Quality Influences in Malaysian Construction Sector by P.E.S.T Factors

Political

As in the construction industry, political is the major influencing factor in defining the strategic management of quality of an organization. One of the factors is the governing policy. As in Malaysia, construction companies are required to register with Construction Industry Development Board (CIDB). In order to be eligible to register, construction companies need to be legally registered and licensed with certain bodies. The CEO and the technical person shall also be registered to CIDB with a valid Construction Personnel Registration card. The technical person should also be accredited. This will ensure only knowledgeable people be allowed to operate the construction company to ensure quality service avoiding problems in the future. Malaysia has a strict labor force, thus companies take a great precaution in this area.

To be approved for registration, the company shall also be financially capable to continuously funding the project. This is important to ensure the project will be continuously worked on. Otherwise, problems in financial may cost delay in purchasing which later may increase the cost of materials + fines if applicable. This in return would cause quality to be dropped in balancing the cost with the initial announced payment from the buyer; unless the cost is voluntarily to be absorbed by the buyer. Failure to commit to all these requirements will result a revocation of the permit issued. In this case, the company will ensure all the requirements to be fulfilled through a systematic Quality control in the organization

Infrastructure provided by the government like the highways, railways will also impacting the construction industry. It is normal that housing or industry development to be built surrounding or near the infrastructure provided. Properties can be build but many it should be a practice that more than one developers to be allowed to build property in the new area. Developers would be able to strategise to meet the quality requirement of the other competitors in order not to left out while customers purchasing.

Economy

More and more countries were liberalizing the economy. Liberalization means reducing the governing regulations and restriction. In the recent changes effective from January 1^st, 2012, foreign suppliers with 100% foreign equity in the company, is allowed to operate in Malaysian construction industry. This change the scenario of the local suppliers of which suppliers will need to raise the quality of the product supplied and the service provided in order to compete with the foreign suppliers. This change was believed to be done as to introduce more construction supply in the market in the move to control the sky-high price.

Given a competitive scenario in the supply industry, as when supply is higher, the price is expected to be lower. Construction companies will have a wider choice of materials to choose from. This is an opportunity for the organization to implement a quality standard towards materials to be chosen.

Based on the current slow growth economic outlook globally, it is important that construction companies to take steps to reduce waste as to improve on gaining in the profit. In uncertain economic condition, it’s very hard to predict the expenditure capabilities of the public. In the economy where quality is expected, people would consider to buy quality products. Quality product would result less after sales issues. Most construction organizations were focusing on completing the job quick without considering the impact to the quality. After sales issue can only be avoided if construction organization properly ensures quality in the material, work and the process since the beginning of construction. Buyers won’t simply return to the developers for issues unless they have real issues. By ensuring quality, it’s not only saving the construction company’s time and money but it would also save a lot of buyer’s time and money in return; a win-win situation.

As customers were looking out for affordable properties with a good built quality, it is good that even with a strict regulations and restrictions implemented by the authority; it is an equal opportunity to qualified parties to get registered and accredited with CIDB and later to form a construction company to build properties. This healthy competitive situation will help to promote each competing parties in the industry to strengthen the quality control and tighten the quality implementation in their built product; in order to gain buyer’s trust and favor. In construction industry, customer loyalty may not be gained but new buyers would be gained through a good reputation and good words of mouth from the past buyers.

Majority property buyers would not cash in their money for house. As for most Malaysians, house acquired through loans from the financial institution. Thus it is important for the Governing authority to ensure the interest rate is balanced with the construction demands as when the interest rate is too high, public will tend to save their money rather than to purchase. In the uncertain economics with averagely high interest rates, developers were having issue to produce affordable-to-buy houses to the mass but capturing high end buyers true a high quality built house is still possible.

Social

Construction companies, especially in Malaysia had been related in many social responsibility issues involving environmental pollution and demolition. For most construction companies, the demolition of the environment is part of the financing activities. Take for example a hilly area with half forest and half open areas. The forest will definitely be cleared and logs will be sold to saw mills. Cleared hill will then be chopped down to become flat land in order to enable construction to be started. The soil of the chopped land will be sold to other parties too.

By complying with the governing regulation of the authority, these activities cannot be simply performed. Selling off logs would require logging license while selling soil would also require sand digging permits. It is important that when these construction companies were registered to the authorized bodies, once they broke the rules their license and permits to be revoked.

As to avoid the revocation, it is important for the construction companies to set procedures to handle such situations. As for trees, the company might want to log necessarily, leaving some of the originals of which properties can be built in between just to ensure part of environment originality remains. As for areas of which trees needs to be totally chopped down, a replacement scheme would be necessary. This should be a quality control built in within all construction organization to ensure continuity of environment care be prolonged.

As in for development that was going on the in the community area, perhaps, the developer has a set of procedures and rules to govern their work. Protective walls and controlled pollution in order to protect surrounding community is important. Proper safety, precautions and security personnel shall be deployed as a social responsibility towards surrounding community; as part of the quality control measures. Deploying these items would in return results less issues that may be raised from the surrounding community, which in turn leads to less cost to entertain such unwanted incidents if occurs.

Technology

Safety is the most important element in the construction industry. Safety culture is a topic attracting considerable attention in the literature recently. As it was immeasurable and reliably changed, it was hard for the management to decide as of which is right and not right.

Recent technology in recording had helped safety experts around the world to observe the safety inspections made at the building. This would enable inspections made not only once but multiple times by observing the images or videos provided during the physical appearance of the inspector at the location. Safety experts may quickly determine patterns which can be extrapolated in predicting future injuries and incidents. Visually recorded data plus the hand recorded data based on the checklist can be managed and compared, with filters applied based on data, including location, contractor and the inspector himself. These data then kept in the database for trending data comparison in order to find abnormalities. This could be a good quality control measure in safety aspects.

Contractor current and past data can also be used to track contractor’s performance, and observing the safety measures being observed in a time period. At risk contractors can easily be identified for precautions. Ability to track and trend subcontractors would also be easier as the information can be used for continuous improvement through feedbacks. Historical data can be a big help for pre-bid selection, of which poor performers can be eliminated from the beginning. This would contribute a good control in measuring contractor’s quality in preserving safety while delivering good quality of work.

References 

Authors, CIDB. "REGISTRATION REQUIREMENTS AND PROCEDURE." CIDB Website. n.d. https://www.cidb.gov.my/cidbv3/images/pdf/RegistrationRequirementAndProcedure.pdf (accessed February 22, 2014).

Authors, Malaysian-German Chamber of Commerce & Industry. "Construction Industry in Malaysia." Malaysian-German Chamber of Commerce & Industry. n.d. http://www.malaysia.ahk.de/fileadmin/ahk_malaysia/Market_reports/The_Construction_Industry.pdf (accessed March 3, 2014).

Saleh, Mr. Shaifubahrim Mohd. "SEMINAR ON IBS AND MECHANISATION 2012:." Liberalisation and Transformation. September 19, 2012. http://www.mbam.org.my/mbam/doc/news/Paper%202.pdf (accessed March 2, 2014).

Usrey, Cary. Using Technology to Improve Safety on Construction Sites. February 1, 2011. http://ehstoday.com/training/using-technology-improve-3004 (accessed February 20, 2014).

Three ways how the economy can reduce imports

Import substitution policy

A policy or initiative to reduce import should be imposed so imports can be reduced. Businesses should be able to produce goods locally. Probably raw materials would still be imported but raw materials can be manufactured to other goods, of which it has its own sellable value and create demand from other countries to be exported out.

Given good infrastructures and communication facilities, Government may also encourage Foreign Direct Investment by getting business corporations to invest on establishing a manufacturing or operating facility in Malaysia. Other than providing jobs to the local, goods produced may also be exported out. Other than goods, products like services, talent and machinery items can be locally produced with a lower cost since duties, transportation cost and management cost can be reduced. These manufactured goods or services that produced with lower cost can be exported to further create trade surplus.

This is a long term solution that can economically improve the economic situation of a country further.

Supporting Trade Policy

Government may impose supporting trade policy like import tax, higher duty and so on. This action will help to increase price of imported goods thus discouraging market from continuing using all the imported goods.

Market is not only reducing consumption of imported items, locally manufactured goods will also be strongly supported locally thus strengthen the local manufacturer to continue manufacture their goods, thus increased the foreign importers to continue buy their goods from the manufacturer.

Governments often work with other country’s government to deal on agreements that will benefits both or more parties. ASEAN countries signed a treaty called AFTA to regulate the trades between participating countries. It would often help all participating countries to improve their trade scenarios. As per AFTA treaty, will have to impose lower import tax for goods traded from a participating country to another participating country

Exchange rate policy

Using this policy, a government will always attempt to lower its currency value. By doing this, it will discourage import thus more goods can be exported out as the currency exchange rate will be lower, thus other country will be able to obtain the goods at a better price. Anyway, this is not a good policy to exercise as it will actually lower the buying power of the people and will cause inflation.

This would normally be used as a short term solution, could be due to certain economic condition of a country. When it is used for long, inflation will further increase price of goods so the purpose of lowering price of goods will no longer be achieved.

What is Full Employment

Basically full employment is achieved when an unemployment rate reached 2%. Readings made through books and internet shows that some would define variable percentage of full employment. There were 0%, 1%, 3%, 4% and even up to 5%. In this context, we will use 2% as the benchmark for full employment rate.

This 2% is considering only people who are eligible to work, at certain age for instance from age 16-60, not inclusive of children. These 2% is actually including those who were just graduated from university, those who were in between jobs and those who are waiting to get into a new job. Malaysia is considered one of the countries with full employment besides Austria, China, Switzerland, Germany and Japan.

Full employment is highly influenced by factors of production being fully utilized in the country. One of the factors is the land & premise availability factor. Mentioning Malaysia as an example, initiating a business would require a premise and probably a land to start with. Considering Malaysia has a lot of new business parks or shop house lots being developed, it is considered that the offering of premises to start a business is very high. Land would also easy to be rented out.

Other factor would be rising of public construction work like building highways, parks, public buildings, transportation and internet infra using public funds. These are the medium where people can make use to create business or to find a job as these projects would create many jobs and it will continue to provide jobs through maintaining the infrastructure build as using these infra will definitely for some payment.

Government may also impose other policies like active labor market policies of which to protect both employers and employees. Tax policies for start-up companies will also help to boost new companies in order to generate more business thus creating more jobs for the people.

When most of the factors above exist, more and more business will grow, thus more jobs created. With supplest job in the market, people would easily get a job or switching jobs thus full employment rate is achieved.