ECM 356 CHAPTER 2

CHAPTER 2 INTRODUCTION TO THE CONSTRUCTION INDUSTRY

2.1 Current Construction Industry Scenario

Construction industry plays an important role in the development of Malaysian economy. It accounts for only 3.9 % of the gross domestic product (GDP) in second quarter 2008. The industry is critical to national wealth creation as it acts as a catalyst for, and has multiplier effects to the economy and also enables other industries namely manufacturing, professional services, financial services, education and others. Recent years decline in the performance of the Malaysian construction industry has resulted in the urgent need for the Malaysian construction industry to chart its direction towards strengthening its foundation to face current and future challenges (CIDB, 2008). The construction projects can be sourced from Public sector and Private sector, and government being the biggest key player (owner). The construction projects can be grouped into two, which are Civil Engineering (CE) Works and Building Works. CE Works includes the construction of road and highway, railway, wharf, airfield, drainage, power station, dam, and etc. Building Works include residential house, office, shop lot, factories, schools, hospital, and etc. There are many stages and parties involved in a particular construction project. The problems facing by construction industry currently (2004) are: a) b) c) d) e) f) Highly traditional and fragmented Slow to embrace new technology Restrictive / outdated building codes Labour agreements and craft jurisdictional issues Liability and legal considerations Lack of profit motive or other incentive

Malaysian construction industry strategic and operational challenges are as follows: a) Inefficient and ineffective method and practices in contractors registration and administration procedure, procurement methods and practices, contracting approaches, construction methods, planning submission and building plan approval procedures. b) Inability to attract and develop local workforce for the industry mainly due to the Dirty, Dangerous, Difficult image of the industry.

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c) Difficulty in securing timely and adequate financing at the various stages of construction, and difficulty in repatriating profits/dividends. d) Inability to provide total integrated solutions in foreign projects, unlike Japanese, Korean and German construction companies which could provide total solutions that include financing package and equipment.

Construction industry directly or indirect, involves many industries/sectors/parties as below: a) Financial institution
- The sector that provides credit and financial facilities to various parties in the

construction industry. They include banks, finance companies, and credit corporations. b) Owner / client / developer - The sector that initiates the project, assumes risk, and enjoys the profit or meets the loss. c) Consultant
- The sector that plans and designs projects, prepare tender documents, advice on

the award of contracts, supervises implementation and administers contract. - They include architect / engineer / quantity surveyor (QS) / Project Management Consultant (PMC) d) Main contracting sector The First-Hand-Contractor sector that physically translates the project from their blue print stage to reality, by co-ordinating the works of various contractors through the construction programme. They are the sole (the only one) main contractor (MC) for a project.

e) Sub-contracting sector -

The sectors that actually carry out the physical work. They include the sub-contractor (SC), supplier, nominated sub-contractor (NSC) who is normally a specialist sub-contractor, nominated supplier (NS), labour subcontractor.

f) Local government agencies / relevant authority department The sector that represents the government approving authorities for the various documents approval.

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2.2

Types and Roles of Institution and Parties Involved in Construction Industry A civil engineering graduate may be attached to one of the following: a) b) c) d) e) Owner or client or developer firm Consultant firm Contractor firm Sales and marketing company Relevant authorities / departments

2.2.1

Type of Institution and Parties Involved Those work with a developer firm may be a project coordinator / project manager. They should be familiar with the role of consultant and contractor. Those serve the relevant authorities may be categorized as project co-coordinator. Their job includes: a) b) c) d) e) f) Incorporate function of consultant and contractor. Engage of consultants and contractor. Co-ordinate and supervise project. Prepare memorandum of a project. Prepare progress report. Prepare payment to consultant and contractor.

Graduates attach to a consultant firm may be a consultant with the designation of design engineer, civil & structural engineer, draughtsman, resident engineer, or clerk of work (COW). They have to carry out the: a) b) c) d) e) f) Feasible study Site Investigation Preliminary study Design work (reinforced concrete, timber, and etc.) Preparation of specifications and report Quantity take-off and estimate

If they were attached to a contractor company, they may be a site agent, site engineer, site supervisor, technical assistant, and etc. their works include preparing: a) b) c) d) e) f) g) h) Feasible study Site investigation Specification and report Quantity take-off and estimate Construction program Progress report (weekly/monthly) Progress payment to sub-contractors Supervise day-to-day work in site

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Some graduates may work as sales personnel or sales representative. Those with technical background may be sales engineer. Their main duty is promote the material supply. Those serve with the relevant authorities (JKR) may start as a design engineer, rise into project co-coordinator. Their functions include: a) Design work b) Co-ordinate and supervise project c) Other function as a consultant and client representative.

2.2.2

Roles and Responsibilities of the Institution and Parties Involved Table below summarize the role of some parties involve in a construction project.

Party Client Consultant

Role Anyone who has landed properties and the financial means to develop them can be considered as client who required project consultancy services. Designs the plans to be used by the construction contractors. Contractors principal business is the performance of the construction work in accordance with the plans and specifications of the owner. A general contractor takes full responsibility for the completion of the project. Provide the raw materials used in the construction project. Coordinates the construction project.

Contractor

Supplier Project Manager

The role and responsibilities of parties involved to be elaborated further are: a) Project manager (client or sometimes consultant representative, in our context) b) Resident engineer in the Consulting Engineers Site Organization c) Key personnel in the Contractors Site Organization d) The Role (duties and responsibilities) of Owner and Contractor according to JKR 203A Contract.

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2.3

Project Manager A Project Manager (sometime project engineer) is a client representative. Sometimes a consultant may be the project manager. The term project manager is usually applied to projects in the private sector, it is known as Superintending Officer (S.O.) for the projects in the public sector. A project manager may be an architect if it is a building work or an engineer if it is a civil engineering work.

2.3.1

Duties and Responsibilities of a Project Manager As a client representative, the main responsibility of a project manager (or project engineer) is to monitor, the work of RE and contractor to ensure the project complete in the shortest period, at the lowest possible cost, with the best value for money (quality). The other duties and responsibilities of a project manager (or project engineer) are: a) b) c) d) e) Advising Advise the client over the appointment of consultant and contractor Responsible for calling and recommendation of tender Coordinating Coordinate the project with the Local and Federal Authorities Certify progress payment to consultant and contractor Leading Acts as a leader of the planning team Liaising Liaise with various parties engaged to prepare project brief Monitoring Keep the record of work progress and report to the client

f)Motivating Motivate various parties engaged in the design and construction g) Problem solving - Liaise between management and parties concerned with the project (in the design and construction problem).

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2.3.2

Time Control To fulfill his main responsibility regarding time control, a project manager should ensure that: a) Owners firm up early on all chargers b) Shop drawings are produced early for consultant approval. c) Construction drawings are issued early to contractors for planning and ordering of materials. d) Critical nominated sub-contracts are called early and concerted effort is made to tackle the critical path areas. e) The use of materials and equipments that need a long lead-time shall be approved early for the procurement f) Purchasing of equipments and materials are placed early to avoid possible factory or shipping delay. In the initial planning before tendering phase, a project manager can shorten the construction period by: a) Prevents time-consuming construction details from getting into design. b) Prevents time-consuming sequence for constructing a particular work from being written into the specifications and drawings. c) Prevents unnecessary stringent conditions from getting into the specifications and drawings. During the construction stage, a project manager can ensure speedier completion of the project by: a) Give overtime most commonly use b) Improve productivity the cheapest method; hire qualified people (good for long term) c) Increase staffs d) Reduce works eliminate certain works e) Subcontract part of the works f) Expedite owners decisions, and the flow of consultants instructions and drawings to maintain job progress. g) Ensure that material deliver on time to the site. h) Ensure that priorities are given to critical areas of work to start early. i) Ensure that proper method of construction is available to do work. j) Encourage of settle site problems among trades. k) Highlight and attempt to solve construction site problems with all parties. l) Re-schedule the work of all trades if necessary to ensure that they do not hold up each other.

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m) Think of the problems ahead anticipate the difficult and get rid of them rather than trying to get problems. n) Using extensive checkpoints in the sequence of work for design and construction. 2.3.3 Skills of an Effective Project Manager An effective PM should have the following skills: a) Technical Technical skills involve the ability to apply specific methods, procedures and techniques in specialized field. A PM should be able to identify, develop and improve the technical skills according to the situation. b) Human relationship Human relationship skills include the dynamic ability of a PM to lead, motivate, manage conflict and work with others. c) Conceptual Conceptual skills involve the ability to: i. See the organization as a whole and recognize its relationship to the larger business world. ii. Understand the relationship among each department or functions or organization (dependency among each other); and changes in one part can affect the others. iii. Know how to diagnose and assess different types of management problems. d) Communication Communication shall be considered as exchange of idea or giving direction/instruction. Communication is important as a mean to transmit and share information between departments and individuals for the distribution of knowledge. Effective communication is necessary at every level of an organization to ensure: Effective flow of information Accelerate work Avoid miscommunication Avoid false information Ensure right instruction received by all parties.

Communication skills reflect PM ability to send and receive information, thoughts, feelings and attitudes in every means. Therefore a PM should possess certain capacity such as writing, oral/verbal and nonverbal (facial expressions, body posture) communication skills. Top management may convey their message (i.e. communicate) through face to face (talk) instruction, circulars (write), or internet.

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