Construction Industry In India | Profile

crook Industry In India ProfileThe fork e realplace field of battle reports profile of reflection intentness in India. It points that eddy intentness is wiz of the oldest industries providing ample employment to the right-hand(a) deal from village aim to tubepolitan cities. The size of it of eddy industry ranges from sm all in all guild owned by unmatched or ii individuals to a largish industry employing thousands of people.In the vex calculate inherent nature of face industry gull been discussed and think that it is base of operations or roof formation industry, which in a flash and in like a shot uses big(p) goods and all sepa range types of resources.It has been as puff up soaringlighted that government agencies has direct interference in kink cultivateivity right from acquisition of unload to commissioning of the jump out.To heart the worldly variation of feast and famine state of body structure industry fierceness on systematized care ha s been suggested.Like all another(prenominal) logical argument, misery of complex body disclose companies is to a fault precise putting surface. This issue has also been overviewed. Incompetence, lack of experience, newness, low-downness and pecuniary handicap atomic number 18 the fewer reasons cited for much(prenominal)(prenominal) blows.It has been concluded that lessons should be agreet from failures as triumph is never terminal and failure is never fatal. It is the bra precise of trouble that counts. At proceed it is not failure notwithstanding piteous aim is a crime.Key words Construction industry, management, device, speak to, root.1. Introductionhistorically complex body part industry is oneness of the oldest and largest industry in un nonionized argonna providing ample employment to the people. Before the independence, the whirl activity in India was restrict to grammatical reflexion of d headings, religious places same mosques and temples etcetera at individual and biotic community level, with the use of traditional techniques, which ar still being used in developing countries c ar India.The Taj Mahal and Lal Quila be the legandry example of competence of Indian natural endowment in the field of face .However very authentic record of the whirl operation of these buildings argon not operable instantly. The history of systematised or organised locution practice in India can be traced back to nearly 1847 AD when Lord Dalhouise established the Public Works Department, called PWD, today, to construct well-mannered engineering science structure which included route, small obstructs, canals etc. The department doinged successfully for 100 years. In 1947, the independent India decided to launch a gigantic multipurpose river valley project, called Bhakhra Nangal Project on the river Sutlej in the North west India for irrigation and power generation at a cost of Rs.7750 lakhs in 1952 which amounts today appro ximately more than Rs.100,000 crore in offset five year protrude in which 50% of jacket crown outlay was allotted to turn of events of civil flora.5 The saying of Bhakhra Dam was transmitn by irrigation wing of PWD of Punjab with the help of good have sexhow from foreign help on cost plus basis. This can be considered as a major breakthrough in the field of construction by India as at that place were no big construction companies available at that cadence to take up such stupendous lineage sector and more over network analysis like Construction intend system / also known as Critical Path Method (CPM) and Programme Evaluation Review Technique (PERT) had not taken dinner gown shape.The evolution of Indian construction industry has followed the same commonplace practice session as happened in other countries, initially founded by the government and easy taken over by small and big enterprises. During execution of Bhakra Nangal dam Indian government realised tra in of professional competence in the field of construction and the first professional consultancy corporation National industrial Development Corporation (N I D C) was established in the existence sector in 1954 .Subsequently a number of speciality companies in innovation and Construction came into existence like Indian Railways Construction Limited (IRCON),National build Construction Corporation (N B C C),Rail India Transport and Engineering work (R I T E S),Engineers India Limited(E I L) and in underground M N Dastur Co.Hindustan Construction bon ton argon the name worth to be mentioned. In late sixties government allowed foreign collaborations in these service .The guide spots for such collaboration were brisk and issued in 1968 with binding that local anaesthetic anaesthetic adviser would be the sensation affirmer in such collaborations .The objective lavatory such binding was to develop indigenous design capabilities comparable to in flown foreign technology and skills. The out semen of this strategy was establishment of joint ventures in India.2. Construction and National EconomyBy just using common sentience it can be inferred that economicalal plans of any rustic is prep atomic number 18d to improve any particular sector of thriftiness. Improvement or emphasis on any particular sector whitethorn or whitethorn not need help of other sectors like construction. A microscopic study of economy, irrespective of its state i.e. primary, secondary or tertiary, reveals that reading of near of the sectors need help of construction. In nutshell, a gap between expect and supply is requisite for the learning of a particular sector.Role of construction and its impact on other argona can be seen from numeral 1.1Thus it can be s sanction that any attention to hone construction activity provide lead to step-down in liquidate of material, saving of nil and saving of time. This provide sure enough lead to reduction in cost over runs of other projects. Thus, construction sector is directly or indirectly influences the overall economy of the country.The pattern of Indian economy of last fifty years shows that construction work amounts to around 40% of development investment .Approximately 16% of Indian working population depends on construction for its living .The construction industry creates immobile assets worth over Rs.20000 crore by employing more than 3 crore people .It enhances nations gross domestic growth by 5% and gross capital formation of 78%.It is expected that total capital expenditure of state and centre will be approaching Rs.802087 crores during the consequence 2011-12. This amount indicates an enhancement of Rs.658500 crore from the figure of Rs. 143587 in 1999-2000.In the 21st century there has been an increase in the share of the construction sector in GDP and capital formation .The GDP from construction at situationore cost or at current prices change magnitude to Rs. 174571 crores (12.02 % of the total GDP)in 2004 -05 from Rs.16238 crores (10.39% of the total GDP in period 2000-01.The increasing involvement of the private sector in infrastructure development through public private partner enrapture and the strategy like Build Own Transfer (BOT) can be cited as the briny factor for such increase in GDP. However there is ever compass for more active participation from private sector in this direction through investment. There are around 200 firms from somatic sector, working in Indian construction industry .The number of registered variant A contractors is around 120000 working for local development self-confidence, state departments and primaeval government bodies like CPWD. The number of small contractors and petty contractors working as sub contractors for principal contractors are enormous. So there is ample scope for expansion of construction industry at micro as well as at macro level in form of infrastructure development.NATIONAL ECONOMYConstruction industry has some rummy characteristics like any other industry. branchly, it is a capital-intensive industry involving current and future outlays of capital with the expectation of a stream of benefits extending removed into the future. tricely, construction project takes a prospicient duration to complete e.g. the Bhakra Dam took fifteen years for its purpose (1950-1965) and they also have a long gestation period.Thirdly, the useful tone of construction project of national importance is very long unremarkably more than 60 years for about of the major constructions.Fourthly, in construction project, products and services are combined together. In construction, product is fixed and forge and men move, stubborn to assembly line production in which product moves.Fifthly, a large construction necessitate a large land area. Acquisition of such land leads to payment of compensation to the owners of the land, which has legal and semipolitical over tones. In some nationals like const ruction of dam, it needs replacement of nearby villages. Such problems commonly do not occur with the other industries.Sixthly, cost benefit analysis of public infrastructure created by construction activity such as roads, bridges and dams cannot be done with traditional concept of profit maximisation alone. Special economic tools like loving Cost Benefit Analysis (SCBA) and principles of welfare economics are necessary for the valuation of such assets.Seventhly, two construction projects are not very(a) in every(prenominal) respect. Thus, construction project can be considered as a job work of a large magnitude contrary to any other manufacturing unit producing products at mass scale by a single machine.Eighthly, the military man resource working in construction forms a temporary organisation for the project at the pose and disperses in different directions as soon as the project is over.Ninthly, experience of generations plays a vital role as some of the construction mat erial directly used after quarrying are the natural material and exertion or relative merit of such material takes a long time for its pronouncement, the time may be in decades.Tenthly, death of workers during the execution phase of project is very common, so safety and precaution are primary concerns.Such leftover characteristics of construction project opened the portals for the development of special film directorial tools, like materials management, CPM and PERT to handle the project in a professional manner.In India, construction industry is fragmented and a sizeable construction work is performed by the nonunionised sector.Such peculiar characteristic creates favourable conditions for the establishment of a new company. If Construction participation is weighed on the basis of men material and money following facts come up.As most of the construction is done either on site or precast members, are fabricated and assembled on the site and most of the construction equipment a re available on rental basis, thus a little capital is invested in fixed assets and machinery.Construction companies require relatively low working capital as after award of contract, company realises mobilisation advance from owner before starting the work.In India, companies, commonly employ labour contractor for the supply of labour force. So very few employees are on the permanent pay roll of the company.These factors are responsible for the birth of small to very big construction companies. This introduces competitor in the market. There are pitfalls but a professionally managed construction company is able to pay rich dividend to its owners/shareholders.3. Constructions and National DevelopmentFor any developing country like India, development of infrastructure is the prerequisite for the economic progress of the country. To achieve this objective optimised construction is the need of the hour as capital is a scarce resource4. Types of ConstructionTotal construction work ca n be divided into two broad categories namely public and private.The public projects i.e. whose direct beneficiary will be the public, is usually handled by the government, of range govt. get it done by any contractor or by construction company by awarding the work through bids and tenders. It is public money or any financial aid or loan from agencies like World Bank, that is spent. Dams, Bridges, Canals, Metro Rail, Power Projects, DUDA,SUDA are typical examples of public projects.Private projects like house of an individual or construction of a factory, a nursing home, hotel or project in which taxpayers money is not involved can be categorised as a private project. Frankly speaking profit motive is incessantly there in most of the private projects.In private projects, capital outlays are less as compared to public projects.Secondly in Indian working environment one cannot afford delay in private projects but cost over runs and delays in public projects are an perfunctory phen omenon in India.5. Consumers of Construction IndustryFollowing are the consumers of construction industryAn IndividualGroup Housing SocietiesCentre, State, topical anesthetic Government and Development Authorities. in collective fieldOther countries at International level.Every consumer has own peculiar requisites, which are being described in following paragraphs.5.1 IndividualsAn individual needs the services of a construction company for the construction of individual house, which is ordinarily his dream house. In such construction, company cannot ignore individual apprehension and preferences. Persons who are executing the project have to help and arrive at a decision in advance on the item of alternative and colour e.g. colour and size of tile of bathroom, colour, size and quarry of marble stone etc. if construction has to proceed smoothly.5.2 Group Housing SocietiesThe house demand will be around 31 million by 2015(MPRA 2008)In homework and designing of an apartment or building blocks for group trapping society, the requirement can be classified into two broad categories. 13First requirement is of an individual in his house. In a group housing most of the finishing items are left for the individual occupant so he could finish the house as per his choice, taste and preferences.Second requirement is the preferences of a group of people as a whole or community. requirement. To fulfil this requirement planner needs noesis of architectural sociology, human behaviour, security aspect, and maintenance engineering practices, generosity of the people and cooperation among the people.5.3 Corporate SectorCorporate sector hires the services of Construction Company for commercial building, for factory or for office building etc.In such buildings, building economics, cost optimization, requirement offuture expansion and flexibility of the plan are the key issues.There is ample scope for creativity and innovation in corporate sector projects.5.4 Government Co nstructionLocal Development Authorities, CPWD, PWD of various states etc are the department which look after the construction of government sponsored, civil engineering works. Here Construction Company is guided by strict rules and commands of the state, for such departments, time factor is least important.5.5 International ContractAfter the Second World War under developed, oil-rich countries were busy in creating infrastructure of the country to boost economic growth. Sometimes even developed countries need grand construction for the events like Olympic and Asian games.These projects are mostly financed by the user country or by some supranational financial backing agency like World Bank. In such cases international bids are invited. Construction companies from US, Great Britain, West Ger legion(predicate) and France usually take the best part of these contracts.Now competition is increasing. Companies from Japan, South Korea and India are also getting business share in these countries in construction and in setting up of power stations and infrastructure. Those companies who offer turnkey services have pictorial chances of success in the competition when the nature of job is purely works contract. Here sub contractor is adequate to(p) of mobilising construction equipments and manpower and gets subcontracts from principal contractor. Joint venture is a very common phenomenon in international contracts.6. Main Organs of Construction IndustryThere are deuce-ace main organs of construction industry other than the consumer.The OwnerThe consultantThe Contractor6.1 The OwnerCivil Engineering Projects are usually cost intensive. Usually the investor does feasibility study in advance. Any investor or actor is worried about two things. Firstly investor is worried about the rate of return. Secondly the patterns of cash flow. The ideal situation will be high and early return. i.e. on what date what amount is required and from where the same will be arranged. T he owner or promoter may be an individual, a government authority, a government department, a corporate house etc.6.2 The ConsultantIn Civil Engineering Projects, Architect, Engineer, Project Manager and charter Accountant usually form the panel of consultants. These persons advise the owner on the basis of their familiarity, experience, and know how. It is generally believed that any person who has experience and knowledge can give advice on a particular problem of his field.The primary function of an engineer is to design and do necessary permutation and combination to optimise the solution. Although consultant should have experience, knowledge and wisdom that all certainly come with age but people who are well internal with new material, new technology, new equipment and of course having a lot of energy and enthusiasm to do something new are also desirable on the project.6.3 The ContractorIn Civil Engineering Project, contractor translates the blue grade into reality with t he help of work force and material. The practice of contractor ship in civil engineering is perhaps as old as civil engineering itself. A poorly written contract sympathy is continuously a good cause of bone of contention. In contracts, one should incessantly seek the help of a legal expert. This is imperative that owner himself should enhance his knowledge on the subjects like laws of contract, negotiable instrument act and consumer protection act etc.7. restrictive Bodies Related with ConstructionRegulatory bodies related with any business can be classified into two broad categories viz. general and specific.Income Tax, Labour Court, Labour Union, Electricity get on are the departments with which every business organization has to deal, fall in general category. So every business organization should be well verse with the rules, regulation ,written and unwritten laws of these departments.The regulatory bodies specific to construction at local level are following (1) Local De velopment Authority, (2) Pollution work Board, (3) Water Works and Conservancy, (4) Local Police.7.1 Local Development AuthorityIt is the first regulatory body, which is encountered in any construction. most of the rules, regulations and byelaws of development authorities of country of Uttar Pradesh are given in the book Regulation of Building public presentation in Uttar Pradesh. This very book every construction director should have and should always keep himself in touch with the office of the development authority for the sensibleness of day-to-day changes in the working and rules and regulation of the authority.In fact, rules, regulation and bye laws are framed to provide healthy living but sometimes these laws are one sided i.e. in favour of government only. Thus, it is advisable that rules should not be violated in ordinary circumstances.However, there is always a provision for the compounding. This is to be weighed by the owners i.e. gain or loss on an unauthorised con struction.7.2 Pollution Control Board (PCB)Now a days regulation regarding environmental pollution have become very stringent in India to, like in advanced countries. Sometimes large projects like construction of power plant, multipurpose river valley project are stopped or even abandoned due to environmental considerations. Most common projects that have been in trouble in the recent recent include Tehri Dam in Uttranchal and Narmada in Madhya Pradesh.Clearance from PCB is also necessary for construction of a factory or fabrication of a impact plant. The days are over when effluents were directly discharged into the river. There is no harm in conforming to PCB norms but sometimes these regulations are challenging to obey and PCB acts as a hassle. Planners are advised to incorporate PCB tribute right from site selection to project formulation.7.3 Water Works and ConservancyIf construction is to be done in urban area then very first question comes to mind is what will be the sour ce of pissing during construction. If municipal peeing supply is used , municipality charges additional tariff on it. So it is advisable that first and foremost job of construction manager is to get a water pump installed and inform the municipality that public water is not being used for construction.The second thing in case of projects like hotel and apartment is the disposal of wastewater and night soil. It is obligatory upon function officer of the construction company or construction manager to set out the issue for the permission of connection of sewer of the building to the municipal sewer.7.4 Local PoliceLocal police plays an important role in any construction project in India because development authorities always take the help of police to meet their objectives or in case of mishappening on the site local police has to be taken into confidence. It is obligatory on the part of construction manager to maintain good relations with local police station and police officers of that area. Of course maintenance of such relations, always lead to additional expenditure on the construction company.8. Business chance in Construction IndustryConstruction of infrastructure like road network, canals, urban development, extension and renovation of existing expertness are few activities through which capital formation takes place in most of the countries of the world. So there is always ample opportunity for construction from village level to international level for the construction companies, depending upon size and ability and experience of the company.9. solicitude in ConstructionBased on work experience, it has been observed that most of the construction contractors manage their business in a very unorganised manner. This ultimately leads to failure of business. The numbers of small and medium size companies failures are much more.Construction industry has been characterized as weak inefficient, nebulous, backward and delay to incorporate changing conditi ons. In a nutshell majority of construction companies are poor absorber of management knowledge. The explanation given for it may be as under.Every construction project is unique in itself and does not need very strict technical standardization. An operation in construction work involves some(prenominal) skills and talent, mostly of non-repetitive nature. Remote location of the project, poor means of rapture and varying productivity of labour are some factors, which are beyond the contractors control. Thus construction business is volatile in nature with many ups and downs.Any construction activity is basically a manufacturing process. So the decision-making people are very few. Any delay in on the part decisions, increases the cost and hampers the progress of construction. Such complexities lead to a managerial challenge. It does not mean management problems of construction are entirely different from other management problems.Like any other industry, construction industry is al so experiencing cutthroat competition. Products and services of construction industry also face temporal variation in demand and supply.Such conditions necessitate the learning of managerial practice specific to construction. Today skilled management is necessary for the survival of construction industry. This maxim has not received adequate attention in construction firms in India. The result is high incidence of failure.10. Failures of Construction CompanyAny construction activity starts from scratch and passes through various abstruse processes and finally project ends in a built up facility or reaches to start up phase of the project and finally project becomes operational. Like other business in construction business also ,there are many slips between cup and lip. The failure of construction business is a subject of analytical inquiry and a matter of concern. So many investigators have examined the issue. A few are being inform here.Dun Bradstreet (1985-1994) have studied th e failure of Construction Company for many years (10 years). They list the following reasons for the failures.1IncompetenceUnbalanced experience escape of managerial experienceLack of experience in particular lineNeglectFraudDisasterReasons unknownThe first four items listed in above list account for over 90 percent of the failures. This fact exhibits that financial success of Construction Company depends almost entirely upon the calibre of its management. Sometimes prolonged work, poor profit margin, lack of proper bill procedure can be cited as reason for the failure. If we club all these reasons, it points towards poor management.Recently Kale and Arditi (1998) have done a radical investigation in this direction. They conclude that newness, adolescence and smallness are three major factors, which are responsible for failure of construction companies.2Arditi et.al.(2000) found budgetary and macroeconomic issues as main reason. 8 Kivrak and Arslan(2008) have examined the critical factors causing the failure of construction companies through a survey conducted on forty medium and small size construction companies of Turkey .They have inferred lack of experience and countrys economic condition as influential factor for the failure.7In scholars tone financial handicap is perhaps the root cause of failure, which is always associated with new companies. It may be concluded that in simple terms, if any one fails in any business, i.e. he could not understand the economics or intricacies or commerce of that business.There is no dearth of literature on the success stories of various companies. Unfortunately success is a public celebration and failure is a private funeral. So for a new entrepreneur, it is better to learn from failures rather than from success stories.In this regard scholar is of the view that stern of right stepping stone always rests on wrong footprints. These wrong footprints are sometimes called experience. In a nutshell a new entrepreneur shoul d know DONTS first rather than DOS. It is the first step to run the construction business.11. The Construction ManagersThe construction manager is the most critical resource in implementation phase of the project. He is supposed to discharge basic functions like organizing, staffing, directing, planning and controlling. A good performance of construction manager is necessary for the growth, development and success of Construction Company.Although the managers do not normally, carry out the construction work with their own hand, Yet they are responsible for keeping the project on schedule within the cost limits. They should have telescopic as well as microscopic vision on each and every step of construction operation, right from preliminary estimates and various types of costs to the final inspection and payment.In managing any construction project, personality of construction manager plays a vital role. This very trait can never be ignored. Mustapha and Naoum (1998) have investigate d factors, which influence effectiveness of site managers. They are of strong opinion that personal variables as a whole have an impact on effectiveness of site managers.4The construction manager should also be capable of handling crisis and contingencies at site. Crisis and contingency do arise at construction site. Managers should be well equipped to deal with such emergencies. To deal with such contingencies collective effort is needed. Loosemore (1998) has identified effective responsibility and teamwork is the basic managerial tool to handle the crisis.12. Need for Professional CompetenceIf a company or contractor is ignorant about his legal rights, entitlements and not vigilant, he will get partial success and will have to be contented with few chips of fruit produced by his hard labour and big chunk will go to the owner who will seldom provide a helping hand.So there is an intense need to impress competence in the management of this valued industry. Introducing a comprehen sive course of study, containing all the relevant aspects of construction management and by writing good books and doing research work, covering all aspects of the problem, can fill this gap.Since construction activities are carried out mostly at the construction site, which are usually far flung from main cities, the academician/authors, and the faculty may not be aware of the practical difficulties and nuances of construction management. These might be the reason that construction management has not received due place in the institutes, universities, colleges and in many management books.13. Application of present paperThis research work will be useful to individual owner, consultant and contractor as well.If a young entrepreneur decides to enter in construction business he is being told in advance about the pros and cons of construction industry. If he plans his business and manages the construction work himself, by employing his own construction team and buying the material hims elf, he will certainly flourish.If the entrepreneur who is conversant with the nuances of construction management practice, can extract maximum from the contractor by applying the knowledge discussed herein, with not much difficulty and solving their problem in time without being deceived or cheated by any one.Consultants can use the present work for optimising the project during conception, definition and planning phase of the project.At last the maximum benefited is the contractor who feels the beat (profit) of the heart of construction project i.e. construction phase.14. ConclusionToday, due to increased competition and the capital, which is scarce, large constructions like metro rail, infrastructure development, high-rise building cannot be handled without the use of modern construction equipment and modern construction management techniques to reduce time and to maintain higher(prenominal) standards of construction quality. On one hand, it is necessary to use modern machinery a nd current construction management tools to optimise the construction activity to improve the corporeal productivity of fixed and variable factors of production. It does not mean that will put across thousands of labourers and other human resource jobless. It is an irrational thinking as it is well said that tomorrow will take its own course.Meticulous management of the finances is necessary for the exponential growth of the company.At last any productive activity serves the society so is with the construction activity. In broader sense every individual of the country will get benefit of increased productivity directly or indirectly through the created individual assets or public infrastructure.