This essay has been submitted by a student. This is not an example of the work written by our professional essay writers.
Delay is a serious problem in the construction industry as if affects construction projects that play an important role in the fast growing economy of developing countries. In addition, many construction projects in these countries include basic infrastructure that needs to be expanded and it requires a lot of money which might be in the form of foreign or state investments. Hence, it is a priority of state organisations and private companies, who are the projects owners, to manage this limited budget and avoid the recurring problem as long as it is possible. This essay will analyse the problems of construction delay on economy and evaluate possible solutions that emphasize the identification delay likelihood and an efficient project management of material and coordination of all parties.
The delay in construction projects including infrastructure, such as road, electricity, communication and similar might slow down economic growth in developing countries such as Saudi Arabia and Malaysia. In fact, there is a significant relationship between construction industry and economy growth because investment infrastructure increase the physical capital stock of nation, thus expanding national output level (Dang et al. 2011). The construction sector is one of the most important contributors to gross domestic product (GDP) of Saudi Arabia and Malaysia, it contributed 4.5% to the GPD in1995 and 3.3% in 2005 and employed 600,000 workers in Malaysia( sambasivan & soon, 2006). In the same way, the building and construction sector is the third largest sector of the Saudi economy (Australian Government, 2010) and it contributes the Saudi Arabia's GDP about 9% of its total value. United nation (cited in Dang & Soon, 2011) indicates that infrastructure development is an essential part of economic development in Asia and pacific region .The relationship between construction development and economy is reciprocal because construction investment has a strong short term effect on economic growth, whereas economic growth has long term effect on construction (Zheng & Liu, 2004;cited in Dang & Soon 2011) ,although during the period of expanding economic growth, the construction industry needs to grow faster than the economy as whole (world bank 1994;cited in Dang & Soon 2011).Thus overtime and over cost in the construction projects would mean loss of productivity in the economy which is not sufficiently capable to install new factories in current infrastructure stage.
Estimation of the likelihood of delay which is comprised of different factors is essential to project success and helps managers reduce the distraction from the original plan. According to Lock (cited in Abdol-Rahman et al. 2006) it is important to develop the methods of estimating of activity duration according to the actual skill levels, unexpected events, efficiency of work time, and mistakes and misunderstandings. Abdol-Rahman et al (2006) maintain that predicting and identifying the problems and diagnosing the cause in the early stages of construction is important to find the most appropriate and economical solutions . According to the research by Chan (2001) the Bromilow model of time-cost relationships is a convenient and useful tool for project managers and client to predict the suitable time required for delivery of a construction project in Malaysia. It is quite clear that recovering the damage caused by delays would need to identify delays and parties which are responsible. However, delay situations are complex, because multiple delays can occur concurrently, and also they can be caused by more than one party. Therefore, there is a need to identify and classify different causes of project delay.
Moreover, unsuccessful construction projects, which are not finished within the schedule time or the total abandoned projects, would impose extra cost to the economy of developing countries. These projects squander materials, which are mostly imported, labours and national capital. For instance, products and the skilled labour were not available in local market of Saudi Arabia, which means that over 80 per cent of construction material and equipment were imported (Australian Government, 2010). On the other hand, recent surveys In Saudi Arabia reveal that only 30% of construction projects were completed within the scheduled completion dates and that the average time overrun was between 10% and 30% (Assaf and Al-Hejji,2006).Similarly, In Malaysia, many projects were temporarily abandoned during the financial crisis between 1997 and 2000 ,because of lack of financial support and poor economic conditions. Many of these projects have now become so prohibitive which is why they have been abandoned permanently (MALBEX,2005;cited in Sambasivan and Soon,2006). These evidence illustrates the vitality of controlling resources in developing countries such as Malaysia and Saudi Arabia which are suffering from the profligate of resources due to the delay in construction projects.
Managing efficiency is the key to mitigate delay in construction projects under constraint of materials. Project managers need to use modern controlling methods and empirical techniques to offset the drawbacks of shortage resources. Abdul-rahman et al (2006) suggest that adopting an appropriate control system especially during the construction phase would be beneficial to achieve economic goals. This finding is consistent with Bart (cited in Abdul-rahman et al2006) that the traditional approach of planning and controlling of projects tend to fail mainly because of too much formal control which limits creativity from playing a fundamental role in execution of the project. Moreover, Stuckenburck(cited in Abdul-rahman et al2006) comments that Decision making process is used as the key to effective project management especially in value and risk analysis . Decision making at the right time is important especially with a fast-track project in preventing delays Stuckenburck (cited in Abdul-rah man et al2006, pp.126). Ogunlana &Promkuntong ,1996 believe that being slow in decision making and variable decision may result in wasting resources and delay. This clearly exemplify that project manager should use new methods to manage programs efficiency. For example, calculating the correlation between time-cost and estimating the risk of projects are samples of actions that project manager could use to make the right decision.
In addition, there is high demand of materials and qualified contractors, which includes engineers, skilled labours, architects in fast growing economy ,thereby project managers emphasize to complete the projects on time, otherwise they would have to pay more price to keep skilled manpower and supplying materials .In some cases, to the contractor, delay means higher overhead costs because of longer work period, higher material costs through inflation and labour cost increases (Assaf & Al hejji ,2005,pp.349). (Ogunlana &Promkuntong ,1996) note that the scarcity of technical personnel is due to the inelasticity of supply which results in decreasing the number of the constructional manpower, who are qualified and they can consequently easily get higher salaries by moving between jobs. As a consequence, they increase their salaries without a corresponding increase in technical ability. Nevertheless clients usually prefer to employ cheaper contractors who have poor qualification of technical staff to execute the projects .This process might intensify the problem and leads to a delay and also causes incapability of contractors of employing skilled personnel.
In order to overcome the high price of contractors and materials, there should be coordination in all parties. (Ogunlana &Promkuntong ,1996) point out that First, the government is responsible to give permission for the import of the materials. second, finding appropriate strategy to estimate the shortage of materials in next years would be beneficial .For example, if cement is predicted to be in short supply in the next year, it can be determined whether or not local manufacturers can increase output to provide demand and on what dates. In the same way the client or owner should provide sufficient finance in order to support contractors to be able to afford better quality personnel and equipment and bargain more with suppliers. And also there should be adequate communication with parties such as site, head offices and purchasing planning .These suggestions may even provide an opportunity for local contractors to compete with foreign contractors .It is clear that local contractors cannot beat the high price of materials and skilled labours solely without coordination among all parties in developing countries.
In conclusion, the impact of construction delays on economy of developing countries is complex and it might have different effects in different countries .In Saudi Arabia and Malaysia it leads to slowing down the economy growth and wasting the materials and increasing the price of material, however; the influences of construction delay on economy may be mitigated by identifying the cycle of delay and managing projects materials efficiency and coordination of all parties which involve the projects to control the price of resources. Unfortunately, There is no solution to completely offset the drawbacks of delay in construction projects. However knowledge of management is being developed and project managers attempt to reduce the distortion of delay on whole project and adjust the project with new conditions with the lowest loss.