CHAPTER 2

Introduction to Construction Industry

 Introduction
• There is probably no other discipline that is more
difficult than construction project.
• The general goal is to build a project on-time,
within budget, with the stated quality standards
and in a safe environment.
• Easy right? Wrong! Research shows that less
than 20% of most construction projects meet
these four requirements.
• Construction project is known for continual
problems. Contractors have a continual record
of poor performance.
• Over the last 20 years construction project
management has developed in knowledge,
management skills and increased performance
and quality.
• Today there are many excellent contractors that
perform well in time, budget, quality and safety.
Challenges in Construction Industry
Objectives of Construction Project

TIME
COST
QUALITY
SAFETY
Once upon a time…
Ancient Civilizations…
Little town…
Then, city…
Thanks to them…
Classification of Construction Industry

Industrial
Building 5%
31%

Residential
47%
Heavy
Engineering
17%
 Residential
• Residential construction includes single-family
homes, multiunit town houses, apartments, high-
rise apartments and condominium.
• Residential housing designs are usually performed
by architects and engineers, and the construction
executed by builders who hire subcontractors for
the structural, mechanical, electrical and other
specialty work.
• Market is heavily affected by general economic
conditions, tax laws, and the monetary and fiscal
policies of the government.
Residential
 Building/commercial
• Small retail stores to urban redevelopment
complexes, from grade schools to complete new
universities, hospitals, commercial office towers,
theatres, government buildings, recreation centres,
light manufacturing plants, and warehouses.
• Most of these structures are financed and built by
the private sector of the economy .
• Specialty architects and engineers are often
engaged for designing a specific type of building,
while the builders or general contractors
undertaking such projects may also be specialized
in only that type of building.
 Heavy Engineering
• Include roadways, bridges, canals, dams, and
tunnels, ports and harbour.
• Both the design and construction phases of heavy
construction are primarily the domain of civil
engineers.
• Construction phase is much more equipment-
intensive, characterized by fleets of large
earthmovers, cranes, and trucks, working with
massive quantities of basic materials such as earth,
rock, steel, concrete, timber, and pipe.
• Require much greater expertise in engineering and
geology
 Industrial
• Include petroleum refineries and petrochemical
plants; synthetic fuel plants; fossil-fuel and nuclear
power plants; mine developments, smelters, steel
mills, and aluminium plants; large heavy-
manufacturing plants; and other facilities essential
to our utilities and basic industries.
• Both design and construction require the highest
levels of engineering expertise, from not only civil,
but also chemical, electrical, mechanical, and other
disciplines.
• This work tends to be much more labour-intensive,
though some of the largest hoisting and materials-
handling equipment is also required.
 - Public Sector
- Private sector - Project Management Consultant
- Partner
- Architect
- Engineers: Civil, Structure, M&E
CLIENT / OWNER - Quantity Surveyor
- Land Surveyor
- Federal - Interior Designer
- State - Landscape Architect
- Local - Other Specialist

AUTHORITIES CONSULTANT

Construction
FINANCIER

Project
- Bank
- Financial Company
- Credit Corporation
- Leasing Company

Participants
SUPPLIER CONTRACTOR

- Nominated Supplier - Main Contractor

- Manufacturer - Nominated Sub-contractor
- Importer
- Distributor

MANPOWER

- Technologist
- Technician
- Skilled Worker
- Semi Skilled Worker
- Unskilled Worker
 Construction Industry in Malaysia
• The construction industry constitutes an
important element of the Malaysian economy.
• Although it accounts for only 2.7% of the gross
domestic product (GDP) in 2006, 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.
• The Malaysian construction industry is generally
separated into two areas.
- One area is general construction, which
comprises residential construction, non-
residential construction and civil engineering
construction.
- The second area is special trade works, which
comprises activities of metal works, electrical
works, plumbing, sewerage and sanitary
works, refrigeration and air-conditioning works,
painting works, carpentry, tiling and flooring
works and glass works.
Employment by Sector
Growth of Construction Sectors
 Number of Projects Awarded
1,800 1,702 1,698

1,530
1,600

1,400 1,312
1,284
1,209
1,200
925
1,000
825
765
800
523
600 474

400
245
200 84 85 92
77
49 45
0
2004 2005 2006
Residential Non residential Mix development
Social amenities Infrastructure Others
 Projects undertaken by
Malaysian Contractors in Global Market
12 12

10 9

6
6
5 5
4 4
4
4 3
3 3
2 2 2
2

0
0
2004 2005 2006

ASEAN India Middle East Africa Others

Issues…
END OF CHAPTER 2