A model to evaluate materials suppliers' and contractors' business interactions

J. Nicholas and D. J. Edwards

Construction Management and Economics, 2003, vol. 21, issue 3, 237-245

Abstract: A symbiotic business relationship exists between materials suppliers and construction contractors. Specifically, contractors must continually purchase materials on credit to complete projects, whilst suppliers exist on the profits made from selling such. In the absence of this indirect source of liquidity, many construction projects would not be completed. Despite the supplier incurring substantial financial risk when furnishing credit to contractors, there are currently no definitive or accurate means with which to measure and predict this risk. This paper presents the findings of a survey conducted throughout the UK that aimed to model the utility value that material suppliers experience when they interact with contractors. It is proposed that the (novel and new) methodological approach used will enable materials suppliers to enhance their decision-making process and subsequently boost business performance (and most notably, profit). Such improvements could ultimately be passed directly to good debtors in terms of lower materials costs, better delivery specifications, and improved creditor staff motivation. Subsequently, this could translate as more economical construction projects for clients. The paper concludes with direction for future works that would develop a more user-friendly software package and subsequently implement the research findings throughout the construction industry.

Keywords: Materials Suppliers; Credit And Debt; Creditworthiness; Construction Contractors; Financial Management; Utility; Business Relationships (search for similar items in EconPapers)
Date: 2003
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DOI: 10.1080/0144619032000049692

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