building for tomorrow: global enterprise and the u.s. construction industry
TRANSCRIPT
![Page 1: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/1.jpg)
title: BuildingforTomorrow:GlobalEnterpriseandtheU.S.ConstructionIndustry
author: Fisher,JohnW.publisher: NationalAcademiesPress
isbn10|asin: 0309039371printisbn13: 9780309039376ebookisbn13: 9780585168340
language: English
subject
Constructionindustry--UnitedStates,Constructionindustry--Casestudies,Constructionindustry--Internationalcooperation,Competition,International.
publicationdate: 1988lcc: HD9715.A2B841988ebddc: 354.64
Constructionindustry--UnitedStates,
![Page 2: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/2.jpg)
subject: Constructionindustry--Casestudies,Constructionindustry--Internationalcooperation,Competition,International.
![Page 3: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/3.jpg)
Pagei
BuildingforTomorrow:GlobalEnterpriseandtheU.S.ConstructionIndustryCommitteeontheInternationalConstructionIndustryBuilding
ResearchBoardCommissiononEngineeringandTechnicalSystems
NationalResearchCouncil
NATIONALACADEMYPRESSWashington,D.C.1988
![Page 4: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/4.jpg)
Pageii
NationalAcademyPress2101ConstitutionAvenue,NWWashington,DC20418
NOTICE:TheprojectthatisthesubjectofthisreportwasapprovedbytheGoverningBoardoftheNationalResearchCouncil,whosemembersaredrawnfromthecouncilsoftheNationalAcademyofSciences,theNationalAcademyofEngineering,andtheInstituteofMedicine.Themembersofthecommitteeresponsibleforthereportwerechosenfortheirspecialcompetencesandwithregardforappropriatebalance.
ThisreporthasbeenreviewedbyagroupotherthantheauthorsaccordingtoproceduresapprovedbyaReportReviewCommitteeconsistingofmembersoftheNationalAcademyofSciences,theNationalAcademyofEngineering,andtheInstituteofMedicine.
TheNationalAcademyofSciencesisaprivate,nonprofit,self-perpetuatingsocietyofdistinguishedscholarsengagedinscientificandengineeringresearch,dedicatedtothefurtheranceofscienceandtechnologyandtotheiruseforthegeneralwelfare.UpontheauthorityofthechartergrantedtoitbytheCongressin1863,theAcademyhasamandatethatrequiresittoadvisethefederalgovernmentonscientificandtechnicalmatters.Dr.FrankPressispresidentoftheNationalAcademyofSciences.
TheNationalAcademyofEngineeringwasestablishedin1964,underthecharteroftheNationalAcademyofSciences,asaparallelorganizationofoutstandingengineers.Itisautonomousinitsadministrationandintheselectionofitsmembers,sharingwiththeNationalAcademyofSciencestheresponsibilityforadvisingthefederalgovernment.TheNationalAcademyofEngineeringalsosponsorsengineeringprogramsaimedatmeetingnationalneeds,encourageseducationandresearch,andrecognizesthesuperior
![Page 5: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/5.jpg)
achievementsofengineers.Dr.RobertM.WhiteispresidentoftheNationalAcademyofEngineering.
TheInstituteofMedicinewasestablishedin1970bytheNationalAcademyofSciencestosecuretheservicesofeminentmembersofappropriateprofessionsintheexaminationofpolicymatterspertainingtothehealthofthepublic.TheInstituteactsundertheresponsibilitygiventotheNationalAcademyofSciencesbyitscongressionalchartertobeanadvisertothefederalgovernmentanduponitsowninitiative,toidentifyissuesofmedicalcare,research,andeducation.Dr.SamuelO.TheirispresidentoftheInstituteofMedicine.
TheNationalResearchCouncilwasestablishedbytheNationalAcademyofSciencesin1916toassociatethebroadcommunityofscienceandtechnologywiththeAcademy'spurposesoffurtheringknowledgeandofadvisingthefederalgovernment.FunctioninginaccordancewithgeneralpoliciesdeterminedbytheAcademy,theCouncilhasbecometheprincipaloperatingagencyofboththeNationalAcademyofSciencesandtheNationalAcademyofEngineeringinprovidingservicestothegovernment,thepublic,andthescientificandengineeringcommunities.TheCouncilisadministeredjointlybybothAcademiesandtheInstituteofMedicine.Dr.FrankPressandDr.RobertM.Whitearechairmanandvice-chairman,respectively,oftheNationalResearchCouncil.
ThisreportwassupportedbytheTechnologyAgendaProgramoftheNationalAcademyofEngineeringandfundedunderthefollowingagreementsbetweentheindicatedfederalagencyandtheNationalAcademyofSciences:U.S.TradeandDevelopmentProgram,InternationalDevelopmentCooperationAgencyGrantAgreementTDP7712561;NationalScienceFoundationGrantsNo.MSM-8612738andMSM-8612783underMasterAgreementNo.8618641;DepartmentoftheInteriorBureauofReclamationGrantAgreements
![Page 6: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/6.jpg)
No.6-FG-81-10310and7-FG-81-11950,U.S.DepartmentofAgricultureForestServiceGrantNo.87-G-050.
LIBRARYOFCONGRESSCATALOGCARDNUMBER88-61728INTERNATIONALSTANDARDBOOKNUMBER0-309-03937-1
CoverillustrationbyTomAdams.
PrintedintheUnitedStatesofAmerica
FirstPrinting,July1988SecondPrinting,October1988ThirdPrinting,May1989
![Page 7: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/7.jpg)
Pageiii
BUILDINGRESEARCHBOARD(1987-1988)
RICHARDT.BAUM,Consultant,Jaros,BaumandBolles,NewYork,NewYork(retired),Chairman
L.GERALDCARLISLE,Secretary-Treasurer,InternationalUnionofBricklayersandAlliedCraftsmen,Washington,D.C.
ROSSB.COROTIS,Chairman,DepartmentofCivilEngineering,JohnsHopkinsUniversity,Baltimore,Maryland
RAYF.DeBRUHL,SeniorVice-President,DavidsonandJonesCorporation,Raleigh,NorthCarolina
C.CHRISTOPHERDEGENHARDT,President,EDAW,Inc.,SanFrancisco,California
DAVIDR.DIBNER,SeniorVice-President,BernardJohnson,Inc.,Bethesda,Maryland
ROBERTC.DOBAN,SeniorVice-PresidentforScienceandTechnology,Owens-CorningFiberglasCorporation,Toledo,Ohio
EZRAD.EHRENKRANTZ,President,TheEhrenkrantzGroupandEckstut,NewYork,NewYork
ELISHAC.FREEDMAN,Consultant,AssociatedPublicSectorConsultantsandUniversityofConnecticut,WestHartford
DENOSC.GAZIS,AssistantDirector,SemiconductorScienceandTechnology,IBMResearchCenter,YorktownHeights,NewYork
GEORGES.JENKINS,President,ConsultationNetworks,Washington,D.C.
RICHARDH.JUDY,Director,DadeCountyAviationDepartment,Miami,Florida
![Page 8: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/8.jpg)
FREDERICKKRIMGOLD,AssociateDeanforResearchandExtension,VirginiaPolytechnicInstituteandStateUniversity,Alexandria
MILTONPIKARSKY,DistinguishedProfessorandDirector,InstituteofTransportationSystems,TheCityCollegeofNewYork
KENNETHF.REINSCHMIDT,Vice-President,StoneandWebsterEngineeringCorporation,Boston,Massachusetts
RICHARDL.TUCKER,Director,ConstructionIndustryInstitute,UniversityofTexas,Austin
![Page 9: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/9.jpg)
Pageiv
JAMESE.WOODS,SeniorEngineeringManager,BuildingControlsDivision,Honeywell,Inc.,GoldenValley,Minnesota
APRILL.YOUNG,Vice-President,NVRDevelopment,McLean,Virginia
Staff
ANDREWC.LEMER,Director
JOHNP.EBERHARD,FormerDirector
PETERH.SMEALLIE,SeniorProgramOfficer
GRETCHENG.BANK,ProgramAssociate
JULIANK.MORRISON,PrincipalConsultant
PATRICIAM.WHOLEY,AdministrativeCoordinator
DONNAF.ALLEN,SeniorSecretary
JOANNCURRY,SeniorSecretary
![Page 10: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/10.jpg)
Pagev
COMMITTEEONTHEINTERNATIONALCONSTRUCTIONINDUSTRY
JOHNW.FISHER,FritzEngineeringLaboratory,LehighUniversity,Bethlehem,Pennsylvania,Chairman
DAVIDP.BILLINGTON,SchoolofEngineeringandAppliedScience,PrincetonUniversity,NewJersey
ARTHURJ.FOX,EngineeringNewsRecord,NewYork,NewYork
DONALDG.ISELIN,SantaBarbara,California
ARNOLDK.JONES,Cary,NorthCarolina
MICHAELMACCOBY,ProjectonTechnology,Work,andCharacter,Washington,D.C.
HENRYL.MICHEL,ParsonsBrinckerhoff,Inc.,NewYork,NewYork
FREDMOAVENZADEH,CenterforConstructionResearchandEducation,DepartmentofCivilEngineering,MassachusettsInstituteofTechnology,Cambridge
WILLIAMW.MOORE,DamesandMoore,SanFrancisco,California
LOUISJ.MULKERN,RMDAssociates,Washington,D.C.
JOHNC.RICHARDS,GovernmentandInternationalAffairs,M.W.KelloggCompany,HiltonHead,SouthCarolina
JOHNH.WINKLER,Skidmore,OwingsandMerrill,NewYork,NewYork
LiaisonRepresentatives
![Page 11: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/11.jpg)
STANLEYBEAN,ForestProductsandHarvestingResearch,ForestService,U.S.DepartmentofAgriculture,Washington,D.C.
MARYSAUNDERS,CapitalGoodsandInternationalConstruction,U.S.DepartmentofCommerce,Washington,D.C.
FRANKA.DIMATTEO,U.S.ArmyCorpsofEngineers,Washington,D.C.
CHARLESM.HESS,U.S.ArmyCorpsofEngineers,Washington,D.C.
CHRISTIANR.HOLMES,InternationalDevelopmentCorporationAgency,Washington,D.C.
BETSYHORSMON,TennesseeValleyAuthority,Washington,D.C.
![Page 12: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/12.jpg)
Pagevi
THEODORELETTES,SmallBusinessTechnology,U.S.DepartmentofCommerce,Washington,D.C.
RICHARDB.SELF,ExecutiveOfficeofthePresident,Washington,D.C.
DARRELLWEBBER,BureauofReclamation,U.S.DepartmentoftheInterior,Denver,Colorado
AdviserstotheCommittee
FRANKBOSWORTH,VirginiaPolytechnicInstituteandStateUniversity,Blacksburg
MARIONC.DIETRICH,CorporationforInnovationDevelopment,Indianapolis,Indiana
JOHNW.FONDAHL,StanfordUniversity,California
EDGARJ.GARBARINI,BechtelGroup,Inc.,SanFrancisco,California
THOMASP.GUERIN,JR.,Construction/ProjectFinance,BAIIBankingCorporation,NewYork,NewYork
H.PETERGUTTMANN,HPGAssociates,Inc.,Washington,D.C.
GEORGES.JENKINS,ConsultationNetworks,Inc.,Washington,D.C.
JOHNT.JOYCE,InternationalUnionofBricklayersandAlliedCraftsmen,Washington,D.C.
FREDERICKKRIMGOLD,VirginiaPolytechnicInstituteandStateUniversity,Alexandria
NICHOLASLUDLOW,DevelopmentBankAssociates,Inc.,Washington,D.C.
![Page 13: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/13.jpg)
RAYMARSHALL,LBJSchoolofPublicAffairs,UniversityofTexas,Austin
ALFREDT.MCNEILL,TurnerConstructionCompany,NewYork,NewYork
RICHARDTUCKER,DamesandMoore,Bethesda,Maryland
RICHARDL.TUCKER,ConstructionIndustryInstitute,UniversityofTexas,Austin
FRANKM.WARREN,JR.,ConstructionManagementConsultant,Charlotte,NorthCarolina
JOHNWISNIEWSKI,Export-ImportBank,Washington,D.C.
RICHARDN.WRIGHT,CenterforBuildingTechnology,NationalBureauofStandards,Gaithersburg,Maryland
![Page 14: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/14.jpg)
Pagevii
Observers
JESSEAUSUBEL,NationalAcademyofEngineering,Washington,D.C.
MARLENER.B.BEAUDIN,NationalAcademyofEngineering,Washington,D.C.
WILLIAMBEDDOW,Caterpillar,Inc.,Washington,D.C.
LYNNS.BEEDLE,LehighUniversity,Bethlehem,Pennsylvania
TERRYCHAMBERLIN,AssociatedGeneralContractors,Washington,D.C.
MARKCHALPIN,NationalConstructorsAssociation,Washington,D.C.
ROBERTGOLD,Arlington,Virginia
WILLIAMPETERSON,ConstructionIndustriesManufacturersAssociationWashington,D.C.
CHARLESPINYAN,InternationalConstructionWeek,NewYork,NewYork
MARTINJ.THIBAULT,BureauofReclamation,U.S.DepartmentoftheInterior,Washington,D.C.
![Page 15: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/15.jpg)
Pageix
ForewordTheU.S.constructionindustryplaysacrucialroleintheUnitedStatesbysupplyingthestructuresthathouseandfacilitatevirtuallyallothereconomicandsocialactivity.Thisindustryhasahistoricroleabroadaswell,notonlythroughitsdirectexportsofU.S.goodsandservices,butalsothroughitsleadershipinopeningopportunitiesforotherU.S.businessandforintellectualexchangethatimprovesinternationalunderstanding.ReportsofdecliningworkbyU.S.firmsabroadandincreasingpenetrationofforeignfirmsintothedomesticconstructionmarketarethereforetroubling.
AlthoughonlyasmallfractionoftheU.S.constructionindustryisactivelyinvolvedintheinternationalmarket,thisparticipationyieldsabroadrangeofintangiblebenefitsthatgobeyondanydirecteffectontheU.S.tradebalanceorothereconomicstatistic.Thesebenefitsincludebetterknowledgeofforeignfirms'capabilitiesandbusinesspractices,enhancedskillsdevelopmentthroughexposuretoforeignculturesandmanagementstyles,andincreasedunderstandingoftechnicalproblemsarisingfromconstructionundertakenindiversephysicalandsocialconditions.
ThereasonsgivenfordeteriorationoftheU.S.constructionindustry'scompetitivepositioninanincreasinglyglobalmarketplacearevariedandcomplex,buttheimportanceoftechnologicalleadershipiswidelyrecognized.TheseissuesalonewouldjustifyanappraisalofthecompetitivenessoftheU.S.constructionindustry.
![Page 16: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/16.jpg)
Pagex
However,inrequestingtheBuildingResearchBoardtoundertakethisstudy,theNationalAcademyofEngineeringhadmoreinmind:Emergingtechnologiesinseveralfieldsofferthepromiseofsignificantadvancesininfrastructureandbuilding,atatimewhenthereisgrowingrecognitionoftheneedtorenewandenhancethesefacilitieshereandabroad.TheopportunitiespresentedtoU.S.industrybythisconvergenceofcapabilityandneedaresubstantial.TheAcademyrequestedthisstudyasoneelementofabroaderefforttoidentifytheseopportunitiesandcontributetothepublicdebateaboutsuchissues.
TheAcademywishestothanktheNationalScienceFoundation,U.S.ArmyCorpsofEngineers,BureauofReclamation,InternationalCooperationAgency,andForestServiceforjoininginthefinancialsupportofthisstudy.
ROBERTM.WHITEPRESIDENTNATIONALACADEMYOFENGINEERING
![Page 17: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/17.jpg)
Pagexi
AcknowledgmentsThisstudywasconductedintwostagesbycommitteesunderthechairmanshipsofWilliamMoore,ofDamesandMoore,andJohnFisher,ofLehighUniversity.ThesecommitteesandtheirchairmendeservetheparticularappreciationoftheBuildingResearchBoard(BRB)andtheNationalAcademyofEngineering(NAE)fortheirsubstantialworkonthisstudy.FinancialsupportbytheU.S.ArmyCorpsofEngineers,BureauofReclamation,InternationalCooperationAgencythroughitsTradeandDevelopmentProgram,andForestService,combinedwithNAE'sinitiatingfunds,demonstratethegovernment'sbroadconcernabouttheU.S.constructionindustry'sinternationalcompetitivenessandtheimportanceofthecommittee'swork.
ThecommitteeswereablysupportedbyJohnP.Eberhard,formerDirectoroftheBRB,underwhoseguidancethestudywasconductedandwhotookamajorpartinpreparationofthisreport.AndrewC.Lemer,currentlyDirectoroftheBRB,alsoparticipatedsubstantiallyinthereport'spreparation.SpecialthanksareduetoJoannCurryforheroutstandingworkonthefinalmanuscript.
![Page 18: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/18.jpg)
Pagexiii
Contents
ExecutiveSummary 1
1Introduction
10
TheScaleofWorldConstruction 11
TheChangingMarket 15
CaseStudy1:TechnologicalAdvantagePaysOff:M.W.KelloggandtheOilandPetrochemicalIndustry
19
2U.S.ConstructioninInternationalCompetition
23
TheU.S.Industry 23
AShortHistoricPerspective 25
MarketStructure 27
ConstructionMachinery 31
ForeignFirmsintheU.S.Market 33
CaseStudy2:Japan'sOhbayashiGumi:DoingConstructionintheUnitedStatesfor20Years
35
3CompetitionintheGlobalMarket
38
CommonCharacteristics 38
SpecificCases 39
GreatBritain 39
![Page 19: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/19.jpg)
![Page 20: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/20.jpg)
Pagexiv
France 41
Italy 41
Sweden 42
Japan 44
India 45
TheSovietUnion 46
U.S.ResponsetoCompetition 47
CaseStudy3:ShimizuMeetsIBM'sNeeds 50
4ResearchandDevelopmentinConstruction
55
U.S.ConstructionResearchandDevelopment 56
OtherEffortsNeeded 58
CaseStudy4:TheBellTelephoneLaboratories 63
5EducationandTraining
66
ProgramsofStudy 67
Engineering 67
Architecture 69
EngineeringandArchitectureTechnology 69
ContinuingEducation 70
IssuesinCivilEngineering 71
EmphasisonDesign 71
![Page 21: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/21.jpg)
ConstructionManagement 72
IssuesinArchitecture 73
SpecializationandSmallPractices 74
ArchitecturalResearchandEducation 75
SkillsforGlobalEnterprise 76
Cross-CulturalTrainingfortheConstructionIndustry 76
AcquiringForeignLanguages 78
InternationalProjectManagement 79
CaseStudy5:BuildingInternationalRelationships:PhilippHolzmannAGandJ.A.JonesConstructionCompany
81
6PursuitofInnovation
85
NatureofInnovation 85
OpportunityinInfrastructure 88
GlobalPartnershipforInnovation 93
CaseStudy6:CooperativeEffortBetweenU.S.PublicandPrivateSectors:ProposalfortheThreeGorgesProjectinChina
94
![Page 22: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/22.jpg)
Pagexv
7Needed:InstitutionalStructuretoPromoteGlobalEnterprise
100
OrganizedFocusofDiverseInterests 100
AttitudeofOpportunity 102
ResearchandDevelopmentandInnovation 103
BuildingforTomorrow 104
![Page 23: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/23.jpg)
Page1
ExecutiveSummaryConstructionofhousing,otherbuildings,civilworks,andutilities(highways,sewerandwatersupplysystems,railroads,telephone,gasandelectricsystems)accountsforabout10percentoftheworld'stotaloutputofgoodsandservices,andwelloverhalfoftotaldomesticinvestment.Buildingsandotherconstructedfacilitiesinfluencetheefficiencyofawiderangeofeconomicandsocialactivities,andtheproductivityofnations.
TheConstructionMarketintheUnitedStatesandAbroad
ConstructionisimportanttotheUnitedStates.Leavingasidetherelatedindustriesthatproduceandtransportthematerialsandequipmentofconstruction,newbuildingconstitutesroughly9percentoftheGrossDomesticProduct(GDP)*oftheUnitedStatesandemploys5.5millionpeople,makingtheindustrythelargestsingle
*GrossNationalProduct(GNP)isameasureofthetotalvalueofanation'soutput,andincludespersonalandgovernmentexpendituresongoodsandservicesandinvestment,bothdomesticandforeign.GrossDomesticProduct(GDP),whichdoesnotincludeforeignconsumptionandinvestmentbydomesticenterprises,isusedasanindicationofeconomicactivitywithinthenation.
![Page 24: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/24.jpg)
Page2
componentinnationalaccounts.TheUnitedStates,withanannualdomesticconstructionvolumeof$330billionto$390billion,isabout25percentoftheworldtotal(seeChapter1).
ForeigncompaniesworkingintheUnitedStatesin1986accountedfor1to2percentofthatamount.Industryobserversareconcernedthatthisasyetsmallpenetrationofforeignfirmsmaysignalthedeclineofanotherindustrywecannotaffordtolose.
Muchoftheworld'sconstructioninvolvessmallfacilitiesbuiltbysmallfirms,butasignificantportionisundertakenbylargefirmsininternationalcompetition.Availabledatasuggestthetotalvolumeofinternationalbidconstructionawardedin1986exceeded$74billionfor250majorfirmsfrommorethanadozencountries.U.S.contractorscaptured$22.6billionofthiswork,about31percentofthetotal(seeChapter2).However,constructionbyU.S.firmsabroadhasdeclinedbymorethan40percentsince1983,duebothtosmallertotalconstructionvolumesanddecliningmarketshare.
Inadditiontoactualconstruction,designandconstructionmanagementservicesrepresentanincreasinglyimportantbusinessinpostindustrialeconomies.U.S.designfirms(architects,engineers,andrelatedprofessionswhosemarketsderivefromconstruction)capturedabout26percentoftheestimated$3.5billioninternationalmarketin1986.Again,thisisadeclinefromthe1982peakof36percent.
Internationalconstructionhasdomesticimportancebeyondthecontributionstonationalincomethatthefiguresreflect.Manyofthe800U.S.producersofconstructionequipmentexportmachinerytosome150countries,oftenfollowingtheleadofU.S.constructorswhoopenedtheway.Othertypesofcompaniesmayfollowaswell,takingadvantageofdesigners'andbuilders'propensitytospecifyandusetheequipmentandmaterialstheyknowbest.However,annualU.S.exportsofconstructionequipmenthavedeclinedbytwo-thirdssince
![Page 25: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/25.jpg)
1978toabout$2billion.Employmentintheindustryhasdeclinedsimilarly.
SourcesofChallenges
DecliningforeignmarketsharesexciteconcernabouttheinternationalcompetitivenessoftheU.S.constructionindustry.Whilethereasonsfordeclineliepartlyindecreasedconstruction,particularlybythosecountrieslikeSaudiArabiawhereU.S.firmshaveenjoyedaspecialrelationship,industryleadersciteotherproblems
![Page 26: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/26.jpg)
Page3
thathamperU.S.firmsabroadandreducetheircompetitiveedgeathome:
Somecountriesrestrictforeigncompetitionfordomesticprojects.
Untilrecently,currencyexchangeratesmadeusingU.S.firmsrelativelymoreexpensive.
CoststosupportU.S.professionalsinforeignassignmentsarekepthighbyU.S.individualandcorporateincometaxpolicies.
U.S.antiboycottandbusinesspracticelawsrestrictU.S.firms'abilitiestooperatewithintheforeignbusinessclimateofsomecountries.
ThetechnologicaladvantagesofU.S.firmshavebeenslowlyerodedbyincreasinglycapableforeigners.Someoftheseforeigncompetitorsarebasedincountrieswherelowerwagescalesgiveadditionaladvantage.
Incontrasttootherindustrializednations,theUnitedStateshasnocoordinatedpolicyorsinglegovernmentagencytofosterinternationalsalesofU.S.designandconstructionexpertise.CompaniesbasedinindustrializedEuropeancountriesaswellasnewlyindustrializingcountriesinAsiaandLatinAmericahaveincreasedtheirmarketsharesininternationalconstruction,oftenwiththeaggressivesupportoftheirgovernments(seeChapter3).
Thestrategicimportanceofconstruction-relatedexportopportunitiesisreflectedintheU.S.TradeandDevelopmentProgram'ssupportofU.S.firmsconductingprojectfeasibilitystudies.Knowledgegainedinthefeasibilitystudycanenhancethefirm'schancesofsuccessfullycompetingforthemuchlargerconstructionproject.However,thissupportismuchlessthanmanyothergovernmentshavechosentoprovidetheirnationals,andU.S.suppliersfrequentlyfindthemselves
![Page 27: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/27.jpg)
atadistinctcompetitivedisadvantage.
PrivatePractices
Internationaldesignandconstructionaredominatedbyarelativelysmallandselectgroupoffirms.Reliabledataarelimited,buttheCommitteeontheInternationalConstructionIndustryestimatesthatthetop30constructionfirmsworldwideperform50to60percentofworkavailableforinternationalcompetition,andvirtuallytheentiremarketiscapturedby250majorinternationalfirms.Ofthetop400U.S.contractorsandtop500U.S.designfirmslistedinEngineeringNewsRecordmagazinein1987,54constructionfirms
![Page 28: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/28.jpg)
Page4
andapproximately200architecture/engineeringfirmsareactivelyseekingorconductinginternationalwork.
InrecentyearslargeamountsofforeigninvestmentcapitalhaveenteredtheUnitedStates.Forexample,theLosAngelesTimesindicatesthatincreasinglylargenumbersofdowntownofficebuildingsinLosAngelesareforeignownedorcontrolled.Foreignownershipoftenopensopportunitiesforforeignfirmstoparticipateindesignandconstruction.
Inadditiontothedirectcapturebyforeignfirmsof1to2percentoftheU.S.domesticmarket,foreignfirmsarepurchasingownershipsharesinU.S.constructionanddesignfirmsorareformingstrongassociationsthatmayobscurethetruevolumeofforeignparticipation.From1978through1983,thenumbersofforeigndesignandconstructionfirmsformingU.S.affiliations(includingpurchaseofownership)grewatannualratesof7.7percentand12.8percent,respectively.Totalrevenuesofthesecompanies,whilestilllessthan2percentofthetotalU.S.constructionmarket,grewatanannualrateof35percent.JapaneseconstructionvolumeintheUnitedStatesreachedmorethan$1.5billionin1985.
ResponsestoChallenge
ThechallengesposedbythedecliningU.S.shareofforeignconstructionandincreasingforeignpenetrationofU.S.domesticmarketsaresubstantial.Appropriateresponsemustbebalancedamongthecompaniesoperatingintheglobalmarketplace,educationalandprofessionalinstitutionsthatprepareandsupportU.S.professionalswithinthesecompanies,andgovernmentpolicyandinstitutionalsupportthatcanmotivateandstrengthentheprivatesector.ApartnershipofdiverseinterestsintheU.S.constructionindustryisneededtofocusresourcesinresearchanddevelopment
![Page 29: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/29.jpg)
(R&D),professionaltraining,andgovernmentprograms.
ResearchandDevelopmentandInnovation
Researchanddevelopmentandsubsequentinnovationhavebeenshowninmanyfieldstobevaluableelementsofcompetitiveadvantage.WhilestatisticsforconstructioningeneralandtheU.S.constructionindustryinparticulararelimited,theysuggestthattheU.S.constructionindustryhasfallenbehinditscompetitioninitseffortstomaintaintechnologyleadership(seeChapter4):Other
![Page 30: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/30.jpg)
Page5
countriesareputtingmoreeffortintoconstructionresearchanddevelopment,backinglonger-rangeresearchefforts,andactivelyencouragingtheadoptionofusefulresearchresultstobringinnovationtotheconstructionindustry.
Japanmaybetheleaderintheseefforts.Thatnation'sMinistryofConstructionsetsnationalpoliciesonbehalfoftheconstructionindustry.OneofitsmajorpolicydecisionswastoencourageprivatefirmstoestablishR&DcapabilitycomparabletothatfoundintheUnitedStates,primarilyatuniversities.Asaresultofthisgovernmentpolicy,morethan20ofthelargestfirmsinJapannowinvest1percentoftheirsalesinR&D.Allhavewell-equippedcampus-likeresearchcenters.Researchisintegratedthroughouttheiroperatingdivisionsandhasbecomeamajormarketingtoolforthem.Theirresearchprogramsincludeawidespectrumofshort-termandlong-rangeprojectsoverarangeoftechnicalsubjects.
Incontrast,totalR&DspendingondesignandconstructionintheUnitedStateshasbeenestimatedtobeabout$1.2billionannually,only0.39percentofthesector's$312billionofsalesin1984.ComparedwithR&DspendingbyothermatureindustriesintheUnitedStates(e.g.,appliancesat1.4percent,automobilesat1.7percent,ortextilesat0.8percent),constructionindustrysupportofR&Dissorelylagging.Contractors,architects,andengineersasagroupinvestlessthan0.05percentofsalesinR&D,afractionoftheamounttheyspendonliabilityinsurancealone.
ThecomplexreasonsforthislaggingeffortincludetheinabilityofthemanyfirmsthatmakeuptheU.S.industrytomobilizesufficientresourcesindividuallyortoconsolidatetheireffortseffectivelytosupportmeaningfulresearchortocapturethecommercialbenefitsthatmayresult.Theresearchthatisdoneisconcentratedwithintheuniversitiesandisoftenslowtohaveanimpactonpracticesinavery
![Page 31: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/31.jpg)
competitiveindustrythatisnecessarilywaryofcommercialriskandlegalliability.
Yet,rapidadvancesintechnologiesnowemergingfromresearchlaboratoriesaroundtheworldsuggestthatafterdecadesofrelativetechnologicalstability,aneraoftechnologicalferment,unprecedentedintheconstructionindustry,isfastapproaching.Leadingthesedevelopmentsistheintroductionofcomputerhardwareandsoftwareintoallfacetsofdesignandconstruction.InnovationsinconstructionarelikelytoresultfromnewinventionsemergingfromR&Dlaboratoriesworkinginphotonics,biotechnology,newmaterials,microelectronics,andotherfields(seeChapter6).
![Page 32: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/32.jpg)
Page6
EducationandTrainingforGlobalEnterprise
Experienceworkingabroadandworkingwithforeignfirmsathomesuggeststhatkeyelementsforprofessionalsuccessininternationaldesignandconstructionincludeastrongtechnicalbase,understandingofdesign,understandingoftheintimateconnectionbetweentechnologyandculture,andexperienceinforeignlanguagesandregionalstudies.Theseelementsaregainedthroughacombinationofpracticalexperienceandformaleducationthatcanneverreallybeconsideredcomplete(seeChapter5).
Civilengineeringeducationinthepasttwodecadeshasemphasizedfundamentalstudiesofmechanics,appliedmathematics,andtheanalysisofstructures,withrelativelylessattentiontodesignassynthesis,toconstructionastheprocessofeconomicalbuilding,ortotheperformanceandpermanenceofcivilworksasmeasuredinfieldobservations.Yearsofpracticemayberequiredtogaintheappreciationofdesign,construction,andperformanceneededtocompeteeffectivelyintheworldofbusiness.Changesinprogramsofformaleducationcouldlayastrongerfoundationforthisappreciation:
Designshouldbeintegratedintotheteachingofanalysisandrelateddirectlytoconstructionandperformance.
Youngengineersshouldbeeducatedinthemoderntraditions,culturalimplications,andinternationalpotentialoftheprofession.
Architecturaleducationhasbeenshapedbytraditionthatgivespreeminencetoapprenticeshipanddevelopmentofstrongintuitiveunderstandingoffunctionalandaestheticbasesforbuildingdesign,withlimitedattentiontotechnology.Architecturalpracticeischaracterizedbytheproliferationofsmalldesignfirmsanddependenceonspecializedconsultantstoaddressstructural,mechanical,lighting,acoustics,andeconomicissues.Exceptforafew
![Page 33: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/33.jpg)
largeandverticallyintegratedfirms,theprofessionisill-preparedfortheinternationalmarket.Again,changeinprofessionaltrainingcouldstrengthenourcompetitivestance:
Technologyandtheculturalcharacteristicsofconstructioninothercountriesshouldbeaddedtopresentprograms,includingcoursesthatfosterunderstandingofhowbuildingsareactuallybuilt,notjustthematerialsandequipmentthatgointoabuilding.
Workingexperienceintheuseofcomputersastoolsofdesignandanalysisshouldbeenhanced.
![Page 34: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/34.jpg)
Page7
Youngarchitectsshouldbeexposedtothegrowingbaseofresearchthatcansupportcreativedesigninunfamiliarsituations.
Increasingly,astheU.S.designandconstructionindustrieslooktogreaterparticipationintheglobalenterprise,engineeringandarchitectureschools,professionalsocieties,andbusinessorganizationsmustlookoutsidethemselvestolearnhowtodobusinessinaninternationaleconomy.Onlythroughmoredeliberateexposuretoforeignlanguages,geography,business,andforeignculturewillU.S.designprofessionalsgainrapidandeffectiveaccesstoforeign-originatedtechnologies,anddevelopastrongabilitytodealwithforeignsourcesofbusinessopportunityandfinance.
GovernmentProgramsandPrivateParticipation
Manyobserverscitegovernmentprocurementpracticesthatdiscourageinnovationaswellastaxpoliciesandregulationsonforeignbusinesspracticesasevidenceofgovernment'sfailuretosupportU.S.industry'scompetitiveposition.Despitetheseveryrealshortcomings,thereareexamplesofeffectivegovernmenteffortsinthisarea:
EstablishmentoftheNationalScienceFoundation'sNationalEngineeringResearchCenters,suchastheCenterforAdvancedTechnologyforLargeStructuralSystems(ATLSS)atLehighUniversity.
Growthofthegovernmentlaboratories,suchastheArmy'sConstructionEngineeringResearchLaboratory(CERL),theNavy'sPortHuenemeCivilEngineeringLaboratory,theTyndallAirForceEngineeringandServicesResearchCenter,andtheNationalBureauofStandards'CenterforBuildingTechnology.
U.S.ArmyCorpsofEngineers'grantsformajornewresearchefforts
![Page 35: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/35.jpg)
attheMassachusettsInstituteofTechnologyandtheUniversityofIllinois.
However,morecouldbedonetoencourageprivateresponsetogovernmenteffortsandtoenhancethelinkagebetweenresearchandpracticalinnovation.TheprogramsofothercountriesillustratethevaluetobegainedthroughtruepartnershipofprivateandpublicinterestsintheU.S.constructionindustry.Thispartnershipshouldembraceresearchandinnovationforbothdomesticproductivityandinternationalcompetitivestrength.
Forexample,projectsbuiltwithgovernmentfundscanassume
![Page 36: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/36.jpg)
Page8
thegreatercommercialriskinvolvedinadoptinginnovation,aswasdemonstratedbytheintroductiontoU.S.transitconstructionofprecastconcretesegmentaltunnelliners(seeChapter6).However,governmentcannotactalone.Mechanismsareneededtoencourageprivate-publiccooperationintheU.S.constructionindustry.Precedentsforsuchcooperationexist(theThreeGorgesprojectdescribedinCaseStudy6,forinstance),buttheyhavebeenisolatedexamples.Professionalsocietiesandtradeassociationsdowellrepresentingtheinterestsoftheirmembers,butthereisnoongoingmeansforbringingtheindustry'sdiverseintereststogethertoenhanceourcompetitivestanceinternationallyortofosterresearchandtechnologicalinnovationathome.Asolidinstitutionalfocusisneeded,andwhileanumberofexistinginstitutionscouldplayasignificantroleincreatingthisfocus,aneworganizationmayberequired(seeChapter7).
BuildingforTomorrow
WithintheUnitedStates,asinmostoftheindustrialworld,thereisanopportunitytoincreasetheperformancecharacteristicsofthoseinfrastructuresystemsusedtotransportpeopleandgoods,obtainwater,removewastes,supplyenergy,andfacilitatecommunications.Thereisalsoreasontoincludethosebuildingsusedeitherforpublicpurposes(e.g.,schoolsandhospitals)orbuiltwithpublicfunds(e.g.,governmentoffices,courthouses,andprisons)asapartofthepublicworksinfrastructure.UnderthisbroaddefinitionofinfrastructuretheUnitedStatesin1984invested30percentofitsdesignandconstructionbudgetsinthesefacilities,atotalof$102billion,andothercountriesareinvestingaswell(seeChapter6).
Developmentofadvancedinfrastructureisachallengeworthyofcooperativeinternationaleffort.Itwillbedifficulttostructurethesedevelopmentstomatchtheperformancerequirementsofasociety
![Page 37: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/37.jpg)
utilizingadvancedscienceandtechnology,andmakemorethanincrementalimprovementstothepresentmodaltechnologies.Inthedevelopingpartoftheworld,whichisexperiencingthemostrapidurbanization,thechallengeistodeveloptechnologyappropriatetotheirrequirementsratherthantoimposesolutionsproducedforindustrialnations.
TherearetworeasonsfortheUnitedStatestodomoretowardadvancingthetechnologyofinfrastructure.Wewouldbenefitwithinourownbordersfromnewandhigher-performancesystems,andwe
![Page 38: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/38.jpg)
Page9
couldalsoenhancetheopportunityformarketingourtechnologyonaglobalbasis.Thiscommitteerecognizestheurgencyofmaintainingandextendingtheexistingnetworksofpublicworksthatunderlieournation.However,weneedalsotodevelopnewandhigher-performingtechnologiestoenhanceourcompetitivepositionintheworld.
Wearefacedasanationwithachallengetobuildfortomorrow.Thestrategicandcommercialrewardsofmeetingthischallengewillbesurpassedonlybytherewardsofimprovedqualityoflifeforthecitizensofanincreasinglyglobaleconomy.
![Page 39: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/39.jpg)
Page10
1IntroductionTheprominentroleofconstructioninthewealthofnationsisreadilyapparentinthebuildingsandinfrastructurefacilitiesthatenablemuchofmodernlife.Leavingasidetherelatedindustriesthatproduceandtransportthematerialsandequipmentofconstruction,newbuildingaccountsforroughly9percentoftheGrossDomesticProduct(GDP)oftheUnitedStatesandemploys5.5millionpeople,makingtheindustrythelargestsinglecomponentinnationalaccounts.ComparisonsamongnationsshowthatconstructiontendstoaccountforanincreasingshareofGDPaspercapitaincomesriseinearlystagesofgrowth,anddominatesinvestmentincountriesatalllevelsofdevelopment.
Giventhescaleofconstructionanditsassociateddesign,materials,andequipmentbusinesseswithintheU.S.economy,thereisasurprisinglackofdetailedstatisticsanddefinitiveanalysisofthissector'sstructure,performance,andcontributiontothenation'sgrowthanddevelopment.Knowledgeoftheconstructionindustryinothercountriesispoorerstill.
TheCommitteeontheInternationalConstructionIndustryfounditnecessarytorelyonitsmembers'experienceandaccountstoldbyotherstosupplementthemeagerbaseofstatisticaldata.Thecommitteefoundinsomecasesthattheseaccountstaughtinformativelessonsandmadethemthebasisforthecasestudiespresentedherein.
![Page 40: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/40.jpg)
Page11
Thecommittee'sworkrevealsapicturethatissomewhatimpressionisticinnature,basedonacombinationoftheselimitedstatisticaldataandcasestudies.Thecommitteefound,nevertheless,aneedforchangesineducation,supportforresearch,andenthusiasmforinnovationintheconstructionindustry.Thesechangesareneededtoenhanceboththenation'sabilitytocapturemajornewopportunitiesfromtechnologicalprogressthatseemslikelytoalterinbasicwaysthephysicalinfrastructureofsociety,anditscompetitivestrengthinanincreasinglyglobalmarketforconstructionservices.
TheScaleofWorldConstruction
Estimatesbasedongovernmentalrecordsindicatethattheworldinvestsabout$1,430billioneveryyearintheconstructionofhousing,otherbuildings,civilworks,andutilities(highways,waterandsewer,railroads,telephones,gas,andelectricity),oralittlemorethan10percentoftheworld'sGDP(seeTable1).Actualamountsmaybeevengreater.Constructionisthelargestindustryintheworld.
Asindividualcountriesdevelop,risingpercapitaincomesspurgrowingdemandformoreandbetterbuildingsandinfrastructure,andconstructionaccountsforanincreasinglysignificantshareofnationaleconomicactivity.Someevidencesuggeststhatconstruction'sshareofeconomicactivitymaystabilizeordeclineathigherlevelsofdevelopment,butthelevelremainshigheveninthemostadvancedcountry.TheU.S.annualdomesticconstructionvolumeof$330billionto$390billionisabout25percentoftheworldwidetotal.
Muchoftheworld'sconstructionisdonebysmall-scalebuilderswhoproducesinglehousesormaintainroadsoversmallareas,usingverytraditionalbuildingmaterialsandmethods.Onlyperhapsone-fifthofthetotalvolumeofconstructionisconsistentlycarriedoutbylarge-scaleorganizationsusingmoremodernmethods,aswellastraditional
![Page 41: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/41.jpg)
methodsthatremainpredominantincurrentpractice.
Muchofthissubmarketisinturnlimitedbypoliticalandeconomicreasonstodomesticfirmsorgovernmentagenciesusinglocalmaterials,labor,anddesignandmanagementservices.Totalconstructionundertakeninafullyinternationallycompetitivemarketin1986exceeded$74billion,orabout5percentoftheworld'sconstruction(seeTable2).
Thismarket,whileonlyafractionoftotalconstruction,isneverthelessabigbusinessanditisdominatedbyarelativelyfewmajor
![Page 42: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/42.jpg)
Page12
TABLE1ComparativeStatisticsonBuildingasaComponentinNationalEconomies,1984
BuildingValue
CountryGDPa($million)
PercentageofGDP
Total($million) Source
Low-IncomeEconomies
Ethiopia 4,270 3.0 128Bangladesh 12,320 5.0 616 UNMali 980 3.0 29Zaire 4,700 3.0 141BurkinaFaso 820 3.0 25Nepal 2,290 7.0 160 UNBurma 6,130 3.0 184Malawi 1,090 3.0 33Niger 1,340 3.0 40Tanzania 4,410 3.0 132 UNBurundi 1,020 4.0 41 UNUganda 4,710 3.0 141Togo 420 8.0 34 UNCentralAfricanRepublic 460 4.0 18India 162,280 5.0 8,114 UNMadagascar 2,380 4.0 95Somalia 1,364 4.0 55Benin 900 4.0 36 UNRawanda 1,600 4.0 64China,People'sRepublicof 281,250 4.0 11,250Kenya 5,140 5.0 257 UNSierraLeone 900 4.0 36Haiti 1,820 4.0 73
![Page 43: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/43.jpg)
Guinea 2,100 4.0 84Ghana 4,485 4.0 179SriLanka 5,430 7.0 380 UNSudan 6,730 4.0 269Pakistan 27,730 5.0 1,387 UNSenegal 2,390 4.0 96Afghanistan 3,000 5.0 150 UNBhutan 3,000 4.0 120Chad 360 4.0 14Laos,People'sDemocraticRepublicof 765 4.0 31Mozambique 2,000 4.0 80Vietnam 18,100 4.0 724
Total,Low-incomeeconomies 25,216
Middle-IncomeEconomiesMauritania 660 4.0 26Liberia 980 7.0 69 UNZambia 1,060 4.0 42 UN
Continued
![Page 44: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/44.jpg)
Page13
TABLE1(Continued)
BuildingValue
CountryGDPa($million)
PercentageofGDP
Total($million)Source
Lesotho 360 4.0 14Bolivia 3,610 5.0 181 UNIndonesia 80,590 6.0 4,835 UNYemenArabRepublic 2,940 5.0 147Yemen,People'sDemocraticRepublicof 792 4.0 32Coted'Ivoire 6,690 9.0 602 UNPhilippines 32,840 19.1 6,272 CICAMorocco 13,300 5.0 665Honduras 2,840 5.0 142 UNElSalvador 4,070 5.0 204 UNPapuaNewGuinea 2,360 5.0 118Egypt,ArabRepublic 30,060 5.0 1,503 UNNigeria 73,450 5.0 3,673Zimbabwe 4,580 3.0 137 UNCameroon 7,800 5.0 390Nicaragua 2,830 3.0 85 UNThailand 41,960 5.0 2,098 UNBotswana 990 5.0 50 UNDominicanRepublic 4,910 5.0 246Peru 18,790 2.0 376 UNMauritius 860 5.0 43CongoPeople'sRepublic 2,010 5.0 101Ecuador 9,870 7.0 691 UNJamaica 2,380 5.0 119Guatemala 9,400 5.0 470Turkey 47,460 5.0 2,373 UN
![Page 45: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/45.jpg)
CostaRica 3,560 5.0 178Paraguay 3,870 5.0 194Tunisia 6,940 5.0 347 UNColombia 34,400 4.0 1,376 UNJordan 3,430 12.0 412 UNSyrianArabRepublic 15,930 5.0 797 UNAngola 4,000 5.0 200Cuba 14,900 6.0 894KoreaDemocraticRepublic 23,000 6.0 1,380Lebanon 5,300 6.0 318Mongolia 1,200 5.0 60
Total,Middle-incomeeconomies 31,857
Upper-Middle-IncomeEconomiesChile 19,760 6.0 1,186Brazil 187,130 5.0 9,357 UNPortugal 19,060 11.4 2,173 CICA
Continued
![Page 46: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/46.jpg)
Page14
TABLE1(Continued)
BuildingValue
CountryGDPa($million)
PercentageofGDP
Total($million) Source
Malaysia 29,280 6.0 1,757Panama 4,540 6.0 272Uruguay 4,580 5.0 229 UNMexico 171,300 15.5 26,552 CICAKorea,Republicof 83,220 9.4 7,789 CICAYugoslavia 38,990 11.0 4,289 UNArgentina 76,210 6.0 4,573SouthAfrica 73,390 6.0 4,403Algeria 50,690 6.0 3,041Venezuela 47,500 7.0 3,325 UNGreece 29,550 9.0 2,660 UNIsrael 22,350 10.0 2,235 UNHongKong 30,620 7.0 2,143TrinidadandTobago 8,620 8.0 690 UNSingapore 18,220 23.9 4,355 CICAIranIslamicRepublic 157,630 5.0 7,882Iraq 27,000 5.0 1,350
Total,Upper-middle-incomeeconomies 90,259
High-IncomeOilExportersOman 7,680 8.0 614 UNLibya 30,570 11.0 3,363 UNSaudiArabia 109,380 15.0 16,407 UNKuwait 21,710 3.0 651 UNUnitedArabEmirates 28,840 10.0 2,884 UN
Total,High-incomeoilexporters 23,919
IndustrialMarketEconomies
![Page 47: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/47.jpg)
Spain 160,930 8.0 12,874 UNIreland 18,270 9.0 1,644Italy 348,380 11.4 39,715 CICANewZealand 23,340 4.0 934 UNUnitedKingdom 425,370 8.5 36,156 CICABelgium 77,630 7.0 5,434 CICAAustria 64,460 28.0 18,049 CICANetherlands 132,600 13.0 17,238 CICAFrance 489,380 11.3 55,300 CICAJapan 1,255,006 23.3 292,416 CICAFinland 51,230 10.0 5,123 CICA
Continued
![Page 48: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/48.jpg)
Page15
TABLE1(Continued)
BuildingValue
CountryGDPa($million)
PercentageofGDP
Total($million) Source
Germany,FederalRepublicof
613,160 14.0 85,842 CICA
Denmark 54,640 10.0 5,464 CICAAustralia 182,170 12.0 21,860Sweden 91,880 12.7 11,669 CICACanada 334,110 12.0 40,093Norway 54,720 12.0 6,566UnitedStates 3,634,600 9.0 327,114 CensusSwitzerland 91,110 14.7 13,393 CICA
Total,Industrialmarketeconomies 996,887
EastEuropeanNonmarket
Hungary 20,150 12.0 2,418 UNPoland 75,410 11.0 8,295 UNAlbania 2,700 11.0 297Bulgaria 56,400 8.0 4,512 UNCzechoslovakia 127,900 8.0 10,232GermanDemocraticRepublic
163,700 7.0 11,459 UN
Romania 117,600 10.0 11,760 UNSovietUnion 1,957,600 11.0 215,336 UN
Total,EastEuropeannonmarket 264,309
WorldTotal 13,027,922 1,432,447
aGrossDomesticProduct.Note:DataarefromUnitedNations'(UN)reports,theSwedishindustryreport(CICA),andtheU.S.CensusBureau.
![Page 49: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/49.jpg)
firms.Morethanhalfofthework(indollarvolume)isdonebythetop30contractors.IntheUnitedStates,whichmayhaveahigherproportionofmoderatelysizedfirmsthanothercountries,200firms(about1.7percentofallU.S.constructors)conductabout85percentofthebusiness.
TheChangingMarket
Theneedforconstructionofnewfacilitiescombinedwithpoorlydevelopeddomesticconstructionindustrieshasmadedevelopingcountriestheprimarylocusofinternationalcompetitioninthepast.
![Page 50: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/50.jpg)
Page16
TABLE2SummaryofEstimatedMarketStructureforInternationalConstruction
MarketSegmentAnnualAmount(U.S.$billion)
Estimatedtotalconstructionworldwide 1,430aSmallscaleandrestricted 1,140b
Modernmethodandmanagement 290bRestrictedorcommunistblocprojects 216b
Internationalconstructionmarket 74cForeigncontractsoftop30constructors 44c
Remaininginternationalconstructionmarket
30b
aFromUnitedNations;dataandsurveys.(SeeTable1.)bCommitteestaffestimates.cInternationalconstructionweek,EngineeringNewsRecord,July20,1984.
Theeconomicupheavalofoilandcommoditypricefluctuationsandgrowingdebtburdens,however,hasslowedconstructiongrowthfromtheaverageof6percentannuallybetween1967and1976to1.5percentin1983.Constructionoflargeandtechnicallycomplexprojectshascometoavirtualstandstillinmanycountries.Somecountriesarebeginningtoshowsignsofslowrecovery,butwithoutquestiontheinternationalmarketremainsconstricted.
Atthesametime,largernumbersoffirmsarecompetinginthis
![Page 51: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/51.jpg)
limitedmarket.Thesefirmsfallintofourcategories.First,somefirms(typicallyBritish,French,Dutch,andScandinavian)havelongexperiencewithconstructionexportandextensivecontactsthroughoutdevelopingcountries.Thisexperiencehasbeenfosteredlargelybyeconomicandpoliticalopportunity.Asaresultofformercolonialties,forexample,theFrenchconstructionindustryhasspecialaccesstomanycountriesinWestAfricaandtheMiddleEast,andtheBritishconstructionindustrytothesubcontinentofAsia,SoutheastAsia,theMiddleEast,andEastAfrica.TosomedegreetheUnitedStateshasenjoyedsucharelationshipwithSaudiArabia.Themarketstheserelationshipsprovidearesensitivetochangingeconomicandpoliticalenvironments,butgivethesefirmsadistinctcompetitiveadvantage.
![Page 52: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/52.jpg)
Page17
Thesecondcategoryincludesfirmsbasedinindustrializedcountriesthathavenotpreviouslybeensubstantialexportersofconstruction,butinthepast10to15yearshaveinitiatedeffortstoexporttheirsurplusdomesticcapacity.IncountriessuchasItalyandJapan,reconstructioneffortsfollowingWorldWarIIcreatedextensiveconstructionindustriestomeetdomesticneeds.Suchdemandisnowdroppingoffsharply,andconsiderablesurplusconstructioncapacityexistsintheirdomesticindustries.CompaniesfromtheseindustrializedcountriesareoperatingunderconditionssimilartothoseofAmericanfirms.Theyhaveahighlydevelopedtechnologybase,theyhavesophisticatedmanagementandtechnologyproducts,theirfinancingcapabilityisconsiderable,andtheirarchitecturalandengineeringfeesarecomparabletothoseoftheUnitedStates.Thenatureofthecompetitionamongthesecountriesisbasedonthequalityoftechnologicalabilityandtheadequacyoffinancing.ScheduledremovaloftradebarriersamongnationsoftheEuropeanEconomicCommunity(theEEC,orCommonMarket)willgivethesefirmsadomesticmarketcomparabletothatoftheUnitedStates,andcompetitionmaybeintensified.
Firmsbasedinnewlyindustrializedcountries,suchasKorea,Brazil,Taiwan,Turkey,India,andthePhilippines,constituteathirdformofcompetition.Thesecountrieshavedevelopedconstructioncapacityasanelementoftheirnationaleconomicplanningandhaveinvestedinexportconstructioncapabilityasameansofraisingexportincome.Firmsinthesecountriesarecharacterizedbyadevelopingbutlimitedtechnicalcapacityandbyrelativelylowwages.Advancedtechnologyistypicallyavailablebylicenseorotherarrangement.However,theirfundamentalbasisforcompetingininternationalmarketsisessentiallylowprice,bothforconstructionlaborandforprofessionalservices.Managementskillsandtechnologicalcapabilityareincreasinginthesecountriesataveryrapidrate.Therearenowfewprojectsuponwhich
![Page 53: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/53.jpg)
thenationalconstructionindustriesofthesecountriescannotbidcompetitively.However,wheresophisticatedtechnologyisrequired,therecontinuestobeastrongincentivetoinvolveEuropean,Japanese,orU.S.contractors.
Firmsbasedinthedevelopingcountriesconstituteafourthgroupofcompetitors,buttheycurrentlydonothavethecapabilitytoposeaseriouscommercialthreatinworldmarkets.However,inmanydevelopingcountriesemphasisisbeingplacedonthedevelopmentofabasiclocalconstructionindustryforimportsubstitution.This
![Page 54: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/54.jpg)
Page18
emphasisreduceshardcurrencyexpenditureforgoodsandcommoditiesthatcanbeprovideddomestically,andinmanysuchcountrieshasprovidedavehicleforgradualincreaseintechnologicalcapabilityandlaborskills,andinvestmentinindustrialcapacity.Inthesecountriesthereisoftenastrongefforttoprotectthisdomesticindustry(organizationssuchastheWorldBankhaveinstitutionalizedapolicypreferenceforutilizingthedevelopingcountry'sownsourcesofconstruction).Manydevelopingcountriesthatpreviouslyprovidedopportunitiesforforeignconstructioncompaniesarenolongeropentotheinternationalmarket.
WhilethenumberofU.S.firmsthatcompeteinthisglobalmarketissmallcomparedtothetotalnumberoffirmsinthedesignandconstructionbusiness,thesefirmsaregenerallyverylargeemployers(byconstructionindustrystandards)andarekeyplayersintheinternationalcompetition.Unlikeitsforeigncompetition,theUnitedStateshasbeenslowtodevelopnationaltradeandeconomicpoliciesinsupportofinternationalengineeringandconstruction.Inthiscountrythereisnocentralpolicy-coordinatingagencyforconstruction,incontrastwithmuchoftherestoftheworld,wherethereisacabinet-levelofficerwhoheadsaministryofconstructionoritsequivalent.
Domestically,theconstructionindustryislargelydecentralizedandgenerallyinadefensivemode.Consolidationsaretakingplaceacrosstheindustry,withforeigninvestorsbuyinglargeinterestsinsomefirms,andotherfirmsareclosingshop.Thedesigncommunitynowfindsmergersandacquisitionswithfirmsfromothercountriescommonplace,especiallyforthosefirmsthatbecamevisiblebycompetingintheinternationalarena.Whilesomecompaniesestablishedleadershipthroughcontroloftechnologyvaluabletomanufacturingfirmsthatareclientsforconstruction(seeCaseStudy1),mostU.S.internationalconstructioncompanieshavegrownfrom
![Page 55: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/55.jpg)
aninitialspecializationinoneofthefollowingmarketsegments:electricpowergeneratingfacilities,highways,mining,refineryfacilities,andlargedams.Regardlessoftheirorigins,however,thesefirmsmaintainedleadershipthroughtechnologydevelopmentsandmanagementskillsthatareincreasinglysharedbycompetitors.
![Page 56: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/56.jpg)
Page19
CaseStudy1:TechnologicalAdvantagePaysOff:M.W.KelloggandtheOilandPetrochemicalIndustry
U.S.constructionfirmshavereapedoverseveraldecadesthebenefitsofthenation'stechnologicalleadershipinindustry.SomeU.S.builderssimplyfollowedtheirlong-timedomesticmanufacturerclientswhomovedabroadinaquestforlargermarketsandsupplysources.Otherfirmshaveplayedamoreactiveroleindevelopingthetechnologythatopenedmarketopportunitiesincountriesseekingtoexpandtheirindustrialbases.
Sinceitsformationinthefirstyearofthiscentury,theM.W.KelloggCompanyhasreliedonexperiencedmechanicalandchemicalengineeringtechniquesandlaboratoryresearchanddevelopmenttogrowasanengineeringcontractorbycreatingandimprovingnewprocessesfortheoilandpetrochemicalindustry.Asmallpipefabricationandchimneybusinesssoonevolvedintopowerpiping.Thecompanybeganexperimentingwithanewhammer-forgeweldingtechniqueitlearnedfromGermanindustry,andsubsequentdevelopmentworkimprovedthemethodsused,providingthebasisforentranceintothepetroleumfield.
ApproachedbyRichardFlemingin1919todevelopanewoilcrackingmethod,Kellogghiredtheinventoranddevelopedhisprocess.Flemingunitswereinstalledatseveraloilrefineryunits,providingmuchhighergasolineyieldsthanwithconventionalequipment.
Intheearly1920soilrefinerieswereconvertingonly30percentoftheircrudeoiltogasoline,andtheheavydemandformotorgasolinedictatedaneedforhigherrecovery.Theanswercamein1924withtheintroductionbytheCrossbrothersofanewhigh-pressurethermal
![Page 57: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/57.jpg)
crackingprocess.Underaspecialagreement,Kelloggwasbroughtintohelpdeveloptheprocess,andforthispurposealaboratorywassetupin1926.Oneofthefirstpetroleumlaboratoriesinthecountry,itsstudiesresultedinthesuccessfulcommercializationoftheCrossprocess.Inthe10yearsfollowing,Kelloggbuiltmorethan130CrossunitsintheUnitedStatesandabroad.TwentyCrossunitswerebuiltoverseas:fiveinArgentina;threeinEngland;twoeachinJapan,Poland,andtheDutchWestIndies(Aruba);andoneeachinBrazil,France,Indonesia,Italy,Mexico,andPortugal.
TheCrossprocessdevelopmentwasfollowedbyfurtherdevelopmentofthermalprocessingtechnology.By1939some45percentofthecrudeoilcouldbeconvertedtomotorgasoline.
![Page 58: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/58.jpg)
Page20
Tostudythethermalcrackingprocessinmoredetail,Kelloggsetupanewlaboratoryin1931especiallyforthatpurpose.Thisresearchworkandtherelatedprocessandmechanicalengineeringdesignproducedthecombinationunitconceptthatmadeanimportantcontributiontothermalcrackingprogress.Thisdesignwasafirststepinprocessintegrationforimprovedeconomyandgaveanearlyimpetustocontinuousplantprocessdesignandlarger,moreefficientoilrefineries.
Incooperationwithmajoroilcompanies,Kellogg'sknowledgeofcatalyticprocessinggrewtowardamajoraccomplishmentthetechnicaldevelopmentoffluidcatalyticcrackingofgasoils.PreliminarystudiesinthisfieldwereapartofanexploratoryresearchprogramcosponsoredwithStandardOilofNewJersey,StandardOilofIndiana,andtheTexasCompany.Aseparatelaboratorywasestablishedforthiswork,andby1938Kellogghadinoperationacontinuousfluidmovingbedcatalyticcrackingpilotplantandbegananexchangeofinformationthatledtothecommercializationoftheprocess.TheoriginalideaforusingapowderedcatalystcamefromStandardOilofNewJersey,andKelloggturneditsattentiontoplacingthisuniqueconceptinpracticalapplication.
In1941fluidcatalyticcrackingwasdraftedintowarservicetosatisfythegreatneedforaviationgasolinebeforetheprocesshadgonebeyondthepilotplantstage.Kelloggplaceditsfirstfluidunitinoperationin1942forStandardOilofLouisianaatBatonRougeandhad20unitsinproductionwhenthenation'saviationgasolineprogramendedin1944.TheseearlyunitswerebuiltessentiallyfromKelloggpilotplantdata.
Parallelingthepioneeringactivitiesinthepetroleumareaweretechnicalcontributionsinthefieldofcryogenicsandgasprocessing.Thisbeganin1937withastudyonoxygengenerationtobeusedina
![Page 59: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/59.jpg)
processproducinghydrocarbonliquidsfromcoal.ThisearlyresearchanddevelopmentworkledtotheconstructioninSouthAfricaoftheworld'sfirstsuccessfullarge-scaleplantproducingsyntheticoilandgasfromcoal.
Theseresearchandengineeringactivitiesprovidedstrongtechnicalpositionsingasprocessing,syntheticfuels,andethyleneproduction.TheextensivebasicworkcarriedonthroughtheyearshasprovidedalargeshareofKellogg'sdomesticandinternationalbusinessoverthepastseveraldecades.
Since1975whenKelloggwaseighteenthontheEngineeringNewsRecord(ENR)annuallistof400contractors(theENR400)witha
![Page 60: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/60.jpg)
Page21
totalcontractvolumeof$1billion,Kellogghasincreaseditsbusinessvolumesubstantially.ThecompanyheadedthelistoftheENRTop250InternationalContractorsfor1984,1985,and1986,withtotalcontractvolumesintherangeof$10.9billion(1984)and$6.9billion(1986).Theforeigncontractvolumeasapercentageofthetotalduringthesethreeyearswas60to80percent.
Thisimprovementinbusinessvolumeisbelievedtobelargelyattributabletothecompetitiveedgegainedthroughtheachievementofstrongtechnicalpositionsinseveralproprietaryprocessessuchassyntheticammonia,ethylene,andliquifiednaturalandpetroleumgasprocessing.TheseprocessesweredevelopedandimprovedovermanyyearsthroughthecontinuingactivitiesinKelloggresearchanddevelopmentlaboratoriesandchemicalandmechanicalengineeringgroups.Certainlytheproprietarypositionintheseprocesseshascontributedinlargemeasuretothehigh-percentagevolumeofinternationalbusiness.
PerhapsKellogg'smostimpressivetechnicalachievementwasthemorerecentdevelopmentandcommercializationofaradicallynewprocessplantthatmakespossibletheproductionofammoniainlargequantitiesatsignificantlyreducedcost.Thenewapproachincorporatedearlierprocessandequipmentdesigndevelopmentssuchashighersteamreformingpressure,lowerammoniasynthesispressure,andtheuseofsteam-drivencentrifugalcompressorsinsteadofreciprocatingcompressorsinallmajorservices.Allofthesedesigninnovationsresultedingreatlyimprovedenergyefficiency.Operatingcostswerereducedappreciablybygeneratingsuper-heatedsteamatelevatedpressuresandusingthesteaminaseriesofefficientextractionstepsinvolvingbothprocessusersandsteamturbinedrivesforallmajorpumpsandcompressors.
Thefirsttwoplantsofthenewlarge-scalesingle-trainammoniaplant
![Page 61: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/61.jpg)
designweresoldtoImperialChemicalIndustries(ICI)inEngland.Withinoneyear,10more600-and1,000-ton-per-dayplantswereorderedinEurope,includingathirdduplicate1,000-ton-per-dayplantforICI.IntheUnitedStates,a600-ton-per-dayplantwasplacedinserviceinJuly1965forMonsantoinLouisiana,andwithinoneyearthreemorelarge-scaleplantswerebroughton-streaminLouisianaandMississippi.Theseplantscutthecostofproducingammoniainhalfandsentproducersoffonamajorroundofnewplantexpansionworldwide.
Between1963and1983theKelloggworldwiderecordinlarge-scaleammoniaplantsnumbered132,ofwhich83areinproduction
![Page 62: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/62.jpg)
Page22
outsideNorthandSouthAmerica.Theseplantsnowsupplymorethanhalftheworld'ssyntheticammonia,theprincipalbasematerialformostfertilizers.
AsignificanttechnicalandcommercialbreakthroughwasalsomadeinthePeople'sRepublicofChinathroughthesaleofKellogg'sammoniaandureatechnologyintheearly1970s.FollowingthesigningofthefamousShanghaiCommuniqueof1972,Kelloggsetinmotionamarketingprograminthefalloftheyear.China'sneedfornitrogenwaswellknownandKelloggvolunteeredtosubmitaproposal.Theinitialproposalwasrejectedbecauseofsomeopencostfeatures,andalumpsumproposalwaslateracceptedforoneammoniaplant.Thisagreementwasfollowedbyasurprisingrequestfortwomoreplants,andacontractforthethreeplantswassignedinJune1973.
Concurrently,theChinesewerenegotiatingwithaJapanesefirmforammoniaplantsusingKelloggtechnology.TheJapanesereceivedcontractsfortwoplants,providingtheChinesewithanexcellentbenchmarkinnegotiationswithKellogg,butatthesametimegivingthecompanyadditionalrevenueforammoniadesignknow-how.
AnevengreatersurprisefollowedwithaChineserequestforfivemoreammoniaplants,andcontractsfortheseplantsweresignedinNovember1973.Ataboutthesametimeastheammoniaplantnegotiationswereunderway,Kellogg'sDutchcompanycompletedcontractnegotiationsforeightureaplantsthatusetheammoniaandcarbondioxideproducedintheammoniaplantsateightdifferentsitesinChina.ThecontractvalueofKelloggammoniaandureaworkinChinarepresentedabout$500millioninbusiness.
![Page 63: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/63.jpg)
![Page 64: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/64.jpg)
Page23
2U.S.ConstructioninInternationalCompetitionTheU.S.constructionindustryhasfaredpoorlyinthisdifficultclimateofstagnantmarketsandgrowingcompetition.AmoredetailedlookatthestructureoftheU.S.industryandsomeofitsprincipalcompetitorsininternationalmarketsrevealserosionoftraditionaltechnologicaladvantagesandfailurestokeepupindevelopingtheskillsneededforcompetition.
AvailabledataindicatethatU.S.constructionfirmsin1986captured$22.6billioninnewcontracts,almost31percentoftheinternationalexportmarket(seeTable3).Thisamountrepresentsadeclineofmorethan40percentinsalesdollarssince1982.
U.S.designfirms(engineers,architects,andconstructionmanagerswhosemarketsaredrivenbyconstruction)workinginternationallyoftenprovidesomeadvantageforU.S.constructionfirms.Thesefirmsgarnered$917.8millionin1986billings,about26percentofthemarket(seeTable4).Again,thesefiguresrepresentasharpdeclinefrom1982,whenU.S.firmscaptured36percentofamarketmadefatbythespendingofprosperousoil-producingcountries.
TheU.S.Industry
ThesmallnumberofU.S.firmscompetingintheglobalmarketaregenerallyverylargeemployers(byconstructionindustrystandards)andarekeyplayersintheinternationalcompetition.
![Page 65: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/65.jpg)
Page24
TABLE3InternationalConstructionShares,1986
NationofContractor
NumberofFirms
TotalAwards$Billion Percentage
American 43 22.6 30.6Japanese 29 9.4 12.7Korean 14 2.6 3.5European 126 33.7 45.5Italian 35 7.4 10.0French 18 7.1 9.6British 17 7.0 9.5German 17 5.5 7.5Yugoslavian 6 1.4 1.9Swiss 5 1.3 1.7Dutch 7 1.1 1.5Other 21 2.9 3.9
Turkish 9 2.2 3.0Allother 29 3.4 4.7
Total 250 73.9 100.0
Source:EngineeringNewsRecord,July16,1987.
Note:Dataarebasedonvoluntaryresponsestoasurvey.
In1983,U.S.firmsinvolvedininternationalcontractingemployed45,000Americansand99,000peopleofothernationalities.
Domestically,theconstructionindustryconsistsofmanysmallfirmsthatrespondtoexternallydetermineddemand.Consolidationsaretakingplaceacrosstheindustry,withforeigninvestorsbuyinglargeinterestsinsomefirms,andstillotherfirmsareclosingshop.
Somepeoplebelievethattheseconsolidationsandmergersarean
![Page 66: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/66.jpg)
attemptbythemarketplacetosorttheindustryintotwobroadcategories:theall-purposefirms(notunliketheirJapanesecounterparts),andthespecialized''boutiques"(small,buthighlyspecialized).Overlyingthisrestructuringoftheindustryisaconstantstrugglewithalitigioussocietyinwhicheachpartytoacontracthasfounditselfconfrontedinacourtoflaw.Insuchaclimate,toomanyorganizationsdevoteenergiesandmanagementstructurelargelytominimizingrisks,ratherthanbuildingnewmarketsorapplyinginnovations.
![Page 67: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/67.jpg)
Page25
TABLE4InternationalDesignShares,1986
NationalityofDesigner
NumberofFirms
ForeignBilling$Million Percentage
American 49 917.8 25.9European 106 1,958.4 55.3British 26 481.4 13.6French 15 306.3 8.6German 21 282.1 8.0Dutch 8 259.3 7.3Scandinavian 11 227.1 6.4Swiss 8 174.7 4.9Other 17 227.9 6.5
Canadian 14 204.0 5.8Japanese 12 220.5 6.2Korean 4 54.0 1.5Allother 15 185.1 5.3
TOTAL 200 3,539.9 100.0
Source:EngineeringNewsRecord,August6,1987.
Note:Dataarebasedonvoluntaryresponsestoasurvey.
AShortHistoricPerspective
UntiltheIndustrialRevolution,constructionremainedlittlechangedfromRomantimes.Stone,brick,andtimberwereusedforbuildings,andinfrastructurewasrudimentary.
Bytheendofthenineteenthcentury,a"secondgeneration"ofessentiallyurbaninventions(structuralsteelframes,theelevator,electricalsystems,sewerandwatersystems,indoorplumbing,centralheating,thetelephone,theautomobileandhighway,andthesubway)
![Page 68: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/68.jpg)
wasreadyforworldwidediffusionandinstallation.Mostoftheworld'sconstructionindustryknowntodaycameintobeingtointegratetheseinventionsintoindividualcommunities.
AfterWorldWarIandthesubsequentboomandbustperiodsofthe1920sand1930s,constructioncapabilitiesincreasedtoincludethebuildingofnationalhighways,largereclamationprojects,anddamsforwatercontrolandpowerproduction.TheU.S.ArmyCorpsofEngineersandtheBureauofReclamationplayedmajorrolesinshapingandmanagingsuchprojects.Asthecountrymaturedsodidtheindustriesofconstruction.
AttheendofWorldWarII,thephysicalrestructuringofthe
![Page 69: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/69.jpg)
Page26
world'scities,manyofwhichhadbeendestroyedordamagedbythewar,wasaidedbysuchmajorgovernmentprogramsastheMarshallPlanandPresidentHarryTruman'sPointFourprogramforThirdWorldcountries.ThedevastatedurbanareasoftheEuropeancontinent,theSovietUnion,theMiddleEast,NorthAfrica,manyislandsinthePacific,China,Korea,andJapanweremuchinneedof"construction"and"reconstruction."TheUnitedStatesaloneretainedrelativelyundamagedphysicalfacilities,aneconomicbase,andtheresourcestoaidinthisglobalprogram.Duringthewar,theUnitedStateshadcreatedtheimpressiveorganizationalcapacityofthemilitaryconstructionarmoftheArmyCorpsofEngineersandtheNavySeabees.Withthedevelopmentofmultinationalcorporations,whichbecameclientsforconstructionprojectsinothercountries,afurtherincentivewasaddedforotherU.S.designandconstructionfirmstomoveintotheinternationalarena.
A"military"componenttotheMarshallPlanincludedtheplacementofU.S.militarybasesonforeignsoiltocountertheperceivedSovietthreat.MostofthephysicalinfrastructureforthesemilitarybaseswasoriginallybuiltbytheengineeringelementsoftheU.S.armedforces,whoweresoonsupersededbyanumberofthelargerandmoreaggressivelyprofit-motivatedprivatesectordesignandconstructionfirms.U.S.engineeringandconstructionfirmswereemployedbyEuropeanindustrytoundertakemuchofthereconstructionworkfortheprivatesectoraswell.Inturn,aparalleleffortwasbegunbyEuropeanfirmswhowerereenteringthemarketfollowingaperiodofdormancyduringthewar,andwhowereadoptingmanyofthetechniquesandmuchoftheequipmentoftheirU.S.counterparts.
Thispatternpersistedthroughoutthe1950sand1960s,inbothmilitaryandciviliansectors,firstinKoreaandtheninVietnam.ThephenomenalgrowthoftheSouthKoreanconstructionindustrycanbeattributedinlargeparttothecloseworkingrelationshipbetweenthe
![Page 70: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/70.jpg)
CorpsofEngineersanditsSouthKoreancounterpart.TheKoreanswererapidlearnersandwithinafewyearshadputtogetheranumberoflargeandcapableconstructioncompanies.ThesecompaniesbecameespeciallyprominentandsuccessfulinthelatterdaysoftheconstructionboominSaudiArabia,andbecameaverylucrativesourceofforeignincomeforKorea.Toamuchlesserextent,thesamepatternwasfollowedinJapanandTaiwan.
ThecaseofSaudiArabia,andtoalesserextentotheroil-producingnations,inthe1970sisaspecialoneandnotlikelytoberepeated.Oilandoilpricingmadeavailableanunprecedented
![Page 71: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/71.jpg)
Page27
amountofcapitaltoSaudiArabiaanditsneighborsforimportsandconstructionprojects.TheSaudishadenjoyedacloserelationshipwiththeUnitedStatessincetheearlyphasesofAramcoandduringWorldWarII.BecauseSaudiArabiadidnothaveanyoftherequisitetechnologicalcapabilityorprojectmanagementexpertise,itsnationalleadersturnedtotheUnitedStates.TheresultwasmajorparticipationbyU.S.engineeringandconstructionfirmssuchasBechtel,Fluor,andRalphParsonsincontractsforplanning,civilandmechanicalengineeringdesign,andsomeconstructionmanagement.TheU.S.ArmyCorpsofEngineers,familiarwithlarge-scaleprojects,wasdesignatedtheoverallprojectmanagerformanymilitary-relatedprojects,workingverycloselywiththeSaudiArabianauthorities.PracticallyalldesignandengineeringprojectswereawardedtoU.S.designfirms,sinceU.S.specificationswerebeingused.Theconstructionprojectswereopentointernationalcompetition.Earlyinvolvementinaprojectusuallyincreasestheoddsoflaterworkforthedesignandengineeringteam(seebox),butAmericandesignteamscannotensurethattheconstructionphasewillgotoAmericanfirmswhenpublicfundingisused.Oncetheactualconstructionisunderway,theproductsusedinthebuildingcanbepurchasedfromacountryotherthanthehomecountryofthedesignteam.
InthepastfewyearstheTradeDevelopmentProgramwithintheU.S.StateDepartmenthasprovidedcriticalfundingforalargenumberoffeasibilitystudiesbyU.S.designandconstructionfirms.Thefinancialsupportisgiventothosefirmswhoseprojectsshowtheprospectofamajorreturntotheeconomyiftheyobtainthecontract.
MarketStructure
Construction,thelargestindustryintheUnitedStatesandthemajoremployer,isarelativelydisaggregatedandvolatilemarketthatrespondstointerestratesandlevelsofgeneraleconomicactivity.The
![Page 72: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/72.jpg)
industry's1.2millionfirmsundertakemorethan$360billionincontractseachyearandemploy5.5millionworkers.Whenthesuppliersofmaterials,machinery,insurance,anddesignservices,andtheoperationandmaintenanceofallconstructedfacilitiesareaddedtothistotal,theoverallindustryaccountsfor17percentoftheU.S.workforce.Constructionhastraditionallymadeupsome55to65percentofthenation'scapitalinvestment.
![Page 73: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/73.jpg)
Page28
PROJECTCYCLEFORMAJORCONSTRUCTIONPROJECTS
Aconstructionprojectpassesthroughthreerelativelydistinctphases:feasibilityanalysis,designandengineering,andactualconstruction.Constructionmaterialsandlaboraccountforabout85percentoftypicalprojectcosts,withthebalancebeingprofessionalservices.Asaruleofthumb,feasibilitystudiesareabout1percentofthetotalprojectcost,designandengineeringfeesareabout10percent,constructionmanagementcanrunbetween2and6percent.Operationandmaintenancecostsoverthe20-to50-yearlifeofthefacilitycanapproachseveraltimestheproject'sinitialcosts.
Whileclearlysmallinscope,feasibilitystudiescanprovideaninvaluableopeningwedgeforengineeringcontractstofollow.BoththeWorldBankandtheInter-AmericanDevelopmentBankprovidefor"continuityofwork."Underthispolicyaclientcanawardthedesigncontracttoafirmasafollow-upcontracttothefeasibilityphasewithoutreopeningthecontractingprocessiftheclientissatisfiedwiththeearlierwork.
Thus,thelinkagebetweenfeasibilitystudiesanddesignworkcanbeexploitedasamarketingtool.Feasibilitystudiescanbeunderpricedorfinancedatgeneroustermstolandthedesigncontract.Consultingengineersmaybefacedwiththechallengeofmaintainingobjectivitywhentheoutcomemayinfluencefutureopportunitiesforwork.
Oncethefeasibilitystudyhasbeenacceptedbytheclient,andveryoftenbythefinancingorganization,thedesignfirmischosen.Giventhenatureoftheproject,thedesignfirmmaybe
![Page 74: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/74.jpg)
moreheavilyorientedtowardengineeringthanarchitecture,orviceversa.Oftenthefirmhasbothqualifications.Alsoatthisstage,theprojectmanagementorganizationmightbechosendependingontheproject'scomplexityandtheclient'sdesires.
Duringthedesignphase,thedetailedworkingdrawingsandspecificationsarepreparedforcontractors'bids.Dependingonthecircumstances,abidders'listbasedonprequalificationsmaybeprepared.Anyfirmwiththeabilitytopostaconstructionbondwillnormallybeallowedtobidonpublicprojects.Awardofthecontractisalmostalwaystothecontractorwiththelowestprice.
Procurementofsupplies,materials,buildingcomponents,mechanicalandelectricalequipment,andconstructionlaborwillbedeterminedbyalargenumberoffactors.However,oncetheconstructioncontractisawarded,itiscommonpracticefortheconstructionfirmtoprocuretheseitemsfromsupplierswithintheirhomecountry,thuscreatingan"aftermarket"forreplacementpartsandadditionsbasedonupgradedperformance.
![Page 75: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/75.jpg)
Page29
TABLE5U.S.ConstructionMarketbySector,1985(in$billionsofnewconstruction)
MarketSectorsFederalInformationa
IndustryInformationb
Residential 159 159Officeandcommercial 60 60Institutional 10 10Hotelsandmotels 7 7Allotherprivate 8 8Subtotal 85 85
Industrial 16 54Electricpower 16 20Otherutilities 17 17Subtotal 49 91
Stateandlocalgovernment 50 50
Federalgovernment 12 12
Total 355 397
aU.S.CensusBureaudata.bConstructionIndustryInstitute(CII)adjustmentstodata,basedontheknowledgeoftheirmembers.TheCIIestimatesarelargerfortheindustrialmarketsectorandtheelectricpowersectorbecauseof"force"accounts,thatisworkdonebytheemployedstaffofindustrialfirmsandthereforenotpubliclybidorcountedincensusdatawhicharelargelybasedonrecordsofbuildingpermits.
Thedesignandconstructionindustryisorganizedaroundmarketsectorsthatarewidelydifferentintermsofthetypeofcustomer,themethodoffinancing,theworkforceused,andeventheleveloftechnology.Table5presentsacommonwayofindicatingthese
![Page 76: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/76.jpg)
marketsectors.
The"residential"(housing)designandconstructionsectorisprimarilymadeupofsmallerindependentbuilders.ThelargesthomebuildersanddevelopersintheUnitedStateshavenomorethan$2billionofthis$159billionmarket.Thebalanceofthebusinessisconductedbythethousandsoffirmswithfewerthan100employees.
ThemanufacturedhousingindustryhasgrowntocapturealargershareofthismarketsinceWorldWarII(29percentofthe
![Page 77: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/77.jpg)
Page30
marketin1980),butstillisconfinedlargelytohousingunitsmarketedatthelowestendofthepricespectrum(82percentofallhousingunitssoldforunder$50,000in1983).
ForseveralreasonsthehousingsectoroftheU.S.industryhasalmostnoexperienceininternationalmarkets:
Thesmallsizeofmostcompanieslimitsavailablefundstoexploremarketsinothercountries;
Homebuildingtechnologyisbasedprimarilyonwood-frameconstruction,whichisnotthecaseintherestoftheworld;
Housingprogramsinmostothercountriesarelargelyinfluencedbytheirgovernmentalpolicies,andarenotopentothespeculativebuildingcharacteristicoftheUnitedStates.
Thesectorstermed"officeandcommercial,""institutional,""hotelsandmotels,"and"allotherprivatework"areinfluencedbytheavailabilityofacombinationoflandandfinancingpackages.Inrecentyearsalargeamountofinvestmentcapitalfromothercountrieshasbeenplacedintothissector.Forexample,theLosAngelesTimesindicatesthat75percentofthelarge,downtownofficebuildingsinLosAngelesareforeignownedorcontrolled,whichisupfrom25percentjusteightyearsago.Aswillbediscussed,suchinvestmentsometimesbringswithitforeignconstructors.
Theheavy-constructionsector("industrial,""electricpower,"and"otherutilities")generallyinvolvestheworkoflargefirms,manyofwhichparticipateintheinternationalarena.Foreignheavy-constructionfirms,whichtendtobelargeinsize,arenowlookingtothisareaintheUnitedStatesasasourceofmarketgrowth.
Thefederal,state,andlocalgovernmentsectorsgenerallyattractfirmsthatconcentrateongovernmentworkbecauseofthespecialmarketing
![Page 78: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/78.jpg)
skills,andsometimesspecialpoliticalvisibility,neededtogainworkfromgovernmentalunits.Whilegovernmentcontractingrequiresopenbidding,itisnotalwayspossibleordesirableformanyconstructionfirmstobidonsuchwork.Architecturalandengineeringfirmsdonotbidongovernmentwork(althoughfromtimetotimethereispressurefromlegislatorstohavethemdoso),butqualifyingforconsiderationongovernmentdesignawardstakesaverydifferentbusinessstrategythangettingdesigncontractsintheprivatesector.Ingeneral,themarketsforworkwithgovernmentclientshavebecomeincreasinglyprice-competitive,reducingsomefirms'abilitytoinvestinnewtechnology.
![Page 79: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/79.jpg)
Page31
TABLE6MajorU.S.ContractorsWorkingonaGlobalBasis(in$million),1986
ConstructionContractsCompany Foreign Total
TheM.W.KelloggCompany,Houston,Texas
5,085.0 6,945.0
TheParsonsCorporation,Pasadena,California
3,823.3 6,408.9
BechtelGroup,Inc.,SanFrancisco,California
3,439.0 7,079.0
BrownandRoot,Inc.,Houston,Texas 1,818.3 3,540.6LummusCrest,Inc.,Bloomfield,NewJersey
1,760.0 2,335.0
FosterWheelerCorporation,Livingston,NewJersey
1,219.0 1,847.0
FluorDaniel,Irvine,California 985.3 6,075.3SantaFeBraun,Inc.,Alhambra,California 630.0 710.0StoneandWebsterEngineeringCorporation,Boston,Massachusetts
428.0 1,625.6
JacobsEngineeringGroup,Inc.,Pasadena,California
275.5 982.3
KaiserEngineers,Inc.,Oakland,California 267.7 945.5DillinghamConstructionCorporation,Pleasanton,California
169.3 1,121.6
Fru-ConCorporation,Baldwin,Missouri 159.5 672.5KiewitConstructionGroup,Inc.,Omaha,Nebraska
147.2 1,262.5
Note:Ofthetotalglobalconstructionmarketof$73.9billion(availableforbidsfromoutsideofclientcountry),43Americanfirmsobtained$22.6billion(30.6percent).The14firmsshowninthislisthadmorethan90percentoftheU.S.volume.
![Page 80: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/80.jpg)
MarketsegmentationandthepreponderanceofsmallfirmsprecludemuchoftheU.S.constructionindustryfrominternationalbusiness.Ofthetop400U.S.contractorslistedinEngineeringNewsRecordin1987,54areinvolvedsignificantlyininternationalcompetition.The14largestfirmsaccountformorethan90percentofU.S.constructionworkabroad(seeTable6).
Fortypercentofthe500largestU.S.designfirmsareinvolvedininternationalwork.The22firmslistedinTable7wereresponsibleformorethan85percentofthework.
ConstructionMachinery
TheUnitedStateshasabout800constructionmachineryproducers,manyofwhichexport(ormanufactureabroad)machinerytoabout150foreigncountries.TheprimarymarketsareCanada,SaudiArabia,Australia,andmanynationsinWesternEurope.Thelargeproducershavequiteextensivedealernetworksaroundtheworld,bothforsalesandservice.
![Page 81: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/81.jpg)
Page32
TABLE7PrincipalU.S.DesignFirmsPracticingonaGlobalBasis,1986
InternationalBillings Servicea
$30millionormoreLouisBergerInternational,Inc.,EastOrange,NewJersey CEDaniel,Mann,Johnson,andMendenhall,LosAngeles,California
AE
DeLeuw,CatherandCompany,Washington,D.C. EAGibbsandHill,Inc.,NewYork,NewYork EAHarzaEngineeringCompany,Chicago,Illinois CEHolmesandNarver,Inc.,Orange,California EAMetcalfandEddy,Inc.,Wakefield,Massachusetts EAMorrison-KnudsenEngineers,Inc.,SanFrancisco,California CE
Under$30millionBlackandVeatch,KansasCity,Missouri EACRSSirrine,Inc.,Houston,Texas AECampDresserandMcKee,Inc,Boston,Massachusetts CEDamesandMoore,LosAngeles,California CEA.EpsteinandSons,Inc.,Chicago,Illinois EAGilbertAssociates,Inc.,Reading,Pennsylvania EAFrederickR.HarrisInc.,NewYork,NewYork EALesterB.KnightandAssociates,Inc.Chicago,Illinois AECharlesT.MainInc.,Boston,Massachusetts EAPacificArchitectsandEngineers,Inc.,LosAngeles,California EAParsons,Brinckerhoff,Inc.,NewYork,NewYork EASkidmore,OwingsandMerrill,Chicago,Illinois AESverdrupCorporation,St.Louis,Missouri EAWilliamsBrothersEngineeringCompany,Tulsa,Oklahoma CE
aAE=architect/engineer;EA=engineer/architect;andCE=consultingengineer.
![Page 82: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/82.jpg)
Note:Ofthetotalglobalvolumeof$3,543millionindesignfeesavailabletodesignfirmsfromoutsidetheclientcountry,49Americanfirmscapturedsome$917million(25.9percent)ofthistotal.The22firmsshownonthislistwereresponsibleformorethan85percentoftheU.S.share.
ThevalueofU.S.exportsofconstructionequipmentwasatitspeakof$6.3billionin1978andhasdeclinedsteadilytoabout$2billiontoday.Similarly,U.S.employmentintheequipmentindustryreacheditspeakin1979atabout175,000workersandhasdeclinedbytwo-thirds.
CaterpillarTractorCompanyoftheUnitedStatesistheworld'slargestconstructionmachineryproducer,withKomatsu,Ltd.,ofJapanfollowing.Thereisatpresentsubstantialexcesscapacityintheworld'sconstructionequipmentindustry,andcost-reduction
![Page 83: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/83.jpg)
Page33
measures,moreefficientandlesscostlymanufacturingmethods,andothersimilarmeasuresarebeingundertakenbytheproducers.Whilepricecompetitionwillprobablyremainthedominantfactorintheindustry,investmentsinresearchanddevelopmentmayyieldfutureadvances.Forexample,thedevelopmentofmoreautomatedequipmentextendingtherangeofweatherconditionsunderwhichconstructionispossiblemaybeforthcoming.
ForeignFirmsintheU.S.Market
TheU.S.constructioncommunityfacesanewchallengeintermsofbothcooperationandcompetition.Withthegeneralslowdowninotherpartsoftheworld,designfirmsandcontractorsfromothercountriesseetheverylargeAmericanmarketasanattractivewaytomaintainorincreasetheirbusinessopportunities.AsCaseStudy2illustrates,companiesfromEurope,Japan,andSouthKoreahavebeendevelopingworkingarrangementsinthiscountryforsometime.
Inthefiveyearsfrom1978to1982,thenumberofforeigndesignandconstructionfirmsenteringtheU.S.domesticmarketgrewannuallyatratesofalmost8percentand13percent,respectively(seeTable8).RevenueofforeignfirmsintheUnitedStatesincreased
TABLE8ForeignDesignandConstructionFirmsintheUnitedStates
NumberofU.S.AffiliatesCategory 1978 1980 1983
Designandengineeringservices 40 53 58Construction 45 70 82
U.S.IncometoForeignOwnedfirms($millions)
1978 1980 1983
![Page 84: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/84.jpg)
Designandengineeringaffiliates 669 694 892ConstructionaffiliatesEuropean 1,142 3,896 5,394Canadian 61 243 144Japanese 24 50 81Other 317 415 1,308
Constructiontotal 1,544 4,604 6,927
Source:U.S.CommerceDepartment,BureauofEconomicAnalysis.
Note:By1985theJapaneseconstructionvolumeintheUnitedStateshadincreasedtomorethan$1.5billion,makingJapan'spenetrationoftheU.S.marketthemostdramatic.
![Page 85: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/85.jpg)
Page34
duringthatsameperiodatanannualrateof35percent.Japan'svolumehasshownstunninggrowth,reachingmorethan$1.5billionby1985.WhiletotalforeignworkintheUnitedStatesisonlyabout2percentofthedomesticmarket,itisconcentratedinthelargeandtechnicallycomplexareasofworkthathavebeenthemainstayofU.S.internationalbusiness.Expertsinthefieldfindthesituationalarming.
![Page 86: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/86.jpg)
Page35
CaseStudy2:Japan'sOhbayashiGumi:DoingConstructionintheUnitedStatesfor20Years
Intheearly1920s,theCalifornia-basedFluorCorporationinvitedexecutivesofaJapaneseconstructioncompanytoAmericatostudyadvancedU.S.constructiontechnology.Today,thiscompanyisback,bringingadvancedJapaneseconstructiontechnologywithit.Overthepast20yearsandmore,OhbayashiCorporationhasbuiltdams,tunnels,offices,andresidentialprojectsintheUnitedStates.
Foundedin1892byYoshigoroOhbayashi,thecompanyhasbeenamongtheBigFiveJapaneseconstructioncompanies,whichincludeKajima,Taisei,Shimizu,andTakenakaKomuten.(Today,withKumagaiGumi,theyaretheBigSix.)
Ohbayashiisamongtheworld'smostexperienceddambuilders.Itsfinisheddamsnumberinthesixties.Ithasbeenaleaderinthedevelopmentofroller-compactedconcretedams,aswellastheuseofdeepconcretecut-offwallstocontrolsubsurfaceseepage.
Ohbayashispendssignificantsumsofmoneyonresearchanddevelopment.IthasoneofthefinestresearchfacilitiesinJapan,theOhbayashiTechnicalResearchInstitute,wherethefirmdevelopscleanroomsforhospitalsandsemiconductorfactories;super-strongconcretefornuclearreactors;concreteforuseinundergroundcontinuouswalls;computersoftwareforcomplexengineeringcalculations,analyses,andsimulations;polymersthatpreventcave-ins;energyconservationsystems;andothertechnologies.Thefirmhasdevelopedadynamicsuspensionmethodthatsubstantiallymitigatesdamagetoabuildingduringanearthquake.
Ohbayashihasbuiltareputationformodifyingexistingtechnologytofitthejobathand.Forexample,itreplacedtheshieldonitstunnel
![Page 87: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/87.jpg)
boringmachinewithabackhoe-likeexcavatoronamajorprojectinPhoenix,Arizona.
Ohbayashi'sadaptationoftheNewAustrianTunnelingMethod(NATM)improvesonthattechnique.TheNATMprocessusesrockboltsdrivenintothecircumferenceofthetunneltoprovidereinforcement.ConcreteisthensprayedonthetunnelwallwithanOhbayashi-developedconcretedistributorrobot.
OhbayashididitsfirstworkoutsideJapaninCambodia,buildinganagriculturalcenter.Sincethen,ithasdonemuchworkinSoutheastAsia,includingbuildings,tunnels,anddams.In1984,thecompanywonamajorcontractfromthePeople'sRepublicofChina,
![Page 88: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/88.jpg)
Page36
fortechnicalsupervisionofconstructionworkontheShanghaiInternationalAirport.
OhbayashicametotheUnitedStatesin1966,openinganofficeinHonolulu,Hawaii,andregisteringtodoconstructionthere.Inthesameyear,itbeganconstructionoftheSurfriderHotelinWaikikiasaconstructionmanager.Thehotelwasfinishedin1969.ItalsobuiltthePrincessKaiulaniHotelinHonolulu,whichwascompletedin1970.BothhotelshadJapaneseowners,andthegeneralcontractorsunderconstructionmanagementbyOhbayashiwereAmericans.
In1972,asubsidiarycompany,OhbayashiHawaiiCorporation,wasestablishedtoengageinrealestatedevelopmentinHawaii.Since1972,thisfullyownedsubsidiaryhasbeendevelopingrealestatecomplexesthroughouttheislands.Alsoin1972,OhbayashicametotheWestCoastandestablisheditswhollyownedOhbayashiAmericaCorporation(OAC),ageneralcontractor,inLosAngeles.OACiscurrentlyinvolvedinalow-incomehousingcomplexfortheLosAngelesCityRedevelopmentAuthorityandisdevelopingalarge-scaleshoppingcenterintheLittleTokyoarea.OAC'smajorlocalaffiliatesare2975WilshireCompany,forofficerentalmanagement,andJamesE.Robert,Inc.,forcondominiumandapartmentdevelopmentinnorthernCalifornia.
In1974,aftertwoyearsinLosAngeles,OACwonahotelconstructioncontract,KyotoInn,locatedinSanFrancisco.Theowner,Kintetsu,alsoownsaJapaneserailroadcompany.Followingthehotelproject,OACundertookbanks,offices,restaurants,andhousingcontracts,mostlyforJapaneseclients.
In1976,Ohbayashiparticipatedindevelopingalarge-scaleresidentialcomplexnearSeattle,Washington.ThiswasajointventurewithTokyoCorporation.The11,000-acresiteinMillCreekincludesagolfcourse,shoppingcenter,and3,200housingunits.
![Page 89: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/89.jpg)
In1979,OhbayashiCorporationformedajointventurewithalocalcompanytobidforaSanFranciscosewagetunnelproject,thefirstU.S.publicworkOhbayashiwastoundertake.Expertiseinsoftground,usingtheearthpressurebalanceshieldtunnelingmethod,ledtosuccessinbiddingonthisproject.Themethodcutcostssubstantially,comparedtoalternativemethods.TheownerswerethecityandcountygovernmentsofSanFrancisco.Ohbayashi'sSanFranciscoofficebecameitsheadquartersforheavyconstructionintheUnitedStatesandin1981theheavydivisionsuccessfullybidtheStrawberryTunnelinUtah,afederallyfundedproject.
In1982aNewYorkCityofficeopened,andin1984itwonthe
![Page 90: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/90.jpg)
Page37
constructioncontractfora17-storybuildingforaChinesemaritimecompany.
In1985,OhbayashiestablishedasubsidiaryintheSoutheastnamedCitadelCorporation,headquarteredinAtlanta.Thiswasestablishedfromscratch,staffedandoperatedbyAmericans.Anopen-shop(i.e.,nonunion)contractor,Citadelhasbeenactiveintheregion,completingfiveprojects.ThestaffisAmerican;theownershipisJapanese.
In1986,OhbayashiwasselectedasaconstructionmanagerforthebigToyotamanufacturingplantinKentucky.ItisthelargestprojectOhbayashihasundertakenintheUnitedStates,entailingsupervisionoffiveAmericangeneralcontractors.
In1987thecompanybeatU.S.competitorstowinconstructionoftunnelsforfloodrun-offinSanAntonio,Texas.
JapanesepersonnelinU.S.Ohbayashiofficestotal30to40people.Somehavestudiedengineeringormanagementinthiscountry.
EijiNoma,generalmanagerinNewYorkCity,whostudiedattheUniversityofChicagointhelate1960s,saysitismoredifficultnowtogetJapaneseprofessionalstoworkintheUnitedStates.Itisnolongertheir''hardshippost"withperquisitesandbonuspay,butratheranexpensiveplacetolivewhenpaidindollars,nobetterthanlivingonyenathome."Thatgapofincomehasnarrowed,whilehardshipsneverlessened,"saysNoma.Still,everyyearfourorfiveOhbayashipeoplecometostudyintheUnitedStates,usuallyinthefieldsofengineeringormanagement.
AnOhbayashimanagerstatesthecompany'sU.S.businessobjectivessuccinctly:
TosatisfytraditionalJapaneseclientsneedingcommercialor
![Page 91: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/91.jpg)
industrialbuildingsintheUnitedStates.ToservetheneedsofitsJapaneseclientsismoreimportantthantomakemoneyhere.
TocompeteandtodojointventureswithAmericansforheavyconstructionworkwhereOhbayashimayhaveusefultunnelingordam-buildingexpertise.
In1986Ohbayashicontractedfor$226millionworthofconstructionintheUnitedStates.
![Page 92: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/92.jpg)
Page38
3CompetitionintheGlobalMarketU.S.industryfacesstiffcompetitionintheinternationalconstructionmarket.Foreignfirmsinmanycountriesenjoystrongsupportofcoordinatedgovernmentpoliciesthatencourageexportofservicesandenablethesenations'firmstopresentaunitedfrontincompetition.
CommonCharacteristics
Thecommittee'sexperienceandreviewoflimitedavailabledocumentationrevealseveralcommoncharacteristicsofthesenationalpolicies.Outstandingfeaturesincludecentralgovernmentleadershipandstrongfinancialsupport.
Manycountrieshaveaprimaryagencythattakesresponsibilityforconstructionpolicy.Inmostcases,particularlyinJapanandFrance,agovernmentministryatthecabinetleveloraquasi-governmentalentitydealswithbothdomesticandinternationalconstructionpolicymatters.
Collaborationwithinthefullrangeofrelevantorganizationsisapparentandincludesleadershiprepresentingfinancialinstitutions,constructionfirms,researchorganizations,educationalinstitutions,anddevelopmentandexportagenciesingovernment.Thecompositionofsuchpolicymakinggroupsreflectsthecomprehensiveness
![Page 93: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/93.jpg)
Page39
ofthepolicyformulationprocessandthedepthandbreadthofthepolicyresponse.
Policiestypicallyreflectanumberofconsiderations.Theseincluderamificationsforusingdesignservicestogainfollow-onconstruction,therelationshipofconstructiontofollow-onequipmentsales,therelationshipofconstructiontofollow-oncapitalgoodssales,andoperationsandmaintenanceaspectsaswellasreplacementpartsactivityrelatedtoconstructionprojects.
Policiesalsoattempttoexploitnationalcompetitiveadvantage,thatis,inwhichpartsoftheworldthenationalindustrieshavethemostadvantageouspositionandwhatelementsofthecompetitivepackagearetheirstrongest.Insomecases,thishasledtorankingtechnologiesforfurtheremphasisandinvestmentandidentifyingtargetareasoffocusfornationalinvestment.
Studiesunderlyingpolicyoftenincludesomespecificconsiderationofthenation'spotentialintheU.S.market.TheU.S.marketremainsthelargeststableandopenconstructionmarketintheworld(althoughtheeliminationoftradebarriersinEurope'scommonmarketwillcreateacombinedmarketcomparableinsizetotheUnitedStates).AllofitsAsianandEuropeancompetitorshavestrategicprogramsforpenetratingtheU.S.market.
SpecificCases
Thespecificpoliciesofseveralcountriesareinstructive.
GreatBritain
ThegovernmentofGreatBritainopenlyandclearlyprovidesanumberofmechanismsforsupportingtheeffortsofBritishconstructionandengineeringfirmstoobtainworkonoverseasprojects.AnOverseasProjectFundadministeredbytheDepartment
![Page 94: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/94.jpg)
ofTradeprovidesdirectsubsidies.Inthisarrangement,thegovernmentputsupalimitedamountoffinancingtocoverprebiddingcosts,withthesubsidizedfirmrequiredtoreturnabout20percenttothegovernmentifitisthesuccessfulbidder.
Thegovernmentalsoengagesinprovidingmixedcredit,*usinga"warchest"similartothatrecentlyobtainedbytheU.S.
*Mixedcreditisameansofreducingborrowingcoststhroughprovisionofgovernment-backedloansatconcessionaryratestogetherwithcommercialloansatmarketrates.
![Page 95: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/95.jpg)
Page40
Export-ImportBank.Thiswarchestisalmostalwaysusedasaninterest-balancingsupportandisobtainedfromBritishcommercialbanks.Thefundssocollectedandutilizedareadministeredthroughagovernmentalagency,theOverseasDevelopmentAdministration,which,inmanyrespects,isquitesimilartotheU.S.AgencyforInternationalDevelopment.RequestsforthesemoniesfromprivatesectorcompaniesarechanneledthroughtheDepartmentofTrade.
TheBritishExportCreditGuaranteeDepartment(ECGD)isaninstitutionwhichfundsprojectssimilarlytotheU.S.Export-ImportBankandtheOverseasPrivateInvestmentCorporation.Itsresourcesareavailableforbothengineersandcontractors,andcanbeusedtofinancecapitalgoodspurchases.
TheBritishconstructionandconsultingindustryprosperedinthelate1960sand1970sonprojectsintheMiddleEast,butwiththeseverediminutionofthatmarket,theindustryhasbeenforcedtoscramblefordomesticwork.VeryfewBritishfirmshavecompetedforWorldBankprojectsbecauseofthelengthybidderlistandbecausetheyareaversetothemultilateralarrangementsoftenrequired.MostBritishfirmsareprivatelyowned,andseveralhavemadepartnershipsorotherarrangementswithU.S.counterparts,especiallyinthehousingmarket.Ontheotherhand,anumberofthelargerU.S.constructionindustryfirmsoperateintheUnitedKingdom,especiallyinconnectionwithNorthSeaoilfieldprojects.WithintheEuropeancommunity,theBritishhavefounditquitedifficulttoobtainprojects,becauseofmanyadministrativebarriers,expectationsofreciprocity,andnocommonalityofqualificationsorstandards.TheBritishcurrentlyviewtheUnitedStatesastheirprimaryoverseastargetmarket.
TheBritishhavetwoorganizationswhich,withgovernmentalacquiescenceandassistance,greatlyassisttheirdesignand
![Page 96: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/96.jpg)
constructioncompanies.ThefirstistheBritishConsultingBureau,headedbytheDukeofGloucester,whichisactiveindevelopingsuchpotentialprojectareasasthePeople'sRepublicofChinaandAfrica.Itsmemberfirmsprovideprimarilyengineeringservices,butalsoconsultantservicesinhealth,agriculture,andvariousdevelopmentdisciplines.ThesecondorganizationistheExportGroupfortheConstructionIndustries,whosepurposeistoencourageotherstouseBritishconstructioncompaniesoninternationalprojects.It,likethebureau,closelymonitorsoverseasintelligencereportsonpotentialprojects,andreceivesstrongsupportfromthecommercialsectionsofBritishembassies.Theorganizationsactasacentralintelligence
![Page 97: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/97.jpg)
Page41
pointanddisseminatetheinformationtotheirmembersmuchmorerapidlyandaccuratelythanisdonebytheU.S.DepartmentsofCommerceandState.
France
TheinternationalactivitiesoftheFrenchdesignandconstructionindustryarebackedbyaFrenchMinistryofConstructionconcernedwithexports,constructioneconomics,andglobaldevelopment.Thisministrydealswithsuchmattersascooperationandcoordinationamongtheconstructionfirmsinobtainingforeignprojectsandotherexportmatters.
Theministryhasalsoposted40personsinFrenchembassiesaroundtheworld,wheretheyareconsideredtobeinvestmentsinfutureprojectsofthehostnations.ThepresentinternationalemphasisoftheFrenchconstructionindustryisonurbansystems,suchaswater,transportation,andnuclearpower.Therearealsodetailedanalysesbytheinvolvedtradeassociationsastofuturemarketpotentialandconcentration.
Francehasnospecificgovernment-sanctionedpoliciesoninternationalconstruction,butitdoeshaveaninformalpolicystatementandunderstandingwithindustry.TheFrenchpoliciesarereportedtobebasedonananalysisthatindicatedthecountryreceivesaseven-toten-foldreturnoneachinvestmentmadeindesignandengineeringprojectsinothercountries.Asinothercountries,theFrenchhavefoundthatitsinternationalmarketspeakedin19801982andhavesubsequentlydeclined.
Italy
ThefirstmajorinternationalconstructionprojectbytheItalianswasalargedaminZimbabwe,completedin1956.By1986theItalianinternationalconstructionvolumehadincreasedtoapointwhereit
![Page 98: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/98.jpg)
stoodthirdintheworld,behindonlytheUnitedStatesandJapan.Italy,inrecentyears,hasconcentratedonobtainingplantconstructionprojects,ratherthanonlycivilworksprojects.Itsinternationalconstructionprojectshaveincludeda$1.3billionsteelworksplantintheSovietUnion,apowerdistributionstationinSaudiArabia,arefineryinGreece,andthesecondBosphorusBridgeinTurkey.In1986theItalianswereworkingon240constructionprojectsin76nationsand120designcontractsin62nations.
![Page 99: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/99.jpg)
Page42
Threemajorgroups,whichincludebothdesignandconstructionfirms,dominatetheItalianconstructionsector.TheseareFIAT(throughtheMilan-basedholdingcompanyFiatimpresit);IRI(throughtheRome-basedholdingcompanyItalstat);andtheLeagueofCooperatives.Amongthetop50Italianconstructionfirms,4contractorsbelongingtotheFIATgroup(thelargestprivatecompanyinItaly)accountfor15percentofthetotalcontracts;6firmsbelongingtoIRIaccountforanother15percent;andthe7cooperativecontractorshaveabout12percent.
OneofthereasonsfortheItalians'successistheirabilitytomaintainalastingpresenceinvariousnations,includingAfrica,Turkey,andGreece.Italiancompaniesarefullycompetenttohandleawiderangeofratherspecializedjobs,andclosecooperationexistsbetweenthepublicandprivatesectorsoftheindustry.TheItalianshavealsocometorealizethevitalimportanceof"financialengineering"andtoputforthproposals,bothtechnicalandfinancial,thatarewellsuitedtotheneedsandcapabilitiesofthedevelopingnations.
TheAssociationofItalianEngineeringandTechno-EconomicConsultingOrganizations(OICE,foundedin1966)representsitsmemberstonationalandinternationalclientorganizations.TheeffortsofOICEaredirectedatsupplyingclientswithintegratedtechnicalandcomplexinterdisciplinarysolutionstoplants,infrastructure,andengineeringworksingeneral.Theseservicesarenotlimitedtotechnicalanddesignservices,butincludeorganizationalmanagementandfinancialexpertise,appliedtobothinfrastructureandcommerciallyorientedprojects.
TheItalianshavelongrealizedthattosucceedintheinternationalarena,abasicelementissuccessfulfinancialengineering.Amajorstepwasundertakenin1977whentheItaliangovernmentorganizedacomprehensiveandarticulatedprogram(theOssolaLaw)toprovide
![Page 100: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/100.jpg)
Italianexporterswiththenecessaryfinancialsupporttocompetesuccessfullyattheinternationallevel.However,Italiancompaniesarestillfindingitdifficulttocompeteagainstthemixedcreditprogramsutilizedbysomeothermajornations.Thus,manyItaliancontractorcompaniesusetheinterventionofspecializedItalianinvestmentbankswithexperienceintheexportcreditfield.
Sweden
In1973theSwedishgovernmentembarkedonanambitioushousingprogram.ItsgoalofprovidingdecenthousingforeverySwedish
![Page 101: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/101.jpg)
Page43
familycalledfortheconstructionof1millionhousesperyearfora10-yearperiod.Thisvolumeincreasedthecapacityoftheconstructionindustrywellbeyondthe"normal"marketvolumeofpreviousyears.
In1983areportoftheSwedishCouncilforBuildingResearchentitledTheSwedishBuildingSectorin1990setthefoundationonwhichthenext10yearsofSwedishconstructionactivitywillbebased.The1983reportconcludedthatacontinuedfavorableexpansionofbuildingprogramswouldbepossibleprovidedthereisasubstantialincreaseinexpendituresonresearch,development,experimentalconstruction,anddemonstrationactivity.Eventhoughconstructionhasdeclinedinrecentyears,itstillrepresented12.7percentofSweden'sGDP,or$11.6billion,in1984.
AmatterofconcerninSwedenistheverylowpriorityplacedonresearchanddevelopmenttoretainandfurtherdeveloptechnicalcompetence.TheCouncilforBuildingResearchrecommendedthatsubstantialincreasesinresearchanddevelopmentexpendituresbythegovernmentandtheprivatesectoroverthenext10yearsareessential.
Anumberofareasweresingledoutforattentioninthisresearchprogram:
thedevelopmentofbuildingtechnology;
satisfactoryandeconomicalpropertymanagement;
energyconservation;
municipalplanning;
higherhousingquality;and
theroleoftheconstructionindustryinthenationaleconomy.
TheSwedishgovernmentsupportstechnicalresearchbythebuildingindustryaswellasbytechnologicaluniversities.
![Page 102: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/102.jpg)
From1968to1979,thevalueoftheSwedishexportsurplusofconsultingservices,constructionabroad,andbuildingmaterialsincreasedalmosttenfold.Atthetimeofthe1983report,theexportofbuildingmaterialsandconstructioncapabilitywasofgreatimportancetotheSwedisheconomy,withabout100,000peopledirectlyorindirectlyinvolvedinthismarket.TheSwedishfirmsthatcompeteintheinternationalarenafeeltheircompetitivenessinforeignmarketsisoftenduetolocaltiesandcontactsinthehostcountry(aperceptionsharedbyallmajorinternationalconstructionfirms).TheSwedesarealsoconvincedthatcompaniesexportingconstructionservicesmust,ingeneral,besizabletobecompetitive.
![Page 103: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/103.jpg)
Page44
InSwedenthereisacentralizedpointofcontactfortheconstructionindustry,theMinistryforHousingandPhysicalPlanning,whichisinvolvedinbothdomesticandinternationalmattersandpolicies.OneofitsrolesistoprovideguaranteesforinternationalconstructionactivitiesinordertohelpSwedishfirmscompetewithothernations.
Japan
ThedesignandconstructionindustryofJapanisconsideredauniquephenomenoninbothitsoverseasoperationsandinitsdomesticpractices.ForthepastseveralyearsJapanhasbeenofmajorconcerntothenationswithwhichitcompetesininternationalmarkets.Thisperception,however,isprobablydistortedbythehugeexportsuccessJapanhashadinsuchmanufactureditemsasautomobilesandelectronicsgoods.Therehasbeenanassumptionthatthesamephenomenonwas,orcouldbe,occurringintheconstructionindustry.However,whileGreatBritainandWestGermanyeachhaveover8percentofthetotalinternationaldesignmarket,Japan'ssharein1986wasonly6percent,aneverthelessadmirablefigureinviewofthenation'srelativesize.TheUnitedStates,with30percentoftheinternationalconstructionmarket,competesasmuchwithItaly,France,orBritainaswithJapan(seeTables3and4).
JapanesedomesticpoliciesonconstructionhavebeenthesourceoffrustrationandmisunderstandingonthepartofthosenationswhowishtoworkintheJapanesemarket.TheKansaiAirportprojecthasbeenarecentandlargesymbolofthisfrustrationfortheUnitedStates.Despiteapparentconcessions,therecanbebutlittledoubtthattheJapanesegovernmentisdeterminedtoprotectamajorshareofsuchlargeprojectsforJapaneseconstructors.
InJune1987,theEconomicCouncilofJapanissuedadetailedsetofpolicyrecommendationsforJapan'sEconomicStructuralAdjustments.Oneoftherecurringthemesisaconcernthatthe
![Page 104: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/104.jpg)
economicgrowthofJapanbetrulyreflectedinthequalityoflifeforitscitizens.Forexample,thereportindicatesthatthepresentstateofthenation'sinfrastructureisconsiderablybelowthatwhichtheoverallGNPwouldindicateitcouldbe.Thereis,therefore,apotentialdomesticmarketofrathersizabledimensionsfortheJapaneseconstructionindustry.ThecouncilalsorecommendspositiveeffortstoensurethatforeigncompaniescandobusinessintheJapaneseconstructionmarket,andexpansionoftheGeneralAgreementon
![Page 105: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/105.jpg)
Page45
TariffsandTrade(GATT)frameworktoincludedesignandconstructionservices.
AsintheUnitedStates,Japanhasahandfulofconstructioncompaniesthatdominateboththedomesticandinternationalmarketsandliterallythousandsofmid-sizeandsmallerfirmswhosemarketisstrictlydomestic.TheBigSixconstructioncompaniesincreasedtheirshareoftheinternationalmarketfromabout1980to1985,andthentheirsharebegantodecreasesignificantly.Whiletheworldwideshrinkageofinternationalprojectswaspivotalinthedecrease,anotherfactorwasaself-imposedretrenchment.AreportentitledOverseasConstructionBasicIssues:InvestigationCommittee,sponsoredin1982bytheJapaneseMinistryofConstruction,emphasizedthat"therearemanyproblemsrelatedtotheshorthistoryofouroverseasconstructionactivities.Furtherdevelopmentisexpectedtoyieldagenuineserviceexportindustry.However,theroadisnotnecessarilysmooth."Althoughthisreportonoverseasconstructionwascompiledin1982,itremainsthemainguidancefortheindustryasawhole.Therehasnotbeenareasontoreviseorupdateitintheensuingfiveyears,accordingtotheMinistryofConstructionrepresentativeattheEmbassyofJapaninWashington.EventhoughtheexperienceoftheBigSixcontractorswithU.S.officeshasbeenthatprofitsarepoortononexistent,thecompaniesdonotdare,asyet,abandontheU.S.constructionmarketplace.
India
In1986theIndiangovernmentsetaside$1billionforathree-yearperiodtoboostitsengineeringsector,fundedbyacombinationofWorldBankloansmatchedbyIndia'scontributionsfromboththegovernmentandprivatesectors.Withthesecondlargestpopulationintheworld,thereispotentiallyanenormousbacklogofinfrastructureworkrequiredwithinthecountry.India'sdesignandconstruction
![Page 106: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/106.jpg)
firms,however,aremoreinterestedinworkingonprojectsoutsidethecountry,actingassubcontractorsorjointventurepartnerswithfirmsfromthelargerdevelopednations.Thisemphasisstemsfromtwodesires:technologytransfertotheIndianfirmsinvolved,andanincreaseinforeignexchangeearnings.
Indiahasnocentralauthorityforconstructionandengineering,butthesesectorsarenominallyunderthepurviewoftheMinistryofHousingandPublicWorks.Indiahasanumberofengineeringandconstructioncouncils,mostofwhichareprivate,thatactivelyseek
![Page 107: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/107.jpg)
Page46
projectsbothwithinIndiaandoutsidethecountryfortheirmembercompanies.
TheSovietUnion
TheindustrializationoftheSovieteconomysincethe1930shasgivendesignersandbuildersofplantsandlargecivilengineeringprojectsthecredentialsrequiredtoworkintheinternationalarena.Mostofthisworkisintheless-developedcountries,especiallythosenationswithlargepublicsectorsandsocialistformsofgovernment.
AlldesignandconstructionactivitiesoftheUSSRareorganizedwithinthemammothagencyknownasGosstroy.ToexportthesecapabilitiestheSovietshaveformedaboutadozenforeigntradeorganizations(FTOs)thatare,inreality,largecontractororganizationswithformidablecapabilities.AlthoughgenerallyconfiningthemselvestoprovenSoviettechnologies,theFTOs,onoccasion,willdesignnewplants,equipment,andinfrastructurefortheirclients.Forfundamentallysimplephasesofagivenproject,theFTOwillusuallydependonthelocalcontractingabilitiesoftheclientcountryforbasicconstruction.However,forheavyequipmentandothermorecomplexphases,theFTOsdependontheirownsourcesofsupplies,supplementedsurprisinglyandquitefrequentlywithWesternequipmentandmaterial.
SinceallforeignprojectsareviewedasventuresofgreatprestigetotheUSSR,onlytheverybestengineersandtechniciansaresentabroad.AlthoughcomplaintsareoftenvoicedintheSovietpressconcerningthecalibreorslownessofdomesticprojects,thesecomplaintsareseldomheardonforeignventures,whichareturnkeytypeprojects,withtheprojectmanagementsubcontractedtoAustrianandFinnishcompanies.Ofthe65FTOsintheUSSR,thedozenthatareallowedtoengageinforeignprojectshavebeenlicensedtoformjointventureswithWesternfirmsandtopurchasesupplies,
![Page 108: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/108.jpg)
technology,andequipmentfromWesternsuppliers.
EachFTOthatengagesinoverseasprojectshasonebasicspecialty,withanumberofothercapabilities.ThesespecialtiesincludeanFTOthatisoneoftheworld'slargestsuppliersofpower-generatingandtransmissionequipment,onethathasbuiltmorethan600industrialplantsandcommunicationsfacilities,onespecializingininfrastructureprojects,andonethatisexpertiniron-andsteelmakingequipment.
Themagnitudeofforeignactivitymaybejudgedbythefactthat
![Page 109: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/109.jpg)
Page47
theUSSRhassignedagreementswith83nationsforeconomicandtechnicalcooperation.Atotalof3,054internationalprojectswerecompletedbetweentheendofWorldWarIIand1986.Theseprojectsinclude1,769industrialenterprisesandpower-generatingplants,and329agriculturalprojects.
U.S.ResponsetoCompetition
ExternaleconomicforceshavehadsubstantialinfluenceonhowU.S.constructionhasrespondedtointernationalcompetition.ThehighvalueoftheU.S.dollarininternationalexchangehasuntilrecentlyhadparticularlystrongimpactonthisresponse.Abroad,andathome,U.S.firmshaveappearedrelativelymoreexpensivethantheirforeigncompetition.
ThestrongU.S.dollarbetween1980and1985servedasamagnetforimportedgoodsandinvestment.AseriesofmajortaxcutsandincreasesingovernmentspendingduringthisperiodfueledastrongrecoveryintheUnitedStateswhileotherindustrializednationsconsistentlypursuedslowgrowthpolicies.U.S.industrywasplacedatgreaterdisadvantageinbothdomesticandinternationalmarkets,withtheresultbeingstagnantexportsandarapidgrowthinimportpenetrationoftheU.S.markets.
However,aseconomistRobertJ.SamuelsonwroteintheJanuary26,1987,issueofNewsweek:
Realchangesunderlieourcompetitivenessanxiety.TheUnitedStatesnolongerenjoysunchallengedsuperiorityintradeandtechnology.Someofoursupremacywasartificial:WorldWarIIdestroyedourmostpotentcommercialrivals.Europe'sreconstructionrestoredthiscompetition.Thespreadoftechnology,moderneducationandmultinationalcompaniestoJapanandthedevelopingworldcreatednewcompetitors.Reversingthesetrendsisimpossible.AcompetitivevisionthatreinstatestheUnitedStatessittingastrideglobalmarketsispurenostalgia.
![Page 110: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/110.jpg)
Nevertheless,theexamplesreviewedhereillustratethattheUnitedStateshasbeenslowerthanmanyofitscompetitorstodevelopnationaltradeandeconomicpoliciesinsupportofinternationalengineeringandconstruction.Whileindustryandtradegroupshavebeenvocalinreportingthepracticestheyfaceintheglobalmarket,theindustrylacksbothcentralrepresentationinnationalpolicydiscussionsandthemeanstopulltogetherdiversepublicandprivateintereststopresentaunifiedcompetitivefront.
![Page 111: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/111.jpg)
Page48
Inaddition,therearespecificproblems.ForeignpolicyconsiderationscanmakeU.S.firmsunacceptableinacountryaftersubstantialinvestmentshavebeenmadeinmarketdevelopment.TheU.S.ForeignCorruptPracticesAct(FCPA),enactedbyCongressforimportantethicalreasons,hamperstheabilityofU.S.firmstoconformtolocalbusinessandculturalstandards.CompetitionfromothercountriesnotsubjecttosuchregulationcanputAmericanfirmsatadisadvantageinbusinessnegotiations.
OthermorespecificdisincentivesarefoundinU.S.policy:
IncometaxrequirementsforU.S.citizensworkingabroadimposeagreaterburdenthanthoseofothercountries,makingitmorecostlytoprovideincentivesneededtoattracthigh-qualitypersonneltoforeignassignments.
DoubletaxationoccursondesignworkperformedintheUnitedStatesforoverseasprojects,becauseforeigncorporatetaxesonimportedengineeringservicesmaynotbedeductedfromU.S.earnings.
U.S.antiboycottlawsthatconflictwiththeboycottlawsofothercountriesrestrictopportunitiesopentoU.S.firms.
ThepreviouslydescribedactivitiesoftheU.S.TradeandDevelopmentProgram,Export-ImportBank,andOverseasPrivateInvestmentCorporationprovidevaluablebutseverelylimitedassistancetoU.S.designandconstructionfirmsseekingtoprovidecompetitivefinancingforprojects.TheincreasingimportanceoffinancehasencouragedU.S.firmssuchasBechtel,Fluor,andKelloggtoformconsortiawithBritish,French,German,andJapanesecompanies:
BechtelassociatedwithAmerican,French,andJapanesesuppliersandexportfinancesourcesforthe$450millionRioZuliatoCovenaspipelineandassociatedfacilitiesconstructedforEcopetroland
![Page 112: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/112.jpg)
OccidentalinColombia.
TheFluorCompanybuiltapipelineforthePetroleumAuthorityinThailand(PTT)aspartofaconsortiumthatincludedthefourlargeststeelproducersinJapan,withfundingprovidedbytheBankofTokyo.
TheKelloggCompanydevelopedacooperativeagreementwiththeWestGermanfirmThyssentoundertakea$1billionaromaticsprojectinIndonesia.
U.S.companiesbringspecializedtechnologicalskillsandmanagerialexpertisetotheseconsortia,whiletheirpartnersprovidethefinancialsupportthroughtheirowngovernmentagencies,whichcan
![Page 113: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/113.jpg)
Page49
providemoneyandguaranteestosupporttheexportofservices,materials,andequipment.Indeed,thesespecializedtechnicalskillshavebeenthesourceofU.S.competitiveadvantageinthepast,althoughthisadvantageisnotexclusive,astheworkofShimizuwithIBMillustrates(CaseStudy3).
Americancompaniesstillaregenerallygivenhighmarksfortheirabilitiesindesign,engineering,projectmanagement,andtheoperationandmaintenanceproceduresforfacilities.U.S.firmsstillleadtheworldinthedesignofprocessplantsforthepetroleumandpetrochemicalindustry,aswellasthetechnologiesofchemicalplantsandpowerstations.Thenationleadsintheuseofcomputer-aideddesignanddraftingtechniques,andtheuseofcomputer-basedtoolsforconstructionmanagement,scheduling,andinventorycontrols.However,thepresentshortageoflargeprojectsaroundtheworldreducestheadvantageofthismanagementknow-howaspricebecomesincreasinglydecisiveinclientdecisions.Ofgreaterlong-termimportanceistheconcernofindustryleadersthatothercountriesarecatchingupwithandpassingtheUnitedStates.
![Page 114: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/114.jpg)
Page50
CaseStudy3:ShimizuMeetsIBM'sNeeds
Inthespringof1986,IBMfaceditsgreatestconstructionchallengeinmorethanadecade.ItsprimesemiconductordevelopmentandmanufacturingfacilityinEastFishkill,NewYork,neededanewtechnologycenterofapproximately300,000squarefeet.Andoccupancywasrequiredinlessthantwoyears.
ThenewAdvancedSemiconductorTechnologyCenter(ASTC)wasdescribedbyoperatingmanagementasanimportantmilestone,playingaroleinthefutureofIBManditsabilitytoremaincompetitiveinthedevelopmentandmanufactureofadvancedsemiconductorproducts.Thestatementofrequirementscalledforlevelsofenvironmentalpurityandvibrationresistanceneverbeforeachievedwithinthecompany.IBMmanagementwantedthenewbuildingtobethebestintheworld.
DesignandconstructionofthenewbuildingwouldbetheresponsibilityoftheRealEstateandConstructionDivision(RECD),whichbeganasearchforanoutstandingsemiconductorfacilitydesignfirm.InviewoftheconsiderableaccomplishmentsofJapanesecompaniesinthedesignandconstructionofsemiconductorfacilitiesincludinganIBMplantinYasu,JapanRECDconsideredtwoJapanesefirms,ShimizuandOhbayashi.RECDmanagementalsoconsideredseveralU.S.designandengineeringfirmsfortheproject.
IBMrecognizedthatconsiderabledevelopmentstudieswouldberequiredduringthedesignstageandthatclosecoordinationwouldberequiredbetweenthedesignandconstructionpeople.
RECDrepresentativesvisitedShimizufacilitiesinJapaninthelatespringof1986;theycameawayfavorablyimpressedwithwhattheyhadseenandlearned.
![Page 115: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/115.jpg)
Shimizuisover180yearsoldandoneofthefivelargestdesignandconstructioncompaniesinJapanwithannualsalesofover$6billion.ThecompanyhasofficesintheUnitedStates,includingaNewYorkCitylocation.MostoftheworkShimizuhaddoneherehadbeenforJapanesecompanieswithU.S.operations.
Shimizuhasanannualresearchanddevelopment(R&D)budgetof$60million,whichis1percentofannualcompanysales.ThisistypicalofmajorJapanesedesignandconstructionfirms.Incontrast,RECDfoundonlylimitedresearchateitherdesignorconstructionfirmsintheUnitedStates.AtShimizu,630peopleareengagedinR&Dworkonsystemsdevelopment,producttechnology,infra-
![Page 116: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/116.jpg)
Page51
structureengineering,intelligentbuildings,constructionautomation,robots,andcleanroomdesign.
Shimizu'sworkincleanroomdesignandvibrationpreventionwasparticularlynoteworthy,andapplicabletosemiconductorfacilities.Shimizuhadachievedclass1capabilityforparticlesof0.5to0.3micronsinsize.AconsiderableamountoftheR&Dactivitywasintestingfilters.Thefirmhadalargevibrationtabletoconductseismictestsonstructuresfromwhichitdevelopedstate-of-the-artdesigns.
TheRECDteamalsoreviewedShimizumanagementsystemsforplanning,costestimating,scheduling,andprojectcontrol,whichareverysimilartothoseusedbyU.S.constructioncompanies.Aconstructionjobwasalsoobserved.Shimizuisbasicallyaconstructioncompany.Itwillconstructadesignpreparedbyanotherfirm,butwouldnotproduceadesigntobeconstructedbyanothercompany.RECDalsoreviewedtheoftendifficultworkingconditionsatEastFishkillwithShimizu.
RECDthenrecommendedtoseniorIBMmanagementthatShimizubehiredtodesignandconstructtheASTCproject.Managementagreed,andinJuly1986ShimizubeganworkingwithanRECDengineeringteam.ThegoalwastodevelopadesignconceptbasedontheIBMrequirementsanddesigncriteria.ShimizuestablishedabaseofoperationsacrossthestreetfromRECD'sheadquartersinWhitePlains,NewYork.
Overall,theworkingrelationshipbetweentheIBMandShimizuteamswentwell.Therewerelanguageandculturaldifferencestoovercome;however,astheparticipantsworkedtogether,soundmutualrespectwasdeveloped.IBMwasveryimpressedwiththeskillanddedicationoftheShimizudesigners.Theyoftenworked''roundtheclock"toanswerquestions(anexpedientinviewofthetimedifferencebetweentheUnitedStatesandJapan).Also,workinsupportoftheU.S.team
![Page 117: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/117.jpg)
wasdoneatShimizu'sR&DfacilitiesinJapan.Theturnaroundtimeonmostofthisworkwasexcellent.Intheareaofadministration,thedesigncontracttookmuchlongertonegotiatethanalikecontractwithaU.S.designfirmbecauseoftheunfamiliarityofthepeoplewitheachother.Also,somedifficultieswithShimizu'sbillingswereexperiencedbyIBMbecauseoftheabsenceofsupportingdetail.
ShimizuandIBMspentconsiderableeffortoncostestimates,themutualdefinitionandunderstandingofcosts,andthenegotiationofthecostofwork.Shimizu'sinitialcostofconstructionworkwas
![Page 118: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/118.jpg)
Page52
about10percentmorethantheIBMbudget.Byworkingcloselytogether,IBMandShimizucametoaprojectcostagreementinthesummerof1986,whichwasreiteratedinNovember1986.
Intheearlystagesofdesign,ShimizuhiredaU.S.architecturalengineeringfirm,GiffelsAssociates,Inc.,ofSouthfield,Michigantosharethedesignwork.GiffelswaschoseninpartbyShimizubecauseofknowledgeofconditions,localcodes,andworkingpracticesatEastFishkill,whereduringthepriorfiveyearstheU.S.firmhaddesignedmanyfacilities.AlthoughShimizuprovidedthedesigndirection,aconsiderableamountoftheworkwasdonebyGiffels.ShimizualsosetupaliaisonteaminGiffelsoffices.
TheShimizudesignhadastrongbiastowardinitialcosteffectivenessincontrastwithfuturelowermaintenancecosts.Life-cyclecostappearedtobealesserconsideration.Overall,thedesignworkproceededwellalthoughtheworkingdrawingsfellbehindschedule.
InNovember1986,ShimizuhiredHuberHunt&Nichols(HHN),Inc.,Indianapolis,asgeneralcontractorontheconstructionofthebuilding.ShimizuchoseHHNbecauseofthesuccessfulworkthefirmshaddonetogetheronotherU.S.projects,plusHHN'sfamiliaritywithworkingintheEastFishkillarea.AlthoughasofthatdateIBMandShimizuhadacontractforthedesignworkonly,itwastheintentofbothpartiesthatShimizuwouldmanagetheconstructionphase.
Sufficientdesignhadbeencompletedtobegintheconstructionworkofgrading,footings,andfoundations.InDecember1986,agroundbreakingceremonywasheld.
ThefirstscheduledifficultiesaroseinJanuary1987,when50percentoftheworkingdrawingsweredueforbiddingpurposes;only15percentofthedrawingswerecomplete.Nevertheless,thesubcontractorbiddingprocessbegan.OnFebruary2,Shimizu
![Page 119: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/119.jpg)
reiteratedthebudgetcostwhichhadbeenagreedtoin1986.OnFebruary13,ShimizuandIBMofficialsmetatRECDheadquartersinStamford,Connecticut.Shimizusaidthattheproject'scostofconstructionhadincreasedbynearly40percentoverthecostofrecord.Theycouldnotexplainthecostincreaseexcepttostatethatitwasbasedoninputsofthegeneralcontractorandsubcontractors.Theinitialoccupancyscheduledatehadalsoslipped.InasmuchasIBMhadnotchangedprojectrequirements,thenewShimizucostwasrejectedbyIBM.
Amonthlater,IBM,withinputsfromShimizuandothers,wasabletodefinethereasonsforthecostincrease,whichcanbesummarizedasfollows:
![Page 120: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/120.jpg)
Page53
ShimizuseemedtoexperiencedifficultiesinworkingwiththesubcontractorsintheEastFishkillarea.InJapan,muchworkisdoneonnotmuchmorethanahandshakebetweentheparties.Here,thesubcontractorsappearedapprehensiveaboutworkingforaforeigncontractor.Thelanguageandcustomdifferences,whichwereovercomebyShimizu,IBM,andGiffelsduringthedesignwork,couldnotbesurmountedduringthecomparativelyshortbiddingcycle.TheroleofHHNinthebiddingwaslessthanonewouldexpectofageneralcontractor.
ShimizuseemedtohavelimitedconfidenceinU.S.specialtyproducts,manufacturers,andsupplies.TheirdesignerswishedtospecifymanyitemsfromJapanesesupplierswithwhomtheyhadextensiveexperience.
ShimizuseemedtoexpectthatU.S.clientcompaniessuchasIBMwouldapprovethebudgetcostincrease,trustingShimizu'seffortsasthebestpossible.
ItshouldbenotedthatShimizuacceptedtheEastFishkillarealaborpractices,productivitylevels,andsoonasagiven,whereasIBMbelievedafreshapproachbasedontheJapanesemodelcouldyieldsomeimprovementshere,ashasbeenthecaseintheautomotiveindustry.IBMwasalsodisappointedthatShimizu'sguaranteeswentnofurtherthanHHN'sguarantees,whichinturnwerebasedsolelyontheinputsofthesubcontractors.
IntensenegotiationswithShimizufailedtoresultinacostdecrease.Therefore,IBMrequestedthatShimizucompletethedesignandactasaconsultantduringconstruction,butnotastheconstructionmanager.
ShimizucontinuedwithdesigncompletionwhileIBMbeganintensenegotiationswithU.S.contractorstodotheconstruction.Thesenegotiationsweresuccessful,andtheprojectwasawardedtoWalsh
![Page 121: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/121.jpg)
ConstructionCompanyofTrumbull,Connecticut.TheprojectcostisnowwithintheIBMbudget,albeitatahighernumberthantheoriginalShimizucontractandwithlesscontingency.Theprojectwillbeundertakenonaphasedbasisinviewofthescheduledelaysthatwereexperienced.(Shimizudoesnotrecommendthisapproachasitismoredifficulttoguaranteeprojectquality.)
Initially,Shimizuwasreluctanttoactasaconsultantbecauseofitscorporatepolicynottocontractfordesignworkwithoutactuallymanagingtheconstruction.However,ultimatelyIBMandShimizusignedaconsultingagreement.IBM'spracticeistoretainthedesignfirmtosupporttheconstruction.
![Page 122: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/122.jpg)
Page54
ThevalueofanIBM/Walsh/ShimizurelationshipduringconstructionisthattheinvolvementofShimizuwillbetterensurethattheprojectisbuiltpertheplansandspecifications.ShimizuwillgainvaluableexperienceintheU.S.market,andWalshwillhavethebenefitofaquality-orientedassociatewithanintimateknowledgeofthedesign.
![Page 123: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/123.jpg)
Page55
4ResearchandDevelopmentinConstructionResearchanddevelopment(R&D)inconstructionincludesabroadrangeofactivitiesdirectedtowardimprovingquality,productivity,andefficiencyofthematerials,equipment,labor,andmanagementofconstruction.ThevalueofR&Dactivitiesiswellacceptedasmeansforimprovingproductivityandgeneratingnewideasinelectronics,telecommunications,geneticengineering,andothertechnicalfields.Thelinkagesbetweenconstructionresearchandapplication,however,havebeenmoredifficulttodocument,despiteadvancesmadeduringthetwentiethcenturyinnewequipmentandmaterials,largelybecauseofthegreatnumberofmostlysmall-scalebuildersandequipmentandmaterialsproducers.Forthissamereason,theconstructionindustryhasgreaterdifficultymobilizingresourcesneededtosupportsubstantialresearchprograms.
Asaresult,thecommitteeobservedseveraltroublingtrends:
OthercountriesappeartobeputtingmoreeffortthantheUnitedStatesintoconstructionR&D;
Othercountriesareworkinghardtoimprovethe"hardware"ofconstructionbyimprovingconstructionmethodsanddevelopingtechnologyforautomation(includingrobotics);
AmoreinnovativeenvironmentexistsinmostforeignfirmsbecauseR&Dhasbeenintegratedintooveralloperations;
![Page 124: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/124.jpg)
Page56
Othercountriesarewillingtobacklonger-rangeresearcheffortsthroughtheslowbutmethodicalmethodsneeded;
R&Dinothercountriestendstobeproprietarytothecompanysponsoringit,leadingtosomeduplicationbutincreasingcommercialrewardsforsuccess;
Verticalintegrationwithinlargeforeignconstructionfirmshasmadeeasiertheutilizationofresearchresultsbytheoperatingunitsoftheircompanies;
Thereislessemphasisonresearchrelatedtothe"management"ofconstructionbyfirmsinothercountries,sincetheytendtoacquirethesetechnologiesthroughjointventureswithAmericanfirmsorbysendingtheiryoungprofessionalstoU.S.universitiesfortraining.
U.S.ConstructionResearchandDevelopment
AccurateappraisalsofR&DinvestmentsintheU.S.designandconstructionindustriesarestubbornlyelusive.Availablestatisticsarescarceandoftenrecordedinamannerthatcanbemisleading.Inanotherstudy*donebytheBuildingResearchBoardthefollowingobservationsweremadeonR&DexpendituresintheU.S.designandconstructionindustries:
Constructioncontractors(bothgeneralandspecialty)$54million
Manufacturersofconstructionmaterialsandequipment$838million
Federalagencies(bothconsumersandnonconsumers)$200million
Allothersectors(basedonestimate)$111million
Totalannualconstruction-relatedR&D$1,223million
Basedonatotalvolumeofconstructionofsome$312billionin1984,theseestimatesrepresentabout0.4percentofsalesinvestedinR&D,
![Page 125: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/125.jpg)
farlessthanothermatureindustriessuchasappliancesat1.4percent,automobilesat1.7percent,ortextilesat0.8percent.(ThisexpenditurelevelisalsowellbelowJapaneseconstructionR&Dexpenditurerates.)U.S.contractors,architects,andengineersinvestlessthan0.05percentinR&Dasagroup,afractionoftheamounttheyspendonliabilityinsurancealone.
*ConstructionProductivity,NationalAcademyPress,Washington,D.C.,1986.
![Page 126: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/126.jpg)
Page57
BothlackofresourcesandcompetingprioritiesarefactorsinthislowlevelofR&Dexpenditure.Facedwithintensepricecompetition,manydesignersandconstructorsfinditdifficulttoappropriatesubstantialresourcesforR&D.TaxregulationsthatmayrequirecapitalizationofR&DexpendituresincreasethedemandsR&Dwouldmakeoncurrentcashflows.ThenaturalaversiontoriskofmanybusinessmenmakesR&Dspendingthatmayyieldnoimmediatecommercialbenefitmoredifficulttojustifyevenwhenbusinessisgood,andeasytocutwhentimesarebad.Notoneofthemanymediumandsmallfirmscanaffordameaningfulresearchprogram,andtherearefewmechanismstofacilitatejointfundingofresearchthatwillyielddistinctbenefitstotheparticipatingfirms.
WhattheoptimumlevelofU.S.constructionR&Dspendingoughttobeisacomplexquestionforwhichthecommitteefoundnoreadyanswer.ObservationofU.S.performanceinintroducingtechnologicalinnovationandanerodingcompetitivepositionmakeitapparentthatthelevelofspendingviewedeitherasaninvestmentforincreasedproductivityorasanindicationofopennesstonewideasistoolow.
Directgovernmentinvolvementinconstructionresearchislimitedbutsignificant:
TheNationalScienceFoundation(NSF)hasbeenaprincipalsourceofsupportforuniversity-basedresearchactivitiesfortheU.S.designandconstructionindustries.ThroughtheNSF,NationalEngineeringResearchCentersarebeingestablished,suchastheCenterforAdvancedTechnologyforLargeStructuralSystems(ATLSS)atLehighUniversity.InadditiontoNSFfundsof$10.4millionoverafive-yearperiod,otherstate-relatedinstitutionsandtheprivatesectorareprovidingmatchingfunds.ThemajorgoaloftheATLSScenteristodoresearchanddeveloptechnologybenefittingU.S.structures-relatedindustriesindesign,fabrication,andconstruction,and
![Page 127: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/127.jpg)
inspectionandprotectionofstructuresinservice.
ThefederalgovernmentlaboratoriessuchastheArmy'sConstructionEngineeringResearchLaboratory(CERL),theNavy'sPortHuenemeCivilEngineeringLaboratory,theTyndallAirForceEngineeringandServicesResearchCenter,andtheNationalBureauofStandards'CentersforBuildingTechnologyandFireResearchconductresearchonadiverserangeoftopicswithmilitaryandcivilapplications.
![Page 128: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/128.jpg)
Page58
GrantsfromtheArmyCorpsofEngineershaveproducedmajornewresearchprogramsattheMassachusettsInstituteofTechnologyandtheUniversityofIllinois.
TheConstructionIndustryInstituteattheUniversityofTexasatAustinisanoutstandingexampleofresearchwithoutdirectgovernmentsupport.Morethan65organizationsrepresentingowners,contractors,and25academicinstitutionshavecombinedtheirresourcestotackleadvancedconstructionresearch.Theinstitutethenrepresentsanimportantmodelforbroaderpublic-privatepartnershipinconstructionresearch.
OtherEffortsNeeded
Anexaminationofresearchideasforaddressingsocietalneeds,undertakenbytheTechnicalCouncilonResearchoftheAmericanSocietyofCivilEngineersin1979,indicatesalonglistofresearchsuggestions,mostorientedtowardimprovingthemethodologyofengineering.Thelistincludesalargenumberofprojectsrelatedtoimprovingmethodology,manyofwhichcouldbevaluableintheinternationalarena.*
Thearchitecturalresearchcommunityisbasedalmostexclusivelyinuniversities,sothatthepotentialexistsforlinkingsuchresearchtoteachingprograms.Thecivilengineeringresearchcommunityisalsolargelybasedinuniversities,butthereissomemechanical,electrical,orelectronicresearchofdirectrelevancetotheconstructionsectorsbeingdonebytheseotherdepartments.Toalimitedextentbotharchitecturalandcivilengineeringresearchinstitutionsdoprojectsrelatedtomechanicalandelectricalsystems.Mostresearchinstitutionshaveprojectstiedtocomputer-baseddesignandengineering,butmoreworkisneeded,particularlytobringnewresultsintopractice,throughteachingandprofessionaloutreach
![Page 129: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/129.jpg)
programs.
WhilespendingonresearchoftenexceedsU.S.rates,theworkgoingoninconstructionsectorresearchprogramsinothercountriestendstomirrorprogramsinU.S.universitiesandgovernmentlaboratories,withthreemajorexceptions:
*AddressingSocietalNeedsofthe1980'sThroughCivilEngineeringResearch,TheAmericanSocietyofCivilEngineers,NewYork,NewYork,1979.
![Page 130: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/130.jpg)
Page59
TheworksupportedbytheSwedishgovernmentonbehalfofthebuildingindustrytendstobemuchmorepeople-oriented,describinguserrequirementsandhowtheserequirementsshouldbeaccommodatedindesign.However,theredoesnotappeartobeanybettermatchbetweentheresearchprogramsandtheteachingprogramsintheuniversitiesthanintheUnitedStates.
TheSovietUnionhassixmajorresearchunitswithinitsconstructionagencyGosstroy.Fiveoftheseunitsdotraditionalscienceandengineeringresearchofthetypedoneingovernmentbuildinglaboratoriesaroundtheworld,butoneresearchunitconcentrateson"cybernetics."Notmuchisknownabouttheworkofthisunit,butitpotentiallycouldrepresentaninterestingareaforcollaboration.
Withtheirgovernment'sstrongencouragement,thesixlarge,integratedJapaneseconstructioncompaniesallsupportresearchbyinternalunits.Theseprogramsincludehundredsofpeople,excellentfacilities,andabroadspectrumofsubjects(seebox).
Thiscommitteehasnotundertakentorecommendacompleteagendaforresearchinconstructionanddesign,andplanningofsuchanagendabyasinglecentralizedbodywouldinanycasebeunproductive.However,committeemembersfeelthatcertaintypesofresearchareclearlyneeded,suchasthesetwoexamples:
1.Thegeneralsubjectof"diagnostics"istalkedaboutwithinthearchitecturalresearchcommunityasanareaformethodologicalimprovement.Workonthissubjectcouldbegreatlyenhancedifuniversityresearchersandpracticingarchitectsworkedinparallelwithfirmsthatareinthebusinessofdesigningandmarketingdiagnosticinstruments.Aprogramthatprovidesspecialfundstoresearchunits(ascontrastedwithindividuals)withinuniversitiesthathadalreadyobtainedanagreementformatchingfundsfrominstrumentcompanieswouldencourageverticalintegrationbetween
![Page 131: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/131.jpg)
thearchitecturalsectorandtheequipment-producingsector.
2.Thedevelopmentofsafetymethodsforstructuresduringtheconstructionphasecouldbenefitfromcasestudies.Forexample,theNBSCenterforBuildingTechnologyhasjustcompletedastudyofthecollapseofL'AmbiancePlazainBridgeport,Connecticut,abuildingwhichwasbeingconstructedusingthelift-slabmethod.Thiscollapsecouldserveasacasestudyforastructuralengineeringfacultytodevelopacontinuingeducationcourseforengineersinpractice,thusprovidingalinkamongafederallaboratory,universityresearch,andprofessionals.Whilethissubjectisuniqueandtimely,
![Page 132: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/132.jpg)
Page60
THEJAPANESECONSTRUCTIONINDUSTRYANDR&D
JapanhasestablishedaMinistryofConstructionresponsibleforsettingnationalpoliciesonbehalfoftheconstructionindustry.Oneofitsmajorpolicydecisionswastoencourageprivatefirmstoestablishresearchanddevelopment(R&D)capability.Asaresultmorethan20ofthelargestfirmsinJapannowinvest1percentoftheirsalesinR&D,andintheseconstructionfirmsR&Dhasbecomeawayoflife.Eachhasestablishedwell-equipped,campus-likeresearchcenters,andresearchisintegratedthroughouttheiroperatingdivisions.
ThegovernmentofJapanprovidesataxdeductionforR&Dofupto1percentofrevenues,sometimesprovidesloans,andsometimessponsorsresearchprojectsdirectly.University-basedresearchisrelativelylimitedbyU.S.standards,butthegovernmentfundsandoperatesaBuildingResearchInstituteandaPublicWorksResearchInstitute.
ThelargeprivateconstructionfirmsinJapaninvestasmallportionoftheirresearchfundsineconomicandmarketingstudiesofwhattheyshouldbedesigningandbuilding,butmuchmoregoesintosuchtechnicalsubjectsasnewmaterialsanddesignideas.Theirlaboratoriesarefurnishedwiththelatestequipment:
Shaketablesforearthquakesimulation;
Windtunnelsforanalysisofstructuraldesigns;
Environmentalchambersforevaluatingperformanceofmechanicalequipment;
Soundchambers(bothquietandnoisyconditionchambers);
![Page 133: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/133.jpg)
Structuraltestingdevices;
Firetestingequipment;
Materialsandchemicaltestinglaboratories;
Cleanroomsformorehigh-technologywork;
Hydraulicandgeotechnicallaboratoriesforcivilworksprojects;and
Outdoortestingyardsforlong-termanalysisofweathering.
InadditionJapanesecompaniesdoworktoimprovedesignandconstructionprocessesthroughapplicationsofcomputer-aideddesignandengineeringsystems,newmethodssuchasslurrywallsinfoundationconstruction,andconstructionautomationandrobotics.Theyareworkinginotherfieldsaswell:
Biotechnologytoimprovethequalityoflakeandriverwateranddevelopanewwatertreatmentprocessingsystemforsewageandindustrialwaste;
Mechatronics,includingrobotization,teleoperationtechnology,automaticcontrols,andconstructionworkcontrolsystems;
Applicationoffifth-generationcomputersincludingcomputer-aidedplanning,designandconstruction,maintenance,andengineering;
![Page 134: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/134.jpg)
Page61
Newenergysources,includingcoalgasification,fuelcells,solarcells,solarthermalsystems,coalliquefaction,newbatteriesforenergystorage,andhydrogenenergy;and
Newprimarymaterials,forexample,theadditionofmetals,plastics,ceramics,andelectronicstoconventionalmaterials,suchassoils,rocks,cement,asphalt,andsteel.
Itseemslikely,atthemoment,thatthepeopleoftheUnitedStateswillbenefitmorefromtheJapanesestrategy(byimportingimprovedinfrastructureinthefuture)thanfromexistinginfrastructureresearchintheUnitedStates.
theconceptistohavethisworkserveasamodelforsimilarprojectsonarangeofstructuralsafetyproblemsandsolutions.
AswillbediscussedfurtherinChapter6,thedevelopmentofadvancedconceptsforinfrastructureposesaninternationalchallengeofenormousproportions.Thepresentpracticeofdealingwithurbantransportation,waterandenergysupplies,wastemanagement,andcommunicationsisbasedoninventionsdevelopednearlyacenturyago.Inthelargestcitiesoftheworldtheseoldinventionsareclearlynotwellsuitedtodealingwithpresentproblems,andinthesmallcommunitiesofthedevelopingworldtherehasalwaysbeenakindofhand-me-down,makeshiftqualitytothenatureofinfrastructureinvestments.
NewtechnologyforinfrastructurecouldpossiblyhelptheUnitedStatesavoidtheendlesscuttingandpatchingofour100-year-oldsystems,andcouldalsoprovidewholenewmarketopportunitiesintheinternationalsphere.Thereshouldbespecialprogramstoconcentrateoninfrastructuredevelopmentwithintheuniversityresearchcommunity.Theseprogramsshouldencourageuniversity
![Page 135: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/135.jpg)
unitsthatareskilledintheareasofthe''emergingtechnologies"toexplorewaysofcreatingneworhigher-performingsystemsforinfrastructure.Technologiessuchasnewceramics,advancedmicroelectronics,biotechnology,andgeneticengineeringshouldbeincorporatedintojointprogramswiththearchitecturalandcivilengineeringfaculties,andespeciallytoprovidegraduatestudentsfromthesetechnologicalareastheopportunitiestoworkoninfrastructure.Insuchprogramsuniversitiescouldassociatewithtradeandprofessionalgroups,suchastheAmericanPublicWorksAssociation,tointroduceengineersinpracticetonewtechnologiesandtheircapability.
Thecommitteerecognizesthatsomeengineeringschoolscanbestbeencouragedtoexpendresearchandteachinginconstructionby
![Page 136: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/136.jpg)
Page62
evidenceofemploymentinterestfortheirgraduates.Programsmaybeneededtolinkemployerswithgraduateprogramsinconstructionbyhavingtheuniversityofferspecialgraduateprogramsformatureemployeesofprofessionalfirms.
AstheJapanesemodelillustrates,university-basedactivityisnottheonlywaythatconstructionR&Dcanbeaccomplished,butintheUnitedStates,academicinstitutionshavebecometheprimarycentersofresearch.Thispatternisunlikelytochangeintheforeseeablefuture,norisitclearthatitoughttochange.Whatiscleartothecommittee,however,isthatbettermechanismsforlinkingresearchtoconstructionpracticeareneeded.
Thereisaneedaswelltoincreasethespeedwithwhichideasfromonefieldofresearcharetestedfortheirvalueinotherfields,andwithwhichideasofvalueenterpractice.ThecaseoftheBellLaboratories(CaseStudy4),drawnfromanindustrialsituationverydifferentfromconstruction,isneverthelessinstructivebecauseoftheirgreatsuccessinlinkingresearchtothemarket.Inconstruction,wherethemarketisdistributedamongsomanysuppliersandbuyers,projectsbuiltwithfederalgovernmentfundscanbeusedtodemonstratenewtechnology.AgoodexampleistheintroductiontoU.S.transitconstructionofprecastconcretesegmentaltunnelliners(seeChapter6).
TheU.S.DepartmentofCommercehasnoted,"Overthenexttwentyyearsitistotallyreasonabletoexpectthatwewillseewidespreadapplicationofthefollowingtechnologies:advancedmaterials,microelectronics,automation,biotechnology,computing,membranetechnology,superconductivity,andlasers."*Todayandinthenearfuturemanyothernewtechnologiesmaybeaddedtothelist.Mechanismsareneededtoexposethesenewtechnologiesandconstructiontooneanother,andtoproducedesignandconstructionprofessionalscompetenttomaketheconnectionsrequiredfor
![Page 137: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/137.jpg)
innovation.Besidesinstitutionalresearch,theremustbetrainingandeducation.
*EffectsofStructuralChangeintheU.S.EconomyontheUseofPublicWorksServices,U.S.DepartmentofCommerce,Washington,D.C.,1987.
![Page 138: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/138.jpg)
Page63
CaseStudy4:theBellTelephoneLaboratories
Theinventionofthetelephoneisperhapsthesinglebestmodernexampleofhownewtechnologycanalterbuildingandinfrastructure.TheBellTelephoneLaboratorieshaveformorethan60yearsbeenoneoftheleadingU.S.centersofresearchandinnovationsthathavechangedhowtodesignandbuildindividualstructuresandcities,aswellasthemorebasicstructureoftheeconomyandsociety.
ThecommitteerecognizesthattheBellLabsareaproductofaprivatesectormonopolycompanythathadverticalintegrationandanabilitytomakeeffectivedecisionsaboutresourceallocationandmanagementstrategy,withgreatereasethanisthecaseinU.S.designandconstruction.Nevertheless,manycharacteristicsoftheBellLabscanserveasausefulmodelforinstitutionalarrangementsneededtostrengthenU.S.buildingresearch.Itisinstructivetolookatthehistoryandaccomplishmentsofthisorganization:
Theinventionofthetelephonewasnotinspiredbyapre-existentpopulardemand.Rather,itcameaboutlargelythroughtheingenuityandvisionofonemanAlexanderGrahamBell.Hisbeliefthattherewasagreatpotentialneedfortwo-wayvoicecommunicationoveradistance,aneedofwhichfewmenhadbeenconscious,wasconfirmedbyitsimmediatesuccessandspectaculargrowthinspiteofearlytechnicallimitations.
Bytheendofthefirstfiftyyearsagreatnewindustryhadbeendeveloped.TherewerenearlyseventeenmilliontelephonesintheUnitedStates,almosttwelvemillionofthemintheBellSystem.Andinperhapsnootherfieldhadtheforceofscientificresearchinsupportofengineeringdevelopmentbeensoeffectivelydemonstrated.*
AstheAT&TCompanyAnnualreportfor1913said:
Atthebeginningofthetelephoneindustrytherewasnoartofelectricalengineeringnorwasthereanyschooloruniversityconferringthedegree
![Page 139: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/139.jpg)
ofelectricalengineer.Notwithstandingthisthegeneralengineeringstaffwassoonorganized,callingtotheiraidsomeofthemostdistinguishedprofessorsofscienceinouruniversities.
Asproblemsbecamemoreformidableandincreasedinnumberandcomplexity,theengineeringandscientificstaffwasincreasedinsizeandinitsspecializationsothatwenow(1913)haveworkingatheadquartersontheproblemsoftheassociatedcompaniessome550engineersandscientistscarefullyselectedwithdueregardtothepracticalaswellasthescientificnatureoftheproblemsencountered.
*AHistoryofEngineeringandScienceintheBellSystem,BellLaboratories,MurrayHill,NewJersey,1975.
![Page 140: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/140.jpg)
Page64
Itcanbesaidthatthiscompanyhascreatedtheentireartoftelephonyandthatalmostwithoutexceptionnoneoftheimportantcontributionstothearthasbeenmadebyanygovernmenttelephoneadministrationorbyanyothertelephonecompanyeitherinthiscountryorabroad.
By1924thetechnicalprogramsoftheBellSystemhadsogrowninrangeandintensity,andinnumberofpersonnel,astosuggestformationofasingleneworganizationtohandlemostoralloftheseactivities.SuchanorganizationwasformedonDecember27,1924,andstartedoperationsonJanuary1,1925,underthenameofBellTelephoneLaboratories,Incorporated.ThiscorporationhadadualresponsibilitytotheAT&TCompanyforfundamentalresearchesandtotheWesternElectricCompanyfortheembodimentoftheresultsoftheseresearchesindesignssuitableformanufacture.Atthedateofincorporation,thepersonnelnumberedapproximately3,600,ofwhomabout2,000weremembersofthetechnicalstaff,madeupofengineers,physicists,chemists,metallurgistsandexpertsinvariousfieldsoftechnicalendeavor....
Technologicalinnovationhadformedtheindispensablecorefortelephony'sgrowthupto1925,butwasevenmoresignificanttothefuturebecausesomuchofitwasfundamental:thewaywasbeingpreparedformorepowerfulsystemsyettocome,whichwouldbeessentialtotheenormousexpansionfelttobelyingahead.Perhapsmoresignificantly,theapplicationofscientificmethodstosolvingthe"system"problemsoftelephonysetapatternthatinfluencedindustrialresearchanddevelopmentbydemonstratingthepowerofthesemethodsanddevelopingtechniquesofmanagementthatencouragedtheiruse.
Backinguptheworkonsystems,whichhadlaidthegroundworkforsomuchthatwasyetneeded,werethesuccessfulmanagementtechniqueswhichhadbeendevelopedforconductingandapplyingresearch,themeansforcloselycontrollingthequalityofmanufacturedproduct,andatypeoforganizationprovidingcloseintegrationoftheuser,technicaldeveloper,andmanufacturer.
TheBellLabshaveproducedthetransistor,thelaser,thesolarcell,andthefirstcommunicationssatellite,aswellassoundmotion
![Page 141: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/141.jpg)
pictures,thescienceofradioastronomy,andcrucialevidenceforthetheorythataBigBangcreatedtheuniverse.Whiletheyareaprivatelaboratory(inthedistinctionmadeintheUnitedStatesbetweengovernmentandprivateresearchwork),theirfinancialsupportwaslargelygeneratedfromakindoftaxoneverytelephoneintheUnitedStates(beforethebreakupofAT&Tin1984),whichinturnwasallowedbytheirrateexaminers(apublicinstitutiondesignedtomonitoramonopolyutility).Thepotentialfordirectemulationbyagovernment/industryresearchcenterislimited,therefore,buttheoperatingprincipleofstrivingforincreasedsystemsperformanceby
![Page 142: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/142.jpg)
Page65
teamsofscientists,engineers,manufacturers,andsystemsoperatorsisagoodone.
Today'stelephonecallerusescomponentsBellneverdreamedof,today'sdriverdependsonsystemsDaimlerandBenzneverthoughtof,andtoday'shomeownerswitchesonapowerandlightsystemthatEdisonneverenvisioned.Thesediscoverieshavelongsincebeenembeddedinmammothnetworksoftechnologythatnosingleindividualinvented.
Technologicalsystemsevolvethroughrelativelysmallstepsmarkedbytheoccasionalstubbornobstacleandbycountlessbreakthroughs.Oftenthebreakthroughsarelabeledinventionsandpatented,butmoreoftentheyaresocialinnovationsmadebypersonssoonforgotten.Intheearlydaysofasystemsuchaselectriclightandpower,inventorsplayedtheprominentrole.Thenasthesystemmaturedandexpandedtourbanandregionalnetworks,otherscametothefore.Electriclightandpowersystemstodayarenotjustscaled-upversionsofthePearlStreetstationthatEdisonintroducedinNewYorkCityin1882.Bytheturnofthecentury,forexample,itwastheutilitymanager,nottheinventororengineer,whoplayedthemajorroleinextendinground-the-clockservicetomanydifferentkindsofcustomerstothenightshiftchemicalplantaswellastherush-hourelectricstreetcars.*
*ThomasP.Hughes,Theinventivecontinuum,Science84,November1984.
![Page 143: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/143.jpg)
Page66
5EducationandTrainingAlthoughtheU.S.systemofprofessionaleducationcontinuestoproducehighlyqualifiedengineers,architects,andconstructionmanagers,andtoattractstudentsfromcountriesaroundtheworld,thecommitteeneverthelessfeelsthatchangeisneeded.Experienceintheinternationalconstructionmarketshowsclearlythatyoungprofessionalsneedstrengthinfourkeyareastomeetthechallengesofglobalcompetition:
Astrongtechnicalbase;
Aclearunderstandingofdesign;
Anunderstandingoftheintimateconnectionbetweentechnologyandculture;and
Anunderstandingofforeignlanguagesandregionalstudies.
Strengthinthesefourareascannotbeachievedonlywithinthecontextofformaleducationalprograms.Institutionsofferingundergraduatetrainingnecessarilyfocustheirattentionandlimitedresourcesondevelopingastudent'sbasicskills,understanding,andintellectualoutlookneededtomaintainprofessionalsuccessoverthecourseofseveraldecades.Realworkexperienceisanindispensableelementofeducationandtrainingforinternationalconstruction.
![Page 144: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/144.jpg)
Page67
ProgramsofStudy
Educationincivilengineeringorarchitectureistheprimarycourseofstudyforprofessionalsenteringconstructionanddesignleadingtoconstruction.Otherengineeringandscientificdisciplines,culture,history,art,andtheoftenintuitiveprocessesofdesignarealsoessentialelementsofknowledgefortheconstructionprofessional.However,constructionprofessionalsnotethatconstructioncannotbetaughtinthesamewayasmanufacturingorotheractivitieswithstandardizedproduction.Constructiontrainingneedsthespecificityofcarefullychosencasestobalancethetendencyofformaleducationalprogramstowardabstractionandgeneralization.DespiteJapaneseandEuropeanexperiencewithmodularhousing,thefailureofProjectBreakthroughintheearly1970swasanexampleofthemistakenbeliefthatstructurescouldbebuiltthesamewayasmachines(i.e.,usingthemassproductionlinesoftheautomobileindustry).
Engineering
IntheUnitedStatestoday,267academicinstitutionsoffer1,323engineeringprogramsaccreditedatthebachelor'sleveland30atthemaster'slevel(seeTable9).(Whilethereareamuchlargernumberofgraduateprogramstheydonotrequireaccreditation.)Thegeneralcriteriaforbasicaccreditationofengineeringprogramsrequireatleastoneyear'straininginacombinationofmathematicsandbasicsciences,oneyear'straininginengineeringscience,one-halfyear'straininginengineeringdesign,andone-halfyear'straininginhumanitiesandsocialsciences.Uptooneyearisthenavailableforotherrequiredandelectivecourses.Thecriteriaforaccreditationattheadvancedlevelrequirethecompletionofabasiclevelprogram,plusafifthyear.Intheadditionalyear,atleasttwo-thirdsmustcomprisesomecombinationofadvancedlevelworkinmathematics,basicscience,engineeringscience,andengineeringdesign.Table10
![Page 145: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/145.jpg)
providesaperspectiveontheannualnumberofgraduatesofengineeringprogramsattheB.S.,M.S.,andPh.D.degreelevels.
Therearefouraccreditedprogramsinengineeringmanagement.However,engineeringmanagementprogramsaretypicallyofferedattheM.S.degreelevel,andaccreditationatthegraduatelevelisnotprevalentbecauseofarestrictivepolicywhichseverelylimitstheaccreditationopportunitiesforengineeringprogramsatthatlevel.
![Page 146: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/146.jpg)
Page68
TABLE9TotalAccreditedEngineeringProgramsbyProgramArea,asofOctober1986
ProgramAreaBachelor'sLevel
Master'sLevela
Civil,construction 201 1Engineeringmanagement 3 1Architecturalengineering 10 0Mechanicalengineering 218 2Electricalengineering 238 3Chemicalengineering 142 1Industrialengineering 85 1Allother(24areas) 426 21
Total 1,323 30
aThesearetheaccreditedprogramsatthemaster'slevel.Mostaccreditationoccursatthebachelor'slevel,sothatthereareonlyafewgraduateprogramscountedforaccreditationpurposes.
TABLE10DegreesinEngineeringAwarded,1986
DegreeProgramArea B.S. M.S. Ph.D.
Civilengineering 8,798 3,197 439Engineeringmanagement (N/A) (N/A) (N/A)Architecturalengineering 381 48 0Mechanicalengineering 16,702 3,462 565Electricalengineering 24,514 5,926 779Chemicalengineering 6,148 1,430 534Industrialengineering 4,645 1,798 120Allother(15areas) 16,990 7,164 1,249
![Page 147: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/147.jpg)
Total 78,178 23,025 3,686
Note:Currently,thereare95institutionsofferingfour-yearbachelor'slevelprograms,and155offeringtwo-yearassociatedegreeprogramsinengineeringtechnology.Theseinstitutionsoffer273and460programsatthefour-yearandtwo-yearlevels,respectively.Nopublisheddataareavailableonthenumberofdegreescurrentlyawardedperyearinthetechnologyprograms.
![Page 148: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/148.jpg)
Page69
Atpresent,thereareapproximately20graduatelevelprogramsinengineeringmanagementofferedatU.S.institutions.
Architecture
Thereare103accreditedprofessionalarchitecturedegreeprogramsinNorthAmerica.Aprofessionaldegreeiseitherafive-yearbachelorofarchitectureoramasterofarchitecture.AccordingtostatisticsthatareavailablefromtheNationalArchitecturalAccreditingBoard(NAAB),3,088B.Arch.degreesand1,545M.Arch.degreeswereconferredin19861987.
Althoughithasbeensaidthat"thereexistasmanycurriculaasthereareprogramsinarchitecture,andinmanyschoolsthereareanumberofoptionsthatleadtothecompletionofthedegreerequirements,"professionalarchitectureprogramsactuallysharesimilarcorecurricula.Criteriaforaccreditationrequirecoursesindesign,history,materials,humanbehavior,practice,andsoon,withtheemphasisplacedonthedesignstudio.Othercoursestakeneitherwithinthearchitectureschoolorinotherdepartmentsaremeanttocomplementandenhancethedesigncoreoftheprogram.ThephilosophystatementoftheGraduatePrograminArchitectureatColumbiaUniversityisrepresentativeofmanyarchitectureschoolsinitsdeclarationthat
Columbia'sGraduateSchoolofArchitectureisdedicatedtothepropositionthatarchitecturaldesignhasalwaysbeenandwillcontinuetobethecoreofprofessionaleducation.Behavioral,technological,andarthistoricalcourseworkisofferedassupportforthedesignstudio.Oftenattemptsaremadetointegratetheattitudesinherentinthesedisciplinesintothedesignexercises.However,itistheabilitytosynthesizevast,differentiatedbodiesofknowledgeastheyaffectandmodifythedesigndecision-makingprocessthatisstressed.
Inadditiontothebasiccorerequirements,theremayalsobea
![Page 149: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/149.jpg)
sequenceofcoursesinarchitecturalhistoryandtheory.Manyschoolsalsorequire,oratleastencourage,speechorwritingcourses,andotherworkinthehumanitiesandsocialsciencestoparallelprofessionalcourses.
EngineeringandArchitectureTechnology
Engineeringandarchitecturebothinvolveamixoftechnicalskillandcreativeapplicationofjudgmentabouthowgeneralprinciplesapplyinspecificcases.Therelativebalancebetweeninnovative
![Page 150: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/150.jpg)
Page70
thinkingandstraightforwardanalysisshiftsfromjobtojob,andfromtasktotaskwithinaproject.Opportunitiesarisefordividingthelabor,givingriseinturntoopportunitiesforpersonnelwhofunctionasabridgebetweendesignerandcraftsman.
Engineeringandarchitecturaltechnologyrequiretheapplicationofscientificandengineeringknowledgeandmethodscombinedwithtechnicalskillsinsupportofengineeringandarchitecture.Thetechnologistisapplications-oriented,buildingonabackgroundofappliedmathematics,science,andtechnologytoproducepractical,workableresultsquickly;toinstallandoperatetechnicalsystems;todevisehardwarefromprovenconcepts;todevelopandproduceproducts;toservicemachinesandsystems;tomanageconstructionandproductionprocesses;andtoprovidesalessupportfortechnicalproductsandsystems.
Normally,thetechnologistwillholdadegreefromanaccreditedengineeringorarchitecturetechnologyprogram.Incontrasttothetwo-yearprogramsoftrainingfortechniciansqualifiedtoconductrelativelystandardfieldmeasurementsandlaboratorytests,thetechnologistmayspendanadditionalonetotwoyearsreceivingtraininginbasicprinciples.Becauseofhiskeyroleasanimplementer,thetechnologistiscalledontomakeindependentjudgmentsthatwillexpeditetheworkwithoutjeopardizingitseffectiveness,safety,orcost.Thetechnologistshouldbeabletounderstandthecomponentsofsystemsandbeabletooperatethesystemstoachieveconceptualgoalsestablishedbytheresponsibleengineeringorarchitectureprofessional.
ContinuingEducation
Generallyspeaking,professionalenhancementthroughcontinuingeducationprobablyoffersthemostpromiseforthenear-futuredevelopmentofprofessionalsintheinternationalconstructionfield.
![Page 151: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/151.jpg)
Manyopportunitiesexistforbotharchitectsandengineers,withdiversesubjectmatters,institutions,andlengthsofcourse.Thesubjectmattermayrangefromtechnicaltopicsatahighlevelofsophistication,toadministrationandmanagement.Continuingprofessionaleducationcoursesareofferedprimarilybyeducationalinstitutions,professionalandtechnicalsocieties,largecorporations,andengineeringfirms.
ThepolicyoftheAmericanInstituteofArchitects(AIA)oncontinuingprofessionaleducationstates:
![Page 152: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/152.jpg)
Page71
Theultimateresponsibilityforprofessionaldevelopmentlieswiththeindividualarchitect.Professionaldevelopmentoccursproperlyinbothformalcontinuingeducationandlessformallearningexperiences,includingeverydayprofessionalpractice.TheAIAadvocatestheprofessionaldevelopmentofitsmembersandiscommittedtoprovideresourcesandservicesinitssupport.
Inmanyinstances,courseofferingsinsubjectareasfrequentlynotincludedinformal,university-basededucationaremoreproperlyavailableinacontinuingprofessionaleducationsetting.Economics,costestimating,realestateprinciples,management,andothercoursesthatarenottraditionallyofferedinaprofessionaldegreeprogrammightinfacthavegreaterimpactontheprofessionalstudentwhoalreadyhassomeworkexperienceonwhichtobuild.
IssuesinCivilEngineering
Civilengineeringteachinginthepasttwodecadeshasfocusedonmethodsofanalysis.Theemphasishasbeenonfundamentalstudiesofmechanics,appliedmathematics,andtheanalysisofstructuresorofsystems.Thecomputerhasalreadyinfluencedmuchofthisteachingandthatinfluenceisincreasing.Coursesinsteelandconcretestructuresdoincludecurrentpracticeasexpressedincodesanddofocusontheprinciplesofdetailedproportioningoncetheformandloadsaregiven,butcivilengineeringeducationisalmostexclusivelyanalytic,concentratingoninstillingbasicknowledgeanddependingonsubsequenton-the-jobexperiencetoteachstudentshowtoapplythisknowledge.
EmphasisonDesign
Thisdominanceofanalysismeansthatthereisalmostnoteachingdevotedtodesignasasynthesis,toconstructionastheprocessofeconomicalbuilding,andtotheperformanceandpermanenceofcivilworksasderivedfromfieldobservations.Thepresentthrustof
![Page 153: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/153.jpg)
educationtreatstheworksasobjectsforanalysisratherthanassubjectsforcreatingnewideasindesignandconstruction.
Thisteachingdirectionmirrorscloselythepresentstateofstructuralresearchweightedheavilytowardmethodsofanalysisandoncomputers.Fromadesignstandpointthisresearchispassive;itisorientedtowardimprovementsinanalysisratherthanchangesindesign.Itiscertainlytruethatmoreefficientanalysiscanhelpdesignas
![Page 154: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/154.jpg)
Page72
aprocess,butitishardtoshowhowmorecompetitiveconstructionhasarisenbecausedesignasaprocessismoreefficient.
Designimprovementdependsoneffectiveperformanceevaluation,forwhichfieldobservationsarecrucial.Theperformanceofactualcivilworksisnotcurrentlyapartofeducation.Existingcoursesonanalysisdoprovideasoundbasisforinterpretingtheresultsoffieldobservations,butatpresentthispowerfulpotentialisunrealized.Becauseeducatorsdonotusedatafromrealworksintheirteaching,thereislittleefforttocollectdata,andsuchdata,ifcollected,rarelyarepublished.Intheteachingofconcretestructures,forexample,performancecriteriaaretaughtalmostexclusivelythroughcodeprovisions,whichisofcoursenecessarybutnotsufficient.Designistreatedascontrolledbyageneralizedsetofrulesratherthanasinformedbyspecific,butcharacteristic,examples.
OnedramaticexampleofthetendencytotreatimprovementsincivilworksasarisingfromgeneralanalysisisthehighwaypavementresearchprogrampursuedbytheBureauofPublicRoadsfrom1920to1945.Theprogramtriedtorepresentobservationsofperformanceandconstructedalongseriesoflaboratoryanalyticstudiesdevotedtothefundamentalsofpavementdesign.Thatworkultimatelyhadtobeabandoned,andfollowingWorldWarIIthebureaureturnedtoamajorfull-scalefieldstudyasthebasisfordesignimprovements.However,thelessonslearnedinthisanalyticalworkstillunderliecurrentunderstandingofthematerialsmechanicsofpavementbehavior.
ConstructionManagement
Constructionandconstructionmanagementaretreatedseparatelyfromdesign,andtheultimaterelationshipbetweendesignandconstructionisonlyrarelydiscussed.Also,constructionisoftentreatedasasetofprocessestobeanalyzedandnotasaseriesof
![Page 155: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/155.jpg)
individualuniquecases.ThisdistinctioniswellrecognizedinpracticeandwasrecentlyarticulatedinaneditorialoftheEngineeringNewsRecord(May7,1987)commentingonanApril1987workshopsponsoredbytheNationalScienceFoundationatLehighUniversity:
Thedominantthemewasrejectionoftask-specificrobotsorexpertsystemsandembracingnewmethodstodistributeinformation.Thereasonforbothisthesame:constructionisoneofthemessiestindustriesaround.Eachprojectdiffersfromothersandeachchangesfromdaytoday.Figuringouthowtocompleteaconstructionprojectefficientlyhasnorelationtofiguringouthowtomakethesame
![Page 156: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/156.jpg)
Page73
spotweldinthesamecarchassiseveryfewseconds.Repetitionisirrelevant;coordinationisvital.
Theabsenceofconstructionmanagementinacivilengineeringeducationthusleavesadistinctvoidthathasimportantimplicationsforhoweffectivelytheresultingprofessionalscansupportconstruction.ThisvoidmaytheninfluencetheentireU.S.constructionindustry.
IssuesinArchitecture
Formostofrecordedhistory(goingbacktothetimeoftheEgyptianpharaohs)architectswereeducatedbybecomingapprenticedtoaprofessionalalreadyinpractice.Towardtheendofthenineteenthcentury,formalschoolswereestablishedoutsideofthearchitect'sofficetoprovidespecial''ateliers"forgainingaprofessionaleducation,usuallywithmoreemphasisontheartofarchitecturethanwasaffordedanapprenticeinanormaloffice.TheEcoledesBeauxArtsinParisbecamebytheearlypartofthetwentiethcenturytheleadingplacetostudyarchitecture,ifone'sfamilycouldaffordit.Theinfluenceofthisschool'smethodofteachingspreadaroundtheworldascollegesanduniversitiesbegantoofferarchitecturecourseswithintheirprograms.
BythetimeofWorldWarII,the"designstudio"agroupof10to20studentsunderthedominanceofa"crit"(memberoftheteachingfacultywhocriticizedthestudentswork)formedtheheartofallschoolsofarchitecture,andstilldoestothisday.Themethodofteachingisessentially,therefore,stillaformofapprenticeship,butwithaseriesofmastersandwithnovisiblefinancialconnectionbetweenmasterandapprentice.Whenastudentisfortunateenoughtoworkwithoneormorereallyskilledcrit,theeducationalformatissuperb,butwhenthecritisneitheraskilledpractitionernoragoodteacher(andthisisalltoooftenthecaseinthepastfewyears),the
![Page 157: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/157.jpg)
studentisnotwelleducated.
Further,thecontextoftheuniversitytendstobedominatedandovershadowedbythedemandsofthedesignstudio.Itisacommonsighttofindthelightsinthearchitecturedesignstudiosburningallnightwhenastudentprojectiscomingupforjuriedevaluation.Theterm"encharrette"wascoinedduringtheseperiodsofintenseconcentrationintheEcoledesBeauxArts,becauseatthefinalandformalendofaproject'sschedule,acartor"charrette"wouldbepulledthroughthestudiostocollectthestudents'work.
![Page 158: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/158.jpg)
Page74
Criticsofthearchitectureeducationsystemclaimthatthedesignstudioisoveremphasized,andthattechnicalinstructionsuffersasaresult.Proponentsofthestatusquosuggestthatitispossibleforastudenttoacquireneededspecifictechnicalskillsintheworkplace.
SpecializationandSmallPractices
Whileeducationemphasizescreativedesigninthestudiosetting,architectureaspracticedbyprofessionalswhoarelicensedbyeachstateisasynthesizingactivitywhichconvertstherequirementsofaclientintobuildingspacesthatarestructurallysound,provideasafeandhealthyenvironment,areeconomicallysuitedtotheclient'sneeds,andarestylisticallyinkeepingwithboththeclient'stastesandtheprofessionalcommunity'sstandards.Inpractice,thearchitectwilluseconsultingengineersforsuchspecializeddesignandanalysisasstructuralsystems,heating,ventilating,andair-conditioningsystems,lighting,acoustics,energyefficiency,costestimating,andsoon.Thepracticingprofessionalthenmustbepreparedduringhiseducationalprogramtounderstandandcommunicatewithsuchconsultants,butnotnecessarilytohavetheseanalyticskillshimself.
Asthenovicearchitectmovesintopractice,hewillbeledtofocusondesign,engineering,construction,ortheproductionofworkingdrawingsandspecifications.Inlargefirmsmostemployeeswillendupontheproductionside,anditisthoseskillsthatareaddressedinvaryingdegreesbyschoolsofarchitecture.Thoseschoolsthatareorganizedaroundtwo-orfour-yearprogramsof"architecturaltechnology"aremostclearlyfocusedonprovidingthetrainingforpeoplewhowilldevotetheircareerstodesignproduction.ThereareaboutadozenschoolsintheUnitedStateswithprogramsinarchitecturalengineering,havingastheirpurposethepreparationofprofessionalswhowillfocusonthataspectofpractice(whichalmostalwaysmeansstructuralengineering,however).Thevastmajorityof
![Page 159: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/159.jpg)
studentsarebeingeducatedasthoughtheywillbedesigners.ItisnotsurprisingthatintheUnitedStatessomanysmallarchitecturefirmsexist(themediansizeofarchitecturefirmsis4.2personsonthestaff),sincethedesignerhastobeseenas"gifted"toplaythatroleinalargefirm,andnotmanygraduatesofarchitectureschoolscanmeetthecriteriaassociatedwith"gifted."
Inthepastfewyears,especiallyinhigh-pricedrealestateareassuchasCaliforniaandNewYork,architecturegraduateshavebeenpursuingcareersinthedevelopmentsideofthebuildingindustry.
![Page 160: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/160.jpg)
Page75
Thisisnotonlyamorelucrativecareerchoice,butsinceadevelopmentfirmnormallybuildsfirstandsellsorleaseslater,itprovidesaneasiermeanstobeing"thedesigner"fortheprojects.Asindicatedelsewhere,internationalpractice(outsideoftheUnitedStates)tendstobedominatedbyfirmsthatareverticallyintegratedsothatarchitectsandengineersarestaffmembersoflargefirmsthatprovide"turn-key"servicestotheirclients,asituationpoorlysuitedtothegreatmajorityofU.S.architecturalfirms.
ArchitecturalResearchandEducation
The103schoolsofarchitectureinNorthAmericahavehadaninconsistenthistoryofresearch.Themajorityoftheschoolshavenoformalunitconcernedwithresearch,althoughindividualfacultymembersmightundertakeresearchstudiesthemselves.Itwouldbeunusualforsuchindividualresearcheffortstoincludeundergraduatestudents,anditwouldbedifficulttodocumentthecontributionsthatsuchresearchmakestotheteachingprogramoftheschool.TheArchitecturalResearchCentersConsortium,createdin1976,isagroupofsome30researchunitsattachedtoschoolsofarchitecturethatprovidesameansofexchangingresearchplansandresults.Theconsortium,originallyintendedtomakeitpossibletoundertakelarge-scaleresearcheffortsbycombininginstitutionsintoteams,hashadlimitedsuccess.
Toenhanceprospectsforarchitecturalresearchasacontributiontoeducation,thecommitteerecommendstheinclusionofadvancedtechnologicalcontentinthearchitecturalcurriculum:
Coursesthatprovideanunderstandingofhowbuildingsareactuallybuilt,notjustthematerialsandequipmentthatgointoabuilding,butthetoolsandtechniquesusedforconstructioninthefieldandinthefactory;
![Page 161: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/161.jpg)
Coursesthatprovideworkingexperienceintheuseofcomputersastoolsofdesignandanalysis;and
Designstudiocoursesorganizedaroundmakinguseofthegrowingresearchbase,whichrangesfromresearchonhumanneedstoresearchonindoorairquality.
Unlessprofessionalsinpracticereceiveearlytraininginhowtousetheknowledgebaseavailabletothem,theywillnotlikelydoso.ContinuingeducationprogramsshouldbeofferedbytheAIAandprofessionalschoolstoprovideprofessionalsinpracticeopportunities
![Page 162: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/162.jpg)
Page76
tolearnabout,andexperience,thedesignandconstructionpracticesofothercountries.
SkillsforGlobalEnterprise
Knowledgeofforeignlanguages,culturalenvironmentsofothernations,andsignificanceofhistoricandculturalcharacteristicsforbothbusinesspracticeandbuildingisthebasisforeffectiveperformancewithintheinternationalconstructioncommunity.ThecommitteeobservesthattheUnitedStateshasnotkeptupwithitsforeigncompetitionindevelopingtheseskills.
Forexample,afewarchitecturalschoolsofferstudy-abroadprograms,butfacultyopinionsaboutthevalueoftheseprogramsismixed.Inmostcases,studentsreturnedtotheirhomeinstitutionswithamoresophisticatedandheightenedawarenessofdesignpossibilities;inoneortwoinstances,thisheldtrueforbuildingtechnologyproblemsaswell.Mostoftheprogramsprovideforampleopportunityformixingwithstudents,faculty,andlocalpractitionersinothercountries.
Whileitisgenerallyagreedthatthistypeofexperiencecontributessignificantlytoanyeducation,mostfacultyrespondingtoaquestionnairedistributedbythecommitteefeltthatsuchaprogramdidnotadequatelypreparestudentsforprofessionalinvolvementininternationalconstructionprojects.Therewasuniformagreementthatfewstudentshadforeignlanguageskills,withtheexceptionofaprograminChinaorganizedbyCarnegie-MellonUniversity,forwhichthestudentswererequiredtostudyChineseforoneyearpriortoenrollingintheprogram.
Cross-CulturalTrainingfortheConstructionIndustry
The"AgendaforAmericanCompetitiveness,"issuedbytheBusiness-HigherEducationForum,theNortheast-MidwestCoalition,andthe
![Page 163: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/163.jpg)
CongressionalClearinghousefortheFuture,pointsoutthatabout10,000English-speakingJapanesebusinessexecutivesworkinAmerica,handlingbillionsofdollarsintrade,someofthattradeinconstruction.However,veryfewofthe1,000AmericanbusinessmeninJapancanspeakJapanese.Generallyspeaking,theJapaneseseemtobemuchbetterequippedtocometotheUnitedStatestostudythetechnologiesandpracticesofindustryherethanAmericanswouldbetogotoJapan.
![Page 164: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/164.jpg)
Page77
A1984surveycitedbythe"Agenda"reportdemonstratedthatU.S.studentsareincreasinglyignorantofworldgeography(andinparticular,countrieswhichareofstrategicimportancetotheUnitedStates):fewerthanhalfcouldlocateIran,only30percentcouldlocateAfghanistan,andonly25percentknewwhereElSalvadorwas.
The"Agenda"reportrecommendedthatcollegesanduniversitiessignificantlystrengthentheirinternationalstudiescourseslanguage,cultural,political,andeconomicsandmakethemreadilyavailabletoU.S.businessexecutivesaspartoftheirownlifelonglearningprograms.Certainlybusinessdegreeprogramscannotaffordtoignoretheincreasedglobalizationofbusinessbothdomesticallyandinoverseasmarkets.
Engineeringschoolswoulddowelltoconsiderforeignlanguagedegreerequirementsandinternationalstudiescourses.Onewaytoinvolveengineeringstudentsinsuchstudieswouldbetodesignthecoursessothattheywouldincludeengineeringaspectsofotherculturesandanemphasisontherelationshipbetweentechnologyandculture.Architecturestudentsalreadyreceiveastrongdoseofculturalstudiesinthearchitecturalhistorycoursesthatareapartofthecorecurriculum.ThecommitteesuggestsinparticularthattheFulbrightProgramshouldbeexpandedtoencouragemorearchitectsandengineerstogainexposuretoothercultures.
Accordingtoareport*oftheNationalAcademyofEngineering(NAE),onewayofconnectingU.S.engineerswithforeigntechnologiesisbyincreasingtheirparticipationininternationalactivities,particularlyinthesettingofinternationalstandardsforproductsandservices.Anotherwaywouldbethroughthedevelopmentofcasestudies,researchedandwrittenbyexpertconsultantsfromvariousnations,andthenincorporatedintothecurriculum.
![Page 165: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/165.jpg)
TheNAEreportstatedthat"technologicalisolationwillsurelyunderminethefutureofourindustries."Increasingly,astheU.S.designandconstructionindustrieslooktogreaterparticipationintheglobalenterprise,engineeringschools,professionalsocieties,andbusinessorganizationsmustlookoutsidethemselvestolearnhowtodobusinessinaninternationaleconomy.Onlythroughmoredeliberateexposuretoforeignlanguages,geography,business,andculturewillU.S.designprofessionalsgainaccesstoforeign-originated
*StrengtheningU.S.EngineeringThroughInternationalCooperation:SomeRecommendationsforAction,NationalAcademyPress,Washington,D.C.,1987.
![Page 166: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/166.jpg)
Page78
technologies,fostercooperationwithforeignworkforcesoverseas,anddevelopanincreasedabilitytodealwithforeignsourcesofbusinessopportunitiesandfinance.
AcquiringForeignLanguages
Thestudyofforeignlanguagesisnotgenerallyofconcerninthepresenteducationalprogramsofeitherarchitectsorengineers.Inthecontextofthisstudy,well-developedlanguageskillsarefarmoreimportantforthecomprehensionofaparticularculturethanforthepurposeofdoingbusiness,asEnglishhasvirtuallytakenoverastheinternationallanguage.AccordingtoaModernLanguageAssociation(MLA)LanguageEnrollmentSurveyconductedinthefallof1986,totalenrollmentinlanguagesotherthanEnglishatAmericancollegesanduniversitiesexceeds1millionforthefirsttimein14years.Thesurveyresultsindicateanincreaseofalmost4percentbetween1983and1986,continuingatrendthatbeganin1980.ItisinterestingtonotethatJapaneseandChinesecourseshadthefastest-growingenrollments(45and28percentincreases,respectively),althoughtotalnumbersofstudentsstilltrailthosestudyingSpanish,French,German,orRussian.Figuresarenot,however,brokendownaccordingtofieldsofstudy.
IntheNAEreport,thecommitteestated,"EducationalinstitutionsshouldrespondtotheurgentneedforincreasedcapabilityinAsianlanguagesandcultureforU.S.engineersandtechnologists.Graduatedegreeprogramsinengineeringandappliedsciencesshouldemphasizetheneedforspokenandtechnicalcompetencyinatleastoneforeignlanguage."Thesamechapteralsoemphasizes"theusefulnessofearlystudyoflanguagesandexperiencethatreinforceslanguageskillsneedstobebetterappreciatedbyyoungpeoplewhowishtopursuecareersinengineeringandtechnology."Itisalsosuggestedthatstudyofanylanguagebedoneinconjunctionwith
![Page 167: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/167.jpg)
studyofthetechnologyandthecultureinquestion.Havingsomefamiliaritywithaforeignculture,evenwithoutthelanguage,canbeveryhelpfultothoseprofessionalsworkingoverseas.
Asfarasarchitectureprogramsareconcerned,itissafetosaythatthesameistrue,althoughthisinformationisschool-specific,accordingtotheAssociationofCollegiateSchoolsofArchitecture(ACSA).Forcertainspecialareasorprogramswithinthefield,suchasarchitecturalhistoryortheory,certainlanguagesmaybemandatory(suchasaRensselaerPolytechnicInstituteprograminRome,
![Page 168: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/168.jpg)
Page79
whichhasaprerequisiteofoneyearofItalian),butlanguagesarenotrequiredforgeneraladmissiontomostschools.Inundergraduatearchitectureprograms,thereisgenerallymoretimeforelectivecoursesthaninengineeringschools,asthefirstprofessionaldegreeisoftenstructuredforfiveorsixyearsofstudy.Inmanyarchitectureprograms,studentsarestronglyencouragedbutnotrequiredtotakecoursesinotherlanguages.
Severalfactorsfavorthestudyofforeignlanguagesbyarchitectureandengineeringstudents:
Languageskillsaretransferable;onceoneforeignlanguagehasbeenstudiedand/ormastered,itbecomesmucheasiertotackleanotherone,becausethoseparticularmentalskillshavebeendevelopedandexercised;
Inthestudyofalanguage,thestudentlearnssomethingaboutthecultureofthatnation,whichcanbeveryusefulprofessionally;and
Languageskillsenhanceastudent'saccomplishments,makinghimmoremarketabletointernationalprojectsinthebuildingindustry.
Factorsthatworkagainstthestudyofforeignlanguageshavelargelytodowithtimelimitations.Sincebothengineeringandarchitectureprogramsarefairlyhighlystructured,andsinceinmanycasesthelanguagesthathavebeenstudiedwillnotbeusefulincurrentlydevelopinginternationalmarkets,continuingeducationcoursesmaybetheanswerfortheshortterm.
InternationalProjectManagement
Mosttrainingandeducationininternationalprojectmanagementhavebeenthroughhands-onexperienceobtainedindividuallybymembersofconstructionandengineeringfirmsengagedinexecutingindividualprojects.Theinternationalmarketischaracterizedbyanumberof
![Page 169: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/169.jpg)
uniqueconditionsthatcandramaticallyaffectprojectcost,schedule,andquality.Theseconditionsareverycountry-andsite-specific,andsubstantiallocalmarketresearchisrequiredofprospectiveengineeringandconstructionfirmsseekingoverseaswork.
Americanfirmsperformingoverseasconstructionworkmayhavedifficultyinobtainingtherequiredcommerciallicensing,facepossibletransportationdelays,andencounterdifficultiesinobtainingcustoms
![Page 170: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/170.jpg)
Page80
clearances.Theseissuesmaybefurthercompoundedbylanguagebarriersandin-countryrestrictionsontheemploymentofAmericans.
Firmsenteringtheinternationalmarketplaceneedtobereadytoreacttouniquelaborlaws,requirementsforuseoflocalmaterials,andsignificantdifferencesinqualitystandards.Theymustalsobepreparedtomakesubstantialinvestmentsintechnologytransferandtrainingtodeveloptheskillbasenecessarytocompletetheproject.Thehostcountry'sbusinesspracticesandconstructionprocessconceptsarefrequentlyatoddswithaU.S.contractor'snormalbusinessmethodologiesandprocedures.
Personnelconductingcontractnegotiationsfrequentlydonothavesufficienttimetobecometotallyfamiliarwithnuancesoftheconstructionprocessofagivencountry.Expensivelessonshavebeenlearnedsimplybecauseinexperiencedcontractorshavefailedtotakeintoaccounttheimpactofthehostcountry'scultureontheirstandardoperatingprocedures.
Thedegreetowhichtheclientbecomesinvolvedintheconstructionprojectcanbeapositiveornegativefactordependingonhisfamiliaritywiththeconstructionprocessandtherolehechoosestoplay.Iftheclientchoosestoactasliaisonwiththehostnation'sgovernment,thecontractorwillbeatthemercyoftheclientwhenitcomestoacquiringneededinformation,permits,andotherapprovals.Thiscanhaveasignificantimpactonprojectschedulesandcosts.
Ingeneral,thecommitteeconcludesthatU.S.constructionanddesignfirmsandtheirprofessionalsneedbettertrainingfortheirroleintheglobaleconomy.TherelationshipbuiltbetweenPhilippHolzmannandJ.A.JonesConstructionCompany(seeCaseStudy5)illustrateshow,withcapablepeoplewillingtocooperate,firmsfromdifferentnationscanworktogethertotheirmutualbenefit.Themotivationforthisinquiryhasbeencompetition,butitisbecomingclearthat
![Page 171: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/171.jpg)
cooperationisequallyimportant.Onbothcounts,U.S.skillsarelagging.
![Page 172: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/172.jpg)
Page81
CaseStudy5:BuildingInternationalRelationships:PhilippHolzmannAGandJ.A.JonesConstructionCompany
AlargeGermanfirm'sacquisitionofalargeAmericanconstructionfirmnineyearsagoiscalledasuccessfulmarriagebytheparticipants.Notonlyhavethetwomanagementstylesmixedwell,theysay,butthetransferoftechnologybetweenPhilippHolzmannandJ.A.JonesConstructionCompanyhasbenefitedbothcompaniesbyallowingexpansionofworldwideconstructionhorizons.
PhilippHolzmannAGhadgrownfromasmallfamilybusinessintoaleaderininternationalconstruction.FoundedasarailwaycontractornearFrankfurtamMainin1849,thefirmquicklyextendedactivitiestoincludecivilengineeringandbuildingofalltypes.HolzmannwonitsfirstmajorcontractoutsideGermany,themainrailwaystationinAmsterdam,in1882,andsincethenhasbeenactiveinmanyEuropeancountries,SouthAmerica,Asia,andAfrica.HolzmannnowhasmajoractivitiesongoingintheUnitedStates.
Thecompanydesignsandbuildspublicandcommercialbuildings,manufacturingandindustrialplants,marinestructures,andmasstransitfacilities.Itsrangeofservicesincludesturn-keyprojectsaswellasmaintenanceandoperationoffacilities.Holzmannalsoundertakesreconstructionandmodernizationofbuildingsandindustrialplants.
ThegeneralmanagementandoverseasdepartmentsofPhilippHolzmannareheadquarteredinFrankfurt,WestGermany.Thecompanyoperates30branchofficesthroughoutGermanyandhasmorethan50domesticandforeignsubsidiariesengagedinspecialfieldsofconstructionandconstruction-relatedactivitiesaroundtheworld.
![Page 173: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/173.jpg)
HolzmannisrepresentedintheUnitedStatesthroughitssubsidiary,PhilippHolzmannUSA,byJonesGroup,Inc.,inCharlotte,NorthCarolina,andbyLockwoodGreeneEngineers,Inc.,Spartanburg,SouthCarolina,inadditiontoothersubsidiaries.Jonesisaconstructioncontractor,andLockwoodGreenerepresentsthearchitecturalandengineeringside.
In1986theHolzmanngroupofcompanieshadsalesof$6.6billionworldwide.Approximately48percentofthattotalwasintheUnitedStates.ThedecisiontoentertheU.S.constructionandengineeringmarketwasaresultofeventsaroundtheworld.Sinceitsfirstinternationalexperienceinthelatenineteenthcentury,Philipp
![Page 174: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/174.jpg)
Page82
HolzmannAGhassetcorporatestrategiesbeyondGermanboundaries.Intheearliestyears,thecompanybuiltthelegendaryBaghdadrailroad,theDar-es-SalaamrailroadinAfrica.
ByWorldWarI,HolzmannhadbuiltthefirstskyscraperinBuenosAiresandenteredtheU.S.marketwithconstructionontheBargeCanalinNewYork.Morerecently,itsactivitiescenteredintheMiddleEastwheresomeoftheworld'slargestconstructionprojectshavebeenbuiltwithoilrevenuesincludinghospitalsandasportsstadiuminSaudiArabia.Intheearly1970s,morethan50percentofthecompany'sforeignrevenuescamefromSaudiArabia.ButtheIranianrevolution,Iran-Iraqwar,andthesofteningofoilpricesmadetheprospectsofabloomingconstructionmarketintheMiddleEastseemlesspromising.
Holzmanncarefullyevaluatedthepossibilityoffutureconstructionmarketcollapsesand,inordertoprotectthecompanyfromsuchuncertainties,decidedtodiversifybyinvestinginothercountries.Economicandpoliticalstabilityandaself-sustainingmarketintheUnitedStateswereanattraction.HolzmannsoughtaU.S.companythatwouldcomplementitsstrengthsand,in1979,acquiredtheCharlotte-basedJ.A.JonesConstructionCompanywhichhad90yearsofexperienceintheU.S.constructionindustry.
J.A.Joneshasitsownhistoryandmanysuccesses.FoundedinCharlotte,NorthCarolina,ithasgrowntobecomeaU.S.andinternationalleader.JamesAddisonJonesstartedhisworkasabricklayerin1890,andgotmostofhisearlyexperiencebuildingforthetextileindustrythroughoutthesouthernstates.ButJ.A.Jones'sfirstproject,likeHolzmann's,involvedtherailroads.JonesbuiltthediningcarfacilityinCharlottefortheSouthernRailroadCompany.
Followingthe1930sdepression,Jonessignedoneofthelargestconstructioncontractstothatdate,foranewairbaseinthePanama
![Page 175: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/175.jpg)
CanalZone.Sincethatproject,militaryconstructionhasbeenanimportantfactor,includingconstructionofLibertyshipsduringWorldWarII,followedbywhatwasthenthe"largestconstructionprojectinthehistoryoftheworld"thegaseousdiffusionplantatOakRidge,Tennessee.
FollowingWorldWarII,Jonesbeganalongseriesofheavyandhighwayconstructionworkwhilecontinuingcommercialbuildingthroughoutthecountry.Today,thecompanyisalsoinvolvedinindustrialandenergyworkaswell.Asit,too,lookedtotheMiddleEastforworkinthe1970s,J.A.JonescompetedagainstHolzmann;
![Page 176: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/176.jpg)
Page83
theythenworkedasajointventureonamilitarytrainingcenterprojectinSaudiArabia.
InOctober1978,J.A.JonesConstructionCompanyannounceditsagreementtobeacquiredbyPhilippHolzmannAG.ThepurchaseendedaplanbyJonestobeemployee-owned,aprocessbegunin1968.Stockholderswereassuredthatthefirm'sname,management,andworkforcewouldnotchange.Today,Holzmannisrepresentedonlyontheboardofdirectors.
Atthetimeofthepurchase,Jones'sstockpricewasvaluedat$23.06pershare,whichwasdeterminedbythecompany'sownestimateofitsvalue,sincethestockwasnotwidelytraded.Holzmann'sofferamountedto$40.61pershare.AlthoughitwasstatedthatseveralothercompanieshadaninterestinthepurchaseofJ.A.Jones,Holzmann'sofferwasaccepted.AccordingtoJohnnieH.Jones,thenexecutivevice-presidentandnowchairmanandpresidentofJonesGroup,Inc.,''ThephilosophyandintegrityofHolzmann'smanagementweremostcompatiblewiththeJonesteam."
Threeprimaryreasonsweregivenforthemarriage:(1)thefinancialstrengthofHolzmannwouldenableJonestoresumeitsgrowthandcontinuetogrowfaster;(2)thecombinedinternationalexperienceofthetwocompanieswouldimprovetheircompetitivenessinforeignmarkets;and(3)themergerwouldallowJonesaccesstothelargerfirm'stechnology,withthecombinedinternationalexperienceofthetwocompaniesimprovingtheircompetitivenessinforeignmarkets.AtthattimeHolzmannspentmorethan$3millionayearonresearchandheldseveralpatentsinconcretetechnology.
Overthenineyearssinceacquisition,theHolzmann-Jonespartnershiphasallowedbothcompaniestobidonagreatervarietyofprojectsbecauseofbroadermarketpresenceandsharedtechnologies.Inaddition,thefinancialstrengthofHolzmannhasgivenJones
![Page 177: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/177.jpg)
bondingcapacitytoincreaseitsvolumeofworkandthesizeofitsprojects.
Benefitsofthemergersurfacedearly.Jonesbecamemorecompetitiveinheavyconstruction,whereHolzmannhadfordecadesbeenaworldleader,andenteredthemarinefieldwithasunkentubetunnelcontractandoneforafloatingpontoonbridge.Holzmanngainedexpertiseinthechemicalplantmarketandinhigh-riseconstruction,longaJ.A.JonesstrengthbutatthetimeacostlytypeofconstructioninWestGermany.
TodiversifyfurtherinAmericaonthedesignsideofconstruction,Holzmannin1981purchased80percentofLockwoodGreene
![Page 178: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/178.jpg)
Page84
Engineers,Inc.,ofSpartanburg,SouthCarolina.HolzmannalsoencouragedJonesGroup'sformationofanewservicecompany,whichspecializesinfacilitiesmanagement,similartooneHolzmannfoundedintheearly1980s.
Thetwocompanieshavesetupaninformalemployeesprogramthatenablesyoungengineerstotravelandworksomewhatlikeexchangestudentsabroad.ManagementlevelstaffmembersalsotakepartinorientationprogramsbetweenWestGermanyandtheUnitedStates.
J.A.Joneshasaddedadimensionininternationalconstructionthathasbenefitedtheparentcompany.ByofferingprocurementservicesformaterialsforprojectswheremanyofthedesignscallforAmericanstandards,JonescanhelpHolzmannavoidproblemsofselectinggoodsinaforeigncountry.
Inturn,JohnnieJonessaysthatHolzmann"doesnotinterferewithouroperationbutprovidessupport.KeepingourmanagementintactprovedtousthatHolzmannagreedwithourphilosophythatpeopleareourmostimportantassets."
TheJonesCompanynowcantakeonmajorheavyconstructionprojectswhichheretoforewouldhavebeenundertakenonlyinajointventure.Andinatotallynewdirection,JOnessigneditsfirstcontracttobuild,own,andoperatealignitemineinLouisiana."Itrequiredasubstantialinvestmentinthebeginning,butwewouldn'thavebeenabletodoitwithoutthefinancialsupportofPhilippHolzmann,"saysJones.
Bothcompaniesareintheprocessofdiversifyingintechnicalfields,expandinginotherlocations,andreestablishingpositionsintheinternationalmarket.TheformationofarealestatedevelopmentcompanyinAtlanta,MarkIII,andadditionalactivitiesfromQueensProperties,Inc.,inCharlotte,werestepsindiversification.
![Page 179: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/179.jpg)
Becausethefinancialcapabilitiesofconstructionfirmshavenewimportance,JonesGroupthisyearformedJonesCapitalCorporationtodevelopprojectfinancingandtoholdtheassetsofprojectsinwhichJonesismaintaininganownershipposition.
Whilestillrunasseparateentities,HolzmannandJonescombinedcanpursuethelargestconstructionprojectsintheworld.
![Page 180: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/180.jpg)
Page85
6PursuitofInnovationThecommitteeobservesthattheUnitedStatesandtheworldareexperiencingrapidtechnologicaladvance,butthatapplicationstoconstructionhavebeenrelativelylimited.U.S.constructionanddesignhaveinthepastplayedanimportantworldleadershiprolethatisnowthreatened,inpartduetosociety'sgrowingwillingnesstoassignliabilityonabasisofabilitytopay,andinpartduetothecompetition'scommitmenttoprogress.Inadditiontomakingagreatereffortinresearchanddevelopmentandenhancingeducationandtraining,theU.S.constructionindustrymustrekindleitsenthusiasmforinnovationifitistomaintainitsplaceintheglobaleconomy.
NatureofInnovation
Innovationcanoccurinadesign(e.g.,suspensionbridge)orinamaterial(e.g.,reinforcedconcrete).Itcanoccurbyamajorbreakthroughbasedonanovelinventionthatdramaticallyandsuddenlychangeswhatwebuild(e.g.,theneedforairportswascreatedbytheinventionoftheairplane).However,innovationismorefrequentlyachievedthroughmanyincrementalimprovementsthatservetomakeatechnologyuseful(e.g.,improvedroadwaypavingmaterials).
Mostinnovations(includingthoseininfrastructure)aretheresultofabsorbinganinvention,oftenafterithasbeendevelopedfor
![Page 181: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/181.jpg)
Page86
anotherpurpose.Ineachera,certainprimaryinventionsbecomethebasisformuchoftheinnovationthatoccurs.Atpresent,anumberofnewprimaryinventionsaredrivingchangeinconstruction:
Photonics:thoseinventionsthatproducecoherentlightthatcanbeamplifiedandpropagated,suchaslasers,masers,andfiberoptics.Pathsoflightwillincreasinglyreplacethewiresalongwhichmessagesflow,andlasershavefoundapplicationinfieldsurveyingaswellasinfactorycuttingandwelding.
Biotechnology:geneticengineering,neuroengineering,andtherecodingofmacromoleculesoflivingthingstoproduceneworganicsubstancesthatcanhaveapplicationsinbuildingsandinfrastructure.Pollutioncontrolandhazardouswastedisposalstandtobenefitgreatly.
Materialsscience:fundamentalreformationandfabricationofinorganicmaterialstoprovideperformancecharacteristicsnotfoundinnature,suchashigh-strengthcomposites,rapid-flowmembranetechnology,andsuperconductivity.Thislatestdiscoverymayhavefar-reachingimpactsonthestorageofelectricityandtransporttechnology.
Microlectronics:circuits,switchingmechanisms,datastoragedevices,amplifiers,andsensors.Suchdevicescanextendhumanstrengthanddexteritythroughrobotics;supportdatacollectionandanalysistoenhancethespeedandeffectivenessofhumanactions;andmakepossiblegraphicinputandoutputofdataandsobegintosubstituteapictureforathousandwords.
Suchinnovationsmayhaveprofoundimplicationsforconstruction.Theymaychangeworkingrelationshipsbetweendesignersandconstructors.Buildingsthemselvesarebecomingmore"intelligent"astheyhaveelectronicenhancementsaddedtotheirinformationand
![Page 182: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/182.jpg)
communicationssystemsaswellasthecontrolsformechanicalequipment.Roboticsandotherformsofautomationarebeginningtoprovidepracticalapplicationsforperformingdifficultordangerousjob-sitetasks,andmaywellaltertheeconomicsofmuchworkdoneonthejob.
TheimpressiveeffortsofJapan'sconstructionindustryhavebeendescribed.Europeanfirmsaswellhaveundertakenaggressivesearchesforinnovation,particularlyinthedevelopmentofproprietaryconstructionsystems.Thesenewsystemsarebasedonextensiveintegrationofdesign,fabrication,anderectionprocesses,allofwhicharecarriedoutbyasinglefirm.SeverallargeEuropeanfirms
![Page 183: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/183.jpg)
Page87
havesucceededinverticallyintegratingtheirbusinessstructurestoincludethemanagementofkeymaterialssupplies,designandengineeringexpertise,developmentknow-how,andfinancingcapability.Theeconomicintegrationintoonefirmofthesefunctionsmoreeasilyallowstheconstructionfirmtocapturetheeconomicbenefitsofproductivityandqualityimprovementsthroughtheadoptionofnewtechnologies.Becausethereisbettercontrolofcosts,suchintegratedfirmsdevelopacompetitiveadvantage.
FirmsintheUnitedStatescontinuetotakeapassiveattitudetowardconstructioninnovation.EventhelargestU.S.firms,whichmayhavetheresourcestoundertakesignificantresearchprograms,continuetoputtheirfaithinthestrategyofbeing"technologyfollowers."Indeed,manylargeU.S.constructionfirmshavesuggestedthatbynotbeingcommittedtoanyoneproprietarytechnologytheyareatastrategicadvantageinbeingabletopickandchooseamongthelatesttechnologiesaroundtheworld.Thecommitteequestionsthewisdomofthisstrategy.Inaglobalmarket,thosefirmsthathavedevelopedaproprietarytechnicaladvantageareinapositiontorefusetograntlicensestofirmswithwhichtheydonotwishtocompete.Evenwhenthetechnologyisavailableinprinciple,individualsandfirmsareoftendeterredbytheinitialintellectualandfinancialinvestmentrequiredtoapplyitinpractice.
TherearethreegroundrulesthatseemtobeneededforanyseriousefforttoencourageinnovationintheU.S.constructionindustry:
Formajorinnovationstotakeholdandbecomecommon,theyneedtobefoundedonaconfluenceofbasicresearchandpracticalimprovements.Inotherwords,theyrelyasmuchonbasicresearch(totheextentitisstillusefultousethatterm)astheydoonappliedengineering.Oftentheareaofbasicresearchusedbearsnoobviousrelationtotheeventualpracticalapplication.
![Page 184: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/184.jpg)
Thesearchforinnovationmustallowformajorbreakthroughsfollowedbyincrementaladvances,anditcanincludeimprovmentsindesignaswellasmaterials.Duringtheoverallprocessofinvention,variousimprovementsreinforceoneanotherandencouragepublicdemand,insuchawayastopromotefurtherinnovations.
Mechanismsareneededtocapturethepotentiallysizablepayoffsofinnovationforthosewhoattemptit.EarlyAmericanbridgeinnovations(fromthenineteenthcentury)areagoodexample,becausegenerousroyaltieswerepaidfortheuseoftheideasthathadbeengrantedpatents.
![Page 185: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/185.jpg)
Page88
OpportunityinInfrastructure
WithintheUnitedStates,asinmostoftheworld,thereiswithoutquestionanopportunitytoincreasetheperformancecharacteristicsofthosesystemsusedtotransportpeopleandgoods,obtainwater,removewastes,supplyenergy,andfacilitatecommunications.Thereisalsoreasontoincludethosebuildingsusedeitherforpublicpurposes(e.g.,schoolsandhospitals)orbuiltwithpublicfunds(e.g.,governmentoffices,courthouses,andprisons)asapartofthepublicworksinfrastructure.
Underthisbroaddefinitionofinfrastructure,theUnitedStatesin1984invested$102billion,30percentofitsdesignandconstructionbudgets(seeTables11to13).
Developmentofadvancedinfrastructureisachallenge,worthyofacooperativeinternationaleffort.Itwillbedifficulttostructurethesedevelopmentstomatchtheperformancerequirementsofasocietyutilizingadvancedscienceandtechnology,andmakethemmorethanincrementalimprovementstothepresentmodaltechnologies.Inthedevelopingpartoftheworld,wherethemostrapidurbanizationishappening,thechallengeistodeveloptechnologyappropriatetotheirrequirementsratherthantoimposesolutionsproducedforindustrialnations.
TherearetworeasonsfortheUnitedStatestodomoreaboutadvancingthetechnologyofinfrastructure.Itwouldbenefitwithinitsownbordersfromnewandhigher-performancesystems,anditcouldalsohaveanotheropportunityformarketingitstechnologyonaglobalbasis.ThiscommitteerecognizestheurgencyofmaintainingandextendingtheexistingnetworksofpublicworksthatunderlieU.S.cities.However,thenationalsoneedstodevelopnewandhigher-performingtechnologiestogainthepotentialmarketthatimproved
![Page 186: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/186.jpg)
performancemakespossibleandtoavoidanindefinitefuturedrainonthepublicpursefrommaintainingtheoldersystems.
Theexistinginfrastructureisbasedonasetofinventionsthatemergedtowardtheendofthelastcentury.Theseinventionsproducedasecondgenerationofurbansystemsthatprovidedperformancecharacteristicssubstantiallydifferentfromthosepreviouslyusedinallofhumanhistory:
Structuralsteelframesforbuildings.Whenthismethodofconstructionwasfirstintroducedinthe1880sinChicago,itmadeitpossibletoerectstructuresthatweretallerthanthefive-orsix-floor
![Page 187: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/187.jpg)
Page89
TABLE11EstimatesofPrivateConstructionVolumethatMightBeIncludedWithintheCategoryofInfrastructure(in$million),1984
TypeofPrivateConstruction(bycensuscategory)
TotalValuea
InfrastructureValueb
Residentialbuildings 145,059
Nonresidentialbuildings(organizedbyfunctions)Industrial 13,745Office 25,940Othercommercial(warehouses,silos,retailstoresshoppingmalls,drugstores,parkinggarages,servicestations,barbershops,danceschools)
22,167 10,000
Religious 2,132Educational 1,411 1,411Hospitalandinstitutional 6,297 6,297Miscellaneous(movietheatres,casinos,healthclubs,radioandtelevisionstations,includingbusandairlineterminals,publicutilitybuildings)
2,455 490
Subtotal 74,147 18,198
Farmnonresidentialbuildings 2,860
Publicutilities(organizedbyindustries)Telephoneandtelegraph 7,174 7,174Railroads 3,671 3,671Electriclightandpower 19,473 19,473Gas 3,233 3,233Petroleumpipelines 271 271
![Page 188: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/188.jpg)
Subtotal 33,822 33,822
Allother(privatelyownedstreets,bridges,parkingareas,dams,reservoirs,sewer,waterfacilities,parks,andplaygrounds)
1,912 1,912
Totalc 257,801 53,932
Source:BureauoftheCensusdata,withstaffextensions,1984.
aValueincludescostofmaterials,labor,equipmentrental,contractorprofit,owners'overheadcosts,architectandengineerservices,miscellaneouschargesonowners'books,interest,andtaxesduringconstruction.bInfrastructureisdefinedasincludingallbuildingsusedforpublicpurposes(e.g.,schools)whetherpaidforprivatelyorpublicly,andallconstructionof"networks"forsupportingbuildings(e.g.,roads).Whereexactdataarenotprovidedanestimatehasbeenmade.cSubtotalsmaynotaddtototalsbecauseofrounding.
![Page 189: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/189.jpg)
Page90
TABLE12EstimatesofPublicConstructionVolumethatMightBeIncludedWithintheCategoryofInfrastructure(in$million),1984
TypeofPublicConstruction(bycensuscategory)
TotalValuea
InfrastructureValueb
Buildings(byfunctions)Housingandredevelopment 1,636Industrial 1,828Educational 5,557 5,557Hospital 2,039 82,039Other(administrative;police,fire,bus,andstreetcarstations;subwaygaragesandbarns;jails;parkingfacilities;airportandmarineterminals;electricpowergeneratingbuildings;andsoon)
6,822 6,822
Subtotal 17,883 14,418
Highwaysandstreets 16,294 16,294
Militaryfacilities 2,839
Conservationanddevelopment(waterresourceprotectionandcontrol,fishhatcheries,spillways,pollutioncontrol,levees,seawalls,canals,docks,piers,wharves,berths,andreservoirsbuiltotherthanforpotablewatersupply)
4,654 4,654
Sewersystems 6,241 6,241
Watersupplyfacilities 2,621 2,621
Miscellaneous(recreationalfacilities,powergeneratingfacilities,andotheropenconstructionfor
4,654 4,654
![Page 190: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/190.jpg)
subways,streetcars,airportrunways,parking,andsoon)
Totalc 55,186 48,882
Source:BureauoftheCensusdata,withstaffextensions,1984.
aValueincludescostofmaterials,labor,equipmentrental,contractorprofit,owners'overheadcosts,architectandengineerservices,miscellaneouschargesonowners'books,interest,andtaxesduringconstruction.bInfrastructureisdefinedasincludingallbuildingsusedforpublicpurposes(e.g.,schools)whetherpaidforprivatelyorpublicly,andallconstructionof"networks"forsupportingbuildings(e.g.,roads).Whereexactdataarenotprovidedanestimatehasbeenmade.cSubtotalsmaynotaddtototalsbecauseofrounding.
![Page 191: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/191.jpg)
Page91
TABLE13EstimatesofPrivateandPublicConstructionVolumethatMightBeIncludedWithintheCategoryofInfrastructure(in$million),1984
TypeofConstructionTotalValuea
InfrastructureValueb
Publicandprivatec 312,987 102,184
Privatesectorbuildings 18,198Publicsectorbuildings 14,418Totalbuildingcomponentsofinfrastructurec
32,616
Privatelyfinancedutilitysystems 33,822Publiclyfinancedutilitysystems 34,464Totalutilitycomponentsofinfrastructurec
70,200
Source:BureauoftheCensusdata,withstaffextensions,1984.
aValueincludescostofmaterials,labor,equipmentrental,contractorprofit,owners'overheadcosts,architectandengineerservices,miscellaneouschargesonowners'books,interest,andtaxesduringconstruction.bInfrastructureisdefinedasincludingallbuildingsusedforpublicpurposes(e.g.,schools)whetherpaidforprivatelyorpublicly,andallconstructionof"networks"forsupportingbuildings(e.g.,roads).Whereexactdataarenotprovidedanestimatehasbeenmade.cSubtotalsmaynotaddtototalsbecauseofrounding.
limitationofmasonrywallsthathaddominatedarchitecturaldesignforallofpriorhumanhistory.
Elevatorsformovingpeopleandgoodsverticallyintallbuildings,madepossiblebytheOtisinventionsforsafety.Elevatorsreplacedstairwaysthat,becausetheyrequiredhumanenergytoascend,were
![Page 192: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/192.jpg)
notpracticalbeyondthefive-orsix-floorlimitationofearlierdesigns.
Thesetofinventionsthatmadepossibleindoorplumbingdevicesconnectedtowaterandwastesystems,whichreplacedtheouthouse,theslittrench,andallofthepriordisease-riddenmethodsofdisposingofhumanwaste.
Centralheatingsystemsthat,especiallywhentheybegantousethefluidfossilfuelsofoilandgas,changedthelogisticsofsupplyingfuelforheatsincefuelnolongerhadtobemanuallysuppledtoseparatestovesandfireplaceslocatedthroughoutabuilding(andashesnolongerhadtoberemovedfromeachseparateheatingdevice).
Thediscoveryofelectricity,andthesubsequentinventionof
![Page 193: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/193.jpg)
Page92
generators,amplifiers,distributionmethods,electricmotors,andthelightbulb,whichsubstitutedforthehistoricaluseofcandles,whaleoil,animalpower,andsoon.
ThetelephonesystembasedontheprimaryinventionofAlexanderGrahamBellin1876thatmadevoicecommunicationspossibleacrossgreatdistances,replacingsuchancientmethodsastowncriers,messengers,andmail.
Theautomobile,ormoreappropriatelytheinternalcombustionengine,whichsubstitutedadevicefortheconversionofafossilfueltousefulenergyfortheanimalpowerusedinallofhumanhistory.
Thesubway,ortheundergroundrailway,asfirstintroducedinLondon,whichprovidedformasstransportationwithinacrowdedurbanarea,withoutpollutionoftheairorinterferenceinthearrangementofbuildings.
Therearemanyindicationsoflimitationsoftheperformancecapabilityofthissecondgenerationofinfrastructuretechnologiesrelativetotoday'sdemands.Theirabilitytosupporttheactivitiesofmodernindustryissorelytaxed.WhilethereisthepossibilitythattherecentlycompletedworkoftheNationalCouncilonPublicWorksImprovementwillstimulateCongresstoprovidemajornewsupportforinfrastructureinnovation,thecommitteefeelsthatonlythrougheffectivepublic-privatepartnershipcaninnovationbeachievedinpractice.
Beyondtheobviouspleatobemadeforincreasedgovernmentfundinginthefield,theprogramsofothercountriesillustratethevaluetobegainedthroughtruepartnershipofprivateandpublicinterestsintheU.S.constructionindustry.Thispartnershipshouldembraceresearchandinnovationforbothdomesticproductivityandinternationalcompetitivestrength.
![Page 194: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/194.jpg)
Forexample,projectsbuiltwithgovernmentfundscanassumethegreatercommercialriskinvolvedinadoptinginnovation,aswasdemonstratedbytheintroductionofprecastconcretesegmentaltunnellinerstoU.S.transitconstruction.Thistechnologyhadbeenwidelyusedaroundtheworld(since1936inEngland),butnotintheUnitedStatesbecauseindividualtransitcompanieswerereluctanttotaketheriskofbeingfirst.TheUrbanMassTransportationAdministrationsponsoredaresearchanddevelopmentprojecttoinstallconcretesegmentsinonestretchoftheBaltimoresubway,andsuddenlythisbecamethestandardtechnologyforU.S.transitsystems.NationalScienceFoundationprojectsdoneincooperationwiththe
![Page 195: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/195.jpg)
Page93
constructionprogramsofotherfederalagenciescouldplayasimilarroleforintroducinginnovationsintodesignandconstruction.
Precedentalsoexistsforprivate-publiccooperationincompetitionforinternationalprojects.WhiletheThreeGorgesProjectinthePeople'sRepublicofChinawasnotresolvedastheteammighthavehoped(seeCaseStudy6),theexperienceisavaluablelessondemonstratingU.S.abilitytoemulatetheinstitutionalarrangementsofBritish,French,Dutch,orScandinavianfirmsandtheirgovernments.
However,eventhisprecedentisnotenough.TheU.S.constructionindustries'1.2millionfirmsneedastrongerandmoreeffectivevoiceinnationalpolicy.Existingindustryorganizationsplayanimportantroleinrepresentingtheparticularinterestsoftheirmembership,butthereisnoforumforresolvinginevitableconflictsandinitiatingcooperativeactivity.
GlobalPartnershipforInnovation
Asthefinalchapterofthisreportwilldiscuss,neworalteredinstitutionsareneededtomakethispartnershipofprivateandpublicinterestseffectiveintheUnitedStates.Thecommitteefeelsstrongly,however,thattheopportunitiesforinnovationinconstructionandthepotentialworldeconomicandsocialbenefitsofcapturingtheseopportunitieswarrantpartnershiponaglobalscale,apartnershiptoworkintheUnitedStatesaswellasabroad.
U.S.constructionanddesignfirmshavefounditdesirabletorelyoncomparativeadvantageandpursueastrategyofcooperationratherthancompetition,astheexamplesandcasestudiesgatheredbythecommitteehaveillustrated.Thestrategyisagoodoneforinnovationaswell.Tomakethestrategywork,however,theU.S.constructionindustrymuststrivetomaintainitstraditionalleadershipintechnology,fortwokeyreasons:(1)lossoftechnologicalleadership
![Page 196: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/196.jpg)
maymeanlossofcomparativeadvantageandcompetitivepositionand(2)withoutthestrengthforgoodcompetitiveposition,meaningfulcooperationbecomesnearlyimpossible.
![Page 197: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/197.jpg)
Page94
CaseStudy6:CooperativeEffortBetweenU.S.PublicandPrivateSectors:ProposalfortheThreeGorgesProjectinChina
Forsixweeksin1985agroupofleadersinengineeringdesignandconstructionsequestereditselfinahastilyassembledofficeinWashington,D.C.Thegroup'sgoalwastoaccomplishataskmanymightthinkimpossible:createaproposaltodesignandconstructoneoftheworld'slargestcivilengineeringprojectstheThreeGorgesProjectinthePeople'sRepublicofChina.Theimpetusforthischallengingundertakingwasaninvitationfromhigh-levelChineseofficialsfortheUnitedStatestotakealeadroleinprojectdevelopment.TheenormousnessoftheThreeGorgesProjectandthebrutalproposaldeadlinewerecomplicatedbythefactthatboththeproposalandtheworkwouldbedonethroughacombinationofU.S.privateandpublicsectorgroups.
The''TeamAmerica"effort,asitwasdubbed,resultedinmuchmorethanadocument.TheundertakingshowedthatrealorperceiveddifferencesandbarriersbetweenU.S.governmentagenciesandprivatefirmscanbesurmountedtomeetsharedgoals.InthecaseoftheThreeGorgesProject,whereU.S.involvementwouldhavefar-reachingeffectsforthenationandothers,theaccomplishmentwasadmirableandonethatcanserveasaprototypeforfuturecooperativeefforts.
Anotherlessfavorable,butequallyimportant,lessoncameoutofthisexercise.WhiletheChinesegovernmentacceptedtheproposal,theworkwasnotpursuedduetolackoffinancialsupportfromU.S.governmentand/orprivateindustrysources.Asaresult,proposedfeasibilitystudiesarenowbeingdonebyanationinwhichtheprivateandpublicsectorscooperatetobestadvantageCanada.
![Page 198: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/198.jpg)
TheThreeGorgesProjectwasconceivedearlyinthe1990sbyDr.SunYat-Seninhis"PlanforIndustrializationofChina.""Itisthelong-cherishedwishfortheChinese...toconstructtheThreeGorgesProject....Completionoftheprojectwillbeofgreatsignificancetotheindustrializationofthecountry,"wroteSun,whoisstillhailedasavisionarybyhiscountrymen.
NearlyacenturyafterSun'spredictions,thepowerfulYangtzeRiverfrequentlyravagesthevalleybelowwithfloodsthatendangerhundredsofthousandsofpeopleandmajoragriculturalandindustrialbases.FortypercentofChina'sfoodsupplyisgrowninthis
![Page 199: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/199.jpg)
Page95
valley.Industrytheheartofthecountry'srevitalizationiscrippledas40to60percentofcapacityisidleatanygiventimeduetopowershortages.Harnessingtheworld'sthirdlongestriverwiththeThreeGorgesDamwouldprovideapproximately1,300megawattsofhydroelectric-generatingcapacityandleadtoformationofanationwide,large-scaleelectricpowerpool.
ImprovingnavigationontheriverisofsignificanteconomicimportancetoChina,andtheprojectwouldaidpassageofshipsthesizeofocean-goingvesselsthroughnarrowchannelsingorgeareas.ThreeGorgeswouldbeaconcretegravitydamwithacrestheightof510to575ftandalengthof7,200ft.Thedamwouldincludetwo,four-stepshiplocks,andthenarrowreservoirwouldbackup100milesormore.
FollowingSun'searlyvisionfortheproject,plansproceededslowlyovertheyearsduetoavarietyofchangingconditionsinChina.Pioneeringworkwasdoneinthe1940sbytheBureauofReclamation'schiefdesignengineer,Dr.JohnL.Savage.Inthedecadesofthe1950sand1960s,theChinesemadeadetailedcomparisonofalternativesites,andin1979proposedthecurrentlyfavoredSandoupingsite.In1984,theStateCouncilapprovedtheproject'sfeasibilityreportandinMarch1985,theChinesecompletedapreliminarydesignreport.
InMay1985,formerSecretaryoftheInteriorWilliamClarkvisitedChinaonadiplomaticmissionthatledhigh-levelChinesedignitariestoinvitetheUnitedStatestoproposealeadroleinprojectdevelopment.ClarkmadeacommitmentfortheUnitedStatestoaidChinabydefiningconcretestepsthatcouldbetakentoaddresstechnicalandfinancialissues.
UponhisreturntotheUnitedStatesinJune1985,Clarkbriefedapproximately50representativesfromawidearrayofpublicand
![Page 200: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/200.jpg)
privatesectorengineeringgroupsregardingtheChineseinvitation.HechallengedtherepresentativestorespondastheysawfitandsetatargetdateofJuly15forreply.
Thegrouprosetothechallenge.InitialorganizingeffortsweredonebyacoregroupcomposedofrepresentativesoftheU.S.DepartmentoftheInterior,AmericanConsultingEngineersCouncil,NationalCouncilforU.S./ChinaTrade,andprivateengineeringfirms.Allinterestedpartieswereinvitedtodonateresourcestotheeffort,withnopromiseofreturnontheirinvestment.Theofficialtitleforthegroupthatevolvedwas"TheU.S.ThreeGorgesWorkingGroup"butWilliamClarkalsochosetochristentheeffortas
![Page 201: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/201.jpg)
Page96
"TeamAmerica,"reflectingthegenuinepatrioticspiritmotivatingthegrouponbehalfofthenation'sbestinterests.
Privateandpublicgroupscontributingtotheproposalfurnishedanestimated$1.5millionto$3millioninhuman,financial,andinkindresourcestothisuniqueeffort,whichoneparticipantdescribedasthehighlightofhiscareer.
Participatingfirmsandagenciescalledintheirtoppeople,manyfromoverseasassignments,toworkonajobwithasenseofmissionforthenation,ajobwheretopmanagersrolleduptheirsleeves,hammeredoutfigures,andworkedpastoldrivalriesanddifferences.
Theteamwascomposedofhigh-levelexecutivessuchaschiefexecutiveofficers,vice-presidents,andagencyheadsfrompublicandprivategroupsoftenknownascompetitorsratherthancooperators.Sidebysidetheysharedtheirexpertiseinengineeringdesign,construction,management,andfinancialandeconomicfields.Mostoftheparticipantshad30years'experienceinlarge-scaledamandhydroelectricpowerprojects.
Representativesoftheseprivatesectorfirmsmadeuptheteam:
GuyF.AtkinsonCompany
BechtelCivilandMineralsEngineering,Inc.
CoopersandLybrand
MerrillLynchCapitalMarkets
TheMorganBank
MorrisonKnudsenCorporation
StoneandWebsterEngineeringCorporation
Thefederalgovernment'scontributioncamefromservicesprovidedby
![Page 202: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/202.jpg)
theU.S.DepartmentoftheInterior'sBureauofReclamationandtheU.S.ArmyCorpsofEngineers.
Eachpartymadeanoffering.With85years'experienceindesignandconstructionofmajorwaterresourcesprojects,theBureauofReclamationfurnishedapproximately20expertsinvariousfieldstoadvancetheproposal.Accesstovital,existingdatawaspossiblethroughworkingagreementsbetweenthebureauandChinaandthroughbureauengineerswhowerethenworkingattheThreeGorgessite.TheCorpsofEngineers,oneofthefewexistingbasesofknowledgeintheUnitedStatesforlockdesign,providedinvaluableexpertise.Theprivatefirmscontributedexperienceinpreparingproposalsandoverallknow-howongettingajobdoneontimeandwithinbudget.
![Page 203: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/203.jpg)
Page97
AnofficewassetupinWashington,D.C.,asthebaseofoperations.Theleaderoftheprivatesectorpartiesmovedtothecityforthesix-weekassignment,whilemostotherparticipantscommutedfromtheirofficesaroundthecountry.WorkdaysoftenbecameworknightsasthegrouppropelleditselffromitsfirstmeetingJune10tothemid-Julytargetdate.
Thetightdeadlineprovedtobeagreatmotivator,promptingtheteamtoadoptmoreflexible,creativeworkingmethodsthantypicallyusedinindustryandgovernment.Uncommoneventsoftendemanduncommonapproaches,andoneparticipantcommentedthat,tohisknowledge,ajointpublic-privateeffortofthismagnitudehadneverbeforebeenattempted.
Theexecutiveswerecalledontousealltheknowledgeandabilities,bothtechnicalandmanagerial,thathavemadethemsuccessfulintheirorganizations.Theco-leaders,onefromprivateindustryandonefromafederalagency,foundtheycouldnotmanagethegroupmembersastheywouldtheirownemployees.Withoutthepowerconveyedbytheirrespectiveorganizations,theyhadtoexercisepersonalskillstomotivatethegrouptoaccept,support,andcarryoutsharedobjectives.Theindividualspracticedtheirinterpersonalcommunicationskillsbyofferingconstructivecritiquesasworkprogressed.Managementbooksonthebestsellerlisttalkaboutcasessuchasthisthatbringoutthebestinmanagerstobuildteams,integratediversetalents,andmanagedisputesinpursuitofafirst-classproduct.
ManagerialskillswerealsorequiredtoaddresstheuniqueorganizationalstructurewithinthePeople'sRepublicofChinarelatingtodesign,construction,andmanagementofexistingandplannedwaterresourceprojects.TheChinesegovernmenthadencounteredsubstantialdifficultiesinbuildingtheGezhoubaProject
![Page 204: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/204.jpg)
ontheYangtzeRiverdownstreamfromtheproposedsiteoftheThreeGorgesProject,mainlyduetotheircomplexsystemofinterrelatedministries.TheU.S.teamworkedondevisingamoreeffective,simplifiedmechanismtoavoidarecurrenceoftheseproblemsonThreeGorges.
Theoutcomeofthisintensiveeffortwasacomprehensiveproposalincludinganimplementationplanandeconomicstudyleadingtoafinancialplanallcompletedonscheduleandwithagreatdealofpride.TheproposalrecommendedusingChina'sowntechnicalandhumanresourcestotheextentpossibletohelpthenationdevelopastrongbaseofknowledge.Theeffortproposedwouldfosteran
![Page 205: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/205.jpg)
Page98
unprecedentedlevelofcooperationandtechnologytransferbetweenU.S.privateandpublicsectorsandthePeople'sRepublic.
Theproposal,withasummaryvolumeinbothChineseandEnglish,waspresentedtoChina'sVicePremierLiPengonJuly17atasettingappropriatefortheoccasion,thebureau'smassiveHooverDam.Later,inChina,theproposalwaspresentedtoMadameMinisterQian,headoftheMinistryofWaterResourcesandElectricPower.
WhiletheChinesewerequicktoembracetheproposalinprinciple,thequestionremainedastowhowouldfundafeasibilitystudyontheproject.Thegovernment-to-governmenteffortinitiatedthroughU.S.-ChineseworkingagreementsandfurtheredbyWilliamClark'svisithadopenedthedoortofuturealliances,butneithertheU.S.governmentnorU.S.privateindustrywasabletosurmountthestumblingblockposedbytheestimatedcostof$6millionto$8millionforthefeasibilitystudy.Thetotalcostofconstructingtheprojectisanticipatedtobeapproximately$8billion.
InOctober1985,theCanadiangovernmentsignedanagreementwiththeMinistryofWaterResourcesandElectricPowerforjointparticipationinafeasibilitystudy.TheagreementincludesagrantfromCanadatoChinatofundtheworkofCanadianengineers.Thecostofthestudyisestimatedat$7.5millionto$8.3million,andtheanticipatedcompletiondatewasDecember1987.
Anumberofhigh-levelChineseofficialshavepubliclystatedthattheThreeGorgesProjectwillbebuilt,butdeclinetoestablishspecifictimeframes.Outsideanalystspredictthatworkwillproceedwhenmajorissuesareresolved,suchasprojectfinancing,appropriateheightofthedam,andenvironmentalconcerns.
Whenaskediftheywoulddoitagain,executivesinvolvedwithTeamAmericaanswerwitharesounding"yes."Theparticipantsviewthe
![Page 206: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/206.jpg)
experienceasapositiveoneandachallengefromtechnical,managerial,andpoliticalstandpoints.Thehardhoursmayhavetemporarilyexactedatoll,butthelong-termpayoffisanenduringsenseofsatisfactiononapersonalandaprofessionallevel.
Onespin-offoftheteam'sworkwasexplodingthestereotypessurroundinggovernmentworkersinrelationtotheirprivatesectorcounterparts.Inthetrenches,theteammembersfoundthattalent,determination,andprofessionalismexistinmanyplaces.Theinvolvementofexperiencedseniorprofessionalsfromthepublicandprivatesectorswasthekeyingredientinproducingaqualityproductontime.
![Page 207: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/207.jpg)
Page99
TheinvitationfromthePeople'sRepublicofChinatopreparethisproposalisanindicatoroftheirrespectforthetechnicalandprofessionalexpertisefoundinU.S.privateindustryandgovernment.Throughotherjointprojects,thecountry'sbesthumanresourcescanbemeldedforavarietyofpurposes,includingtechnologytransfertohelpothernationsachievetheirgoals,andenhancingthepositionoftheUnitedStatesininternationalcompetition.
![Page 208: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/208.jpg)
Page100
7Needed:InstitutionalStructuretoPromoteGlobalEnterpriseTheU.S.constructionindustryconsistsof5.5millionindividualsemployedin1.2millionfirms,myriadprofessionsandtrades,andavarietyoforganizationsrepresentingtheseindividuals.ThesemanyparticipantssharecommoninterestsandconcernsaboutthegeneralhealthoftheU.S.economy.Whileonlyasmallfractionoftheseparticipantsareactiveintheinternationalconstructionmarket,theyrecognizetheimplicationsofU.S.weaknessinthismarket,andtheycanunderstandtheopportunitiesthattechnologicalleadershipoffers.
Thecommitteehasnotedthehigh-levelgovernmentfocusforconstructionpolicyandexportactivitythatsomecountrieshaveestablished.Thecommitteehasnotedaswellthesupportforconstructionresearchandtheclosepublic-privatepartnershipthatindustryinsomeothercountriesenjoys.Finally,thecommitteehasnotedtheneedsfortheUnitedStatestocatchupinitsresearchanddevelopment,professionaltraining,andpursuitofinnovationinconstruction.
OrganizedFocusofDiverseInterests
ThecommitteeconcludesthatamoreeffectivewayisneededtobringtogetheronacontinuingbasisthemanydiverseprivateandpublicinterestsintheU.S.constructionindustry,toresolveinevitableconflictsofopinionamongtheseinterests,andthereby
![Page 209: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/209.jpg)
![Page 210: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/210.jpg)
Page101
togivetheindustrystrongervoiceinthenationalpolicyforum.Professionalsocietiesandtradeassociations,suchastheAmericanInstituteofArchitects,AmericanSocietyofCivilEngineers,andAssociationofGeneralContractors,currentlyplayanimportantroleinrepresentingtheinterestoftheirmembers,butthereisnoeffectivemeanstobridgethedifferencesamonggroups.Asolidinstitutionalfocusisneededtoprovidegreaterunitywithintheindustryandtofacilitateconcernsandcoordinatedaction.Existinginstitutionscouldbegivenexpandedmandatestoplaysucharole,butnewinstitutionsmaybeneeded.
ThecommitteehasfounditdifficulttounderstandwhytheUnitedStates,asanation,wasunableorunwillingtoallocatethefundstosupportitsalreadysubstantialprivateinvestmentintheThreeGorgesProject,whileitsmuchsmallernorthernneighborfoundtheallocationtobeinitsnationalinterest.At$8milliontheamountismeagrewhencomparedtogovernmentspendingonanynumberofprogramstosupportvariousothersectorsoftheU.S.economy.
AtradeagreementsignedwithJapaninearly1988offerspossibleresolutionoftheproblemsalreadydescribedregardingU.S.constructionindustryactivityintheJapanesemarket.However,intheheatoflong-runningnegotiations,theUnitedStatesappearstohavelostsightofitsmaininterest:thetechnicallyadvancedsegmentoftheconstructionmarket.ApparentaccesstoarangeofsmallerprojectsthatarelargelylaborandmaterialsintensivewillnotonlyholdlittleattractionforU.S.firms,butwillthenhurtfutureU.S.prospectsbygivingtheappearancethatthenationisnotseriousaboutglobalenterprise.Bothsidesintheagreementarereportedtoholda"show-me"attitude(EngineeringNewsRecord,April7,1988,pp.1213).
WhiletheU.S.-Japanesetradenegotiationsproceeded,theFrenchgovernment-sponsoredconsultingfirmAeroportsdeParis,whichhad
![Page 211: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/211.jpg)
beenhiredtoevaluateproposeddesignsforpassengerterminalsatKansaiInternationalAirport,investeditsresourcesinpreparationofitsownalternativeproposal.Itsinnovativeplanswayedtheairportauthority'sopinionandledtoanewdesigncompetition,creatinganopportunityforwhichFrenchdesigners(andultimately,constructorsandequipmentsuppliersaswell)nowappeartoholdadistinctadvantage.
Thecommitteefeltthesecasesarenotunusual,butratherareexamplesofapatternofpoorlyfocusedattentionandseeminglack
![Page 212: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/212.jpg)
Page102
ofinterestinU.S.constructionwithinanincreasinglyglobalmarketplace.Furtheranalysisisneededtodefinethepatternmoreclearlyandtoidentifywhatshouldbedonetocorrectwhatis,inthecommittee'sview,aproblemthatwillhaveincreasinglyseriousconsequencesforthenation'swell-being.Nevertheless,itisreadilyapparentthattheUnitedStateslacksthemeanstobringtogetherpublicandprivategroupstoofferthebestofU.S.constructionskillsandtechnologyinworldmarkets.TheinstitutionalstructureisneededtofacilitatethecooperationillustratedinthepursuitofChina'sThreeGorgesProject,andthentofollowthroughwiththesupportneededtostrengthenthenation'sabilitytocompeteortodevelopcooperativeventureswithinternationalpartners.
Theinstitutionalstructurecouldtakeanynumberofforms:
Therecouldbeattheapexafederalgovernmentagencyresponsibleforsupportinginternationalanddomesticconstructionenterprise.Thisgovernmentofficecouldproposepolicyinitiativesforlegislativeactionandcoordinategovernmentactivitythatinfluencestheconstructionindustry.
Therecouldbeaquasi-governmentalorganizationthatwouldassembleU.S.constructionexpertsfromavarietyoffirmsandgovernmenttoworkwithcounterpartorganizationsfoundinothercountries.ThisorganizationcouldacttorepresentU.S.interestsininternationalcompetitionformajordesignandconstructionprojects.
Therecouldbeaunitassociatedwithgovernment,butnotanagencyofgovernment,thatwouldmonitortheperformanceoftheU.S.constructionindustryandgovernmentpoliciesthatinfluencethatperformance.Thisunitwouldserveasanobjectiveobserverandforumforidentifyingproblemsanddefiningoptionsforsolvingtheseproblems.
![Page 213: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/213.jpg)
Perhapssomecombinationofsuchorganizationsisappropriate.However,thisinstitutionalfocusisneeded,itsexactformmustbedetermined,andthecommitteerecommendsthatstudyshouldproceed.
AttitudeofOpportunity
ThedesignandconstructionindustriesinWesternsocieties(andinJapan)believetheyarefacedwithdecliningmarketsbecauseofstablepopulations.OthercountrieshavetargetedtheU.S.marketbecauseitissoopenandlargethatitseemsanaturalwaytogainbusinessthatwilloffsettheirownshrinkingvolume.However,an
![Page 214: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/214.jpg)
Page103
internationalcooperativeefforttoadvancethetechnologyofinfrastructurecouldcreatewholenewmarketsforurbanandinterurbansystemswithhigher-performancecharacteristics.
Developmentofadvancedinfrastructureisachallengeworthyofcooperativeinternationaleffort.Itwillbedifficulttostructurethesedevelopmentstomatchtheperformancerequirementsofasocietyutilizingadvancedscienceandtechnology,andmakemorethanincrementalimprovementstothepresentmodaltechnologies.Inthedevelopingpartoftheworld,whichisexperiencingthemostrapidurbanization,thechallengeistodeveloptechnologicalapplicationsappropriatetospecific-caserequirements,ratherthantoimposesolutionsproducedforindustrialnations.
TherearetworeasonsfortheUnitedStatestodomoretowardadvancingthetechnologyofinfrastructure.Thenationwouldbenefitwithinitsownbordersfromnewandhigher-performancesystems,anditcouldalsoenhancetheopportunityformarketingitstechnologyonaglobalbasis.Thiscommitteerecognizestheurgencyofmaintainingandextendingtheexistingnetworksofpublicworksthatunderliethenation.However,theUnitedStatesalsoneedstodevelopnewandhigher-performingtechnologiestoenhanceourcompetitivepositionintheworld.
Thecommitteerecommendsthatactionisneededatanationalleveltodealwiththeissuesofliabilityandsocietalriskaversionthatdiscouragelargecompaniesfromintroducingpotentiallyinnovativetechnologies.Increasedgovernmentcommitmenttoresearchandinnovationareneeded,throughprogramstoapplynewtechnologyaswellasthroughfinancialsupportofconstructionresearchanddevelopment.
ResearchandDevelopmentandInnovation
![Page 215: Building for Tomorrow: Global Enterprise and the U.S. Construction Industry](https://reader036.vdocument.in/reader036/viewer/2022090905/613c8d53a9aa48668d4a3f42/html5/thumbnails/215.jpg)
Thedegreetowhichresearchanddevelopmentactivitywillleaddirectlytoinnovationininfrastructureorinconstructioningeneralmaybeasubjectofdebate,butitisapparenttothecommitteethattheUnitedStatesiscurrentlyspendingtoolittleonconstructionresearchanddevelopment.Meansmustbefoundtoenhancetheapparentadvantagesthatprivatecompaniescanrealizefromthisinvestment,forexample,throughchangesintaxpolicy,risksharingongovernment-sponsoredprojects,ormodificationofprocurementprocedurestosupportpurchaseofinnovativedesignandmaterialsapplications.