CM 650

Principles of Construction
Management

Assignment No. 3
1. Identify and discuss issues that confront the construction
industry in the Philippines in the current situation.
Propose solutions. Propose solutions to address the issues
you identify and discuss their impact.
 I. INTRODUCTION
There are two ways to understand “construction” in the Philippine economy. First,
as an industry, construction sector includes “activities of establishments primarily
engaged in the putting up of buildings and structures and other land improvements;
secondary activities such as the provision of technical/engineering services and the
manufacture of construction materials undertaken by horizontally integrated
construction firms; and informal construction activities like repair and maintenance and
own-account construction.”
Construction as an investment or capital formation, on the other hand, is classified
either as a private and public construction. In particular, “all construction owned by the
government and government corporations are classified as public construction; while
all other construction activities are classified as private.”
The construction industry everywhere faces problems and challenges. However, in
the developing countries, these difficulties and challenges are present alongside a
general situation of socio-economic stress, chronic resource shortages, institutional
weaknesses and a general inability to deal with the key issues. There is also evidence
that the problems have become greater in extent and severity in recent years.

II. CONSTRUCTION INDUSTRY IN THE PHILIPPINES

A. ISSUES IN CONSTRUCTION INDUSTRY

1. Building and Construction Material Cost Indices

On the average, prices of construction materials increased by 2.6% in 2010.

Significant price hikes were recorded for Tinsmithry Materials (4.5%), Electrical
Materials (4.3%), and Plumbing Materials (2.4%). Higher prices of commodities (e.g.
steel and copper) in the world market were a major factor for the increase in the prices
of construction materials.
During the first half of 2011, the prices of construction materials continue to show an
increasing trend; but starting last May, prices were slowing down already. The increase
in the prices, however, can be attributed to strong demand for construction industry in
the first half of 2011.
 2. Labor / Human Resource (including Safety and Health)

In terms of labor productivity (measured as the ratio of Gross Value Added of the
industry to corresponding employment), construction industry does not do well relative
to other sectors in the Industry Group. In fact, Construction lags behind mining &
quarrying, manufacturing, and Electricity, Gas, and Water Supply sectors in terms of
labor productivity. Factors for the low productivity in construction industry include
outdated technology, more complicated projects and complex implementing rules and
regulations by the government. The bright side is that labor productivity of
Construction industry has been consistently increasing for the past three years.

3. Manpower Crunch Crimps

CONSTRUC TION companies are experiencing an unprecedented “tight ness” in
the supply of skilled workers that threatens to derail the real estate sector’s growth
momentum and the government’s ambitious infrastructure program. The construction
sector may be a victim of its own success. Robust private real estate activity, coupled
with the take-o􀁼 of government infrastructure projects, have left con tractors scram
bling for workers to take on more contracts and get the job done.

4. Challenge to Professionalize the Industry

“It is still a challenge to ‘professionalize’ the industry. There are licensing and/or
certifying bodies but a lot of entities still look for opportunities to make fast and easy
money and skip out on all the legalities. Investors must be wary of the fact that not all
entrepreneurs have really taken time to calculate their personal risks and embark on a
construction endeavour with the purest of intentions.”

5. Delays and Overspendings

Traditional construction practices can be costly and inefficient. In fact, with large
projects, the industry fails to deliver on time, within budget and to specifications. In
a separate study, it was reported that 98% of these projects had cost overruns of more
than 30% and 77% were at least 40% late. Large projects take at least 20% longer to
finish and are up to 80% over the budget .The industry’s unhurried need to adapt to
new technology has been steadily declining financial returns for contractors.

6. Bad Organizational Structure

The construction project management practice’s decision making and
procurement processes do not have the capacity for the current speed and scale
demand.
 7. Deficient Communication
The lack of a central data system results to delayed and inconsistent sharing of
information and reports. This leads to subcontractors, contractors, and owners not
having a common understanding of the project’s state at any given time.

8. Weak Performance Management

Midstream changes, inadequate communication and lack of accountability lead to
unresolved issues piling up.

9. Non-Universality of Information
When a different team carries over work to a different team for the next process
and when a problem comes up arising from the previous process, the construction
project manager may have a hard time understanding how to proceed. For example, the
procurement team deals with complicated contracts and when a problem with the
contracts arise while in the middle of construction, it may confuse the CPM
(construction project management) lead.

10. Connection Gaps

Planning spans a lot of aspects; it includes high-end preparation and daily tasks.
If daily work does not align with the day’s goal, schedulers should be notified but often
are not. This system ends in delays due to the absence of real-time updating of task
priorities.

11. Poor Short-Term Calculations

Another construction issue is that companies are good at planning and
forecasting outcomes in the next 3 months but fail to identify and calculate work in the
next week or two. This often results in delays that may be caused by unavailability of an
equipment or materials.

12. Inadequate Risk Management

Construction managers and contractors are usually looking into long-term risks
of planning, design, construction, operations, and maintenance. Risks that just pop up
on the job are usually overlooked. These tiny construction issues may just have a
snowball delay in decision making and compound to major schedule overruns.

13. Limited Skill Capabilities

Another cultural problem in construction is that companies tend to work with
previous people and teams and fail to connect with more capable firms and manpower
suited for the job.

14. Financial problems

You may have payments due for the employees, vendors, equipment renters and
suppliers yet the amount for you is due on project completion.
 B. PROPOSED SOLUTION TO ADRESS THE ISSUES

All of the mentioned issues greatly affect the construction industries, but we
should not only focus on these issues, because every problem there is a solution. The
following are the list of solutions that we have to work on

1. Investing in strong safety management programs ultimately reduce injury

rates thereby decreasing schedule and budget overruns and ultimately
improving project ROI and company reputation. The integration of
technology in the industry like documenting safety concerns, using building
information modeling (BIM), and prefabrication and modularization are
impacting positive safety outcomes for companies that embrace them.
2. Improving on “basic” project management skills is the most potent remedy
for reducing construction problems and improving construction
performance.
3. Embracing transparency and real-time collaboration create a continuous
work flow, a transparent environment makes it easier to resolve issues faster.
Efficient and effective tracking aligned with preparedness for unseen events
enable the construction team to anticipate micro-changes and allow them to
adapt and adjust accordingly.
4. The integration of technology in the industry practice definitely plays a huge
role in improving construction productivity.
5. For the delays, it must be addressed quickly, communication must be made
between the client and the contractor immediately.
6. To have consistent and efficient communication, agree on the best ways to
keep communication useful during the project. You may choose to use text
messages, emails or technology apps to allow real time communication
regarding project progress and updates. It is one way to speed bumps of a
communication failure by reducing slowdowns.
7. The construction project management should have people with proper
management skills that will ensure the success of the project according to the
schedule.
8. As the contractor, you need to have enough cash to manage this problem.
Going for an open business line of credit will help you manage such bills and
save your reputation.

III. REFERENCES

 https://www.philstar.com/business/2017/07/14/1719598/contractors-
bullish-infra-amid-politics-pricing-issuesAssociated
https://www.pressreader.com/
 https://www.bworldonline.com/the-building-blocks-of-the-countrys-future/
 http://www.asranet.com