City & Country: Construction sector lacks skills

The Malaysian construction industry lacks skills, declares Dinesh K Nambiar, managing director of WTW Bovis Sdn Bhd. The company is the Malaysian entity of Bovis Lend Lease, a global project and construction management company operating in more than 30 countries worldwide. It celebrated its 30th anniversary last month.

With 30 years’ experience under his belt, Dinesh shares with City & Country his thoughts on the country’s construction and project management industry.

“Back in the 80s, local contractors and consultants dominated the business. In the 90s, a sizeable number of international firms entered the local market. Many people went into construction then because it was a boom time for the construction industry — the flavour of the month. Today, I believe the number of registered contractors is more than 50,000. That’s a phenomenal number if you compare that to our population, yet we sometimes struggle to get even 10 qualified bidders for our tenders. The lack of good resources is a problem.”

That’s not to say that Malaysia does not have good contractors, but the pool needs to be bigger. The selection of contractors has to be based first and foremost on technical skills and methods, not the price, he says.

“Evaluating a tender based on these two criteria can push contractors to build up their skills and put in a lot more effort into reducing project failures,” adds Dinesh. It will also get firms to invest in their own resources and reduce rampant sub-contracting.

“Certain jobs can be sub-contracted but it’s when you sub-contract even the management and engineering skills that the project will run into problems. If you look at some of the successful big builders, they have their own management and engineering team. What they sometimes do is sub-contract the actual construction,” says Dinesh.

The construction industry in some countries has become less labour-intensive with greater mechanisation and the use of prefabrication. Prefabrication is the practice of assembling components of a structure in a manufacturing facility and transporting the assembled components to the construction site.

Dinesh elaborates: “These countries are driven to become less labour-intensive because of rising labour cost. We have become too reliant on labour, especially foreign labour because it is cheap. The problem is we get the labour but it will not be skilled. Ultimately, it’s the quality of the work that suffers.”

The government’s push for Industrialised Building System (IBS) seems to have quietened down. The government needs to do more if it is serious about this, he says.

Cheap labour should not be made so easily accessible, but reducing cheap labour may affect projects and in the short term, drive costs up, Dinesh adds.

A study conducted by Bovis Lend Lease shows that the construction of a high-rise building in Australia employs only 25% of the labour used for a similar building in Malaysia. “They use a lot more prefabricated components and the 25% is well-paid, skilled labour. There is no doubt the construction cost is higher but it is all tied to the rents, selling price and cost of living. The quality is better and they can get the desired yield at this cost. Even Singapore uses a greater amount of prefabricated components than us,” says Dinesh

However, one must look at the big picture. “The reality is, as labour becomes less and less accessible, we will have to become less reliant on labour. If we shift to more prefabrication, we create another part of the supply chain in the industry with the manufacturing of these components and create jobs as well. That said, it’s very hard to see it happening now.”

Another downside of being labour-intensive is safety. The more labour you have on a construction site, the bigger the environmental health and safety issues.

“When you have a larger number of unskilled and untrained workers, the greater the risk of accidents. That is why we always look at how to build safely and how to do the job with less labour. We put a lot of effort into training and educating the workers so that they understand the risk and follow the systems to ensure that they work safely,” says Dinesh.

He notes that the safety culture in Malaysia is relatively new, with the introduction of the Occupational Safety & Health Act (OSHA) in 1994. “We only started taking safety seriously in the 1990s; some countries started decades ago. However, I think there is a lot of focus on safety now in Malaysia, which is good and very encouraging to see.”

Going green
There is a growing push towards green buildings. The Malaysian Green Building Index (GBI) was introduced in May this year. The green rating tool was developed by the Malaysian Institute of Architects (PAM) and Association of Consulting Engineers Malaysia (ACEM). The government also announced incentives to encourage the adoption of green technology under Budget 2010.

According to Dinesh, Bovis is ahead of the game. “We are actually one of the sponsor partners of the Malaysia Green Building Confederation (MGCB). Bovis is very much a leader in green buildings around the world, and a few of our staff are GBI-accredited certifiers.

“Our head office in Australia, when it was opened three years ago, was the greenest building in the country. Now, that distinction has been passed to our new office in Melbourne,” he says.

Bovis has been encouraging its clients to incorporate green features into their properties and presently, most of its projects are planning to pursue GBI certification. “In the near future, any Grade A building will have to be green. It’s about future-proofing your building. If you want to build a premier building, you have to go green and to go green, you have to start from the beginning, from site planning and design to construction and operations,” he says.

Multinational companies are paving the way; many have in place a policy to only lease spaces in buildings with green features. Even in the residential sector, some developments are showing that people are willing to pay for greener properties, he says, citing S P Setia’s Setia Eco Park as an example. “Bear in mind, developments that are green are also developments that are built to good quality.”

The company
The growth of WTW Bovis has been steady. Even the recession did not manage to put a dent in its business. “We have seen relatively little impact... it has not resulted in jobs being cancelled or delayed. Actually, we have secured significant new work this year, which is very encouraging. In terms of property, we have not had huge amounts of oversupply like in some countries and there is actually a shortage of Grade A buildings in the city,” he says.

Dinesh also notes a growing market — local developers. He says, “This is not a market we had before. The local developers hire us for projects in which the company may not have the needed skill set, such as when a residential developer ventures into commercial development.”

WTW Bovis started as a division in property consultancy C H Williams Talhar and Wong (WTW) and one of the things Dinesh was keen to explore when he joined the firm in 1978 was project management, which was nearly an unknown practice in Malaysia at the time.

“I would not say a lot of people thought it was a good idea back then. The company then was busy doing real estate and valuation work and I was busy chasing after project management work,” he laughs.

It began with the management of some of the Malaysian Pilgrims Fund Board’s (Lembaga Tabung Haji) projects and then expanded to other clients.

The company built up sufficient business and this led to the formation of the project management arm, WTW Consultan Sdn Bhd in 1984.

Then came the 1990s, which saw the arrival of many big international project management firms. “We went from being a big fish in a small pond to a small fish in a big pond,” he recalls.

That changed in 1995 when WTW Consultan — in a venture with the Bovis Group of the UK — formed a new company, WTW Bovis Sdn Bhd, to undertake larger and more complex projects. Bovis Group was later renamed Bovis Lend Lease following Lend Lease Corp’s acquisition of the company in 1999.

This article appeared in City & Country, the property pullout of The Edge Malaysia, Issue 786, Dec 21-27, 2009.