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The challenge of change for innovation in construction: A North Cyprus perspective
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Building and Environment 42 (2007) 1319–1328 www.elsevier.com/locate/buildenv
The challenge of change for innovation in construction: A North Cyprus perspective I˙brahim Yitmen Department of Civil Engineering, Faculty of Architecture & Engineering, European University of Lefke, Gemikonagi, Lefke, Kibris, Mersin 10-Turkey Received 23 August 2005; received in revised form 17 October 2005; accepted 31 October 2005
Abstract A vision of change for innovation within the perspective of revaluing the construction industry is essential to develop a culture of selfsustaining improvement, mutual recognition, respect and support in the long term in North Cyprus. The research attempts to put forward a case for a restructuring of the construction sector in order to deliver a step in change in quality of output and to realise maximum value to all clients, stakeholders and end users. The main objective of this study is to (1) determine current innovation practices and identify key issues that contribute to successful implementation (2) assess the existence and severity of barriers to change for innovation (3) propose solutions for overcoming barriers to change for innovation in construction industry and develop a framework to revaluate the construction industry. The research includes an extensive literature study, interviews with managers on the challenge of change for innovation in construction, analysis of this information to develop findings, and extending these to present the key strategic issues that could be targeted for revaluing the construction industry. The paper commences on understanding the firms’ own processes and detecting their weaknesses and strengths, determining the strategies and actions that should be made in the short term to adopt innovation practices and helping the North Cyprus construction industry to learn as a whole. The paper concludes how the drivers of change for innovation can offer benefits to construction firms in North Cyprus if appropriate strategies are adopted. r 2005 Elsevier Ltd. All rights reserved. Keywords: Change; Innovation; Revaluing construction industry; North Cyprus
1. Introduction Construction is often typified as: confrontational, lacking vision, risk averse and engaged in ‘‘cut throat’’ competition, exacerbated by a lack of trust, inappropriate contracts and poor communications, involving uninformed team members and widespread organizational amnesia [1]. Around the world, construction processes and practices are under scrutiny. Changing markets, new technology and rising client expectations are stimulating radical reviews of how the industry can be re-engineered to enhance its performance [2]. The performance of the construction industry in terms of productivity, quality and product functionality has been low in comparison to other industries, and a low rate of innovation has been provided as the major explanation to this situation [3]. Construction Tel.: +90 533 867 3363; fax: +90 392 727 7528.
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is commonly characterized as a backward industry, one that fails to innovate in comparison to other sectors. While the other sectors modernized through the introduction of interchangeable parts, then assembly lines, and then automation, construction retained its craft method of operation and fell further and further behind the rest of the manufacturing industry in terms of productivity, quality and hence value for money [4]. The construction industry development is a deliberate process to improve the capacity and effectiveness of the construction industry in order to meet the demand for building and civil engineering products, and to support sustained national economic and social development objectives [5]. A global research agenda has emerged from work undertaken over the last few years within the CIB to find ways to move the construction industry forward so that: the value jointly created is maximized and the resulting rewards equitably distributed. There are attempts in many countries to undertake strategic and structural
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reform of the construction industry. In many of these exercises, the construction industry is being revalued. The key objectives are to improve the performance of the industries, prepare them to face the perceived challenges in future, and hence to enhance the image of the industries in these countries. During the past decade, several countries at different levels of development have undertaken comprehensive reviews of their construction industries and formulated long-term plans for improving their performance. The reviews were undertaken because of perceived weaknesses of the industries, and internal and external threats and challenges. In particular, there was evidence that clients, users and other stakeholders were dissatisfied with the performance of the industry. There were also expectations of greater complexity of future constructed items in increasingly sophisticated economies; technological and social change; and globalization was leading to competitive pressures at home and abroad. For developing countries, it is important for the construction industries to be improved owing to their critical role in the national economies, and in long-term socio-economic development. These industries have been taken for granted by governments and the societies, and have failed to attain their potential. Indeed, their performance has been unsatisfactory from the point of view of clients and users, as well as governments. It is time to revalue the industries in order to improve their performance and enhance their image. This revaluing exercise should involve all the stakeholders of the construction industries [6]. As the 20th century waned, technology raised the bar of global economics and spawned an era where change and innovation are inextricably linked. This view of organizational change involves examination of the perspectives and behaviors required for innovative change [7]. Innovation in the construction industry refers to the process of development, distribution and application of technologies a new or improved product, process or service and knowledge with the purpose to improve productivity and to suit the customer’s requirements [8]. Toole [9] defines innovation process as application of technology that is new to an organization and that significantly improves the design and construction by decreasing the cost, increasing the performance, and improving the business process. Mottowa et al. [10] emphasizes innovation in construction as the process through which new ideas turn into new components of constructed products that have economic, functional, or technological value. Construction presents important opportunities for innovation. Current competitive conditions and owner demands for cost effectiveness provide strong incentives. Examining mechanisms for innovation rather than barriers to technical progress is one means to stimulate advance. Tatum [11] described several advantages and disadvantages which the construction industry presents for innovation. The advantages include project organization, necessity and challenge, engineering and construction integration, low capital investment, capability and experience of key personnel, process emphasis, and
variation in methods. Major disadvantages for construction include investment reluctance, competitive conditions, institutional framework, seasonal and economic cyclicity, and the role of suppliers. Based on these conditions, a set of hypotheses was developed (project demands, individual initiative, construction input to design, and transfer from other industries) concerning possible mechanisms for innovation in construction. Driving forces in the construction industry indicate that the ability to innovate is quickly becoming a competitive necessity. Changing needs of owners, changing designs of constructed facilities, and increased foreign competition for domestic construction markets provide new incentives for advanced construction technology [12]. Tatum [13] described a process for innovation in the construction firm, based on an investigation of several new construction methods. Innovation-led performance improvement in the construction industry is significantly influenced by the innovation performance of small firms. The type of innovation undertaken, and the different organizational factors which are brought into play, is shown to depend on the characteristics of the interaction environment in which the firm is operating. Small construction firms need to incrementally nurture, or identify and move into, supportive enabling interaction environments. This is achieved through an integrated development of a firm’s business strategy and market positioning, organization of work, technology and people [14]. Nowadays construction firms are increasingly forced to offer their clients innovative solutions. The importance of innovations as an instrument of competition is steadily growing [15]. The innovation potential of the firms depends on their ability to acquire existing knowledge, to create new knowledge and to make use of it for the realization of new constructional solutions. Drucker [16] emphasizes ‘‘Innovation, that is the application of knowledge to produce new knowledge’’. Thus knowledge plays a critical role in creating and sustaining competitive advantages of construction firms, as it represents the principal source of new or improved services, products or processes [17]. Moreover, the management of knowledge is seen as a critical success factor to maintain and enhance the capability to innovate [18–20]. The pressure on construction firms to continuously look for innovative constructional solutions is increasing. Because innovations represent newly developed, combined or enhanced knowledge, construction firms are confronted with two questions. First, which kind of knowledge for realizing technological innovations is strategically relevant for the firms and second, how should the firms procure the knowledge necessary to put an innovative solution into practice [21]. Pries and Janszen [22] analyzed the innovative and strategic behavior of the construction industry and the companies within that sector. A clear relationship between innovation and the environment of the industry was shown. Companies in the construction industry will have to compete in a more extrovert and market-driven way and they will have to reconsider their capabilities. Specialization and diversification on various subjects are probably
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the most important strategic choices. Innovation creates possibilities of achieving competitive advantage, but only when damaged properly. Innovation in the construction industry is influenced by various factors. These influences are divided into five groups: market, product, management, building process and sector characteristics. Slaughter [23] presented five models of construction innovation categorised as incremental, modular, architectural, system and radical, which can provide a basis upon which companies can select and implement the innovations. Based upon current management and economic theories of innovations, the models reflect the unique conditions of constructed facilities, including the scale, complexity, and longevity of the facilities, as well as their organizational and social contexts. Seaden and Manseau [24] developed a conceptual model for the analysis of innovation in construction to describe the linkages between the business environment, business strategy, innovative practices and business outcomes. It is evident that both market forces and company resources are important determinants of the innovative capability of a company, and their respective dominance for the success of innovations can only be investigated from a multidimensional perspective. Dikmen et al. [25] developed a conceptual framework to investigate value innovations within construction companies in Turkish construction industry. A visual metaphor has been defined to model the innovation system where the elements of the model are objectives, strategies, environmental barriers/ drivers, and organizational factors. Construction industry in North Cyprus is aware and recognizes the need to modernize in order to tackle the severe problems it is encountering, namely, Profitability, Research and Development, Training, Price and Cost, Dissatisfaction of Clients and Fragmentation. The necessary conditions for competitiveness for the North Cyprus construction industry include strong and sustained levels of productivity growth, openness to innovation and new technology and a commitment to delivering value for clients’ money. There is growing interest in the role of innovation within the North Cyprus construction industry [26]. Compared with other industries, there are constraints placed on innovation within construction because of the characteristics of the industry. These include the adversarial culture and fragmentation of the different participants in most construction projects, the project based nature of construction. Projects are discontinuous and temporary and there are often poor linkages between project and business processes. Also the environment within which most organizations operate is changing rapidly. Organizations failing to adapt and respond to the complexity of the new environment tend to experience survival problems, sooner or later. The construction industry has been continually criticised for not achieving the level of improvement in performance and productivity shown by other industrial sectors. This has created a national need for reform to challenge the change for innovation in construction. New challenges require new approaches. A vision of change for innovation within the
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perspective of revaluing the construction industry is therefore essential to develop a culture of self-sustaining improvement, mutual recognition, respect and support in the long term. The key issues facing construction industry in North Cyprus and needed to be addressed to revalue the construction industry are global competitiveness, organizational culture and change, usage of IT, performance measures and benchmarking for continuous improvement, best practices for constructability, and sustainable development. The research covers a lot of ground, but the main contribution are derived from the results of survey studies conducted to the contractors in North Cyprus construction industry. The research focus is to investigate the challenge of change for innovation in North Cyprus construction industry. The main objective is to (1) determine current innovation practices and identify issues that contribute to successful implementation (2) assess the existence and severity of barriers to change for innovation (3) propose solutions for overcoming barriers to change for innovation in construction industry and develop a framework to revaluate the construction industry. 2. Research method The research includes review of background literature, interviews with managers on building construction projects, analysis of this information to develop findings, and extending these to present the key strategic issues that could be targeted for the challenges of change within construction firms in North Cyprus Construction Industry in terms of innovation. The empirical data was collected through structured interviews within the main large private sector construction organizations. The paper deals with the results of questionnaire surveys conducted by research members of European University of Lefke (EUL), Department of Civil Engineering M.Sc. in Construction Management Program. Main topics in the questionnaires were as follows: i. General information about organizations. ii. Globalization and competitive strategies. iii. Organizational culture, cultural changes and its impact on construction performance. iv. Measuring the benefits of IT usage in construction. v. Performance measures and benchmarking for continuous improvement. vi. Establishment of Corporate Constructability Program, Planning Constructability Implementation, Implementing Constructability and Updating Corporate Program. vii. Barriers, Challenges and Opportunities for Sustainable Construction.
2.1. Literature review This stage involves a thorough review of literature about the key issues involving organizational culture and its
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impact on construction performance; globalization and competitive strategies for sustainable construction in a developing country; the opportunities of establishing the framework of performance measures and benchmarking implementation aligned with the contracting firm’s competitive strategy; the perspectives of the IT Performance framework; the implementation of performance measurement systems that include measures adapted to constructability and that can be a real driver for continuous improvement of project processes. The intensive literature review resulted in the identification of six Drivers of change for innovation in construction perceived to be effective in terms of Processes, Perspectives, Indicators and Measures. Categorization and context of the Processes, Perspectives, Indicators and Measures for innovation in construction are presented in Table 1. The Drivers of Change for innovation in construction are as follows: (a) (b) (c) (d)
Globalization and competitive strategies. Organizational culture and cultural changes. Usage of IT. Performance measures and benchmarking for continuous improvement. (e) Best practices for Constructability Implementation. (f) Sustainable development.
2.2. Data collection The second stage involved the collection of data. A questionnaire, which was administered to almost all the firms registered to the Association of Building Contractors, has been used in conducting the survey. The survey includes seven main types of information involving Organizational structure, Globalization and Competitiveness in construction industry, Organizational Culture and Cultural Changes, Impact of Usage of Information Technology, Performance measurements and benchmarking for continuous improvement within construction firms, Best practices for Constructability Implementation, Sustainable Construction, and Procurement systems used by construction firms. i. Organizational structure: General company characteristics were sought which include the general functions of service areas of the organizations, size of the organizations involving the production, firms’ turnover, number of permanent employees, human resources and development and target group of customers. ii. Globalization and competitiveness in construction industry: This portion of the questionnaire was used to analyze the globalization and competitive strategies applied by organizations for winning contracts, bidding strategies in the global market and impact of globalization (advantages and disadvantages) on construction industry.
iii. Organizational culture and cultural changes: This portion of the questionnaire was used to analyze the effect of culture on organizational structure and the management of cultural changes due to increased competition, globalization, mergers, acquisitions, alliances, and various workforce developments. iv. Impact of IT usage: This portion of the questionnaire was aimed to find out the organizations’ investment on Hardware, Software, Operating Systems, Networks (LAN, Intranet, Extranet) and communication systems between the functional departments within the organization. v. Performance measurement and benchmarking for continuous improvement: Variables and management dimensions affecting the implementation of performance measurement systems and benchmarking were analyzed. vi. Best practices for constructability implementation: This portion of the questionnaire was used to address the steps necessary in establishing a corporate-level constructability program, the steps leading to effectively planning for constructability implementation, the steps for implementing constructability, and the steps for updating a corporate program for contractor organizations. vii. Sustainable development in construction: This portion of the questionnaire was used to analyze the potential barriers existing in the construction sector such as lack of capacity of the construction sector, an uncertain economic environment, lack of accurate data, lack of interest of stakeholders for sustainability and lack of integrated research. Also the challenges and opportunities available for the sector involving public awareness, making sustainability a priority, effective use of resources and improvement of the quality of the construction process and methods were analyzed. The questionnaires were designed using a nominal scale for the real values of the independent variables. In evaluating the dependent variables, a scale of 4 intervals (with a ‘0’ value given to no effect, ‘2’ to a middle value, and ‘4’ given to maximum effect). The respondents were asked to check a number on the scale, which reflects their assessment regarding the different factors to be effective in drivers of change for innovation. A list of all contractor organizations within the construction sector was obtained from the Association of Building Contractors. The list consisted of a total of 30 organizations. An attempt was made to contact every single organization. In this particular survey, the sample size n ¼ 20. During the survey 30 organizations were contacted and 20 (%66) of these questionnaires were evaluated. Contact personnel in the companies for the questionnaire survey were either the top management or senior management in their respective departments, therefore their level of knowledge expected to provide responses was acceptable for the purpose of validity of the survey results.
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Table 1 Categorization and context of processes, perspectives, indicators and measures for innovation in construction No
Categorization
Context
1
Processes
2 3
Perspectives Indicators
4
Measures
Planning (Strategic Plan, Preliminary Feasibility, Final Feasibility), Design (Program or Conceptual Phase, Pre-schematic Phase, Schematic Phase, Design Development Phase, Construction Document Phase), Construction (Sitework, Shell, Interior), Procurement (Prior to Completion of CDs, after completion of CDs), Occupancy (Prior to Completion of CDs, after completion of CDs) Operational, Benefits, Technology/System, Strategic Competitiveness, User orientation Deviation of Cost by Project, Deviation of Construction Due Date, Change in Amount Contracted, Accident & Risk Rate, Efficiency of Direct Labor, Productivity—performance, Rate of Subcontract, Cost Client Complaints, Effectiveness of Planning Enterprise level, Business unit, Construction project level
3. Findings This section of the study discusses the challenges of change within construction firms in North Cyprus Construction Industry in terms of innovation. The participating contractors provided numerical scoring expressing their opinions on the significance of factors to be effective in drivers of change for innovation for determining the current innovation practices and identifying issues that contribute to successful implementation, assessing the existence and severity of barriers to change for innovation, and presenting the key strategic issues that could be targeted for revaluating the North Cyprus Construction Industry. The weighted average for each factor was calculated and then it was divided by the upper scale of the measurements in what is referred to as ‘‘importance index’’ therefore the level of important of the factors in drivers of change versus processes, perspectives, indicators and measures were calculated using the Kish’s formula [27]. Table 2 shows the matrix of significant factors perceived by respondents to have an influence on drivers of change for innovation versus Processes, Perspectives, Indicators and Measures. The X-axis of the matrix indicates processes, perspectives, indicators and measures. Y-axis of the matrix indicates drivers of change for innovation. The most significant factors were highlighted in the appropriate cells of the matrix. The factor Cultural Changes, Organizational Structure and Work Force (Education Level) perceived by respondents to have an influence on the driver of change for innovation, ‘‘Organizational Culture and Cultural Change’’, ranked #1, carries the highest level of importance (Importance Index Value ¼ 57) versus Processes. The factors Enhanced coordination between project participants, Established and supported the project organization, Enabled realizing cost savings, Enabled streamlining processes, Secure against unauthorized use, Appropriate for application/function and IT Tool, and Operational Performance, Research into Emerging Technologies, Competitive Advantage, Contribution to Business Competitiveness, Strategic Value to Business, User Satisfaction and Individual Impact perceived by respondents to have an influence on the driver of change for innovation, ‘‘Usage
of IT’’, ranked #2, carries the highest level of importance (Importance Index Value ¼ 57) versus Perspectives and Measures respectively. The factor Production System, Cost and Due Date Control and Scope of Project perceived by respondents to have an influence on the driver of change for innovation, ‘‘Performance Measures and benchmarking for Continuous Improvement’’, ranked #3, carries the highest level of importance (Importance Index Value ¼ 42.5) versus Indicators. The factor Partnering and Joint Venture perceived by respondents to have an influence on the driver of change for innovation, ‘‘Globalization and Competitiveness’’, ranked #4, carries the highest level of importance (Importance Index Value ¼ 57) versus Measures. The factor Advanced Information Technologies are applied throughout project, Project planning involves construction knowledge and experience and Project team participants responsible for constructability are identified early on perceived by respondents to have an influence on the driver of change for innovation, ‘‘Best Practices for Constructability’’, ranked #5, carries the highest level of importance in Processes. The factor Efficiency of Use, Education, Health and Safety and Participation and Control perceived by respondents to have an influence on the driver of change for innovation, ‘‘Sustainable Development’’, ranked #6, carries the highest level of importance (Importance Index Value ¼ 42.5) versus Processes. 3.1. Discussion of survey The ability to foster innovation is frequently cited as the key to a successful modern economy. Given this emphasis on innovation it is worthwhile considering what the key drivers are for change in the construction industry and what are the associated implications of these drivers? If it is true that innovation is necessary for a successful economy and for the competitive advantage of the companies that shape it, it will be those companies that can adapt to these changes that will be successful. Innovation is as a key element of a successful modern economy and by implication for those companies that comprise that economy. At the same time, and reinforcing this idea, the construction industry is faced by a whole range of challenges which occur at a relentlessly increasing pace [28]. The key issues
Rank
4
1
2
3
5
6
Mean imp. ind.
35.625
46.125
42.75
39.125
28.5
25
Sustainable development
Performance measures and benchmarking for continuous improvement Best practices for constructability Advanced Information Technologies are applied throughout project, Project planning involves construction knowledge and experience and Project team participants responsible for constructability are identified early on, Imp. ind. value ¼ 42.5 Efficiency of Use, Education, Health and Safety and Participation and Control, Imp. ind. value ¼ 42.5
Imp. ind. value ¼ 14.5
Imp. ind. value ¼ 14.5
Imp. ind. value ¼ 28.5
Imp. ind. value ¼ 28.5
Production System, Cost and Due Date Control and Scope of Project, Imp. ind. value ¼ 57 Imp. ind. value ¼ 28.5
Imp. ind. value ¼ 14.5
Imp. ind. value ¼ 42.5
Imp. ind. value ¼ 28.5
Enhanced coordination between project participants, Established and supported the project organization, Enabled realizing cost savings, Enabled streamlining processes, Secure against unauthorized use, Appropriate for application/ function and IT Tool, Imp. ind. value ¼ 57 Imp. ind. value ¼ 28.5
Imp. ind. value ¼ 28.5
Operational Performance, Research into Emerging Technologies, Competitive Advantage, Contribution to Business Competitiveness, Strategic Value to Business, User Satisfaction and Individual Impact, Imp. ind. value ¼ 57
Imp. ind. value ¼ 42.5
Imp. ind. value ¼ 42.5
Partnering, Joint Venture Imp. ind. value ¼ 57 Imp. ind. value ¼ 42.5
Measures
Cultural changes, Organizational structure, Work force (education level), Imp. ind. value ¼ 57 Imp. ind. value ¼ 28.5
Imp. ind. value ¼ 28.5
Indicators
Imp. ind. value ¼ 28.5
Perspectives
Imp. ind. value ¼ 28.5
Processes
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Usage of IT
Globalization and competitiveness Organizational culture and cultural change
Drivers of change for innovation
Table 2 Matrix showing the significant factors in effective drivers of change for innovation in construction
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Globalization and Competitivenes
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IT Revolution
Organizational Culture and Change
Performance Assessment Tools Performance Measurement Continuous Improvement
Improving Capacity Better management solutions
Benchmarking
Sustainable Development
Efficiency
Best Practices
Fig. 1. Model framework of drivers of change for innovation in construction industry development: A North Cyprus perspective.
facing the construction industry in North Cyprus and needed to be addressed to revalue the construction industry are summarized as follows, and also a model framework illustrating the relationship and interaction between the drivers of change for innovation in construction industry development is presented in Fig. 1. 3.1.1. Globalization and competitive strategies The interviews and observations highlighted that the process of globalization is inevitable. Considering the strategies that are commonly used in teaming up with foreign firms, joint venture and partnering are the most beneficial strategies in construction services. Joint venture would be a preferable strategy because it enables collaboration between the parties involved on a long-term basis, as compared to partnering that is often limited to one-off projects. Joint ventures are formed to provide global market change where each partner brings specialist expertise. This assists in searching out cheaper sources of material, equipment and personnel outside the home country. Therefore, if proper mechanisms are put in place, these global strategies could benefit construction firms in developing countries [29]. 3.1.2. Organizational culture and cultural changes The interviews and observations highlighted that culture is a powerful force that can shape the firm’s overall effectiveness and long-term success. It affects virtually all aspects of organizational life from the ways in which people interact with each other, perform their work, and
dress, to the types of decisions made in a firm. Effective and efficient management of contractors’ organizational performance requires commitment to effective performance measurement. Effective in the sense that, it should enable organizations to evaluate, control, and improve their performance today and in the future. The development, implementation and use of adequate performance measurement and management frameworks is one of the major challenges confronting organizations and plays an important role in their success. Coordination and integration across organizational units in order to improve efficiency, quality, and speed of designing and constructing is a result of revolutionary and comprehensive efforts to change the culture of the entire organization through the impact of cultural issues on contractual arrangements for construction projects [30]. 3.1.3. The impact of IT usage The interviews and observations highlighted that contractors are clearly utilizing IT as a support tool for operational efficiency raising productivity in most business processes. There is a common basis for all organizations to evaluate both the potential costs and benefits of new systems, and the performance of systems after implementation. Contractors are willing to make long-term investment on IT if there is clear evidence of business benefits. This has raised productivity in most business processes and has resulted in an increase in the quality of documents used and in the speed of work, better financial controls and communications, and provided an added value improving
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their position within the sector. On the other hand, possibility of low profit margins and unavailability of initial funds are major risk factors hindering the uptake of IT in construction. Furthermore, contractors are finding IT to be their most strategic plan in meeting increased competition in construction market by redesigning and continuously improving their production and operational processes. Contractors have efforts to improve competitiveness through integration of information and processes and enable it to collaborate more effectively in an increasing global market. Executives address the need for intelligent integration of information in supporting decision-making for effective management in all stages of construction [31]. 3.1.4. Performance measures and benchmarking for continuous improvement In North Cyprus there is a potential exists to improve industry performance relative to a range of measures— defined work processes, people involvement and organizational learning through the processes identify and reduce waste, time performance measurement and cost performance measurement to be contributing to the best practice programs which include benchmarking, constructability of design, skills training of workers, security of/timely payment, and foreman/supervisor development, predominating [32]. The interviews and observations highlighted the necessity of creating and maintaining an optimal work environment and production system. Furthermore, the work process or production system must be aligned with the workers’ needs—i.e., work is made more convenient for the worker—as much as workers must align themselves with the system. Thus there will be an increase in the performance of the workers leading to higher productivity rates. An important aspect of cost control is cost and schedule integration. This integration is required because of the tight linkage and interdependency between cost and schedule. Simply stated, any impacts to the schedule will result in impacts to the cost (or vice versa) of a project. The client’s value parameters have to be stated clearly at the outset of the project during conceptual planning process and their fulfillment have to be monitored systematically through the project life cycle. This is a benchmarking tool for companies to use in evaluating completion of scope definition versus the performance of past projects, both within their company and externally, in order to predict the probability of success on future projects [33]. 3.1.5. Best practices for constructability implementation The interviews and observations highlighted that there must be an efficient utilization of Information Technology tools for the storage of historical data. These data are stored by computerized databases. These databases must include lessons learned from the constructability program as part of the project control system (e.g. budget amounts, change orders, and purchase orders). Gaining knowledge from past experience is essential to any successful
constructability program. Lessons learned are usually communicated by project kick-off meetings, informal conversations, project meeting notes and post-project review meetings. At the design phase an organizational chart must be drafted identifying the constructability team participants and delineating their roles [34]. 3.1.6. Sustainable development The interviews and observations highlighted that sustainable development (including technology specified) is designed and managed to be highly efficient and effective, achieving high productivity levels with few resources and limited waste and pollution. Briefing helps to establish the level of commitment by the client to unstainable development at the outset of the project and enables the client and the design team to monitor design development against an explicit performance brief. There is a shared understanding about sustainable development and strong commitment to addressing this amongst all stakeholders in the project. Site analysis aimed to ensure that the project, where possible, helped to address local social, environmental and economic problems, using, where available and appropriate, local resources. Target Setting is used to develop detailed sustainable development performance targets for the building. This draws on a range of information. The site analysis is used to provide a description of the local context in terms of problems and resources. Finally, benchmark performance figures for similar buildings in similar contexts are required. All of this information is then used to develop a detailed set of achievable, but challenging performance targets for the building. Design development enables the performance of different designs and strategies to be evaluated and the best options chosen. Extensive monitoring of site and construction processes is also required. Sustainable development issues should be addressed in tender documents and covered by the contract and a detailed briefing to the contractor. This enables the contractor to understand the requirements of the project and provides recourse if these requirements are not met. Development improves levels of education and awareness, including awareness of sustainable development. Sustainable development considers human rights and supports improved health, safety and security. Site Analysis investigates the site in terms of Social, Economic and Environmental aspects in order to establish the context in terms of problems to be addressed and potential resources that can be used. Target setting uses outputs from the briefing workshop to establish the level of commitment by the client to sustainable development and the capacity and understanding within this area by the design team. The design is to be tested back against the target document. This will support the rapid evaluation of different decisions as it enables the ‘performance’ of an approach to captured readily. Construction monitoring includes tender documentation and site checklists. Sustainable development supports interaction, partnerships and involves, and is influenced by, the people that it affects. Participation of
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people is the key to achieving decisions needed to secure changes in the consumption patterns of the majority of the population. It is important to develop campaigns that on one hand inform the public regarding the benefits and opportunities of the use of environmentally friendly building materials and products, and on the other, encourage the change of consumer habits towards a more sustainable use of resources [29]. 4. Conclusions This paper presents a survey study involving the key issues facing construction industry and needed to be addressed to revalue the construction industry in North Cyprus. The research attempts to put forward a case for a restructuring of the construction sector in order to deliver a step in change in quality of output and to realise maximum value to all clients, stakeholders and end users. In summarizing the results of the survey study:
It is necessary to reconsider the arrangements and procedures of the developing construction industry in North Cyprus. Effort is required to reflect the cultural attributes and values of a developing country in its construction practices and procedures. In particular, effort should be made to formulate procurement approaches which enable and facilitate the integration of the construction process in the context of the country. IT usage in North Cyprus construction industry has to be increasingly implemented for strategic reasons, so as to enable improved efficiency, better control and enhanced productivity of internal processes. As competition continues to intensify, construction organizations have to invest large amounts of resources into IT as they seek to gain competitive advantage in construction industry. The interviews show that if construction organizations are willing to invest in setting up a comprehensive IT performance measurement framework, then they will be rewarded by the results that translate business strategies into action. This is only possible through being innovative, investing in people and the required technologies and finally by creating an IT infrastructure and culture that would support their competitive strategy and corporate goals. One of the principal barriers to promote improvement in construction projects is the lack of appropriate performance measurement. For continuous improvement to occur it is necessary to have performance measures which check and monitor performance, to verify changes and the effect of improvement actions, to understand the variability of the processes, and in general, it is necessary to have objective information available in order to make effective decisions. Performance measurement and benchmarking will provide management with invaluable feedback to guide daily decision-making in contracting firms. By regularly using such feedback, management will become more compe-
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tent by achieving the most optimum outcomes in constructional operations and meeting the growing needs of the North Cyprus construction sector. In North Cyprus, clients are increasingly becoming aware of the benefits of constructability review. They require buildings to be completed on time and within the tender price. These buildings should be of sufficient quality and easy to operate and maintain. Good constructability has been shown from experience to speed up construction, improve standards and lower costs. The time or cost ‘saved’ in the design process by inadequate attention to constructability is, lost over and over again during construction. Poor constructability can lead to lower standards of construction. The more complex the assembly of the structure is, the greater the number of operations and specialist trades required. New developments in the construction industry highlight the importance and continued relevance of constructability.
It can be concluded that the socio-economic components of sustainable construction are viewed to be the most challenging in North Cyprus. Construction industry hold knowledge and values that can contribute to a new vision for development, as well as the practical know-how needed to make it work. To ensure sustainable construction at all levels, long-term strategies must envision the processes of manufacture, the use of appropriate technologies and appropriate materials, and the creation of sustainable livelihoods. References [1] Barret P. The global agenda for revaluing construction. University of Salford; 2004. [2] Barret P, Lee A. Revaluing construction: an international survey questionnaire results. The Netherlands: CIB; 2004. [3] Winch GM. How innovative is construction? Comparing aggregated data on construction innovation and other sectors—a case of apples and pears. Construction Management and Economics 2003;21(6): 651–4. [4] Alinaitwe H, et al. Labor productivity in the building industry. In: Proceedings of 11th joint CIB international symposium, combining forces. Advancing facilities management and construction through innovation. Understanding construction business and companies in the new millenium, Fillandia Hall, Helsinki, Finland, June 13–16. 2005;(1):210–20. [5] CIB. Agenda 21 on sustainable construction. The Netherlands: CIB; 1999. [6] Ofori G. Revaluing construction in developing countries. Synopsis paper, CIB Revaluing Construction; 2005. [7] Hattori RA, Lapidus T. Collaboration, trust and innovative change. Journal of Change Management 2004;4(2):97–104. [8] Egmond ELC, Ligny W. Successful industrialisation, innovation and prefabrication in construction. In: Proceedings of 11th joint CIB international symposium, combining forces. Advancing facilities management and construction through innovation. Understanding construction business and companies in the new millenium, vol. (1). Fillandia Hall, Helsinki, Finland, June 13–16. 2005. p. 415–26. [9] Toole TM. Uncertainty and home builders adoption of technological innovations. Journal of Construction Engineering and Management 1998;124(4):323–32.
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[10] Mottowa IA, Price ADF, Sher W. The introduction and management of innovative construction processes and products. In: Proceedings of ARCOM conference, University of Reading, vol. (2). Reading, UK. 1999. p. 672–82. [11] Tatum CB. Potential mechanisms for construction innovation. Journal of Construction Engineering and Management 1986;112(2):178–91. [12] Tatum CB. Organizing to increase innovation in the construction firm. Journal of Construction Engineering and Management 1989;115(4):602–17. [13] Tatum CB. Process of innovation in construction firm. Journal of Construction Engineering and Management 1987;113(4):648–63. [14] Sexton M, Barret PS. Appropriate innovation in small construction firms. Construction Management and Economics 2003;21(6):623–33. [15] Sexton M, Barret PS. A literature synthesis of innovation in small construction firms: insights, ambiguities and questions. Construction Management and Economics 2003;21(6):613–22. [16] Drucker P. Post-capitalist society. New York: Butterworth Heineman; 1993. [17] Liebeskind J. Knowledge, strategy, and the theory of the firm. Strategic Management Journal 1996;17(Winter Special Issue):93–107. [18] Wiig K. Integrating intellectual capital and knowledge management. Long Range Planning 1997;30(3):399–405. [19] McAdam R. Knowledge management as a catalyst for innovation within organizations: a qualitative study. Knowledge and Process Management 2000;7(4):233–41. [20] Forcadell F, Guadamillas F. A case study on the implementation of knowledge management strategy oriented to innovation. Knowledge and Process Management 2002;9(3):162–71. [21] Hartman A. The strategic impact of knowledge and innovation in construction firms. In: Proceedings of CIB W102 2005 meeting and international conference information and knowledge management in a global economy, Lisboa, Portugal, 19–20 May. 2005. p. 425–34. [22] Pries F, Janszen F. Innovation in the construction industry: the dominant role of the environment. Construction Management and Economics 1995;13:43–51. [23] Slaughter S. Models of construction innovation. Journal of Construction Engineering and Management 1998;124(3):226–31. [24] Seaden G, Manseau A. Public policy and construction innovation. Building Research and Information 2001;29(3):182–96. [25] Dikmen I, Birgonul MT, Artuk U. Integrated framework to investigate value innovations. Journal of Management in Engineering 2005;21(2):81–90. [26] Yitmen I, Alibaba HZ. The impact of information technology usage on North Cyprus construction industry. Third FAE international
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symposium, creating the future. European University of Lefke, 25–26 November 2004. p. 129–35. Kish L. Survey sampling. New York: Wiley; 1965. p. 162. Abbott C, et al. Improving innovation diffusion: a case study approach to strategy development. In: Proceedings of 11th joint CIB international symposium, combining forces, advancing facilities management and construction through innovation. Understanding construction business and companies in the new millenium, vol. (1). Fillandia Hall, Helsinki, Finland, June 13–16. 2005. p. 115–26. Yitmen I. Globalization and competitive strategies for sustainable construction in a developing country: North Cyprus construction industry. In: Proceedings of the 10th international conference on durability of building materials and components, LYON—Palais des Congre`s—France, April 17–20, 2005. Yitmen I, Taneri C. Globalization and cultural impacts of procurement. In: Proceedings of the CIBW92 international symposium on procurement systems—the impact of cultural differences and systems on construction performance, vol. (1). Las Vegas, Nevada-USA, 8–10 February. 2005. p. 71–8. Yitmen I, Al Qadi S. Facing the challenges of information technology in construction: competitive strategies for North Cyprus construction industry. In: Proceedings of CIB W102 2005 meeting and international conference information and knowledge management in a global economy, Lisboa, Portugal, 19–20 May. 2005. p. 35–44. Yitmen I, Ozturk GB. Challenges of lean construction for competitive strategy: North Cyprus construction industry. In: Proceedings of the CIBW92 international symposium on procurement systems— the impact of cultural differences and systems on construction performance, vol. (2). Las Vegas, Nevada-USA, 8–10 February. 2005. p. 521–8. Yitmen I, Ozturk GB. Performance measures and benchmarking for competitive strategies: North Cyprus construction industry. In: Proceedings of CIB W102 2005 meeting and international conference information and knowledge management in a global economy, Lisboa, Portugal, 19–20 May. 2005. p. 669–78. Yitmen I, Akyel S. Challenges of best practices for constructability implementation: North Cyprus construction industry. In: Proceedings of 11th joint CIB international symposium, combining forces, advancing facilities management and construction through innovation. Understanding construction business and companies in the new millenium, vol. (1). Fillandia Hall, Helsinki, Finland, June 13–16. 2005. pp. 85–96.
Building and Environment 42 (2007) 1319–1328 www.elsevier.com/locate/buildenv
The challenge of change for innovation in construction: A North Cyprus perspective I˙brahim Yitmen Department of Civil Engineering, Faculty of Architecture & Engineering, European University of Lefke, Gemikonagi, Lefke, Kibris, Mersin 10-Turkey Received 23 August 2005; received in revised form 17 October 2005; accepted 31 October 2005
Abstract A vision of change for innovation within the perspective of revaluing the construction industry is essential to develop a culture of selfsustaining improvement, mutual recognition, respect and support in the long term in North Cyprus. The research attempts to put forward a case for a restructuring of the construction sector in order to deliver a step in change in quality of output and to realise maximum value to all clients, stakeholders and end users. The main objective of this study is to (1) determine current innovation practices and identify key issues that contribute to successful implementation (2) assess the existence and severity of barriers to change for innovation (3) propose solutions for overcoming barriers to change for innovation in construction industry and develop a framework to revaluate the construction industry. The research includes an extensive literature study, interviews with managers on the challenge of change for innovation in construction, analysis of this information to develop findings, and extending these to present the key strategic issues that could be targeted for revaluing the construction industry. The paper commences on understanding the firms’ own processes and detecting their weaknesses and strengths, determining the strategies and actions that should be made in the short term to adopt innovation practices and helping the North Cyprus construction industry to learn as a whole. The paper concludes how the drivers of change for innovation can offer benefits to construction firms in North Cyprus if appropriate strategies are adopted. r 2005 Elsevier Ltd. All rights reserved. Keywords: Change; Innovation; Revaluing construction industry; North Cyprus
1. Introduction Construction is often typified as: confrontational, lacking vision, risk averse and engaged in ‘‘cut throat’’ competition, exacerbated by a lack of trust, inappropriate contracts and poor communications, involving uninformed team members and widespread organizational amnesia [1]. Around the world, construction processes and practices are under scrutiny. Changing markets, new technology and rising client expectations are stimulating radical reviews of how the industry can be re-engineered to enhance its performance [2]. The performance of the construction industry in terms of productivity, quality and product functionality has been low in comparison to other industries, and a low rate of innovation has been provided as the major explanation to this situation [3]. Construction Tel.: +90 533 867 3363; fax: +90 392 727 7528.
E-mail address: [email protected]. 0360-1323/$ - see front matter r 2005 Elsevier Ltd. All rights reserved. doi:10.1016/j.buildenv.2005.10.032
is commonly characterized as a backward industry, one that fails to innovate in comparison to other sectors. While the other sectors modernized through the introduction of interchangeable parts, then assembly lines, and then automation, construction retained its craft method of operation and fell further and further behind the rest of the manufacturing industry in terms of productivity, quality and hence value for money [4]. The construction industry development is a deliberate process to improve the capacity and effectiveness of the construction industry in order to meet the demand for building and civil engineering products, and to support sustained national economic and social development objectives [5]. A global research agenda has emerged from work undertaken over the last few years within the CIB to find ways to move the construction industry forward so that: the value jointly created is maximized and the resulting rewards equitably distributed. There are attempts in many countries to undertake strategic and structural
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reform of the construction industry. In many of these exercises, the construction industry is being revalued. The key objectives are to improve the performance of the industries, prepare them to face the perceived challenges in future, and hence to enhance the image of the industries in these countries. During the past decade, several countries at different levels of development have undertaken comprehensive reviews of their construction industries and formulated long-term plans for improving their performance. The reviews were undertaken because of perceived weaknesses of the industries, and internal and external threats and challenges. In particular, there was evidence that clients, users and other stakeholders were dissatisfied with the performance of the industry. There were also expectations of greater complexity of future constructed items in increasingly sophisticated economies; technological and social change; and globalization was leading to competitive pressures at home and abroad. For developing countries, it is important for the construction industries to be improved owing to their critical role in the national economies, and in long-term socio-economic development. These industries have been taken for granted by governments and the societies, and have failed to attain their potential. Indeed, their performance has been unsatisfactory from the point of view of clients and users, as well as governments. It is time to revalue the industries in order to improve their performance and enhance their image. This revaluing exercise should involve all the stakeholders of the construction industries [6]. As the 20th century waned, technology raised the bar of global economics and spawned an era where change and innovation are inextricably linked. This view of organizational change involves examination of the perspectives and behaviors required for innovative change [7]. Innovation in the construction industry refers to the process of development, distribution and application of technologies a new or improved product, process or service and knowledge with the purpose to improve productivity and to suit the customer’s requirements [8]. Toole [9] defines innovation process as application of technology that is new to an organization and that significantly improves the design and construction by decreasing the cost, increasing the performance, and improving the business process. Mottowa et al. [10] emphasizes innovation in construction as the process through which new ideas turn into new components of constructed products that have economic, functional, or technological value. Construction presents important opportunities for innovation. Current competitive conditions and owner demands for cost effectiveness provide strong incentives. Examining mechanisms for innovation rather than barriers to technical progress is one means to stimulate advance. Tatum [11] described several advantages and disadvantages which the construction industry presents for innovation. The advantages include project organization, necessity and challenge, engineering and construction integration, low capital investment, capability and experience of key personnel, process emphasis, and
variation in methods. Major disadvantages for construction include investment reluctance, competitive conditions, institutional framework, seasonal and economic cyclicity, and the role of suppliers. Based on these conditions, a set of hypotheses was developed (project demands, individual initiative, construction input to design, and transfer from other industries) concerning possible mechanisms for innovation in construction. Driving forces in the construction industry indicate that the ability to innovate is quickly becoming a competitive necessity. Changing needs of owners, changing designs of constructed facilities, and increased foreign competition for domestic construction markets provide new incentives for advanced construction technology [12]. Tatum [13] described a process for innovation in the construction firm, based on an investigation of several new construction methods. Innovation-led performance improvement in the construction industry is significantly influenced by the innovation performance of small firms. The type of innovation undertaken, and the different organizational factors which are brought into play, is shown to depend on the characteristics of the interaction environment in which the firm is operating. Small construction firms need to incrementally nurture, or identify and move into, supportive enabling interaction environments. This is achieved through an integrated development of a firm’s business strategy and market positioning, organization of work, technology and people [14]. Nowadays construction firms are increasingly forced to offer their clients innovative solutions. The importance of innovations as an instrument of competition is steadily growing [15]. The innovation potential of the firms depends on their ability to acquire existing knowledge, to create new knowledge and to make use of it for the realization of new constructional solutions. Drucker [16] emphasizes ‘‘Innovation, that is the application of knowledge to produce new knowledge’’. Thus knowledge plays a critical role in creating and sustaining competitive advantages of construction firms, as it represents the principal source of new or improved services, products or processes [17]. Moreover, the management of knowledge is seen as a critical success factor to maintain and enhance the capability to innovate [18–20]. The pressure on construction firms to continuously look for innovative constructional solutions is increasing. Because innovations represent newly developed, combined or enhanced knowledge, construction firms are confronted with two questions. First, which kind of knowledge for realizing technological innovations is strategically relevant for the firms and second, how should the firms procure the knowledge necessary to put an innovative solution into practice [21]. Pries and Janszen [22] analyzed the innovative and strategic behavior of the construction industry and the companies within that sector. A clear relationship between innovation and the environment of the industry was shown. Companies in the construction industry will have to compete in a more extrovert and market-driven way and they will have to reconsider their capabilities. Specialization and diversification on various subjects are probably
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the most important strategic choices. Innovation creates possibilities of achieving competitive advantage, but only when damaged properly. Innovation in the construction industry is influenced by various factors. These influences are divided into five groups: market, product, management, building process and sector characteristics. Slaughter [23] presented five models of construction innovation categorised as incremental, modular, architectural, system and radical, which can provide a basis upon which companies can select and implement the innovations. Based upon current management and economic theories of innovations, the models reflect the unique conditions of constructed facilities, including the scale, complexity, and longevity of the facilities, as well as their organizational and social contexts. Seaden and Manseau [24] developed a conceptual model for the analysis of innovation in construction to describe the linkages between the business environment, business strategy, innovative practices and business outcomes. It is evident that both market forces and company resources are important determinants of the innovative capability of a company, and their respective dominance for the success of innovations can only be investigated from a multidimensional perspective. Dikmen et al. [25] developed a conceptual framework to investigate value innovations within construction companies in Turkish construction industry. A visual metaphor has been defined to model the innovation system where the elements of the model are objectives, strategies, environmental barriers/ drivers, and organizational factors. Construction industry in North Cyprus is aware and recognizes the need to modernize in order to tackle the severe problems it is encountering, namely, Profitability, Research and Development, Training, Price and Cost, Dissatisfaction of Clients and Fragmentation. The necessary conditions for competitiveness for the North Cyprus construction industry include strong and sustained levels of productivity growth, openness to innovation and new technology and a commitment to delivering value for clients’ money. There is growing interest in the role of innovation within the North Cyprus construction industry [26]. Compared with other industries, there are constraints placed on innovation within construction because of the characteristics of the industry. These include the adversarial culture and fragmentation of the different participants in most construction projects, the project based nature of construction. Projects are discontinuous and temporary and there are often poor linkages between project and business processes. Also the environment within which most organizations operate is changing rapidly. Organizations failing to adapt and respond to the complexity of the new environment tend to experience survival problems, sooner or later. The construction industry has been continually criticised for not achieving the level of improvement in performance and productivity shown by other industrial sectors. This has created a national need for reform to challenge the change for innovation in construction. New challenges require new approaches. A vision of change for innovation within the
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perspective of revaluing the construction industry is therefore essential to develop a culture of self-sustaining improvement, mutual recognition, respect and support in the long term. The key issues facing construction industry in North Cyprus and needed to be addressed to revalue the construction industry are global competitiveness, organizational culture and change, usage of IT, performance measures and benchmarking for continuous improvement, best practices for constructability, and sustainable development. The research covers a lot of ground, but the main contribution are derived from the results of survey studies conducted to the contractors in North Cyprus construction industry. The research focus is to investigate the challenge of change for innovation in North Cyprus construction industry. The main objective is to (1) determine current innovation practices and identify issues that contribute to successful implementation (2) assess the existence and severity of barriers to change for innovation (3) propose solutions for overcoming barriers to change for innovation in construction industry and develop a framework to revaluate the construction industry. 2. Research method The research includes review of background literature, interviews with managers on building construction projects, analysis of this information to develop findings, and extending these to present the key strategic issues that could be targeted for the challenges of change within construction firms in North Cyprus Construction Industry in terms of innovation. The empirical data was collected through structured interviews within the main large private sector construction organizations. The paper deals with the results of questionnaire surveys conducted by research members of European University of Lefke (EUL), Department of Civil Engineering M.Sc. in Construction Management Program. Main topics in the questionnaires were as follows: i. General information about organizations. ii. Globalization and competitive strategies. iii. Organizational culture, cultural changes and its impact on construction performance. iv. Measuring the benefits of IT usage in construction. v. Performance measures and benchmarking for continuous improvement. vi. Establishment of Corporate Constructability Program, Planning Constructability Implementation, Implementing Constructability and Updating Corporate Program. vii. Barriers, Challenges and Opportunities for Sustainable Construction.
2.1. Literature review This stage involves a thorough review of literature about the key issues involving organizational culture and its
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impact on construction performance; globalization and competitive strategies for sustainable construction in a developing country; the opportunities of establishing the framework of performance measures and benchmarking implementation aligned with the contracting firm’s competitive strategy; the perspectives of the IT Performance framework; the implementation of performance measurement systems that include measures adapted to constructability and that can be a real driver for continuous improvement of project processes. The intensive literature review resulted in the identification of six Drivers of change for innovation in construction perceived to be effective in terms of Processes, Perspectives, Indicators and Measures. Categorization and context of the Processes, Perspectives, Indicators and Measures for innovation in construction are presented in Table 1. The Drivers of Change for innovation in construction are as follows: (a) (b) (c) (d)
Globalization and competitive strategies. Organizational culture and cultural changes. Usage of IT. Performance measures and benchmarking for continuous improvement. (e) Best practices for Constructability Implementation. (f) Sustainable development.
2.2. Data collection The second stage involved the collection of data. A questionnaire, which was administered to almost all the firms registered to the Association of Building Contractors, has been used in conducting the survey. The survey includes seven main types of information involving Organizational structure, Globalization and Competitiveness in construction industry, Organizational Culture and Cultural Changes, Impact of Usage of Information Technology, Performance measurements and benchmarking for continuous improvement within construction firms, Best practices for Constructability Implementation, Sustainable Construction, and Procurement systems used by construction firms. i. Organizational structure: General company characteristics were sought which include the general functions of service areas of the organizations, size of the organizations involving the production, firms’ turnover, number of permanent employees, human resources and development and target group of customers. ii. Globalization and competitiveness in construction industry: This portion of the questionnaire was used to analyze the globalization and competitive strategies applied by organizations for winning contracts, bidding strategies in the global market and impact of globalization (advantages and disadvantages) on construction industry.
iii. Organizational culture and cultural changes: This portion of the questionnaire was used to analyze the effect of culture on organizational structure and the management of cultural changes due to increased competition, globalization, mergers, acquisitions, alliances, and various workforce developments. iv. Impact of IT usage: This portion of the questionnaire was aimed to find out the organizations’ investment on Hardware, Software, Operating Systems, Networks (LAN, Intranet, Extranet) and communication systems between the functional departments within the organization. v. Performance measurement and benchmarking for continuous improvement: Variables and management dimensions affecting the implementation of performance measurement systems and benchmarking were analyzed. vi. Best practices for constructability implementation: This portion of the questionnaire was used to address the steps necessary in establishing a corporate-level constructability program, the steps leading to effectively planning for constructability implementation, the steps for implementing constructability, and the steps for updating a corporate program for contractor organizations. vii. Sustainable development in construction: This portion of the questionnaire was used to analyze the potential barriers existing in the construction sector such as lack of capacity of the construction sector, an uncertain economic environment, lack of accurate data, lack of interest of stakeholders for sustainability and lack of integrated research. Also the challenges and opportunities available for the sector involving public awareness, making sustainability a priority, effective use of resources and improvement of the quality of the construction process and methods were analyzed. The questionnaires were designed using a nominal scale for the real values of the independent variables. In evaluating the dependent variables, a scale of 4 intervals (with a ‘0’ value given to no effect, ‘2’ to a middle value, and ‘4’ given to maximum effect). The respondents were asked to check a number on the scale, which reflects their assessment regarding the different factors to be effective in drivers of change for innovation. A list of all contractor organizations within the construction sector was obtained from the Association of Building Contractors. The list consisted of a total of 30 organizations. An attempt was made to contact every single organization. In this particular survey, the sample size n ¼ 20. During the survey 30 organizations were contacted and 20 (%66) of these questionnaires were evaluated. Contact personnel in the companies for the questionnaire survey were either the top management or senior management in their respective departments, therefore their level of knowledge expected to provide responses was acceptable for the purpose of validity of the survey results.
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Table 1 Categorization and context of processes, perspectives, indicators and measures for innovation in construction No
Categorization
Context
1
Processes
2 3
Perspectives Indicators
4
Measures
Planning (Strategic Plan, Preliminary Feasibility, Final Feasibility), Design (Program or Conceptual Phase, Pre-schematic Phase, Schematic Phase, Design Development Phase, Construction Document Phase), Construction (Sitework, Shell, Interior), Procurement (Prior to Completion of CDs, after completion of CDs), Occupancy (Prior to Completion of CDs, after completion of CDs) Operational, Benefits, Technology/System, Strategic Competitiveness, User orientation Deviation of Cost by Project, Deviation of Construction Due Date, Change in Amount Contracted, Accident & Risk Rate, Efficiency of Direct Labor, Productivity—performance, Rate of Subcontract, Cost Client Complaints, Effectiveness of Planning Enterprise level, Business unit, Construction project level
3. Findings This section of the study discusses the challenges of change within construction firms in North Cyprus Construction Industry in terms of innovation. The participating contractors provided numerical scoring expressing their opinions on the significance of factors to be effective in drivers of change for innovation for determining the current innovation practices and identifying issues that contribute to successful implementation, assessing the existence and severity of barriers to change for innovation, and presenting the key strategic issues that could be targeted for revaluating the North Cyprus Construction Industry. The weighted average for each factor was calculated and then it was divided by the upper scale of the measurements in what is referred to as ‘‘importance index’’ therefore the level of important of the factors in drivers of change versus processes, perspectives, indicators and measures were calculated using the Kish’s formula [27]. Table 2 shows the matrix of significant factors perceived by respondents to have an influence on drivers of change for innovation versus Processes, Perspectives, Indicators and Measures. The X-axis of the matrix indicates processes, perspectives, indicators and measures. Y-axis of the matrix indicates drivers of change for innovation. The most significant factors were highlighted in the appropriate cells of the matrix. The factor Cultural Changes, Organizational Structure and Work Force (Education Level) perceived by respondents to have an influence on the driver of change for innovation, ‘‘Organizational Culture and Cultural Change’’, ranked #1, carries the highest level of importance (Importance Index Value ¼ 57) versus Processes. The factors Enhanced coordination between project participants, Established and supported the project organization, Enabled realizing cost savings, Enabled streamlining processes, Secure against unauthorized use, Appropriate for application/function and IT Tool, and Operational Performance, Research into Emerging Technologies, Competitive Advantage, Contribution to Business Competitiveness, Strategic Value to Business, User Satisfaction and Individual Impact perceived by respondents to have an influence on the driver of change for innovation, ‘‘Usage
of IT’’, ranked #2, carries the highest level of importance (Importance Index Value ¼ 57) versus Perspectives and Measures respectively. The factor Production System, Cost and Due Date Control and Scope of Project perceived by respondents to have an influence on the driver of change for innovation, ‘‘Performance Measures and benchmarking for Continuous Improvement’’, ranked #3, carries the highest level of importance (Importance Index Value ¼ 42.5) versus Indicators. The factor Partnering and Joint Venture perceived by respondents to have an influence on the driver of change for innovation, ‘‘Globalization and Competitiveness’’, ranked #4, carries the highest level of importance (Importance Index Value ¼ 57) versus Measures. The factor Advanced Information Technologies are applied throughout project, Project planning involves construction knowledge and experience and Project team participants responsible for constructability are identified early on perceived by respondents to have an influence on the driver of change for innovation, ‘‘Best Practices for Constructability’’, ranked #5, carries the highest level of importance in Processes. The factor Efficiency of Use, Education, Health and Safety and Participation and Control perceived by respondents to have an influence on the driver of change for innovation, ‘‘Sustainable Development’’, ranked #6, carries the highest level of importance (Importance Index Value ¼ 42.5) versus Processes. 3.1. Discussion of survey The ability to foster innovation is frequently cited as the key to a successful modern economy. Given this emphasis on innovation it is worthwhile considering what the key drivers are for change in the construction industry and what are the associated implications of these drivers? If it is true that innovation is necessary for a successful economy and for the competitive advantage of the companies that shape it, it will be those companies that can adapt to these changes that will be successful. Innovation is as a key element of a successful modern economy and by implication for those companies that comprise that economy. At the same time, and reinforcing this idea, the construction industry is faced by a whole range of challenges which occur at a relentlessly increasing pace [28]. The key issues
Rank
4
1
2
3
5
6
Mean imp. ind.
35.625
46.125
42.75
39.125
28.5
25
Sustainable development
Performance measures and benchmarking for continuous improvement Best practices for constructability Advanced Information Technologies are applied throughout project, Project planning involves construction knowledge and experience and Project team participants responsible for constructability are identified early on, Imp. ind. value ¼ 42.5 Efficiency of Use, Education, Health and Safety and Participation and Control, Imp. ind. value ¼ 42.5
Imp. ind. value ¼ 14.5
Imp. ind. value ¼ 14.5
Imp. ind. value ¼ 28.5
Imp. ind. value ¼ 28.5
Production System, Cost and Due Date Control and Scope of Project, Imp. ind. value ¼ 57 Imp. ind. value ¼ 28.5
Imp. ind. value ¼ 14.5
Imp. ind. value ¼ 42.5
Imp. ind. value ¼ 28.5
Enhanced coordination between project participants, Established and supported the project organization, Enabled realizing cost savings, Enabled streamlining processes, Secure against unauthorized use, Appropriate for application/ function and IT Tool, Imp. ind. value ¼ 57 Imp. ind. value ¼ 28.5
Imp. ind. value ¼ 28.5
Operational Performance, Research into Emerging Technologies, Competitive Advantage, Contribution to Business Competitiveness, Strategic Value to Business, User Satisfaction and Individual Impact, Imp. ind. value ¼ 57
Imp. ind. value ¼ 42.5
Imp. ind. value ¼ 42.5
Partnering, Joint Venture Imp. ind. value ¼ 57 Imp. ind. value ¼ 42.5
Measures
Cultural changes, Organizational structure, Work force (education level), Imp. ind. value ¼ 57 Imp. ind. value ¼ 28.5
Imp. ind. value ¼ 28.5
Indicators
Imp. ind. value ¼ 28.5
Perspectives
Imp. ind. value ¼ 28.5
Processes
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Usage of IT
Globalization and competitiveness Organizational culture and cultural change
Drivers of change for innovation
Table 2 Matrix showing the significant factors in effective drivers of change for innovation in construction
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Globalization and Competitivenes
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IT Revolution
Organizational Culture and Change
Performance Assessment Tools Performance Measurement Continuous Improvement
Improving Capacity Better management solutions
Benchmarking
Sustainable Development
Efficiency
Best Practices
Fig. 1. Model framework of drivers of change for innovation in construction industry development: A North Cyprus perspective.
facing the construction industry in North Cyprus and needed to be addressed to revalue the construction industry are summarized as follows, and also a model framework illustrating the relationship and interaction between the drivers of change for innovation in construction industry development is presented in Fig. 1. 3.1.1. Globalization and competitive strategies The interviews and observations highlighted that the process of globalization is inevitable. Considering the strategies that are commonly used in teaming up with foreign firms, joint venture and partnering are the most beneficial strategies in construction services. Joint venture would be a preferable strategy because it enables collaboration between the parties involved on a long-term basis, as compared to partnering that is often limited to one-off projects. Joint ventures are formed to provide global market change where each partner brings specialist expertise. This assists in searching out cheaper sources of material, equipment and personnel outside the home country. Therefore, if proper mechanisms are put in place, these global strategies could benefit construction firms in developing countries [29]. 3.1.2. Organizational culture and cultural changes The interviews and observations highlighted that culture is a powerful force that can shape the firm’s overall effectiveness and long-term success. It affects virtually all aspects of organizational life from the ways in which people interact with each other, perform their work, and
dress, to the types of decisions made in a firm. Effective and efficient management of contractors’ organizational performance requires commitment to effective performance measurement. Effective in the sense that, it should enable organizations to evaluate, control, and improve their performance today and in the future. The development, implementation and use of adequate performance measurement and management frameworks is one of the major challenges confronting organizations and plays an important role in their success. Coordination and integration across organizational units in order to improve efficiency, quality, and speed of designing and constructing is a result of revolutionary and comprehensive efforts to change the culture of the entire organization through the impact of cultural issues on contractual arrangements for construction projects [30]. 3.1.3. The impact of IT usage The interviews and observations highlighted that contractors are clearly utilizing IT as a support tool for operational efficiency raising productivity in most business processes. There is a common basis for all organizations to evaluate both the potential costs and benefits of new systems, and the performance of systems after implementation. Contractors are willing to make long-term investment on IT if there is clear evidence of business benefits. This has raised productivity in most business processes and has resulted in an increase in the quality of documents used and in the speed of work, better financial controls and communications, and provided an added value improving
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their position within the sector. On the other hand, possibility of low profit margins and unavailability of initial funds are major risk factors hindering the uptake of IT in construction. Furthermore, contractors are finding IT to be their most strategic plan in meeting increased competition in construction market by redesigning and continuously improving their production and operational processes. Contractors have efforts to improve competitiveness through integration of information and processes and enable it to collaborate more effectively in an increasing global market. Executives address the need for intelligent integration of information in supporting decision-making for effective management in all stages of construction [31]. 3.1.4. Performance measures and benchmarking for continuous improvement In North Cyprus there is a potential exists to improve industry performance relative to a range of measures— defined work processes, people involvement and organizational learning through the processes identify and reduce waste, time performance measurement and cost performance measurement to be contributing to the best practice programs which include benchmarking, constructability of design, skills training of workers, security of/timely payment, and foreman/supervisor development, predominating [32]. The interviews and observations highlighted the necessity of creating and maintaining an optimal work environment and production system. Furthermore, the work process or production system must be aligned with the workers’ needs—i.e., work is made more convenient for the worker—as much as workers must align themselves with the system. Thus there will be an increase in the performance of the workers leading to higher productivity rates. An important aspect of cost control is cost and schedule integration. This integration is required because of the tight linkage and interdependency between cost and schedule. Simply stated, any impacts to the schedule will result in impacts to the cost (or vice versa) of a project. The client’s value parameters have to be stated clearly at the outset of the project during conceptual planning process and their fulfillment have to be monitored systematically through the project life cycle. This is a benchmarking tool for companies to use in evaluating completion of scope definition versus the performance of past projects, both within their company and externally, in order to predict the probability of success on future projects [33]. 3.1.5. Best practices for constructability implementation The interviews and observations highlighted that there must be an efficient utilization of Information Technology tools for the storage of historical data. These data are stored by computerized databases. These databases must include lessons learned from the constructability program as part of the project control system (e.g. budget amounts, change orders, and purchase orders). Gaining knowledge from past experience is essential to any successful
constructability program. Lessons learned are usually communicated by project kick-off meetings, informal conversations, project meeting notes and post-project review meetings. At the design phase an organizational chart must be drafted identifying the constructability team participants and delineating their roles [34]. 3.1.6. Sustainable development The interviews and observations highlighted that sustainable development (including technology specified) is designed and managed to be highly efficient and effective, achieving high productivity levels with few resources and limited waste and pollution. Briefing helps to establish the level of commitment by the client to unstainable development at the outset of the project and enables the client and the design team to monitor design development against an explicit performance brief. There is a shared understanding about sustainable development and strong commitment to addressing this amongst all stakeholders in the project. Site analysis aimed to ensure that the project, where possible, helped to address local social, environmental and economic problems, using, where available and appropriate, local resources. Target Setting is used to develop detailed sustainable development performance targets for the building. This draws on a range of information. The site analysis is used to provide a description of the local context in terms of problems and resources. Finally, benchmark performance figures for similar buildings in similar contexts are required. All of this information is then used to develop a detailed set of achievable, but challenging performance targets for the building. Design development enables the performance of different designs and strategies to be evaluated and the best options chosen. Extensive monitoring of site and construction processes is also required. Sustainable development issues should be addressed in tender documents and covered by the contract and a detailed briefing to the contractor. This enables the contractor to understand the requirements of the project and provides recourse if these requirements are not met. Development improves levels of education and awareness, including awareness of sustainable development. Sustainable development considers human rights and supports improved health, safety and security. Site Analysis investigates the site in terms of Social, Economic and Environmental aspects in order to establish the context in terms of problems to be addressed and potential resources that can be used. Target setting uses outputs from the briefing workshop to establish the level of commitment by the client to sustainable development and the capacity and understanding within this area by the design team. The design is to be tested back against the target document. This will support the rapid evaluation of different decisions as it enables the ‘performance’ of an approach to captured readily. Construction monitoring includes tender documentation and site checklists. Sustainable development supports interaction, partnerships and involves, and is influenced by, the people that it affects. Participation of
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people is the key to achieving decisions needed to secure changes in the consumption patterns of the majority of the population. It is important to develop campaigns that on one hand inform the public regarding the benefits and opportunities of the use of environmentally friendly building materials and products, and on the other, encourage the change of consumer habits towards a more sustainable use of resources [29]. 4. Conclusions This paper presents a survey study involving the key issues facing construction industry and needed to be addressed to revalue the construction industry in North Cyprus. The research attempts to put forward a case for a restructuring of the construction sector in order to deliver a step in change in quality of output and to realise maximum value to all clients, stakeholders and end users. In summarizing the results of the survey study:
It is necessary to reconsider the arrangements and procedures of the developing construction industry in North Cyprus. Effort is required to reflect the cultural attributes and values of a developing country in its construction practices and procedures. In particular, effort should be made to formulate procurement approaches which enable and facilitate the integration of the construction process in the context of the country. IT usage in North Cyprus construction industry has to be increasingly implemented for strategic reasons, so as to enable improved efficiency, better control and enhanced productivity of internal processes. As competition continues to intensify, construction organizations have to invest large amounts of resources into IT as they seek to gain competitive advantage in construction industry. The interviews show that if construction organizations are willing to invest in setting up a comprehensive IT performance measurement framework, then they will be rewarded by the results that translate business strategies into action. This is only possible through being innovative, investing in people and the required technologies and finally by creating an IT infrastructure and culture that would support their competitive strategy and corporate goals. One of the principal barriers to promote improvement in construction projects is the lack of appropriate performance measurement. For continuous improvement to occur it is necessary to have performance measures which check and monitor performance, to verify changes and the effect of improvement actions, to understand the variability of the processes, and in general, it is necessary to have objective information available in order to make effective decisions. Performance measurement and benchmarking will provide management with invaluable feedback to guide daily decision-making in contracting firms. By regularly using such feedback, management will become more compe-
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tent by achieving the most optimum outcomes in constructional operations and meeting the growing needs of the North Cyprus construction sector. In North Cyprus, clients are increasingly becoming aware of the benefits of constructability review. They require buildings to be completed on time and within the tender price. These buildings should be of sufficient quality and easy to operate and maintain. Good constructability has been shown from experience to speed up construction, improve standards and lower costs. The time or cost ‘saved’ in the design process by inadequate attention to constructability is, lost over and over again during construction. Poor constructability can lead to lower standards of construction. The more complex the assembly of the structure is, the greater the number of operations and specialist trades required. New developments in the construction industry highlight the importance and continued relevance of constructability.
It can be concluded that the socio-economic components of sustainable construction are viewed to be the most challenging in North Cyprus. Construction industry hold knowledge and values that can contribute to a new vision for development, as well as the practical know-how needed to make it work. To ensure sustainable construction at all levels, long-term strategies must envision the processes of manufacture, the use of appropriate technologies and appropriate materials, and the creation of sustainable livelihoods. References [1] Barret P. The global agenda for revaluing construction. University of Salford; 2004. [2] Barret P, Lee A. Revaluing construction: an international survey questionnaire results. The Netherlands: CIB; 2004. [3] Winch GM. How innovative is construction? Comparing aggregated data on construction innovation and other sectors—a case of apples and pears. Construction Management and Economics 2003;21(6): 651–4. [4] Alinaitwe H, et al. Labor productivity in the building industry. In: Proceedings of 11th joint CIB international symposium, combining forces. Advancing facilities management and construction through innovation. Understanding construction business and companies in the new millenium, Fillandia Hall, Helsinki, Finland, June 13–16. 2005;(1):210–20. [5] CIB. Agenda 21 on sustainable construction. The Netherlands: CIB; 1999. [6] Ofori G. Revaluing construction in developing countries. Synopsis paper, CIB Revaluing Construction; 2005. [7] Hattori RA, Lapidus T. Collaboration, trust and innovative change. Journal of Change Management 2004;4(2):97–104. [8] Egmond ELC, Ligny W. Successful industrialisation, innovation and prefabrication in construction. In: Proceedings of 11th joint CIB international symposium, combining forces. Advancing facilities management and construction through innovation. Understanding construction business and companies in the new millenium, vol. (1). Fillandia Hall, Helsinki, Finland, June 13–16. 2005. p. 415–26. [9] Toole TM. Uncertainty and home builders adoption of technological innovations. Journal of Construction Engineering and Management 1998;124(4):323–32.
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