Construction industry

?Fugar and Agyarkwa-Baah (2010) in the study Delays in Building Construction constructed In Ghana synthesized a number of these factors towards highlighting their relevance in contemporary Ghana- ian construction practice. They concluded that the factors affecting construction performance could be classified under the following themes: materials, manpower, equipment, financing, environment, changes, government action, contractual relation- ships and scheduling and controlling techniques. Indeed, there is a lot of popular literature on factors affecting construction performance in Ghana.

Although these significant bodies of knowledge exist in the It is contended that, given that Local constructors account for over 95% of building firms operating in the Ghanaian Construc- tion Industry (GCI), and also in financial terms contributing substantially to construction GDP at decentralised and Local Government areas in Ghana, their evaluation of the knowledge of the factors influencing performance in the industry could be useful in deve loping a framework towards effective performance management and improve- ment in a very crucial sector of the GCI.

World Bank (2003) in their article “Registration of Construction Firms’ observed that fiscal constraints largely accounts for insecurity of funding for construction projects which creates a constant spectre of delayed payments. There is also,no doubt that these factors, especially those linked to finance and interest rates, are within the purview of the government’s fiscal policy (see, for instance,SSER, 2008). That is why, it makes practical sense to name factor 1 as fiscal policy-related. It also makes practical sense why f actors, such as availabil- ity of materials and availability of technology, should be classified under fiscal policy.

This is because, presumably, if access to finance and the enabling environment is addressed, there is a high possibility that these factors would, invariably, also be taken care of, especially if sound managementmprinciples are also adopted. However, it is not clear why the factor, “weather conditions”, also loaded onto the factor now termed fiscal policy. Perhaps, this is a manifestation of the fact that, there are certain logistics that could help small-scale contractors work in adverse weather conditions and these are funding-related Wells, J. (2007).

In the study Informality in the Construction Industry in Developing Countries find that The issue bordering on the managerial capacity for the Local constructors is also quite revealing. Thus, it is striking that the Local constructors are admitting to their own inadequacies, although this is also a long-held belief among many industry analysts. According to the study the reality is that, many Local constructors operate a ersonalised style of management without due regard to effective modern management practices and recruitment methods Kuruogul, M. and Ergen, E. (2000).

In the study “The Effects of Economic Development on Project Management in Developing Countries Here, the variables classified under managerial-related factor are all practically relevant even in modern-day Ghanaian construction practice. From the authors’ experience, factors, such as health and safety, site organisation, communication, interpersonal skills, availability of training proprietors and technicians, are all management-related and could be addressed by providing a holistic, but rigorous continuing profes- sional development management programme for small-scale contractors.

By their own admission, it should be possible for th e GoG and other stake- holders to collaborate with Local constructors towards devising a robust strategy to improve their managerial capac- ity regularly in the sector. As noted by Ganesan (1983), small-scale firms account for over 90% of all construction firms in practically all countries. Indeed, in many developing countries, practically all construction firms are small and the Ghanaian situation is no exception (cf. Ayisi, 2000).

Notwithstanding that these companies are described as small firms, their dominant role in building materials production and construction in many construction economies is well established (cf. Wells, 2007). Indeed, in Ghana, the contribution of Local constructors in terms of employment in the informal sector is quite significant.

Above all, they are responsible for engendering the accelerate develop- ment of many rural and local government areas where approximately 60% of Ghanaians make their living. However, against the background of fluctuat- ing and declining demand for projects, taxed with a deteriorating national economic environment, the challenges faced by these firms can be overwhelm- ing. Indeed, when account is taken of the difficult environment in which they operate, their perfor- mance could be described as satisfactory.

However, the reality is that, these firms must be competitive, if they are to survive and grow in an increasingly difficult business environmen t such as those pertain- ing in many developing countries south of the Sahara. As noted by numerous writers in the past (cf. Ganesan, 1983; Ofori, 1991;

Zawdie and Lanford, 2000), the most pressing problems facing small-scale contractors in many developing coun- tries are the same, namely, lack of finance, low labour productivity, shrinking demand arising from fluctuations in national construction output, capacity under-utilisation and inadequate technical assistance required for rationalisation. Interestingly, despite some modest improvement made in the economy of many developing countries, such as Ghana, in recent times (GSTDP, 2010), the above problems still exist and are undermining the capacity of most busi- nesses, including construction companies to grow and be competitive (cf. ISSER, 2008).

As a developing country, the role of the Ghanaian Construction Industry (GCI) in terms of its linkage to the agricultural sector and rural development is very much unquestionable. Subsequently, many of the local construction firms, particularly small ones, operate in rural areas to help stimulate local govern- ment development. As noted earlier, these firms, albeit small, could also be accounting for over 50% (cost-wise) of all building material production and nearly 80% of all short-term employment in many deprived communities in Ghana.

With the discovery of oil in commercial quantities, a massive flow of capital, both domestic and foreign, is expected to be attracted to undertake the necessary infrastructure in Ghana. Within this context, the construction indus-try is projected to grow at an unprecedented a rate of 13. 0% (ISSER, 2008).

Thus, contextually, key sector indications suggest that the GCI is strategi- cally well positioned to help engender the much-needed accelerated development of wider economy. However, many performance-related deficiencies exist that need to be addressed before the industry can become a major driver of economic growth and job-creation. Thus, the degree to which the GCI industry can maintain competitiveness and growth is to train highly skilled and adaptable workforce and also learn from effective modern management techniques from best practices.

The findings of this research should help generate renewed interest in a rigorous policy programme towards strengthening the financial position and managerial capacity of Local constructors. All in all, govern- ment, as the largest employer and regulator, has a lot to do in terms of streamlining fiscal policy direction towards making the operations of Local constructors competi- tive. W o r l d B a n k (1996), Westering ( 19 9 7) , Cr ow n Agents (1998) , World Bank (2003)

Payment difficulties and delays, poor coordination and communication structures, fiscal constraints and extensive controls, landownership disputes Fugar and Agyarkwa-Baah (2010) Materials related, equipment related, finance related, environmental re- lated, changes, government action, contractual relationship, scheduling and controlling techniques Edmonds and Miles (1984)

Delay in payments, lack of credit facilities, poor communication struc- tures, unreliable materials supply base The literature in Ghana identifies numerous poten- tial factors that could affect the performance of contractors on construction projects. For instance, qualitative evidence provided by Edmonds and Miles (1984) and Ofori (1984) about three decades ago revealed chronic delay in the payments of contractors for work done, lack of credit facilities for firms, poor communication structures and an unreliable material supply base.

Using quantitative analysis, Ahadzie (1995) also reported evidence of lack of finance and credit facilities for contractors, delay in the payment of contractors for work done, design changes and/or variations, low morale and motivation of craftsmen, poor planning, supervision and low mechanization, as some of the important factors that could be affecting construction perfor- mance (see also Owusu-Tawiah, 1998).

In their procurement of audit of Ghana, the World Bank (1996, 2003), Westring (1997) and Crown Agents (1998) have continuously reported documentary evidence of contracts taking very lengthy periods to reach financial closure and also, often subjected to unnecessary delays, poor coordination and commu- nication structures, fiscal constraints and extensive systems of controls and land ownership disputes. In a recent study, Fugar and Agyarkwa-Baah (2010) synthesized a number of these factors towards highlighting their relevance in contemporary Ghana- ian construction practice. They concluded that the factors affecting construction performance could be