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Impact of Technological Innovations on the UK Construction Industry

Question 2


The technical innovation and advancement are having a significant impact on the construction industry of the UK. The leading organizations are using the different tools and technologies for improving the efficiency and managing the operational effectiveness in design, architect and managing the resources. For example, the technical tool like Building Information Modelling (BIM) software is helping the construction organization to improve the level of productivity and integration of the operations to maintain the high standards in construction. The processing power of software is allowing the companies and project team to identify the risks and issues that could influence the overall quality of the building (Turk, and Klinc, 2017). The early detection and planning of the actions are increasing the progress and helping to improve the quality. Moreover, the implementation of Artificial Intelligence (AI) is also beneficial for the scaling and minimizing the role of the human in the construction work. This kind of technological advancement is increasing the level of production and monitoring of the approaches to maintain the design standards. The proper planning and lack of human errors are helping the construction industry of the UK to complete the project in the estimated budget and completing it as per the given deadline. In addition to this, the technical innovation is also helping to improve the level of communication as the emailing, video conferencing and virtual team management is helping the organizations and teams to maintain the collective efforts and meet the satisfaction level of the customers by offering the customized services (Guo, Yu, and Skitmore, 2017). However, to utilize these tools and technologies, the organization has to provide the training and information to the staff members that influence the cost of managing the operations. b. The research and development are having a significant impact on the planning, organizing and implementing the strategies to meet the goals and objectives of the client in the construction industry. The leading and emerging organization are following the traditional process of collecting and analyzing the information for trends and requirements of the industry. The lack of R&D is influencing standards and working standards. However, there are various tools and technologies are available for managing the research work but lack of investment is affecting the process (Li, and Yang, 2017). The major reasons for the lack of investment in this sector are involving the lack of resources and technical knowledge to collect and analyze the information. The uncertainty in the market and post-Covid-19 effects are hurting the business of construction industry of UK. To improve the research and development work, companies need to develop a separate fund for this activity. Moreover, the organizations could take the help of the consultancy agency that will help to increase the investment (Laing, 2020). Apart from this, the local authority of the UK needs to conduct the workshop and seminars for providing information related to the benefits and importance of research and development in this sector. The awareness related to different aspects of design and construction will be beneficial for increasing productivity and help to gain a competitive advantage.


Question 3

a) Product Life Cycle (PLC) is considered as important tool through which companies can develop their products and determine ways through which their life can be enhanced so that customers can be served in a better and effective manner. According to Andriankaja et. al (2015), one of the key uses of PLC is that it can help companies in introducing new products in the market at a much quicker rate. The reduced time to market can help the construction companies in effectively introduce new products while entering the new market. PLC also helps in reducing entry costs while entering into new markets. According to Restuccia et. al (2016), this is because of the reason that PLC enables companies in understanding the target market and on the basis of such information, firms can determine ways that can help them to reduce the costs for entering the new market. Chau et. al. (2015) also argues, while highlighting the benefits of PLC, that it helps companies in developing more efficient and profitable distribution channels. This can enable the construction firms in creating such systems that can help the firms in developing better channels that can improve distribution and profitable channels. Such an approach can be useful for the organisations in enhancing the operational flows and thereby serve the customers in a better and effective manner. According to Guimon (2016), using PLC enables organisations in understanding the target markets in a better manner and thereby be able to fulfil needs and demands of the customers. In addition to this, PLC can further enable the construction companies in extending the lifetime of their products and/or services. In a highly competitive market such as the construction sector, using PLC can help such organisations in creating better products and/or services that satisfies demands of the customers. b) The Eclectic Paradigm is also known as the Ownership, Location and Internationalisation (OLI) framework (Dunning, 2015). It is a three-tiered framework that can be used by organisations when they are attempting to determine if it is beneficial for the firm to pursue FDI. In the construction industry the OLI framework can be used as a means by companies that are seeking to engage in involvement in international operations. In this regard, it can be suggested that companies in the UK construction industry can focus on expanding their operations in the developing markets. This way, such organisations can attempt to enter into new markets and establish their operations to cater to a new set of customers and enhance their overall operations and sustainability in the industry. Furthermore, it can also be said that these enterprises should focus on creating a proper ownership structure, so that the organisation can operate effectively and thereby be able to fulfil its goals and objectives (Guimon, 2016). In addition to this, these companies should also focus on identifying the right location, so that they can reach out to maximum number of customers and fulfil their varied needs and wants. This will help these organisations in enhancing the quality of their operations and thereby also enhance their performance.

Question 5

a. Relationship between the construction sector and wide economy In the context of wide economic context, the construction sector play an important role to influence the economic growth of UK. This section encourages various sectors of economic development. In this regards, different studies have determined that countries like Finland, Ireland, Italy, Japan, UK and USA have recorded a significant U-shaped economic growth after World War II with the help of construction and other activities. Khosrowshahi, and Arayici (2012) stated that the increase in construction activities activates the requirements of different materials and workers to manage different tasks. Therefore, the countries find a significant increment in the Gross National Product due to multiplier effects of the investment in construction sector. This is because the construction operations within a country creates several direct and indirect jobs such as transportation, designing, material production and supply, designing, mining, and others (Shahbaz and Ozturk, 2014). The increase in jobs also influences the public spending and the market demand that plays a critical in order to stimulate the economic growth in the country. This type of phenomena can be applied in all countries so as the relationship between economic growth and construction section can be used in the wide economic context. McCombie and Thirlwall, 2016

The above chart determines the positive and upward relationship between the investment in construction operations and per-capita GDP of a country. In addition to that, the construction or infrastructure development project like highway, bridges and many more plays a critical role in stimulating the economic growth in the form of trade and other economic activities that could influence lifestyle of people. Therefore, the investigation in construction practices provides benefits to all types of countries that are termed as less developed countries (LDC), newly industrialised countries (NIC), and advanced industrial countries (AIC) (Ball, 2014). In this context, global regulators like IMF and others have determined the positive relationship between the construction operations and economic growth of different countries. b. Causes of busines cycles In the context of contemporary business environment, there are different causes of business cycle identified that may have a significant implication on the output of construction sector along with the demand of construction and professional services firms in UK and other countries. In this regard, the change in Interest Rate has been emerged as the important cause of busines cycle. The high-interest rates in 1991-92 were being emerged as key drivers of recession. However, the cut-down in interest after 1992 stimulated the lowcost availability of capital and investments (Rapetti, Skott and Razmi, 2012). In the context of construction sector, the reduction in interest rates encourages the construction companies and government agencies to handle a wide range of public and private construction projects in all over the world. It also influences the demand and needs of different professional services such as accountants, designers, transporters and many more. Moreover, the house prices have been emerged as an important causes of business cycle that would not only influence the demand of construction operations along with other economic operations (Koellinger and Roy Thurik, 2012). The investment in construction operations leaves multiplier implications and it can be considered as an important element of the business cycle.

Question 6

a. Identification of construction material produced in Oligopoly Market In the context of constructional material, iron & steel, and cement are considered as the basic materials for any kind of construction activities. These materials are also produced in oligopoly market conditions. In the context of oligopoly market conditions, a small number of firms dominates the whole market or industry. The main reason behind the increased dominance by a small group of companies is that the existing big brands have maintained the huge investments in the production capabilities of steel & iron ore processing, and cement manufacturing for assessing the competitive advantage over the other companies through aggressive cost construction (Sherman, 2014). Furthermore, there is huge business rivalry identified among companies and top brands not only in domestic marketplaces of UK but also in international markets. In the context of contemporary market trends, the term oligopoly has been emerged as the most appropriate economic measure to examine the industry trends within the UK’s market of construction material. In the context of steel production, the industrialization of steel production was mainly originated in the United Kingdom (UK) and it was termed as an important part of a variety of new manufacturing processes that helmed the Industrial Revolution (Karmarkar and Rajaram, 2012). This type of industry trends influence the pricing of different materials and other products that are manufactured by iron and other basic component that may have a significant influence over the construction operations within country. The main reasons behind the increment in dominance of the large firms in the construction material industry are expertise in production, huge volume of investment, global quality and durability standards, brand value and many more. Moreover, the new emerging companies would not be able to manage the market competition and huge competitive rivalry in the context of price wars (Petit, 2013). b. Managing the market share. In the context of iron & steel production of UK, top companies such as Tata Steel UK, British Steel Ltd., Celsa (UK) Holdings Ltd. and some others have maintained the highest market share (Sourisseau, 2018). For assessing the competitive edge over other brands and increasing in the market share, companies like Tata Steel UK have adopted different measures such as Aggressive branding of different products, Customised Solutions, Diversification of product portfolio with a huge range of new composites to meet distinct needs of different projects, Environment production, Increment in quality with consideration of latest technologies, Reduction in the production cost, and others that have supported companies in assessing the competitive edge and enhancing the market share in positive manner (Iron & Steel Manufacturing in the UK - Market Research Report, 2020). In similar way, the cement industry has been emerged as an important example of oligopoly in which top companies named CEMEX UK, Hanson Cement, Breedon Cement, Lafarge Cement and Tarmac have maintained the 90% of total market share. Therefore, both sectors incorporate several barriers for new entrants in the field of steel and cement manufacturing (welcome to the UK cement industry, 2020). For enhancing the market presence, top leading brands pay extra attention on the sustainable corporate practices to enhance positive image of firm and market share.

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