EG7036 Business Procurement and Contractual Practice Assignment
Introduction
The construction industry impacts global society in every country. The research and development within the construction industry helps to create more safer and productive construction options (Kraatz and Sanchez, 2014). In comparison with the Indian construction industry in India and the UK, there is a significant difference in the R & D investment and therefore the impact also differs in the construction sector of both countries. UNESCO states that research and development expenditure globally has crossed $1.7 trillion whereas the R&D expenditure in India is relatively low at only 0.66 % of the GDP (Pental, 2023). In 2017 the UK construction sector’s total R&D expenditure comparatively increased significantly to £417 million with an increase of 11.5% annually (MacFarlane, 2017). This shows a significant difference in the construction sector investment in R&D in both countries. Kraatz and Sanchez (2014), highlighted that R&D in the construction industry is considered a proven factor in the economic growth of the industry as well as helps to develop a more productive and innovative industry. This research focuses on discussing the impact of R&D expenditure on the construction sector in the UK and India.
Summary
In India, the construction sector has significant importance as it influences almost 25% of material demand. In India, construction constitutes around 40% to 50% of the total expenditure of India on different construction projects such as railways, highways, irrigation, airports, bridges, townships and housing apartments (Ghosh et al. 2021). However, due to poor investment in R&D within this sector, the Indian construction sector faces barriers to adopting advanced technologies (Wei and Lam, 2014). According to Son et al. (2009), a lower level of technology adoption due to poor R&D expenditure in the construction sector leads to higher necessary costs in construction projects. According to Barrett et al. (2007), the R&D expenditure in the UK construction industry was around £140 million annually in the late 1990s but in recent years this R&D investment has increased to £471 in 2021 from £399 in 2020. Because of this investment in R&D, the performance of the construction industry in the UK was comparatively higher than the other sector even during the Covid-19 pandemic (Alwan et al. 2017). According to Price (2019), because of this high investment, the UK construction industry has become able to adopt numerous advanced technologies and sustainable building practices and measures that enable the UK construction sector towards achieving the Net Zero goal.
Conclusion
The study has discussed a competitive overview of the UK and the Indian construction industry in terms of research and development expenditure. This research has found that the Indian construction sector has significantly poor research and development expenditure that leads to slow adoption of technology and innovation. Because of this, the cost of numerous construction projects in India became high. Along with that the innovation leads to significant waste generation and faces various sustainability issues. Comparatively, the UK construction sector has increased its research and development investment annually which has helped this sector to adopt technologies and innovation. Because of this research and development investment, the UK construction sector has become able to sustain itself within the Covid-19 crisis period. Also, the investment helps the sector to improve sustainable building practices and various technology measures making an effective construction process. Hence it is true that the construction sector requires heavy investment in research and development for improving its performance. Furthermore, the Indian construction sector must acknowledge the need for research and development to improve its construction sector performance and reduce operation costs.
Reference
Kraatz, J.A. and Sanchez, A.X., 2014. R&D Investment and Impact in the Global Construction Industry.
Pental, D. 2022. Budget should have allotted more funds for R&D. [News] Available at: https://indianexpress.com/article/opinion/columns/unesco-stats-on-global-expenditure-on-r-d-7775626/ [Accessed on 08-05-2023]
MacFarlane, I. 2017. R&D spending in construction hits record high. [News] Available at: https://www.showhouse.co.uk/news/rd-spending-in-construction-hits-record-high/ [Accessed on 08-05-2023]
Son, H., Kim, C., Kim, H., Han, S.H. and Kim, M.K., 2010. Trend analysis of research and development on automation and robotics technology in the construction industry. KSCE Journal of Civil Engineering, 14, pp.131-139.
Barrett, P.S., Abbott, C., Sexton, M.G. and Ruddock, L., 2007. Hidden innovation in the construction and property sectors. RICS Research paper series, 7(20), pp.1-21.
Price, A. 2019. How R&D is building the future of construction. [Online] Available at: https://forrestbrown.co.uk/sectors/construction/how-r-and-d-is-building-the-future-of-construction/ [Accessed on 08-05-2023]
Ttjonline, 2022. Construction R&D spending at record level in 2021. [News] Available at: https://www.ttjonline.com/news/construction-rd-spending-at-record-level-in-2021-9610759#:~:text=R%26D%20spending%20is%20important%20to,%C2%A3399m%20invested%20in%202020. [Accessed on 08-05-2023]
Alwan, Z., Jones, P. and Holgate, P., 2017. Strategic sustainable development in the UK construction industry, through the framework for strategic sustainable development, using Building Information Modelling. Journal of cleaner production, 140, pp.349-358.
Wei, Y. and Lam, P.T., 2014. Innovation barriers at the project level: Study of a UK construction firm. International Journal of Architecture, Engineering and Construction, 3(3), pp.182-194.
The role and methods of dispute resolution boards in the construction industry in the UK and Sri Lanka
Introduction
The dispute resolution process in the UK construction industry is constantly evolving and the development method for alternative dispute resolution is continuously developing to prevent disputes within the construction sector in the UK (Maiketso and Maritz, 2012). In the UK the dispute resolution method involves dispute boards that are commonly used across various UK construction projects to provide availability of statutory adjudication in order to offer a quick temporary binding as well as enforceable decision related to numerals construction disputes (Wilkinson et al. 2019). In the UK construction sector, there is a tendency to focus purely on dispute resolution. For this reason, combined avoidance and resolution mechanisms like dispute boards have not widely been adopted throughout UK construction projects (Abeynayake and Weddikkara, 2013). According to Abeynayake and Weddikkara (2013), in the construction industry in Sri Lanka, disputes normally arise under different contracts due to the owner losing investment revenue as well as delay in the project. The construction industry in Sri Lanka required a first and cause effective dispute resolution process where litigation is a traditional method for dispute resolution in the construction sector. This study focuses on discussing the role and method of dispute resolution boards in the context of the construction sector in the UK and Sri Lanka.
Summary
In the UK construction, the dispute resolution board can be categorised into Dispute Adjudication Board (DAB), Dispute Resolution Adviser (DRA) and Dispute Review Board (DRB). The dispute resolution board is required for making regular visits to different UK construction sites and attending all meetings. In construction projects, the cost often becomes high so a dispute resolution board is employed in very large contracts (Maiketso and Maritz, 2012). In this case, an agreement between the party and owner while constructing projects creates boards and defines their roles and responsibilities. In the construction sector in Sri Lanka, Alternative Dispute Resolution (ADR) helps to settle the construction process (Hons, 2010). The “Dispute Adjudication Board (DAB) ” and “Dispute Review Board (DRB)” are majorly used for the resolution of disputes in the Sri Lankan construction industry for resolving site-level disputes (Illankoon et al. 2022). However, the DAB is used in Sri Lanka followed by FIDIC 1999 (Red Book) in construction for mostly foreign-funded infrastructure and development projects. Additionally, the Alternative dispute resolution process involves mediation, mini-trials and third-party neutrals (Taş and Fırtına, 2015). The DAB or the sole adjudicator within the context of construction dispute resolution act as an impartial expert in resolving any disputes within the construction projects. In 1999 FDIC conditions provided a DAB system in terms of pre-arbitration (Klein and Britain, 2006). There are two major types of DAB that include full terms DAB and Ad hoc DAB in the construction sector of Sri Lanka for dispute resolution.
Figure 1: Conflicts, Claims and Disputes Process (Source: Abeynayake and Weddikkara, 2013)
Conclusion
This research discusses the dispute resolution boards’ role and the method for dispute relations in the construction industry UK and Sri Lanka. The study has observed that in the UK an independent panel of various professionals provide guidance in dispute resolution to solve issues during the construction process. The dispute reservation Board members can be selected by the contracting party and the dispute resolution board provides guidance to resolve disputes but not as a decision-maker. In the context of the construction sector in Sri Lanka, the dispute adjudication board and dispute review board are incorporated for resolving site-level disputes within construction projects. In Sri Lanka, the dispute adjudication board (DAB) are mostly involved in foreign construction projects. In alternative dispute resolution in the Sri Lankan construction sector, it involved Mini trials, mediation and third-party neutrals. The DAB within construction projects is involved in the arbitration process where DAB performs as an impartial expert for resolving disputes. However, in Sri Lanka, there is no statutory recognition regarding the adjudication method as well as the adjudicator’s award does not have such legal recognition whereas in the UK the adjudication process has significant recognition and actors one of the effective way of solving disputes in construction projects.
Reference
Abeynayake, M.T.D.E. and Weddikkara, C., 2013. Special features and experiences of the full-term dispute adjudication board as an alternative dispute resolution method in the construction industry of Sri Lanka. Department of Building Economics, University of Moratuwa, Sri Lanka.
Illankoon, I.M.C.S., Tam, V.W., Le, K.N. and Ranadewa, K.A.T.O., 2022. Causes of disputes, factors affecting dispute resolution and effective alternative dispute resolution for Sri Lankan construction industry. International Journal of Construction Management, 22(2), pp.218-228.
Hons, K.D.G.B.Q., 2010. Performance of critical attributes in alternative dispute resolution (ADR): A study in Sri Lankan construction industry. SLQS Journal, p.42.
Abeynayake, M.D.T.E., 2015. Critical analysis of alternative dispute resolution methods used in the construction industry in Sri Lanka (Doctoral dissertation).
Maiketso, N.C. and Maritz, M.J., 2012. Adjudication as an alternative dispute resolution method in the South African construction industry. Journal of the South African Institution of Civil Engineering= Joernaal van die Suid-Afrikaanse Instituut van Siviele Ingenieurswese, 54(2), pp.65-70.
Taş, E. and Fırtına, Ö., 2015. The use of dispute review boards in construction projects: A comparison of Turkey, UK and US. A| Z ITU Journal of the Faculty of Architecture, 12(2), pp.187-204.
Klein, H. and Britain, G., 2006. Alternative dispute resolution procedures used to resolve construction disputes in the UK. In XXIII FIG Congress TS.
Maiketso, N.C. and Maritz, M.J., 2012. Adjudication as an alternative dispute resolution method in the South African construction industry. Journal of the South African Institution of Civil Engineering= Joernaal van die Suid-Afrikaanse Instituut van Siviele Ingenieurswese, 54(2), pp.65-70.
