Strategy for gross national happiness (sgnh) Annexures to the Main Document
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- Role of NRDC and DoF in the Cluster formation
- Revitalization of the Construction Industry 0. Background
- Very low levels of productivity
- Poor quality of construction
- Lack of real competition among contractors
- Poor skills at both professional and working levels
- Proliferation of undesirable practices such as fronting and collusion
- Poor motivation and morale among government engineers
- Fragmentation of design and construction process
- High Cost of Construction
- Technology development Contractors’ capacity/skills development as well as regulation Human Resources Development and Management
- 1.3 Areas of Productivity Improvement 1.3.1 Roads
- 1.3.2 Building Construction
Marketing/Brand Promotion
Role of NRDC and DoF in the Cluster formation
Revitalization of the Construction Industry 0. Background The construction industry in Bhutan is one of the largest sectors both in terms of GDP share as well as in the number of agencies and personnel involved in the government and the private sector. Almost every other industry depends on man-made structures so that the construction industry has become the foundation of any economic development. Therefore, the productivity, efficiency and competitiveness of building and construction are of critical importance to the growth and success of the Bhutanese economy. The construction sector contributed 21% to the GDP in 2004 and recorded a growth rate of 19% in the same year. However, this growth is attributable solely to the government’s investments in infrastructure development such as the large power projects of Tala and Basochu and not due to any improvements in productivity of the industry itself. The industry is characterized by the following constraints and problems:
Due to reasons such as the use of conventional labour-intensive methods of construction and poor project management, productivity levels are very low resulting in long project gestation periods. For example, Planning Commission statistics reveal that during the 9th FYP, we were able to construct only 37.5 km of national highways roads and 155 km of feeder roads. At this rate, the construction of the Southern East-West Highway would take more than 10 Plan periods! Construction of buildings and other infrastructure are equally slow. This extremely slow rate of infrastructure development has an exponential negative impact on the development and growth of all other downstream activities that are dependent on infrastructure.
The poor quality of construction is an area of major concern that has been debated and highlighted at various forums including the National Assembly. The MoWHS has submitted a report to the NA which details steps to be taken to improve the quality of construction. However, unless the two major causes of poor quality construction which are inferior/spurious building materials and inadequately skilled workers are addressed, improvements in quality will be insignificant. There is a need to adopt construction techniques that are less dependent on intensive non-national labour whose skills are questionable and whose training cannot be taken up by the government since they are not regular construction workers in the country.
While there are more than 1700 contractors of all levels operating in the country, the competition is not healthy. On the one hand, particularly for larger works where only a few contractors may be qualified, bid prices run extremely high due to inadequate competition. On the other extreme, due to intense competition and the inability of some contractors to get jobs, impractically low prices are quoted which leads to compromises in quality or the inability to complete the job. Neither of these two scenarios is good for the construction industry and there is the need to stimulate healthy competition that would promote quality services as well as contractors’ skills and professionalism.
At the professional level (engineers and architects), there is a lack of exposure to modern technology and international best practices. Construction techniques applied in the country today are not much different to those that were introduced in Bhutan with the start of its modern socio-economic development more than 40 years ago. During the same time, construction technology has advanced to such a degree that in some advanced countries, they are already experimenting with the idea of a house being constructed by robots in 24 hours! While we are nowhere near such advancement, it is necessary for professionals in the industry to be exposed to techniques and materials that are prevalent in international markets that can be adopted in the country. At the working level, the industry is totally dependent on non-national workers whose skills can neither be certified nor upgraded. Therefore, there is the need to adopt techniques and practices that minimize labour requirements or allow substitution of imported labour by Bhutanese workers who can be both trained and certified.
For reasons such as weak regulatory authority and lack of professional ethics, the practices of fronting and collusion have become very rampant. Collusion among contractors leads to very high bid prices that are a burden on the government and fronting, particularly through non-nationals, stifles the professional growth of contractors while also creating room for compromises in quality since now the profits have to be shared between two parties. Strong legal instruments and strict enforcement are required to curb such malpractices.
All the ills of the construction industry have been rightfully or wrongly attributed to the engineers. While engineers cannot shirk from their duties and responsibilities, often, inspite of constant monitoring of projects, contractors are either unable or unwilling to provide the inputs that are required to complete the project to the specifications required. As the first tier in the construction process, the contractor is responsible to complete the project within the stipulated time and the given specifications. However, all accountability is placed on the government engineer causing loss of motivation and morale in the engineering community. Despite being the proverbial backbone of all socio-economic development, the government has not seen the need to provide any additional incentives to the engineering profession and with the new PCS system curbing the career growth of diploma engineers, there will be further loss of motivation and morale which could be damaging to the construction industry and further to the whole socio-economic development of the country.
It is standard procedure in the construction industry for the design to be done by the client, usually the government, and the implementation by a contractor. This creates a situation where any design defects detected during the construction process have to be referred to the designer who has to rectify the defect and then start a series of approval procedures that lead to delays and financial deviations. By implementing projects on a design and build basis, such problems would be minimized and project implementation would be smoother as the designing engineer/architect would be available with the constructor to supervise the construction and changes required could be made immediately. This would further have additional benefits in terms of contractors developing their professional capacities and the government being able to downsize their design units. Experience in other countries show that design and build projects usually promote “buildable” designs which means they are easier and faster to build.
Specialization is lacking in both the government and the private sector. In the government, engineers are required to be transferred every five years and usually, after five years of gaining experience in a certain field, an engineer can find himself starting afresh in a new field. In the private sector, a contractor, particularly in the lower categories, is usually also a retailer or a trader or a travel agent or maybe even a housewife! This does not lead to efficiency and professionalism but results in poor management and therefore, poor services. By default, big contractors are also owners of construction machinery so they also function as equipment hiring units which distracts from their primary responsibilities as contractors. Therefore, there is a need both in the government and the private sector to promote and encourage specialization.
As mentioned earlier, construction technology has not made any significant advances over the last 9 Five Year Plan periods. Heavy investment costs have hindered the speed of the mechanization process and thereby, the continued reliance on techniques and practices that are highly labour-intensive and requiring almost total fabrication of components at site. Such practices invariably result in poor quality construction unless the skills of the craftsmen or the level of supervision by a skilled supervisor is very high, which are very rare. Therefore, there is the need to adopt technologies where most of the components are prefabricated requiring only assembly at site. The onus of quality achievement must be shifted from the worker at site to the factory where the components are manufactured, usually by machines whose ability to achieve consistency and quality is greater than that of humans. This will also have the added benefit of requiring simpler training programs for the workers at site.
Construction costs in Bhutan are seen to be rather high compared to those within the region. Even within the country, costs can be almost double in places like Thimphu and Paro compared to costs in the border towns. It is evident, therefore, that costs are high because of higher transportation and labour costs. With the move towards more mechanization and prefabrication, it is expected that costs will rise further. However, the initial cost increase on these accounts should generally be offset by the gains in terms of improved quality, longer durability and the greater socio-economic impact of creating employment for Bhutanese youth replacing the imported work force. The other paradox that blights the construction industry in Bhutan is that while in other developing countries, locally available materials are encouraged primarily for their cost-effectiveness, here the “locally available materials” such as timber, sand and stone are becoming increasingly unaffordable. It is ironic that in a country that boasts of its vast natural resource base, we are already looking for things like timber substitutes. One of the reasons for the high costs of local materials is the way the resources are managed and distributed. The other reason is that usually the supplier of local materials is a monopoly and even where there is an apparent competition due to the presence of a number of suppliers, through collusion, supply again becomes monopolistic. With the shift in technology towards prefabrication and premixed concrete, more monopolies will emerge as the size of the market will not allow more than one or two players. There is the need, therefore, to prohibit monopoly and collusion and declare such practices liable for prosecution. It is suggested that in order to revitalize the construction industry and address the issues listed above, there is the need to provide interventions in three broad areas as under:
I. Technology Development 1.1 Situation Analysis The construction industry in Bhutan is characterized by low productivity levels that are a result of primitive construction technology that rely heavily on conventional building materials and intensive labour requirements. On the whole, local construction continues to use extensive wet trades on site which are labour intensive. Quality of the finished product is extremely dependent on the skills of the craftsman as well as the intensive supervision of them for quality assurance. While the growth of the construction sector has been fast-paced due to the government’s huge investments in infrastructure, the technology itself has not kept up concurrently. The main building materials are bricks and concrete and the technology of brick-laying and concreting are largely manual – practices that have been introduced in Bhutan since the erstwhile PWD started modern building construction about 30 years ago. Mechanization has made certain headway in areas such as excavation of foundations in buildings and formation cutting in roads but beyond that, manual methods that rely heavily on cheap imported labour are still predominant. The slow pace of mechanization and therefore low productivity can be attributed to the following factors:
The productivity levels in Bhutanese construction is extremely low and while this can be accepted as normal features of the industry in a developing country, it is now envisaged to build up the industry into a sophisticated one, able to undertake large, and technologically and managerially complex projects including high-rise buildings, high technology industrial installations, and large civil engineering works including underground structures. Such a transformation can only be achieved through dedicated government efforts through which the industry has benefited from the government’s understanding of its strategic importance, and its commitment to nurture a strong and competitive local construction industry. 1.2 Objectives The objective of enhancing productivity in the construction industry will be primarily to improve the quality of construction and reduce the total number of workers (mainly unskilled imported workers) deployed on construction sites through mechanization of the construction process and the use of prefabricated building components. Concurrently, such a development in technology will also have the following benefits:
The move towards prefabrication will also open up opportunities in allied industries such as component manufacturers, batching plants, etc. The flip side is that mechanization and prefabrication usually tend to cost more and seen against the backdrop of existing concerns on the high costs of construction in Bhutan, this could pose a threat to technology advancement. 1.3 Areas of Productivity Improvement 1.3.1 Roads The roads sector is seen as having a high potential for mechanization. However, this potential needs to be exploited within the short term since most other developments are dependent on road infrastructure. This is particularly so given the huge developmental activities envisioned in both the SGNH and the 10th FYP. Unless the roads sector is mechanized to a high degree, road infrastructure development, or rather the lack of it, will render meaningless, or at the very least, significantly dilute what could be achieved by the SGNH. Fortunately, the two inhibiting factors of cost and design may not be as serious obstacles in the roads sector. Firstly, as almost 100% investment in roads is made by the government, while cost of mechanization may be a cause of concern, it would not be as big an issue as it would be for private individuals. In fact, initial additional construction costs could probably be offset by improved construction quality, reduced construction periods and improved geometrics and durability. Secondly, in terms of design, while buildings have to be designed differently based on the components and technology used during construction, the design of roads will remain the same regardless of the method of construction. Mechanization in the roads sector can be done in the following areas: Formation cutting – Bulldozers, Excavators, Crawler Drills Base Course – Quarries, Chips Spreader Bitumen Sealing - Bitumen Sprayer, Motor Grader
In the building construction sector, productivity can be improved through a combination of mechanization and prefabrication. While studies in Bhutan have not yet been carried out, analysis of labour usage done in Singapore (1992) showed that 65% to 70% of construction labour are engaged in structural work and the “brick and mortar” finishing work such as external and internal brickwork, plastering and tiling. Largely, these figures would appear to hold good in Bhutanese conditions except that in our situation, we would need to factor in the timber works in roofing, flooring and joinery where labour usage is quite significant. There would, therefore, be considerable potential to raise productivity in these three areas and the major areas of focus are suggested as:
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