Managing Materials Vendor Risks for Improved Project Operational Performance

The Role of Risk-Oriented Culture

Authors

  • Nsikan John Covenant University, Ota- Nigeria. https://orcid.org/0000-0001-7682-3909
  • Peter Nwaguru European Global School-University, Paris France
  • Mercy G.D Okon University of Uyo- Nigeria
  • Uduak Tommy University of Calabar, Nigeria
  • Mba Bariate Garden City Premier Business School, Port Harcourt- Nigeria

DOI:

https://doi.org/10.14488/BJOPM.1957.2024

Keywords:

Vendor Risk Management, Construction Project Management, Construction Supply Chain, Sustainable Project Quality, Risk Culture

Abstract

Highlight: Sound risk management implementation is well noted for helping organisations to overcome operational inefficiencies. However, the management of risk associated with construction materials vendors, and how they impact project operational performance appear to have not been extensively researched.

Goal: In this study, the effect of materials vendor risk management (vendor risk identification and vendor risk prevention) on project operational performance (project quality and scheduled completion time) was investigated. We also interrogate the mediating role of risk-oriented culture in the relationship between vendor risk management and operational performance.

Design/Methodology/Approach: The target population was all 1,044 registered public construction firms under the Urban Regeneration Programme in Nigeria. The cross-sectional survey design was adopted, and random sampling was used to select 173 project managers, engineers, surveyors, vendors/contractors, and store representatives. Primary data was collected through the structured questionnaire, they were analysed via the Structural Equation Modelling (SEM) technique.

Results: Three main conclusions are made about managing vendor risks: First, properly identified materials vendor risks (in terms of material handling issues, price escalation, non-compliance to specification, delivery delay, and sharp procurement practices) is positively related to operational performance. Second, implementing context-specific risk prevention measures (prior assessment score, vendor financial capacity, warranty policy, continuous monitoring, technical capacity) positively enhances operational outcomes. Third, paying attention to risk culture orientation of project stakeholders positively impact their risk prevention capability and operational performance of construction projects.

Limitations: Study was limited to few operational performance indicators in project management. Future study could include other performance indicators.

Practical Implications: The results can help project operations managers in industry address numerous risks associated with materials vendor.

Originality/Values: The numerous abandoned and failed construction projects in developing countries as a result of less attention to vendor risks management prompted this study. 

Downloads

Download data is not yet available.

References

Adebayo, O.P., Worlu, R.E., Moses, C.L. e Ogunnaike, O.O. (2020), "An Integrated Organisational Culture for Sustainable Environmental Performance in the Nigerian Context", Sustainability, Vol. 12, No. 20, pp. 1-15.

Adedugba, A.T., Ogunnaike, O., Adeyemo, K.A., Kehinde, B.E. e Inegbedion, D.O. (2022), "The Degree of Material Distribution on Environmental Outcomes in Selected Large-Scale Fabrics Manufacturing Firms in Lagos State, Nigeria: A Control Approach", Journal of Technological Advancements (JTA), Vol. 2, No. 1, pp. 1-11. Disponível em: http://doi.org/10.4018/JTA.304070

Adhitya, A., Srinivasan, R. e Karimi, I.A. (2009), "Supply Chain Risk Identification Using a HAZOP-Based Approach", American Institute of Chemical Engineers Journal, Vol. 55, No. 6, pp. 1147–1163.

Aduma, L.K. e Kimutai, G. (2018), "Project risk management strategies and project performance at the National Hospital Insurance Fund in Kenya", International Academic Journal of Information Sciences and Project Management, Vol. 3, No. 2, pp. 111-136.

Agápito, A. de O., Vianna, M. de F.D., Moratori, P.B., Vianna, D.S., Meza, E.B.M. e Matias, I. de O. (2019), "Using multicriteria analysis and fuzzy logic for project portfolio management", Brazilian Journal of Operations & Production Management, Vol. 16, No. 2, pp. 347–357. Disponível em: https://doi.org/10.14488/BJOPM.2019.v16.n2.a14

Ahmed, S.M., Azhar, S., Castillo, M. e Kappagantula, P. (2012), "Construction Delays in Florida: An Empirical Study", State of Florida: Miami: Florida International University.

Ahmed, S., Ahmad, R. e Saram, D. (2019), "Risk management trends in the Hong Kong construction industry: a comparison of contractors and owners’ perceptions", Journal of Engineering, Construction and Architectural Management, Vol. 6, pp. 225–234.

Aibinu, A.A. e Odeyinka, H.A. (2019), "Construction Delays and Their Causative Factors in Nigeria", Journal of Construction Engineering and Management, Vol. 132, pp. 667–677.

Akande, O.E. (2018), "Evaluation of Failures in Public Project Management Practices in Minna, Nigeria", Journal of Architecture and Construction, Vol. 1, No. 3, pp. 15-24.

Alaghbari, W., Razali, A., Kadir, A. e Ernawati, A. (2017), "The Significant Factors Causing Delay of Building Construction Projects In Malaysia", Engineering Journal of Construction and Architectural Management, Vol. 14, pp. 192–206.

Al-Dalaeen, A.S. e Tarawneh, S. (2022), "Obstacles Facing Women Working in The Jordanian Construction Industry: Women's Perspective", International Journal of Construction Supply Chain Management, Vol. 12, No. 2, pp. 1-15. DOI: 10.14424/ijcscm120222-1-15

Alkaissy, M., Arashpour, M., Li, H., Alaghmand, S. e Nezamian, A. (2022), "Quantitative analysis of safety risks and relationship with delayed project completion times", Risk Analysis, Vol. 42, No. 3, pp. 580-591.

Amoah, P., Ahadzie, D.K. e Dansoh, A. (2011), "The factors affecting construction performance in Ghana: The perspective of small-scale building contractors", The Ghana Surveyor, Vol. 4, pp. 41–48.

Amos, D., De-Graft, O.M., Erika, P. e David, J.E. (2016), "Identifying Potential Critical Risks in the Construction Supply Chain: An Empirical Study in Ghana", Mindanao Journal of Science and Technology, Vol. 14, pp. 79-100.

Andreas, W. e Carl-Marcus, W. (2012), "Dealing with supply chain risks: Linking risk management practices and strategies to performance", International Journal of Physical Distribution & Logistics Management, Vol. 42, No. 10, pp. 887–905.

Assaf, A. e Al-hejji, S. (2016), "Causes of delay in large construction projects", International Journal of Project Management, Vol. 24, pp. 349–357.

Azis, A.A. (2020), "Significant Risk Factors in Construction Projects: Contractor’s Perception", Colloquium on Humanities, Science and Engineering Research, Vol. 12, No. 1, pp. 187–196.

Bahamid, N. e Doh, B. (2017), "A review of risk management process in construction projects of developing countries", IOP Conference Series: Materials Science and Engineering, Vol. 271. DOI: 10.1088/1757-899X/271/1/012042.

Bahamid, R.A., Doh, S.I., Khoiry, M.A., Kassem, M.A. e Al-Sharafi, M.A. (2022), "The Current Risk Management Practices and Knowledge in the Construction Industry", Buildings, Vol. 12, p. 1016.

Barber, R.B. (2019), "Understanding internally generated risks in projects", International Journal of Project Management, Vol. 23, pp. 584-590.

Brammer, S. e Walker, H. (2011), "Sustainable procurement in the public sector: an international comparative study", International Journal of Operations & Production Management, Vol. 31, No. 4, pp. 452-476.

Brandon-Jones, E., Squire, B., Autry, C.W. e Petersen, K.J. (2014), "A contingent resource-based perspective of supply chain resilience and robustness", Journal of Supply Chain Management, Vol. 50, No. 3, pp. 55-73.

Chapman, B. e Stephen, W. (2022), Managing Project Risk and Uncertainty: A Constructively Simple Approach to Decision Making, Wiley & Sons, Ltd., Chichester, New York.

Chapman, R.J. (2011), "The controlling influences on effective risk identification and assessment for construction design management", International Journal of Project Management, Vol. 19, pp. 147–160.

Cheng, Y., Chaudhuri, A. e Farooq, S. (2016), "Interplant Coordination, Supply Chain Integration, and Operational Performance of a Plant in A Manufacturing Network: A Mediation Analysis", Supply Chain Management, Vol. 21, No. 5, pp. 550–568. Disponível em: https://doi.org/10.1108/SCM-10-2015-0391

Creswell, J.N. (2014), Research Design: Qualitative, Quantitative and Mixed Methods Approaches, 4th ed., Sage, Thousand Oaks, CA.

Damoah, I.S. e Kumi, D. (2018), "Causes of Government Construction Projects Failure in an Emerging Economy: Evidence from Ghana", International Journal of Managing Projects in Business, Vol. 11, pp. 558-582. Disponível em: https://doi.org/10.1108/IJMPB-04-2017-0042

Damoah, I.S., Mouzughi, Y. e Kumi, D.K. (2018), "The effects of government construction projects abandonment: stakeholders’ perspective", International Journal of Construction Management, Vol. 20, pp. 462-479.

Darko, A., Owusu-Manu, D., Pärn, E. e Edwards, M. (2019), "Identifying Potential Critical Risks in the Construction Supply Chain – An Empirical Study in Ghana", International Journal of Project Management, Vol. 32, No. 4, pp. 698–708.

Eja, K.M. e Ramegowda, M. (2020), "Government project failure in developing countries: A review with particular reference to Nigeria", Global Journal of Social Sciences, Vol. 19, No. 2, pp. 35-47. DOI: https://dx.doi.org/10.4314/gjss.v19i1.4

Elia, S., Petruzzelli, A.M. e Piscitello, L. (2019), "The Impact of Cultural Diversity on Innovation Performance of MNC Subsidiaries in Strategic Alliances", Journal of Business Research, Vol. 98, pp. 204–213.

Farooq, M.U., Thaheem, M.J. e Arshad, H. (2018), "Improving the risk quantification under behavioural tendencies: A tale of construction projects", International Journal of Project Management, Vol. 36, No. 3, pp. 414–428.

Ferreira, S.A., Neto, J.V. e Batista, H.M.C. da S. (2019), "Critical success factors on project and process management in competitive strategy implementation", Brazilian Journal of Operations & Production Management, Vol. 16, No. 4, pp. 605–616. Disponível em: https://doi.org/10.14488/BJOPM.2019.v16.n4.a6

Ghosh, S. e Jintanapakanont, J. (2014), "Identifying and assessing the critical risk factors in an underground rail project in Thailand: a factor analysis approach", International Journal of Project Management, Vol. 22, pp. 633–643.

Hair, J.F., Hult, G.T.M., Ringle, C.M. e Sarstedt, M. (2017), A Primer on Partial Least Squares Structural Equation Modeling (PLS-SEM), 2nd ed., SAGE Publications.

Hair, J.F., Black, W.C., Babin, B.J. e Anderson, R.E. (2010), Multivariate Data Analysis, 7th ed., Pearson, New York.

Han, S., Diekmann, E. e Ock, J. (2017), "Contractor’s Risk Attitudes in the Selection of International Construction Projects", The International Journal of Construction Management, Vol. 131, pp. 283–292.

Hany, E., Ali, A., Al-Sulaihi, K. e Al-Gahtani, M. (2013), "Indicators for measuring performance of building construction companies in Kingdom of Saudi Arabia", Journal of King Saud University- Engineering Sciences, Vol. 25, pp. 125–134.

Hatcher, L. (2013), Advanced Statistics in Research: Reading, Understanding, and Writing Up Data Analysis Results.

Idoro, G.I. (2019), "Influence of Quality Performance on Clients’ Patronage of Indigenous and Expatriate Construction Contractors in Nigeria", Journal of Civil Engineering and Management, Vol. 16, pp. 65–73.

Jerome, J.J.J., Sonwaney, V., Bryde, D. e Graham, G. (2023), "Achieving competitive advantage through technology-driven proactive supply chain risk management: an empirical study", Annals of Operations Research, Vol. 1, pp. 1-42.

Kosutic, D. (2022), What is Risk Management, and Why is it Important?, disponível em: https://advisera.com/27001academy/iso-27001-risk-assessment-treatment-management/

Kurniawan, R., Zailani, S.H., Iranmanesh, M. e Rajagopal, P. (2017), "The effects of vulnerability mitigation strategies on supply chain effectiveness: risk culture as mediator", Supply Chain Management: An International Journal, Vol. 22, No. 1, pp. 1-15.

Lekchiri, S. e Kamm, J.D. (2020), "Navigating barriers faced by women in leadership positions in the US construction industry: a retrospective on women’s continued struggle in a male-dominated industry", European Journal of Training and Development, Vol. 44, Nos. 6-7, pp. 575-594. Disponível em: https://doi.org/10.1108/EJTD-11-2019-0186

Macura, D., Laketić, M., Pamučar, D. e Marinković, D. (2022), "Risk Analysis Model with Interval Type-2 Fuzzy FMEA—Case Study of Railway Infrastructure Projects in the Republic of Serbia", Acta Polytechnica Hungarica, Vol. 19, pp. 103-118.

Matinheikki, J., Kauppi, K., Brandon-Jones, A. e van Raaij, E. M. (2022), "Making agency theory work for supply chain relationships: a systematic review across four disciplines", International Journal of Operations & Production Management, Vol. 42, No. 13, pp. 299-334.

Mishra, B. K., Rolland, E., Satpathy, A. e Moore, M. (2019), "A framework for enterprise risk identification and management: the resource-based view", Managerial Auditing Journal, Vol. 34, No. 2, pp. 162-188.

Mitzkus, S. (2013), Theoretical basis of supply management: theoretical and practical contributions of agency theory, Bachelor's thesis, University of Twente.

Moczydłowska, J., Sadkowska, J., Żelazko, B., Ciocoiu, C. N. e Stawicka, E. (2023), "Understanding Risk Culture in the Context of a Sustainable Project: A Preliminary Study", Sustainability, Vol. 15, No. 6, art. 5302. Disponível em: http://dx.doi.org/10.3390/su15065302

Motilewa, B. D., Agboola, G. M. e Adeniji, C. M. (2015), "Organisational culture and performance", International Conference on African Development Issues (CU-ICADI); Africa Leadership Development Center, Covenant University, Ota, Nigeria, pp. 297-300.

Muhammad, A., Sikandar, B. K., Tufail, H. e Uroosa, N. (2022), "Assessment of critical risk and success factors in construction supply chain: a case of Pakistan", International Journal of Construction Management, Vol. 22, No. 12, pp. 2258-2266. DOI: 10.1080/15623599.2020.1783597

Nguyen, L. e Watanabe, T. (2017), "The Impact of Project Organizational Culture on the Performance of Construction Projects", Sustainability, Vol. 9, No. 5, art. 781. Disponível em: http://dx.doi.org/10.3390/su9050781

Nitya, P. S. e Paul, C. H. (2020), "Impact of strategic and operational risk management practices on firm performance: An empirical investigation", European Management Journal, Vol. 12, No. 3, pp. 231-250.

Nnadi, E. O. e Ugwu, O. O. (2013), "An Appraisal of Risk Management in Nigeria Construction Industry", International Journal of Research and Advancement in Engineering Science, Vol. 3, No. 2, pp. 41-50.

Nsikan, J. E., Nwaguru, P., Williams, A. J. (2022), "Assessing Materials Vendor Selection in Construction Project Supply Chain: The Relative Importance Index Approach", International Journal of Construction Supply Chain Management, Vol. 12, No. 2, pp. 32-46. DOI: 10.14424/ijcscm120222-32-46

Nunnally, J. C. e Bernstein, I. H. (1994), Psychometric Theory, 3rd ed., New York, McGraw Hill.

Nweze, N. (2016), "Failure of Public Infrastructure Projects in Nigeria: Causes, Effects and Solutions", International Journal of Management, Vol. 2, No. 2, pp. 1-20.

Nyaoga, P. M. (2016), "Procurement Risks Management Practices and Supply Chain Performance", International Journal of Industrial Engineering Computations, Vol. 14, No. 2, pp. 144–159.

Okesina, M. (2020), "A critical review of the relationship between paradigm, methodology, design and method in research", IORS Journal Handbook of qualitative research of Research & Method in Education, Vol. 101, pp. 57-68.

Oladapo, I. O. (2015) "Problems of the construction industry in Nigeria", IABSE reports of the working commissions, disponível online em link, acessado em 03/05/2023.

Saunders, M., Lewis, P. e Thornhill, A. (2019) Research methods for business students, 8th ed., Pearson Education Limited, Financial Times Prentice Hall.

Sharma, S., Singh, R. K., Mishra, R. e Subramanian, N. (2023) "Developing climate neutrality among supply chain members in metal and mining industry: natural resource-based view perspective", The International Journal of Logistics Management.

Shimizu, T., Park, K., Park, Y. e Haney, M. H. (2020) "Supply chain risk management and the role of project managers: a comparative analysis of US and Japanese firms", International Journal of Services and Operations Management, Vol. 35, No. 4, pp. 504-527.

Souza, G. M. de, Santos, E. A., Silva, C. E. S. e Souza, D. G. B. de (2022) "Integrating fuzzy-MCDM methods to select project portfolios under uncertainty: the case of a pharmaceutical company", Brazilian Journal of Operations & Production Management, Vol. 19, No. 3, pp. 1–19. https://doi.org/10.14488/BJOPM.2022.008

Tiwari, P. A. (2023) "Moderating Role of Project Flexibility on Senior Management Commitment and Project Risks in Achieving Project Success in Financial Services", In International Conference on Data Management, Analytics & Innovation, pp. 627-646, Springer Nature Singapore, Singapore.

Trading Economics (2022) "Nigeria GDP From Construction", disponível em link.

Ubani, E. C., Amade, B., Okorocha, K. A. e Agwu, F. O. (2015) "Project Risk Management Issues in the Nigerian Construction Industry", International Journal of Engineering and Technical Research, Vol. 3, No. 1, pp. 217-232.

Vipin, P. e Rahima, S. S. (2019) "Factors Affecting Material Management in Construction Industry", International Journal of Recent Technology and Engineering (IJRTE), Vol. 8, No. 3, pp. 8445-8448.

Wieland, A. e Wallenburg, C. M. (2012) "Dealing with supply chain risks", International Journal of Physical Distribution & Logistics Management, Vol. 42, No. 10, pp. 887-905. http://dx.doi.org/10.1108/09600031211281411.

Windapo, A. O. (2006) "A study of the quality of materials used in the Nigerian construction Industry", Professional Builder, No. 32, pp. 34–38.

Xiaohua, J., Guomin, Z., Junxiao, L., Yingbin, F. e Jian, Z. (2017) "Major Participants in the Construction Industry and Their Approaches to Risks: a Theoretical Framework", 7th International Conference on Engineering, Project, and Production Management, Procedia Engineering, Vol. 182, pp. 314–320. doi: 10.1016/j.proeng.2017.03.100.

Xiaoteng, M., Ziyu, T., Dan, W. e Hao, G. (2020) "The Influence of Risk Culture on the Performance of International Joint-Venture Securities", Sustainability, Vol. 12, No. 2, 2603. doi: 10.3390/su12072603.

Zsidisin, G. A. e Ellram, L. M. (2003) "An agency theory investigation of supply risk management", Journal of supply chain management, Vol. 39, No. 2, pp. 15-27.

Zu, X. e Kaynak, H. (2012) "An agency theory perspective on supply chain quality management", International Journal of Operations & Production Management, Vol. 32, No. 4, pp. 423-446.

Zuofa, T. e Ochieng, E. (2014) "Project Failure: The Way Forward and Panacea for Development", International Journal of Business and Management, Vol. 9, No. 11, p. 59. Disponível em: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3105462

Downloads

Published

2024-05-21

How to Cite

John, N., Nwaguru, P., Okon, M. G., Tommy, U., & Bariate, M. (2024). Managing Materials Vendor Risks for Improved Project Operational Performance: The Role of Risk-Oriented Culture. Brazilian Journal of Operations & Production Management, 21(2), 1957 . https://doi.org/10.14488/BJOPM.1957.2024

Issue

Section

Research paper