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BIJ
17,2 Analyzing the dynamics of the
global construction industry:
past, present and future
232
Abdul Razak Bin Ibrahim
University of Malaya, Kuala Lumpur, Malaysia
Matthew H. Roy
University of Massachusetts Dartmouth, Dartmouth, Massachusetts, USA
Zafar U. Ahmed
Fahad Bin Sultan University, Tabuk, Saudi Arabia, and
Ghaffar Imtiaz
University of Malaya, Kuala Lumpur, Malaysia

Abstract
Purpose – The purpose of this paper is to analyze the production processes utilized by the global
construction industry.
Design/methodology/approach – This paper discusses the history of the construction industry
with a specific focus on the evolution of lean production systems (LPSs) that has a significant impact in
reduction of waste in the light of operational performance. The paper proceeds through a comparison of
the differences between construction and manufacturing processes.
Findings – The construction industry consumes large amounts of natural resources along with
wastage due to inefficient and improper utilization. Numerous factors contribute to this poor
performance, but an efficient means of identification and reduction of waste has always been left aside.
A fully integrated LPS is a way to eliminate much waste in the construction process.
Originality/value – This paper has developed an instrument to measure degree of integration of LPS
principles in the construction industry that can be used globally. It can be used as a checklist for what
to aim at when trying to implement LPS in construction.
Keywords Lean production, Construction industry, Waste
Paper type Research paper

Benchmarking: An International
Journal
Vol. 17 No. 2, 2010
pp. 232-252
q Emerald Group Publishing Limited
1463-5771
DOI 10.1108/14635771011036320
Introduction
The term construction is generally used to describe the activity of the creation of
physical infrastructure, superstructure and related facilities (Wells, 1985). Construction
is also referred to as all types of activities associated with the erection and repair of
immobile structures and facilities (Nam and Tatum, 1988).
The construction industry plays a major and vital role in transforming the
aspirations and needs of people into reality by physically implementing various
construction development projects. Construction projects usually cover infrastructure,
such as roads, dams and irrigation work. Schools, houses, hospitals, airports, railways,
factories and other construction work are some of the examples of the physical
foundations as some form of development efforts to improve living standards. Thus,
the construction industry is undeniably essential to the growth of a nation and a key
sector in the nation’s economy. A country cannot grow if there is no development and Global
infrastructure build to spur the economy. The construction industry is an important construction
factor in the process of development. Its contributions are more than just economic; the
products of construction mentioned above contribute extensively towards the creation industry
of wealth and the quality of life of the population.
Traditional ways of performing and managing construction processes face
unprecedented challenges. The growing competition forces construction organizations 233
to rethink their construction for improving productivity, quality and efficiency (Kärnä
and Jonnonen, 2005). The construction industry may also benefit from best practices in
other industries – for example electricity (Chau, 2009), breweries (Goncharuk, 2009),
healthcare (Duggirala et al., 2008) or new processes – for example quality function
deployment (Miguel and Carnevalli, 2008).
The construction industry as defined by the US Census Bureau (2002) comprises
companies primarily engaged in the construction of buildings and other structures,
heavy construction, additions, alterations, reconstruction, installation, and maintenance
and repairs. Companies engaged in the demolition or wrecking of buildings and other
structures, clearing of building sites and sale of materials from demolished structures
are also included. This industry also includes those establishments engaged in blasting,
test drilling, landfill, levelling, earthmoving, excavating, land drainage and other land
preparation. The industries within this sector have been defined on the basis of their
unique production processes such as earthworks and piling, sub structure and super
structure, mechanical and electrical, etc. As with all industries, the production processes
are distinguished by their use of specialised human resources and specialised physical
capital. Construction activities are generally administered or managed at a relatively
fixed place of business, but the actual construction work is performed at one or more
different project sites (US census Bureau, 1997). The department of Statistics Malaysia
has defined the construction sector as new construction, alteration, repair and
demolition. Installation of any machinery or equipment which is built-in at the time of
the original construction is included, as well as installation of machinery or equipment
after the original construction but which requires structural alteration in order to install
(Department of Statistics Malaysia, 1995).
The construction sector mainly has two classes of end product, first, buildings
associated with offices, hospitals, airports, shopping centres, housing, factories, etc.;
second, the civil works that involve the infrastructure for water supply, irrigation,
transportation, power generation and so forth (Chris, 1998; Gould and Joyce, 2008).

Literature review
The concept of using fewer resources, especially shortening the total time of production
was first highlighted in 1921 ( Journal of Mechanical Engineering, 1921; Clark, 1922;
Miller, 1922). The following two quotes from Ford (1926, p. 826) also show that time
was understood as one of the production inputs in that period:
The time element in manufacturing stretches from the moment the raw material is separated
from the earth to the moment when the finished product is delivered to the ultimate consumer.
Time waste differs from material waste in that there can be no salvage. The easiest of all
waste, and the hardest to correct, is this waste of time, because wasted time does not litter the
floor like wasted material.
BIJ Another similar study by Gilbreth and Gilbreth (1922) found that time is consumed
17,2 in production by two types of activities. These are transformation and
non-transformation activities. The non-transformation activities are transfers, delays
and inspection activities. These two notes in the history reveal that engineers were
looking to eliminate unnecessary steps from production and make effective use of
resources. This elimination of unnecessary elements from production, compounded
234 with the lack of resources (Fawcett, 1989) after the Second World War in Japan, resulted
in the invention of the Toyota Production System, developed by Toyota Motors
and later known as lean production system (LPS) (Schuster, 1993; Wu, 2003). Under the
tutelage of Ohno, an engineer at Toyota Motors is considered the inventor of the Toyota
Production System, which is arguably the pre-eminent manufacturing organization in
the world (Balakrishnan et al., 1996; Becker, 2003; McMohan and Browne, 1998;
Womack et al., 1990; Ohno, 1988). However, the term LPS was coined around 1989 with
the popularity of the book The Machine that Change the World written by researchers
at the Massachusetts Institute of Technology (Boyer, 1996; Krafcik, 1988). The term
itself is used to describe the collection of efficiency improvement.

What is LPS?
The LPS is defined as the reduction of non-value added activities called waste, thereby
reducing time from customer order to the collection of cash (Ohno, 1988). Spear and
Brown (1999, p. 97) have defined it as:
A systematic approach to identifying and eliminating waste (non value added activities)
through continuous improvement by flowing the product at the pull of the customer in
pursuit of perfection.
MIT (2000) defined the LPS as the elimination of waste in every area of production
including customers’ relations, product design, suppliers’ networks and factory
management. Cox and Blackstone (1988) have defined the LPS as a technique that
emphasizes the minimization of the amount of all the resources (including time) used in
the various activities.
The LPS offers the potential for nothing less than revolutionary improvements in
performance and cost. LPS is a technique that reduces the waste inherent in any
business process, and at the same time exceeds performance (Sohal, 1996). LPS is able
to produce more products with higher quality but with fewer resources, and global
competition is associated with the practice of LPS (Santos, 1999). Agbulos and Simaan
(2003) have looked at the LPS as the avoidance, elimination or reduction of waste.
Waste is recognised by LPS as a performance criterion. That is, failure to meet the
unique requirements of a client. In other words, time, space, or material used in
performance of an activity that does not directly contribute value to the finished
product. Waste as a non-value added element is classified as being handling,
transportation, delay, inspection, storage and rework.
The careful review of the literature has shown that LPS brings benefits in business.
The LPS is successful because its main objective is to eliminate waste from all business
processes by using continuous improvement brought by the employees (Emiliani,
2000; Hopp and Spearman, 2001). It has been applied in manufacturing, automotive,
aviation, industrial equipment, furniture, fixtures, consumer goods, ceramics, software
and healthcare (Womack and Jones, 1996; Imtiaz and Ibrahim, 2006; Moore and
Gibbons, 1997) and results showed significant improvements in the operational
performance such as cost, quality, on-time delivery, inventory level and value added Global
per employee (Berry et al., 2003). The interest in LPS is mostly based on the theory as construction
well as empirical evidence that its introduction in a shop, factory or company increases
productivity, reduces lead times and cost, and improves quality (Karlsson and industry
Ahlstrom, 1995; Sriparavastu and Gupta, 1997). The LPS is simply without equal and
can be applied equally in any industry around the globe (Womack et al., 1990).
More recently LPS has been studied in the construction industry, and the seminal 235
author is Lauri Koskela (Koskela, 1992). Later Egan (1998) in Rethinking Construction
Report has advised the UK construction industry to use LPS in the construction
industry. Similarly, Singapore in its Construction 21 (C21) Report (1999) has also
emphasized that the construction industry should use LPS. The other countries such as
the USA, European Union and Australian construction industries are implementing
LPS in construction (Dulaimi and Tanamas, 1999). This study advocates applying the
LPS in the Malaysian construction industry to explore its integration in construction
industry, and its impact on the operational performance in the construction industry.

Research objectives and methodology

This research is applying the principles of LPS from the manufacturing sector into the
construction industry with the aim that LPS is able to enhance operational
performance in construction.
This research has the following objectives:
.
To evaluate the use of LPS principles in construction industry.
. To study the influence of LPS principle on operational performance.

The researchers have used the most popular survey method used to understand the
characteristics of a population. As Roberts (1999) pointed out, the survey method is one of
the most common approaches used in the social sciences to empirically study the
characteristics and interrelationship of sociological and psychological variables, and its
methods and analysis have profoundly influenced the social sciences (Kerlinger, 1986).

Construction industry in the years bygone

Construction is one of the oldest laboratories of the management sciences, particularly in
the field of production management. In 400 BC, Cairo in Persia carried out studies on the
use of movement, layout and transport of materials in construction sites. Moreover, it
was in the construction industry that Gilberth carried out his famous motion studies that
laid down some of the principal foundations of scientific management (Cheetham et al.,
1992; Gilberth, 1911). Construction is a type of production (Heizer and Render, 2005;
Koskela, 2000). Bertelsen and Koskela (2004) have defined construction as a complex
production of a one kind product undertaken mainly at the delivery point by cooperation
within multi-skilled ad hoc teams. This definition of construction indicates at least
four characteristics. Construction is production and it produces a one-of-a-kind product,
it is complex and undertaken through cooperation by a temporary organization.

Current status of the global construction industry

Current theory in the construction industry
Construction is a very old industry. Its culture and many of its methods have their roots
in the periods before explicit scientific analysis. However, especially after the Second
BIJ World War, there have been several different initiatives to understand construction and
17,2 its problems, and to develop corresponding solutions and improvement in methods
such as industrialisation, computer integrated construction, and total quality
management (TQM) (Koskela, 1992). The other operational and tactical techniques
are project planning and control tools, organizational methods, project success factors,
and productivity improvement methods (Koskela, 1992). By far the most general
236 concept seems to be the understanding of construction as a set of activities aimed at a
certain output, i.e. conversion. This activity view of construction is shared both by the
old traditions of construction and the newer methods.
The traditional method of cost estimation is at the heart of this activity view. The
building (or other structure) is divided into its constituent elements, and for each
element, the costs of needed materials and labour (conversion of input to output) is
estimated. This is exactly according to the conversion model. The great influence of
design on construction and operating costs was first pointed out and analyzed in
Paulson (1976). Friedrich et al. (1987) strongly criticized the customary notion that
large projects can be measured by using yardsticks viewed as simple summations
of individual yardsticks taken by discipline, system-by-system, or component-
by-component. Thus, the overall effects of revisions, repairs and rework on large
projects can be very significant, even when the individual effects of specific functions
and disciplines appear small and within normal acceptable practices. A recent study
shows that outsourcing inputs can have negative consequences on organizational
capabilities (Agndal and Nordin, 2009).
Beyond this conversion model, what theories or frameworks have been used in
construction? As odd as it might seem, there are hardly any other theoretical or
conceptual frameworks in general use. Even a rapid glance at the contents of textbooks
on construction management shows that they usually begin with a descriptive account
of a construction project (Barrie and Paulson, 1992; Clough and Sears, 1994) and then
proceed to specific techniques of management and control. No major conceptual or
theoretical analysis of construction is provided at the outset.
Thus, the construction industry is currently practising the conversion or
transformation model of production in the construction jobs. Dominant in the
nineteenth and twentieth centuries this model posses that production is conceptualised
as a transformation of inputs to outputs. That is, a production process receives inputs,
transforms them and exports the outputs to the environment, or into the next process
(Koskela, 1992; Schroeder, 1993; Vonderembse, 1996; Weihrish and Koontz, 1993).
Furthermore, the inputs, conversions or outputs may be integrated with control elements
that monitor and correct system behaviour (Lee and Schniederjans, 1994) (Figure 1).

Features of current practices in construction

Construction is a contract centred activity, with transactional contracts or assignments
defining and balancing the objectives of various participants. Coordination between
organizations or crew is primarily controlled from a central plan that establishes

Input
Figure 1. Output
(Material, Labour, Conversion
Concept of conversion (Products)
Machine etc.)
model
Source: Koskela (1992)
sequence and determines when an activity will start. Costs, errors, and learning occur Global
within activities. Cost reduction results from improving productivity, and project construction
duration is shortened by accelerating activities, or by changing logic to allow
concurrent work. Waste is a cost that can be avoided within the activities, such as industry
rework, or cost due to extended activity duration along the critical paths. As per
Howell and Ballard (1998), the features of current practices in the construction are:
.
Designs as per client(s) requirements, align design to quality, schedule and 237
budget limits.
. Manage by breaking into pieces, estimate duration and resource requirement and
then put logically into critical path method and project evaluation review
technique.
.
Contract for each piece, start notice, monitors. Coordinate project by using
master schedule and daily, weekly and biweekly meetings.
.
Reduce cost by increasing productivity. Improve quality and safety by better and
enforced inspection.
.
Activity centred – Batch and Queue that trades efficiency for apparent security.
.
Inflexible to changes.
.
Control begins with tracking cost and schedule.
.
Improving local productivity/speed leads to unreliable workflow further
reducing project performance.

Deficiencies in the current construction practices

The deficiencies in the current construction practices are: waste activities such as
waiting, storing, inventory, moving materials are generally not modelled, 50 per cent of
activities realised as planned (Ballard and Howell, 1998) and the conversion model
have proven inadequate (Koskela, 1992). In project control, fire fighting ongoing or
looming crises consumes management resources and attention so totally, that there is a
little room for planning, let alone improvement activities:
Managers are too occupied with the complexities involved in getting the work done to think
about, much less to carry out, organized programs for productivity improvement (Oglesby
et al., 1989).
In fact the whole construction culture is characterised by this short-term, action
oriented behaviour: “fire fighters get the laurels” (Ballard, 1989). Developments in
construction technology and market demand and the increasing variety of materials
and components, and requirements for shorter project duration, tend further to
aggravate the inherent problems in construction processes (Koskela, 1992).

Construction vs manufacturing
The construction industry is more complex and uncertain (Antonio, 2002; Gidado,
1996; Howell and Laufer, 1993; Kim and Wilemon, 2003; Wild, 2002; Williams, 1999)
than manufacturing. The construction industry is distinguished by the physical nature
of its production process and in general the large portion of works carried out on site
where the product will be used in post occupancy life of project (Ball, 1988). The end
product of construction is generally fixed, large and the resources are moving in and
BIJ out to products, unlike other sectors where products are moving in and out to the
17,2 resources (Schmenner, 1993) and the workstations have to move through the emerging
wholes, adding pieces as they move (Ballard and Howell, 1998). The construction
client(s) and customers normally have little or no experience in buying a house or other
product from construction and it is a make to order industry, where the majority of
projects are one-off and tailored-made to a particular client’s requirement (Fellows et al.,
238 1983). The client(s) wants durable construction because the investment in this sector is
more than other industries (Gann, 1996).
A comparison with manufacturing shows the key features, which distinguishes
construction from manufacturing, is the uncertainty evident throughout the
construction process (Howell and Ballard, 1995) (Table I).
The authors have carried out a similar comparison by compiling other authors work
shown in Table II. The combination of the various characteristics of construction
confers a peculiar mode of production to it (Ball, 1988; Ballard and Howell, 1998;
Towill, 1997). When this peculiar mode of production is placed in dynamic construction
projects, characterised for quickness, uncertainty and complexity, construction shows
constant reminders that it cannot be transformed into manufacturing.

Global construction industry’s environmental uncertainties

An overview of construction environmental uncertainties is presented in Table III. One
of the first to discuss the environmental uncertainties of construction might have been
Groak (1992). He took the view that advances in construction are often related to the
elimination of uncertainty. Nam and Tatum (1988) came to a similar conclusion in their
analysis of the impact of uncertainties in construction innovation. Warszawski (1990)
compares construction with manufacturing, and argues that, for the sake of efficiency,
industrialised construction should be set as a target. Carassus (1998) takes the view
that fundamental specificity, namely that constructed products are located on a site,
structure most of the other specific characteristics, as presented by him. Even if it is

Start of manufacturing production Start of construction in the field

What Highly defined Evolving as means refines ends

How Highly defined. Operational plan is in
great detail based many trials. Primary
sequence of major tasks is inflexible,
interdependencies are documented and
analyzed. Positions in process determine
required skills
Assembly Produce one of a finite set of objects
objective where the details of what and how are
known at the beginning of assembly
Table I. Improvement Rapid learning during the first units
Context of manufacturing strategy preparing for production runs
and construction
uncertainty Source: Howell and Ballard (1995)
Partly defined but details unexamined.
Extensive planning remains as situation
evolves. Primary sequence only partly
determined by hard logic but many
change. Interdependencies due to
conflicting measurements, shared
resources, and intermediate products
only partly understood. General craft
skills to be applied in a variety of
positions
Make the only one. The details of what
and how are not completely known at
the beginning of assembly
Rapid learning during both planning
and early sub-assembly cycles
 Global
Area Operations management Construction management
construction
Human Job design, payment and incentives, Health and safety, legislation, costs, industry
resource workers motivation safety policies, recruitment and selection,
education and training, communication
Quality TQM, International Standard Economics of quality, quality assurance,
Organisation (ISO) 9000, total quality quality control, ISO 239
control, etc.
Purchasing Logistics; specifications and quo Definition of documents, purchasing and
contracting, control of procurement,
budgeting, estimating
Material/ Management methods, just-in-time, Operations research methods, costs
inventory activity-based-costing system, Kanban, models, linear regression, linear
LPS, material requirement planning I, programming, queuing
material resource planning II, computer-
aided design/computer-aided
manufacturing/computer-aided
engineering/computer integrated Table II.
engineering Comparison of practices
in operations and
Sources: Barrie and Paulson (1992); Fellows et al. (1983); Lee and Schniederjans (1994); Santos (1999); construction
Schroeder (1993); Wild (1995) management

easy to find treatments of construction environmental uncertainties, there is little

accumulation in understanding in this respect. This is illustrated by the fact that
there is no cross-referencing among the sources discussed here. Moreover, related
knowledge is qualitative; there have been few, if any attempts to acquire quantitative
data on the occurrence or impact of these environmental uncertainties.
However, with similar characteristics and environmental uncertainties to
construction, other industries have managed to overtake them and reach excellent
levels of performance as shown in Table IV.

Challenges of the global construction industry

The problems in the construction industry in the form of waste, design, planning,
material control, production control and labour control were first reported by Journal
Mechanical Engineering (1921). There have been several attempts to measure and
improve construction productivity (Siegel, 1980). Walker (1996) also quoted that there
has been a stream of official investigations of various facets of construction. The other
reports on construction problems and their improvement are Emmerson (1962), Banwell
(1964), Tavistock Institute (1965) report, Latham (1994) report and finally rethinking
construction by Egan (1998). The problems and the improvement in the construction
industry were never ignored. Even then the estimates indicated that up to 30 per cent of
construction costs are due to inefficiencies, mistakes, delays and poor communication
(Atkins, 1993; Eaton, 1994; Forbes et al., 2002; Koskela, 2000; Tucker, 1986). The
problems concerning areas in the construction industry are briefly explained below.

Productivity
The prosperity of a nation is recognised as being dependent upon its productivity
levels in comparison to other countries (Hill, 1992). In this context, construction
BIJ Source Peculiarities
17,2
Nam and Tatum (1988) Immobility
Complexity
Durability
High level of social responsibility
Costliness
240 Warszawski (1990) Rugged and harsh work environment
High turnover of workers
Long service life of atypical project
Work dispersed among many temporary locations
Small extent of standardisation
Large number of tasks requiring a high degree of manual skills
necessary to complete a typical construction product
Authority divided between sponsor, designers, local government,
contractor and subcontractor
Groak (1992) Fixity
Uniqueness
Weight
Often sold before built
Bulk or volume
Complexity and temporary organization
Long construction time
High initial and running cost
Longevity in use
Carassus (1998) Artistic creation
Construction of mock up
Located on site
Localised orders of extraordinary diversity
Rules and conventions playing a considerable role
Complex and random work
Hancock (2000) Conflict
Fragmentation
Labour mobility
Subcontracting
Table III. Crisis management
Construction Masculine
environmental Dubois and Gadde (2002) Fragmented
uncertainties Fluid

productivity is one of the economic indicators of success, since this sector has a
substantial impact on gross domestic product (GDP) and employment. Despite its
greater importance, the construction industry regularly demonstrates lower levels of
productivity when compared with the manufacturing industry. Construction
performance affects productivity across all sectors of the economy (Hampson, 1997).
It has been estimated that a 10 per cent increase in construction industry productivity
would result in a 2.5 per cent improvement in GDP (Stoeckel and Quirke, 1992).

Waste
Waste is defined as any activity that adds no value to the product but consumes
resources (Alarcon, 1994; Koskela, 1992; Love et al., 1997). Waste in the construction
industry has been the subject of several research projects around the world in recent
 Global
Construction Other sectors
construction
One of a kind product Shipbuilders industry
On site production Car repair (e.g. AA patrol)
Fixed position manufacturing Aeroplane (e.g. Boeing)
Land dependence High street retailers (e.g. Benetton)
Long life expectancy required Elevators manufacturer (e.g. Otis, Kone) 241
Non experienced clients Ambulance (e.g. 999 services)
Merchant/producer role of companies Car factories (ex. Toyota, Nissan)
Overwhelmingly domestic industry Fast food (e.g. McDonald’s)
Temporary organization Sports events (e.g. World Cup-FIFA)
Masculine Mining
Long period for design production Car factories (e.g. Toyota, Nissan)
High cost of the project Chemical industries.
Amplified reaction in economic crisis Entertainment (e.g. Disney production)
Labour intensive Fast Food (e.g. McDonald’s). Table IV.
Fragmented industry Clothe producers (e.g. Levi Strauss) Excellent companies with
similar construction
Source: Santos (1999) characteristics

years (Formoso et al., 1999). The studies not only focussed on the surplus material
quantity (CII, 1986) and the unnecessary material waste (Illingworth and Thain, 1988)
on-site but also related to several activities such as over production, waiting time,
material handling, processing, inventories and movement of workers (Alarcon, 1994;
Formoso et al., 1999). The other main categories of waste during construction processes
are poor quality (rework/repairs/defects), lack of construct-ability, material waste,
delays, waiting, poor material allocation, unnecessary material handling and material
waste (Alarcon, 1995; Alwi, 1995; Koskela, 1993; Lee et al., 1999; Robinson, 1991). As
mentioned above, these categories of waste attributed up to 30 per cent of construction
costs.
The unproductive time waste in construction sites was 24 per cent on average in
Australia, Sweden and The Netherlands (Vershuren, 1980), 43 per cent in Nigeria
(Olomolaiye et al., 1987) and 26 per cent in Brazil (Bicca et al., 1994).
Bossink and Brouwers (1996) found that 9 per cent of total purchased materials end
up as waste and from 1 to 10 per cent of every single purchased construction material
leaves the site as solid waste in the Dutch construction industry. Since materials
account for 50-60 per cent of a construction project cost, any improvement in avoiding
material waste results in major cost savings (Akintoye, 1995; Ibn-Homaid, 2002; Wong
and Norman, 1997). Similar magnitudes of wastage in materials and time are reported
in the Turkish construction industry (Polat and Ballard, 2004). In the UK, Skoyles and
Skoyles (1976, 1987) found wastage of materials ranging from 5 to 10 per cent in
volume. Sjostorm (1998) has said that the construction industry is estimated to
generate approximately 40 per cent of man-made waste. Bell and Stukhart (1987)
reported 10-12 per cent extra in labour costs because of poor material management
systems. Wyatt (1978) stressed the consequences of high levels of waste in both
reducing the future availability of material and energy, and creating unnecessary
demands on the transportation system. The Hong Kong Polytechnic (1993) conducted a
research on construction waste aimed at reducing the generation of waste at source and
proposed alternative methods for the treatment of construction waste in order to reduce
BIJ the demand for final disposal areas. Koskela (1992) also confirmed waste in the
17,2 construction sector as shown in Table V.
Chilean building construction projects experience waste variables such as waiting
time, idle time and travelling time (Serpell et al., 1995). Kaming et al. (1997) identified
lack of material, rework/repair, lack of equipment and supervision delays as factors
influencing productivity in the construction industry. An investigation by Mohamed
242 and Tucker (1996) showed that 25 per cent timesaving is achievable in a typical
construction work package without increasing allocated resources.
Beside this wastage in construction, there are quality failures that have been
estimated to the cost the industry between 2 and 12 per cent of construction turnover in
rework alone (Burati et al., 1992; Ledbetter, 1994; Love, 2002). Marosszeky et al. (2002)
also found about 2-4 per cent of direct and indirect cost defects in four Sydney
construction sites. Waste in the construction industry supply chain is omnipresent
(Luhtala et al., 1994; Vrikjhoef and Koskela, 2000). Poor quality is attributed to be 10-20
per cent of total project cost (Cnudde, 1991). In the USA, the deviation cost averaged
12.4 per cent of the total installed project cost (Burati et al., 1992). In Sweden a study on
design-construct project, the costs of quality failures were found to be 5.4 per cent of
the production costs (Hammarlund and Josephson, 1991; Josephson, 1994). In Norway,
Sjoholt (1998) estimated that the cost due to nonconformity, errors, alterations and
wastage, in the course of building process, were around 10 per cent of the total building
cost.

Image
The construction industry has one of the worst public images among the industrial
sectors. It is considered dirty, dangerous, dull and environmentally insensitive (Ball,
1988; Pheng, 2005; Santos et al., 2000; Santos and Powell, 2001). Joyce (1995) has stated
that the construction industry has the dubious distinction of having the highest
incident rate of fatal accidents and serious injuries of all industries. Furthermore,
construction projects are widely seen as unpredictable in terms of delivery time,
profitability and quality standards. The investments in construction are usually seen
as expensive when compared to other industries (Egan, 1998). The under achievements
of construction are reflected in the growing dissatisfaction that is found both its private
and public sector clients. Building costs too much, takes too long and does not serve
our needs into the future (Howell, 1999).

Waste Cost Country

Quality cost (non-conformance) 12 per cent of total project cost USA

External quality cost (during facility use) 4 per cent of total project cost Sweden
Lack of construct-ability 6-10 per cent of total project cost USA
Poor material management 10-12 per cent of labour costs USA
Excess consumption of materials on site 10 per cent on an average Sweden
Working time used for non-value added activities App. two out of three of total time USA
on site
Table V. Lack of safety 6 per cent of total project costs USA
Waste in the construction
industry Source: Koskela (1992)
Cost and time target failure Global
A British study on commercial building projects in 1984-1986 (NEDO, 1988) found that construction
about one third of projects were completed in time, another one third overran by up to
one month and rest had overruns in excess of one month. Another study in Australia industry
on building projects completed in 1988-1993 found that 14 per cent of projects had a
cost overrun, and 67 per cent a time overrun (CIDA, 1993). Furthermore, it was found
that 73 per cent of projects had variations in scope, representing 9 per cent of the total 243
value of project studies, 2 per cent of projects had variations in scope of greater than
10 per cent and all of these projects had time overruns. A recent study in America
(Konchar et al., 1997) showed that 38-51 per cent of 304 projects considered, depending
on the project delivery type, ended up more than 5 per cent above budget.
A corresponding study in the UK (Bennett et al., 1996) found that 21-32 per cent
projects ended up above budget by more than 5 per cent.
A few real life examples encompassing construction industry problems discussed in
the above paragraphs are appended below.
In Indonesia. Delay to schedule or non-completion of construction job in time is very
significant besides other wastage (Alwi et al., 2002).
In Singapore. The Construction Industry Steering Committee in 1999 have reviewed
state of the industry under C21 challenges and criticized its performance. Wilfred
(1992) in an empirical study in Singapore and Hong Kong found that their construction
industries are facing problems such as exceeding budget, inferior quality and delays in
construction.
In Saudi Arabia. Al-Khalil and Al-Ghafly (1999) stated that delays in construction
job completion are a major problem leading to costly disputes and acrimonious
relationship between parties involve.
In Nigeria. Construction project delays are identified as the principle factors leading
to the high cost of construction (Okpala and Aniekwu, 1988).
In the UK. A new hospital, Cumberland Infirmary building in Carlisle, in 2000. The
hospital has 442 beds and cost UK £87 million. This hospital has received notorious
publicity through sewage spills from sinks in the operating theatres, collapsing
ceilings, walls so thin that shelves could not be installed and flooding of the cardiology
and maternity wards, etc. resulted in massive reworking (Browne, 2001).
In Australia. The budget for the Sydney opera house escalated from AUS $7 million
to AUS $107 million and the construction time from four years to more than 14 years
(Kharbanda and Pinto, 1996). Furthermore, the Royal Commissions (Cole, 2002; Gyles,
1992) found that Australian construction industry substantially under-performs its
potential.
In the USA. The Denver international airport project was planned from 1989 to 1993
with a cost of US $1.7 billion, but its opening was delayed four times and total delay
was 16 months and cost increased to US $4.5 billion (Drexl and Hans, 2002). An
industrial plant costing US $100 million on a fast track construction job was delayed
substantially (Fazio et al., 1988). In a nuclear power plant there was substantial minor
and major reworking cycle or time, reflecting that the quality of work was not in order
(Friedrich et al., 1987).
In Denmark. An office building exceeded the working hours estimated more than
three times (Bertelsen, 2003).
BIJ It is apparent from the above discussion and examples that the construction
17,2 industry is facing problems globally. All these factors make production management
in construction an important and valuable area for research (Koskela, 1993). On the
other hand, production or manufacturing especially LPS has been performing better
than construction productivity. LPS has caused a revolution in manufacturing design,
supply and assembly and applied to construction industry, LPS changes the way work
244 is done throughout the project delivery process.

Summary of findings and conclusions

This study has looked into the background of construction, the current theory in
construction and its deficiencies. It also discussed characteristics and environmental
uncertainties in construction and emphasized how other industries have overtaken
similar characteristics and uncertainties and improved their performance.
The study successfully achieved its objective and found that the construction
industry is using principles of the LPS into construction management, but with
variations. It also revealed that the LPS has influence on the operational performance.
The results also revealed that there is difference in LPS application with respect to
respondent designation and educational level. Finally, it also concluded that there is
difference in operational performance improvement with respect to company size and
respondent designation.
The present study is testing the LPS principles with performance for the first time
in the construction. It also has developed new knowledge by identifying new LPS
principles from an extensive literature survey and applies them to the global
construction industry. The model has implications both for research and practice. For
research, it can be used as a model for operationalizing LPS in construction in order to
be able to study change processes. In practice, the model can be used as a tool to assess
the conversion from conventional construction organization to LPS. This study has
developed an instrument to measure degree of integration of LPS principles in the
construction industry that can be used globally. It can be used as a checklist for what
to aim at when trying to implement LPS in construction.
The findings of this preliminary study must be interpreted in the light of several
limitations. An inherent limitation of this study pertains to its sampling frame, as the
population of the study is limited to Grade Seven construction companies, the results of
this study cannot be generalised to the whole of industry. The second limitation of this
study stems from use of a cross-sectional analysis. A longitudinal analysis would have
been meaningful because it would have provided some measure of how the use of LPS
in construction influences its operational performance. The third limitation side is on
the survey mail as a research methodology because it can establish whether or not a
relationship exits between two variables but is not sufficient to determine the direction
of causality (Babbie, 1982). Furthermore, survey is like a self-report and therefore
truthfulness of reporting is important (Babbie, 1982).
There are number of topics that deserve further investigation in order to advance
knowledge in this area. For future research, the topics are suggested by this research
are; holistic integrative implementation of the LPS, a longitudinal analysis as this
study used cross-sectional analysis and an evaluation to test and improve safety
performance in the construction industry.
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Further reading
CIDB (2004), Master Plan for Occupational Safety and Health in Construction Industry
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Corresponding author
Zafar U. Ahmed can be contacted at: zafaruahmed@gmail.com

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