The Indian Construction Industry
Risk management is recognized as an integral part of good management practices.To be most effective and sensitive risk management should become part of an organization’s culture.It should be integrated into the organization’s philosophy, practices and business plans rather than be viewed or practiced as separate functions.
As it is achieved, in organization risk management becomes the business for everyone .This research gives an idea of the procurement risk within Indian construction industry; this will also demonstrate the culture of construction industry, economic development of country due to construction, by this it also shows bad practice in construction and Action taken on it, Procurement in construction industry (CIDB document, 2004)
Procurement is the acquisition of appropriate goods and services at the best possible total cost of ownership to meet the needs of the purchaser in terms of quality and quantity, time, investment and location. in the construction projects are carried out with internal resources, i.e where no work is outsourced, only the organisation requiring the project, for practical purposes, it is at risk. However, where construction projects are implemented by contractor, a number of parties can be at risk. (Best practice guide, 2004).
The developing countries should develop and apply appropriate procurement systems which suit their culture and business management traditions. Research should be undertaken on a set of criteria for contractor selection including price, which is suitable for the context of each developing country. Given the nature of the culture of most developing countries, where trust and goodwill are valued, partnering appears to have scope in these countries, as business relationships in the construction industries are, as yet, less adversarial than in the industrialised countries.
Corporate development is a key issue in developing countries, and the availability of suitable work opportunities is important. Local construction firms should be enabled to participate in as wide a range of the projects undertaken in their home markets as possible. Innovative schemes will be necessary, and involving the potential beneficiaries in the design of the programmes would help for country economy. Developing countries adopt different approaches hereare few of them have agencies dedicated to this task such as the
National Construction Council of Tanzania (formed in 1982);
Building and Construction Authority, Singapore (set up in 1984);
Construction Industry Development Board, Malaysia (established in 1994) and
Construction Industry Development Board, South Africa (set up in 2002).
Some of these organisations have made progress but t, as yet, small number shows that developing countries are not convinced that they are beneficial. (Gorge Ofori no date)
Developing economy in Indian construction:
India is currently the second fastest-growing economy in the World. The Indian construction industry has been playing a vital role in overall economic development of the country, growing at over 20% Compound Annual Growth Rate over the past 5 years and contributing 8% to GDP (By NewsDesk 2010). some new technologies entering the market everyday in Indian constructions and in keeping with international trends, construction design has become a basic part and parcel of the design concept and identity of a building, whether commercial, residential or industrial constructions. It is critical to keep with the latest trends and technologies for the basic safety and security of a building. (By NewsDesk 2010)
India is one of the most developing construction economies and is the eleventh largest economy in the world by nominal and the fourth largest by purchasing power parity (PPP) (Ist Agencies, 2010). Following strong economic reforms from the socialist inspired economy of a post-independence Indian nation, the country began to develop a fast-paced economic growth, as free market principles were initiated in 1990 for international competition and foreign investment. Hhigher productivity leads to improved economic outcomes (for example, higher income, more choices to the consumers, better quality products, etc.), Lall (2001) says that the appropriate strategy for any country depends not only on its objective economic situation but also on its government policies and national views regarding the appropriate role of the state. (Economic development in India)
India’s construction industries:
India is the fourth largest economy, with a GDP of US$1,242.8 billion in 2008 between 2000 and 2008 in construction, India’s GDP growth rate doubled from 5.7% in 2000 to 9.3% in 2007. The construction industrial sector has predominately fuelled this growth. During 2000-07, contributions by the industrial sector to India’s total value-added increased from 26.2% in 2000 to 29.4% in 2007. According to IHS Global Insight, India’s GDP is expected to continue along a robust growth path, albeit slower than growth witnessed in recent years. Between 2008 and 2012, India’s real GDP growth will range between 6.5% and 8.2%. During the same period, India’s nominal GDP growth will range from 9.3% in 2008 to 13.5% in 2012, with a negative growth rate of 1.7% in 2009.(his Global,2009)
The word ‘culture’ has many meanings, which have changed over the past two generations (Barthorpe,s, 1999). Kroeber and Kluckhohn (1952), American anthropologists, presented 160 different definitions of culture. Bodley (1994) culled a simple version that stated that culture involves what people think, what they do, and what they produce. Culture has several properties: it is social heritage or tradition; it is shared, learned human behaviour; and it is symbolic and based on shared, assigned meanings of the members of a group. (Putti and Chia 1990) considered culture as a set of values, beliefs, norms, attitudes and habits of people, pointing out that a society’s beliefs and values have an impact on the way business is conducted in that society.
Hildebrandt et al. (1991) suggested that the implementation of an organization’s culture is influenced by: nature of environment, type of company, and special character of company and employees.
Construction culture in U.K and India:
It can be said that, Indian construction culture is different from the British in by certain ways like attitudes towards quality, price, consistency, branding, and other costs of stress and time. This will ultimately have an effect on consumption behaviour and, therefore, it is vital to understand ‘‘value orientations’’ which will help us to better understand the psyche of people. Issues relating to community support in its various guises (Bonacich, 1973, 1987; Aldrich et al., 1989; Waldinger, 1989) as well as issues relating to the historical perspective of Asian-owned firms operating a ‘‘harmonious, family-orientated practice’’ (Werbner, 1984) will all affect consumption behaviour too.
From a managerial viewpoint, the priority of collaborators in cultures where ‘‘time is money’’ will be to optimise time, which is seen as a scarce economic resource in western cultures, a lot of time is actually spent waiting, whereas for the Indian cultures, there is often neither expectation nor despair; people do not get impatient because they are not nervously dependent on an uncertain future time. They do not ‘‘wait’’ because, unconsciously or not, they are not eliminating the present. Indians look at time as something to experience, logical to suppose that saving time would be less important to Indians than as compare to other countries.
The project procurement and administrative arrangements currently in use in developing countries have been inherited from Western countries which have different history, culture, collective experience and breadth of construction expertise. These arrangements determine the documentation, procedures and practices in the industry, and specify the roles of the participants and the relationships amongst them.
Traditional design and construction services can foster adversarial relationships between the clients, designers, and contractors, can restrict innovation, resulting high cost and time extended. Traditional systems may therefore not necessarily provide the best value to all project types, as deteriorating infrastructure and increasing population and have created tremendous pressures to move critical projects quickly through the planning stage and into design and construction, without a commensurate increase in available funding. External pressures are the basic requirement to include quality concepts in all phases of the highway program. Thus, there is a continuing need for the Department to review and evaluate procurement and contracting procedures that promote improved efficiency and quality of construction.
Procurement procedures are used to evaluate and select designers, contractors, and various consultants. Evaluation and selection can be based solely on price, solely on technical qualifications, or on a combination of price, technical qualifications, time, and other factors. (Innovative procurement practices).
Bad practice of construction (Corruption/ Transparency)
Corruption on construction projects is a complicated problem. It may occur in the form of bribery, extortion, fraud or collusion. It can take place during any phase of a project, including project identification, planning, financing, design, tender, execution, operation and maintenance. In each project phase, corruption may involve any one or more of the government, project owner, funders, consultants, contractors, subcontractors, suppliers, joint venture partners, and agents. Furthermore, corruption is concealed and those aware of it are either complicit in it or reluctant to report it. This makes it more difficult to detect (Giacc, 2008)
Corruption in Indian construction:
In India found that more than 50% of the people had firsthand experience of paying bribe or peddling influence to get a job done in a public office. Transparency International estimates that in another industry it was found that their annually pay was US$5 billion in bribes. For 2010, India was ranked 87th of 178th countries in Transparency International’s Corruption Perceptions Index, which was a huge setback from the preceding year (Jo Johnson, May, 2007)
Type of corruptions within Indian construction:
Land and Property
Tendering Process and awarding contracts
Even police, judiciary and
· Preferential award of public resources
For purpose of this study, this discussion will focus upon more pertinent issues in Indian construction industry are:
Land and property:
Officials often steal state property. In Bihar, more than 80% of the subsidized food aid to poor is stolen. In cities and villages throughout India, Mafia Raj consisting of municipal and other government officials, elected politicians, judicial officers, real estate developers and law enforcement officials, acquire, develop and sell land in illegal ways. (Economic development, 2008)
In India, since in most of the land settlement has not been undertaken since the departure of the British. Land records are in a pathetic state, and so are very easy to manipulate. In major cities like Delhi and Mumbai it is believed that typically 60% of the payment for high-end properties is made in cash under the table. (Corruption trips India’s rise, 2010)
Tendering process and awarding contracts:
Government officials having discretionary powers in awarding contracts engage in preferential treatment for selected bidders, display negligence in quality control process. Many state-funded construction activities in India, such as road building, are dominated by construction mafias, which are groupings of corrupt public works officials, materials suppliers, politicians and construction contractors. Shoddy construction and material substitution (e.g. mixing sand in cement while submitting expenses for cement) result in roads and highways being dangerous, and sometimes simply washed away when India’s heavy monsoon season arrives (The Wall Street Journal, 2008)
Corruption in U.K construction:
Corruption within the UK construction industry is an issue that is the subject of perception and rumour rather than of facts. Apart from periodic instances of exposure and action, it is a subject discussed as conjecture rather than knowledge. This survey has attempted to look at the issue from the point of view of those who work within the industry in order to gain a better perspective on the issues they face. (Ciob Survey,2006)
It would seem from the results that while corruption is present to some degree in many areas of the construction industry, there is some disagreement of where networking and the development of harmonious working relationships stop, and corruption starts. It is clear that those who responded are aware of the issues, but there are clear indications of degrees of tolerance to some practices that some would regard as corrupt. The results also showed that the vast majority of respondents feel strongly that more should be done to address this issue.
CORRUPTION IN CONSTRUCTION INDUSTRY: THE PROBLEM.
“The impact of corruption goes far beyond the specific misbehaviour of the actors involved. It is repercussion sweep across the entire population. A one million euro bribe can rapidly amount to one hundred million euro loss in a poor country – through de-railed development plans and incoherent investment decisions. Unfinished roads, crumbling schools and crippled health systems are but a few serious examples which illustrate the impact of this phenomenon” (James Lewis, 2008)
FORMS OF CORRUPTION
Corruption in construction industry can take place in many forms, the common ones being bribery, exhortation, fraud and collusion as well as other persons, who were complicit in the offence, may be guilty of bribery. A bribe may be a cash payment, or it may be a non-cash advantage (such as the promise of a future contract, or a holiday). It can be institutional or personal. Institutional bribery refers to a situation where a bribe may be paid or received with the full approval of the organisation which is the employer of the individual paying or receiving the bribe. This may occur, for example, where a contracting company authorises its commercial director to pay a bribe to win a tender
This may occur, for example, where a government officer receives a bribe to award a contract, where the government department in question would not approve the bribe. A contractor may pay a bribe to the project owner’s representative to have defective or non-existent work approved. (James Lewis, 2008)
If the parties are in dispute in relation to the construction of the project, one party may bribe a witness, expert, arbitrator or judge in order to give false evidence, or to give a favourable opinion or verdict.
Fraud usually involves one person (or group of persons) deceiving another person in order to gain some financial or other advantage. In the context of a construction project, fraud offences may include:
concealment of defects
dishonestly levying liquidated damages
dishonestly withholding payment
dishonestly exaggerating the quantum of a claim
fabricating or falsifying evidence to support claims (James Lewis, 2008)
Parties may be liable for the offence of fraud, For example, a contractor may be liable for fraud if it submits a claim for additional payment which it suspects is inflated but fails to take reasonable steps to determine that the claim is accurate. A bribe paid to win a project will normally be concealed by some fraudulent act with the aim that the project appears from the outside to have been won on a genuine arms-length basis. (James Lewis, 2008)
However, many acts of fraud may need an act of bribery in order to complete the fraud. For example, a contractor may submit a false claim to a project owner (which is fraud) and May then bribe the certifier to approve the claim (which is bribery).
Extortion is a form of blackmail where one party makes threats against another party of adverse consequences unless demands, usually for payment, are met by the other party. Such blackmail may constitute, for example, refusal to provide customs clearance for equipment or materials, or refusal to make payments or issue certificates that are due. Sometimes such threats may involve threats of physical harm. Collusion occurs where two or more parties co-operate to defraud or deceive another party.
This is a type of fraud and is often described as a “cartel”, “anti-trust” or “anti-competitive” offence. This form of collusion is often referred to as “bid rigging In some cases, the corrupt practice may be a voluntary act undertaken by the relevant party with the deliberate intention of gaining a competitive advantage or obtaining additional unjustified compensation. (James Lewis, 2008)
However, in other cases, the practice may be undertaken so as to “level the playing field”. For example, a contractor may feel compelled to offer a bribe during tendering if it believes that its competitors will be offering a bribe. A contractor may feel that it is necessary to inflate a claim artificially if it believes that the project owner will automatically and unjustifiably reduce the contractor’s claim or raise artificial counter-claims against the contractor. (James Lewis, 2008)
In some circumstances, a bribe may be extorted from the payer. For example, a contractor may be informed that if it does not pay a bribe, it will not receive a payment to which it is entitled.
Corruption in the public sector usually involves bribery or fraud being perpetrated against a government body Contract prices fraudulently inflated. Where a contract is corruptly awarded, it is often the case that the contract price is significantly inflated, not just to cover the cost of the bribe, but also to maximise profit for the contractor. Where the contractor is assured of success in winning the contract, it will have considerable freedom to demand a high contract price.
Contracts awarded and claims approved in the hope of future or indirect gain. In developed countries, the corrupt awarding of contracts and corrupt approval of fraudulent claims may take a more insidious form. Large bribes may not necessarily change hands directly. (James Lewis, 2008)
In simple terms, corruption in the public sector is stealing from the taxpayer. Money is stolen which could be spent on hospitals, schools, roads, and other vitally important infrastructure. This loss will be felt most severely in poorer countries. It will nevertheless also be felt in developed countries where large sums may be lost through more subtle forms of corruption.
It may result in an increase in the financing, capital, operating and maintenance costs of projects. This in turn may result in increased property or utility prices, or increased charges that are required for use of certain facilities such as toll roads or bridges. It may also result in dangerously defective works. It is unlikely that there will be significant corruption in the private sector without such corruption spreading to the public sector.
The risks of corruption in public contracting can be more easily understood in relation to each stage of a contracting process what to buy/sell/do and description of goods and services. These are the technical requirements.
Contract award ending with a decision to select the winning bidder; and Contract implementation and supervision, It is generally believed that the risk of corruption is especially high during the evaluation phase of a contracting process, Underperformance, contract renegotiation; change orders, over-billing, and non compliance are just some of the forms of abuse.
Action Taken On corruption
From this research is a lack of clear definition of corruption and corrupt practices, the results is apparent that the respondents felt that corruption certainly did exist in the UK and India but to what extent was not clear still. The client should knock them down. The client is knocking down the hours as they are aware that exaggeration is common therefore the situation becomes self-fulfilling and self-perpetuating. A similar situation appears to be occurring with inflated invoicing or claims for extra costs. On the flip side of this, clients may be finding spurious reasons to withhold payment from the contractor.
Type of UK corruption in the provision and management of financing for the project:
Bribes paid or fraud perpetrated by the funder’s representative for the benefit of the funder;
Bribes paid or fraud perpetrated by the funder’s representative for his own personal benefit;
Bribes paid or fraud perpetrated by the project owner’s representative for the benefit of the project owner;
Bribes paid or fraud perpetrated by the project owner’s representative for his own personal benefit;
Bribes extorted or fraud perpetrated by a government official for the benefit of the official.( TI-ACF.REPORT, 2006)
Anti-corruption actions should deal with all types of construction corruption referred to in paragraph above, both by implementing appropriate anti-corruption systems within the funder’s organisation, and by that suitable anti-corruption controls are imposed at project level.
Anti-corruption actions may be modified according to the extent of the commercial risk and the type of financing being provided by the funder. The provision of aid, or a material amount of equity or lending will inevitably give a funder greater control over the implementation of project anti-corruption mechanisms than, for example, the provision of insurance. low risk contracts or projects would require a lower level of preventive action than large or high risk contracts or projects. However, it should be remembered that while commercial risk may be reduced according to the size of the contract or project, the criminal risk will remain the same.
India is rapidly ramping up its capital spending, the efficiency of which will be determined by the Government able to manage infrastructure spending effectively. Unfortunately civil works, worldwide have the tendency to create strong differences in opinion between even the best intentioned parties, which can quickly degenerate into acrimonious disputes and become difficult to resolve. The ability, therefore, to resolve contract disputes quickly and effectively is the difference between a project that is completed on time and a failed capital investment that is completed only after many years of delay.
The DRB process is recognized globally as a best practice for dispute resolution as a cost-effective mechanism to help the parties head off problems before they escalate into major disputes resulting in arbitration or litigation22. Since 1994 DRBs have been required on all World Bank23-funded civil contracts above US$50 million and in 2004 the Multilateral Development Banks (MDBs) 24 jointly agreed to the publishing of harmonized procurement documents that included the requirement for DRBs. DRB recommendations often have little effect, since the vast majority is rejected. 79% of DRB recommendations are rejected – 44% are rejected by the Employer and 35% by the Contractor. (IRCI, 2008)
The rejection of DRB recommendations has serious negative consequences for the efficiency of public spending. There is a clear difference in the time it takes to complete a project in cases where DRB recommendations are rejected, as compared to those where recommendations are accepted. Contract dispute resolution processes that happen after the rejection of a DRB recommendation are very lengthy and costly.
Finally a high-level meeting with GOI is proposed to summarize the findings of the workshops and to provide recommendations for improving the effectiveness of DRBs in India. GDLN/NICNET could then be utilized to provide training for potential employers, contractors and DRB members to share the principles of DRBs; the contractual and legal implications; and how the members of DRBs are appointed with a concentration on the “how” of making DRBs work with actual examples of problems and obstacles that have to be overcome. (IRCI, 2008)
The objective of these case studies is to identify other countries that have experienced rapid road development and to examine how they strengthened the capacity of their road construction industry to meet the demand of their roads program. The purpose of these case studies is to identify what measures were taken by other governments and industry, to improve the construction industry capacity.
Since the 1990s China has enjoyed a rapid increase in the rate of road construction and has become one of the fastest countries to build its road network27. At the core has been the National Trunk Highway System (NTHS), designed to connect all the major cities and provincial capitals with populations greater than 500,000 through the construction of twelve major highways. This has now been expanded by the “7- 9-18 Highway Network” which is intended to link all cities with populations above 200,000 to those connected by the NTHS. According to the UN Economics and Social Commission for Asia and the Pacific28, road construction investment in China has been steadily increasing from US$25 billion in 2001 to US$68 billion in 2005 (.(IRCI, 2008)
Malaysia decided in 1977 to build a toll expressway from north to south of the peninsular to link all the main towns. To facilitate this construction the Malaysia Highway Authority was established in October 198029 with the objectives to (a) provide a fast, safe and efficient means of road transport for the entire country; (b) link all existing major townships and potential areas of development; (c) enable an effective interurban public road transportation to be provided throughout the country and (d) train personnel and further develop expertise on all facets of road construction, operation and maintenance. Most of the highways are toll operated. The highway program in Korea is governed by the National Transport Network Plan (NTNP), which has guided road development over the last 40 years from 313 km of major highways in 1960 to 2,778 km in 2003 (an almost 800% expansion) and from 27,169 km of general roads in 1960 to 94,473 km in 2003 (250% increase)31. According to the NTNP between 2000 and 2019, 3,753 km of additional highways are to be built, increasing the length of highways by three times the length that existed in 1997, together with increasing fourlane highways from the 24% in 1997 to 50% in 201032. Korea has also developed a way for private investors to profit from 2,844 km of its toll roads by the development of the Korean Road Infrastructure Fund, which is traded on the Korean Stock Exchange (IRCI, 2008)
China has seen remarkably fast changes in its transition from a command economy to a competitive market economy and in the strengthening of its construction industry. Only in 1983 did China classify the construction companies as a service industry. China has reformed its procurement process and now more than 90% of urban and industrial projects are awarded based on competitive or selective bidding (IRCI, 2008)
Malaysia provides an example of a country developing its road program through the construction of toll roads. It learned lessons, which included the reality of restrictive public funds limiting its ability to expand the road network and leading to cancellation of projects. This prompted the opening up to the private industry with BOT arrangements (IRCI, 2008)
Korea provides a good example of rapid expansion using the private industry and public/private partnerships (PPP). Most of the road network consists of PFI projects, which has demonstrated the strengths and weaknesses of BOT-type development. To understand the structure of the road construction industry it is useful to review the dramatic institutional changes that have occurred in China over the last 30 years. (IRCI, 2008) Prior to 1976 during the leadership of Mao Zedong business enterprises and communes, including construction organizations, were all directly controlled by central or provincial government. In many rural areas the agricultural communes actually replaced local government and provided the basic services, such as health care, education, welfare for the elderly and granted permission to couples to have their one child. This was the time of the “iron rice bowl”, when enterprise workers were guaranteed life-long employment and security despite enterprise redundant overstaffing and lack of finances to provide adequate services (IRCI, 2008). As a simple activity to assemble material for Construction was viewed; plant and other items made by the other sectors of the economy to create building or civil engineering works and were considered to have no significant added value to the total social product. Most of the central ministries formed their own construction companies to implement their own specific capital projects.
This report gives information about process and types of construction in Indian and in UK, and also construction plays main role for economic development in both countries, and it has some negative parts such as Corruption/ Transparency in both countries, and also this report is prepared by Transparency International (UK) and the Indian construction on commission for the UK and Indian Government Department for International Development (DFID). It has been endorsed by the UK Anti- Corruption Forum which is an alliance between UK business associations, professional institutions and organisations with interests in the domestic and international infrastructure, construction and engineering sectors.
Primary data collection will be through semi structured telephone interviews of selected sample
Exploratory research of Qualitative Data
Procurement play very important role in Construction Industry whether it is small scale or big scale construction industry. In this chapter will discuss the rationale behind the choice of the data collection that was used in this research.
As previously stated the main aim of the dissertation is to discover corrupt practices within the procurement process in the Indian Construction Industry. The research plans to comparison between the India and U.K construction industry and investigate any associated corruption within them. As we have found less information on this topic, we need to talk with some of the experience people of this field. In this telephones interview we have to discover as much as possible information about the topic. The sequence of the questioning is in order to built up the rapport with in the respondent and the explore
As interviews are taken of the Engineers, Client and Contractors, and in that the result we got is India and UK construction process is very much similar and the business culture of different from the Indian in some ways such as high technology used in construction in UK, Employees and main is Currency due to that all the process changes, as the Currency of UK pound is high as compare to the INDIAN Rupees,
It make lot of difference by standard of living, thinking and mostly on construction project by using Advance Machineries on site. As we all know the India is one of the developing countries and UK is developed, it make lot of change in everything, and the technique of construction used in the Indian construction is the followed from UK, as an example ISO code is used for construction all the safety and construction work is the same. Just different is in labours in India most of the construction project is completed by using Labours and less machinery, and in UK all the construction work is done by machineries, for an example in India till today in small project concrete is mixed by labour on site with site mixture. These days in India in big scale construction industry we found all the heavy machineries and less labour are used; all the process is the same like UK.
The question which was asked to all of them was related to construction industry and all were in general. First question I asked them all was
How do you think Indian and UK construction process compare?
Most of them said they don’t know much about UK construction process but they just know few main key points as are:
Both the countries follows the same construction process
We follow the British rules of construction like ISO code and many more
Mainly in the UK construction work done by high technique and accurate machineries and in the India small or big scale industry mainly work done by labours.
As the labours are cheap and easy to get that’s why most of the Indian construction labour oriented work is done.
Relation between client and contractors:
As the both countries follows the same construction method. In both countries the relationship between the client and contractor is the same while the construction is in process, they have to maintain their relationship in good, as the interviewers said in some of the firm relation between the client don’t take place client hire the third party (consultancy) to look after the construction work as the client don’t have construction profession/ knowledge, consultancy look for the clients expectations and requirements and complete the requirement from the contractor.
As the client hire the consultancy the time take for any decision is much longer than direct conversation, client goes with safe and quality work.
Comparison between two countries in Procurement process:
As the interviewer said they don’t have idea about UK construction process but they said they can tell about the Indian construction procurement process.
As the both countries have lot of different in using materials for construction as the climate is not the same.
In the Indian construction contractor mostly stock the material in bulk quantity, as they have space to store the material
In the UK construction the material can easily available when they required.
In the India material is stock due to unavailability of material in certain season. For example contractor stock river sand (fine aggregate) before rainy season starts, the chances of availability river sand is less and the material cost is very high in rainy season so they stock the some material before price goes high. Material like River sand, Bricks cement and course aggregate.
As from new and some online documentary can be say that both countries have similar procurement process not all the some ways.
In the Indian construction more space is available for storage of material on site as in UK doesn’t have space for storage as compare to Indian construction site.
What are the Procurement problems caused by the client are you aware of?
As this question are only about the Indian construction, the interviewers some main points:
Client has issues with good quality materials should be used on the construction site.
Client also has problems in material used as per design the material is used more or less.
Re estimating the project due to fluctuation of the materials rate in market.
Client mainly have problem with contractor as the client look for his profit and use material which is not tested or not quality material
Contractor makes profit and using fewer materials.
Procurement problem in Sub contractors and Labours:
Sub contractor and labours are the part of procurement process. Problem for clients are:
Labours which are used for work on site are not skilled
Client won’t interfere in the work but he found any mistake done by the worker he interfere that time,
In big scale construction industry client don’t interfere with sub contractor, as they have appointed the consultant party for the work,
Procurement problems in Material Issues to client:
Client have issues in material by not using proper/ quality material while construction,
Client have problem with not proper planning of the material availability
Less use of the material like cement in concrete while construction
Material which has taken on site should be checked and tested properly and should be recorded on the record book.
Contractor can accept the low quality material for their own profit
In your opinion does corruption occurs in the construction industry?
Most of the interviewer said Yes corruption does take place in construction industry, but not as previous days, the percentage of corruption in the Indian construction industry is very less or negligible, that also in small scale construction industries. In big scale industry they keep all the records of materials, like by Quality or Quantity all materials are mention and recorded on the material recorded book.
These days on every construction industry you will get record book of material which are used and how much is left, so there’s no chance to get corruption.
Corruption in Tendering Process
Some of the interviewer said NO corruption don’t appear in tendering process, these days before submitting the tender all the contractor has to submitte their previous record and all the work record, the client check all the details of the contractor and then he goes for the better work experience or the good work records.
Few interviewers said Yes corruption does happen in tendering process, as the tendering is the main step of the construction, corruption in tendering means are managing tender between the client and contractor, these can be seen in private construction sector, but these days mostly tendering are submitted online which can bidding so that everyone can see the tendering process and who got the tender. Corruption happen in tendering is by contractor changing the material rates as the rates are fluctuated rise by 6% to 7%, so contractor can demand for revaluation for rates as per market in this way corruption happens in tendering process.
Material Procurement process:
In construction industry no chance of corruption as all the material have the records and check list with the certificates so no chance of corruption, as all the time client engineer is with contractor’s engineer to check all the material and its quantity and quality. Corruption occurs when accepting bad quality material on site.
Sub contractor and labour:
As the sub contractor and labour don’t have many issues in the process, as the working rates are fixed for them, problem is sub contractor use the unskilled labour and takes payment of skilled labour from the contractor. As the sub contractor has given the work on measurement. As the interviewer saying they don’t find much problem of corruption in subcontractor and labours.
Construction process of UK and the India is same as both countries follow the same construction process. Just have difference in procurement process in both the countries. Corruption in the Indian construction industry is reduced as using new technology in construction, and some where the corruption happen but that also negligible. India’s big scale industry and UK construction is the same. In the India, labours are easily available and cheap to hire them for work as compare to UK.
Client and contractor relationship don’t have much difference, certain things are better in UK construction like speed work, quality work, new technologies are used.
Indian construction industry is poised to grow exponentially because of massive infrastructure building programs. This has created excellent opportunities for the construction industry in terms of business opportunity. The Indian economic environment and system and procedures would further boost the construction industry which would provide the basic physical infrastructure for the nation as well as other industries. (CIDC, …………………………)
Recommendation of Further Research
“The construction industry is dynamic in nature. The concept of project success has remained ambiguously defined in the construction industry. Project success is almost the ultimate goal for every project”. (Albert P.C. Chan, Ada P.L. Chan, (2004)). The research of UK and Indian construction industry information was not much information to collect; further research should be more about Technology, use of machineries and their procurement process, more information of UK construction and its bad practise within it. Detail
Keith Parry. (12 January 2010). Local Democracy, Economic Development and Construction Act 2009. Available: http://www.parliament.uk/briefingpapers/commons/lib/research/briefings/snpc-05268.pdf. Accessed 19 Nov 2010.
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