By Marvin Oey, Director, Construction Institute
Not only is the U.S. construction industry a major economic driver, but an essential function of modern civilization providing the facilities in which we perform our
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everyday lives. The construction industry is among the most fragmented in the nation with over 50,000 building codes, over 100,000 design firms, and over a million contractors.
From a simplistic view, the construction industry consists of at least four different sectors that differ significantly from each other. Residential construction can be characterized as a relatively unsophisticated sector where professional engineers and architects do not play a significant role and craft workers typically have little training or certification. Non-residential building construction often involved design leaders that are licensed architects with support from various engineering disciplines and construction workers tend to have higher skill levels than those working in residential construction. In addition, most of the construction is accomplished by specialty sub-contractors with coordination by general contractors or construction managers. Industrial construction puts process engineers as lead designers with considerable attention given to the technologies associated with each manufacturing process. Construction workers are found to be highly skilled and are employed by a direct-hire contractor rather than specialty sub-contractors. Heavy construction relates to highways, dams, tunnels, pipeline projects that involve large quantities of earth and are thus dominated by civil engineers. Construction activities are equipment-dominated, rather than labor-dependent as in the other sectors.
The construction industry is relatively stable in terms of history and size, but is very dynamic in that each project requires a new organization and an original design responsive to a unique site. It is perhaps the most archaic of all industries in terms of fundamental physical techniques, but involves a high level of innovation on every project. It is an industry of easy recognition since workers can easily identify with construction materials and components; yet successful project execution requires considerable skill and knowledge. Contractual risk is high as evidenced by the large numbers of bankruptcies in established companies. Yet the profit margins remain low, due to the ease of entry and high level of competition.
Many associations in the construction industry are also fragmented. For example, the Associated General Contractors (AGC) focuses on construction contractors, the American Road and Transportation Association is geared towards construction contractors specializing in highway projects, and the Construction Users Round Table (CURT) includes only owner companies. Even the American Society of Civil Engineers caters mainly to civil engineers. The Construction Institute was formed and designed to “defrag” the construction industry and bring all who are involved in the construction process, whether it be the designer, owner, materials supplier, equipment supplier, surety, or insurer, together. Just as a computer’s hard drive requires the occasional defragmentation of data to ensure optimal performance, so does the construction industry and the Directorates are the tool the Construction Institute intends to use to accomplish this “defragmentation.” As a member of the Construction Institute, I encourage you to get involved with a Directorate that will allow you to optimize your line of business by “linking” yourself to other professionals you would not typically interact with, but has a critical impact on the success of the projects that you execute. Inside this issue, we are providing brief descriptions of the seven Directorates and those who are already involved. I recommend looking at the Directorates and contacting us to become involved with one or more of the Directorates.
Construction Institute of the American Society of Civil Engineers