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BIJ
17,2 An investigation of the status
of the Malaysian
construction industry
294
Abdul Razak Bin Ibrahim
University of Malaya, Kuala Lumpur, Malaysia
Matthew H. Roy
University of Massachusetts Dartmouth, Dartmouth, Massachusetts, USA
Zafar Ahmed
Fahad Bin Sultan University, Tabuk, Saudi Arabia, and
Ghaffar Imtiaz
University of Malaya, Kuala Lumpur, Malaysia

Abstract
Purpose – The purpose of this paper is to understand the production processes utilized by the
Malaysian construction industry (MCI).
Design/methodology/approach – The paper follows an earlier work published in this journal in
which the authors analyze the global construction industry focusing on the evolution of lean
production systems.
Findings – The future of construction is exciting. International markets, innovations in technology,
and techniques of construction project management, new relationships across disciplines are all
avenues of development. To make the best use of their opportunities, the MCI must invest in research
and development (R&D), undertake public education about the field and develop new methodologies to
improve operational performance in construction.
Originality/value – This paper provides a detailed analysis of the MCI, it’s impact on the economy,
key success factors, struggles and problems that the industry currently faces. Analysis of key
functional areas like operations management, R&D, and occupational safety and health administration
provide insights into improvement.
Keywords Construction industry, Lean production, Malaysia
Paper type Research paper

An overview of the Malaysian construction industry

Benchmarking: An International
Journal
Vol. 17 No. 2, 2010
pp. 294-308
q Emerald Group Publishing Limited
1463-5771
DOI 10.1108/14635771011036357
Malaysia began develop its construction industry since independence. According to
Lewis (1955), more than half of capital formation consists of work in construction.
Hence, the expansion of capital is a function the rate at which the construction industry
can be expanded. This can be seen in the initial economic plan (1956-1960) where it was
basically a development expenditure plan. The primary concern was developing the
infrastructure during independence because of its inadequacy. In order for the nation’s
economy to prosper, the construction industry has to be developed first for the
economy to take a one step further.
The Malaysian construction industry (MCI) is generally separated into two areas. One
area is general construction, which comprises residential construction, nonresidential
construction and civil engineering construction. The second area is special trade works,
which comprises activities of metal works, electrical works, plumbing, sewerage and Status of the MCI
sanitary work, refrigeration and air-conditioning work, painting work, carpentry, tiling
and flooring work, and glass work.

Role of the Malaysian construction industry

The construction industry is considered to be a major productive sector in Malaysia,
for example output for the construction sector hovered around RM 7248 million, RM 295
7168 million, and RM 7350 million in year 2004, 2005, and the estimate for 2006,
respectively, (Budget Report 2006). This sector is essential for development of the
nation. It is among the top three of the major economic sectors. The other two sectors
being manufacturing and agriculture, which contribute to the national output. For
instance, the contribution to gross domestic product (GDP) in 2004 by manufacturing,
agriculture and construction sector is 57.1, 8.3, and 2.9 percent, respectively,
(Construction Industry Master Plan (CIMP), 2005).
The construction industry’s output is relatively small when compared to the other
sectors in Malaysia. For example, the construction sector contribution accounts
1.8 percent in first quarter 2006 and 2.9 percent in 2004 to GDP. Its contribution to the
GDP is less than 15 times smaller than that of the services sector and less than eight
times smaller than that of the manufacturing sector (Malaysian Economic Report
1999-2004). Although it accounted for less than 3.3 percent of GDP from 1999 to 2004,
the industry is a strong growth push because of its extensive backward and forward
linkages with the rest of the economy (Ofori, 1990). Backward linkages, or derived
demand, are measures of the demands created by one economic sector for the products
of other sectors. It has widespread impact because much of the raw, semi-processed,
and processed materials can be provided by relatively unsophisticated
labour-intensive domestic sources and by basic industries such as cement and steel
manufacturing. The backward linkages are quite strong in the case of construction and
represent a value, which in most circumstances exceeds the value added by the
construction industry itself. The Malaysian Department of Statistics observes that the
intermediate inputs to construction as a percentage of the industry’s output from 1983
to 1993 averaged around 65 percent. The forward linkages or the consumption
encouraged by the production of intermediate goods, are more difficult to establish for
construction than backward linkages. The forward linkages or consumption of
products affects practically all other sectors of the economy and construction has been
ranked among the top four out of twenty economic sectors in terms of intersectional
linkage (Park, 1989; Stanley, 1984). It is difficult to separate the value of investment in
various structures from the value of the activities inside. The task is further
complicated by national accounting practices that treat construction as a final product.
Regardless of the varying stages of industrialisation of different countries, their
construction industries generate one of the highest multiplier effects through its
extensive backward and forward linkages with the other sectors of the economy (Park,
1989; Fadhlin, 2004).
However, the construction industry is crucial because the role that it plays as a
major indicator and determinant of domestic performance in the economy. As Malaysia
is in the process of industrialisation, the construction industry is important because
it provides the economic and social infrastructure for industrial production and
reproduction. Basic amenities and also infrastructure for example residential space,
BIJ roads, airports, railways, ports, power electricity, communication utilities, and also the
17,2 other basic infrastructure needed in a country are just some of the basic developments
required for the society to improve in social living standards and also for all other
sectors to develop and grow. The Malaysian Government has realised the importance
of building up the construction sector to benefit other sectors along the way.
Therefore, the government has initiated some mega projects in the hope of propelling
296 the economy to a better level. Since 1991, Malaysia has spent well over US $15 billion
on infrastructure projects such as the Kuala Lumpur International Airport (KLIA).
The KLIA that cost $2.4 billion was built to resemble a cluster of Arabian tents.
The $2.9 billion Petronas Twin Towers in Kuala Lumpur, which consist of Islamic
motifs with the soaring lines of New York’s Chrysler building, are the world’s tallest
twin skyscrapers. The new capital, Putrajaya was built at a cost of $5.3 billion some
30 kilometres from central Kuala Lumpur, parking lots are landscaped like golf
courses, and domed government office buildings are modelled after mosques. The city
was built to relieve overcrowding in Kuala Lumpur. The Multimedia Super Corridor
Malaysia an intricate project that transformed a 15-by-40-kilometre area stretching
south from Kuala Lumpur into Asia’s version of Silicon Valley.

The progress of the Malaysian construction industry

The construction boom in Malaysia started in the early 1990s in conjunction with the
development of mammoth projects. The Government has launched Vision 2020 to
envision that Malaysia will be a fully industrialised country by the year 2020. Towards
this goal, the government has invested heavily in modernising the infrastructure of the
Kuala Lumpur metropolitan area. The modernisation is designed to propel Malaysia
into the digital age and position it as a hub for high technology businesses in Southeast
Asia.
The construction industry reached its peak 1995 where the GDP of construction
industry hit an amazing 17.3 percent. That rate of development was equivalent to the
developed countries. During the period from 1994 to 1997, the construction industry
GDP averaged at 14 percent. Consequently, the MCI dropped to an alarming position in
1998, when Malaysia and the Asian region were facing the Asian Financial Crisis.
During the regional economic crisis in 1997-1998, output of the industry experienced a
bust cycle with a sharp drop in output. In 1998, output of the industry contracted by
23 percent, after a robust and double-digit growth rate (Bank Negara Malaysia 2003).
This was the worst slump for the construction industry. While GDP grew at an
average rate of 5.2 percent from 1999 to 2004, the construction industry stagnated,
recording an average growth of 0.4 percent over the same period. Output for the
construction industry hovered around the RM 7 billion mark, but steadily contracted
as a share of GDP, from 3.6 percent in 1999 to 2.9 percent in 2004 (Table I). The
contribution of the MCI to the nation’s GDP is much lower compared to the
other countries as shown in Table II. Its been estimated that a 10 percent increase in
the construction industry’s in productivity would result in a 2.5 percent improvement
in GDP (Stoeckel and Quirke, 1992) and that the construction industry represents about
10 percent of the GDP for most countries (Olomolaiye et al., 1998).
The MCI has largely been spurred by Government spending to build the nation’s
infrastructure. From 1981 to 2005, total development expenditure by the Federal
Government is in excess of RM 300 billion, mainly in expenditure in economic sector,
 Status of the MCI
In RM millions – 1987 prices
Construction GDP Construction Construction
sector growth sector contribution sector
Year GDP output (%) to GDP (%) growth (%)

1999 192,794 6,922 5.8 3.6 25.6

2000 209,365 6,996 8.3 3.3 1.0 297
2001 210,480 7,159 0.4 3.4 2.3
2002 219,309 7,275 4.1 3.3 2.3
2003 231,674 7,417 5.3 3.2 1.9 Table I.
2004 247,880 7,276 7.0 2.9 21.9 Malaysian construction
industry and the
Sources: Malaysian Economic Reports 1999-2004, MOF, BNM Annual Report 2004 economy

Country 1999 (%) 2000 (%) 2001 (%) 2002 (%) 2003 (%)

Malaysia 3.6 3.3 3.4 3.3 3.2

Singapore 7.6 6.9 6.8 5.9 5.3
China 6.7 6.6 6.6 6.7 Not available
Korea 8.8 8.0 8.3 8.4 8.6
India 5.0 5.1 5.2 5.1 5.3
Australia Not available 6.9 6.8 5.9 5.3 Table II.
New Zealand 4.1 4.5 3.9 3.9 4.2 Construction
industry contribution to
Source: Economic Intelligence Unit GDP by country

i.e. agriculture and rural development, transport and commerce and industry
(Table III). The demand for sports tourism in general and information technology (IT)
development has resulted in the need for some government projects as depicted in
Table IV during the period of 1998-2001.
A decline in the number of large-scale infrastructure projects is one of the major
immediate causes for the construction industry slowdown of recent years.
The industry was buoyed by major projects initiated by the Government in the early
and mid-1990s four of these projects alone contributed an estimated RM 60.0 billion in

Fourth Fifth Sixth Seventh Eighth

Malaysian Malaysian Malaysian Malaysian Malaysian
Industry Plan Plan Plan Plan Plan
(in RM million) (1981-1985) (1986-1989) (1990-1995) (1996-1999) (2000-2005) Total

Economic 28,042 2,886 27,712 47,172 50,515 176,327

Social 9,973 8,764 13,555 31,284 37,518 101,094
Security 7,494 2,527 10,987 11,644 10,750 43,402 Table III.
General administration 811 1,123 2,451 8,937 11,217 24,539 Federal government
Total 46,320 35,300 54,705 99,037 110,000 345,362 development
allocation/expenditure
Sources: Fourth to Eighth Malaysian Plan 1981-2005
BIJ jobs (nearly ten times 2004 industry output) to the construction industry. Since the
17,2 completion of these major projects approximately five years ago, there have been no
new large-scale projects announced by the government. Another reason for the
slowdown of the construction industry is return of a cyclical downturn in the business
cycle that affects current performance. The construction sector has consistently
been the smallest contributing sector to the economy. Its contribution to GDP is less
298 than 15 times smaller than that of the services sector and less than eight times smaller
than that of the manufacturing sector, see Table V.
The construction industry enables the growth of other industries through its role as
a fundamental building block of the nation’s socio economics development. Educational
institutions, government offices, some tourist attractions, transportation infrastructure
(airports, seaports, roads), housing, commercial property – all the essential elements
of a healthy, functioning economy, need to be built and maintained by the construction
industry. Besides, enabling socio-economic development, the construction activities
generate tremendous spillover opportunities. It contributes to the growth of other
industries in its role as a large user of manufactured goods (building materials, iron,
steel, etc.) of specialized tooling and heavy machinery and the financial services sector.
Malaysia has gained an impressive growth over past more than three decades (Frances,
2002). During this period, the construction industry has carried out glorious projects
but some of them were not cost, time and quality effective (Hamzah Hassan, 2003;
Imtiaz and Ibrahim, 2005; Ron Pratt, 2000) and also has gone through an economic
downturn in 1997 when whole Asia was in financial crises during 1997. As a result of
the crisis, some of the investment and activity in the sector halted because of the excess
capacity and deferment of major construction projects in the country. In 2001, the

Major government project Year RM billion

KLIA 1998 8.70

Federal Government Administration Centre, PutraJaya 1999 30.80
Multimedia Super Corridor, Cyberjaya 1999 20.10
Table IV. Formula one circuit 2001 0.43
Partial list of major Total 60.03
government projects
1998-2001 Source: CIDB

In percentage 1999 2000 2001 2002 2003 2004p

GDP (RM millions – 1987 prices) 192,794 209,365 210,480 219,309 231,674 247,880
Services sector 54.3 53.4 56.4 57.0 57.6 57.1
Manufacturing sector 30.0 33.4 30.2 30.1 30.8 31.8
Agriculture, livestock, forestry
and fishing sector 9.4 8.4 8.7 8.4 8.7 8.3
Mining and quarrying sector 7.2 6.9 7.6 7.2 7.2 7.1
Table V. Construction sector 3.6 3.3 3.4 3.3 3.2 2.9
Contribution to GDP
by sector Sources: Malaysian Economic Report 1999-2004, MOF, BNM Annual Report 2004
industry continued to show a promising trend and registered a positive growth of 2.3 Status of the MCI
percent compared with 1.0 percent in 2000. In 2003, the construction industry registered
a slow growth of 2.4 percent in GDP.

Employment created by the Malaysian construction industry

The construction industry plays an important role in national employment (Ofori, 1990)
and in generating wealth and improving the quality of life for Malaysians through 299
the translation of Government’s socio-economic policies into social and economic
infrastructures and buildings. The construction industry provides job opportunities to
approximately 800,000 people (Table VI). Further, the construction industry creates a
multiplier effect on other industries, including manufacturing, financial services, and
professional services. The construction industry employed approximately 8 percent
of the total workforce in Malaysia. However, most of them are Indonesian or from
other Association of Southeast Asian Nations. As per Economic Report 2003/2004, it
estimated that only 30 percent of the 800,000 workers are local.

Problems in the Malaysian construction industry

A wealth of literature is available on the problems faced by the construction industry
globally discussed earlier in an earlier paper in this issue, but very little research has
been carried out by academics and practitioners on the problems faced by the local
construction industry. There is a gap in the literature on the problems faced by the
MCI, and also for developing countries in local and international journals, conferences,
and conventions. However, very few writers such as: Abdul Rahman and Alidrisyi
(1994), Abdul Rahman et al. (2005), BIPC/CIDB (2003), Hamzah Hassan (2003), Imtiaz
and Ibrahim (2005), and Pratt (2000) have written on the problems in the MCI. Abdul
Rahman et al. (2006), who is currently Dean of the Faculty of Built Environment in
University Malaya have found 45.9 percent delays in the completion dates during the
construction stage. These delays are known to cause losses to the client/developer and
to the entire industry because construction has an important influence on the economy.
Similarly, Pratt (2000), a construction and project management consultant (PMC) in
Malaysia since 1962, has mentioned that Malaysian projects in the last decade
especially the magnificent monuments were not cost and function effective. He further
added that in certain cases the budget was exceeded, projected completion dates were
not achieved and quality was not always up to the expectation. Pratt has emphasized
this situation must be rectified in the new millennium. Similar views by Abdul Rahman
and Alidrisyi (1994) that Malaysian construction projects faced delays in material

Year
Industry 1999 2000 2001 2002 2003 2004

Construction 749,000 755,000 772,000 782,000 792,000 798,000

Agriculture, hunting,
forestry and fishing 1,389,000 1,407,500 1,406,500 1,405,600 1,402,600 1,400,300
Mining 42,000 41,200 41,800 42,200 42,800 43,400
Services 4,127,000 4,509,200 4,756,700 4,920,500 5,086,000 5,239,200
Manufacturing 2,379,000 2,558,3000 2,555,800 2,679,800 2,857,800 3,064,500
Table VI.
Sources: Industry Report 2001-2002, CIDB, Malaysian Economic Reports 1999-2003, and MOF Employment by services
BIJ arrival at construction sites caused delay in the completion of projects, and frequently a
17,2 bulk of surplus material at site after project completion. Another local study by
Abdullah (1985) on construction material wastage showed the cost of materials
exceeded 50 percent of the construction cost, depending on the type of construction.
He indicated the reasons of such material wastage were poor workmanship, setting out
error, order not meeting specifications, excessive use of materials, material not meeting
300 requirements, breakage in handling materials, improper storage, and misdemeanour.
The Construction Industry Development Board (CIDB) master plan for occupational
safety and health (CIDB Master Plan OSHA, 2004) highlighted seriously MCI problems
such as as low quality, low productivity, poor image, economic volatility, delays,
shortage of manpower, and lack of data and information. The low productivity in the
industry is attributed to low technology usage, poor project and site management,
unskilled labour, high-input cost and duration estimation, shortage of construction
manpower, high-construction wastage, poor maintenance, nonconducive, and accident
prone environment. The poor image of the industry is caused by high incidence of
accidents, absence of job security, poor management, and low wages for high-risk jobs
and lack of opportunity for career development.
On a similar note, Wong (1991), honorary advisor to the Master Builders Association
Malaysia, has highlighted that the weak points of the construction sector of Malaysia
include that the discipline of planning, architecture, various fields of engineering and
quantity surveying have been well established, however the important discipline of
construction which is the production function that deals with physical implementation of
development projects, only recommended formal education and training just under two
decades ago. The imbalance is great as between those who plan, design (both architectural
and engineering), take off quantities and prepare documentation (all known as consultants)
and those who plan, implement and execute construction development projects (known as
contractors). It is therefore obvious that accelerated growth and development in the
construction discipline or the production of construction is imperative. The weak points of
the industry among others are: poor image of the industry, lack of systematic and orderly
education and training of skills in the industry, lack of appropriate recognition of status of
construction technicians and technologists, the confrontational attitude taken by the
consultants and contractors, lack of team work approach and sense of belonging.
Interestingly, as of the end 2004, major development projects face problems such as
delay in construction time and cost escalation and the structural defects said to be found
in school buildings and community college buildings. PMCs, which supervises and
manages government projects, has failed to control costs, design and scope of those
projects, resulting in higher costs. It has been quoted that the construction industry was
fraught with delays in approval of projects, uncompleted projects, and poor quality of
work, cost overruns and late payment to contractors. Similarly, problems in projects like
new Pandan hospital, Middle Ring Road 2 project highway and KLIA have been
reported in local newspapers of having problems during post occupation period. The
local papers have recently reported safety concerns of the industry after the two fatal
accidents, which claimed two lives.
Considering the above weaknesses and problems in the construction industry of
Malaysia, the CIDB in collaboration with Building Industry Presidents Council held
a roundtable discussion in June 2003 with president’s and chief executive officers of the
MCI. The theme of discussion was establishing priorities to improve the MCI for
the future. Among the ten priorities identified and recommended for improvement, Status of the MCI
were productivity and quality. Furthermore, CIDB has suggested that the construction
industry use automation, prefabricated products, new construction methods and
techniques and industrialisation, etc. so as to improve operational performance and the
bad image of the industry.
Similarly, Zaini Omar (2000), Director General Public Works Department Malaysia has
advised that in spite of spectacular growth rate, the MCI has not change much since the 301
1960s in terms of technology. Whilst the country’s other major economic sectors have
advanced in the utilization of modern technology, the construction industry still depends
on old conventions of building techniques. The local construction industry needs to
undergo a marked evolution in its development and maturity, old construction practices,
management and technology that have served to transform Malaysia into a modern and
thriving country need to be radically upgraded to meet exacting standard of building
performance for the future. Expectation of higher quality finish, tighter building schedules
and the need to keep within budget will mean that superior construction technology and
techniques will be required. Therefore, it is time to act fast and act decisively before many
more become disillusioned with the industry. First and foremost we have to rebuild
confidence in construction through training. In order to face the challenges of the
twenty-first century the MCI must compete through continuous productivity
improvement, more value-added operations and enhanced product quality. There is no
doubt that substantial improvement in quality and efficiency is possible.

Regulatory framework and registration of contractors by CIDB

Construction companies in Malaysia must be registered before executing any
construction work. The CIDB established in 1994 registers all construction companies
on behalf of the Malaysian Government. CIDB’s headquarters are in Kuala Lumpur
(www.cidb.gov.my). One of the functions of CIDB is to regulate and register
construction firms in seven grades from G1 to G7. These grades depend on the
construction company experience, financial status and personnel capability. The
registration of construction companies is on a one to three year basis and is granted to
qualified construction companies under the relevant grade that defines the limits of the
value of work the company is allowed to undertake. Table VII showed the value of
work for which approved construction companies can tender. Construction companies
can apply for promotion to a higher grade. Other functions of CIDB are to provide
training, to promote and simulate development, improvement and expansion of the
construction industry, to advise the government on matters affecting the construction

Grade Tender capacity (RM)

G1 Not exceeding 100,000.00

G2 Not exceeding 500,000.00
G3 Not exceeding 1.0 million
G4 Not exceeding 3.0 million
G5 Not exceeding 5.0 million
G6 Not exceeding 10.0 million Table VII.
G7 No limit Tendering capacity for
the construction
Source: CIDB Directory (2004) companies
BIJ industry, to promote, stimulate, and assist in the export of services relating to the
17,2 industry, and to initiate and maintain construction industry information systems.
A total of 64,194 construction companies are registered with CIDB in different grades
as shown in Table VIII and Figure 1.
These grades (G1-G7) are classified further as specialist category building construction
(B), civil engineering construction (CE), mechanical and electrical construction. These
302 specialist categories are further subdivided into subspecialties. Building construction for
example is subdivided has 19 subspecialties from B01 to B19, civil engineering construction
has 20 subspecialties from CE01 to CE22. Construction mechanical has 15 subspecialties
from M01 to M15 and finally electrical has ten subspecialties from E01 to E10.
As per a CIDB ruling, a construction company can be registered in more than one
category and subspecialty within one grade (tendering limit) as far as it satisfies the
registration requirements.

Challenges in the Malaysian construction industry

Improvement in the operations
Given due consideration to the current market condition, the enhancement of
productivity and quality is vital to build a sustainable local construction industry that

Grade Numbers of contractors

Foreigners 76
G1 37,721
G2 7,259
G3 9,835
G4 2,004
G5 2,787
G6 1,063
Table VIII. G7 3,449
Contractors population
by grade Source: CIDB (2004)

5% 0%
2%
4%
3%
Foreigners
G1
G2
15%
G3
G4
G5
60%
G6
Figure 1.
Contractors’ population 11% G7
by grade
is poised to venture overseas. While the productivity of the construction industry at Status of the MCI
present may be sufficient to meet domestic market or regional market needs, it has to
improve to compete effectively with global players and increase the benefits to the local
market. In order to enhance productivity, there is a need to take a holistic approach to
reviewing factors impacting the construction industry. Besides, improving operational
performance the construction industry in Malaysia shall focus on health, safety and
environment at construction sites. The accidents and fatality rates in the construction 303
industry stood at 3.3 percent (Social Security Organisation (SOCSO), Ministry of
Finance (MOF), Economic Report 2003/2004) higher than other sectors such as
manufacturing (0.7 percent), transport (2.1 percent), and services (1.1 percent).

Research and development

Construction industry players are not conducting Research and development (R&D)
and in Malaysia most of the R&D is carried out in academic institutions. But areas
covered are usually not in accordance with industry needs. This is another challenge
for the industry and institutions to develop a closer working relationship with each
other.

Human resources
The MCI needs to train to its professionals and workers so as to be more competitive,
capable and enhance operational performance in local and international markets.
Besides, training of the existing construction industry workforce, the industry has to
overcome shortages of technical, managerial, skilled and unskilled personnel. The
construction industry’s human resources are the key challenge that has a significant
bearing on the industry in fulfilling construction demand.

Technology
Technology and capital-intensive construction are other challenging areas for the
industry and these will reduce reliance on labour or human capital. The use of
mechanisation, prefabrication, IT and creative use of new construction project
management techniques is vital for the enhancement of the industry’s capabilities and
performance. A study conducted by Mui et al. (2002) of the MCI on internet usage found
that the use of the internet in industry is still limited to basic typical business processes
such as e-mail and obtaining information. The user of the internet in this industry has
yet to strategically exploit its potential, such as virtual meetings or teleconferencing,
project management seminars, completing design estimates and contracting
procurement and bidding (Mui et al., 2002). Superior construction technologies and
techniques will be required to meet higher quality finish, tighter building schedules
and the needs to keep within budget (Zaini Omar, 2000).

Environmental pollution
The need to manage the environment is assuming increasing importance by the day.
The construction industry, provides an important component of economic growth and
social development, but has been the source of significant negative impacts on the
physical environment, such as soil erosion and sedimentation, flash floods, destruction
of vegetation, dust pollution, noise pollution (Lee and Fong, 2000). This is another
challenging area for the industry. Tun Dr Mahatir Mohammed said in June 2001:
BIJ [. . .] in the pursuit of economic development, Malaysia will ensure that its invaluable natural
resources are not wasted. The land must remain productive and fertile, the atmosphere clear
17,2 and clean, the water unpolluted the forest resources capable of regeneration, able to yield the
needs of national development. The beauty of our land must not be desecrated for its own
sake and for its economic development [. . .] (Source: Utusan Malaysia, June 2001).
Since, the lean production system (LPS) has showed relationship of lean to green (Florida,
304 1996; Hart, 1997), the adoption of LPS in construction practices may lead inadvertently to
pollution reduction (Imtiaz and Ibrahim, 2006). Additionally the zero waste mantra of LPS
suggests that pollution reduction will inevitably follow from it (King Andrew and Micheal,
2001). Hence, the scholars propose that the adoption of LPS principles will improve the
environmental performance of manufacturing establishments; in other words, lean is
green. Thus, lean and green compliment each other.

Occupational safety and health

Another big challenge to the construction industry, the rise in the number of fatalities
within the industry over the last ten years, has brought into focus the hitherto low
priority placed by the stakeholders on occupational safety and health. As per master
plan for occupational safety and health in the construction industry 2005-2010,
the number of fatalities in the industry is alarming. Out of the total 73,858
industrial accidents reported by SOCSO by the year 2003, 4,654 were recorded in
construction. From this figure, almost 2 percent or 95 resulted in death, while
12.2 percent or 566 resulted in permanent disability. In comparison, the manufacturing
and agriculture, forestry and fisheries industry recorded 0.7 and 0.6 percent fatalities
out of the total accidents. Since, LPS advocates minimizing waste and continuously
improving, incidents that disrupt the flow of work or lead to injury are waste, so the
relationship between LPS and safety is clear (Howell et al., 2002).

Strategic directions for the construction industry

Over the past decade, the MCI has contributed significantly to the economy as an enabler
of growth to other industries. Although it accounts for , 5 percent of GDP, the industry
is an essential growth enabler because of its extensive linkages with the rest of the
economy, for example, the manufacturing industry (such as basic metal products and
electrical machinery). In 1998, when the construction industry experienced a sharp
downturn, basic metal incurred some 35.6 percent drop in output (Malaysia Market
watch 2005). Nevertheless, recent events, such as globalisation and the saturation of
business prospects in Malaysia, have contributed to the sudden plunge in the growth of
the industry. At this juncture, it is clear that fundamental changes are now needed in
order for the construction industry to achieve greater efficiency and address the
overarching challenges, as well as seize new opportunities in liberalized global markets.
The MCI has reached a critical juncture (CIMP, 2005) in its development. The vast
mega projects that sustained the industry over the past decade have been either
completed or reprioritised. In addition, the dampening effect of the Asian financial
crises and the subsequent economic prudence is slowly taking its toll on the industry.
At the same time, the growth of countries abroad – from China to Kazakhstan – is
creating opportunities that, with some efforts, would be apt for the MCI to garner.
Internally, there are considerable issues across the construction industry’s value
and supply chain. The challenges discussed above have retarded the forward
movement of the construction industry. Thus, the current situation necessitates a Status of the MCI
comprehensive framework to ensure that a strong foundation will be laid and that
construction players will be well positioned to complete globally.
The critical success factors are the elements that are imperative to the success of the
achievement of the strategic thrust and strategies. These are productivity, quality,
human resources, knowledge, innovation, environment practices, industry
sustainability, and professionalism (CIMP, 2005). 305

Time to change
Traditional ways of performing and managing construction processes face
unprecedented challenges. The growing competition forces construction
organizations to rethink their construction for improving productivity, quality, and
efficiency (Karna and Jonnonen, 2005). The construction industry may also benefit
from best practices in other industries – for example electricity (Chau, 2009), breweries
(Goncharuk, 2009), healthcare (Duggirala et al., 2008) or new processes – for example
quality function deployment (Miguel and Carnevalli, 2008).
The MCI has completed numerous projects but is not cost, quality and time
effective. Additionally the Malaysian government’s investments in construction jobs
has been decreased substantially (Abdul Rahman et al., 2005) in the last few years and
the project owners are working on construction cost reductions to implement
construction projects with client(s) satisfaction, effectiveness, and within limited
resources. These are the reasons why today’s MCI must implement an aggressive
transformation plan for the future. And in order to face the challenges of the
twenty-first century, the MCI must compete through continuous productivity
improvement, more value-added operations, enhanced quality and there is no doubt
that substantial improvement in operational strategies are possible (Zaini Omar, 2000).
The MCI sooner or later has to innovate new operational and productivity
instruments so as to have a competitive advantage in local and global markets. The
industry needs to prepare for paradigm shifts to improve its competitiveness that can
be achieved by using good practices, advanced construction techniques and optimise
resources utilization. Increasing productivity is the greatest untapped area for
improvement in the construction industry. Companies that embrace new technologies,
innovative processes, collaborative partnering, improved safety and reduction in
litigation costs through contract arrangements will have a significant advantage over
those that continue with past practices. Only with enhanced capabilities and capacity
can the industry withstand challenges in good and bad times (Abdul Rahman et al.,
2005; Zaini Omar, 2000).

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Corresponding author
Abdul Razak Bin Ibrahim can be contacted at: razak.um@gmail.com

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