What can the construction industry learn from the manufacturing industry?

Student thesis: Master thesis (including HD thesis)

  • Martin Møller Madsen
  • Damir Kandic
This master thesis with the title "What can the construction industry learn from the manufacturing industry?" is a final report on the M.Sc. program Management in the Building Industry, performed at the Department of Mechanical and Manufacturing Engineering at Aalborg University.

The starting point of the thesis is the prevalent critique of low productivity, as well as the bad standards and poor quality in the Danish construction sector compared to other industries and countries. In this context the industry is blamed for being tradition-bound, conservative, and that it does not follow technological, organizational and managerial development. Overall it gave reason to a more detailed analysis of the background for the construction industry’s development situation, where the focus was on identification and diagnosis of problems including barriers, causes and effects throughout the whole construction process.
The basic idea of the group's work is a technical sociological approach based on the hermeneutic method. It has been necessary to carry out analyses on macro-, meso- and micro-levels, thereby creating a holistic overview of the industry's problems and proposal for possible solutions. This approach results in a theoretical report which focuses on the analyses.

Through the problem analysis, it became visible that the construction sector is sensitive to the state of the market, politically driven and that the economic crisis has affected the industry significantly. Furthermore it appeared that the criterion lowest price, customers’ and suppliers’ high bargaining power as well as the low entry and exit barriers contribute to intensified competition in the industry. Further analysis showed that in the industry there are manifold problems where some can be seen as a barriers, while others as causes and effects. Cooperation and management issues appeared to be a recurrent problem in the stages of building process, due to poor management skills, different values, lack of management tools, changing partners from project to project and construction process phase shift. This is expressed among other things through widespread distrust, sub-optimization, expensive construction, low productivity- and efficiency-development. In view of the problem formulation, trends in organization and management theory as well as selected production philosophies were studied. Through the detailed analysis it appeared that the development of organizational and management theory has been characterized by two dominant humanity perspective; the mechanistic and organic respectively. Furthermore, it emerged that the construction industry can be inspired and take advantage of the following theories Lean manufacturing, Concurrent Engineering, Agile Manufacturing, Supply Chain Management and the Virtual Enterprise.
Inspired by organizational and management theory plus selected production philosophies improvement initiatives were proposed, based on the McKinsey 7-S model. In this regard, it was recommended that companies in the industry should change their organizational structure, work focusing on strategy and include production philosophies in their strategy development. It was additionally suggested that the companies should use the concept Resource Basin and that Lean Construction is to be applied more extensively. Leaders should strengthen their leadership skills through understanding of strategy, communication and motivation. In this context, it was also recommended that they should use a combination of situation-dependent leadership, values-based management and value management. In relation to that, companies must be convinced of the real values plus develop, expose and adhere to them.
Publication date9 Jan 2013
Number of pages113
ID: 72443125