CHP1 Construction Industry

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CE-332 CONSTRUCTIONENGINEERING AND MANAGEMENT

CONSTRUCTION INDUSTRY

LECTURER : DR. MEHMET GESOLU

UNIVERSITY OF GAZANTEPDEPARTMENT OF CIVIL ENGINEERING

Lecture 1


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CE-332 CONSTRUCTIONENGINEERING AND

MANAGEMENT

Textbook:

Construction Project Management,By Gould, F. E. and Joyce, N.E.

Prentice Hall, 2000.

Web Page:

http://www1.gantep.edu.tr/~aoztas/ce332-notes/
http://www1.gantep.edu.tr/~aoztas/ce332-notes/http://www1.gantep.edu.tr/~aoztas/ce332-notes/http://www1.gantep.edu.tr/~aoztas/ce332-notes/http://www1.gantep.edu.tr/~aoztas/ce332-notes/http://www1.gantep.edu.tr/~aoztas/ce332-notes/


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CHP1-COSTRUCTION

INDUSTRY Introduction

Type of Industry

Industry Sectors

(residential, building, heavy, and industrial)

Research and Development

Trends in Industry

(Demographics, Opportunities)

Conclusion


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Learning Objectives

In this chapter you will learn the following:

1. The principles characteristics that define the of

construction industry.2. The four major sectors of construction projects

3. The nature of research and development within

the construction industry.4. Current trends within the construction industry.


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Introduction

To form by assembling parts is dictionary definition

of CONSTRUCT,

but the phrase is a metaphor for the constructionprocess itself.

Divergent materials

Diverse group of people come together to make a

project possible. This is a Goal-oriented process

--> peculiar challenge to construction industry


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Introduction-2

More basic to our economy and daily life.

Designer have a visions; but until contractors builds,

those visions are just dreams on a sheet of paper.Synergy between construction and technological

development.

Example: skyscraper, invention of elevator.

Innovation of robotics and computer modelling alsoaffected industry . With robots directing

equipment during construction.


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What is ConstructionIndustry?-1

Look at any construction company, and you will find peoplefrom a variety of backgrounds.

Construction projects can be awe-inspiring in their breath andcomplexity, From Egyptian pyramids to soaring sky

skyscrapers and enormous bridges.It is a service industry. So, its success or failure depends on

qualities of its people rather than on its technology orproduct.

Construction sector does not require a patent or large capital

investment.Risk factor is much higher in construction.Reasons: Government funding, demographics

market trends, weather conditions, etc.


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Risk factor is much higher in construction.Reasons:a) Government funding, demographics

market trends, weather conditions, etc.b) Unpredictable nature of work itself.c) Any extremes can effect productivity level,

damage materials.

d) Custom oriented meaning: to use massproduction is difficult

e) Each project has its own learning curve.


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Financial institutions, medical services, accounting firms andreal estate companies : all involved in recent mergers,consolidations and conglomerations. However,construction is a study of contrasts.

At one time general contractors constructed entire projectwith their own work force.

Later projects are complex and sophisticated. So, industryturned to speciality trades. Contractor's role changed fromboss to manager.

However, in other aspects of industry, the reverse ishappening. Technical complexities are merging owners,contractors. And designers into more collaborative units

This trend is leading construction to its roots-AS THE MASTER BUILDER


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Turkish ConstructionIndustry-1

Following the textile and agriculture sectors, construction isthe third leading sector in Turkey.

There are 5,000 registered architectural practices and 10,000engineering firms in Turkey.

Today, Turkish construction and engineering companies areable to design, erect, build and operate almost all kinds ofcivil and industrial projects

Such as: Dams, hydroelectric and thermal power plants,industrial plants, airports and seaports, large scale

petroleum and natural gas pipelines, fertilizer plants,petrochemical complexes and refineries, motorways,tunnels, bridges, large housing projects, hotels and allkinds of sophisticated buildings.


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Bridge

Adana - OsmaniyeMotorway

Seyhan Viaduct


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AKMERKEZ


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Annual construction spend in 2000 was $10.5 billionexcluding building materials. Building materialsaccounted for an additional $5 billion, which is

10% of Turkeys industrial output, also 10% of totalexports.The sector is estimated to employ more than 1

million people (they are not continuouslyemployed, 80 % of the construction workers are

non-insured, and 98 % are non-unionized) andaccount for 8 to 10% of GNP. GNP in 2000 wasaround $201 billion.


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The construction and building material industries areboth positively correlated with the GNP growth ofthe country.

During 1991-98, growth in GNP averaged 4.5% and5.4% in the construction sector. The sector had adownturn in 1999, following the Asian and, inparticular, Russian crises.

In addition, in the second half of 1999, Turkey wasaffected by two major earthquakes in its north-western region, with estimated reconstruction costof $4-6 billion.


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A big boost to the Turkish economy came inDecember 1999, with Turkeys acceptance ofcandidacy to the EU membership. Following a

positive growth in 2000, the sector was badlyaffected due to the economic crises of November2000 and February 2001.

Negative economic growth, higher taxes and higherinterest rates along with continued delay in

important public tenders in accordance with theIMFs stand-by agreement, are the majordrawbacks for the Turkish construction industry in2001.


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Table-I Growth rates of the GNP and the Turkish Construction Sector.

Years GNP Growth (%) Construction Growth (%)

1991-1998 4.5 5.4

1999 -6.4 -12.7

2000 6.1 5.8

2001 -9.4 -5.8

2002 (Estimated) 3.0 Flat

According to the data compiled and averaged between the years of1970-1997 by the Turkish Contractors Association (TCA), the breakdown ofthe construction works by type of business is as follows: Housing 20%,Industrial 27%, Commercial 7%, Infrastructure 46%.


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The construction sector, has strong backwardlinkages with over 200 sub-sectors in theeconomy. The backward linkages of thesector is related with the input to theindustry. This makes over 200 subsectors,being strongly dependent and affected by

the construction industry.Thus, the sector plays a vital role in the

employment in the country.


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Industry Sectors

Since most owners are generally interested inacquiring only a specific type of constructed

facility, they should be aware of the commonindustrial practices for the type of constructionpertinent to them.

Likewise, the construction industry is a

conglomeration of quite diverse segments andproducts. Some owners may procure aconstructed facility only once in a long while andtend to look for short term advantages.


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Industry Sectors

However, many owners require periodic acquisitionof new facilities and/or rehabilitation of existing

facilities. It is to their advantage to keep theconstruction industry healthy and productive.

Collectively, the owners have more power toinfluence the construction industry than they

realize because, by their individual actions, theycan provide incentives or disincentives forinnovation, efficiency and quality in construction.


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Industry Sectors

It is to the interest of all parties that the ownerstake an active interest in the construction and

exercise beneficial influence on the performanceof the industry.

In planning for various types of construction, themethods of procuring professional services,

awarding construction contracts, and financing theconstructed facility can be quite different.


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Industry Sectors

For the purpose of discussion, the broadspectrum of constructed facilities may be

classified into four major categories, eachwith its own characteristics.

1. Residential

2. Building construction

3. Infrastructure and heavy construction

4. Industrial


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Residential Construction

Residential housing construction includes single-family houses, multi-family dwellings, and high-rise apartments.

During the development and construction of such projects, thedevelopers or sponsors who are familiar with the construction industryusually serve as surrogate owners and take charge, making necessarycontractual agreements for design and construction, and arranging thefinancing and sale of the completed structures.

Residential housing designs are usually performed by architects andengineers, and the construction executed by builders who hiresubcontractors for the structural, mechanical, electrical and otherspecialty work.


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Residential HousingConstruction

Residential Construction


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Building Construction

Institutional and commercial building construction encompasses agreat variety of project types and sizes, such as schools anduniversities, medical clinics and hospitals, recreational facilities and

sports stadiums, retail chain stores and large shopping centers,warehouses and light manufacturing plants, and skyscrapers foroffices and hotels.

The owners of such buildings may or may not be familiar withconstruction industry practices, but they usually are able to select

competent professional consultants and arrange the financing of theconstructed facilities themselves.

Specialty architects and engineers are often engaged for designing aspecific type of building, while the builders or general contractorsundertaking such projects may also be specialized in only that typeof building.


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Infrastructure and HeavyConstruction

Infrastructure and heavy construction includesprojects such as highways, mass transit systems,tunnels, bridges, pipelines, drainage systems andsewage treatment plants.

Most of these projects are publicly owned andtherefore financed either through bonds or taxes.

This category of construction is characterized by ahigh degree of mechanization, which hasgradually replaced some labor intensiveoperations.


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Construction of the DamePoint Bridge in Jacksonville,

Florida



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Industrial Construction

Specialized industrial construction usuallyinvolves very large scale projects with ahigh degree of technological complexity,

such as oil refineries, steel mills, chemicalprocessing plants and coal-fired or nuclearpower plants.

The owners usually are deeply involved inthe development of a project, and prefer towork with designers-builders such that thetotal time for the completion of the projectcan be shortened.


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Industrial Construction

Specialized IndustrialConstruction

Construction of aBenzene Plant in Lima,Ohio


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Research and

Development Traditional construction focuses on

cash flow and is almost completely

driven by projects and their schedules.So, there is a little incentives forindividual companies to invest in

research and development. International companies are starting to

challenge to this profile. Like Japanese.


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Trends in Industry

Has an image problem.

In fact, construction is a noblestprofessions. Working with your hands,solving problems in the field, workingcollaboratively with many other

disciplines to create a real product thatwill be handed to future generations:

----> This is construction


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Next Chapter

Chapter 2 - Project Participants

Documents

CHP1 Construction Industry