Notes

Depending upon the activity and the method used during the logistics process, different resources may be consumed. Those resources can be broadly divided into five categories, namely, labour, materials, equipment, facilities, property and capital ([30] Kaplan and Cooper, 1998; [5] Brimson, 1991). To consider the cost elements that may occur during the logistics process, [19] Fang and Ng (2008) examined the flow of precast components consumed in a residential project. According to their findings, resources were employed for procurement, stocking at the supplier's yard and/or intermediate warehouse, transportation, as well as loading and stocking on site as shown in Figure 1 [Figure omitted. See Article Image.].
24] Gurmann and Schreiber (1990) considered the inventory cost as an operating cost associated with the keeping of stocks in the warehouse and maintaining the warehouse. Warehouses in the perspective of construction materials could mean those in the supplier's factory/yard or in an intermediate location to ensure materials are delivered to site according to the delivery schedule. [54] Waters (1996) expanded the components of inventory cost to include the holding, shortage and re-order costs, while the inventory holding cost is taken as the cost between the transfer and the cost of buffer stock ([56] Zeng and Rossetti, 2003). Studies on inventory control were conducted by researchers to trade-off the fixed re-order cost against the inventory cost of increased order size ([13] Daganzo, 1985). Yet, as delay on the contractor's part could lead to undesirable consequence, most would prefer to keep sufficient stock on or off-site to maintain work continuity.

Since the re-order and shortage costs are regarded as a penalty for delay when considering the transportation cost, the inventory cost in this study is the cost of holding one unit of item in stock for a period of time. Such cost includes the charges for the storage space, any losses due to damages, handling fee, administration cost and insurance ([54] Waters, 1996


TT: Transportation cost has been a very common topic of research. Examples of these include the routing of transportation ([17] Eilon et al. , 1971), minimisation of transportation cost ([4] Bodin et al. , 1983), etc. [6] Burns et al. (1985) believed that the transportation cost should relate to the travel distance between the warehouse and destination, and such cost should include the driver's wages, equipment cost and in-transit inventory cost

Pro: rocurement cost refers to the expenses associated with the sourcing of suitable suppliers for the project which involves identifying appropriate suppliers, seeking quotations from the suppliers, negotiating the contractual terms with the suppliers, etc. ([56] Zeng and Rossetti, 2003). While some research studies were conducted to examine the supplier selection methods ([1] Albino and Garavelli, 1998; [16] Dissanayaka, 1998; [33] Kumaraswamy and Palaneeswaran, 2000) and procurement strategies ([8] Chan, 1995; [29] Humphreys et al. , 1998; [32] Kaynak and Hartley, 2006; [7] Castro-Lacouture et al. , 2007)
this cost is reflected as a percentage to the total purchasing expenditures, and that could range from 2.5 to 5 per cent should independent purchasing services be appointed ([25] Heinritz et al. , 1991
Yet, there is no simple and readily available rule to compute the procurement cost due to the amount of materials involved and the distinguish relationship with the suppliers ([14] Davis-Case, 1991). The problem is aggravated as the materials in each construction project vary. Consequently, the procurement cost should be analysed by referring to the hours in which staff in the procurement department expended on the project, as well as the office equipments being used to facilitate the communication and negotiation (Table IV [Figure omitted. See Article Image.]).

Mathematical formulation