Challenges in Indian Construction Industry
Major research works on key challenges in India and how Baevr mitigates them
It is obvious from Google that construction industry is the second largest industry in India, employs over 32 million people, or 16% of the working population, adding about a million per year, contributes 5.7% of GDP and constitutes 40% of investments. [Iyer, K.C., Jha, K.N., 2005] However, formal project management is rarely evident in the Indian construction industry and there is little planning for capability and professionalization [Sreepuram and Rao 2006]. We have conducted an extensive literature survey, and based on the studies conducted by universities in India and abroad, an exhaustive list of key challenges in the Indian construction industry is listed below. The list also provides our proposed mitigation strategies using Baevr software and Book of Knowledge from Adept Algorithms.
Executive Summary of Key Challenges & Mitigation Measures
|Mitigation using Baevr
|Shortfalls in proper standards for better project formulation
|Project formulation can be measurably standardized using Baevr
|Cash flow management
Payment Delays by clients
Bad debts and outstanding payments
Inadequate working capital
|A proprietary extension of earned value analysis is used for cash flow management in Baevr, which updates the cash flow calculations d=for every deviation in plan.
Lack of client involvement and competence
Lack of top management support
|Baevr enables a smooth communication means with the client and top management
|Need for better contractor selection system
Substandard and one-sided contracts
Focus of low prices at tender stage
|Contract organization can be standardized with complete clarity
Lack of trust between stakeholders
Inadequate governance by owners and transparency
|Baevr forms a transparent system of management information
|Lack of proper facilities for workers
Lack of safety measures to workers
|Baevr global database enumerates the facilities for workers and lists the provision of proper facilities in the project cost.
Lack of productivity benchmarks, standards/norms and KPIs
Lack of lean practices
|Baevr benchmarks and measures productivity, in fact, being a lean-management-based system
|Knowledge management systems at Baevr is incorporating quality objectives in the reporting structure.
Lack of professional advisors and consultants
Need for up-skilling construction professionals
Lack of systems and processes
|The BOK and reporting procedures establish a much-needed discipline for construction site
|Lack of innovation
Lack of technology adoption
Reluctance to adopt new work practices such as lean practices
|Adept algorithms compile existing technologies and methods in the construction industry, making it simpler to showcase and disseminate new technology.
|Improper supply chain management
|Baevr has a unique procurement planning system to control the irregularities in the supply chain
|Monitoring, feedback, coordination, conflict and knowledge of the project participants
|Baevr uses the same database for all project participants such as QS, planners, contract management, site reporting, billing and business development. This enables clear coordination among the participants.
Non-completion of projects on time
Waste of time, money and resources
|Control of schedule and budget are the prime prerogatives of Baevr software
|Following the systematic procedures make construction companies competitive
|Fluctuations in material cost
|Adept algorithms work on AI-based predictive mining of price fluctuations, using our Global resources cost database
|Acute shortage of skilled workmen
Adverse climatic conditions
Weak economy and consumer demand
|Not in scope
The references that we used in this study in the order of citation are as follows:
- Iyer, K.C., Jha, K.N., 2005, Factors affecting cost performance: evidence from Indian construction projects, International Journal of Project Management, 23(4)
- Sreepuram and Rao 2006 Proceedings of the World Conference for Design and Construction, INCITE/ITCSED 2006, New Delhi, India, November 2006, Vol. 4
- Santhosh Loganathan, Purushothaman Srinath, Mohan Kumaraswamy, Satyanarayana Kalidindi and Koshy Varghese. (2017) Identifying and addressing critical issues in the Indian construction industry: Perspectives of large building construction clients. Journal of Construction in Developing Countries, 22(Supp. 1)
- Shibani, A. and Sukumar, D. (2015); Coventry University, Coventry, England The Role of the Project Manager in Construction Projects in India. Chinese Business Review, volume 14 (6)
- Prof. V Srinivasa Raghavan and Karthik Kumar V [Problems faced by Small Scale Construction Contractors in India, International Research Journal of Engineering and Technology, (IRJET), May 2015]
Some MIS Reports produced in Baevr
A brief description of the findings in these researches is being discussed in forthcoming sections.
Findings by Construction Industry Improvement Initiative CI3 India
Santhosh Loganathan et al (2017) expect large investments to flow into infrastructure for rapid urbanization in recent future. However it is also observed that, in most of the developing countries, the construction industry has failed to play its expected role as an “engine of growth” by providing the basis for socio-economic development as even some of the rudimentary issues are still not being addressed adequately (World Bank, 1984; Wells, 1986; Ofori, 2006; Ofori, 2015).
To overcome this, it was contemplated to form a central body in the lines of Construction Industry Institute (CII) USA, Construction Industry Council (CIC) UK, Canadian Construction Innovation Council (CICC) and Construction Industry Development Board (CIDC) Singapore. The objectives of this body, called Construction Industry Improvement Initiative India – CI3 India were
- To identify current and imminent critical issues in the construction industry in India.
- To compile a roadmap for industry improvements in strategic high (and wide) impact domains.
- To launch (a) system improvement initiatives and (b) demonstration projects, in prioritized focus areas within the above strategic domains.
Ci3 India was kick-started with an inaugural first Regional Roundtable in Chennai at IIT Madras in October 2015. A second Regional Developers’ Roundtable was conducted in Mumbai in February 2016. The participants of the two Regional Roundtable were large building construction clients from Chennai, Bangalore, and Mumbai regions.
In the two Roundtables, CI3A identified the following challenges in the construction industry in the order of decreasing importance:
Procurement & Delivery
- Shortfalls in proper standards for better project formulation
- Lack of client involvement and competence
- Need for better contractor selection system
- Lack of trust between stakeholders
- Substandard and one-sided contracts
Productivity, Quality & Sustainability
- Acute shortage of skilled workmen
- Lack of proper facilities for workers
- Low productivity
- Lack of productivity benchmarks, standards/norms and KPIs
- Lack of innovation
- Hindrance to off-site (pre-cast/pre-fab) construction
- Inadequate quality
- Inadequate governance by owners and transparency
Construction Project Eco System
- Need for up-skilling construction professionals
- Improper supply chain management
- Lack of technology adoption
- Reluctance to adopt new work practices such as lean practices
Additional critical issues in the Second Round Table
- Inefficient design process management
- Uneconomical design codes and operational standards
- Outdated operational design codes
Other Studies in India
The study by Iyer & Jha identifies that the industry does not have the structure required for executing projects but, with some variation in opinion, this can be provided by project management. They also observe that the implementation of PM is/will be appreciated by clients, end-users and stakeholders, although some difficulty was foreseen in the acceptance of PM by the Indian construction industry. Coordination amongst project participants was found to be the most significant of all factors governing cost performance of projects, other factors being adverse climatic and economic conditions; unfavourable project-specific attributes; lack of top management support; monitoring, feedback, coordination, conflict and knowledge of the project participants; and reluctance to make timely decisions.
Shibani, A. and Sukumar, D. (2015) at Coventry University, England enumerated key challenges in the Indian construction industry, based on a survey of project managers as:
Gadekar and Pimplikar (2015) identified the success and failure factors of Indian construction companies. A survey was carried out among 30 construction companies. The ranking of the factors has been determined by using the point rating techniques. The finding from the research is cash flow management, insufficient capital and inadequate sales are the most important factors for the success of the construction companies among the large, medium and small-scale firms respectively. Prof. V Srinivasa Raghavan and Karthik Kumar V [Problems faced by Small Scale Construction Contractors in India, International Research Journal of Engineering and Technology, (IRJET), May 2015] identified, following problems faced by small scale construction contractors: