Construction industry in kuwait – an analysis on e procurement-2

International Journal of Management Research and
Development (IJMRD), ISSN 2248 – 938X(Print)
ISSN 2248 – 9398(Online), Number 1,2, Number 1 (2012)
2248 – 9398(Online), Volume 2, Volume July-December
IJMRD
International Journal of Management Research and Development (IJMRD), ISSN 2248 – 938X(Print) ISSN

July-December (2012), pp. 01-17
© PRJ Publication, © PRJ
http://www.prjpublication.com/IJMRD.asp PUBLICATION

CONSTRUCTION INDUSTRY IN KUWAIT – AN ANALYSIS
ON E-PROCUREMENT ADOPTION WITH RESPECT TO
SUPPLIER’S PERSPECTIVE

T.Baladhandayutham( 1)
Dr. Shanthi Venkatesh (2)
Doctoral Research Scholar, Assistant Professor (SG) - Marketing
School of Management, SRM University, SRM B School, SRM University,
New No.78/1, Mosque Street, Saidapet, No.1, Jawaharlal Nehru Road, Vadapalani,
Chennai-600015, India Chennai 600026. INDIA.
Mobile: 0091-9444320720 Mobile: 0091- 98400 97489
balachinnu@yahoo.com Shan_venky@yahoo.com

ABSTRACT

Information technology (IT) has been widely applied in many industrial sectors in order to
increase their profit, competitiveness, and to reduce unnecessary costs. In line with the
Global Scenario, the procurement concept is also moving ahead from traditional manual
paper-based to electronically-based due to improvement in the Internet. Electronic
procurement (e-procurement) has been widely adopted in various industrial sectors across the
Globe, and as such various aspects of its adoption has been researched. Construction
material procurement is one of the most important sections in the construction project
life cycle. The possibilities afforded by E- Procurement are evident, but the level of
implementation and penetration was not as expected within the construction industry
compared to other industrial sectors. The potential benefits for construction are suggested
by the E- Procurement accomplishments in other industries. Yet the adoption of e-
procurement in the Construction Industry is not as widespread, especially in Kuwait and
other GCC countries in Middle East Region, and accordingly there has been limited
research into the factors affecting the adoption of e- procurement, within this context.
Consequently, this study, which has been undertaken with quantitative survey
questionnaires on supplier’s dimensions, aims to add to current published literature, and in
particular provide an understanding of the relationship between the factors identified
which have affected adoption of e-procurement for Construction Industry and Material
Suppliers in Kuwait.

Keywords — e-Procurement, Construction Industry, Kuwait

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International Journal of Management Research and Development (IJMRD), ISSN 2248 – 938X(Print)
ISSN 2248 – 9398(Online), Volume 2, Number 1, July-December (2012)

1. INTRODUCTION

Faced with a challenging economy and a fiercely competitive market environment,
corporations around the globe are hard pressed to explore newer and sustainable
approaches of attaining Competitive advantage. The global economy has changed
dramatically from an industrial society to an information society. Business has turned
into e-business. The new world of business with business pressures and increasing
business needs forms the driving force for the organizations to take competitive
advantage using E-commerce. The organizations respond to these business pressures to
fulfil their business needs by Adopting strategic systems, Continuous improvement
efforts, Business process reengineering (BPR), Business Alliances, and Electronic
commerce. Electronic commerce is driving fundamental changes in the way in which
organizations buy and sell. Traditionally, high operation and transaction costs and
limited information flows forced most enterprises to adopt one of two procurement
operating models: centralized command and control or highly decentralized operations.
Each of these organizational models offered benefits and challenges.

Dai and Kaufmann (2000) note that “to buyers in supply chain management,
procurement systems and B2B (business to business) electronic markets are perceived
as a new procurement channel enabled by the internet and new technologies of the World
Wide Web. Adoption of these technologies and the corresponding business models
associated with them, are of great significance to the success of many businesses in a
spectrum of industries”. One important sector that, in recent years, has seriously begun to
evaluate and adopt e- procurement technologies is the Construction sector.

Construction material procurement is one of the most important sections in the
construction project life cycle. The procurement concept is moving ahead from traditional
manual paper-based to electronically-based due to improvement in the Internet. It is
necessary for every construction company to maintain an efficient and effective
material procurement to cut administration cost and overcome various market
uncertainties to procure materials at the right price, quality and time.

1.1. E-Commerce and E-Business

In general, e-business is used in the broadest sense. It includes buying and selling
on-line, but also other aspects of on-line business activity, such as purchasing, tracking
inventory, managing production and handling logistics, customer support services, supply
chain management and collaborative engineering. Electronic Commerce, or e-commerce,
is buying and selling online. It is part of the broader term e-business and involves
transactions.

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In simple words B2B commerce can be defined as "doing business electronically" or
business that is conducted over the Internet. . Electronic procurement (E-procurement) is
the application of Internet technology in material procurement. The growth of internet
has fuelled the growth of e- procurement. “Today e-Procurement and e- Sourcing are two
of the most useful practices in purchasing. Ten Years ago, those terms were unheard of”
(Charles, 2008, p1).

1.2. Procurement in Construction Project

The construction industry is faced with the ongoing challenge to enhance current work
practices and become more client-oriented. This trend is influenced by a number of
factors, including greater performance expectations by clients, globalization of the
economy, increased competitions between contractors, continued restructuring of work
practices, industrial relations, and industry’s need to implement information and
communication technologies.

Despite the unique and individual nature of any construction project, it requires
involvement by many participants, such as clients, designers, consultants, contractors,
subcontractors, and suppliers, as an entity to perform various roles and responsibilities.
Today, enterprises are increasingly in need of sustainable, faster and safer methods of
construction, innovative project delivery modes and procurement practices, as well as
interoperable standards within the construction industry, which is really a big challenge
to their existing supply chain to improve the efficiency and effectiveness.

1.3. Relevance of this Research to Kuwait

Kuwait’s already buoyant economy is the third largest in the Gulf Cooperation Council
(GCC) countries, after Saudi Arabia and the United Arab Emirates, with its real gross
domestic product (GDP) standing at US$32.92 billion in 2002 (UNESCWA, 2003),
which is powered by its 10% of world’s oil reserves. Oil production and related industries
drive the Kuwaiti economy. As estimated by MEED.com on 29th September 2010 the
Value of Construction Projects in GCC stands at US$2.29 trillion. Top 100 projects in
GCC region contribute US$ 1.3 trillion and Kuwait contributes more than 25% value.
There is a huge scope for efficient Procurement methods and yet the B2B e-Commerce /
organizational e-Procurement have not reached their potential utilization as it is practiced
in the rest of the developed / developing countries.

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2. THE PROBLEM AND RESEARCH QUESTIONS

According to the existing literature, e-Procurement is likely to increase firm’s
competitiveness through cost reduction and increased efficiency on the inbound logistics.
However, even though some construction companies are adopting and using such systems,
other firms are not intending to do so. The following problems have been identified to be
studied / analyzed by the way of this ambitious research.

a) What are the factors that affect the intention of Construction Material
suppliers in Kuwait to adopt e-Procurement? What is their relative relevance?
b) What are the benefits / barriers perceived by Construction Material Suppliers
for the e-Procurement adoption?

In order to ascertain the answers for the questions above, a detailed literature review
was conducted to develop a research model containing a set of factors for explaining the
construction companies’ likelihood to adopt e-Procurement.

3. LITERATURE REVIEW

Review of various literatures using a funneling approach of Hofstee (2006) was carried
out. The sources of literature review includes books, management journals, survey
reports, research reports and contemporary articles on the e- Procurement practices in
supply chain management in varied industrial sectors including construction industry.
Literature Survey broadly covered the Supply Chain Management, Construction Supply
Chain Management, Procurement for Construction Projects, B2B e-Commerce, E-
Procurement, B2B e-Procurement Applications for Construction Projects, Global E-
Commerce Trends, E- Commerce Initiatives in GCC, E-Commerce Initiatives in
Kuwait. The available / collected literature (more than 200 Nos.) can be broadly
grouped under following categories:

• Research prior to Year 2000 = 6%
• Research between Year 2000 to 2004 = 42%
• Research between Year 2005 to 2010 = 52%

It is evident from the literature survey that research on B2B e-Commerce has begun
during late 90’s, gained its momentum during year 2000 to 2004 and the trend continues.
Summary of observations made out of the detailed literature survey is given below:

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3.1 E-Procurement Process

E-Procurement can be defined as the “electronic integration and management of all
procurement activities including purchase request, authorization, ordering, delivery and
payment between a purchaser and a supplier” (Chaffey, 2002). Six forms of e-
Procurement are described by De Boer et al.(2002); (i) electronic- Maintenance Repair
and Operations (e-MRO), (ii) web-based Enterprise Resource Planning (ERP), (iii)
electronic-sourcing (e-sourcing), (iv) electronic- tendering (e-tendering) (v) electronic-
reverse auctioning (e-reverse auctioning) and (vi) electronic-informing (e-informing
Research of enterprises’ experiences with Internet-based procurement automation
technologies indicates that companies have been able to achieve significant cost and
process benefits by automating key procurement activities (Aberdeen, 2001).

3.2 E-Commerce in Relation to Construction

The potentials of e-commerce technologies applications in the construction industry
include: E-marketing; E-selling/e-procurement of goods and services; E-collaboration; E-
finance; and E-customer services and relations (Veeramani et al., 2002). Complexity,
Strategic Importance, Price and Repeat Purchase are the important dimensions of
Procurement Spend for conducting a Commodity Spend Analysis. Similarly, on-time and
on-budget are the most relevant measurements for e-Procurement Implementation (OGC,
2002).

E-business provides mechanisms for cross-enterprise coordination in name of
construction supply chain integration. In order to optimize the entire supply chain
system cross-enterprise coordination and special business relationship must be established
among the organizations along the supply chain (Francisco Loforte Ribeiro and Jorge
Lopes, 2001). It was felt a more rigorous verification of the application of general e-
procurement drivers and barriers to construction e-procurement may provide a clear
outlook for the potential for the advancement of e-procurement in construction. Despite
the benefits of e- commerce technologies to the construction industry, there are many
challenges in its applications (Elliman & Orange 2003).

3.3 E-Procurement models in Relation to Other Industries

Literature review reveals that despite the fact several models and varying factors exist,
the core of most of the models is the view of management of people, process and
technology that leads successful implementation of e- procurement. The model proposed
by Dooley and Purchase (2006), enforces the view that attitude towards ecommerce can
be tracked using 4 factors namely Internal organization Support, Integration with
Supplier, Supplier Willingness, supplier / buyer relationship and Perceived
Improvements to procurement tasks. Boyler and Olson (2002) proposed a model that
focuses on

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two broad factors namely Purchasing Company and Internet Factors that predict
outcomes of performance improvements from e-procurement implementation.

Vaidiya et al., (2006) proposed a model focusing on factors that impact level of user and
supplier satisfaction leading to e-procurement implementation in public sector. Bingi,
Mir, and Khamaleh (2000) found that the major concerns that face electronic commerce
adoption are the absence of the technological infrastructure needed to support business
operations, information security, and privacy of exchange. It is especially evident when
suppliers may be hesitant or even unable to meet business customers’ systems’ integration
requirements without guarantees of future revenue streams (Sigala 2006). The hesitation
to adopt e-procurement, for example, does not stem from expected difficulty or
constraints, but arises due to being unaware of clear anticipated benefits (H. Min and
W. P. Galle, 2003 & C. K. Riemen Schneider, D. A. Harrison, and P. Mykytyn, 2003).

Business-to-businesses processes differ along several dimensions, such as specificity,
structuredness, variation in demand, frequency of orders, value of product, amount of
human intervention required, and complexity. The realized value of e-Procurement
depends not just on the complexity of the procurement process, but also on the
transaction volume of this procurement category. Moderately complex items (i.e., MRO,
office equipment, software, and services) had the potential to return higher benefits than
simple or more complex items. More complex purchases require more time and effort to
be set up in an e-procurement system, and deciding which item to Web-enable at
earlier stages depends on the distribution of transactions of different complexity.
(Subramaniam, C. and Shaw, M.J., 2002).

Subramaniam and Shaw (2002, 2004) propose that both buyer and seller can achieve
lower transaction cost and error cost in a web-based e-Procurement environment and
also asserted that the reduction of these costs will have a positive effect on corporate
performance. Past research on the value impacts of e-Procurement has focused on the
benefits for a single company through case studies. This phenomenon can be attributed
to the complex inter-organizational environments where loyalty of business partners
might be questionable and decentralized coordination and decision making mechanisms
which are more susceptible to supply chain uncertainties (Ageshin, 2001; Subramaniam
and Shaw, 2002). The literature review revealed a collated set of benefits and barriers
to e-procurement as identified in Table 1 and Table 2 respectively.

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Table – 1 Benefits of e-procurement identified from Literature

No Drivers from Literature Referenced in:
Knudsen (2003), Minahan and Degan
1 Process cost savings - (Tender / Purchase Process) (2001)
2 Service / Material / Product Cost Savings Minahan and Degan (2001), Martin (2008)
Davila et al (2003) and Panayiotou et al
3 Transaction Administration Cost Savings (2003)
McIntosh and Sloan (2001), Wong and
4 Increasing Profit Margins Sloan (2003) , Ribeiro (2001)
5 Strategic Cost Savings Knudsen (2003)
6 Enhanced Inventory Management Hawking et al (2004), Martin (2008)
Kong (2001), Davila et al (2003), Egbu et
7 Decrease in Costs through reduced staffing levels al (2003)
8 Shortened Overall Procurement Cycle Times Minahan and Degan (2001)
9 Reduction in Evaluation Time Panayiotou et al (2003), Martin (2008)
10 Reduction in Time Panayiotou et al (2003)
11 Reduction in time through increased visibility Kalakota et al (2001)
12 Increased Quality through increased competition Kalakota et al (2001)
13 Increased Quality through Benchmarking Hawking et al (2004)
Increased Quality through increased visibility in Minahan and Degan (2001) and Hawking
14 the supply chain et al -2004
Increased Quality through Improved
15 Communication Hawking et al (2004)

Table – 2 Barriers of e-procurement identified from Literature

No Barriers from Literature Referenced in:
1 Upper Management Support / Lack of Leadership Davila et al (2003), Hawking et al (2004)
3 Resistance to change Davila et al (2003), Martin(2008)
4 Lack of a widely accepted solution Davila et al (2003) , Martin (2008)
5 Magnitude of Change Kheng et al (2002)
Lack of a national IT policy relating to e-
6 procurement issues Carayannis et al (2005)
7 Bureaucratic dis-functionalities Carayannis et al (2005)
Complicated procedures and extended
8 relationships Carayannis et al (2005)
9 Lack of technical expertise Davila et al (2003), Martin (2008)
10 Company access to the internet Smith (2006)
Security the process - Data transmission to the Gebauer et al et al (1988), Kheng et al
11 wrong person (2002)
Confidentiality of information - unauthorised Gebauer et al et al (1988),Julia-Barcelo
12 viewing (1999)
13 Enforceability of electronic contracts Jennings (2001), CITE website (2004)
Irani and Love (2002),Wong and Sloan
14 Information technology investment costs (2004), Martin (2008)
15 Internal & External Compatibility Davila et al (2003),Boeing (1996)

The detailed literature review has helped to identify the following dimensions, which
needs to the investigated in the research:
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• Perceived e-Procurement benefits (Opportunity, Time & Cost)
• Perceived e-Procurement barriers (Online Crime, Relationship &
Internal)

Based on previous studies and institutional theory the proposed e-Procurement model can
be defined in terms of Supplier dimensions (Figure 1).

Comparability
Benefits

e-Procurement Adoption
Time Benefits

Cost Benefits

Suppliers'
Dimensions

Internal Barriers

External Barriers

Technical
Barriers

Figure 1. Conceptual Model - eProcurement Adoption for Construction Industry in Kuwait

4. RESEARCH GAPS IDENTIFIED

Until now, not much evident research has been conducted to pursue successful
applications of e-Procurement to the construction supply chain in GCC Countries
especially in Kuwait. Although independent studies as specified in the literature have
been conducted Suppliers benefit/barriers towards adoption of e-Procurement
independently at various industrial sectors, the above aspects have not been studied with
context to Construction supply chain in a single market.

5. OBJECTIVES & PROPOSED HYPOTHESIS

The identified problems have lead to the following objectives of the research:
a) To conduct an empirical analysis on the e-procurement process, Commodities, Supply
chain partners of construction Industry in Kuwait and
b) To identify the benefits / barriers those are affecting the intention of Construction
Material Suppliers in Kuwait to adopt e-Procurement.

Based on previous studies and institutional theory the proposed e-Procurement model
can be defined in terms of Supplier dimensions with the following proposed hypothesis:

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Hypothesis:- There is no relationship between Construction Material suppliers’
dimensions and e-Procurement adoption among the Construction Material suppliers
in Kuwait.

6. SCOPE OF THIS RESEARCH

Scope of this research is limited to the investigation of e-Procurement adoption for
construction projects related to the Commercial and Industrial buildings in Kuwait. The
study is limited to its applicability to Kuwait and can be extended only to markets
having similar dimensional perspectives in construction segment. The research applies
simple random sampling as well as convenience sampling method of data collection,
and the limits that apply to convenience sampling methods of data collection hold good
for this study also. The findings of the study can be extended for further researches
on varied perspectives related to construction supply chain.

7. METHODOLOGY & DATA COLLECTION

Considering the nature of research and based on the various literatures, Quantitative
methods of research have been extensively adopted in this research. The following is a
brief methodology of the proposed research:

• Area : Kuwait
• Industry : Construction Industry (Commercial / Industrial buildings)
• Sampling Method: Convenience Sampling
o Sample Size: Number of Suppliers = 35
o Instrument used: Online Survey for Suppliers

A field survey through interview questionnaire was carried out to conduct the
descriptive study on the Construction Buyer Dimensions. It has been noted that Kuwait
Construction materials are supplied by 165 “Vital” suppliers and a sample of 35
suppliers (who are supplying all types of commodities) out of population of 165 “vital”
suppliers has been selected and a field survey through online questionnaire was carried
out on the Construction Material Suppliers dimensions (Refer Table 3 for the Survey
Questionnaire Scaling and Measurement Framework). In addition, Secondary data on
various commodities procured by the 50 construction companies for the construction
projects were collected for conducting high level Procurement commodity and Supplier
spend analysis.

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The data collected was subjected to detailed statistical analysis using SPSS 20 to
ascertain the Supplier Dimensions for e-Procurement adoption in Kuwait Construction
Industry. When we have well defined groups of independent and dependent variables we
can use the available data analysis techniques (Sharma, 1996). Statistical tools like
Descriptive Statistics, Chi-Square Test, One way analysis of Variance (ANOVA), Test
of Mean differences, Factor Analysis, Reliability Test, Regression analysis and
Correlations analysis have been used in this research.

Table – 3 Survey Questionnaire Scaling and Measurement Framework

Concept Dimension Scale
Suppliers e-Procurement Adoption Intention Perception variable Interval; Likert
Supplier e-Procurement benefits / barriers Perception variable Interval; Likert

8. ANALYSIS OF DATA

The results the Statistics table indicates that the 35 respondents indicates that 32% of
the Construction Material Suppliers in Kuwait are not aware of e- Procurement and
68% are having awareness. Out of the Suppliers who have awareness on e-Procurement,
88% are using e-Procurement for conducting their business.

The frequency distribution of the benefits and barriers of the suppliers indicates that 73%
suppliers agreed e-Procurement will result in process cost reduction and 54% expressed
their agreement for cycle time reduction and 80% were in agreement for the benefit"
automation leads to more focus on strategic issues". The frequency distribution of the
barriers perceived by the Suppliers in Kuwait indicates that 40% of them agreed
"technical standards not developed", 60% of the Suppliers were in agreement of online
crime.

The data from 35 respondents were subjected to Chi Square test using SPSS to identify
the relationship between the e-Procurement awareness and e- Procurement adoption. Chi-
Square indicates that there is significant difference in the awareness level among the
construction material suppliers in Kuwait and there is significance relation between e-
Procurement awareness and adoption.

The data collected from sample survey of 35 respondents who has answered 20
statements (10 for benefits and 10 for barriers) was subjected to detailed analysis to
arrive at core underlying factor for adoption of e-Procurement by construction material
suppliers in Kuwait. It can be concluded the “Cost Benefits”, “Time Benefits” and
“Opportunity Benefits” are the three common underlying factors which represents the
perceived benefits of Construction Material Suppliers in Kuwait. Reliability test to verify
the internal consistency of the 3 major factors which represent 10 variables have been
conducted for “Cost Benefits”, “Time Benefits” and “Opportunity Benefits”.

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It has been noted that Cronbach's Alpha is > 0.90 for all the three factors, which
indicates high overall internal consistency among the 10 variables representing the
perceived benefits of Construction Material Suppliers in Kuwait.

It can be concluded the “Crime Barrier”, “Relationship Barrier” and “Internal
Managerial Barrier” are the three common underlying factors which represents the
perceived barriers of Construction Material Suppliers in Kuwait. Reliability test to
verify the internal consistency of the 3 major factors which represent 10 variables have
been conducted for “Crime Barrier”, “Relationship Barrier” and “Managerial Barrier”.

It has been noted that Cronbach's Alpha is > 0.85 for “Crime Barrier” and
“Relationship Barrier” and > 0.70 “Internal Managerial Barrier”, which indicates high
overall internal consistency among the 10 variables representing the perceived barriers of
Construction Material Suppliers in Kuwait.

Using the data obtained from through the Factor Analysis from the scores obtained from
the three factors which represent the perceived benefits of suppliers in Kuwait, a
prediction equation has been developed to predict the level of understanding on the e-
Procurement Adoption from the perceived benefits and barriers among the suppliers. Prior
to regression analysis, the three 20 variables which constitute the three benefit factors
and three factors barrier has been computed in SPSS.

Table – 4 Coefficients Table – Supplier benefit dimensions

Unstandardized Standardized Collinearity Statistics
Model Coefficients Coefficients t Sig.

Std. Error
B Beta Tolerance VIF
1 (Constant) -.443 .199 -2.224 .034
COSTBEN -.530 .130 7.713
-.293 .129 -2.274 .030
TIMEBEN .293 .127 .527 2.314 .027 .136 7.373
OPPBEN .462 .141 .856 3.271 .033 .133 7.732

a Dependent Variable: e-Procurement Adoption

From the Coefficient table (Table 4) it has been noted that “Cost Benefits”, “Time
Benefits” and “Opportunity Benefits” are Significant independent variable (Sig < .05)
and accordingly the variable is considered in the prediction equation. The ANOVA
indicates that the computed F statistic is 37.8, with an observed significance level of
less than 0.001.

Predicted e-Procurement Adoption = -0.433+0.462 (Opportunity Benefit) +0.293 (Time
Benefit) - 0.293 (Cost Benefit).

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Table – 5 Coefficients Table – Supplier benefit dimensions

Unstandardized Standardized Collinearity
Model Coefficients Coefficients t Sig. Statistics

B Std. Error Beta Tolerance VIF
1 (Constant) .089 .389 .229 .820
CRIMEBAR -.092 .081 -.151 -1.131 .267 .872 1.147
RELABAR -.451 .081 -.702 -5.591 .000 .982 1.018
MANAGBAR .063 .067 .125 .933 .358 .865 1.156

From the Coefficient table (Table 4 & 5 it has been noted that “Relationship Barrier”
is the only Significant independent variable (Sig <0.05) and accordingly the variable is
considered in the prediction equation. The ANOVA indicates that the computed F
statistic is 11.29, with an observed significance level of less than 0.001.

Predicted e-Procurement Adoption = 0.089 - 0.451 (Relationship Barrier)

Table – 6 Correlation Analysis – e-Procurement adoption Vs Supplier’s dimensions

Variable Name Pearson’s Significant /
coefficient In-significant
1. Cost Benefits -0.736, P<0.001 Significant
2. Time Benefits 0.839, P<0.001 Significant
3. Opportunity Benefits 0.852, P<0.001 Significant
4. Crime Barrier -0.059, P>0.001 In-Significant
5. Relationship Barrier -0.704, <0.001 Significant
6. Managerial Barrier 0.160, P>0.001 In-significant

8.1 E-Procurement Model based on Research Findings:

The purpose of this research was to identify factors that affect the intention of
Construction Material suppliers including benefits / barriers perceived for the e-
Procurement adoption in Kuwait. Based on review of literature and the analysis of data,
six significant factors Suppliers’ dimensions were identified that might influence e-
procurement adoption for Construction Industry in Kuwait. The significance of these
factors was then tested in explaining e- procurement adoption in the construction industry
of Kuwait and several interesting findings emerged from this research. The findings of
this research will be a useful reference for the Construction Material Suppliers to
develop appropriate e-procurement strategies in Kuwait.

Based on the findings of the analysis, the following e-Procurement adoption Model
has been evolved for Construction Industry in Kuwait (Refer Figure 2).

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e-Procurement Adoption Model -
Regression Equation
Construction Industry in Kuwait

-0.530
Cost Benefits

e-Procurement
e-Procurement Adoption = -

Adoption
0.527 0.433+0.462 (Opportunity
Time Benefits
Benefit) + 0.293 (Time Benefit) -
Supplier's 0.293 (Cost Benefit)
Dimensions 0.856
Opportunity
Benefits

-0.702 e-Procurement Adoption =
Relationship
0.089 - 0.451 (Relationship
Barrier
Barrier)

Figure. 2. E-Procurement Adoption Model for Construction Industry in Kuwait

We have observed a significant difference in the awareness level of the Construction
Material Suppliers Kuwait (X² <0.5) and there is a significant relationship between e-
Procurement awareness and e-Procurement adoption (X²<0.5). It has been noted from
the outcome of factor analysis that Construction Material Suppliers in Kuwait perceive
Cost Benefits, Time Benefits and Opportunity Benefits (Cronbach's Alpha is > 0.90)
towards e-Procurement adoption. Detailed statistical analysis indicates that all benefit
factors i.e. Cost Benefits, Time Benefits and Opportunity benefits are the significant
factors driving the intension of Construction Material Suppliers to adopt e- Procurement
(F(3,31) =37.005,
p < .001).

However, it has been noted from further analysis that the beta coefficient of “Cost
Benefits” is negative (β = -0.530), whereas beta coefficients of “Time Benefit” and
“Opportunity benefit” are positive (β = 0.527 / β = 0.856). This signifies that e-
Procurement adoption tends to benefit the construction material buyers by increase
competitiveness through cost reduction and reduce the price of Construction Material
Suppliers, which supports the theory of A. Soares - Aguiar and A. Palma-dos-Reis
(2008). At the same time it has been noted that level of Significance of “Opportunity
Benefit" is much stronger than the “Cost Benefit” and “Time Benefit”, which signifies
that suppliers look for more business opportunities to adopt e-Procurement.

It has been noted from the outcome of factor analysis that Construction Material
suppliers in Kuwait perceive “Crime Barrier”, “Relationship Barrier” and “Managerial
Barrier”. (Cronbach's Alpha is > 0.70, Eigen Values in FA >0.5 for all Factors) for
adopting e-Procurement. However, detailed statistical analysis indicates that
“Relationship barriers” is the only significant barrier for predicting the e-Procurement
adoption of Construction Material suppliers in Kuwait (F(3,46) =11.29, p <0.001), which
is supporting the theory proposed by Ageshin (2001) and Subramaniam, Shaw (2002).

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9. CONCLUSIONS

Construction and related Industrial sector is booming in Kuwait with more than USD 300
billion worth of construction contracts are being executed in Kuwait. Kuwait is having a
good ICT infrastructure to support the B2B e-Commerce and internet users are
increasing in Kuwait.
The Survey and subsequent analysis indicate that Construction Material Suppliers in
Kuwait perceive Cost Benefits, Time Benefits, Opportunity Benefits for e-Procurement
adoption. However, detailed statistical analysis indicates that Opportunity benefit is the
only perceived major factor for Construction Material Suppliers to adopt e-Procurement
in Kuwait. Also, Construction Project Material Suppliers in Kuwait perceive “Crime
Barrier”, “Relationship Barrier” and “Managerial Barriers” for e-Procurement adoption.
However, detailed statistical analysis indicates that “Relationship Barrier” as the only
major significant barrier for e-Procurement adoption among the Kuwait Construction
Material Suppliers.

An interesting point to be noted that suppliers perceive that e-Procurement will reduce the
loyalty and close relationship with the buyers. Considering the market conditions
prevailing in Kuwait this is understandable and this is related to the traditional thinking
required to be changed by the Construction Materials Buyers. Supplier adoption Strategy
is inextricably linked to the overall procurement strategy of the buyers when
implementing any e-Procurement solution.

This research has helped to identify the prevailing e-procurement adoption scenario for
Construction industry in Kuwait. Opinions of Construction Material Suppliers were
collected to identify e-procurement benefits / barriers for e-Procurement adoption for
construction project procurement in Kuwait. As e-procurement is still in its infancy stage
for Construction Industry in Kuwait, Suppliers yet to gain experience of perceived
advantages and benefits.

There is a wide scope for conducting further researches to identify the technological
and cultural changes that are effecting the e-Procurement adoption among all industrial
sectors in Kuwait. Similar, researches can focus on other GCC states i.e. United Arab
Emirates, Qatar, Saudi Arabia, Bahrain and Oman. Future researchers can also find
out the returns on investment associated with the e-procurement adoption and how it
measures up to the initial investment.

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