The business model for the construction industry tells the story about how the industry works, defining who the target customers are, how the business makes money, and what the customer values. Most of the construction projects originate by clients as concepts of public or private utility, and actually delivered by many players in the industry.
Clients provide investment, different contractors bid for the opportunity to perform the work, and finally, the project is executed and delivered. Let’s explore the business model of the Construction Industry.
Each agency associated with the construction industry has its own particular organizational set up compatible with the nature of its work load. The detailing will depend upon the size, the geography of the area of interest, nature of activities, and complexity of the problems faced by it.
The majority of construction projects are situated far from the head office and from one another. It is, therefore, almost impossible to provide continuous supervision or control over the routine and day-to-day activities and problems of project sites. The physical distance itself will decrease the degree of management controls and hence, increase the workforce autonomy. Improvisations have to play an important part in many "here and now" decisions at construction sites.
It makes imperative that at s construction project site there is a widespread delegation of decision-making powers through all levels of the organization right up to the operative level. This contrasts markedly with the manufacturing industries where rules, procedures, and method statements can be formed and applied more rigorously to the job tasks. Thus, the availability of trained and skilled human resources at all levels of management is much more important in the construction sector than any other sector of the industry.
In general, there are various groups of stakeholders involved in a construction project. Each group contributing a specific component, examples are the owner group, the engineering group, and the construction group.
The owner group supplies the "need" of the project and the finances required to fulfill this need. They are the driving force behind the construction industry. Their demands for housing, commercial facilities, industrial products, and infrastructure are the chief motivation to build. After determining the need and deciding to build, the owner is accountable for the following primary duties:
The engineering group consists of area experts like architects, structural designers, and construction managers. These area experts supply the specifications, method statements, designs, and schedules of the project and perform supervision and quality control functions.
The construction group consists of a matrix of contractors executing the various work packages.
The use of various new technologies and deployment of project management strategies has made it possible to undertake projects of mega-scale. In its path of advancement, the industry has to overcome a number of challenges. However, the industry is still faced with some major challenges, including housing, disaster-resistant construction, water management, and mass transportation.
Construction planning is the specific process construction managers use to lay out how they will manage and execute a construction project, from designing the structure to ordering materials to deploying workers and subcontractors to complete various tasks. Construction planning involves identifying all the required steps to build a structure, splitting them into defined activities, ordering these steps logically, and determining the necessary materials, manpower, and equipment.
The construction industry is dependent upon increased collaboration and joint working between clients and the whole supply chain. Construction execution refers to standards, methods, and practices used during the construction phase of a project to successfully deliver the object that is being constructed. Providing direction to labor, meeting all the regulatory requirements, and supervision of a project from early development to completion is part of the execution phase. The ultimate goal of construction is to deliver the project to the full satisfaction of the client’s demands both in terms of functionality and budget.
Inspection and supervision are required at every step to make sure that the required tasks are being performed required to complete the construction activities. Progress is constantly monitored and changes are being made accordingly. The construction project manager spends most of the time in the step of monitoring and depending on the information that he gets redirects the tasks and maintains the control of the project. There are several unknown factors in any construction process that could cause the cost of projects to increase, programs to be delayed, and the quality of builds to be compromised. These introduce two aspects that come into play around commerciality and risk, and which party incurs additional costs is frequently an area where disputes arise between clients, consultants, and contractors. Furthermore, given that construction works often incur a significant amount of money, the stakes are high in terms of the final bill for clients and the level of profit attained by contractors.
The financial structure of the construction industry is also different from other industries. The capital requirement on a construction project is classified below:
The construction industry offers many types of jobs and positions for all types of workers, those with degrees, those without, skilled workers, and unskilled workers. Degreed professionals in the industry typically work as architects, engineers, project managers, or site managers. These professionals may also be part of sales and marketing or other jobs such as advertising, human resources, and accounting that are part of every company.
Non-degree workers or those with associate degrees or certifications may be hired as design technicians or assistants, site supervisors, customer relations or service representatives, materials coordinators, or similar positions.
Skilled workers must usually complete formal training or an apprentice program and they typically focus on a specific trade such as brickwork or masonry or welding. Unskilled workers are hired as laborers on construction sites to operate equipment and provide the physical labor needed.
Up until the 1960s, the management tasks associated with large construction projects were typically handled by civil engineers. But in 1965, faculty from nine universities gathered in Florida to form the Associated Schools of Construction. Now they offer a standardized construction management curriculum leading to an exciting new career choice, one for which there is increasing demand.
Overview of Construction Industry
Construction is the oldest and one of the largest industries in the world with its market size of about ten trillion US dollars. Construction is traditionally a contracting business right from the good old days, the industry comprises of a very large number of small firms. Now the construction industry is one of the largest industries in any economy. It makes a significant contribution to the national economy and provides employment to a large number of people.
Construction Industry – The Sectors
The construction industry produces a wide range of products, and the enterprises working in the construction domain are equally diverse. The construction industry can be divided into three sectors of construction namely building, infrastructure, and industrial. They can be further classified as residential, non-residential, and engineering projects. The construction activity can be carried out as a private or public endeavor.
Features of Construction Industry
Construction projects (activities) have some unique features with respect to other industrial projects. The construction industry is a unique industry with its own inherent complications that involves multiple stakeholders and agencies. Dependent on contractors and seasonal labor-force it has multiple linkages with other industries. Productivity and safety hazards are peculiar to this industry.
Construction Industry – Business Model
The business model for the construction industry tells the story about how the industry works, defining who the target customers are, how the business makes money, and what the customer values. Most of the construction projects originate by clients as concepts of public or private utility, and actually delivered by many players in the industry.
Roles in Construction Industry
In general, there are various groups of stakeholders involved in a construction project. Each group contributing a specific component, examples are the owner group, the engineering group, and the construction group. In this article, we take a look at different roles that exist within the ambit of the construction industry.
Importance of Construction Industry
The construction industry is an important part of the country's economy. Construction is an important sector that contributes greatly to the economic growth of a nation. The construction industry has laid down the physical and technological foundations upon which modern civilization has developed. It also creates investment opportunities across various related sectors and vital to the achievement of national socio-economic objectives.
Construction Industry in India
India is one of the world's fastest-growing construction markets, rising at the rate of 7-8 percent annually. By 2025, India will become the third-largest market in the world, thereby becoming a key driver for the Indian economy. The Indian construction industry employs over 30 million people and creates assets worth over ₹ 200 billion. Indian Construction Industry consists of 200 firms in the corporate sector.
Challenges in Construction Industry
In spite of the steady rise of the construction industry and its demand, it remains heavily dependent on manual labor. The construction industry faces challenges that become even more for developing countries. Some key challenges are poor productivity, inflation, and rising costs, availability of skilled labor and increased competition, and shrinking profit margins.
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