Companies involved in building projects require assure superior quality and continuous improvement in the building projects they undertake in order to ensure customer satisfaction. The project managers in looking after building projects need to exhibit high rate of adaptation to the environment within which the projects function and take appropriate decisions. The aim of the project would be visiting quality management in the construction industry in Australia. The company considered for the study would be CPB Contractors which is one of the largest construction companies of Australia and a wholly owned subsidiary of CIMIC Group Limited listed on ASX (Cpbcon.com.au. 2018). The terms ‘principles’ and ‘project owners’ would refer to the clients on behalf of which the company performs projects. The terms ‘project management company’ and ‘contracting’ would refer to CPB Contractors.
The vision of CPB Contractors is to serve customers with integrity, innovation and deliver superior quality projects to its clients. Safety of the employees as well as clients also form important components of the vision of CPB.
The goals or missions of CPB are to generate sustainable returns to the stakeholders by delivering superior projects. The company also aims to provide secure, rewarding and effective career development for its employees. Thus, the stakeholder concerns form the base of the both the vision and missions of CPB.
Organisational environment of CPB:
The organisational environment of CPB can be divided into macroeconomic environment and microeconomic environment. The following are the macroeconomic environmental factors which prevail in the construction industry of Australia in which CPB operates:
Political and legal:
The construction industry of Australia comes heavily under the control of Government of Australia and the state governments. The industry is overseen by specific departments both at the state level and central level. The Government of Australia has set up Australian Procurement and Construction Council oversees the procurement of projects, construction and asset management in the government bodies both at the central and state levels (Apcc.gov.au. 2018). Similarly, Department of Treasury and Finance, Government of Victoria maintain construction supplier lists which includes names of consultants and contractors. As far as Australia is concerned, two areas which the government oversees the operations of the construction industry are work safety and environment. The firms involved in the construction industry have to comply with the SafeWok Act (Worksafe.vic.gov.au. 2018). Similarly, they have to comply with the Environment and Biodiversity Conservation Act 1999 which is in power in Australia (Environment.gov.au. 2018). This shows that the construction industry in Australia comes heavily under the influence of political influence.
Economic and technological:
The first economic factor which effects the construction industry in Australia is the gross domestic product of the country which shows the economic development of the country. This is because economic development creates demand for more construction of more civil structures like bridges and housing complexes which in turn pushes up the business generation of the industry. The graph below shows that the GDP of Australia has increased manifold in 2017 compared to 2016 which has boosted the construction industry.
The graph shown above shows that values of residential and non-residential buildings in month of June for five consecutive years. An analysis of the second figure shows that it is closely related to the first graph. The fall of GDP in Australia in the year 2016 was reflected in the fall in the value of buildings constructed in the year 2017. The rise of GDP in the year 2017 was reflected in the increase of value of building works in 2018. Thus, it can be established from the analysis that increase in GDP is one of the most important factors affecting the construction industry.
The second economic factor which effects the construction industry is the availability of building materials and building contracts. This is where the bilateral agreements of the Government of Australia comes into play. Department of Foreign Affairs and Trade. Government of Australia clearly mentions that the Government of Australia invests in overseas projects (Dfat.gov.au. 2018). It can be pointed out that the foreign construction projects of the government allows the construction companies in Australia to acquire projects overseas which enables them to earn revenue in form of foreign currencies. The construction companies are also able to import machinery and technology from foreign countries which enable them to take up complex and expensive projects. The construction industry is Australia is highly advanced owing to availability of modern construction plants and project management methods (Spalek 2016). This brings into the light the next organisational environmental factor as far as economic conditions are concerned, international currency rates.
The above graph shows five years trend of AUD against five international currencies namely, USD, GBP, JPY, EU and INR. The graph that the position of AUD is strengthening against INR and GBP. The power of AUD shows weakening trends against EU, USD and JPY. This means that the construction companies based in Australia can important materials and plants from India and the United Kingdom. Similarly, they can prefer taking up projects in the USA, Europe and Japan. This investment of resources on currencies having varying power against AUD would allow the Australian construction companies to hedge in the international and diversify their business risks.
Social:
The social factors in Australia have great influences on the construction company. The table below shows that the population in Australia has increased steadily in all the states particularly New South Wales and Victoria.
The graph above shows that the GDP per capita income of the Australians have also increase. The increase in population along with increasing per capita income means that more people have sufficient disposable income to afford premium accommodations, which means there would demand for more housing complexes. Moreover, the government would also float more tenders to building infrastructure like roads, bridges and housing projects for the increasing population. This would create immense business opportunities for construction industry and boost its income generation.
It can also be pointed out from an analysis of the above mentioned environmental factors that the Australian construction industry faces several risks which have profound impact on the industry. The following are the risks faced by the construction industries in Australia and their impacts on the industry:
|
Environmental factor(s) |
Risk |
Impact(s) |
|
Political |
Terrorism and extortion threats from local groups |
Halting of projects, wastage of resources, budget and time overrun |
|
Entry of foreign construction company into Australia |
Increased competition and revenue risks |
|
|
Economic factors |
Volatile currency rates |
Increased import and exports expenses. |
|
Asian construction markets gaining more importance |
Scarcity of resources in Australian projects and shifting them to serve Asian projects |
|
|
Legal |
Increasingly strict environmental laws and OHS laws |
Construction companies are required to comply with these laws. Failure to comply with laws attract penal charges from governments. |
|
Increasing stringency in international laws |
More complex operations and increase in legal compliance expenses. |
|
|
Environmental |
Increasing risk of environmental disasters |
Loss of resources, loss of staff, cost and budget overrun |
|
Technological |
Increasing chances of data theft |
Loss of business data. |
CPB ensures that the projects which the company delivers to the project owners are marketable, are capable of serving the purpose for long tenure and cause convenience to the users. Serpella, et al.(2014) mentions in this respect that quality refers to the capability of the products or projects to serve the purpose of end users for a longer span of time and cause value addition. The construction company performs civil construction projects for the governments and also for the private housing firms. CPB in order to determine the quality expectations of the clients hold meetings with the representatives of the latter to ensure plans, designs, expected time within which the projects are to delivered, cost of the projects and materials to be used. This is followed by a signing of contracts and documentation between the principle and the project management company. This detailed process followed by CPB ensures that the company adheres to the quality expectations of the clients (Hia.com.au. 2018).
The strict quality management system of CPB Contractors lends superior quality to the project the Australian construction company undertakes. The company complies with the AS/NZS ISO 14001:2016 Environmental Management Systems which encompasses areas like employment, health and safety, risk management, safety management and even seasonal standards. The company by adopting ISO 9001 benefits stakeholders like consumers or usres, buyers of the projects, suppliers, regulatory bodies at the government level, research and development organisations, technical firms and the society in general. This ensures that the company maintains very high parameters for the projects it undertakes and gives high credibility to the business operations (Standards.govt.nz. 2018).
Quality management forms a significant part of the audits of CPB Contractors Pty Limited and also its mother company CIMIC, which is a listed organisations. The Auditing Standards ASA 250 mandates audit of financial statements of the companies in Australia. The laws clearly mentions that the auditing body should also take into account the degree of compliance of the companies in Australia with the laws and legislation in power supported by appropriate documents (Legislation.gov.au. 2018). CPB holds quality management as an indispensable part of audit which is evident from the audit financial results published by its mother company CIMIC. The audited reports clearly mention the stand of CPB in important quality parameters like safety and community development while commencement of projects. The reports mentions the details of the contracts awarded and its CSR initiatives (Cpbcon.com.au 2018). All these point out that the construction while operating in the market consider quality as an important parameters and publishes quality reports in its audited financial reporting documents.
CPB takes into account the following parameters to determine meeting of quality review measures to determine compliance with quality parameters:
Money:
The company takes into account cash inflows and expenditures towards specific projects,. Then it measures the rate of time and cost overrun which took place in case of projects.
Future:
The company takes into account the future projects it would take up to generate more revenue. The company also acquires suppliers, sub-contractors and labour contracting firms to support each project. The company operates in markets like Australia, New Zealand and Asia. It takes into account quality acquisition of these partners in each of its markets in the light of its quality standards to measure the success of its operations.
Customer satisfaction:
CPB takes into account customer satisfaction rates while measuring its quality performance standards. The company in working with several project owners like government of various countries and body corporates. New projects awarded in existing principles means that the customers’ satisfaction rate is high which indicates high quality performance by the company.
CPB takes into account two parameters to improve efficiency and overall job effectiveness. The company time to time measures the competencies of its current work forces and takes initiative to train them. Secondly, the company acquires resources like funds and plants which it require in the future projects. These two steps ensure that CPB maintains its efficiency and improves it to ensure greater customer satisfaction.
CPB takes into account two aspects of the completed project to recognise lessons learnt and bring about further improvement. The first parameter is whether the project completed complies with the designated standards procedures of operations. Secondly, it measures the actual quality of the project completed. The company takes steps to rectify defects it recognises in a projects in future projects.
Conclusion:
CPB should take steps to improve its project management methods and comply with the laws to a higher degree. It should expand its operations in new markets. As far as the environmental factors are concerned, the company should expand more in the emerging markets like China to bank on the boom in demand for civil projects to support the latter’s infrastructure development.
References:
Abs.gov.au. 2018. Abs.gov.au. [online] Available at: https://www.abs.gov.au/ausstats/[email protected]/0/13ABDBADFD4D140ACA2568A9001393D7?Opendocument [Accessed 30 Oct. 2018].
Apcc.gov.au. 2018. APCC Home – Home. [online] Available at: https://www.apcc.gov.au/SitePages/Home.aspx [Accessed 29 Oct. 2018].
Bloomberg.com. 2018. Bloomberg – Are you a robot?. [online] Available at: https://www.bloomberg.com/quote/AUDUSD:CUR [Accessed 30 Oct. 2018].
Cpbcon.com.au. 2018. Cpbcon.com.au. [online] Available at: https://www.cpbcon.com.au/about-us/our-structure/ [Accessed 29 Oct. 2018].
Dfat.gov.au. 2018. Dfat.gov.au. [online] Available at: https://dfat.gov.au/about-us/publications/Pages/international-investment-australia.aspx [Accessed 30 Oct. 2018].
Environment.gov.au. 2018. Environment.gov.au. [online] Available at: https://www.environment.gov.au/resource/local-government-and-australian-environment-law [Accessed 30 Oct. 2018].
Hia.com.au. 2018. Hia.com.au. [online] Available at: https://hia.com.au/business-information/legal-information/contracts [Accessed 30 Oct. 2018].
Legislation.gov.au. 2018. Legislation.gov.au. [online] Available at: https://www.legislation.gov.au/Details/F2017L01172 [Accessed 30 Oct. 2018].
Serpella, A.F., Ferrada, X., Howard, R. and Rubio, L., 2014. Risk management in construction projects: a knowledge-based approach. Procedia-Social and Behavioral Sciences, 119, pp.653-662.
Spalek, S., 2016. Traditional vs. Modern Project Management Methods. Theory and Practice.
Standards.govt.nz. 2018. Environmental management systems. [online] Available at: https://www.standards.govt.nz/search-and-buy-standards/standards-information/environmental/ [Accessed 30 Oct. 2018].
Tradingeconomics.com. 2018. Tradingeconomics.com. [online] Available at: https://tradingeconomics.com/australia/gdp [Accessed 30 Oct. 2018].
Worksafe.vic.gov.au. 2018. Worksafe.vic.gov.au. [online] Available at: https://www.worksafe.vic.gov.au/ [Accessed 30 Oct. 2018].
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