Strategic management practices in the construction industry : a study of Indonesian enterprises

Since the establishment of the first national strategic development plan in the early 1970s, the construction industry has played an important role in terms of the economic, social and cultural development of Indonesia. The industry’s contribution to Indonesia’s gross domestic product (GDP) increased from 3.9% in 1973 to 7.7% in 2007. Business Monitoring International (2009) forecasts that Indonesia is home to one of the fastest-growing construction industries in Asia despite the average construction growth rate being expected to remain under 10% over the period 2006 – 2010. Similarly, Howlett and Powell (2006) place Indonesia as one of the 20 largest construction markets in 2010. Although the prospects for the Indonesian construction industry are now very promising, many local construction firms still face serious difficulties, such as poor performance and low competitiveness. There are two main reasons behind this problem: the environment that they face is not favourable; the other is the lack of strategic direction to improve competitiveness and performance. Furthermore, although strategic management has now become more widely used by many large construction firms in developed countries, practical examples and empirical studies related to the Indonesian construction industry remain scarce. In addition, research endeavours related to these topics in developing countries appear to be limited. This has potentially become one of the factors hampering efforts to guide Indonesian construction enterprises. This research aims to construct a conceptual model to enable Indonesian construction enterprises to develop a sound long-term corporate strategy that generates competitive advantage and superior performance. The conceptual model seeks to address the main prescription of a dynamic capabilities framework (Teece, Pisano & Shuen, 1997; Teece, 2007) within the context of the Indonesian construction industry. It is hypothesised that in a rapidly changing and varied environment, competitive success arises from the continuous development and reconfiguration of firm’s specific assets achieving competitive advantage is not only dependent on the exploitation of specific assets/capabilities, but on the exploitation of all of the assets and capabilities combinations in the dynamic capabilities framework. Thus, the model is refined through sequential statistical regression analyses of survey results with a sample size of 120 valid responses. The results of this study provide empirical evidence in support of the notion that a competitive advantage is achieved via the implementation of a dynamic capability framework as an important way for a construction enterprise to improve its organisational performance. The characteristics of asset-capability combinations were found to be significant determinants of the competitive advantage of the Indonesian construction enterprises, and that such advantage sequentially contributes to organisational performance. If a dynamic capabilities framework can work in the context of Indonesia, it suggests that the framework has potential applicability in other emerging and developing countries. This study also demonstrates the importance of the multi-stage nature of the model which provides a rich understanding of the dynamic process by which asset-capability should be exploited in combination by the construction firms operating in varying levels of hostility. Such findings are believed to be useful to both academics and practitioners, however, as this research represents a dynamic capabilities framework at the enterprise level, future studies should continue to explore and examine the framework in other levels of strategic management in construction as well as in other countries where different cultures or similar conditions prevails.

Evaluating the influences of stakeholder management on construction project quality

The issue of ensuring that construction projects achieve high quality outcomes continues to be an important consideration for key project stakeholders. Although a lot of quality practices have been done within the industry, establishment and achievement of reasonable levels of quality in construction projects continues to be a problem. While some studies into the introduction and development of quality practices and stakeholder management in the construction industry have been undertaken separately, no major studies have so far been completed that examine in depth how quality management practices that specifically address stakeholders’ perspectives of quality can be utilised to contribute to the ultimate constructed quality of projects. This paper encompasses and summarizes a review of the literature related to previous research undertaken on quality within the industry, focuses on the benefits and shortcomings, together with examining the concept of integrating stakeholder perspectives of project quality for improvement of outcomes throughout the project lifecycle. Findings discussed in this paper reveal a pressing need for investigation, development and testing of a framework to facilitate better implementation of quality management practices and thus achievement of better quality outcomes within the construction industry. The framework will incorporate and integrate the views of stakeholders on what constitutes final project quality to be utilised in developing better quality management planning and systems aimed ultimately at achieving better project quality delivery.

Automated object identification using optical video cameras on construction sites

Visual recording devices such as video cameras, CCTVs, or webcams have been broadly used to facilitate work progress or safety monitoring on construction sites. Without human intervention, however, both real-time reasoning about captured scenes and interpretation of recorded images are challenging tasks. This article presents an exploratory method for automated object identification using standard video cameras on construction sites. The proposed method supports real-time detection and classification of mobile heavy equipment and workers. The background subtraction algorithm extracts motion pixels from an image sequence, the pixels are then grouped into regions to represent moving objects, and finally the regions are identified as a certain object using classifiers. For evaluating the method, the formulated computer-aided process was implemented on actual construction sites, and promising results were obtained. This article is expected to contribute to future applications of automated monitoring systems of work zone safety or productivity.

Relationship management implementation in the Australian construction industry from the contractor's perspective

Many studies carried out in relation to construction procurement methods reveal evidence of a need to change of culture and attitude in the construction industry. This culture change would transition from traditional adversarial relationships to cooperative and collaborative relationships. Relational contracting approaches, such as partnering and relationship management, are business strategies whereby client, commercial participants’ and stakeholders’ objectives are aligned for mutual benefit. The efficacy of relationship management in the client and contractor groups is proven and well documented. However, the industry has a slow implementation of relational contracting down the value chain. This paper reports the findings of an empirical study which examined the practices and prerequisites for relationship management implementation success and for supply chain engagement to develop. Questionnaire survey, interviews and case studies were conducted with Australian contracting organisations in this study. The study reveals that the adaption of relational contracting approach in the supply chain is found to be limited and contractors still prefer to keep suppliers and subcontractors at arm’s length. Findings also show that the degree of match and mismatch between organizational structuring and organizational process is found to have an impact on staff’s commitment level and performance effectiveness.

Long range relations : stakeholder engagement in Queensland road construction

This paper presents the historical and contextual background of road construction by state and local government in Queensland. It also highlights some key events that have shaped stakeholder participation in road infrastructure planning and delivery in Queensland. This synthesis was developed from a review of publications, organisational documents and interviews. To set the scene, the factors that shaped road delivery will be discussed.

Construction safety : development of an assessment tool to reduce risk on building sites

Australian construction and building workers are exposed to serious workplace risks - including injury, illness and death - and although there have been improvements in occupational health and safety (OHS) performance over the past 20 years, the injury and fatality rate in the Australian construction industry remains a matter of concern. The concept of safety culture is rapidly being adopted in the industry, including recognising the critical role that organisational leaders play in overall safety performance. This paper reviews recent research in construction safety leadership and provides some examples and applications relevant to risk reduction in the workforce. By focusing on developing safety competency in those that fulfil safety critical roles, and clearly articulating the relevant safety management tasks, leaders can positively influence the organisation’s safety culture. Finally, some promising research on Safety Effectiveness Indicators (SEIs) may be an industry-friendly solution to reducing workplace risks across the industry, by providing a credible, accurate, and timely measure of safety performance.

Safety leaders' perceptions of safety culture in a large Australian construction organisation

Safety culture in the construction industry is a growing research area. The unique nature of construction industry works – being project-based, varying in size and focus, and relying on a highly transient subcontractor workforce – means that safety culture initiatives cannot be easily translated from other industries. This paper reports on the first study in a three year collaborative industry and university research project focusing on safety culture practices and development in one of Australia’s largest global construction organisations. The first round of a modified Delphi method is reported, and describes the insights gained from 41 safety leaders’ perceptions and understandings of safety culture within the organisation. In-depth, semi-structured interviews were conducted, and will be followed by a quantitative perception survey with the same sample. Participants included Senior Executives, Corporate Managers, Project Managers, Safety Managers and Site Supervisors. Leaders’ definitions and descriptions of safety culture were primarily action-oriented and some confusion was evident due to the sometimes implicit nature of culture in organisations. Leadership was identified as a key factor for positive safety culture in the organisation, and there was an emphasis on leaders demonstrating commitment to safety, and being visible to the project-based workforce. Barriers to safety culture improvement were also identified, with managers raising diverse issues such as the transient subcontractor workforce and the challenge of maintaining safety as a priority in the absence of safety incidents, under high production pressures. This research is unique in that it derived safety culture descriptions from key stakeholders within the organisation, as opposed to imposing traditional conceptualisations of safety culture that are not customised for the organisation or the construction industry more broadly. This study forms the foundation for integrating safety culture theory and practice in the construction industry, and will be extended upon in future studies within the research program.

Community-based protest against construction projects : a case study of movement continuity

Community-based activism against proposed construction projects is growing. Many protests are poorly managed and escalate into long-term and sometimes acrimonious disputes which damage communities, firms and the construction industry as a whole. Using a thematic storytelling approach which draws on ethnographic method, within a single case study framework, new insights into the social forces that shape and sustain community-based protest against construction projects are provided. A conceptual model of protest movement continuity is presented which highlights the factors that sustain protest continuity over time. The model illustrates how social contagion leads to common community perceptions of development risk and opportunity, to a positive internalization of collective values and identity, to a strategic utilization of social capital and an awareness of the need to manage the emotional dynamics of protest through mechanisms such as symbolic artefacts.

Relational contracting and its efficacy of project outcomes in the Australian construction industry

The Australian construction industry is characterized as being a competitive and risky business environment due to lack of cooperation, insufficient trust, ineffective communication and adversarial relationships which are likely lead to poor project performance. Relational contracting (RC) is advocated by literature as an innovative approach to improve the procurement process in the construction industry. Various studies have collectively added to the current knowledge of known RC norms, but there seem to be little effort on investigating the determinants of RC and its efficacy on project outcomes. In such circumstances, there is a lack of evidence and explanation on the manner on how these issues lead to different performance. Simultaneously, the New Engineering Contract (NEC) that embraced the concept of RC is seen as a modern way of contracting and also considered as one of the best approaches to the perennial problem of improving adversarial relationships within the industry. The reality of practice of RC in Australia is investigated through the lens of the NEC. A synthesis of literature views on the concept, processes and tools of RC is first conducted to develop the framework of RC.

The desire for the construction industry to move towards lifecycle carbon emissions analysis

A significant reduction in carbon emissions is a global mission and the construction industry has an indispensable role to play as a major carbon dioxide (CO2) generator. Over the years, various building environmental assessment (BEA) models and concepts have been developed to promote environmentally responsible design and construction. However, limited attention has been placed on assessing and benchmarking the carbon emitted throughout the lifecycle of building facilities. This situation could undermine the construction industry’s potential to reduce its dependence on raw materials, recognise the negative impacts of producing new materials, and intensify the recycle and reuse process. In this paper, current BEA approaches adopted by the construction industry are first introduced. The focus of these models and concepts is then examined. Following a brief review of lifecycle analysis, the boundary in which a lifecycle carbon emission analysis should be set for a construction project is identified. The paper concludes by highlighting the potential barriers of applying lifecycle carbon emissions analysis in the construction industry. It is proposed that lifecycle carbon emission analysis can be integrated with existing BEA models to provide a more comprehensive and accurate evaluation on the cradle-to-grave environmental performance of a construction facility. In doing so, this can assist owners and clients to identify the optimum solution to maximise emissions reduction opportunities.

Validating a model of cooperative procurement in the construction industry

Project management in the construction industry involves coordination of many tasks and individuals, affected by complexity and uncertainty, which increases the need for efficient cooperation. Procurement is crucial since it sets the basis for cooperation between clients and contractors. This is true whether the project is local, regional or global in scope. Traditionally, procurement procedures are competitive, resulting in conflicts, adversarial relationships and less desirable project results. The purpose of this paper is to propose and empirically test an alternative procurement model based on cooperative procurement procedures that facilitates cooperation between clients and contractors in construction projects. The model is based on four multi-item constructs – incentive-based compensation, limited bidding options, partner selection and cooperation. Based on a sample of 87 client organisations, the model was empirically tested and exhibited strong support, including content, nomological, convergent and discriminant validity, as well as reliability. Our findings indicate that partner selection based on task related attributes mediates the relationship between two important pre-selection processes (incentive-based compensation and limited bid invitation) and preferred outcome of cooperation. The contribution of the paper is identifying valid and reliable measurement constructs and confirming a unique sequential order for achieving cooperation. Moreover, the findings are applicable for many types of construction projects because of the similarities in the construction industry worldwide.

Crisis preparedness of construction companies

In high-risk industries, companies with well-conceived crisis management plans are at a commercial advantage. While there is some understanding of the risk management practices of construction companies, there is little insight into their crisis preparedness. This paper presents the findings of exploratory research that investigated this issue. Using a diagnostic model of crisis preparedness that has been developed and tested across a broad range of industries, it concludes that if the sample surveyed is typical, then corporate philosophies in construction companies do not support crisis management activities. Furthermore, crisis planning is rudimentary and undertaken in an insular, informal, fragmented fashion, supported by few resources and little strategic guidance. Consequently, many construction companies will have an inadequate understanding of their crisis exposure, of how to cope with crises when they happen, and of how to learn and recover from their aftermath.