Construction firms are traditionally segmented in four types and work as project basis and each successfully completed construction project participates its positive role in integrative performance of firm and construction industry which is positively correlated with national economy of Pakistan. But at the same time some construction projects get delayed due to un-certain reasons and to identify such reasons is core purpose of this study. Five major causes of delaying construction projects in developing countries e.g. Jordan, KSA, Egypt, have drawn from literature review i.e. a) Payment Delays from Client b) Co-ordination among, client, consultant, contractor c) Lack of Technical Staff in Project Team d) Change Orders e) Environmental disorder. A questionnaire has sent to civil engineers to prioritize among five reasons of delaying construction projects according to their own working experience in Pakistan. 27.77 % respondent prioritize Payment Delays from Client, 19.44% respondent prioritize Co-ordination among, client, consultant, contractor, 16.66% prioritize Lack of Technical Staff in Project Team, 19.44% prioritize Change Orders, 16.66% prioritize Environmental disorder as main causes of delaying in construction projects. Limitations of this study are short sample size and respondents have no choice to prioritize any other reason of delaying construction project in the questionnaire.
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Traditionally construction industry is segmented, and this segmentation is depends upon the nature of construction that is to be carried out, and this segmentation widely consider as residential housing construction, institutional and commercial building construction, specialized industrial construction, infrastructure and heavy construction. Residential housing construction is regarded as adding structure to real property and mostly involved in small projects with little investments and short span of time. Institutional and commercial building construction is dependent on size and type of the construction project which usually require higher cost, longer span of time, and technical sophistication. Specialized industrial construction involve in highly technical construction of oil refineries, steel mills, chemical processing, nuclear power plants with higher specialized construction skills, time, cost with the interest of government. Infrastructure and heavy construction is mostly concerned with construction of large projects e.g. big dams, roads, bridges to meet the infrastructural and developmental needs of the country with high cost, time, technical as well as general skills and mostly publicly owned through bonds or taxes. Decisions are made on the basis of risk assessment, cost estimation, forecasting and economic evaluation in construction project. To see this, Hendrickson's (2000, ch.1).
Purposely, to lemmatize the geographical, economical, boundaries for this study I have selected Pakistan to express challenges to construction firms. Pakistan is located in region of South Asia, sharing its geographical boundaries with Iran, Afghanistan, China and India, with per capita income $1,022. Construction firms have prominent share in national income of Pakistan with 31,535 total registerd construction firms divided 1,859 construction firms in federal area, 15,906 construction firms in Punjab, 6078 contruction firms are registered in Sindh, 6,092 contruction firms are registeed in NWFP, 1,600 contructions firms are registered in Balochistan. 1,395 consulting firms are registered in overall Pakistan under Pakistan Engineering Council updated detail of February 12, 2010.
Construction firms not merely benefits its blessings to domestic level but play a vital role in nation's economy. Sine, economic development is partly dependent on the performance of construction sector's performance. However, other factors e.g. economic crises, security risk, less foreign investment, political instability, unavailability of support industry, are needed to measure empirically in relation to performance of construction sector. Natural disaster e.g. floods, earthquakes are havoc for nations but on the other hand always provided an opportunity to boost up construction activities to proceed on rehabilitation and reconstruction of infrastructure. ERRA provided prospect to construction industry after deadly earthquake in nine districts in NWFP and AJK to reconstruct over 13,000 projects, at the cost of over US $ 5 billion located over more than 30,000 sq km. UNDP, with UN-HABITAT, is working on a $5.3 million project to design and implement a program of support to rehabilitation and reconstruction of housing and associated infrastructure in Aceh Province of Indonesia after lethal Tsunami. Military operation in Swat end with demolition in Malakand Division, Pakistan with the total cost of rehabilitation and reconstruction of building and infrastructure of approximately Rs. 50 billion which definitely create another opportunity to boost up construction industry. Pakistan requires a little over half-a-million new houses every year to cater to the needs of the citizens, but only 200,000 houses are normally constructed in the country during a year's time, with the exception of last two years when the number slightly increased. If the pace of galloping deficit is not contained, estimates suggest that the shortage will rise to a million houses in the not too distant future. On the other hand, this situation will also aid to construction industry in near future in Pakistan.
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Review of construction Performance in Comparison with Industrial Sector Performance in Pakistan
Rupees in Million
Performance of Industrial Sector
Performance of Construction Industry
Performance of Industrial divided i) Mining & Quarrying, ii) Manufacturing: a) Large Scale b) Small Scale c) Slaughtering, iii) Construction, iv) Electricity and Gas Distribution.
Construction industry has made progress in year 2005-06 from last year performance under the head of "income from industrial sector" in gross national product. Considerable reasons are natural disaster of earthquake in second quarter of the year, stable government of General Pervez Musharraf (1999-2008) and foreign aid for reconstruction and rehabilitation of displaced people of earthquake hit areas. Continuations of all these factors assist in year 2006-07 to construction industry and able it to achieve progress. But, in the end of second quarter of next year construction industry loss it progress rate due to country wide clashes after the assassination of former Prime Minister of Benazir Bhutto and could not sustain progress in year 2008-09 due to certain governance issues of the country.
Review of Construction Performance in Comparison with the performance of Gross National Product in Pakistan
Rupees in Million
Gross National Product
Performance of Construction Industry
Performance of Gross National Product is calculated on the basis of: i) agriculture income, ii) industrial income, iii) services sector income, iv) indirect taxes, v) subsidies, vi) net income from abroad.
Rate of performance of the construction industry in Gross National product had risen in year 2005-06 and continue it to the end of the year 2006-07 and began to fall in next two years due to above mentioned political, governance constraints in country and showed a positive correlation.
Developments in twentieth century have opened new horizons for the theorist and researcher to see things differently with sole and combination of parallel ideas and here we will discuss the above mentioned challenges of construction industry in context of organizational literature.
Construction firms made decisions of appointing contractors (agent) on the basis of transactional cost economics and same is the case with the agent to go for an agreement and contract in construction industry. Delivering performance of Construction Corporation is not merely considered on financial gain but to deliver within prescribed time, within budgeted cost and on set standards of quality. Role of contractor (agent) may be a role of client (principle) at the same time in case of subletting the task to sub-contractor. Sadi A. Assaf, and Sadiq Al-Hejji (2006) a study was conducted in Saudi Arabia on subject of "Causes of Delays in Large Construction Projects" field survey of 23 contractors, 19 consultant, and 15 owners resulted that seventy three causes identified of delaying project in which 76% are related to contractors, 56% of the consultants and average time of overrun is between 10% to 30% to the original duration. Stephen O Ogunlana, Krit Promkuntong, and Vithool Jearkjirm (1996), concluded that construction problems in growing economies can be grouped in three segments a) problem of inadequacies of in industry infrastructure e.g. supply of resources b) problem caused by client and consultant c) problems caused by contractor's incompetence and recommend that need of economic managers and construction industry association to provide the infrastructure for efficient project management. Joseph Lampel, (2001) argued that successful project is depend upon flexible engineering, construction and procurement firms and the management of flexibility based on acquisition and development of core competencies. These four core competencies are entrepreneurial, technical, evaluative and relational. Contractors face hurdles of payments delays / stuck from the client organizations and it directly affects contractor's performance i.e. delays of project completion. G. Sweis, R. Sweis, A. Abu Hammad, A. Shboul (2008) argue that major causes of delays in construction projects are, financial difficulties faced by contractors and too many change orders. Abdalla M. Odeh, and Hussien T. Battaineh, (2008) aim that most important causes of delaying in construction projects in viewpoint of contractors and consultant with traditional type contracts and identify, owner interference, inadequate contractor's experience, financing and payments, labor productivity, improper planning, slow decision making, and subcontractors among the top ten causes. Coordination among client, consultant, structural & electrical engineering and HVAC departments is vital for stream execution of the construction project. Client is final authority to place change orders and needed to coordinate with all stake holders of the project and absence, may cause delay. Torger Reve, and Raymond E Levitt (1984) observed trilateral governance of a client, engineering consultant, and contractors in construction projects and proposed professional relationship between the client and the consultant and a clan-type relationship between the consultant and the contractors. Review of studies conducted in developing countries suggest five major reasons of delaying construction projects are a) Payment Delays from Client b) Co-ordination among, client, consultant, contractor c) Lack of Technical Staff in Project Team d) Change Orders e) Environmental disorder. Relevancy of the study could be maintained by choosing respondents from Pakistani construction sector. Construction industry considered as most hazardous to human life due to nature of work and contractors are required to take full preventive measure to avoid any type of human loss from client end. Three findings of safety non-performance have been drawn out of a) siren not work due to noisy equipments and machinery, b) protective footwear not worn, c) protective face masks not worn in case of dusty environment, Rizwan U. Farooqui et. al., (2008). Most of the site accidents happen due to non-compliance of safety measures by the worker and un-sufficient safety arrangements of the employer. Installation of mechanical safeguards and a proper education system of workmen is obviously time taking and cost related issues for contractors. One side a contractor can claim superior safe environment and, on the other side an unsafe contractor can be liable to pay for huge penalties in term of insurance. Safety, therefore and effects of its absence e.g. accidents is now a key cost driver in construction industry. So the most important step in controlling cost for contractors is to run safe construction projects Rizwan U. Farooqui et. al., (2008).
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A questionnaire has been developed which consist of five major reason of delaying construction drawn from the literature review i.e. 1) Payment Delays from Client, 2) Co-ordination among, client, consultant, contractor, 3) Lack of Technical Staff in Project Team, 4) Change Orders, 5) Environmental disorder. Respondents are particularly engaged in construction sector and set a minimum requirement for interviewing them are a) respondent should be a civil engineer b) respondent should have at least five years experience in construction industry of Pakistan. Questionnaire had sent to forty eight (48) civil engineers working with client, consultant, and contractor, and sub-contractor firms in Pakistan through e-mail, and post without discrimination of firms. Thirty six (36) filled questionnaires received from respondents. Simple average method used to evaluate the respondents.
Payment Delays from Client 10 27.77
Co-ordination among, client, consultant, contractor 7 19.44
Lack of Technical Staff in Project Team 6 16.66
Change Orders 7 19.44
Environmental disorder 6 16.66
Payments Delays from Client: Ten out of thirty six civil engineers identified "payment delays from client" is major cause of delay in construction project in Pakistan. Delay of payment in construction is mostly co-related from the client and cause work stoppage from the contractor and sub-contractor end. M. E. Abd El-Razek et al. (2008) indicated that major causes of delaying construction projects in Egypt are: financing by contractor during construction, delays in contractor's payment by owner, design changes by owner or his agent during construction, partial payments during construction, and non-utilization of professional construction/contractual management. The contractor and owner were found to have opposing views, mostly blaming one another for delays, while the consultant was seen as having a more intermediate view.
Co-ordination among client, consultant and contractor: Seven out of thirty six civil engineer identified lack of proper coordination among client, consultant, and contractor is a major reason for delaying of construction project. A construction project team usually includes a number of agents such as clients, designers, constructors and other specialists as well as suppliers and coordination among them can save lot of cost and time of the project and absence cause delay in construction projects. In other words, successful projects require extensive communication and effective coordination that aid in organizing and integrating teams' client, consultant, and contractor to become committed to successful delivery of the construction project. Essentially, effective communication reduces time factors, avoids the risk of misunderstand-dings and develops positive relationships and encourages achieving common goals. Open communication and coordination creates an environment where all parties understand each other and tend to cooperate in a respectful manner to get the work done. The factors or attributes identified earlier by various authors can be merged into the communication and coordination super category.
Lack of Technical Staff in Project Team: Six out of thirty six civil engineers identify "lack of technical staff in project team" is a major cause of delays in construction projects in Pakistan. The increasing complexity of construction projects requires specialized technical construction personnel. Knowledge of sophisticated technology, the proliferation of laws setting standards for buildings and construction materials, worker safety, energy efficiency, and environmental protection now becoming essential for construction personnel.
Change Orders: Seven out of thirty six civil engineers identify "change orders" is a major cause of delays in construction projects in Pakistan. Too many change orders from client side not only increase the actual cost of construction from the projected cost of construction but can cause delay in delivering. More disputes can arise and more adversarial positions are staked out because of actual or perceived changes in a construction project than for any other reason. Aggressive contractors will threaten slow-downs and work stoppages if they don't get paid. Overbearing owners will insist that unknown conditions, extra features, and an expanded project are covered by the original bid price. New instructions arise instantly in the field through the superintendent or architect or owner's representative. One side may have no recourse except to make the change or get thrown off the job and lose the ensuing legal fight, or the contractor will have a valid claim for extras and the owner will bear the consequences. Informal change requests may be backed up by the full force of law; in other circumstances the impact of changes will be ignored by the courts, and claims for extra payment will not be enforced. Contractors who do not document every change are setting themselves up for a losing battle in the event of a dispute. In addition, such contractors may be reducing their profit margin by not taking into account the additional cost (and markup) of each change. Largely it is seen that most of the conflicts rise among, client, contractor and sub-contractor due to insufficient project documentation especially at the time of claim. Significance of these documents is to describe the project execution guidelines and limitations and consider as constitution among the stakeholders. Ultimate responsibility of preparing project documents on client's shoulders and generally consists of: general definitions and interpretations, authority and duties of client engineer, contract agreement with contractor including general responsibilities of contractor, appointment of sub-contractor, certificate and payments, settlement of disputes, project timeline, delays and cost of delays, etc. and absence caused conflict and that may lead to project delay.
Environmental disorder: Six out of thirty six civil engineers identify "environmental discord" is a major cause of delays in construction projects in Pakistan. Weather condition is also a very decisive factor in construction firms, any unusual weather conditions may cause delay. Any miscalculation in prediction of weather assessment may cause delay in construction project. Construction companies may monitor weather conditions by incorporating freely available or private weather forecast services, but the accuracy of these forecasts can be marginal and do little to lessen the financial impact caused by the weather. Construction project that rely on dry weather (roads, pipelines, foundations, etc) are drastically impacted when too many "wet days" occur during the planned project period.Â Previously, construction project weather risk was managed by "padding" the schedule with more time in anticipation that some days will be unproductive. There are traditionally three types of delays on a construction project: a) non-excusable: the construction company gets no time or money. b) excusable: The construction company gets time, but no money. c) compensable: The construction company gets both time and money. Both construction companies and their clients can benefit from precipitation risk management because project contracts are often structured so that contractors are not responsible for the most extreme weather events.
Resource Dependence Model: No construction organization is able to produce and perform all the required resources needed to run its operation and necessitate to look for other supporting firms but the instinct to be independent always encourage and lead them to new mergers and acquisitions for the sake of domination. Essence of the resource dependence model means that construction firms are dependent of the environment for resources to perform certain construction project. Even, some self sustaining construction groups must recruit staff, purchased raw material e.g. cement, bricks, steel, technology, etc., from the environment or go out of existence in absence. So the fact is that construction organizations are dependent on other organization's sources that is resource-dependence model and can be consider as inter-organizational resource dependence Hall (p279). Contrarily, assumption of the resource dependence model is: construction firms make decisions to launch a project on the basis of their own strengths, weaknesses, opportunities, and threats among the available choices that more feasible with the strategy rather than environment. While participating in a tender, different firms' leaders perceive the same phenomenon quite differently here is the point that environment is acted upon by organizational decision makers on basis of their perceptions, interpretations and evaluations. Thus, different construction firms will act differently toward the same environmental condition. In small construction firms socialization and leadership type culture is more prevailed whereas in large size construction corporations a bureaucratic type culture is observed.
Transactional Cost Economics Model: Functioning of construction corporations based on transactional cost theory and agency theory in organization literature. A very moderate preview of transactional cost economics model is prevailed in construction related firms as the variety of tasks involved in completion of construction project and hiring of sub-contractors, temporary help, and out-sourcing is a routine practice. Performing of core function of construction costs almost same within given context but to perform least elaborative tasks necessitated the application of transactional cost economics model. Not only the margin but direct supervision, auditing and other quality control mechanism can obtain from the application of the transactional cost economics model. Appointing a contractor (agency) is strictly based on the evaluation TCE model.
Rational Contingency Model: Definitely purpose of the construction firms to meet the organizational goals for their existence but neglected in the resource dependence model and population ecology model. In this rational contingency model we consider the issues of goals and see the construction organizations in goals oriented perspective. In construction industry rational contingency model proposed best fit model according to the context and configuration.
Sample size of data is very short which could not be validating the result. As respondents are belonged to Punjab and to interpreting the results on behalf of Pakistan may not be suitable. Respondents are given no other option to elaborate causes of delaying construction projects in Pakistan except the given five which is the major limitation in this study.
This study may be enhanced by enlarging the sample sizes from all over Pakistan and by giving options to respondents to elaborate causes of delaying construction projects according to their own context and experiences.