Construction

• Construction is an enormously important industry

by which societies create most of new values.
• Most of our day-to-day activities are dependent on
the infrastructure delivered by the CI and its allies

Transportation Energy Urban Water

Infrastructure supply development supply
 The History of CM
• Since ancient times, mankind has erected
some huge structures

The 6, 550, 000 t and137 The 6,400Km long China The 24m and 180t Axum
m Pyramids of Khufu at Wall (Around 668 BC) Obelisk (Before the 4th century)
Giza (Circa 2500BC)

• These works are believed to have involved

enormous number of ppl
• No records of the CM techniques used
 History of CM-Cntd
• Modern day project management
 1900’s Henry Gantt invented the Gantt chart,
 1960’s construction, defense and aerospace industries
started to use some PM tools and techniques,
 Later on, different tools, knowledge and skills start to be
developed in different sectors,
 1980’s varies institution started to offer CM as a program,
 Companies seek professionals specially trained in CM
Causes for a rapid interest in CM
• The ever increasing complexity of projects
• Fierce competition and ever stiffening demands of
customers
• The task and scope size
• Projects can’t be managed by ‘accidental’
project managers
 Demand for projects to be managed by trained
professional.
 Why? Architects and Engineers are trained to design
structures not to oversee their successful
implementation
 CI: Characteristics
• Compared to other industries, CI is labeled as
‘conservative’
 Different arguments about the advantages and disadvantages of its
conservatism.
• Some serious critics about ‘inefficiencies’ in the industry
 Fragmented industry
 Sequential project delivery system and adversarial supply-chain
relationship
 Inefficient HR utilization

• Known for late delivery, over budget, low profitability&

poor returns and slow up take of new technology and
management philosophies
 CI: Unique characteristics
• Nature of production: [usually] on site
 Changing supply-chain relationship and production
site
Exposed to inclement weather condition
Proliferation of small firms
Seasonal disruption
Health and safety concerns
 CI: Unique characteristics
• Nature of product: large, heavy, durable,
expensive, heterogeneous, and immobile
 Demand is localized
Demand doesn’t vary extensively
Costly to abandon and rebuild
Not tenable to change in taste and fashion
 CI: Unique characteristics
• Demand for the product
 Demand is usually driven by ‘other’ goods and
services; not controlled by industry,
In the majority of cases, clients define requirements
before the industry provides it,
Time lags b/n demand and supply is long.
 CI: Unique characteristics
• Structure of industry:
Fragmented industry
Large uncertainty
Proliferated with small firms
 Construction and Economy
• Construction constitutes about 10% GDP of
many economics; about 30% of developing
countries
• 111million employment worldwide
• Often is used as an economy regulator due
to its multiplier effect
 Construction and Economy
• In Ethiopia, construction consumes about
58% of the countries budget
• Provides the second largest work
opportunity (next to Agriculture)
• In the current fiscal year, only road sector
budget is about 13% (5.6 billion) of the
countries total budget
 Status of Ethiopian construction
industry
• Not as matured as it should be given its long
history (if one is to consider what was erected in
the ancient times)
• Organized in modern form only during the
Imperial period (in the 1960’s)
• Has numerous challenges
 Even given all the challenges, the industry has
done marvelously well over the last few years
Sector Major outputs
Road sector (RSDPI &II) Upgrading, maintaining (of existing) and
1995-2005 construction of new roads. So far, built and
upgraded about 78,564Kms of roads
Power sector The electrification program based on
(Power SDP) generation and transmission of power, Built
huge hydropower projects to move the nation
from rationed power supply to the verge of
power exporter
Water works sector Many irrigation, sanitation &water supply
projects across the country

Housing/building sector Huge number of housing units and

(IUHDP) institutional (such as UCBP) buildings being
build
Private sector Vibrant private involvement with many real
estates and buildings (residence &
commercial)
Sector Forecasts
Road sector (RSDP 106106Km road upgrading,
III) 2005/6- maintenance, construction at estimated
2009/10 cost of Birr 43.16 Billn
Power sector Huge hydropower projects still under
(Power SDP) construction. To name a few Tekeze
(2.132 Billion), Gojeb (1.524Billion)
Water works sector The still running irrigation schemes
would cost the nation more than 21
billion when complete in 2010
Housing/building To build about 400,000 housing units in
sector the coming five years
(IUHDP)
Private sector Can only be forecasted to grow even
faster (the nation has to move to the
 Major draw backs
• Considerable components of these programs are
implemented by international companies
(contractors, suppliers, consultants etc)
– Lose in business and job opportunities
– Lost opportunity to build capacity of local firms
– Siphoning of in hard currency
• Most of the projects delivered have failed under
the conventional project success criteria of being
delivered on time, on budget and to the standard
and quality required
– Huge impact on the country’s already constrained
resource
– Necessity to maintain infrastructure before their due
period etc
 Major Challenges of the domestic
Construction industry
• Major stakeholders (contractors & consultants)
lack capital (equipment and machineries),
financial, institutional (managerial, experience
reputation, etc), human etc competency and
capability;
• Undeveloped financial and loaning system;
• Other industries not well developed to supply
construction with what it needs (most goods used
in construction are imported);
• Scarcity of construction materials;
 Major Challenges of the domestic
Construction industry
• Low quality of construction
• Very weak industry stakeholders link( eg. Industry
Vs training institutions)
• Not supportive and up to scratch lows, cods
procedures and standards
• Various problems in procuring and contract
administration processes
• Almost non visible professional associations