CHAPTER 2

INTRODUCTION TO THE CONSTRUCTION INDUSTRY

Lesson Learning Outcomes:
Define the construction industry
Identify the major parties involved in the construction industry
Appreciate and understand the role and responsibility of a project
manager
Begin and developing skills necessary for holding management positions

Current Construction Industry Scenario

The construction industry constitutes an important element of

the Malaysian economy.

Currently accounts for only 3.9% of the gross domestic product

(GDP) in second quarter 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 Civil Engineering

(CE) Works and Building Works.

CE Works includes the construction of :

HIGHWAY

RAILWAY

WHARF

AIRFIELD

DRAINAGE

DAM

Building Works include:

RESIDENTIAL

OFFICE

SHOP LOT

FACTORY

SCHOOL

HOSPITAL

CONSTRUCTION INDUSTRY MASTER PLAN MALAYSIA

2006-2015
7 Strategic Thrust in CIMP:
1.Integrate the construction industry value chance to enhance
productivity and efficiency.
2.Strengthen the construction industry images.
3.Strive for the highest standard of quality, occupational safety and
health and environmental practices.
4.Develop human resources capabilities and capacities in the
construction industry.
5.Innovate through research and development and adopt new
construction methods.
6.Leverage on information and communication technology in the
construction industry.
7.Benefit from globalization including the export of construction
products and services.

Current Construction Industry Scenario (cont.)

PARTIES

FUNCTION

Financial
Institution

Provides credit and financial

facilities includes bank, financial
companies, credit cooperation.

Owner/
Client/
Developer

Initiates the project, assumes

risk, and enjoys the profit or
meets the loss.

Consultant

plans and designs projects,

prepare
tender
documents,
advice on the award of contracts,
supervises implementation and
administers
contract
include
architect / engineer / quantity
surveyor
(QS)
/
Project
Management Consultant (PMC)

EXAMPLE

PARTIES

FUNCTION

Main
Contractor
Sector

First-Hand-Contractor
sector
that physically translates the
project from their blue print
stage to reality, by coordinating
the works of various contractors
through
the
construction
program.

Sub
Contractor
Sector

Sectors that actually carry out

the physical work include the
sub-contractor (SC), supplier,
nominated
sub-contractor
(NSC) who is normally a
specialist
sub-contractor,
nominated supplier (NS), labour
sub-contractor.

EXAMPLE

PARTIES

FUNCTION

Local
Government
Agencies/
Local
Authority

Represents
the
government
approving authorities for the
various documents approval.

EXAMPLE

Current Construction Industry Scenario (cont.)

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

Current Construction Industry Scenario (cont.)

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.
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.

civil engineering graduate may be attached to one of the

following:

Owner or client or developer firm

b) Consultant firm
c) Contractor firm
d) Sales and marketing company
e) Relevant authorities / departments
a)

Types and Roles of Institution and Parties Involved in

Construction Industry

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 cocoordinator. Their job includes:
a)Incorporate function of consultant and contractor.
b)Engage of consultants and contractor.
c)Co-ordinate and supervise project.
d)Prepare memorandum of a project.
e)Prepare progress report.
f) 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) Feasible study
b) Site Investigation
c) Preliminary study
d) Design work (reinforced concrete, timber, and etc.)
e) Preparation of specifications and report
Types
and Roles
ofand
Institution
f) Quantity
take-off
estimate and Parties Involved in
Construction Industry (cont.)

 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:

Feasible study
b) Site investigation
c) Specification and report
d) Quantity take-off and estimate
e) Construction program
f) Progress report (weekly/monthly)
g) Progress payment to sub-contractors
Types
and Roles
of Institution
and Parties Involved in
h) Supervise
day-to-day
work in site
a)

Construction Industry (cont.)

1.

Client
Anyone who has landed properties and the financial means to develop them can
be considered as client who required project consultancy services.

2.

Consultant
Designs the plans to be used by the construction contractors.

3.

Contractor
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.

Supplier
Types
and the
Roles
of Institution
Parties
Involved in
Provide
raw materials
used in theand
construction
project.
Construction Industry (cont.)
5. Project Manager
4.

Coordinates the construction project.

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

Project Manager

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:

1. Advising
Advise the client over the appointment of consultant and
contractor
Responsible for calling and recommendation of tender
2. Coordinating
Coordinate the project with the Local and Federal Authorities
Certify progress payment to consultant and contractor

Duties and Responsibilities of a Project Manager

3. Leading
Acts as a leader of the planning team
4. Liaising
Liaise with various parties engaged to prepare project brief
5. Monitoring
Keep the record of work progress and report to the client
6. Motivating
Motivate various parties engaged in the design and construction
7. Problem solving
Liaise between management and parties concerned with the
project (in the design and construction problem).

To fulfill his main responsibility regarding time control, a project

manager should ensure that:

Owners firm up early on all chargers

Shop drawings are produced early for consultant approval.
Construction drawings are issued early to contractors for
planning and ordering of materials.
Critical nominated sub-contracts are called early and concerted
effort is made to tackle the critical path areas.
The use of materials and equipments that need a long lead-time
shall be approved early for the procurement
Time
Control
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:

Prevents time-consuming construction details from getting into

design.
Prevents time-consuming sequence for constructing a particular
work from being written into the specifications and drawings.
Prevents unnecessary stringent conditions from getting into the
specifications and drawings.

Time Control (cont.)

During the construction stage, a project manager can ensure

speedier completion of the project by:

Give overtime most commonly use

Improve productivity the cheapest method; hire qualified
people (good for long term)
Increase staffs
Reduce works eliminate certain works
Subcontract part of the works
Expedite owners decisions, and the flow of consultants
instructions and drawings to maintain job progress.
Ensure that material deliver on time to the site.
Time
Control
(cont.)
Ensure
that priorities
are given to critical areas of work to start
early.

 Ensure that proper method of construction is available to

do work.
Encourage of settle site problems among trades.
Highlight and attempt to solve construction site problems
with all parties.
Re-schedule the work of all trades if necessary to ensure
that they do not hold up each other.
Think of the problems ahead anticipate the difficult and
get rid of them rather than trying to get problems.
Using extensive checkpoints in the sequence of work for
design and construction.

1.

Technical
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.

2.

Human relationship
dynamic ability of a PM to lead, motivate, manage conflict and work with
others.

3.

Conceptual
Conceptual skills involve the ability to:
See the organization as a whole and recognize its relationship to larger
business world.
Understand the relationship among each department or functions or
organization (dependency among each other); and changes in one part
can affect the others.
Know how to diagnose and assess different types of management
problems.

Skills of an Effective Project Manager

4.

Communication
shall be considered as exchange of idea or giving direction/instruction.
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.

Skills of an Effective Project Manager (cont.)