The Saudi Construction Industry - Article Example

 The Saudi Construction Industry Introduction The Saudi construction industry is developing very fast, but its heavy dependency on poorly skilled foreign labor is making it hard for the industry to achieve international standards. In Saudi, many contractors and developers use unskilled labor or workers with little experience in construction. Even in cases where these foreign workers have any construction-related skills, the standards of their country of origin may differ highly from those practiced locally in the Kingdom of Saudi Arabia (Oesteen, 2008). The other challenge for the construction industry in Saudi Arabia is that just like it is the case with other Arab countries and the Middle East, punctuality is poor and people hardly ever take time seriously. This means that people do not keep time commitments and this culture is also reflected in the project management, especially in the construction industry. Such cultural attitudes to time will affect the performance of the industry and will need to be changed. According to Dadfar & Gustafson (1992), foreign construction companies operating in Saudi find it very hard to operate in the country. The main problem with the Saudi construction industry is that it is full of structural problems that are caused by lack of competency and professional management. These are caused by bad culture and lack of professionalism in areas such as innovation, improving global operations, strategic planning and creating joint ventures. The use of IT technologies and information systems and knowledge acquisition is also not well developed and this puts the industry at a position where information sharing is difficult, almost impossible. These weaknesses make it hard for Saudi construction firms to acquire strategic edge in the market. This kind of strategy is important because the future of the industry will depend on it (Irshad, 2004). According to Abdul-Hadi et al. (2005), unless these issues are addressed in time, the Saudi construction industry will continue to suffer from inefficiency and this can have a negative effect on the overall Saudi economy. Some challenges that are facing the Saudi Arabian construction industry are unique to the environment, while others are common to any construction industry in the world. Some of the common challenges that are common across of the global construction industry are; management of cost, total quality management and time management. Studies have indicated that delayed and incomplete projects account for over 72% of the total projects carried out in the industry (Al Khalil & Al Ghafly, 1999). Poor research or lack of research altogether has made it even harder for these problems to be addressed in a proper way. Research is needed to know where to start addressing the problems and how to solve the problems (AL Meer, 1998; O'Brien & Al Biqami, 1990). Falqi (2004) did a study that highlighted a number of challenges associated with the Saudi construction industry as well as the general construction background as a whole. These challenges went around the issue of timely, cost-effective and robust delivery of contract documents. In other words, communication was identified as a major problem in the industry and if this was to be improved, the industry would be able to improve most of its processes. One thing with the construction industry is that despite it being the oldest industry, it has gained from very little success in the past. As such, traditional ways of doing things are still used and this has a negative effect on the industry especially in time when the IT revolution is changing everything. As Frankilin says (2009), this lack of competency makes the construction industry to be very poorly managed and thus low profitability is a major feature in the industry. Apart from that, construction processes are ineffective and suffer from delays, budget deficits, poor quality, lack of control mechanisms and waste (Oesteen, 2008). In a nutshell, time management and cost management are two main areas where the construction industry in Saudi is suffering (Frankilin, 2009). This is important because as research has found, the timely completion of projects is frequently seen as a major criterion of project success (Al Haji, 2009). This has raised alarm among scholars and there are a number of studies that have been conducted in that respect, to study why these two factors of project management are rarely well managed in the Saudi construction industry (Frankilin, 2009). This research study is set in Saudi Arabia. Causes of delay- identification and categories Different studies reported different factors that cause delays in projects. This means that there are a range of factors that will affect any given project and it is therefore important to identify these factors. Causes of delay were listed and categorized as follows (Farheed, 2009). 1. Causes which could be prevented or controlled by the owner/representative. 2. Causes which could be prevented or controlled by the contractor. 3. Causes which neither party could control or mitigate. Odeh and Battainah (2002) found the following causes of delay and listed them as a major way to connect causes of delay with specific types of projects: the client, the contractor, the consultant, materials, labor, the contract and the contractual relationship. Factors that lead to delayed projects As many studies have shown, delay is a recurring problem and although it has been thoroughly researched, it remains a very common problem in construction projects. Over the last two decades, numerous studies have sought to assess the causes of delays to construction projects in many countries, several of them in Saudi Arabia. For example, Assaf & al-hejji (2006) list 73 causes of delay in the Saudi construction industry. Poor planning and control, poor management and supervision by contractor, and outdated construction methods are some of the most notorious reasons for delay of construction projects. According to Zain Al-Abedien (1983), over 70% of projects undertaken in the ministry of public works were delayed by some time. This finding was seconded by Al-sultan (1987) whose study evaluated the performance of different projects carried out by public departments. According to his study, 70% of them experienced severe delays. In a more recent survey however, Falqi (2004) reports that over 40% of projects in Saudi Arabia experienced delays. This is an improvement of 30 percent and may be an indication that the industry is improving. In their study, Assaf and Alhejji (1995) outline the main reasons for delay in large construction projects and compared this to the importance of the projects. Another study on water and sewage authority in one of Saudi Arabia’s province indicated that over fifty percent of projects completed between late 80s and early 90s ran out of the forecast time. Some of the major issues identified in these studies were, preparation and approval of shop drawings, design changes and delays in payment by the owner were. The issues that were identified by the consultants as most important factors were cash flow issues, poor decision making process by the project sponsor miscommunication between different project teams. On the part of the owners, the most important factors of delay were excessive bureaucracy in project-owner organizations, design errors, labor shortages and inadequate labor skills. In another study of causes of delay in public utility projects in Saudi Arabia, Alkhalil and Alghafly (1999a) showed that cash flow related financial difficulties were the main hindrances of project completion. The bureaucratic process of obtaining permits from government offices was also cited as having a huge bearing on the ability of project teams to complete the project in time. Apart from that, corruption in government was cited as another problem because this led t the government offering contracts to incompetent contractors while the competent contractors were left out. Tendency of clients to underestimate project duration is also a major factor that affects whether the projects will be completed in time. In a second study, the same authors (Alghafly and Alkhalil, 1999b) analyze the causes of delay in such projects as falling into six major categories. Under contractor performance, they identify five main problems. These were listed as materials, equipment, labor, project management and financing. The owner of projected was likely to face problems such as administration, poor planning and design, government requirements , site conditions and site supervision. Alkharashi & Skitmore (2009) tried to understand the issues in the Saudi construction industry by studying ten previous studies done by other authors. They sampled over 80 participants who included contractors, owners and managers. This study revealed that contractors were affected lack of adequate finance by the client, postponement by client late approval. Contractor related factors also included contractor inexperience, poor qualification of the technical staff, and unreliable poor project scheduling by the contractor. Some of the issues that are found in Saudi construction are also in other nations. For instance, according to Odeh and Battinah (2002) the main causes delay in Jordan were contractor-related problems such as poor planning, poor site management and misunderstood requirements. Problems associated with the client were poor cash flow; poor and incompetent decision making processes etc. To the same consultants, issues such as contract management, approval and certifications, total quality management and inspection processes were cited as the main problems. With regard to materials, factors such as low quality of materials and equipment, supply and material availability and logistics were cited as main problems. Change in owner requirements, and mistakes in contract documents affected the contract between the contractor and the project owners. On their study on Lebanese construction industry, Mezher & Tawil (1998) they examined the causes of delay from the project stakeholders such as owners, contractors and architectural and engineering companies. According to this study, owners regarded financing and the scheduling of subcontractors as the most important issues while the architectural and engineering firms named factors identified project management, lack of personnel training or management support, variance in estimates and actual figure, poor planning as the main issue that would need addressing. In the same study, contractors thought that the most notorious causes of delay were contract issues and design changes by sponsors of the project. The authors identify an urgent need to adopt innovative management techniques in order to make the construction industry more efficient and cost effective. Previous studies in Saudi construction industry In recent years, Saudi Arabia has experienced a comprehensive development in its construction industry due to the boom in the economy resulting from the rising oil price. However, very few comprehensive studies directly related to construction management in Saudi Arabia have been done. According to Alsedairy (2001), a change management model in the Saudi construction industry and the Arabian business environment will be required in order to make the industry more productive. According to him, there is an urgent need for the business environment as a general to change and apply total quality management in order to take advantage of the economic development breeze that is blowing across the kingdom of Arabia. The focus of the study is on how to achieve change and on the survival of contractors, which depends on winning and managing projects. More importantly, he points out that the \Saudi construction industry is in dire need for a change process that will help in improving the industry and bring it to international standards. Other researchers such as Alsaqer (2001) examined existing project management practice in the public sector projects and how business culture impact on them. His study was directed towards understanding the popular methods of management affecting the performance of government construction projects. In his study, he identifies and recommends a number of ways to improve the public sector in managing construction projects. On the other hand, Bubshait and Aljuwairah (2002) carried out a study that revealed the following factors has the main factors affecting the increasing costs in the construction industry in Saudi Arabia. These are grouped as environmental issues, raw materials, cost estimation processes and financing of projects. In hteir conclusion, they identified proper panning as a major way to avoid most of these issues and proposed that project managers should be able to plan properly before flagging off a project. According to them, the five most notorious factors in affecting the costs of construction projects in Saudi Arabia were cost of raw materials, poor planning, poor site management and ineffective coordination of resources. Other researchers such as Assaf et al. (2002) on the other hand identified different kinds of problems which that affected the hiking cost of a project. These factors according to them were management issues, knowledge acquisition, timing, procedures used. According to them, poor an incompetent planning skill among project leaders and poor application of management control structures at different stages of the project were the most eminent factors that made project management a difficult task. One of the most interesting things that they found was the fact that although many project managers in the construction industry in Saudi Arabia used the concept of project life cycle, goal and especially budgetary goals were never met. To address these issues, Alatawi (2005) in his study suggested an information and communication technology (ICT) usage to improve communication in government departments in Saudi Arabia. In his study, he researched the available ICT technologies that can be used in the construction industry to help in increasing efficiency. His study revolved around the tender application process stage of and revealed that government departments continued to use paper as their main mode of information processing and dissemination, passing large amount of paperwork between different offices. He recommended adoption of an ICT technology as the best possible solution to communication problems inherent in the public tender procurement process in Saudi Arabia. To address the same issue of business efficiency, Abdul-Hadi et al. (2005) researched on the barriers that prevent businesses from being able to apply proper business reengineering processes. Poor knowledge about BPR, inadequate communication and failure by the top management offices to support BPR were identified in this study as the main problems that hindered businesses from being able to restructure themselves in order to gain competitive advantage. Other research contributions include Alsehaimi’s (2009) study which evaluated the effectiveness of implementing last planner system to improve construction planning practice in Saudi construction industry. The author found that the time needed to complete a project decreases by 50% when last planner implemented. Moreover, the main factors that led to the late completion of projects were unavailability of materials and poor order of priorities among others. His study also highlighted the success factors and potential barriers, and numerous benefits that are gained in terms of improving construction management. Conclusion The Saudi Arabian construction industry is in dire need for improvements and modernization. The above studies indicate that there are many problems in the construction management in Saudi Arabia. Improvements will need to be introduced in the industry to help the industry come out of the situation it is in today. In the analysis of previous studies that have been done in the past by scholars and authors, the factors which were most eminent in included poor planning, incompetency among project managers and lack of proper communication problems. These factors will need to be addressed properly in order to give the Saudi Arabian construction industry a good shot and becoming a world class industry. References Al Haji, P., 2009. Project Management . Middle East Management Journal, 78-79. Farheed, G., 2009. Construction Project Management. Journal of Management and Esconomics , 29-12. Frankilin, P., 2009. Understanding the Construciton Industry. Journal of Economic Development, 40-45. Oesteen, L., 2008. The Saudi Economic development: Understanding the construioin Industry. The Saudi School of Managemnt Journal, 45-47. Read More