IN AN effort to get building contractors to comply with the best practices and reduce costly overruns, the Caribbean Business Forum is proposing a number of measures that it is hoped will redefine the building contracting industry in Jamaica and the wider Caribbean region.Caribbean Business Forum (CBF) Executive Director, Len Davidson, addressing the Caribbean Construction Financial Management Conference held at Le Meridien Jamaica Pegasus hotel in Kingston last week said: "There are very few construction performer measurements which are acceptable in the Caribbean. There have been increased reports of significant overruns in terms of construction time within the Jamaican sector. We do not generally find this to be the case with the other islands in the region."
He added that the construction sector is the key to moving the Jamaican economy forward but he noted that there was a lot of apathy in that particular sector. He told the conference that it was important that the internationally recognised measurement benchmark, International Standards Organisation (ISO) should be applicable to all building firms in the Caribbean.
The Sunday Gleaner learned that only one building contracting firm, namely West Indies Home Contractors has initiated efforts for ISO 9002 certification with many building companies operating in Jamaica failing to do so.
A leading industry operator made it clear that Jamaican companies cannot bid in the rest of the Caribbean region if they don't have international certification. He further pointed out that there are product standards relating to concrete, steel and bitumen which are in place to emphasise the necessity to adhere to international product standards, but not all industry practitioners comply.
The conference was held in conjunction with the American group, Construction Financial Management Association (CFMA) which is attempting to regularise accounting procedures in the construction industry both in the United States and the neighbouring region.
A spokesperson for the CFMA outlined its objectives as: to get construction workers to ask relevant questions of, or understand what's being asked by financial executives and to improve communication between project managers, owners and financial executives.
The CFMA has made it clear that it intends to:
Unite industry financial executives. Provide forum to exchange ideas. Develop education programmes to improve professional standards. Enhance the role and promote the image of the construction financial manager. Be the voice of the construction financial management.Characteristics
As far as the Jamaican construction industry is concerned, the conference identified a number of unique characteristics namely, it is dominated by small, local, family or privately owned firms valued at between $10 million to $15 million. The industry also contains multi-billion, international publicly traded corporations and ego over profit drives day-to-day decision making.
This appears to confirm some of the findings from a financial trends survey conducted last year by the CFMA which discovered a backlog of uncompleted work of between 7.9 months with the major source of competition coming from United States' contractors. Of concern is the shortage of trained workers to facilitate growth in the sector which is now experiencing a fall in profitability.
As a result the CFMA have defined a number of areas of challenge which include:
Shortage of trained field help Shortage of project managers Sources of future work Litigation Changing technologyImproving labour productivity Exceeding client expectations.Although efforts to significantly improve the efficiency and productivity of the local construction sector are to be commended, it is faced with the obstacles of surmounting an economy that is contracting, rising unemployment and a fluctuating exchange rate that does not augur well for the industry as a whole.
It is a well-known fact that an indication of the state of the construction industry is a good indicator of the condition of the economy.
The construction industry plays a critical and indispensable role in the Jamaican economy by providing the physical infrastructure which is fundamental to development. It also supports a large labour force (77,000 as at 1999) and has the ability to generate a higher level of lower-skilled employment. It must also be stressed that it makes a large contribution to GDP (8.2 per cent as at 1999).
STATIN figures show that the construction industry contributed 11.4 per cent to Gross Domestic Product (GDP) at current prices. Data was comprehensively compiled by STATIN on the sector in 1998 which indicated that the industry had declined by 5.7 per cent.
The huge interest rate has had a negative impact reflecting a 37.6 per cent decline in commercial bank loans to the sector back in 1998. There has been a decline in real GDP by 1.6 per cent in 1999 compared to 1998 and the reason attributable for this is that construction /installation declined by 2.5 per cent and 4 per cent respectively.
This despite significant expenditure by the Government in the other construction category comprising multimillion dollar contracts for the building and rehabilitation of major highways and roads works such as the North Coast Highway project, South Gully expansion project and the Hope Road and Old Harbour Road projects.
The construction industry could also benefit from expenditure from other Government agencies such as the National Housing Trust (NHT), the Jamaica Social Investment Fund (JSIF), Sugar Industry Housing and the Housing Development Corporation.
The main problem experienced within the sector has been the decline in demand with the worsening economy, demand has been drastically reduced. Industry sources have indicated that construction activity as at October 2000, is less than half of what it was in October 1999, with a number of contracting firms and contractors closing or about to close their doors, the rest hanging on for dear life with the threat of FINSAC foreclosure looming over their heads.
The reasons for this decline in the Jamaican industry can be put down to :
Decline in public sector expenditure Decline in private sector investment Inability of the public sector to manage its procurement function effectively. Increased regulatory framework. In order to address its plight the construction industry must substantially improve industry performance by a major transformation in work organisation and practices and at the same time actively promote new industry capacity by sub-contracting large contracts to smaller independent contractors.It is essential that training becomes part of its primary responsibilities and so some financial support should be given by the Government. What has become apparent is the need to implement efficiency and productivity improvements throughout all industry sectors, including performance measurement and partnering arrangements.
