Important Of Construction Industry


02 Nov 2017

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Well, 1985 was define the construction is an activity of the creation of physical infrastructure, superstructure and related to the facilities.

Nam and Tatum, 1988 define the construction as all type of activities associated with the erection and repair of immobile structures and facilities.

Hillebrandt, 2000 define the construction as a covering the arties that involved in the construction process as well as the suppliers of the industry inputs.

Then industry is defined as a group of related economic activities classified according to the type of goods or services supplied.

Then, the construction industry is a sector of an economy which constructs, alter, repairs, and demolish the buildings, civil engineering works, and other similar structures.


The important of construction industry are :

Engine of growth

They are public works that considered to be an instrument for economic control since ancient times. For example, the construction of irrigation works and highways.

Capital formation

Capital formation is a construction as a creator of the physical facilities. For example, the poor construction capacity delayed project implement, thus hindering overall national development.


These are the characteristic of construction industry.

Features of construction output


Nature of demand


Nature of demand for construction output

Nature of work

Structure of the construction industry

Government as a client














Consultant firm is a firm that has experts in providing of professional advice to an organization or an individual for a free. The consultant firm has provided access to industry to make the work easier. In consulting firm, there are many different type of sectors.

These different sectors under these following fields :

Financial services

Financial services is an economic services that provided by the finance industry. It can encompasses a broad range of organization that manage money and some government sponsored enterprise.

Information technology consulting

Information technology consulting is an advising business on how best to use information technology to meet their business objective. The other purpose of information technology consulting is to provide advice. They also estimate, manage, implement, deploy and administer the information technology system.

Management consulting

Management consulting is a practice of helping organization. They improve the performance through analysis of existing organizational the problem and development of plans for improvement.

Human resources

Human resources has emerged from management consulting and addresses human resources task and decisions. The consultant responsible to assisting the clients with effective strategy in their daily operations.

Hospitality industry

Hospitality industry is a service industry that include the lodging, restaurants, event planning, theme parks, transportations, cruise line, and additional fields within the tourism industry.


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Project manager will manage the flow of the project and make sure the work move smoothly. They also make sure the project finish on time.

Architect will produced a good, unique and suitable plan of building to be selected depend on the clients or tender.

Civil and surveyor engineer will measure and produce the quantity of material uses in the construction.

Mechanical and electrical engineer will make sure the building will be install with the electricity and water supply as daily needs.

Landscape architect will decorate the building to make it more interesting and have aesthetic value.

Contractor act as supplier to the project. He will find the labors, the material suppliers to make sure the material continuous.




Tendering is a process or method to obtain offers leading to a contract. According to the Aqua Group, tendering is a procedure to select a suitable contractor, at a time appropriate to the circumstances, and to obtain from him at the proper time, an acceptable tender or offer upon which a contract can be let.


The type of tendering are divide into three. These are :

Open or public tendering

Open or public tendering is a bidding process which open to public to compete with each other to win the tender and fulfilled the qualifications. The selection process based on the price and quality offered and sealed bids are often revealed in public to ensure transparency. The main tendering procedure employed by the government and private sector.

Selective tendering

Selective tendering is when the contractor was chosen from the pre qualification register.

Negotiated tendering

Negotiated tendering is when the contractor is selected and the contract price agreed upon not through competition but on the basis of negotiation between the parties. The contract is not put out to tender but the extent of the works and contract price are established by the mutual agreement through protracted discussion or negotiation. Usually refer only to the main contractor’s own work as sub contract work is often awarded through competition.


Based on my case study, the suitable type of tendering method can be applied for this project is a selective tender. This is because to have a good management in the tender process. In the project, the contractor should have to consider on the aspect based on the project. The contractor must have to complete the 92 units of semi-detached house with the good features of boasts top-notch, fitting, and design layout that shown the best of millennium developments. For example the uses of lighting, the ventilation, and fire contraction in semi-detached house. The contractor also must touch the futuristic of the developments. The skill of contractor and consultant is very important to make sure the project success. The project also must finish on time, so the selective tender is the best way to find out the good contractor to di this project.

The consultant firm is a team that have members with different skill. In consultant firm should have the project manager, architect, civil and surveyor engineering, mechanical and electrical engineering, and also landscape architect. The project manager needs to manage the work of project and make sure the project finish on time. The architect needs to produce a unique and best design to show to the client. The civil and surveyor engineering also one of the important members in construction industry because they need to measure and assume the quantity will use in the project. The mechanical and electrical engineering will use their skills to install the uses of electricity and the uses of water into the house. For example, the electrical engineer will install the lighting circuit and make sure the building have an electricity. The landscape architect helps to make sure the building more interesting like the uses of painting for the wall and the uses of mosaic for the floor.

Selective tender also known as pre-qualified tendering or restricted tendering. Selective tendering has two types are one or single stage process, and two stage process. One or single stage process has two envelopes which is technical and financial bids. The two stage process has to envelopes which is post qualification questionnaire and technical or financial bids. The selective tender only open to a limited number of contractor that are prequalified or pre selected from the list. So they are invited to submit their tenders or bids by the employer. This project very big and need a suitable contractor to do it. So the selecting of contractor very important to make sure the project success. The selective tender is to ensure only contractor with the necessary experiences and competence are given opportunity to submit the bids.

There are many advantages and disadvantages of the selective tender. The advantages of this select tender a reduced documentation and make the shorter period of tender than open tender. The tender have submitted considered on the basis of price alone and the lowest may be selected with little risk. This select tender is a better management of the tender process and by pre qualifying, the number of potential tenderers reduced drastically. The uses of selective tender also have a disadvantage such as the process of developing the tender list, prequalification and invitation to tender used more resources in employer side.


The tendering process can be a minefield of potential litigation, with tenders complaining of the lack of a fair and consistent approach to tendering and accusation of favouritism and corruption. The aim of the selection to produce a list of contractor that capable completing the project satisfactorily. Then, the final choice of contractor will be submit the lowest or most economically advantageous to tender.

Based on case study, the select tender was applied for tendering method. The selected tendering has two types that are :

One or single stage process

The tender list development stage

The employer will generate the list based on the previous project. Then the consultant team will generate their own list and recommend to the employer. After that the employer will advertises the tender to be short list for the pre qualification exercise.

The pre qualification stage

When the list of potential tenderer has been approved, they issued pre qualification document. The content of document should include :

Identification of document

Instructions on date filling-in procedures

Instruction on date, time, mode, and place of submission of completed documents

Description of project, work to be tendered, and identification of the principal parties

Proposed milestone schedule or outline programme

Questionnaire or capability statements

Statements non- collusion statements on confidently or information received

The document will be returned to evaluated based on specific employer’s requirements. Then the potential tenderers will be interview and after that the completion of evaluation or recommended list will out. The decision should be professionally and fairly.

The invitation to tender stage

The selection tenderer are issued with tender documents and invited to submit the tender to the employer.

Two stage process

Selection of suitable contractor

The establishment of a list of eligible contractor will out. Then an interview will be to the potential contractor and the list will be shorter. The completed document will be returned must be received, opened, and evaluated with employer’s approved procedures.

Determination of the contract price

The selected contractor will start contributing to pre contract process in capacity as an unbiased but independent construction expert. The process of contributes expert to produced an innovative, and cost effective design. The practical skill is needed to make sure the project finish on time and the guaranteed of quality of material use and the cost. The contractors need to minimize of project delay if the date is coming.

Both of selective tendering that involved in the tender from the firm or chosen, they meet certain minimum standards in criteria like financial standing, experience, capability and competence. The price and quality is an important element in the tender. This method always use in complex project because the contractor can design any plan that interesting and unique.


Construction industry is one of the largest industries that face many problems such as prequalification, tendering and selecting a contractor. This is because the selection criteria will be effective in building construction projects. The process of contractor selection can achieved unless the prequalification, tendering criteria and tendering process linked to project performance in term of time, cost, quality, and customers satisfaction. The different project types and objectives should have different proportion on each selection criteria.

The purpose to select good contractor is to define contractor prequalification criteria, tendering criteria, and tendering procedure. The others purpose also to define how the contractor prequalification, tendering criteria, and tendering procedure give affect to the project. The objective of this selection is a study effective contractor prequalification criteria, to study the effective contractor tendering criteria, to study the effective contractor tendering procedure, and how the contractor prequalification criteria, tendering criteria, and tendering procedure affect the project performance.

The main criteria to select contractor are:

Financial consideration

Past performance

Technical ability

Management capability

The financial consideration is about the financial stability of the contractors. Financial consideration also shows the bonding and arrangement with the bank. The past performance is a schedule overruns, cost overruns, and past failure of the previous projects. The good contractor never has a record failure to complete the projects. The good contractor also has a good relationship with the owner or clients. The technical ability is about the technical expertise, possessed plant and equipment, and experience. The experience of the worker and materials use to finish the project. Management capability is a quality of the past performance and how the contractor manage the time to complete the project, how the contractor mange the cost use, how the contractor manage the organization of project management.

The contractor tendering criteria are :


Technical skills


Relevant experiences

Past performance

The price is an important factor for contractor tendering criteria because mostly the tenders still rely on tender price which has been proven its competency to acquire the contractors. The technical skills are quality of the design of project. Then, also the technical expertise to complete the project. The methodology is how the program of works, the division into sub contractor and the performance of indicators. The contractor should show the reporting and recording system of the project to show the contractor manage the project. The relevant experience is a cost used in the project. The past performance is very important criteria I selection of contractor. The contractor must have the quality of standard, target performance level, tender price, variation, and final cost to complete the criteria of a tendering contractor.


The construction industry very important in the development of the country. Before do the projection, the tendering process and the selection of contractor should be done first to make sure the work smoothly and to reduce the problems. The right select of type of tendering will give affect to the development. The selection or good contractor to make sure the work can finish on time. The past performance that has done by the contractor will be look. Other than that, the financial management of the contractor also one of the criteria that will be find.

In this assignment, the type of tender uses is a selective tendering. Selective tendering suitable to the conditions because the construction very complex and need more attention. For example for the lighting to look like urban and more modern. The house also must have the security like the uses of CCTV and the armed guard to safety of clients.

As a conclusion, the tendering must be done first before the construction activity can be done. A lot of people involved in the construction to build up the building. A clients, engineer, architect, contractor also the labor should have a good relationship to make the project success.


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