PROJECT

1. Future challenges in
construction
By : Ir Hj Mohd Fazli bin Osman

2. Content
Introduction
Challenges
Malaysia’s Initiatives

3. Introduction
 In the years ahead, the construction industry will have to overcome
various challenges, be it direct or indirect. Technocrats associated with
the construction industry need to employ innovative technologies and
skilled project handling strategies to overcome these challenges.
 A glance around and the wonders of civil engineering glares at us; a
house here and a flyover there; a highway here and a metro line there.
The green splash of nature is slowly converting into a concrete
boulevard, thanks to the construction industry.

4.  The influx of various new technologies and deployment of project
management strategies has made it possible to undertake projects of
mega scale. Investment in this sector has been found to contribute
significantly to the GDP of the country.
Gross Domestic Product (GDP) is the best way to measure a
country’s economy. It is one of the primary indicator use to gauge
the health of the country’s economy

5. Country Construction Sector Contribution to
country’s GDP (%)
India 10
UK 6.4
Australia 8.5
Indonesia 10
Malaysia 4.5

6.  However, in its path of advancement, the industry has to overcome a
number of challenges, some new and some old. Many of these
challenges are a direct result of construction operations, while others a
result of indirect, peripheral activities.
 A surprising number of challenges are not construction issues but
must be addressed and managed to ensure project success. Some of
the construction issues include workforce considerations, safety, time
constraints, and the changing nature of the work.

7.  Non-construction challenges that are part of the business landscape
include legal issues, government regulations, environmental
concerns, and sociopolitical pressures.
 Business that fail to take the challenges seriously, however will face
uphill battle for viability.

8. What are the challenges?
1. Project
Performance
2. Project
Management
3. Skilled Labor
Shortage
4.
Sustainability
5. Poor
Productivity
6. Embracing
disruption and
readiness for
the digital
future
7.
Compliance

9. 1. Project Performance
 The opportunities in construction are growing, but so is
project complexity. With companies already operating under
razor-thin profit margins, a single production surprise can
wipe out profits for the whole company. Design complexity
compounds this problem. As designs become larger and
require greater efficiency, construction companies struggle to
keep up.

10.  The lack of on-time and on-budget projects is telling. The
2015 KPMG Global Construction Survey found that more
than half of all construction companies experienced one
or more underperforming projects in the previous year.

11. 2. Project Management
 Construction as such, is a complex array of interdependent
activities that some would say is at best, an organized chaos. The
very nature of construction introduces challenges typically not
encountered in other industries. The work is often seasonal and
involves functioning in remote sites with accessibility problems.
There may be difficulty in applying automation and requires
adoption of technical innovation and the costs can vary as per
the conditions.

12.  The product can be of mindboggling size, cost, and
complexity and also the work is not performed in controlled
conditions, therefore highly impacted by weather and other
environmental conditions.

13.  The management of construction projects requires knowledge of
modern management as well as an understanding of the design and
construction process. Construction projects have a specific set of
objectives and constraints such as a required time frame for
completion. The Great Pyramids, the Hanging Gardens of Babylon,
and the ancient cathedrals of Europe did not rise up haphazardly.
From start to finish, precise coordination was required to complete
these massive projects that often stretched across decades and
generations.

14.  Construction managers plan and coordinate such construction
projects. She/he must understand and navigate the project through
its realities and master the obstacle thereby gaining an edge over
the market. A capable project manager must understand the
business, legal and social aspects of construction and be determined
to convert risks into opportunity. He must adapt to the changing
business, social, legal and sustainable environment and lead the
organisation through the challenges it faces.

15. 3. Skilled Labor Shortages
 The construction industry is bracing for a dramatic reduction in
workforce. The Associated General Contractors of America (AGC)
found that 74% of the total respondents believe there is a crunch in
skill trades, and 53 percent said they were unable to
hire construction professionals such as supervisors, estimators, and
engineers.
 The U.S. construction market consisted of two generations: the
traditionalists and baby boomers. Now, the workforce has split into
four generations: traditionalists, baby boomers, Generation X, and
millennials.

16.  This present labor diversification is a challenge because of stark differences
in work ethic, attitude, outlook, and behavior between the generations.
Traditionalists have nearly all left the workforce and baby boomer
retirement is in full swing. By 2020, millennials are expected to represent
half of the global workforce– many with little to no experience or interest in
the construction industry
 The combination of increasing project complexity and decreasing
experience is a risk multiplier, increasing the risk of deliverable delays,
quality construction problems, and employee safety concerns.

17. 4. Sustainability
 The construction industry is the top global consumer of raw materials. The
industry generates between 25 to 40 percent of the world’s carbon emissions.
This volume of natural resource utilization is not sustainable and could
compromise the environment for the sake of growth.
 Achieving targets for global carbon dioxide emissions reduction will be a major
challenge for the construction energy in rapidly developing countries. Smart
planning and sustainable design could reduce energy consumption and
pollution, but require a new approach to project management– an approach
that the construction industry on a whole is not yet prepared to undertake.

18. 5. Poor Productivity and Profitability
 Currently, the barriers to entry in construction are low, creating a saturated
marketplace with heavy competition. This competition is shrinking profit
margins and constraining essential reinvestment in new technology and
better business practices. Stagnant construction labor productivity is
compounding this problem.
 This lack of productivity is reflected in the bottom line, where typical
margins for construction companies range between 2 and 8 percent.
Consequently, construction companies find themselves trapped between
shrinking profit margins and stagnant productivity, unable to generate the
profit necessary to invest in critical technology

19. 6. Embracing Disruption and Readiness for
the digital future.
 The construction industry is at an inflection point, analogous to the
move from landline telephony to cellular technology. Digital
technologies are disrupting the industry, providing new opportunities to
address the challenges of poor profitability/productivity, project
performance, skilled labor shortages, and sustainability concerns.
Digitization of the construction industry is not a question
of if or when—the changes are happening now.

20.  The industrialization of construction and the application of proven
manufacturing technology and best practices will help companies drive
reliable outcomes and improve margins. Digitization will increase
productivity, eliminate waste, and mitigate the adverse impact of on-site
surprises.
 Digitization will change almost everything, including the competitors
and the barriers to entry. The end result: a more productive and
profitable industry that builds more sustainable
assets. Construction companies must take steps now to join the digital
future and stay ahead of the competition—or risk being left behind.

21. 7. Compliance
 Government and lawmakers impose industry legislation for a
reason, but it is sometimes difficult to see past the red tape.
Industry legislation is a major driver for change in a number of
different sectors. With safety engineering, H&S, employee rights
and numerous other business management practices affected,
construction companies can often find the red tape constrictive
and counter-intuitive.
 While some of these issues may not materialize for years to
come, many others are more than likely to cause imminent
concern construction firms.

22. What about Malaysia?
 Malaysian construction industries are tackling the challenges
through CIDB construction Industry Transformation Program (CITP)
initiative.
 CITP initiative have 4 strategic thrust as follows:
Quality, safety & professionalism
Environmental sustainability
Productivity
Internationalisation

23. • Increase emphasis on quality and implement
quality assessments
• Improve workplace safety and workers amenities
• Improve ease of doing business by addressing
regulatory constrains
• Promote and raise awareness of CITP initiatives
• Enhance integrity and increase governance
Quality, safety
&
Professionalism
• Drive innovation in sustainable construction
• Drive compliance to environmental
sustainability ratings and requirements
• Focus on public projects to lead on suitable
practices
• Facilitate industry adoption of sustainable
practices
• Reduce irresponsible waste during construction
Environmental
Sustainability

24. • Continue investment in human capital development in
construction
• Enhance control and balance of workforce supply
• Accelerate adoption of IBS, mechanization and modern
practices
• Roll out technology advantage across project life-cycle
• Enhance availability of strategic information via National
Construction Industry Information Centre (NCIIC)
• Advance SME/Bumiputra capacity and capability-building
Productivity
• Internationalise construction practices and
standards
• Strengthen access to financing for Malaysian
champions going abroad
• Support consortia formation and strengthen
overseas market intelligence
• Intensify contractor’s capacity and capability
building.
Internationalisation

25. How JKR fits in?

26.  Let us look at past organization that is similar to JKR. Looking at
the organization stand at any given moment which necessitate to
anticipate effects that changing economic conditions, new rivals
and market dynamics is a major threat to your ability to
for business.

27. Australia
 Public Works Department (PWD)
 Formed :1st January 1901
 Dissolved :31st December 1984
 Superseding agency : Building management authority
 Jurisdiction : Government of western Australia
 Public Works Department (PWD) are the State Government Agency of Western
Australia which was charged with providing and maintaining public infrastructure such
as dams, center supply, school, hospital, harbor and other public building.
 The department is no longer operational, having its responsibilities reassigned to other
state government and corporate entities

28. New Zealand
 Department of Public Works often referred to as Public Works
Department
Formed 1876
Disestablished and privatized in 1988
 When privatized the corporation have 2 main subsidiaries, work
consultancy services and works civil construction. These were sold in
1996 and became OPUS international consultants and
infrastructure respectively, and the corporation were disestablished.

29. United Kingdom
 Formed 1943 during world war 2
 1962 renamed as ministry of Public Buildings and Works
 1972 most former works function were transferred to the largely
autonomous property service agency (PSA).
 Subsequent re-organisation of PSA into Property Holdings was followed by
abolition in 1996 when individual Government departments took on
responsibility for managing their own estate portfolios.

30. Singapore
 Public Works Department of Singapore formed in 1946.
Infrastructure and building development.
 PWD Singapore was incorporated in 1999 under Temasek Holdings.
 2002 renamed CPG corporation and 1 year later became part of the
Downer EDI group.
 2012 Downer EDI was transferred to China Architecture Design and
Research Group (CAG)

31. Malaysia
 PWD was born 1872
 PWD Federation of Malaya was formed in 1948
 Later as JKR Persekutuan Tanah Melayu and finally JKR
Malaysia.

32. Observation 1
 From the above scenario, it can be observed that in meeting the
challenges of the construction industries, these organization have
adopted certain standard and reengineered themselves. These
reengineering is done in the context of changing economic conditions
and market dynamics in order to alleviate the competitive ability of the
organization to compete for business.

33.  PWD Singapore is a glaring example. From a government
organization, it become a corporate body under Temasek Holding and
later CPG corporation. It is one of the leading development
professional in Asia-Pacific region providing building and
infrastructure development and management service which comprise
master planning, urban design, green design, architectural,
engineering design and consultancy, project management,
construction management to facilities management services.

34. Observation 2
 Another thing to note is that, most of the PWD organization started with
D.I.Y.
 Later to meet the changing economics conditions and market dynamics, the
modus operandi of this organization evolved. Thus introduction of the
outsourcing concept.
 Now we have suppliers , skill workmen, contractors, consultants etc i.e the
ecosystem of the construction industry.
 The PWD’s role has change to that of consultancy and project management.
Some PWD’s organization went on further to become corporatize and
privatized entity. Their business is still engineering business.

35. Observation 3
 JKR Malaysia is no exception. In meeting the changes of the construction
industry. JKR Malaysia too has her share of the rollercoaster ride.
 Massive road building plan to open up rural Malaya. “Self-contained work
team formed” (NST, 19.6.1960)
 PWD comes under review to speed up government projects. (The Strait
Times, 25.12.1981)
 Dasar Pengswastaan Negara, 1983. “Many ambitious and service
professionals left JKR for the private sector”.
 1994 paper on corporatization of JKR, was sent to cabinet. The proposal was
rejected. The paper was prepared by JKR/Arthur Anderson.

36. Corporatization of state water department 1990’s
The privatization of Institut Kerja Raya Malaysia (IKRAM) 1997.
During Tan Sri Zaini tenure as KPKR he introduced “ Self contained team
for small projects to speed up projects delivery.
Privatization of federal road maintenance, 2001.
Formation of National Water Services Commission, 2007.

37. Cont’d
 During Dato Sri Wahid tenure as KPKR. “Change or die”. Hence the
introduction of matrix Organization, 2007.
 Restructuring of JKR Malaysia Headquarters, 2014, with emphasis on the
following:
Project Based to Asset based organization
Total asset management. Life cycle cost
Hybrid matrix – improving delivery.
Going forward as Government Technical Advisor.

38.  JKR stigma
 The design does not complete on time
 The tender does not execute as schedule
 Lack of communication among stakeholder
 Lack of coordination among stakeholder.
 The project does not complete on time as schedule
 The project need extension of time in order to be completed
 The quality of construction and installation does not meet the good
engineering practice and functional requirement.
 Discrepancy and error in construction drawing
Pre-
Tender
Post-
Tender

39.  JKR strategies and initiatives to enhance effectiveness of project delivery.
Acquisition Categorization (ACAT)
Gateway
PM Competency Framework
PM Tools and Methodologies
Project Implementation Strategies

40. Cont’d
Building Information Modelling (BIM)
JKR Strategic Themes
Outstanding Project Delivery
Co-creative Customer Experience
Centre of Technical Excellence
Leading Sustainability
Innovative Organization.

41. For us to ponder.
 What JKR can do other people also can do.
 They can do better than JKR
 What value added does JKR have in order for JKR to be The Choice
Consultant.
 What will JKR be beyond 2020???

42. The organization will
not get better by chance,
it will get better by
CHANGE.
To improve is to
change.
To be perfect is to change often.