fcr

2022

The Nature of
Construction Industry
in Developing
Countries
Assignment No# 1 – Nature of Construction
Industry. Semester1
This report is based on the Nature of the Construction Industry in Developing
Countries such as Papua New Guinea and other developing Nation.

Charles STEVEN
Lecturer: Magdelyne Kuluwah
CONSTRUCTION MANAGEMENT (BACM-1)
 TABLE OF CONTENTS

List of figures 3

List of tables 4

Introduction 5–6

Structure of the 7 – 10
Construction Industry

Management of the 11 – 21
Construction Industry

Business in the 22 – 26
Construction Industry

Conclusion 27

Recommendation 27

References 28 - 29

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List of Figures Page No#
Figure 1 – Structure of Construction Industry 5
structure

Figure 2 – Flow chart for the function of Management 12

Figure 3 – Level of Management 15

Figure 4 – Flow chart for the process of payments 26

made by the client to contractor

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List of Tables Page No#
Table 1 – Examples of participants in Construction 9
Industry

Table 2 – General overview on the old and new 14 – 15

Manager

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INTRODUCTION
The construction industry influences a wide range of integrated organizations that collectively
constructs alteration and repairs a wide range of different building and civil engineering
structures. The industry has certain unique characteristics, stemming mainly from the physical
nature of the construction products and their demand (Patrick, 1992). They depend mainly
from other industries such as timber (forestry), mine, automobile, steel etc (Kuluwah, 2022).

The construction industry is essentially an assembly industry, assembling on site the products
of other industries. The designer’s intensions are portrayed in drawings, Bill of quantities and
specifications and skill operatives undertake the work of construction and assembly of
components on site. Construction work is subject to the unpredictable weather and of ground
conditions (Patrick 1992).

A wide range of economic factors influence the extent of activity in the construction industry.
These include the general economic climate, interest rates, credit available, the extent of
control of public sector spending and labor intensive (Patrick, 1992).

The construction industry can be divided into three major areas of activity namely building, civil
engineering and industrial. These compliment and many building contracts include some civil
works. In general building work satisfies man’s need for shelter and includes, residential,
commercial, social and industrial buildings, while civil engineering work encompasses the
essential services to make the building operational and Industrial is mainly about the processing
and manufacturing. Construction work is undertaken in both public and private sectors and
relative proportions vary over time. Building construction work is carried out by either private
contractors or direct labor organizations. Direct Labor Organizations offer advantage for
emergency work, particularly in the maintenance field (Patrick, 1992). Private contractors can
be divided into two categories based on their scale of operation:
1. Large firms
2. Small firms

Large construction firm, have the capacity to undertake large construction projects in terms of
individual project value and project complexity. They usually have a head office and a number
of branch offices in different parts of a country. They generally show the highest output per
employee and are better equipped, financed and organized (Patrick, 1992).

Small construction firms employ few operatives compared to large construction firms and
prefer to operate within reasonable distance on their offices and travel further afield only
under special circumstances. Construction work undertaken by small firms comprises mainly of
extensions to existing buildings, refurbishment, repairs and maintenance, and small new
building projects of low monetary value compared to those works undertaken by large
construction firms (Patrick, 1992).

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The construction industry comprised of clients the project owner, consultants the estimator,
architects, structural engineers, civil engineers etc, and the main contractor which is the
construction firm that will be taking lead in the project. A consultant basically acts as the middle
man between the client and the contractor. Also we have the subcontractors (people like
electrician, plumbing, brick layers etc), plant and materials supplier, financial institutions and
regulatory institutions (Kuluwah, 2022).

The process of the construction is executed in a way of project described as the procurement
system. Projects are temporary organization which means it is a contract of a period of time
and once the project is done, the organization is over (Kuluwah, 2022).

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STRUUCTURE OF THE CONSTRUCTION INDUSTRY
The construction industry is structured in a manner wherein the entire main players are
interconnected to each other. One of the critical tasks of senior staff in construction
organizations is to design project organizations which are suitable for a particular environment.
In the construction industry the organizational patterns have to take account of the need for
subcontractors or specialist contractors working together and the organizational structure of a
project can shape the nature of these intrafirm relations and the way people involved in
construction projects are organized.

Construction Industry Structure

ECONOMY

Agriculture Mining Constructtion

Building Civil Industrial New Alteration Maintenance

Figure 1: Structure of construction structure

Source: Figure 1 was reproduced from Kuluwah (2022)

The construction industry includes building, civil and industrial.

Building – building industry is responsible for the construction of the new buildings,
renovations, alterations and maintenance of building infrastructure like hospitals, Papindo
Department store, Cross Road Hotel etc (Kuluwah, 2022).

Civil – Civil industry mainly concerns on the construction and alteration and maintenance of
roads, highways, bridges, dams etc (Kuluwah, 2022).

Industrial – Processes in these industries require highly specialized expertise in planning,

design, and construction. As in building and heavy/highway construction, this type of

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construction requires a team of individuals to ensure successful project. The industrial structure
is a very small part of the construction but they are very important component. Owners for
these projects are usually large, for-profit, industrial corporations such as medicine, petroleum,
chemical, power generation manufacturing etc (Kuluwah, 2022).

PARTICIPANTS IN THE CONSTRUCTION INDUSTRY

There are several project participants involved during the life-cycle of a construction project
and all of them have influence on the success of the project. The contractor has to interact with
all the participants at one time or another within the stages of the projects (Kuluwah 2022).

According to Kuluwah (2022), the participants in the construction industry include;

• Clients
• Consultants
• Main contractor
• Sub-contractor
• Suppliers
• Financiers
• Regulators
• Stakeholders

Clients
A client is the party that contracts other parties to undertake the construction works. Clients
are the owners and users of the facility. Client’s objective of the project is value for money that
results in the performance of the project. The client is usually attracted by aesthetic view of the
project, quality of the workmanship and the cost of the project (Kuluwah, 2022).

Consultants
Professional consultants regularly engaged in construction projects by clients are Architects,
Surveyor, Quantity Surveyor, Planners and Engineers. These specialists design and managed the
project (Kuluwah, 22).

Main Contractor
The contractor translates working drawings, designs, schedules and specifications into physical
structure. They take full responsibility for supplying materials, labor, equipments and services
necessary for a specific construction project (Kuluwah, 2022)
.
Sub-contractor
Sub-contractors are particular group of people who are specialized in a particular job or task to
be done on the construction. They are basically engaged by the main contractor to do specific
works example plumbing, lift, air conditioning etc (Kuluwah, 2022).

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Suppliers
Suppliers are companies responsible for supply of machinery, plant, equipment and materials
for the construction of the facility such as Hardware Haus, Boinamo Gravel, PNG Concrete
Products etc (Kuluwah, 2022).

Financiers
Financiers are the financial institutions, commercial banks, donor agencies and the government
especially treasury that provide funds for the project. Financial institutions that provide funds
are Fincorp, Moni Plus, Nambawan Super. Commercial Banks like BSP etc (Kuluwah, 2022).

Regulators
Regulators are government agencies who are responsible for regulating various aspects of
construction. They make rules, laws, acts, standards, policies and regulations (Kuluwah, 2022).

Stakeholders
Stakeholders are any person, society or organization with a vested interest on the project
(Kuluwah, 2022).

Table 1: Examples of participants in Construction Industry

CLIENTS CONSULTANTS CONTRACTOR FINANCIERS SUPPLIERS REGULATORS STAKEHOLDERS

Papindo Architects Associate BSP PNG Building Board of

Building Concrete Boards directors
Contractors Products
Angau Engineers Niugini Moni Plus Boinamo Investors
Hospital Electrical (Sub Gravel
contractor)
Fincorp Hardware Cooperate
Haus Sponsors
PNG Forest Shareholders
Atlas Steel Government

Source: Table 1 reproduced from Kuluwah (2022)

STRUCTURE OF THE CONSTRUCTION INDUSTRY IN PNG

The total area of PNG is 461,690 square kilometers with a total land area of 451,710 square
kilometers. The national government owns only 3% of the total land with 2% privately owned
and 95% is traditional owned through clans or kinships. The national government-owned land
comprises freehold land, which is only accessible by nationals, and alienated land, which is
accessible by nationals and foreigners for development purposes (Wasi and Skitmore, 1990).

Despite 20 years of independence, general construction activity in Papua New Guinea is

dominated by large overseas construction companies, mainly from Australia, who undertake
major engineering and building construction projects funded by the private and the public

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sector. The large expatriate companies have access to finance, equipment, material and
management and technical expertise, which enable them to move around the country to
undertake large construction projects. On the other hand, the small indigenous contractors
compete for small construction projects within the town or city where they operate and rarely
move out to expand their business (Wasi and Skitmore, 1990).

Indigenous contractors are small business sometimes one man operation which is basically
doing the management and the work at the same time. Most indigenous contractors lack
management and professional skill. They also lack financial back up. There are some obstacles
which indigenous contractors encounter and there are (Kuluwah, 2022):
• Acquisition
• Labor relations
• Access to finance
• Winning Contracts

Acquisition – lack of credit facility, purchase by cash from suppliers and cannot buy bulk for
future stock.

Labor relations – are wantok system, lack social skills, difficulty in supervision few skilled
workers and not enough knowledge.

Access to finance – banks cannot give funds and difficulty in financing equipment.

Winning contract – they are given bold figure quotation and negotiated directly by client, small
contracts and lump sum and labor contracts only.

SPECIAL FEAATURES OF THE CONSTRUCTION INDUSTRY

Special features of the construction industry talks about two things the experiences industry
faces annually and the industry’s standards both in terms of the level of output. There is always
a break down in the service of the contractors, having separate jobs, no guarantee that when
one job is completed another one is ready, fluctuations results in high failure rates, long term
planning is difficult because of the uncertain nature of future demand, and firms enter and
leave industry frequently (Kuluwah, 2022).

Also output is not standardized such as wide variety of goods in terms of size and type of
building; different projects involve the utilization of a wide range of techniques and equipment.
The other factor is contractor may specialize in one service he must be flexible to be able to
shift into different jobs. Industry is fragment the government must adopt policies to encourage
efficiency, mobility of contractor is important. Different ethnic backgrounds create problems
like most materials are imported and so contractors need order in advance (Kuluwah, 2022).

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MANAGEMENT IN CONSTRUCTION INDUSTRY
Management is an art of getting things done through and with the people in formally organized
groups. It is an art of creating an environment in which people can perform an individual and
can co-operate towards attainment of group goal. Management personal may be described as
the people who design an organization’s structure and determine how different aspect of the
organization will interact (Balakrishna and Kumar, 2000).

Management Process is a process of setting goals, planning and/or controlling the organizing
and leading the execution of any type of activity, such as; a project. In general an organization’s
senior management is responsible for carrying out its management process (Balakrishna and
Kumar, 2000).

INPORTANCE OF MANAGEMENT

1. It helps in Achieving Group Goals – it arranges the factors of production, assembles and
organizes the resources, integrates the resources in effective manner to achieve goals. It
directs efforts towards achievement of predetermined goals. By defining objective of
the organization clearly there would be no wastage of time, money and effort.
Management converts disorganized resources of men, machines, money etc. into useful
enterprise. These resources are coordinated, directed and controlled in such manner
that enterprise work towards attainment of goals (Balakrishna and Kumar, 2000).
2. Optimum Utilization of resources – management utilizes all physical and human
resources productively. This leads to efficacy in management. Management provides
maximum utilization of scarce resources by selecting its best alternate use in industry
from out of various uses. It makes use of experts, professional and these machines are
producing its maximum there are no under employment of any resources (Balakrishna
and Kumar, 2000).
3. Reduces cost – it gets management results through minimum input by proper planning
and by using minimum input and getting maximum output. Management uses physical,
human and financial resources in such a manner which results in best combination. This
helps in cost reduction (Balakrishna and Kumar, 2000).
4. Establishes sound organization. No overlapping of efforts (smooth and coordinated
functions). To establish sound organizational structure is one of the objective of
management which is in tune with objective of objective of organization and for
fulfillment of this, it establishes effective authority and responsibility relationship that is
who is accountable to whom, who can give instructions to whom, who are superiors and
who are subordinates. Management fills up various positions with right persons, having
right skills, training and qualification. All jobs should be cleared to everyone (Balakrishna
and Kumar, 2000).
5. Establish equilibrium – it enables the organization to survive in changing environment. It
keeps in touch with the changing environment. With the change is external
environment, the initial co-ordination of organization must be changed. So it adapts

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 organization to changing demand of the market / changing needs of societies. It is
responsible for growth and survival of organization (Balakrishna and Kumar, n.d.).
6. Essential for prosperity of society – efficient management leads to better economical
production which helps scarce resource. It improves standard of living. It increases the
profit which beneficial to business and society will get maximum output at minimum
cost by creating employment opportunities which generate income in hands.
Organization comes with new products and researches beneficial for society
(Balakrishna and Kumar, 2000).

FUCTIONS OF MANAGEMENT

To achieve goals, managers must executive 5 basic functions (Kuluwah 2022);

• Planning
• Organizing
• Staffing
• Directing
• Controlling

PLANNING

CONTROLLING ORGANISING

DIRECTING STAFFING

Figure 2: Flow chart for the functions of management

Source: Figure 2 produced from Kuluwah (2022).

Planning – it is the basic function of management. It deals with chalking out a future course of
action and deciding in advance the most appropriate course of action for achievement of
predetermined goals. According to KOONTZ, “Planning is deciding in advance – what to do,
when to do and how to do. It bridges the gap from where we are and where we want to be”. A
plan is a future course of actions. It is an exercise in problem solving and decision making.
Planning is determination of courses of action to achieve desired goals. Thus, planning is
systematic thinking about ways and means for accomplishment of predetermined goals.
Planning is necessary to ensure proper utilization of human and nonhuman resources
(Balakrishna and Kumar, 2000).

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Organizing – it is the process of bringing together physical, financial and human resources and
developing productive relationship amongst them for achievement of organizational goals.
According to Henry Fayol, “To organize a business is to provide it with everything useful or it
functioning that is raw material, tools, capital and personnel’s”. To organize a business involves
determining and providing human and non-human resources to the organizational structure.
Organizing as a process involves (Balakrishna and Kumar, 2000):
➢ Identification of activities.
➢ Classification of grouping of activities.
➢ Assignment of duties.
➢ Delegation of authority and creation of responsibility.
➢ Coordination authority and responsibility relationships

Staffing – it is the function of manning the organization structure and keeping it manned.
Staffing has assumed greater importance in the recent years due to advancement of
technology, increase in size of business, complexity of human behavior etc. the main purpose of
staffing is to put right job that is square pegs in square holes and round pegs in round holes
(Balakrishna and Kumar, 2000). According to Kootz and O’Donell, “Managerial function of
staffing involves manning the organization structure through proper and effective selection;
appraisal and development of personnel to fill the roles design in the structure”. Staffing
involves (Balakrishna and Kumar, 2000):
➢ Manpower Planning (estimating man power in terms of searching, choose the person
and giving the right place).
➢ Recruitment, Selection and Placement.
➢ Remuneration.
➢ Performance Appraisal.
➢ Promotions and Transfer.

Directing – it is that part of managerial function which actuates the organizational methods to
work efficiently for achievement of organizational purposes. It is considered life-spark of the
enterprise which sets it in motion the action of people because planning, organizing and
staffing are the mere preparations for doing the work. Kootz and O’Donell states that “Direction
is that inert-personnel aspects of management which deals directly with influencing, guiding,
supervising, motivating sub-ordinate for the achievement of organizational goals”. Direction
has following elements (Balakrishna and Kumar, 2000):
➢ Supervision
➢ Motivation
➢ Leadership
➢ Communication

Controlling – it implies measurement of accomplishment against the standards and correction

of deviation if any to ensure achievement of organizational goals. The purpose of controlling is
to ensure that everything occurs in conformities with the standards. An efficient system of
control helps to predict deviations before they actually occur. According to Theo Haimann,
“Controlling is the process of checking whether or not proper progress is being made towards

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the objectives and goals and acting necessary, to correct any deviation”. According to Kootz and
O’Donell “Controlling is the measurement and correction of performance activities of
subordinates in order to make sure that the enterprise objectives and plans desired to obtain
them as being accomplished”. Therefore controlling has following steps (Balakrishna and
Kumar, 2000):
➢ Establishment of standard performance.
➢ Measurement of actual performance.
➢ Comparison of actual performance with the standards and finding out deviation if any.
➢ Corrective action.

THREE (3) ISSUES FACING MANAGERS TODAY

1. Internationalization – it is a way of management that the manager is in other parts of

the world and manages a company from other part of the world. Example the manager
can be in Tokyo and manage a company in Port Moresby (Kuluwah, 2022).
2. Ethical concerns – standard govern the conduct of a person, (number of a profession,
value, moral and rules). People do wrong things and rules are broken. Example Wantok
System (Kuluwah, 2022).
3. Total quality management – no goodness or perfection of the output of the production
or the goal. Example a building is supposed to be built with treated timbers to withstand
the climate and weather but it is built with untreated timbers (Kuluwah, 2022).

OVERVIEW BETWEEN OLD MANAGER AND NEW MANGER

Old Manager refers to how a manager manages during the time of industrialization and new
manager refers to today’s modern manager.

Table 2: General overview on old and new manager

OLD MANAGER NEW MANAGER

Think of self as a manager/boss – tells people Think of self as a sponsor, team leader or
what to do internal consultant like sharing responsibility
and delegating task to everyone.
Follows chain of command. Information or Deals with anyone necessary to get the job
any issues has to go through several done. Manager can come down to talk to the
departments before it reaches the manager. labour workforce instead of the supervisor.
Works with a set of organizational structure. Changes organizational structure in response
Sticking to the same strategy when the market to the market change.
changes.
Keeps information to himself which delay the Share’s information to everyone and getting
time frame of the project. the task done on time.
Tries to master one discipline like sticking to Tries to master a broad array of managerial
one given task and not helping others. disciplines. Helping others doing task that is

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 not allocated to do.
Demands long hours. Example even the task is Demands results. Example concerns about the
finished, you have to remain in the office until results of the task. If the task in done, you can
the working hours is over you can leave. do other things instead of waiting long hours.

Source: Table 2 reproduced from Kuluwah (2022)

LEVEL OF MANAGEMENT

TOP MANAGEMENT

MIDDLE MANAGEMENT

FIRST LINE MANAGEMENT

Figure 3: Order of Level of Management

Source: Figure 3 reproduced from Kuluwah (2022).

Managers are the organizational members who are responsible for the work performance of
other organizational members. Managers have formal authority to use organizational resources
to make decisions. In organizations, there are typically three levels of management: top-level,
middle-level, and first-level. These three main levels of managers form a hierarchy, in which
they are ranked in order of importance. In most organizations, the number of managers at each
level is such that the hierarchy resembles a pyramid, with many more first-level managers,
fewer middle-level managers, and the fewest managers at the top-level. Each of this
management levels is described below in terms of their possible job titles and their primary
responsibilities and paths taken to hold these positions. Additionally, there are differences
across the management levels as to what type of management tasks each does and the roles
that they take in their jobs. Finally there are a number of changes that are occurring in many
organizations that are changing the management hierarchies in them, such as the increasing
use of teams, the prevalence of outsourcing, and the flattering of organizational structures
(Simmering, 2006).

Top-Level Management

Top-level managers, or top managers, are also called senior management or executives. These
individuals are at the top of the two levels in an organization, and hold titles such as: Chief
Executive Officer (CEO), Chief Financial Officer (CFO), Chief Operational Officer (COO), Chief

15
Information Manager (CIO), and Chairperson of the Board, President, Vice President and
Corporate Head (Simmering, 2006).

Often a set of these managers will constitute the top management team, which is composed of
the CEO, COO and the other department heads. Top-level managers make decision affecting the
entirety of the firm. Top managers do not direct the day-to-day activities of the firm; rather
they set goals for the organization and direct company to achieve them. Top managers are
ultimately responsible for the performance for the organization, and often, these managers
have very visible jobs (Simmering, 2006).

Top managers in most organizations have a great deal of managerial experience and have
moved up through the ranks of management within the company or in another firm. An
exception to this is a top manager who is also an entrepreneur; such an individual may start a
small company and manage it until it grows enough to support several levels of management.
Many top managers possess an advanced degree, such as a Masters in Business administration,
but such a degree is not required. Some CEOs are hired in from other top management
positions in other companies. Conversely, they may be promoted from within and groomed for
top management with management development activities, coaching, and mentoring. They
may be tagged for promotional through succession planning, which identifies high potential
managers (Simmering, 2006).

Middle-Level Managers

Middle-level managers, or middle managers, are those in the levels below top managers.
Middle managers job titles include: General Manager, Plant Manager, Regional Manager, and
Divisional Manager (Simmering, 2006).

Middle- Level Managers are responsible for carrying out the goals set by top management.
They do so by setting goals for their departments and other business unit. Middle managers can
motivate and assist first-line managers to achieve business objectives. Middle managers may
also communicate upward, by offering suggestions and feedback to top managers. Because
middle managers are more involved in the day-to-day workings of a company, they may provide
valuable information to top managers to help improve the organization’s bottom line
(Simmering, 2006).

Jobs in middle management vary widely in terms of responsibility and salary. Depending on the
size of the company and the number of the middle-level managers in the firm, middle managers
may supervise only a small group of employees, or they may manage very large groups, such as
an entire business location. Middle managers may be employees who were promoted from
first-level manager positions within the organization, or they may have been hired from outside
the firm. Some middle managers may have aspirations to hold positions in the top management
in the future (Simmering, 2006).

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First-Level Managers

First-level managers are also called first-line managers or supervisors. These managers have job
titles such as: Office manager, Shift supervisor, Department manager, Foreperson, Crew leader,
Store Manager (Simmering, 2006).

First-line Managers are responsible for the daily management of line of workers – the
employees who actually produce the product or offer the service. There are first-line managers
in every work unit in the organization. Although first-level managers typically do not set goals
for the organization, they have a very strong influence on the company. These are the
managers that most employees interact with on a daily basis, and if the managers perform
poorly, or may leave the company (Simmering, 2006).

In the past, most first-line managers were employees who were promoted from line positions,
(such as production or clerical jobs). Rarely did these employees have formal education beyond
the high school level. However, many first-line managers are now graduates of a trade school,
or have a two-year associates or a four-year bachelor’s degree from university (Simmering,
2006).

MANAGEMENT SKILLS

These skills refer to the personal ability put to use by the manager in specific position that he or
she holds in the organizational hierarchy. As one move up in the hierarchy of the managerial
positions, the responsibility increases. The fundamental functions of a manager such as
planning, organizing, staffing, directing and controlling and decision making are the skills
required to be mastered by the managers. In order to exercise these functions, one has to keep
in mind, the type of job, the size of the organization, the skills and the experiences of the
people one works with the time available at his disposal to do these management functions
(Katz, 1974).

Katz (1974) talks about three types of skills that are recognized by all managers. These are the
technical, human, and the conceptual skills. The use of these skills differs for various levels of
managers.

TECHNICAL SKILL

It is the ability to work with resources in a particular area of expertise. A surgeon must know
how to do surgery. An accountant must know how to keep the accounts. Without the technical
skill, one is not able to manage the work effectively. The first line supervisor in a manufacturing
industry need greater knowledge about the technical aspects of the job compared to his top
boss. In a small manufacturing organization, even the top boss who owns the company needs
to know a lot of technical skills (Katz, 1974).

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Technical Skills refers to the ability and knowledge in using equipment, technique and
procedures involved in performing specific tasks. These skills require specialized knowledge and
proficiency in the mechanics of a particular job. The ability in programming and operating a
computer for instance is a technical skill (Katz, 1974).

Quit a lot of training programs for equipping the people with technical skills are going all over
the country like Mapex Training Institute, in industries, hospitals, banks and educational
institutions. As you move up in the managerial hierarchy, perhaps this skill becomes relatively
less important than the human and conceptual skills (Katz, 1974). In a relatively small
organization, where you yourself are the owner and at the top management level, your
technical skills are needed.

HUMAN

Human skill is the manager’s ability to work effectively as a group member and to build
cooperative effort within the team he leads. Every managerial level requires managers to
interact with other people, whereas technical skill is primarily concerned with working with
things (processes or physical objects). The first level manager is involved on a regular basis with
the perception of his or her superiors, equals and subordinates and his or her behavior
subsequently (Katz, 1974).

If you have a highly developed human skill and if you are aware of your own attitudes,
assumptions, and beliefs about other individuals and groups, you are able to see their
usefulness and limitations. And you are likely to accept others’ viewpoint, perceptions and
beliefs, which might be different from yours (Katz, 1974).

Your human skills will help you to build a work atmosphere of approval and security, where
people working with you as subordinates feel free to express themselves without fear of being
ridiculed and to participate in the planning and carrying out those things which directly affect
them. You feel sensitive to others’ reactions to your actions and you will act after taking others’
perception into account (Katz, 1974).

Your human skills thus become a continuous and natural activity with you so that whatever you
say or do (or leave unsaid and undone) leaves an effect on your associates. Perhaps your true
self will be seen through by others. In order to be an effective manager, your human skill must
be naturally and unconsciously developed, as well as consistently demonstrated in every action
of yours. For example, you want to boost the output of a production unit in an industry by
introducing a conveyor system. You must keep in mind how to make your subordinates accept
the situation of top speed production through this system with which they were not familiar
earlier. You must also make sure that the person, whom you place in charge of the workers or
operators, is acceptable to them in creating a right attitude towards this conveyor system,
towards the production goals (how much output per day to be produced) or what standards of
production have to be attained. These are the human factors in production which cannot be
ignored (Katz, 1974).

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The human skill can be developed without any formalized training for some. Many others to be
individually aided by their immediate superiors who themselves should posses the human skill
in order to be able to impart that. An important part of the procedure is the self-examination of
the individual’s own concepts and values which may enable him to develop more useful
attitudes about himself and about others. With this change in attitude, there may also develop
some active skill in dealing with human problems. You as a superior may like to observe your
subordinate’s ability to work effectively with others. You may probably improve your own
human skill of rating people for their effectiveness as you become more experienced in this art
(Katz, 1974).

CONCEPTUAL

This skill means the ability to see the organization as a whole and it includes recognizing how
the various functions of the organization depend on one another. It also makes the individuals
aware how changes in any one part of the organization affect all the others. It extends to
visualizing the relationship of the individual business to the industry, the community and the
political, social and economic forces of the nation as a whole. Thus the manager gains insight
into improving the overall welfare of the total organization (Katz, 1974).

As a manager you should have the ability to coordinate and integrate the variety of factors. You
need to view situations and determine the inter-relatedness of the people who make the
decision and those who put it into action. For example, you are trying to introduce some
change in the working policy in your manufacturing organization. It is very important to know
the effect of such a change on production of goods, control, finance, research and people
involved in these processes. Finally, it is equally important right down to the last executive who
must implement the new policy. So at every level of management, no matter which level you
belong to, you have to recognize the overall relationships and significance of the change in
order to be an effective manager. The chances of your success as a manager are greatly
increased (Katz, 1974).

MANAGEMENT ROLES

To meet the many demands of performing their functions, managers assume multiple roles. A
role is an organized set of behaviors. Kumar (2015) stated that Henry Mintzbeg has identified
ten roles common to the work of all managers.

The ten roles are divided into three groups:

• Interpersonal roles.
• Information roles.
• Decision roles.
The performance of managerial roles and the requirements of these roles can be played at
different times by the same manager and to different degrees depending on the level and
function of management. The ten roles are described individually, but they form an integrated
whole (Kumar, 2015).

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1. Interpersonal Role – the interpersonal roles link all the managerial work together. The
three interpersonal roles are primarly concerned with interpersonal relationship.
• Figurehead Role: the manager represents the organisation in all matters
formality. The top level manager represents the company legally and socially to
those outside of the organisation. The superior represents the work group to
higher management and higher management to work group (Kumar, 2015).
• Liaison Role: the manager interacts with peers and people outside the
organisation. The top level manager uses the liaison role to gain faviours and
information, while the supervisor uses it to maintain the routine flow of work
(Kumar, 2015).
• Leader role: it defines the relationship between the manager and employees.
Create environment and working to improve the employees’ perfomancees,
reduce conflict, providing feedback on perfomance, and encouraging growth
(Kumar, 2015).

2. Information roles – the information roles ensure that information is provided. The three
informational roles are primarily concerned with the information aspects of managerial
work. As a result of the manager’s contacts inside and outside of the organisation
he/she normally has more information than members. Therefore there are three (3) key
dissemination of information (Kumar, 2015).
• Monitor role: the manager receives and collects information about the operation
of an enterprise. Constantly monitors the environment to determine what is
going on (kumar, 2015).
• Disseminator role: the manager transmits special information into the
organisation. The top level manager receives and transmits more information
from people outside the organisation than supervisor (Kumar, 2015).
• Spokesperson role: the manager disseminates the organisation’s information
into its environment. Thus, the top level manager is seen as an industry expert
(Kumar, 2015).
3. Decisional roles – the decisional role make significant use of the information and there
are four decisional roles (Kumar, 2015).
• Enterpreneur role: the manager initiates change, new projects; identify new
ideas, delegate idea responsibility to others (Kumar, 2015).
• Disturbance Handler Role: the manager deals with threats to the organisation.
The manager takes corrective actions during disputes or crises; resolve conflicts
among subordinates; adapt to environmental crisis (Kumar, 2015).
• Resource Allocator Role: the manager decides who gets resources; schedule,
budget set priorities and choose where the organisation will apply its efforts
(Kumar, 2015).
• Negotiator Role: the manager negotiates on behalf of the organisation. The top
level manager makes the decisions about the organisation as a whole, while the
supervisor makes decisions about his or her particular work unit (Kumar, 2015).

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MANAGEMENT DECISION MAKING

Decision making is a process and is concerned with selecting the best type of alternative. The
decision taken is aimed at achieving the organisational goals. Process of identifying problems
and opportunities, developing alternative solutions, choosing an alternative and implementing
it (Kuluwah, 2022).

Decision making is the process of making choices by identifying a decision, gathering

information and assessing alternative resolutions. According to Kuluwah (2022), there are
seven (7) steps in the decision making process.
1. Define the problem/opportunity: What is the praticular problem/opportunity you have.
Accurate definition of the problem is vital. Saves time/money and frustration. Try to
clearly define the nature of the decision you must make (Kuluwah, 2022).
2. Identifying limiting factors: determine the limmiting factors of the problems. Reduce
certain alternative solutions. This step involves both internal and external work. Some
information is internal: you will seek it through a process of self-assessment. Other
information is external: you will find it online, in books, from other people, and from
other sources (Kuluwah, 2022).
3. Develop potential alternatives: in this step, you will list all possible and desirable
alternatives. You can also use your imagination and additional information to construct
new alternatives. Alternative should eliminate, correct, or neutralise the problem or
maximise the opportunity. Start an extra work shift, to schedule overtime on a regular
basis (Kuluwah, 2022).
4. Analysis the alternative: decide the relative merits of each alternative. The
positive/negatives of each. Do any alternatives conflict with the critical limiting factors.
If so they must be automatically discarded (Kuluwah, 2022).
5. Sselect the best alternatives: once you have weighed all the alternatives, you are ready
to select the alternativethat seems to best one for you. You may even choose a
combination of alternatives. Solution must offer fewest serious disadvantages than
advantges (Kuluwah, 2022).
6. Take action/implement the solution: solution needed effective implementation to give
the desired results. People must be told of their roles and know exactly what they must
do and why. Programs, procedures, rules or policies must be put into effect thoughtfully
(Kuluwah, 2022).
7. Establish a control/evaluating system: ongoing actions need to be monitored. The
system should provide feedback on how well the decision has been implemented. What
results are – positive or negative. What adjustments are necessary to get the expected
results (Kuluwah, 2022).

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TYPES OF BUSINESS
Business in construction industry is fragment with numerous participants from clients,
designers, constructor, supplier, state (public), and private. The type of business in construction
industry is project (Kuluwah, 2022).

A project can be defined as a series of activities and tasks that consume resources and have a
specific objective to be completed with certain specifications, defined start and finish dates,
and financial limitations. Construction project management has evolved from business project
management which is defined as the planning, organising, staffing, coordinating, directing and
controlling of company resources for a relatively short-term objective that has been established
to complete specific goals and objectives. Constrcution project management is defined as the
protocols of applying project management principles in managing construction projects leading
to their successful execution (Syal and Duah, 2011).

Projects range from new building work to maintenance. The term often used for new big
construction work. Temporary organisation set up to design and construct a building for the
client. Projects are usually delivered through a contract between the client and the contractor.
Design consultants are engaged directly by the client or the contractor (design/build). Supplier
involved through the commercial process by supplying materials, plant and equipment. State
involved to protect the public htrough regulating standards and rules example; boundry
requirements, safety etc. through government expense. Stakeholder groups involved to address
views of the various stakeholders – stakeholders expense (Kuluwah, 2022).

DIFFERENT CONSTRUCTION PROJECT TYPES

According to Kuluwah (2022), construction projects in terms of developing countries (PNG) are
grouped into two main categories:
1. Private Construction Project
2. Public (State) Construction Project.

PRIVATE CONSTRUCTION PROJECT

Private construction projects are projects of every type that are owned, or controlled by a
private party include individuals, homeowners, corporations, other business entities, non-profit
associations, privately funded schools, hospitals, publicly traded companies, etc. Anything in
other words that is not government (Kuluwah, 2022). Private construction projects come in all
different sub-categories:

Residental Construction: whenever construction work is being performed to a single-family

residence or a residental facility with less than 3 or 4 units. If you are working on an apartment
complex this would more likely be considered a commercial project instead of a residential
project. Examples of Clients are: Eriku lodge, Apoati, Regional Construction etc.

22
Commercial Construction: is the construction of any buildings or similar structures for
commercial purposes. Commercial construction includes a huge variety of projects including
building restaurants, grocery stores, skyscrapers, shopping centers, sports facilities, hospitals,
private schools and universities, etc. Papindo, RH, Besta, Fletcher Morobe, Lae Builders are
some of the Clients (Kuluwah, 2022).

Industrial Construction Project: This is relatively small segment of the construction industry.
These projects include power plants, manufacturing plants, solar wind farms, refineries, etc.
(Kuluwah, 2022).

PUBLIC (STATE) CONSTRUCTION PROJECTS

Public (state) refers to projects commisioned by a country, city, government board, public
school board or any other state-funded entity. State construction projects can take a variety of
forms. They can be pretty traditional projects like construction of public school or government
building (like a court room). These projects can also be pretty sophisticated, such as the
construction of a bridge, sewer line, highways, etc. Clients of Public (state) are Air Niugini,
Telikom, PNG Power, PNG Ports etc (Kuluwah, 2022).

Consultants like Pacific Architects, Consortium, Billy Architects, ATS, Frame Harvey & West etc.
plays a important role in the two client project types. They are basically partnership owned by
partners. Their revanue is paid by the clients by the way of claims (Kuluwah, 2022).

Contractors also plays major role in the project. Big companies like Fletcher Morobe
construction company, Lae builders, etc. Medium contractors like ABC, Niugini Builders, etc.
and small contractors like Nokia, Regional Engineering generate their revanue from claims paid
by the client. Sub contractors are also a part of puzzel of the project they are specialist like
Electrical, AC Glass, Aluminium etc) and paid by the main contractor (Kuluwah, 2022).

Suppliers generate their revanue through orders. They provide materials and equipment such
as hardware, plant hires etc. Suppliers like Hardware Haus, Mainland Plumbing, Plumtrade,
Bowmans, etc. They are specialists in the materials and equipments they offer. They also supply
stock goods needed by the industry (Kuluwah, 2022).

THE BUSINESS ENVIRONMENT IN CONSTRUCTION INDUSTRY

Business environment has two components;

• Internal environment.
• External environment.

23
Internal Environment

Internal environment includes internal forces of the business which can be controlled by
business. It refers to the environment within the organization. It includes objectives of business,
managerial policies, management and employees of the organization, labor management and
commitment of human resources, facilities and technological infrastructure (Kaja, 2013).

The internal environment components usually can be controlled by the business. The main key
for success of the business is the quality of human resources. If employees of an organization
are skillful it can take business to heights, but if workers are not satisfied, then their efficiency
will go down and then it may badly effect the organization. Marketing activities, available
physical and financial resources are also part of internal environment (Kaja, 2013).

External Environment

The external environment is a set of complex that rapidly changing and significant interacting
institutions and forces that affect the organization’s ability to serve its customers. External
forces are not able to be controlled by an organization but they may be influenced by that
organization. The external environment has a major impact on the determination of marketing
decision. Successful organization scans their external environment so that they can respond
profitable to unmet needs and trends in the targeted markets (Reddy, 2004). The external
environment consists of all the outside institutions and forces that have an actual interest on
the organization’s ability to achieve its objectives like: competitive, economic, technological,
political, legal, demographic, cultural and ecosystem (Kaja, 2013).

Competitive Market

For companies to become competitive they had to reduce their cost, speed up the product
development, focus their attention on satisfying their customers. A key to customer’s
satisfaction lay in quality improvements and an increased emphasis on customer service. To be
competitive companies resort to downsizing, flattening, empowering employees, and
outsourcing (Kuluwah, 2022).

NEW PROJECT MANAGEMENT

As stated by (Kuluwah 2022), “Authority plus function of management is equal to manager”.

Kuluwah (2022) as stated some new ways to approach management in construction and they
are:

i. Become more customers focused – customers expect good products and services,
increase the likelihood of repeat business. Customer satisfaction can wrap up projects
more rapidly.

24
ii. Explore the use of new management tools – Expanded role: Contracting, business
finance integrated cost/schedule control, measuring work performance, monitoring
quality, conducting risk analysis.
iii. Redefine the role of project managers giving them more power to operate effectively –
decisions be made independently without having to operate effectively. Possess
substantial profit and loss responsibilities. See themselves largely as independent
business men and women running their own business. Possess the business skills and
knowledge needed to operate effectively.

25
PROCESS OF MAKING MONEY IN CONSTRUCTION INDUSTRY

CLIENT CONSULTANTS – Specify for a DRAWINGS -

building, civil and industrial Architects
projects
SPECIFICATION -
Engineers

CONTRACT STANDARDS –
Process of work
DOCUMENTS

INSTRUCTION –
Geo tech

Tendering Contract Projection Forward a Client

award Construction claim

Architect Paid to Payment Client Payment

Contractor Satisfied representative Stages as per
asses the claim claim
to verify the
Client makes quantity +
the payment quality of the
work production

Figure 4: Flow chart of the process of payments made by the client to contractor.
Source: Figure 4 was reproduced from Kuluwah (2022).

26
CONCLUSION
In carrying out research for this repot, we can see that construction industry is an industry in
which it is responsible for the built environment and services for a nation both developed and
developing nations. Construction industry can be abroad for the case of this report; we can see
that it is scale down to building and civil works range from new, alteration to maintenance. The
research report as shown that the construction industry depend on most other industries in
terms for materials, equipments etc. Construction industry is one of the high risk industries in
terms of the cost of work to be done. It also uses a lot of human resources from client to
contractor as far as to the labor workforce.

In developing countries, the industry structure is bias most of the large firms are foreign owned
whilst the smaller firms are owned by native indigenous. Due to the obstacles of finance,
winning contracts, acquisition etc. the indigenous contractors cannot cater for the big projects.
Industry also experiences quite server annual fluctuations in its level of output. In terms of the
management structure, we have different levels of management with different roles which the
manager plays and make decisions depending on the level of management.

Construction industry is also a business industry by the way of projects. The contractor’s
revenue is by the way of claim paid by the client. The client goes through the contract
documents before making the payments. Competition in the industry is demanding for
companies to become competitive, they had to reduce price, speed up production and focus on
satisfying customers.

RECCOMENDATIONS
Construction industry in developed countries needs more skilled workers in all structures of the
industry. Financial assistance is another area that needs attention from the government for the
small firm mostly indigenous contractors. This will help boost the indigenous contractors win
big projects.

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Katz, R. L. 1974. Skills Of An Effective Administrator, Harvard Business Review. Harvard:

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Kuluwah, Magdelyne. 2022.” Lecture 1-Nature Of Construction Industry: Construction

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