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Structure of the UK Construction Industry

Paper Type: Free Essay Subject: Construction
Wordcount: 3443 words Published: 15th Mar 2021

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Table of Contents

Introduction

P1 – Explain how the construction industry has developed and encompassed professionalism within its structure.

P2 – Demonstrate the scope and linkage between all parties within a construction organisation

P3 – Identify the type of contractual work tendered by contractors

M1 – Analyse how the construction industry has developed overall in terms of company structures, its employees and contracted work

D1 – Critically evaluate how construction companies have developed their structure and business ethos

P4 – Identify the different types of construction companies in the market

P5 – Explain the relationship between different construction organisations

M2 – Analyse the catalyst which connects construction companies, including contracts and tendering

D2 – Compare the main factors which differentiate between construction companies, contracts and tendering

Conclusion

References

Introduction

This report is focused on the structure of the UK construction industry and how this can be replicated on a smaller scale for a family-owned construction firm.  It will be focusing on the relationships between companies, the tendering process, the type of work that can be contracted and more.

P1 – Explain how the construction industry has developed and encompassed professionalism within its structure.

In an effort to discuss how professionalism has developed in the construction industry, I will be focusing on how the Health and Safety Executive has evolved in to what it is today. This is due to the Health and Safety Executive playing a major part in making the construction industry a safe and tolerable industry to be part of, but also as the health regulations it brought changed the industry as a whole forever.

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The Health and Safety Executive dates to the 1800s. Starting in 1833, its formation began as the HM Factory Inspectorate. The need for it derived from the lack of concern for health, there was a need to prevent injury but also to improve the work conditions of the child workers in textiles. Originally, there were only four inspectors that had to be in charge over 3,000 textile mills and the workers inside of them (HSE, n.d.).  Jumping to 1974, the Flixborough chemical plant exploded which led to 28 people being killed and 36 being injured (HSE, n.d.). The widespread damage around the plant had affected both commercial and residential buildings. As a result, the Health and Safety at Work Act 1974 was created to enforce a set of regulations to prevent an incident like this from happening again.

P2 – Demonstrate the scope and linkage between all parties within a construction organisation

Over the years, the construction industry has evolved a lot and with this change in operation, the specialities of the workers also began to change. More professional and technical workers were needed due to the new regulations in health and safety but also in the building codes. The industry needs people who understand the new changes and can implement them. The professionals and technical would be put through training at university or college in order to gain the relevant knowledge. Whereas skilled workers gained their knowledge of their speciality through their work experience, such as electricians, plumbers and carpenters. This brought also the requirement for an organisational structure to aid the cohesion between all parties (professional, skilled and technical). The benefits of all three parties working together included the ability to work more efficiently and effectively due to it removing the requirement for one person to undertake everything. If more people work on a project, it saves time. Additionally, f they began to do the same tasks overtime, they become more specialised and will be better at what they are doing from the experience they gained. The productivity that this can produce will allow the company to make more profits and to expand itself to grow with the market. Within a typical construction company, the parties involved would be as follows:

Role

Summary

Director

Directors will own a share of the company and will track the success of the company through ow much profit is taken in. They would also be in charge of taking over new projects and allocating tasks.

Associate Director

Will organise the day-today tasks for the company, while giving the director feedback. An associate director would have the professional skills from their experience in design and project management. They would also be overseeing projects themselves before it is handed over to the client.

Design Engineers

Will be receiving tasks from the associate director to complete which will be the various design work for their projects. They will need to work cohesively with other design members including technicians. This is a professional role which would be known as a civil/structural engineer.

Technicians

Will receive tasks from design engineer to aid the engineer in its work. Will typically be doing CAD drawings and such that the engineer requires.

Operatives

The skilled workers who would go and do the construction work, such as digging and building.

Administrative

Deal with; marketing, legal, human resources and payroll

Commercial

Deal with; procurement of materials, tendering and requisitions

P3 – Identify the type of contractual work tendered by contractors

Tendering is the process where a proposal is written by contractors for companies to choose to accept or give out. This is undertaken through a bidding scheme, which allows the different contractors to set out the supply of good or services on offer (Ghaffari, 2019) throughout the project. In essence, a tender is an open invite for people to trade with agreed terms from both parties, which highlights the first stage of contracting.

The four types of contractual work are:

Contractual Work

Summary

Residential Building

The construction of buildings with the purpose of residing in. An example will be a house or apartment.

Institutional & Commercial Building

Institutional buildings are built with the intent for public use, such as; hospitals, schools, police stations and libraries. Whereas commercial buildings are built with the intent to use them for business. An example of this would be a shopping centre.

Specialised Industrial Construction

These buildings are used to create storage and can be used for product production. Examples of this would be warehouses, power plants and steel mills.

Infrastructure & Heavy Construction

This involves the building of; dams, transportation links, bridges and sewers.

There are three types of contracts that can be used for these types of contractual work:

Contract

Summary

Fixed Price Contracts

Fixed Price Contracts are a mutually agreed fixed rate per unit of output. (Ghaffari, 2019) In simple terms, for a set amount of work there will be a set price. This contract will allow an increase in price, but it is not possible for there to be a decrease in price after it has been set.

Cost Plus Contracts

Cost plus Contracts allow companies to pay all of the contractor’s costs, which is paid in one payment at the end of the project. This is otherwise known as lump sum.

Time & Material Contracts

Time and Material Contracts works by letting companies calculate the costs and profits at the end of the works before paying the contractors.

As a company trying to branch out and expand it is best to avoid the fixed price contracts due to the high risk it poses for our company. Cost plus contracts are favourable as they allow us to have a mutual agreement with the contractor and pay everything at once as a lump sum. This prevents

 

M1 – Analyse how the construction industry has developed overall in terms of company structures, its employees and contracted work

The company structure has developed and evolved over time due to the need for professionals and technical. An example of a team structure is placed below:

It shows how professionals like directors are now at the top dealing with the managerial and financial side of construction. Then following is the technical workers such as architect and structural engineers who do the design work for projects. Then below them are the skilled workers who would be the operatives who do the building work. This has developed greatly as previously companies would attempt to do work internally and there would not be this clean-cut structure. Thus, there was a lot of inefficiency which led to a lot of accidents and in turn less profit.

If the project can not be done internally, then the company will outsource to the contractors, subcontractors and suppliers to fill the skills gap.

Figure 1. (Desinging Buildings Wiki, 2019)

D1 – Critically evaluate how construction companies have developed their structure and business ethos

Business ethos is important as the construction industry has become so big. Companies will have large teams which is harder to control and keep staff happy. Have a strong business ethos helps prevent this as it allows for departments like human resources to be created to take care of the staffs needs. It allows staff to stay motivated and to feel safe in their jobs as they have someone speaking to them directly about their needs. Additionally, business ethos will allow staff to find companies they would like to work for as it can reflect the morals of the companies. More and more construction firms are looking to be more sustainable as this is what the current working population want. To know that the work they are doing will remain there and not be destroying the environment around them.

P4 – Identify the different types of construction companies in the market

Type of Construction Company

Summary

Small Renovation Contractors

These contractors deal with small scale operations. Commonly, they do not have a fixed office location but if they do it is usually a small office. Little amounts of capital will be required, due to the jobs mainly being general home maintenance. (Ghaffari, 2019)

General Contractors

General contractors are the larger scale versions of small renovation contractors. The scale of the jobs they undertake are much larger, therefore they sometimes subcontract a portion of the work out. They normally specialise in residential or commercial new builds. (Ghaffari, 2019)

Owner Builder

An owner-builder is not considered a contractor. The project is determined by what they want to so in future they can own and operate to rent or sell on completion of the building.

Real Estate Developer

A real estate developer is a type of owner-builder They also build for personal ownership; however a real estate developer might sell before a build is complete. (Ghaffari, 2019)

Professional Construction Manager

A professional construction manager is an agent that acts as an authority on behalf of an owner. This may be an individual or an organisation when it comes to bigger projects.

Program Manager

A programs manager is identical to a professional construction manager. The manager here would take more of a role in the business structure itself. They would have more control over the business plan and the contracts.

Package Builders

Package builders take on design and construction of buildings at an earlier stage. Package builders often employ staff such as architects, engineers and construction staff for the early stage design work. (Ghaffari, 2019)

Sponsor Builder

A sponsor-builder will be planning the design, the construction of the design, the rental of the building, management and maintenance of the building. (Ghaffari, 2019)

P5 – Explain the relationship between different construction organisations

It is important to maintain a good relationship in the construction industry with the different companies due to it leading to:

-        Successful project completion

-        Loyalty`

-        Mutual incentives

-        Future growth

-        Contract Agreements

-        Work Efficiency

A key way to create a solid relationship is through having a strong way to network and communicate with other companies. These skills are integral as they are the gateway to doing business with others, and as it is the way to make other companies feel they are entering a good deal. This can cause the phenomena of ‘positive project culture’ where workers feel more motivated to have successful completion in a project which can lead to profits. (Ghaffari, 2019)

M2 – Analyse the catalyst which connects construction companies, including contracts and tendering

The main factors that will bring companies together as a catalyst are Communication and Networking, Tendering Process and Contractual Agreements.

These are all important as they are key steps in allowing for strong relationships between companies to form. Networking acts as the gateway but then tendering will be what solidifies these relationships as they are tailored for the relationship that already pre-exists.

There are many ways to tender to suit the different types of relationships companies have. Below are the different types summarised:

Type of Tendering

Summary

Open tendering

It will allow anyone to put forth a tender to supply the goods that are needed. An advert will be placed with a notice that there is a tender, allowing equal opportunity. (Designing Buildings WIki, 2018)

Selective tendering

Only allows suppliers to submit tenders through an invitation. The suppliers are pre-selected. (Designing Buildings Wiki, 2018)

Negotiated tendering

A client will approach one supplier because of a previous relationship that is held. (Designing Buildings Wiki, 2018)

Serial tendering

Involves the tenders being prepared based on scheduled (Designing Buildings Wiki, 2018) works.

Framework tendering

The client offers a contract but the job is not continuous. Thus it stops and starts again

Public procurement

The state is involved so certain jobs are required to be advertised for a certain period of time before bidding closes. (Ghaffari, 2019)

D2 – Compare the main factors which differentiate between construction companies, contracts and tendering

The main factors the differentiate between the companies are the company size, contract type and tender type. The size of the company will allow it to hold more leverage when they are tendering as they have a greater ability to compete due to the amount of resources they have. This can be seen with companies like Morgan Sindall who have projects all over the country and has been one of the top 10 construction companies for many years.

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Conclusion

This report highlights the need for growth and development within a company. Improving the company’s structure and the relationships it has will open many doors to the industry. It will allow a boost in efficiency, productivity and overall profits. Thus, I urge you to consider the things I have mentioned in this report as they are essential in benefiting the company.

References

  • Designing Buildings Wiki. (2018, 03 27). Negotiated Tendering. Retrieved 12 13, 2019, from Designing Buildings Wiki: https://www.designingbuildings.co.uk/wiki/Negotiated_tendering
  • Designing Buildings WIki. (2018, May 27). Open tendering of construction works. Retrieved 12 13, 2019, from Designing Buildings WIki: https://www.designingbuildings.co.uk/wiki/Open_tendering_of_construction_works
  • Designing Buildings Wiki. (2018, 08 13). Selective Tendering. Retrieved 12 13, 2019, from Designing Buldings Wiki: https://www.designingbuildings.co.uk/wiki/Selective_tendering
  • Designing Buildings Wiki. (2018, 10 02). Serial Tendering. Retrieved 12 13, 2019, from Desingin Buildings Wiki: https://www.designingbuildings.co.uk/wiki/Serial_tendering
  • Desinging Buildings Wiki. (2019, 01 25). Project team for building design and construction. Retrieved 12 13, 2019, from Designing Buildings Wiki: https://www.designingbuildings.co.uk/wiki/Project_team_for_building_design_and_construction
  • Ghaffari, M. (2019, 12 13). Construction Practice and Management Powerpoint.
  • HSE. (n.d.). Health and Safety Executive. Retrieved 11 22, 2019, from The history of HSE: http://www.hse.gov.uk/aboutus/timeline/index.htm

 

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