CE-332 CONSTRUCTION ENGINEERING AND MANAGEMENT

CONSTRUCTION INDUSTRY

LECTURER : ASSOC. PROF. DR. AHMET ÖZTAŞ

UNIVERSITY OF GAZİANTEPDEPARTMENT OF CIVIL ENGINEERING

Lecture 1

CE-332 CONSTRUCTION ENGINEERING AND

MANAGEMENT

• Textbook:

Construction Project Management,

By Gould, F. E. and Joyce, N.E.

Prentice Hall, 2000.

Web Page: http://www1.gantep.edu.tr/~aoztas/ce332-notes/

CHP1-COSTRUCTION INDUSTRY

• Introduction• Type of Industry• Industry Sectors

(residential, building, heavy, and industrial)• Research and Development• Trends in Industry

(Demographics, Opportunities)• Conclusion

Learning Objectives

In this chapter you will learn the following:

1. The principles characteristics that define the of construction industry.

2. The four major sectors of construction projects

3. The nature of research and development within the construction industry.

4. Current trends within the construction industry.

Introduction

“To form by assembling parts” is dictionary definition of CONSTRUCT,

but the phrase is a metaphor for the construction process itself.

• Divergent materials• Diverse group of people come together to make a

project possible. This is a Goal-oriented process

--> peculiar challenge to construction industry

Introduction-2

More basic to our economy and daily life.

Designer have a visions; but until contractors builds, those visions are just dreams on a sheet of paper.

Synergy between construction and technological development.

Example: skyscraper, invention of elevator.

Innovation of robotics and computer modelling also affected industry …. With robots directing equipment during construction.

What is Construction Industry?-1

Look at any construction company, and you will find people from a variety of backgrounds.

Construction projects can be awe-inspiring in their breath and complexity, From Egyptian pyramids to soaring sky skyscrapers and enormous bridges.

It is a service industry. So, its success or failure depends on qualities of its people rather than on its technology or product.

Construction sector does not require a patent or large capital investment.

Risk factor is much higher in construction.Reasons: Government funding, demographics

market trends, weather conditions, etc.

What is Construction Industry?-2

Risk factor is much higher in construction.Reasons: a) Government funding, demographics

market trends, weather conditions, etc.b) Unpredictable nature of work itself.c) Any extremes can effect productivity level,

damage materials.d) Custom oriented … meaning: to use mass

production is difficulte) Each project has its own learning curve.

What is Construction Industry?-3

Financial institutions, medical services, accounting firms and real estate companies : all involved in recent mergers, consolidations and conglomerations. However, construction is a study of contrasts.

At one time general contractors constructed entire project with their own work force.

Later projects are complex and sophisticated. So, industry turned to speciality trades. Contractor's role changed from boss to manager.

However, in other aspects of industry, the reverse is happening. Technical complexities are merging owners, contractors. And designers into more collaborative units

This trend is leading construction to its roots- AS THE MASTER BUILDER

Turkish Construction Industry-1

Following the textile and agriculture sectors, construction is the third leading sector in Turkey.

There are 5,000 registered architectural practices and 10,000 engineering firms in Turkey.

Today, Turkish construction and engineering companies are able to design, erect, build and operate almost all kinds of civil and industrial projects

Such as: Dams, hydroelectric and thermal power plants, industrial plants, airports and seaports, large scale petroleum and natural gas pipelines, fertilizer plants, petrochemical complexes and refineries, motorways, tunnels, bridges, large housing projects, hotels and all kinds of sophisticated buildings.

ATATÜRK DAMATATÜRK DAM

Bridge

• Adana - Osmaniye MotorwaySeyhan Viaduct

AKMERKEZAKMERKEZ

Turkish Construction Industry-2

Annual construction spend in 2000 was $10.5 billion excluding building materials. Building materials accounted for an additional $5 billion, which is 10% of Turkey’s industrial output, also 10% of total exports.

The sector is estimated to employ more than 1 million people (they are not continuously employed, 80 % of the construction workers are non-insured, and 98 % are non-unionized) and account for 8 to 10% of GNP. GNP in 2000 was around $201 billion.

Turkish Construction Industry-3

The construction and building material industries are both positively correlated with the GNP growth of the country.

During 1991-98, growth in GNP averaged 4.5% and 5.4% in the construction sector. The sector had a downturn in 1999, following the Asian and, in particular, Russian crises.

In addition, in the second half of 1999, Turkey was affected by two major earthquakes in its north-western region, with estimated reconstruction cost of $4-6 billion.

Turkish Construction Industry-4

A big boost to the Turkish economy came in December 1999, with Turkey’s acceptance of candidacy to the EU membership. Following a positive growth in 2000, the sector was badly affected due to the economic crises of November 2000 and February 2001.

Negative economic growth, higher taxes and higher interest rates along with continued delay in important public tenders in accordance with the IMF’s stand-by agreement, are the major drawbacks for the Turkish construction industry in 2001.

Turkish Construction Industry-5

Table-I Growth rates of the GNP and the Turkish Construction Sector.

Years GNP Growth (%) Construction Growth (%)

1991-1998 4.5 5.4

1999 -6.4 -12.7

2000 6.1 5.8

2001 -9.4 -5.8

2002 (Estimated) 3.0 Flat

According to the data compiled and averaged between the years of 1970-1997 by the Turkish Contractors Association (TCA), the breakdown of the construction works by type of business is as follows: Housing 20%, Industrial 27%, Commercial 7%, Infrastructure 46%.

Turkish Construction Industry-6

The construction sector, has strong backward linkages with over 200 sub-sectors in the economy. The backward linkages of the sector is related with the input to the industry. This makes over 200 subsectors, being strongly dependent and affected by the construction industry.

Thus, the sector plays a vital role in the employment in the country.

Industry Sectors

Since most owners are generally interested in acquiring only a specific type of constructed facility, they should be aware of the common industrial practices for the type of construction pertinent to them.

Likewise, the construction industry is a conglomeration of quite diverse segments and products. Some owners may procure a constructed facility only once in a long while and tend to look for short term advantages.

Industry Sectors

However, many owners require periodic acquisition of new facilities and/or rehabilitation of existing facilities. It is to their advantage to keep the construction industry healthy and productive.

• Collectively, the owners have more power to influence the construction industry than they realize because, by their individual actions, they can provide incentives or disincentives for innovation, efficiency and quality in construction.

Industry Sectors

• It is to the interest of all parties that the owners take an active interest in the construction and exercise beneficial influence on the performance of the industry.

• In planning for various types of construction, the methods of procuring professional services, awarding construction contracts, and financing the constructed facility can be quite different.

Industry Sectors

For the purpose of discussion, the broad spectrum of constructed facilities may be classified into four major categories, each with its own characteristics.

1. Residential

2. Building construction

3. Infrastructure and heavy construction

4. Industrial

Residential Construction

– Residential housing construction includes single-family houses, multi-family dwellings, and high-rise apartments.

– During the development and construction of such projects, the developers or sponsors who are familiar with the construction industry usually serve as surrogate owners and take charge, making necessary contractual agreements for design and construction, and arranging the financing and sale of the completed structures.

– Residential housing designs are usually performed by architects and engineers, and the construction executed by builders who hire subcontractors for the structural, mechanical, electrical and other specialty work.

• Residential Housing Construction

Residential Construction

Building Construction

– Institutional and commercial building construction encompasses a great variety of project types and sizes, such as schools and universities, medical clinics and hospitals, recreational facilities and sports stadiums, retail chain stores and large shopping centers, warehouses and light manufacturing plants, and skyscrapers for offices and hotels.

– The owners of such buildings may or may not be familiar with construction industry practices, but they usually are able to select competent professional consultants and arrange the financing of the constructed facilities themselves.

– Specialty architects and engineers are often engaged for designing a specific type of building, while the builders or general contractors undertaking such projects may also be specialized in only that type of building.

•  Institutional and Commercial Building Construction

• Construction of the PPG

Building in Pittsburgh,

Pennsylvania

Building Construction

Infrastructure and Heavy Construction

– Infrastructure and heavy construction includes projects such as highways, mass transit systems, tunnels, bridges, pipelines, drainage systems and sewage treatment plants.

– Most of these projects are publicly owned and therefore financed either through bonds or taxes.

– This category of construction is characterized by a high degree of mechanization, which has gradually replaced some labor intensive operations.

• Infrastructure and Heavy Construction

• Construction of the Dame Point Bridge in Jacksonville,

Florida

Infrastructure and Heavy Construction

Industrial Construction

– Specialized industrial construction usually

involves very large scale projects with a high degree of technological complexity, such as oil refineries, steel mills, chemical processing plants and coal-fired or nuclear power plants.

– The owners usually are deeply involved in the development of a project, and prefer to work with designers-builders such that the total time for the completion of the project can be shortened.

Industrial Construction

• Specialized Industrial Construction

• Construction of a Benzene Plant in Lima, Ohio

Research and Development

• Traditional construction focuses on cash flow and is almost completely driven by projects and their schedules. So, there is a little incentives for individual companies to invest in research and development.

• International companies are starting to challenge to this profile. Like Japanese.

Trends in Industry

• Has an image problem.• In fact, construction is a noblest

professions. Working with your hands, solving problems in the field, working collaboratively with many other disciplines to create a real product that will be handed to future generations:----> This is construction

Next Chapter

Chapter 2 - Project Participants