down approach had been applied, a large amount of
essential information would have been missed.
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“It is not just a history from the point of view of generals or presidents
but also from those who lived with it every day…The story is told
through the use of personal letters, stories, and anecdotes recorded by the
individuals who fought in the war and their families”.
In order to gain an overall representation of the tendering and estimating processes
within the case study, documentation used will need to be reviewed, not just
interviews with senior management. This will include the selection of internal
documentation, client tender documents, company literature and journal or
newspaper articles on horizontal directional drilling, and tendering within the
construction industry. Of course “documents cannot be probed and cajoled in an
attempt to overcome” deficiencies such as incomplete or unsystematic items (McCall
& Simmons, 1969 : 63). Yet they will provide greater detail and insight into what the
employees are referring to during their interviews, and an overview of current
opinions and trends in the industry. Having reviewed this literature I shall carry out
contrived observation whereby the “researcher participates indirectly by contriving
the situation to include certain stimuli designed to elicit action toward some object”
(Gorden, 1987 : 10). Participants will be provided with a recent tender document and
asked to demonstrate how they deal with it, in order to gain a greater understanding
of the processes involved. This may involve observing how they deal with both hard
copy and electronic documentation. Furthermore, I shall also use participant-
observation. Participating “in some role other than that of the interviewer…will
provide access to those people and situations he or she must observe to accomplish
the objectives of the study” (Gorden, 1987 : 8). I have worked for the case study
company for over four years and part of my role there was to prepare tender
submissions. McCall & Simmons (1969 : 5) explains that a major advantage of this
method is that the researcher “receives the same socialization as ordinary members,
acquires similar perspectives, and encounters similar experiences. In this way the
scientist acquires some sense of the subjective side of events which he could less
easily infer if he observed without taking part”. Working within the organization
provides an understanding of the company and certain aspects of the tendering
process. However, subjectivity can also prevent researchers from gaining an overall
perspective of the process which could lead to bias in the results. However,
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objectivity should be maintained by completing the literature review and applying a
variety of data collection methods.
In order to ensure that “ethical principles are catered for in the research, including
the privacy of respondents and their anonymity (Gray, 2004 : 62), an email will be
sent to prospective interviewees requesting consent and will describe the purpose of
the interview. Interviews will be audio recorded so that they aren’t disrupted
throughout by note taking, and will be transcribed after the interview. Interviewees
will be informed that they are being recorded and that once the recordings have been
transcribed they will be destroyed.
Participants will be informed that their names will not be disclosed within the report
and the interview transcriptions will not be given to any other person. This will
ensure that confidentiality is maintained, and should provide employees with
reassurance that they can speak freely and share their opinions without any fear of
repercussions.
Finally, this study has been classed as Low Risk, because in some cases the findings
of a case study may cause potential upset and surprise. Such a result would pose an
ethical dilemma. Censorship of results would make the research report invalid, yet
causing upset and distress to participants must be avoided. In such circumstances the
employee or the organization may request that the researchers’ findings are not
published. Gorden (1987 : 111) proposes the following solution prior to sharing
research results:
“(a) promise to share results unless there is some very unusual reason
why this would be harmful; (b) when the promise is given, prepare an
follow through on the promise; (c) give respondents a chance to
comment on what they feel are errors …before the final draft is
completed; (d) do not back down from the facts and your best
interpretation merely because it would put someone in an unflattering
light; (e) do not distort the findings to avoid embarrassing yourself or the
research organization doing the study”.
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The Directors of the organization will be provided with the opportunity to review the
results of the findings and offer any comments. If for any reason they decide that the
consequences of publishing the results could be potentially damaging, they will not
be included within this report and an explanation will be provided. However, the
likelihood of this occurring is low, as the name of the company will remain
confidential and the subject of this research paper is not seen to be dealing with
sensitive issues.
3.4 Data Analysis - Role Activity Diagrams & RIVA
In order to analyse the qualitative data obtained from the case study, Martyn Ould’s
(2005) RIVA method will be used. Although there are a number of tools to analyse
business processes such as rich pictures, UML’s8 use case and activity diagrams, and
SSADM’s9 data flow diagrams, it was felt that RIVA would be most suitable for this
report. RIVA is a business process modelling method which is used for the
“elicitation, modelling, analysis and design of organizational processes” (Ould, 2005
: 11). The other tools focus more on the flow of information and data, the way users
use an information system, and how to identify problems within complex and
confusing flow of information within an organization. Therefore, RIVA is the most
suitable method for this report.
In order to represent business processes it is important to represent them graphically
as a process model. “A process model is an abstract description of an actual or
proposed process that represents selected process elements that are considered
important to the purpose of the model and can be enacted by a human or machine”
(Curtis et al, 1992 : 76). Although there are numerous ways of representing process
models, such as flow charts, RIVA uses Process Architecture Diagrams (PAD) and
Role Activity Diagrams (RAD) to illustrate processes. PAD are used for the
“chunking of the organizational activity into individual processes” (Ould, 2005 : 11).
Most organizations carry out multiple processes and PAD are used to identify the
boundaries and remove actions which are not relevant to each process and belong in 8 Unified Modelling Language 9 Structured Systems Analysis and Design Method
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other processes. However, as the company is so small and there are so few
employees involved in each process it isn’t difficult to distinguish individual
processes. Alternatively, RAD is a “structured technique for modelling
processes…[They] display the sequence of actions within roles and the interactions
between them. The main focus is on roles, their interactions and their constituents’
activities, as well as the connection with external events” (Noor et al, 2003 : 3).
RAD use the following notations, which are adapted Martyn Ould’s (2010) website:
The advantages of RAD are that it provides a simple format to define a process, and
enables all employees to easily understand their own roles and how this affects
others, without needing an in-depth knowledge of BPM. In addition, it reflects the
organisation as a “dynamic network of interacting instances” (Ould, 2005 : 169)
which are carried out concurrently, rather than static activities which occur
separately. They are independent of job titles and reflect job roles, which avoids the
need to change the models after a change in work force roles. For example, one
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employee, or what Ould (2005) refers to as an Actor, may have the job title
Construction Manager but this Actor may be involved in a number of roles such as
purchasing, estimating and stock control. These responsibilities may be given to
different Actors depending on work load and the company organisation. Finally,
“RAD is a modelling technique from “role” perspective which can be used to
explore features that will enable further improvement of the current process”
(Tbaishat, 2010 : 485).
Before beginning to model a process it is necessary to identify the main reason and
viewpoint which the diagram will represent. Checkland & Scholes (1990) argue that
no model will satisfy all needs and represent all perspectives. For example, an
engineer may believe the aim of a process is to ensure that a product is produces
safety and to a high specification, yet from a manager’s viewpoint a process should
ensure that a product is developed within budget, on time (Ould, 2005). Therefore, in
order to satisfy this requirement it is necessary to state the aims of the process
models within this report. The aim of the first process model is to discover how the
case study company carries out its tendering process. The second process model will
aim to illustrate a streamlined tendering and estimating process suitable for an SME.
Once the first process has been defined it will provide an excellent means for
analysing any areas in which the process can be made more efficient, and this will be
reflected in the second model.
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4. The Case Study
The company used for the case study is one of just a few privately owned horizontal
directional drilling and open-cut pipeline construction companies in the UK. The
company was established in 2004 and worked initially as a subcontractor. During
recent years they have expanded and now work predominantly as a main contractor.
They are classed as a small enterprise and employ around 30 people during
construction works, just 12 people when projects have been completed. They operate
across the country, carrying out two to three construction projects per year, for high-
profile clients including E.ON, CEMEX and Aquamarine Power. Aside from
carrying out highly specialized construction works, a key process within this
company is tendering and estimating. Whilst some tenders only require an
approximate figure for a theoretical project, other tenders require an exact price to
carry out the works, based on large volumes of contractual and technical data.
As each construction project requires exceptional technical expertise and precise
engineering in order to carry out such high-risk and high value works, it is essential
that the paperwork conveys this within the tender submission. Given the importance
of this system, accurate, streamlined processes are essential for the company to
maintain their competitive edge, and submit high quality tender submissions within
critical deadlines. As the company employs a small workforce roles and
responsibilities change due to workloads and the new business process should reflect
this.
4.1 Case study system
Three interviews were carried with three key employees involved in the tendering
and estimating process, in accordance with the methodology discussed in Section 3.
One employee also participated in a contrived observation task and notes were taken.
Interview scripts and the contrived observation research list can be found within
Appendix A and B. A previous tender provided by a client and a completed tender
submission was also examined. My findings are discussed throughout Section 4.
This section will describe and illustrate the case study tendering process. Section 4.2
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will critically compare the company’s process and the theoretical process, and
differences will be described. Finally, Section 4.3 will provide a list of
recommendations the case study company could implement to improve their current
system.
The case study company operates three main internal roles within the tendering and
estimating process. These are the Document Control role, the Estimating role and the
Director role. The Document Controller is the first contact within the company. They
receive the tender documents from the clients, liaise with other roles to compile the
tender submission, and ensure that the completed tender submission is submitted on
time, in line with the clients tendering instructions. The main activity for the
Estimator is to calculate the prime cost of the tender, prior to any mark-up’s being
added. The role of the Director is to act as key decision maker. They decide if a
tender is suitable to produce a price for, and the value of the mark-up’s added to the
prime estimate.
The Role Activity Diagram below illustrates the tendering and estimating process
within the case study company, and highlights how each of these roles interact in
order to submit a tender.
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Figure 3 - Case Study Tendering and Estimating Process Model
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4.2 Theory Vs Practice
There were a number of similarities and differences identified between the Brook’s
(2008 : 4) theoretical tendering and estimating process model (Figure 2) and the case
study process model (Figure 3). Although the role titles are absent from the
theoretical model, presumably to keep the illustration simple and generic, many of
the actions are also different to the case study model.
A significant difference between the two models was the lack of activities carried out
by the document control in the theoretical model. Within the case study organization,
the document controller registers the tender documents on their information system
and compiles a list of generic forms such as quality plans, organisation charts and
curriculum vitae. Yet neither of these activities is included in the theoretical model.
Many of the Initial Actions and Appraisal activities identified within the theoretical
model were also carried out by differently by the company. There is a template
tender summary form which is attached to all tenders received yet this form is often
overlooked and rarely completed. As Haug (2011) and Smith & Zagelmeyer (2010)
stated, employees within SMEs often have to focus on production rather than
strategic factors and formal bureaucratic paper trails. However, whilst this offers
freedom within limited time frames imposed by the clients, technical and
commercial decisions made at the time may be forgotten later on and recording such
factors would be useful if the tender is deemed successful.
The decision to tender is noted on both models although within the case study
organization this decision is made informally by the directors. It may be useful to
have a list of documented criteria against which the directors can check for
suitability. This would ensure that any variations in opinion are minimised, i.e. one
director may believe that it is worth the risk tendering against 10 other contractors,
whereas the other director may believe that time would be better spent tendering for
projects with fewer tenderers as there are greater chances for award. It would also
enable them to pass this role to other actors involved in tendering if their workload is
too great or the company expands.
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The other difference in this section of the theoretical diagram is the Estimate
timetable. This is not currently completed by the Estimator but the document
controller. As the company is small, the Estimator is not responsible for a large team
of estimators as suggested in the theory. Instead the document controller is
responsible for getting all of the documents compiled for submission and that all the
necessary documents are included in accordance with the client tender specifications.
One other process is missing within the initial appraisal is the directors decision to
choose an estimator. As the company carries out both HDD and pipeline works the
director will review which speciality the tender works are for and advise the
document controller to distribute the documents to either the HDD or pipeline
estimator. If both estimators are busy, the director may carry out this role. If the
project is for both works, both the HDD and pipeline estimator receive copies of the
documents and combine their estimates within the tender package. Within a larger
company a senior estimator would be responsible for distributing the works within
their department, after consulting the estimate timetable.
All of the activities with regards to a successful tender were also completed
differently. The theoretical model states that a handover information package should
be created. This should contain client correspondence, the form of tender, drawings
and specifications, etc. (Brook, 2002 : 239). Although a copy of the entire tender file
is copied from the computer system and copied onto their personal laptop, an
assessment of what they require and a checklist to ensure everything is included, has
not been implemented.
The activities for checking contract documents, pre-contract meetings and conditions
of award was seen by the company to be part of the next process, which is the
contract award process rather than the tendering and estimating process. Often the
contract documents are carefully negotiated and this can become a costly exercise
involving external experts. Consequently, it would not be financially viable at tender
stage, if there was a significant chance the tender could still be awarded to another
company. Usually, some form of initial agreement is been made between the two
parties before contract negotiations begin.
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Finally, the last major difference between the two models was the theoretical activity
of monitoring methods and costs on site. Although the estimator monitors costs
during most projects, either by obtaining weekly updates or carrying out commercial
works for the project, this information is not analysed and used for future estimates.
Theory suggests that forecasting methods should be used to analyse the cost and time
length of previous projects and this information should be used to produce future
estimates (Bozarth & Handfield, 2008; Crandall et al, 2010). Yet, this company does
not forecasting methods. As each construction project is completed in unique ground
conditions, different locations and with different pipeline or drilling lengths there are
too many variables to use data from previous projects to apply to new tender
estimates. In addition, major disruptions and delays are typically due to unexpected
and unpredictable circumstances and are highly unlikely to occur again on future
works.
However, the estimating role was very similar. The estimator examines the tender
documents and establishes the client’s specific requirements such as time deadlines.
Then they establish time needed to complete the works, size and type of crews
required for each type of work, for example a welding crew or a fencing crew. Next
materials and plant required are chosen. If items are not available within the
company supplier and subcontractor enquiries are sent out, requesting quotes and
supporting documentation. Method statements and programmes are then completed.
Once the quotes are received an estimators report is completed on an excel
spreadsheet and sent to the director for approval. All of these tasks are included in
both process models although they are in a slightly different order. This difference is
not seen to be significant though, as the author of the diagram has chunked the
activities into sections in this case rather than strictly following a sequential process.
As a result this difference is seen to be a diagrammatical error rather than a flaw in
the process.
It is important to note that there are a few limitations which may have affected the
results obtained from the interviews and unobtrusive measures, which have been
described above. Firstly, during the interview with the estimator, the last five
minutes of the interview were not recorded as the laptop on which the recordings
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were carried out on, went onto standby. Notes were taken, however a few important
points could have been missed, regarding the problems he identified within the
existing process. Secondly, the Director had a meeting arranged following the
interview. This meant that some of the answers were short and the interviewer was
under pressure to complete the interview quickly, so some important information
could have been missed. It is hoped that the second informal interview would have
rectified this issue.
4.3 Recommendations
The literature review and comparative study discussed in the previous section has
identified a number of areas in which the case study company could improve its
tendering and estimating process. Although some of the differences from the
theoretical process model are justified, several suggestions have been identified in
order to streamline their current process. This section will fulfil the fourth objective
of this report: to create a set of recommendations for a new streamlined tendering
process in order to resolve conflicts identified following the comparison between
theoretical propositions and the case study results.
Within the company process model there are a number of points where there is a
delay in the distribution of documents. These delays occur while they are manually
sent i.e. they are held in one email inbox, or time is spent taking photocopies, or
while the documents are recorded within the information system on tender and
document registers. This bottleneck in the process could be removed with a new
information system. The company has recently implemented a shared server, which
enables employees to access the entire server from remote locations, not just within
the office. However, although this should mean that some delays are avoided, they
are still continuing to process documents in the old way i.e. by sending them by
email and saving documents on their personal computers rather than accessing the
server. The first recommendation would be to implement the new process model for
SMEs in Section 5 (Figure 4) of this report.
The second recommendation would be to participate in another research project
looking specifically at implementing information technology to improve their
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information systems. Research projects are chosen by university students in
December each year. This would enable the company to implement the new process
model over the next several months and would give all employees time to become
familiar with the shared server system recently implemented, prior to further
research investigations taking place.
During the interviews all employees acknowledged that feedback from clients
regarding their tender submissions would be very useful, however they rarely receive
any such information. Although on the majority of occasions the tender submission
may be rejected simply due to commercial reasons, it would be beneficial to receive
comments on how future submissions could be improved. Concern was expressed
that asking the clients for feedback would be an imposition and it is unlikely that
they have the time or the desire to give each contractor a detailed response as to why
they failed to win the contract. However, Lewis (2009 : 268) argues that feedback
from clients is essential, in order to continually improve future tender submissions
and increase your chances of success. “Whatever its outcome, the tendering process
in incomplete without an effort to understand the reasons for success or
failure…There is no need to be apologetic about approaching them on this matter”.
The third recommendation is to create and implement a simple and quick electronic
evaluation questionnaire, using a website such as http://www.surveymonkey.com/.
Clients can then quickly respond to a few specified questions and consequently the
company is more likely to get valuable feedback.
The fourth recommendation would be to develop a check-list of tender suitability
conditions, including criteria such as minimum contract value, minimum drill length,
and contract works location. As discussed in the previous section, this would enable
the Directors to ensure that a uniform decision is made between them, and allow
others to carry out this role when required.
The case study company do not currently use forecasting techniques as they are not
seen to be a useful method for improving the accuracy of estimates. Although
research identified in the literature review summarises a number of techniques and
benefits for using such methods for improving customer satisfaction, due to the
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variables involved in such a specialised and varied type of construction work it
would not be useful for this organization. Brook (2002) concurs, identifying a
number of other reasons for its unsuitability for SMEs within this sector, such as the
frequent changes in market prices, confidential restrictions applied to commercial
information within the organisation and the expense of implementing feedback
systems. However, he does recommend a few other simpler, but more specific
forecasting techniques to improve the reliability and accuracy of further estimates;
1. “Individual investigations can be carried out to find the actual waste of
high-value materials.
2. The average cost of employing certain categories of labour could be
compared with the all-in rate used at tender stage.
3. The value of sub-contracts (and major material orders) which have been
let can be entered on a comparison spreadsheet…This would give
management, and estimators, evidence of the buying margins which are
available in the current market” (Brook, 2002 : 243).
Therefore, my fifth recommendation would be to incorporate some or all of these
cost checks within a contract close-out report, which could be completed by the
Project Manager at the end of each project. Such feedback could then be shared with
both the Estimator and the Directors.
Another difficulty with implementing forecasting techniques is the time needed to
evaluate the project costs. A comparison of estimated cost against actual costs could
be made using Microsoft excel spreadsheets. However, much more detailed cost
comparisons could be made if a specific ERP system was implemented.
My sixth recommendation would be to invest in SAGE 50 Construction, a
description of which is given in Section 2.3, Information Systems within SMEs.
Although the system is expensive, with an approximate cost of £8000.00 –
£12,000.0010, in order to be financially viable the company could pay in instalments
over two to three years. This investment then has the potential to reap back savings
10 Quotation provided verbally by SAGE on 12th August 2011, and includes training and set-
up costs as well as allowing 3 users to access the system.
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through a decrease in wasted time spent on duplicated work activities throughout the
organisation (such as data input for purchase orders and timesheets), easier cost
monitoring for managers which would allow them to manage finances better, and
more accurate and reliable estimates. It would also increase customer satisfaction if
the projects were completed within budget and would in turn improve the company’s
reputation and increase their chances of gaining future work.
A summary of the recommendations for the case study to implement are as follows;
1. Implement the new SME tendering and estimating model (Figure 4).
2. Participate in another research project on information technology to support
information systems.
3. Implement an electronic client feedback request form.
4. A tender selection criteria check-list.
5. Carry out simple forecasting methods suggested by Brook (2002).
6. Invest in SAGE 50 Construction software.
5. Evaluation & Conclusion
Within this report a detailed literature review on SCM and the tendering and
estimating process has been completed. A set of research questions were then
established and qualitative research techniques were then used to develop and
understanding of how such theory can apply to SMEs. This section will now draw to
a conclusion the theory and findings described, and establish a new theory based on
these findings.
Section 5.1 will provide a summary of the findings during the literature review and
how this compared to the case study. Section 5.2 will answer the research questions
ascertained in Section 2.4, following the literature review and in doing so create a
new theory. The findings will fulfil the fifth objective which is to contribute to SCM
theory by investigating how SMEs can implement such management practices.
Section 5.3 will describe and illustrate a tendering and estimating process model
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which can be used within all SMEs. Finally, Section 5.4 will outline further research
which could be carried out.
5.1 Summary of Findings
SCM has been described as a fundamental part of running a successful business
(Ross, 2011), and essential for improving financial gains (Crandall et al, 2010). One
of the key areas of focus within SCM literature in recent years is on customer
relationship development. Suppliers have realised that as customer expectations and
demands for high quality service have increased, it is cheaper to satisfy and retain
existing loyal customers, rather than implementing expensive marketing campaigns
(Crandall et al, 2010). In order to retain successful customer relationships, a number
of techniques have been developed. Such tools include forecasting, to predict
customers future needs and to produce better products, services and quotations.
CRM can also be used to develop a programme on improving relationships with
clients (Salam, 2011). Improving service quality and reputation is also vital for
retaining existing customers (Egemen & Mohammed, 2005).
SRM is also an important component of SCM. Developing long-term relationships
with suppliers can not only save money, but facilitate the exchange of valuable
information. Behavioural aspects including improving communication, trust, power
and continued expectation of future work can develop such relationships (Salam,
2011). Furthermore, procurement methods including partnering and tendering can
influence SCM. Partnering can offer many benefits for developing long-term
relationships with both clients and suppliers. Whereas tendering can ensure that high
quality suppliers are selected in order to provide the customer with an excellent,
competitive service. Although both approaches have their benefits and weaknesses
supplier assessment can offer a useful compromise. Suppliers are assessed on a range
of criteria including quality, safety, commercial and environmental aspects. Such
suppliers can then be added to a preferred supplier list. This enables the contractor to
ensure that suppliers provide a competitive and high quality service, whilst allowing
them to develop long-term relationships with just a few key suppliers and
subcontractors.
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The majority of companies carry out a number of essential processes but an
investigation into all of these processes was impossible given the time restrictions
given for this assignment. Therefore, the tendering and estimating process was
selected in order to develop an understanding of how SCM can be used to streamline
operations within an SME. Tendering and estimating is a core function within civil
engineering companies (McCaffer & Baldwin, 1986). It involves a team of
employees who create an estimate based on a client specification, and a package of
documents including programmes and method statements. However, the literature
review revealed that there was a lack of clear guidance on how SMEs should carry
out this process, and where the boundaries of the process should be. Brook’s (2008)
diagram was selected as the best theoretical model for SMEs as it focused only on
the company completing the process and represented activities carried out
concurrently rather than sequentially.
The final part of the literature review examined the role of information systems and
information technology in SCM within organizations. The ultimate system identified
was an Enterprise Business System which combined all aspects of information
within a business into one central point. This could be supported by an Enterprise
Resource Planner (ERP) which is a tailor-made technology system which provides a
central database for enabling reporting, decision-making and operation management
(Ross, 2011). However, this solution was is unaffordable to many SMEs (Buonanno
et al, 2005). Cheaper solutions include SAP Business by Design and SAGE 50
Construction although these still require a substantial financial investment.
Alternative technological methods identified included I-Marketing, such as advanced
company websites which support financial transactions, electronic marketplaces and
electronic catalogues. E-tendering is also a popular and cheaper solution. Companies
can monitor and express an interest in up and coming projects as well as completing
pre-qualification questionnaires in order to join clients preferred contractor lists.
RFID technology is also useful for managing stock and providing real-time
information on products. Technology is rapidly improving and new solutions which
can be used within SCM are constantly being developed, and in the future possible
tools could include QR codes and automated computer systems.
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Following an extensive literature review a number of research questions were
developed. Although a wide variety of information exists on SCM there was a lack
of detail on how these solutions could be applied to SMEs with limited financial and
man power resources. Consequently a section on qualitative methods which could be
used in order to investigate solutions to these questions were discussed. A case
study, interviews and unobtrusive measures were used to gain information on a real-
life SME tendering and estimating process, and SCM techniques employed. This was
then modelled using Martyn Ould’s (2002) Business Process Management
methodology and Role Activity Diagrams. An analysis between Brook’s (2002)
process model and the company process model could then be carried out.
There were a number of similarities and differences between the theoretical literature
and the case study system. Within the theoretical model there was a lack of detail on
the role of the document controller. It is an essential part of the process to record
tender details within the company information system and this should have been
included. The theoretical model also suggested that an estimator timetable should be
created but this would only be required for a large company with a number of
estimators who would need techniques to manage their workload effectively between
employees. However, the theoretical research also identified some areas in which the
case study company could improve their process, such as pre-submission meetings
and tender handover packages. As a result, a list of recommendations for the case
study company was created.
The rest of this report will use the research findings, summarised above, to answer
the initial research questions and develop a new theory which establishes how SMEs
can implement SCM to improve their business operations.
5.2 Response to Research Questions
Following the literature review in Section 2, it was found that research into supply
chain management was insufficient and four key research questions were developed.
Findings from the case study have provided an insight into how SMEs implement
supply chain management and responses to each question will now be discussed.
Question 1 – How are relationships with clients and subcontractors developed?
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One of the fundamental components of effective SCM is relationship development
with both customers and suppliers. This can be achieved through methods such as
customer relationship management and supplier relationship management. However,
there was a lack of specific information on how SMEs in the construction sector can
develop these techniques. The case study results revealed that SMEs prefer long term
relationships with both sub-contractors and clients. There were many advantages for
the company as a result of forging a partnership with one major utility company
within the UK. Employees within the company were able to develop personal
relationships with their client’s employees, facilitating harmonious working
relationships, and in turn encouraging the sharing of information and efficient
problem solving. The company was eager to provide excellent customer service and
the client assisted by providing advice on developing their health, safety, quality and
environmental systems. Likewise the company employees also developed
relationships with two of their key contractors. This enables them again to share
information quickly and efficiently, not only on current projects but to share
potential leads for future projects. This supports Salam’s (2011) theory that effective
relationships are built upon trust, power, communication and continuity (the
expectation of future work). Of course on some occasions it isn’t possible to use
their preferred subcontractors due to each client’s contractual terms and conditions.
However, where possible these subcontractors were used.
Question 2 – How do SMEs carry out supplier and subcontractor assessment?
To ensure that effective customer service is provided, the case study company carries
out assessments on all of their subcontractors and their main suppliers, addressing
aspects including health, safety, quality, environmental and commercial information.
Questionnaires are completed and reviewed by three key personnel within the
company. However, as Ordoobadi and Wang (2011) warn, without a structured
assessment process in place these reviews could be skewed by personal bias.
Although there is a wide variety of literature on different review methods, employees
within an SME are unlikely to have time to develop and implement difficult
assessment measures. Within the case study company there is often just a few week
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turn around between one project finishing and another project starting. As a result,
assessments need to be carried out quickly. Therefore, one of the best solutions for
supplier assessment within SMEs, and one which was suggested by many textbooks
within Sheffield University Library (Bozarth & Handfield, 2008; Crandall et al,
2010; Lysons & Gillingham, 2003) is the Linear Weighted Average method.
Question 3 - How does a small company with a limited number of employees manage
its work tasks during the tendering and estimating process, and which activities does
the company include within this process?
Contrary to many of the textbooks on tendering and estimating processes which
discuss a multitude of roles involved in this system, the case study company only
implemented three or four roles within the organization. This included the document
controller, the director and one or two estimators, depending on the type of works
involved. A detailed model of their process is illustrated in Section 4 (Figure 3).
Several additional activities were carried out in the case study process such as
document control. However, many essential activities were not carried out. These
included carrying out pre-submission meetings and creating a handover package.
Additional activities will be added to the new tendering and estimating process
model for SMEs (Figure 4).
Question 4 – How does an SME with a limited budget for technology, use IT to
facilitate their information systems?
Within the case study company free e-procurement resources were implemented, and
seen as a useful means of monitoring and obtaining information on current and
future projects. Websites including www.selltowales.co.uk and the Official Journal
of the European Communities online database were searched on a weekly basis and
updates were received. Furthermore, they also subscribed to Achilles UVDB which
is an on-line pre-qualification questionnaire, which the contractor completes and
clients have access to. This solution enables the company to promote directly to a
number of key clients and save valuable time spent of completing numerous client
questionnaires.
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The case study recently installed a remote access server by purchasing a new
computer system and operating a software called Dropbox11, which enables
employees to access data not only from the office but from their homes or on site.
This system was relatively low budget and was completed with little interference to
employees. This is an excellent method which all SMEs could implement to improve
their information systems.
5.3 A proposed SME tendering & estimating system
Following the completion of the case study and critical analysis a new Role Activity
Diagram for the tendering and estimating process has been developed. A number of
activities have been removed to streamline the process and several activities have
also been added in order to produce a high quality tender submission.
The first major change in the new system would be to remove the bottlenecks which
occur during the document control stage. Ideally a new information technology
system would facilitate the distribution of tender documents by automatically
sending them to the Director, rather than being delayed while they are recorded
within the company system. It would also automatically allocate reference numbers
for letters and documents without the need for somewhat slow manual data input. It
may be possible to create a new document numbering system to facilitate this
process without the need for a new technology system. However, if a further
research investigation was carried out, these suggestions could be tested and a
suitable solution could be developed.
The activity to manually pass document from one actor to another has been removed
from the new diagram. Documents no longer need to be transferred by email or post
with a shared, remote access server. A notification of the project number and when
the documents have been completed is all that is now required.
11 http://www.dropbox.com/features
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Several activities have been added which are necessary to carry out in order to an
accurate tender submission has been completed. In order to ensure that an overview
of the tender information is accurately shared between all personnel a tender review
form has been included. It should summarise all the basic correspondence details,
technical details and commercial information i.e. type of contract and ground
conditions. It should also include a list of tender documents received from the client
so that documents aren’t missed during the review process.
A pre-submission meeting should be held in order to ensure that all actors
understand what is required within the tender submission and to ensure that all
documents are included. It will also provide an opportunity to discuss any technical
and commercial variations if necessary.
Feedback should also be requested following submission of the tender in order to
gain information on how to improve future submissions.
A tender handover package has now been included in the new diagram. Brook
(2002) recommends that a checklist should be completed to ensure that all the
relevant documents are handed over to the project team. This could be incorporated
into the tender review document to avoid any duplication of work and information.
Finally, the new diagram includes the new role of the Project Manager. At the end of
each project a summary of quality, technical and commercial recommendations and
problems during the project should be completed by the Project Manager. This could
then be passed on to the Director and Estimator in order to account for these issues
during future tendering and estimating submissions.
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Figure 4 - A Tendering and Estimating Process Model for SMEs
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5.4 Future Work
This dissertation has investigated how supply chain management theory can be
applied to SMEs, in order to streamline their processes.
There are however, a number of limitations which the findings of this report have not
been able to accomplish within the timeframe provided:
• A complete study, including the implementation and evaluation of the
suggested streamlined process model has not been carried out.
• Only one business process was researched and analysed;
• Only one case study has been carried out;
• An indepth enquiry into possible information systems for SMEs has not been
carried out;
• This report has only focused on SMEs within the construction industry.
Therefore, in order to provide a more accurate and broader understanding of how
SMEs can improve their processes using SCM, the following future work has been
proposed:
• Researching how the new process model for SMEs and list of
recommendations were implemented within the case study company, and
evaluating whether its implementation was successful;
• Investigating different processes within SMEs, such as purchasing, and how
current theory applies;
• Contribute further to empirical research by carrying out further case studies,
and examine whether the research findings are typical within a variety of
construction SME organizations;
• Carry out a detailed study into information systems within SMEs, with a
focus on technology to support tendering and estimating systems. By
carrying out a more detailed review of current literature on information
technology available and identifying systems which could be implemented
within SMEs, taking into account limited financial expenditure and minimal
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time for implementation, information systems within many SMEs could be
simplified and free up scarce resources;
• A further study into technology for facilitating information systems within
SMEs could look at solutions for overcoming issues with remote access. As
some organizations operate from remote locations such as power stations and
offshore platforms, obtaining internet connectivity can be difficult and SMEs
have limited resources to spend on high-tech equipment.
• Carry out additional theoretical research and complete a similar case study
within a different industry, such as health or manufacturing.
Word Count: 19,274
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APPENDIX A - INTERVIEW QUESTIONS
Interview 1 – Document Controller
Introduction – The aim of this interview is to discover how a small business carries
out its tendering and estimating process. What I would like to discuss with you today
is your role and the activities you carry out during this process. At the end of the
interview I shall ask you for any opinions and recommendations to improve the
current process.
Participants job role:
1. How long have you worked for the company?
2. Have you been involved with tendering and estimating for long?
3. Please could you talk me through the main activities you carry out during the
tendering and estimating process, starting with how you receive tender
enquiries?
• Triggering Question – Could you describe step by step all the activities you
carry out to complete a tender submission, such as who the tender documents
are sent to and where they are all saved and filed?
• Redirection Question – Please could you describe just the activities involved
in creating a tender package?
Notes
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4. Which are the main documents you create for a tender submission?
• Triggering Question – Do you create documents such as programmes,
method statements, or the covering letter?
• Redirection Question – Could you list the main documents you create?
Notes
5. Are there any forms you use to assist with planning, controlling and recording the
tender process?
• Triggering Question – Do you use forms such as a tender register, a tender
summary form or a tender programme to record tasks and responsibilities?
• Redirection Question – Which forms specifically are used within the tender
process?
Notes
6. Do you use any particular computer software to complete your tendering and
estimating activities?
• Triggering Question – Do you use any forms of software such as Microsoft
Office, SAGE estimating or Computer Aided Design (CAD)?
• Redirection Question – Which are the main software products used to publish
and assist you in creating presentable tender submission?
Notes
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7. How many other people are involved in this process?
• Triggering Question – Who do you receive tender documents from, who
carries out the estimates and who submits the final tender?
• Redirection Question – Which people directly contribute to the tender
submission package?
Notes
8. What would you say are the main problems with this process?
• Triggering Question – Do you ever have problems with time constraints or
have the clients ever provided negative or constructive feedback on a
submission?
• Redirection Question – Within the tender process which would you say are
the three main problems?
Notes
9. Can you suggest any areas for improvement?
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• Triggering Question – Are there any ways in which your activities could be
made simpler and easier?
• Redirection Question – Within the tender process which would you say are
the three main ideas for improvement?
Notes
Thank you for your time. Now I have an understanding of how the process works I
shall create a process model. Would it be possible to arrange another meeting to
discuss my findings and establish if I have understood the process correctly?
Interview 2 – Estimator
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Introduction – The aim of this interview is to discover how a small business carries
out its tendering and estimating process. What I would like to discuss with you today
is your role and the activities you carry out during this process. At the end of the
interview I shall ask you for any opinions and recommendations to improve the
current process.
Participants job role:
1. How long have you worked for the company?
2. Have you been involved with tendering and estimating for long?
3. Please could you talk me through the main activities you carry out during the
tendering and estimating process, starting with how you receive tender
enquiries?
• Triggering Question – Could you describe step by step all the activities you
carry out to complete a tender submission, such as who the tender documents
are sent to and where they are all saved and filed?
• Redirection Question – Please could you describe just the activities involved
in creating a tender package?
Notes
4. Which are the main documents you create for a tender submission?
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• Triggering Question – Do you create documents such as programmes,
method statements, or the covering letter?
• Redirection Question – Could you list the main documents you create?
Notes
5. How do you select which suppliers and subcontractors to use?
• Triggering Question – Do you use any selection techniques such as
subcontractor assessment and a supplier rating scheme?
• Redirection Question – Could you briefly sum up the key selection methods
used?
Notes
6. Do you use forecasting methods to predict the future costs of projects?
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• Triggering Question – For example do you review the time it took and the
cost incurred to weld a pipeline during previous projects, and if not why not?
• Redirection Question – Could you identify the three most useful forecasting
methods?
Notes
7. Do you receive feedback from site managers regarding the technical and
financial progress in order to learn from their experiences?
• Triggering Question – Do construction supervisors or project managers keep
you updated on any cost changes and provide you with an explanation
regarding why such changes were made?
• Redirection Question – Do project managers report cost updates on a weekly
basis?
Notes
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8. Are there any specific sources of information you use in order to carry out the
estimating role?
• Triggering Question – Do you refer to documents such as the Code of
Estimating Practice and the Working Time Agreement?
• Redirection Question – Could you list the key documents you use?
Notes
9. What would you say are the main problems with this process?
• Triggering Question – Do you ever have problems with time constraints or
have the clients ever provided negative or constructive feedback on a
submission?
• Redirection Question – Within the tender process which would you say are
the three main problems?
Notes
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10. Can you suggest any areas for improvement?
• Triggering Question – Do you ever have problems with time constraints or
have the clients ever provided negative or constructive feedback on a
submission?
• Redirection Question – Within the tender process which would you say are
the three main problems?
Notes
Thank you for your time. Now I have an understanding of how the process works I
shall create a process model. Would it be possible to arrange another meeting to
discuss my findings and establish if I have understood the process correctly?
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Interview 3 – Director
Introduction – The aim of this interview is to discover how a small business carries
out its tendering and estimating process. What I would like to discuss with you today
is your role and the activities you carry out during this process. At the end of the
interview I shall ask you for any opinions and recommendations to improve the
current process.
Participants job role:
1. How long have you worked for the company?
2. Have you been involved with tendering and estimating for long?
3. Please could you talk me through the main activities you carry out during the
tendering and estimating process, starting with how you receive tender
enquiries?
• Triggering Question – Could you describe step by step all the activities you
carry out to complete a tender submission, such as who the tender documents
are sent to and where they are all saved and filed?
• Redirection Question – Please could you describe just the activities involved
in creating a tender package?
Notes
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4. How do you decide which projects to tender for?
• Triggering Question – Do you refer to a list of criteria such as the location of
the project, competition from other contractors or the estimating team’s
current workload?
• Redirection Question – Could you state the main criteria for project
selection?
Notes
5. How you obtain the majority of tenders?
• Triggering Question – Are many of the tenders received via tender websites
or are they sent direct from clients due your reputation in the industry?
• Redirection Question – What are the four key sources of tender sources?
Notes
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6. Do you have, or have you considered forging partnerships with subcontractors
or clients?
• Triggering Question – Have partnerships been a successful means of
completing projects/ the literature on partnerships identifies may benefits and
weaknesses with this work ethic. What are your reasons for not going into
partnership?
• Redirection Question – What were they main benefits and weaknesses?
Notes
7. What would you say are the main problems with this process?
• Triggering Question – Do you ever have problems with time constraints or
have the clients ever provided negative or constructive feedback on a
submission?
• Redirection Question – Within the tender process which would you say are
the three main problems?
Notes
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8. Can you suggest any areas for improvement?
• Triggering Question – Are there any ways in which your activities could be
made simpler and easier?
• Redirection Question – Within the tender process which would you say are
the three main ideas for improvement?
Notes
Thank you for your time. Now I have an understanding of how the process works I
shall create a process model. Would it be possible to arrange another meeting to
discuss my findings and establish if I have understood the process correctly?
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APPENDIX B – CONTRIVED OBSERVATION TASK LIST
Document Controller
Theoretical Tasks Actual Tasks
1. Receive documents by post or email
2. Record project on tender register
3. Tender enquiry form attached to tender
4. Send to Director for decision to tender
5. Decision to tender given/ declined
6. Client notified of decision
7. Documents sent to Estimator
8. Estimate timetable received
9. Examine document
10. Prepare template documents for submission
11. Receive completed documents
12. Compile tender submission
13. Pass copy of tender to Director for approval
14. Authorization to submit tender given/declined
15. Make additional changes if requested
16. Submit tender
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