Nowadays, the growth of construction industry’s productivity is slow, unlike the manufacturing sector, where standardization of components, mechanisation and innovation greatly enhance the rate of production, that is because of the procedure of construction industry is more complicate and always take longer time than manufacturing sector. Therefore, the supply to meet the needs and demand of housing and infrastructure is a very slow process. This is a serious problem which indicates that over the past 40 years, construction projects have required significantly more field work hours over cost of contract.
In other words, the construction industry seriously lags other industries in developing and applying labour saving ideas and in finding ways to substitute equipment for labour. While there are a number of construction tasks that have been made more productive through the use of labour saving equipment, it is clear that, looking at the whole industry, there is a significant productivity problem. Productivity in the construction industry reached a peak in 1968 and, except for a brief and small upturn between 1974 and 1976, has been falling ever since.
This paper examines the sources of this slow productivity by estimating a production function to assign weights to various factors responsible for productivity change and deriving a new price deflator for construction which does not rely on labour or material cost indexes, thus eliminating a systematic bias toward overstating the rate of growth of prices There are few reasons, why the supply is slow in construction sector which because of the rising cost, human affect the construction sector, income tax, lack of labour and the housing supply.
And therefore I will discuss about the problem of slow supply that exist in construction sector. The Rising cost Basically, cost that have been rising are the rising costs of steel, cement and other building materials are expected to cause a juggling of priorities, if not a mild slowdown, in all types of construction, ranging from freeways and office buildings to schools and homes.
And if the cost increases continue, the state as well as cities, towns and counties likely will be forced to reassess plans for public works construction, such as new freeways, bridges, schools or other projects. Materials costs for construction have greatly outstripped the Consumer Price Index and even the overall Producer Price Index. However, contractors are so hungry for work that they are continuing to promise to deliver jobs for almost no increase in price, in spite of their having to pay more for materials.
It is a dangerous situation for contractors who have already cut their margins to a minimum or maybe into negative territory The prices of cement and steel marched upward and labour shortages increased last summer when the season’s powerful hurricanes churned across the Gulf Coast, devastating communities by tearing down homes and damaging office buildings, bridges, roads and harbours. Today, cement prices are up as much as 30 percent over a year ago, and no one can say where the price is headed. And because of this the price of houses will increase and most of the people cannot afford it.
Income Tax Income tax also plays an important role that is because if the government increase the income tax the demand for house will decrease due to the lack of purchaser money. The purchaser is force to save of make a budget of his or her money just to purchase a house. And when the demand for house is low the developer is force to decrease the price of the house and therefore the expense of the developer will higher and the developer will either stop the project or reduce the expenses of the project.
The abandon project will appear until the material price is cool down so that the developer will continue the project. The weak planning and economy will cause the slow supply. Supply is refers to the quantity of goods suppliers are willing and able to offer for sale in the market. This is not necessarily the same as the amount being produced, as there may be times when stockpiles are being built up or run down. Human affect the construction sector
The procedure of construction industry is more complicate and always takes longer time than manufacturing sector that is because we have to make an early preparation before construct any houses or the building due to the time, quality and cost. Also for the location, the developer need to find a stable, good and correct location and needs to make a research and analysis the land value so that no risk will be taken. As for the tendering, the appointed consultant is taking a lot of time to finish the tendering which is to hire a contractor for the project.
Usually in construction sector, the contractor will took a lot of times to finish a project and due to this the developer will lost a few numbers of customers or make the customers disappoint but then it is not the contractor fault, sometimes it is because of the force majeure, that is essentially frees both parties from liability or obligation when an extraordinary event or circumstance beyond the control of the parties, such as a war, strike, riot, crime, prevents one or both parties from fulfilling their obligations under the contract. Exceptionally weather that is rough, harsh or stormy weather.
Civil commotion, strike or lockout affecting any of the trades employed upon works or any of the trades engaged in the preparation, manufacture or transportation of any goods or materials required for the works. The contractor not having received in due time necessary instructions, drawings, details or levels from the architect for which he had specifically applied in writing provided that the application was made on a date having regard to the date of completion was neither unreasonably distant nor unreasonably close to the date on which it was necessary for him to receive them.
The lacks of technology will also causes the supply of houses to be drop, that is because bad technology will causes the slow supply, therefore we need a better and updated technology to increase the speed of the supply. The solution we need to import all the new technologies around the world and the expert or professional contractors from other countries to build the building. Plus in Malaysia, we are lack in professionals, contractors, and this will slow down the process of build. Income Tax
Income tax also plays an important role that is because if the government increase the income tax the demand for house will decrease due to the lack of purchaser money. The purchaser is force to save of make a budget of his or her money just to purchase a house. And when the demand for house is low the developer is force to decrease the price of the house and therefore the expense of the developer will higher and the developer will either stop the project or reduce the expenses of the project.
The abandon project will appear until the material price is cool down so that the developer will continue the project. The weak planning and economy will cause the slow supply. Supply is refers to the quantity of goods suppliers are willing and able to offer for sale in the market. This is not necessarily the same as the amount being produced, as there may be times when stockpiles are being built up or run down. Land Reclamation
There will always be a limitation of natural land because of the land itself is used for government purposes or been planned by somebody else. The reclamation of land is the solution for those have no other option to build a building or houses. Population expansion and industrialization are the two main factors that have contributed to the rapid growth of many coastal cities, resulting in an escalating demand for prime land. The wide shallow waters that abut the coastline become the prime target for reclamation.
The financial advantage of coastal land reclamation is easily demonstrated considering the current market value of prime land in coastal cities and the construction cost for coastal reclamation. It is also due to the same reason that coastal cities such as Penang, Melaka, Labuan became the pioneers of coastal land reclamation projects. Lack of labour Productivity The labour, most of the labours are from other countries such as Indonesia, Bangladesh, India and other more.
The majority of the labour is not local that is because of cheaper salary compare to local people but the disadvantages of taking labour from other countries, most of them are illegal workers without any working permit or passport and the custom from the government department have the right to catch all of them without any hesitation, when this happened it will affect the slow supply in construction because when there is no labour the project will stop and the developer or the contractor will have to find a new labour. And because of this the developer or the contractor need to pay more for the local workers.
Productivity in construction is often broadly defined as output per labour hour. Since labour constitutes a large part of the construction cost and the quantity of labour hours in performing a task in construction is more vulnerable to the influence of management than are materials or capital, this productivity measure is often referred to as labour productivity. However, it is important that labour productivity is a measure of the overall effectiveness of an operating system in utilizing labour, equipment and capital to convert labour efforts into useful output, and is not a measure of the capabilities of labour alone.
For example, by investing in a piece of new equipment to perform certain tasks in construction, output may be increased for the same number of labour hours, thus resulting in higher labour productivity. Construction output may be expressed in terms of functional units or constant ringgit. In the former case, labour productivity is associated with units of product per labour hour, such as cubic yards of concrete placed per hour or miles of highway paved per hour. In the latter case, labour productivity is identified with value of construction (in constant ringgit) per labour hour.
The value of construction in this regard is not measured by the benefit of constructed facilities, but by construction cost. Labour productivity measured in this way requires considerable care in interpretation. Wages are an important component in construction costs, the value of construction put in place per hour of work will decline as a result, suggesting lower productivity. Lack In Materials & Skill To Manage It In the construction site, there will always be a late or delays in sending the material because of the lack of material. This will affect a waste of a lot of money because time is wasted due to the developer to rent the houses.
And slow in supply will occur, usually the delays or late are because of the imported materials such as steel, wood and the other materials etc. Materials management is an important element in project planning and control. Materials represent a major expense in construction, so minimizing procurement or purchase costs presents important opportunities for reducing costs. Poor materials management can also result in large and avoidable costs during construction. First, if materials are purchased early, capital may be tied up and interest charges incurred on the excess inventory of materials.
Even worse, materials may deteriorate during storage or be stolen unless special care is taken. For example, electrical equipment often must be stored in waterproof locations. Second, delays and extra expenses may be incurred if materials required for particular activities are not available. Accordingly, insuring a timely flow of material is an important concern of project managers. Materials management is not just a concern during the monitoring stage in which construction is taking place. Decisions about material procurement may also be required during the initial planning and scheduling stages.
For example, activities can be inserted in the project schedule to represent purchasing of major items such as elevators for buildings. The availability of materials may greatly influence the schedule in projects with a fast track or very tight time schedule: sufficient time for obtaining the necessary materials must be allowed. In some case, more expensive suppliers or shippers may be employed to save time. Materials management is also a problem at the organization level if central purchasing and inventory control is used for standard items.
In this case, the various projects undertaken by the organization would present requests to the central purchasing group. In turn, this group would maintain inventories of standard items to reduce the delay in providing material or to obtain lower costs due to bulk purchasing. This organizational materials management problem is analogous to inventory control in any organization facing continuing demand for particular items.
In Malaysia, slow supply in construction sector is often because of lack of professionals, contractors and other consultants. The government need to improve the studies and giving practical to those who are have an interest in construction industry for the purposes of better development. And for the contractors and architect need to update the new technologies from other countries so that Malaysia will not left behind and can compete with other countries and due to this people will spend a lot of money for purchasing the houses and buildings.