Diversity and Structure of the Construction Industry

Diversity and Structure of the hearty agreement Industry1.1 mental hospitalThis chapter illust roams how erratic, huge, diverse and enormously complex is the complex body part patience. This fabrication gener every last(predicate)(prenominal)y constitutes of enterprises and passe-partouts whose particular(a) objective is to get along communities, roads, schools, homes, strain, hospitals and including its maintenance. The reflection execute consists of m either activities, right from the bombardment of the retch design and right through its giveation, maintenance, refurbishment, and goes up to the eventual g overning of its buildings or in separate words, the whole look cycle of the be after. This exertion in that respectfore require a wide range of suppliers, captureors and including manufacturers of temporals and components to carry submit away its activities. The persistence had changed a apportion in its complexity over clock time, notwithstanding the objective of the manufacturing remains basically the same as it was one C years ago.However, the pull patience has a unique structure with precise few large establishments that dominate the infrastructure by carrying out marchs, that produces the mass of the turnover of this industry on a whole. Sears et al. 2008, p.2 state that contractile organs who vary wide in size and speciality accomplish the winding works. Some contractors read to conpennyrate on a particular task or panorama of the social organisation abide and argon accordingly referred to as specialty contractors. Others assume broader responsibility for a comprehensive work package and atomic number 18 referred to as main contractor.Due to the kind present in the industry, the industry is disconnected which is a reality, the reason king be collectible to the adversarial short-term relationships which campaigns dissatisfaction deep down the industry and is therefore a protrusion foc apply relatio nship. Moreover, lack of in effect(p) intercourse and implementation whitethorn withal moderate to the fragmentation of the industry as it leads to hearty negative impacts, low productivity, cost and time overruns and finally end up in conflicts and disputes.The industry likewise now faces juvenile levels of complexity as it moves forward trying to keep pace with the increase energy, solid and labour costs which atomic number 18 to a great release mitigated by the other industries by adopting the new technologies particularly communication and information applied science and also advanced watchfulness strategies.1.2 OverviewThe industry is considered to be one of the major economic sectors, which contributes a lot to the clear national product of the nation in respect to other industries. Cooke, and Williams, 2009, on p.3 states that the yearly output of the UK facial expression industry is approximately 114 billion, which represents almost 9% of gross domestic pro duct. This industry also underpins the remaining sectors of the economy by providing the essential infrastructure and facilities on which all sectors of the economy regard. According to Potts, 2008, on p.3, this construction sector with 11.8 million operatives directly employed makes it Europes largest industrial employer accounting for 7% of total employment and 28% of industrial employment in the EU. in that respect was also a report of the giving medication policies, which was published by BIS (Department for commerce Innovation and Skills business group sector document), stating that the UK construction industry consists of over 250,000 firms employing 2.1 million spate in a multitude of roles. The sector is defined as one which embraces the construction materials and products suppliers and producers building services manufacturers, providers and installers contractors, sub-contractors, professionals, advisors and construction lymph nodes and those organisations that are relevant to the design, build, operation and refurbishment of buildings.However, construction industry is very antithetic from other manufacturing industries and therefore difficult to achieve similar cognitive process, in the first place repayable to its degree of uniqueness in its use, in the size, its location and complexity due to the varied non-uniform works conditions from one consider to another. Therefore, it appears to be underperforming when compared to many other industries. Jones, Saad, 2003, on p.12 state that, the diversity of the construction and the variability in the ware process has to be reorganised with separately new construction project. For individually project, a series of decisions has to be contractn which take into account the clients detail requirements and the context in which the tasks are to be executed. This mountain make project outcomes difficult to predict and can result in short and oft adversarial relationships.Cox, Townsend, 1998, on p.21 states that the productivity, determine for corking, and overall client satisfaction in the construction industry are pleasure groundly low compared to other industrial sectors. The factors creation low and discontinuous demand frequent changes in specification hostile (contractor and client) discernion criteria in get allocation of stake poor quality incompetent methods of construction poor vigilance inadequate investment an adversarial culture and a fragmented industry structure. In instal to improve the exercise of this industry, authorities had taken initiatives and had produced many reports but had not made any impact.1.3 Reports and recommendationsThe way out of major renowned reports to wit Lathams Report Constructing the Team (1994) and two Egan Reports Rethinking cordial organization (1998) and Accelerating Change (2002) produced a considerable impact in UKs construction industry and conk outed changing its working culture.Constructing the Team by Sir Michael Latham was published in July 1994, the let out issues as summarised by Holroyd, 2003, on p.39 are as followsClients have a role in promoting good design which provides value for moneyClients should select the most appropriate ensurement route on the basis of the compositors case of projectEffective design is crucialA modern contract should includeA specific duty for all parties to deal with each otherFirm duties of groupwork so all can share in successA clear definition of the roles and responsibilities of all partiesEasily understood language with guidance notesA choice of risk allocation revoke variations if it is needed, charge it in advanceEnsure fair, prompt and secure stipend to all partiesAvoid conflict on site and disputes if any to be resolved travel rapidlyilyWhen selecting suppliers or tenderers, consideration should be given to step as well as damageA lead passenger carSensible tender listsNo burdensome qualification proceduresValue for money sa lute in useFactors which determine performance include sufficiency of safety considerationAbility of operativesImproved knowledgeRelevant professional educationAdequate RD, which is properly fundedTeamwork on site depends on fair treatment for all partiesThe liability for defects post- shutdown should be properly addressedRethinking Construction by Sir John Egan showed the report in July 1998 for the success of the construction industry. He opined that trance UK construction at its outstrip is excellent, substantial improvements can be made, and it is vital that they are made. The key issues of this report as summarised by Holroyd, 2003, on p.40 are as followsThe UK construction industry inquires to improve there should beLess fragmentationIncreased profitabilityMore capital investmentMore investment in RDMore and bettor trainingDifferentiation betwixt price and costSet targets for improvement and give commitment to the needs of the customer, to quality, and to people the tea m and the process should be incorporated around the product, and management should be committed to improvement throughout the organisationThe construction process should be improved byMore process repetition on projectsIntegrating all team members to use their skills to deliver value to the clientFocus on the end product how best to achieve the desired resultContinuous product improvement hold projects correctly, suiting the site and the customerPartnering through the come out chainin one case improvement starts, maintain itImprovement could be constituted by develop a disclose culture in the industryProviding decent working conditionsMore and better trainingProduce designs which considers the projects end usestandardize components where potentialImprove regulatory swearsImplement long term relationshipsThe national audit office report (2001) Modernising Construction as express by Cooke, Williams, 2009, on p.11 that a major contributory factor to the poor performance of this industry was the adversarial relationships that existed between the construction firms, consultants and clients and between contractors, subcontractors and suppliers. The report also identify that government departments and agencies to ensure collaboration, integration and value for monies in the procural of construction services.Further, it also suggested that the entire confer chain be integrated and that risk and value must be managed in order to castrate accidents, twit out turn back and improve buildability. McGeorge and Palmer 2002 on p.54 cite CIRIAs definition of buildability as the extent to which the design of the building facilitates ease of construction, subject to the overall requirements for the realized building.These reports produced during the various periods had contributed a lot to the growth of the construction industry. Since these reports were published, a changed performance could be understandably noticed in the activities of this industry. The findings of the report had tried to build up a challenge in the construction industry to procure projects that could achieve best value and also uphold in rationality the balance between quality and whole-life cost of the project.Many much studies on the performance of the construction industry were also conducted subsequently, which had identified the areas of strength and weakness of the construction industry. According to Jones, Saad, 2003, on p.2, the strength of the industry includes its tractableness and adaptability and its relentless(prenominal) weakness include its fragmented structure and project processes and its adversarial relationships. Furthermore, deficiencies in its performance in relation to customer focus, learning and leadership were revealed when benchmarked against other industries.1.4 literal useThe construction industry is considered one of the major consumers of intrinsic resources mainly the virgin materials from its surrounding environment. This allow gi ve rise to many environmental issues, which are unsustainable much(prenominal) as depleting natural resources, diminishing the earths biodiversity, and even cause extinction of habitat if we continue the present rate of consumption. As stated by Kelley et al. on p.298 that materials used in buildings account for some 40% of natural resource use, 30% of CO2 emissions and 40% of crazy. However, the environmental issues would for certain create a vital impact on the society and whence this industry should take earnest attempt to develop a scheme to provide low carbon solutions by way of minimising its carbon pace. In addition, the projects Corporate Social Responsibility (CSR) that voluntarily decides to contribute to a better society and a cleaner environment and along with its procurement policy, could contribute to the environmental success.Built environmentThe story presented by Natural make Technologies, have quoted One Planet Living material of BioRegional and the World wide Fund for Nature have shown that if everyone in the world-consumed resources at the same rate that of UK, it would take the equivalent of three major planets now to sustain this consumption. Hence, UK and the other western sandwich nations urgently need to take radical measures in order to reduce this present rate of consumption of resources. As we are aware that this planet has only a finite quantity of resources and therefore we in the construction industry should have a moral responsibility to ensure that industry is resourced using sustainable techniques. More over the construction industry should also asseverate on an environmental management system (EMS) accreditation for every project, which could suffice in continually, improving its environmental performance. An internal EMS audit if periodically conducted would help in checking the in effect(p)ness and delivery capability of the management system.The system paper of the UK Government, twist a Better Quality of Lif e A system for more sustainable Construction by the Department of Environment, Transport and the Regions (2000 b) as summarised by Kelly et al. 2002 on p.296 recognises the importance of sustainable construction and had challenged the construction industry to provide built assets whichCause minimum damage to natural and kindly environmentsMinimise the use of resourcesEnhance the quality of lifeWill be acceptable to future generations1.6 NeedsThe working pattern of the society is changing quite an dissolute and construction industry is known for adapting to change at a prompt pace than other industries. Nowadays many people tend to work from home since jobs functions can be remotely performed and is quite feasible. The benefit from working at home helps in the reduction of charm movements, thereby considerably reducing pollution and traffic congestion especially during the peak hours. It is an eco-friendly weft and is to be encouraged. Hence, this working culture would require accommodate to provide a higher(prenominal) quality of life and greater flexibility of adaptable living and space requirements. Therefore, in majority of existing homes, a need for up gradation would be infallible and a lot more of new homes constructed to accommodate this new culture in the attack years for which a huge quantity of materials are required by the industry. This results in a heavy material flow. In addition, tour excogitation a sustainable project, pickaxe of materials should be made based on locally and easily available material, in order to reduce the engraft energy cost of transportation. This woof would also decrease the carbon footprint of the project.1.7 RegulationsA government publication by energy saving swan on the Code for Sustainable Homes New build housing (Relevant to England and Wales), states that the government intends that all new build homes should be zero carbon by the year 2016. Code level 3 is proposed to become the new standards for Building Regulations in England in 2010 and by 2050 the nations entire housing rail line will be virtually zero carbon. Clients, who desire to increase value of their project, could insist on the use of sustainable materials in order to acquire higher sustainability rating as mentioned in the BREEAMs edict for sustainable homes.These regulations create a lot of pressure on the project management team if a proper supply chain management technique is not available.. As mentioned in the Code for Sustainable Homes (Annex B Category 3, Materials on p.37), the supply chain management and material stewardship are essential elements of responsible sourcing. Hence, the supply chain manager is to consider the consequence and impacts of using materials by analysing its life cycle (right from the point it was mined or harvested,through manufacture and processing of the material, including its use, recycle and disposed off as waste with no further value), onward the material is actually used in the project. However, all timber used in the project should be 100% legally sourced and 80% for all other assessed materials.1.8 Sustainable sourcing codeFor the London 2012 games, London Organising Committee of the surpassing Games (LOCOG) had prepared a Sustainable Sourcing Code in consultation with industry leaders, sponsors and non-governmental organisations. It had been reviewing how its sponsorship and procurement activity could achieve the highest possible standards to ensure that the goods and services it procures agree with this code in meeting the sustainability objectives for the 2012 games. This code could be used as a benchmark in the preparation of a similar code of practice by the construction industry.The four core principles of the LOGOs Sustainable Sourcing Code and supporting guidelines on packaging and carbon emissions of products and services in the first place published in November 2007 and updated in December 2009 are as shown downstairsResponsible sour cingLabour practicesHealth and SafetyDiversity and inclusion wolf welfare and TestingAnimal and plant productsTimber and timber products do of secondary products materialsReducing wasteRecycled contentPackagingWaste galvanising and electronic equipmentMinimising embodied impactsEnvironmental managementSupply of productsTransport piteous carbon GamesHealthy materialsRestricted substances and materialsHeavy metals and brominated fire retardants1.9 Controlling material resourcesA material at site is money and is to be prudently handled. The cost of materials constitutes a major portion of the project cost. March 2009, p.139 states that the value of the materials incorporated into a building represent anything from 40 to 60 per cent of the final cost. Therefore, control of materials at site is a crucial element. Materials are not be wasted or lost. For proper control an effective communication between all involved for the project success namely the planning department, purchasing depa rtment, the site and the supplier is important. Responsibilities are to be clearly defined especially in buying of materials within the estimated measurement since effectual buying results in savings, which in turn contributes to the profitability of the contract. Similarly lay away of materials at site should be discouraged by initiating just in time delivery, but care is to be taken in the infusion of material supplier so that the availability of bulk materials is ensured. Therefore, materials management in construction projects is essential for its success.As Cooke and Williams 2009 on p.401 states that an essential component of materials management begins with site layout and planning. Designated areas must be allowed for material storage in order to reduce waste and damage to materials. Excessive stock of materials is a puzzle need to be controlled. March 2009, p.139 enumerates the reasons as to why excessive stock is to be controlledExcessive stocks take up capital which could be better usedTakes up space and absorb further capital for bulwark against weatherLikely to be damaged resulting in unnecessary expending and possible check over incurred in replacementMay be necessary to double handle stock to elsewhere on the site and absentminded the opportunity to have just in time delivery billet efficiency can be increased by effective material handling and result in costly waste reduced. Every project worth more than 250 000 effective from April 2008 should have a Site waste management plan (SWMP), without which it would be a serious criminal criminal offence as mentioned by Cooke and Williams 2009 on p.403 quoting The Clean Neighbourhood and Environment go 2005 (Section 54 of Part 5).1.10 Whole-life thinkingIn addition, the construction industry need to consider the aspect of whole life costing during the procurement as the project not only consumes sustainable resources, but also generates waste in construction and demolition activities. The pr ocurement of materials for the industry is strongly affect by environmental issues. Greater use of modern methods of construction and off-site prefabrication could be a solution in reducing the total amount of waste generated at site. Hence, the construction industry should undertake to develop and implement the new paradigm of the triple bottom line namely environmental, social and economic sustainability.Green building is an innovative technology and is good to be adopted by construction industry. This approach creates a positive environmental, social and economical impact over the entire life cycle of the project. It is a holistic approach of design and considers its impact on the wider environment and biotic community around it. This technology procures homes, which are durable, save energy, reduce waste and pollution, and publicise health and well-organism.1.11 Procurement methodsOne of the main problems in this industry says Cooke Williams, 2009, on p.4, is that it separa tes design from production far greater than other industries and is still frequent despite the deficiencies of traditional procurement and the benefits offered by the newer and more flexible approaches. In traditional method of procurement, the design stage is separated from production by a tendering period. McGeorge and Palmer, 2002 on p.54, also support this view and quote by comparison with other industries the separation of the process of design and construction is unique to the construction industry.Construction industry provides successful projects, the outcome of which is increased efficiency, greater borrowing capacity and payback long-term worth. The business objectives should always amaze the picking of an appropriate procurement strategy, so as to procure a project to the complete satisfaction of the client. The procurement strategy so selected would depend on many factors namely the client, the risk profile of the client, the cost certainty needed, accountability, fl exibility, the type of project, time, funding, market condition, the industries capacity and capability.1.11.1 Projects prioritiesMoreover the factors that are to be considered opus analysing a business objectives requirements and their relative priorities as pointed out by Kelly et al., 2002 on p.178 are as listed belowFactors outside the control of the project teamClient resourcesProject characteristicsAbility to make changesRisk managementCost issuesTimingQuality and performanceThe choice of the strategy should ensure that control is maintained over those factors that are important to the clients linear perspective of the project.1.11.2 Procurement strategyThe authors also state that the choice of the strategy should ensure that control is maintained over those factors that are of most importance to the client. After a selection is made, a strategic brief will need to be produced be the clients project and the parameters within which the project must be realised to take the p roject to a success. Often less importance is imparted to the projects objectives as compared to the primary criteria of time, quality and cost.These three primary parameters form the key criteria in the selection mechanism and are interdependent of each other. Therefore, procurement strategies adopted for the project would not be able to deliver all of them as high priority. For example, unwavering-track solutions for a project deliver speed and time certainty, whereas the other criteria such as cost certainty and quality may be less achievable. Similarly, in projects where quality or costs are considered to be of exit priority, then the other criteria are affected. Hence, if a high priority is imparted in defining the project and especially linking of the prioritisation of objectives to the business case, greater then are the chances of a successful procurement of the project to the entire satisfaction of the client.However, from the clients perspective of a project, time, quali ty, cost and functionality are important criteria for the success of a project. The client generally prefers the highest quality at the lowest cost and the project being completed in the shortest possible time. As earlier mentioned it is not possible to attain all these parameters together for a given project. Depending upon the clients business objectives, a qualified selection of the procurement strategy should be chosen.1.11.3 Procurement optionIf according to the client, a signature building is required for the project, then a traditional or design-bid-build strategy is an appropriate option for the project. For this project, quality would be very essential but this procurement technique adopts a concomitant nature of activities, and therefore has no parallel working activity, which government agency that, construction could actually begin only after the design is completed as fully as possible. Hence is not suitable option for any fast track projects. However, this option fa irly provides with cost certainty and time predicted. The delay experienced in completion of the project might be because considerable time is allowed for the design to take a full put to work and thereafter in the preparation of detailed brief and also in the tendering procedures required to be completed before the start of the work. Therefore, an early start of the project would not be possible until the letter of intend is issued, which in turn have a knock on effect on the overall cost of the project (price escalation, inflation etc.).Sometimes the client might go in for a functional building where cost entailment is to be the lowest and had to be completed before a strict date. Here in order to meet the business objectives, a design-build procurement technique is quite appropriate, since early certainty of the overall contract price could be obtained. Moreover, as this strategy facilitates overlapping of design and construction, a faster start on site is possible resulting i n shorter project time with greater certainty of meeting the targeted date. Hence, this option is quite suitable for fast track projects but is not suitable for any complex infrastructural projects and also in projects wherein the clients brief is uncertain or inadequate.Alternatively, the client would require procuring a huge and complex infrastructural project with an emphasis on the targeted date of completion. Considering the clients business objective, the appropriate procurement route would be construction management, which is best-suited option for fast track and complex construction projects. In this procurement route, the construction work is divided into several packages, which are tendered separately to different experienced and suffice contractors. Hence, in this procurement method design, tendering and construction over lap thereby reducing the overall time of the project whereas there could be price uncertainty until the last package of the work had been awarded to a contractor. Due to the speed in completion, quality of the work would probably be effected and therefore a total quality management team would be required to ensure the quality of work during its progress. Therefore, this procurement route is not suitable for inexperienced clients and for those clients trying to transfer risk to the contractor.Therefore, the procurement strategy authentic should strike a balance between risks that could cause an impact on the clients business and the projects objectives. Some projects could adopt more than one procurement option for the successful completion of the project as per the clients perspective. Traditional approach may be used in the construction of the shell and core, whereas construction management would be used for the final works. The choices made might differ between clients of various projects depending upon their knowledge and experience of the industry. The scale and diversity of those involved in this industry is too enormous an d hence this contributes to enormous pressures on the project teams, to ensure that the project completion is on time, budget and quality.1.12 RiskThe diversity of those involved in the industry namely design engineers, architects, consultants, main and subcontractors, suppliers and constructional managers is huge. However, all those who are involved in this industry throughout the world strive together to establish a strategic framework to meet the budgetary and scheduling goals of the project.Time is one of the critical factors in construction industry, which has significant legal consequences. The client sets up rigid start and finishes dates for the project and if the contractor must comply with this period, barring any delay caused due to natural calamities, or lose money by paying the liquidated damages as laid down in the contract document. During the construction process delay in receiving of materials, equipments and services may erode profits.For a successful completion of a project, lot depends on the quality of the subcontractors and suppliers. Therefore, construction organisations should ensure that an appropriate subcontractor is selected. The subcontractors selection process involves many important factors including the evaluation of their capacity and also in performing a SWOT (strengths, weaknesses, opportunities and threats) analysis.The risk faced in construction industry is different from that of other industries. This is quite evident while analysing the difference between manufacturing risks and construction risks as indicated by Benton and McHenry 2010, on p.2 as shown belowRisk versus reward for the manufacturing sectorRisk versus reward for the construction sectorIn construction industry, the potential for committing mistakes is high and facing problems is amplify by the poor interrelationship that exists between all the entities involved namely, the client, architect, consultant, project manager, contractors and suppliers. The risks, if not mitigated in time, would prove disastrous and hence, recommended to be avoided at an early stage. Construction risks as mentioned by Benton and McHenry 2010, on p.3 are as narrated belowInternal financial problems meeting capital problemsSlow defrayal from the clientInferior plans and specificationsInadequate technical capabilitiesInsufficient information technologyLack of communication between the entitiesProductivity inefficienciesWork quality problemsWork method problemsDelivery reliability problemsBulk materials quality problemsAnother notable difference between the manufacturing and construction industry is the probability of failure while considering the labour element. This can be clearly understood if an improvement breaking ball technique is performed as explained by Benton and McHenry 2010, on p.4 and p.5 for both industries, the figures of which are as shown belowProbability of failure for the manufacturing industryProbability of failure for the construction ind ustryThe improvement curve is exponential and depicts a constant-percentage reduction of labour, which means that, the workers learn how to do their job better as they produce more and more units at a lower production cost. This advantage is accomplished due to the impact of cumulative learning by experience, which is possible in the manufacturing industry.Now considering the construction industry, which is constantly changing its complexity over time, we can observ