Chapter 1

The Nature of the Construction

Industry

Introduction
Industrialized economies require construction to
renew and build new infrastructure
Basic facilities and installations needed for
functioning of society
Homes
Chemical plants
Highways
Buildings

Some Statistics
Construction accounts for about 4.1% of gross
domestic product ($1.2 trillion in 2007)
Residential construction accounted for 45%
Nonresidential construction accounted for 30%
Government projects accounted for 25%

Projects and the Construction Industry

A project may be defined as:
A temporary endeavor undertaken to create a
unique product
A unique venture with a beginning and an end,
undertaken to meet established goals within the
constraints of time and resources

Construction project participants

Owner
Designer
Construction contractor
Subcontractors
Government agencies
Community
Construction Manager

Specialization Within the Construction Industry

Residential construction
Small companies building single homes
Large national or multinational companies developing
residential complexes of homes and condominiums
Commercial building construction
Skyscrapers, office buildings, warehouses, schools,
stadiums, and hospitals
Industrial construction
Power plants, chemical plants, or oil refineries
Heavy construction
Highways, dams, airports, and other infrastructure
(e.g., transportation and water supply)
Environmental

Building Codes
Regulations concerning how buildings must be
designed to protect the health, safety, and
welfare of the public
New construction must conform to latest
versions
Designer is responsible for ensuring design
conforms
Typically based on International Building Code

Emerging Trends in the Construction Industry:

Megaprojects

Huge infrastructure projects

Require billions of dollars
Several years to complete
Involve many different parties
Management is complex
Undertaken to fulfill important societal needs
Extreme pressure to construct rapidly

Examples of megaprojects:
Palm Islands project in Dubai
Replacement of the Bay Bridge between Oakland
and San Francisco
San Francisco TransBay Terminal

Palm Islands, Dubai

Palm Islands, Dubai

San Francisco Bay Bridge

San Francisco Bay Bridge

San Francisco Bay Bridge Project

San Francisco Bay Bridge Project

San Francisco
Transbay Terminal

San Francisco Transbay Terminal

San Francisco Transbay Terminal

Globalization
The situation where international borders become
increasingly irrelevant, and economic
interdependencies between nations are
heightened
Risk factors of international projects:
Local construction practices
Local business practices
World and national economic conditions
Levels of spending by the local government
Priorities for construction spending of the host
nation

Canary Wharf, London, England

Canary Wharf, London, England

U.S. transportation infrastructure crisis

Infrastructure is the arrangement of a

nations transportation networks and
facilities
Emerging belief that U.S. is not renewing
and expanding infrastructure to keep up
with increasing demands

The Importance of Ethics in the

Construction Industry
Ethical behavior
Behavior philosophically judged to be good or
right.
Construction contractors are responsible for
behaving ethically towards clients and the greater
public.
Unethical behavior
Unethical and collusive bidding practices
Low-quality construction that does not meet
quality standards
Cutting corners

Careers in Construction
Some reasons for choosing a career in
construction:
Ability to work outdoors in a dynamic
environment
Satisfaction of contributing to and seeing a
project evolve
Better compensation for construction
managers
Good for those who want to start their own
businesses and for those who want to
work in an organization

Summary
Construction is an important segment of the
economy, employing millions
Construction differs from manufacturing; Emphasis
on unique facilities, custom-built on a project basis
Many stakeholders are involved in construction
projects
There has been an increasing trend to build
megaprojects
Construction industry is becoming global
Ethical behavior is required of all parties in
construction
Construction industry offers exciting careers