Wednesday, September 10, 2008

The Construction Industry - the need for professionalism

The demand for professional contractors in the Malaysian Construction Industry
In a nutshell, the Construction Industry has contributed significantly to the economic growth in this country. Over the last 20 years or so the industry has been consistently contributing an average of 3% of the national Gross Domestic Product (GDP).

It has recorded double digit growths from 1989 (11.6%) until mid 1997 (10.6%). The highest growth recorded was in 1995 at 21.1%. However, in the third quarter of 1997, its performance declined considerably to 8.8%. It went down drastically to -24% in 1998. This sudden decline in performance can be attributed to the consequences of economic downturn faced by the country.

Fortunately in 1999 Malaysia made a remarkable economic recovery. The Construction Industry recovered to an improved -5.6% growth. It went on to grow steadily by 2.3% in 2001 and stagnated with the same growth rate in 2002. The growth in 2003 was around 2.5%. However it recorded a negative 2.4% growth in 2004. A significant growth is not anticipated in 2009 as a number of large projects are yet to be implemented by the Government and that there is a slowdown in the contribution of the private sector.

However, an announcement on the injection of around RM48 billion by the Government in 2004 may well see some growth in the industry’s performance by late 2005 and beyond. The industry should recover significantly in the next 2 years as the Government is in full swing in implementing its 9th Malaysia Plan starting January 2006.

In terms of numbers and values of construction contracts, in 2002 alone 5,026 contract works were completed to the tune of around RM41.6billion. The highest recorded between 1996 and 2002 was RM57.5billion with 6,136 contract works.

The construction value chain comprises upstream activities (like design and project procurement) to downstream activities (construction phase) to the final stage of maintenance of the completed projects. The major players within this value chain are the public and private sectors clients; consultants; contractors; manufacturers and suppliers; workers; regulatory bodies; and the end-users.

The construction industry employs some 800,000 personnel, i.e., 7.8% of the total workforce in 2003. Around 10% of them are professionals. Construction workers and tradesmen form the bulk of the workforce. Many of the general construction workers are unskilled and/or untrained. Most of them (roughly in the region of 400,000) are foreigners. An estimated figure of 310,000 construction personnel directly involved in the industry had undergone the safety induction course for accreditation in the Green Card programme organized by the Construction Industry Development Board (CIDB).
There are around 50,000 contractors registered with the CIDB in 2007 – a far too many when compared to those in countries like the U.K., Japan or even Indonesia (based on the size of contract values and the ratio between per contractor and the population of a particular country. For example in Indonesia with a population of 200 million, there are only around 260,000 registered contractors). Most of the contractors in this country are generalist and non-professional. What Malaysia needs is quality, specialist and professional contractors to be globally competitive.

To project the requirement of workforce in the construction industry proves to be difficult. It may well be easier to determine the required number of personnel in the health services sector, for instance, by working on a certain ratio based on the size of the population of a country regardless of the ups and downs of its economic situation. The optimum size of the construction workforce depends very much on many factors and variables. The main one is the demand for construction projects at a particular period of time. The demand for projects in turns depends on the overall performance of the national economy. As such the employment pattern in this industry is very volatile resulting in massive unemployment when the economic performance is negative and vice versa.

Again, the population of the industry’s workforce may well be determined by the level of productivity which is a function of the skill level of the workers, state-of-the-art of building practices, processes and technology and the Governmental procurement system and regulations. If the level of productivity is low then the size of the workforce tends to be relatively large. The need for construction personnel could well be lower if there is an improvement in productivity through the upgrading of skills, knowledge and quality of the workforce; construction methods; management and better procurement and delivery systems (like the adoption of the modular coordination method and IBS (Industrialised Building System) in a big way.

The training of the construction personnel at various levels is being carried out by a number of institutions in Malaysia. Skills training is largely done by the public vocational and technical schools; the Construction Industry Development Board (or CIDB); Giat MARA; and Ministry of Human Resource. The middle or supervisory level training has been carried out by various polytechnics; Institut Kemahiran MARA; UiTM and UTM (both at diploma level) and a few private institutions as well. At the professional level, normally the universities provide the necessary education and training.

Getting a qualification at one of theses various levels enable one to practise a construction skill at a pertinent category during the design, procurement or production of a construction project. However, most of the graduates of the said levels tend to concentrate at the design, procurement and supervisory phases. The critical phase, i.e., the interpretation and production of the designs is entirely left to the builders or contractors as they are commonly known. There appear to be a notable weakness in the management knowledge, skills and professionalism on the part of the majority of the 50,000 odd contractors in Malaysia. This often resulted in shoddy workmanship, longer construction time and the unnecessary increase in costs (especially due to the lack of financial administration skill and wastage in the use of production resources).

Again, contractors are being singled out as the ones that should be equally responsible in the delays in the issuance of the certificate of fitness for occupancy. Question arises: are they professional enough to carry that responsibility? The answer seems to be simplistically no- pinpointing to their lack of professional training and accountability (because contractors do not have their own professional institution, board and regulations).

Therefore, there is an urgent need for contractors and those aspiring to become one to go through a much more structured and professional course to be qualified as “ professional builders or constructors” to play a more meaningful role in the construction industry. Already there is a move by the Ministry of Public Works via the CIDB to propose a Construction Act to develop and regulate professionalism among contractors. Perhaps in the future, a construction organization will not be allowed to operate without professional builders or constructors running it.

No comments: