Industrials / Construction / Process 1 comments

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An understanding of the construction industry, poised to be the next hot local sector, has to start with an understanding of the overall construction project processes.
A description of the overall lifecycle of a typical construction project is described below.

Overall process
Below is a schematic representation of events for a typical construction project:–
















Tender process
The client (the developer), or sometimes the architect or consultant acting on behalf, issues a set of building requirements (comprising tender documents, drawings and specifications), often to a set of select contractors they have worked with before. These contractors then tender for the project, submitting their bid separately.

Often the selection is based on lowest cost, because tender requirements are so specific that little room is left for contractors to maneuver eg. materials used, construction method, feature requirements are often standardised. This is why contractors often have little margin for error.

Subcontractors
The main contractor usually maintains a list of approved sub-contractors and suppliers. The name of the game is outsourcing, and the various services outsourced (this is where the investor can start looking for investment ideas) include:
- steel-bending/steel structural works
- carpentry
- sanitary and plumbing,
- concreting works
- installation of windows and doors
- tiling works
- electrical installation works and
- architectural or finishing works

Construction
Building construction consists of two areas: sub-structure works and super-structure works. Sub-structure works include piling, the installation of pile caps, ground beams and slabs. Super-structure works comprise the installation of upper storey beams, columns, floor slabs and walls, either through cast-in-situ or using pre-cast components. Obviously superstructure construction cannot proceed without completion of substructure works. The key building materials for beams, columns, slabs, walls are bricks and reinforced concrete, although structural steelworks are becoming increasingly popular. The building structure is completed with the erection of the roof.
During building construction, mechanical and electrical services such as sanitary plumbing, sewerage, water pipes, water tanks, gas pipes, ACMV (air conditioning/mechanical ventilation) systems, lifts, electrical and lighting system and telephone lines are installed at different stages of the project.
Architectural or finishing works are usually performed simultaneously with building construction. These works include tiling, plastering, glazing, painting and installation of fixtures.
Variation orders are issued when, during the course of building construction, the contractor is required to perform additional works which are not specified in the original contracts or to carry out variations to the specifications stipulated in the original contract.

References:
(1) Lian Beng IPO prospectus
(2) Chip Eng Seng IPO prospectus