CONSTRUCTION INDUSTRY by ANJALI M V

INDUSTRIAL ANALYSIS ON
CONSTRUCTION OF APARTMENTS









ASSIGNMENT SUBMITTED TO:

Prof.JAYAMOHAN NAIR

SUBMITTED BY:

ANJALI M.V.


First year MBA
Institute of Co-operative Management,Poojappura.






















ABSTRACT

The construction industry which is one of the most developed industries in recent years has great relevance today. It is a sector which provides employment opportunities to many and also contribute a great to the development of our country. Through this analysis various subsectors like real estate, architecture, cement industry, management etc are included. From the analysis we can conclude that this industry has a wonderful future and for the development of any economy construction industry is very valuable.






















CONTENTS



INTRODUCTION

GENERAL FEATURES

RELEVANCE

DIFFERENT SUBSECTORS
1. ARCHITECTURE
2. REAL ESTATE
3. CEMENT INDUSTRY
4. INTERIOR DESIGNING
5. MANAGEMENT

USE COMPETENCY MODEL TO ACHIEVE STRATEGIC GOALS

INDUSTRY STRUCTURE

INDUSTRY EXPECTATIONS

PROBLEMS FACED BY THE INDUSTRY

IMPACT OF RISING PRICES OF STEEL AND CEMENT

MAJOR CONSTRUCTION COMPANIES IN KERALA

INDUSTRIAL ATTRACTIVENESS

FUTURE OF THIS INDUSTRY





INTRODUCTION

The present day world offers a great variety of opportunities, which when tackled properly becomes a reserve for tomorrow.
Of all the problems and crisis that ruled the world for almost a year, the construction sector has survived well and all the fear which gripped the market has evaporated.
The recent months have shown that there is a genuine demand for property and buyers are now willing to spend more than they did three or four months ago. This itself makes this industry one of the top developing industries in both Kerala and world wide.

GENERAL FEATURES

1. It is a sector which provides employment opportunities for many people.
2. Concentrates on different levels of society including middle class and high class.
3. The increasing IT hubs resulted in need for more apartments and villas.
4. Ensures quality home.
5. Adds fuel to development of an area.
6. Private sector construction companies concentrating not only in metropolitan cities but also in small towns and villages.










RELEVANCE OF THIS INDUSTRY

Builders are now looking for new opportunities in building houses affordable to middle income groups. The builders and the buyers have become more practical. For example apartment units are now available for below rupees 20 lakhs. Rise in demand for ready to occupy units have tremendously increased. Falling bank rates on home loans are considered important. Now there is more understanding between builders and promoters. The increasing population finds it difficult to acquire land and the idea of apartments and villa solve this problem to a certain extent. Apart
from civil engineering there are wide opportunities for architects and interior designers who are associated with the technical level.

DIFFERENT SUB SECTORS
ARCHITECTURE

The profession of architects in India is based on the British system where in architect is a sacred independent entity and renders only consultancy and supervision. The American system for architectural profession is more liberal and wide open so that architects can join hands with developers as part of consortium.
Construction companies are now concentrating more on architectural ventures.

REAL ESTATE

One of the most important fields in the present scenario.
All immovable properties including land, structures on it and all other natural resources can be classified as real estate. Realtors, builders, brokers, buyers and sellers are the major players of the real estate industry. All type of residential, commercial and industrial properties fall under its domain. With its huge growth potential it has emerged as a major field of business in recent types.
The real estate sector in India is flourishing rapidly with a growth rate of 30% each year. About 80% of the real estate development in India has been in the field of residential building. The remaining 20% of the real estate includes office, shopping malls, entertainment centers, hotels, multiplexes
and hospitals. India’s booming outsourcing business industry and the consumption led growth are contributing significantly to its real estate growth.
Considering the advantages of significantly lower cost of operations in India, several MNC’s across the globe are expressing their willingness to shift their operations to India. Altogether it results in the foreign investment


INTERIOR DESIGNING
This is also a major sector included in this industry. Altogether for the effective functioning of this sector much importance is given to the management.


CEMENT INDUSTRY
The role of cement industry in Indian GDP is significant in the economic development of the country. The cement industry in India is one of the oldest sectors in India.
The industry is driven by the immense growth in the housing sector,the infrastructure development and construction of transport systems.The infrastructure development of the country in the recent years is the demand driver for the cement industry.










MANAGEMENT

Construction industry offers a wide range of opportunities as far as management people are considered. It is the responsibility of good managers to explore the field of entrepreneurship. As far as a construction company is considered, the CEO has a vision.
It is through the managers and employers that a company fulfills its vision. The ability of the managers is reflected in this. The various sectors of management can contribute a lot to this. The responsibility of recruiting good engineers, architects and managing the finance effectively are all the efficiency of managers. In addition to this they should be responsible for the best working conditions in a firm. The concept of marketing depends much on market perceptions and word of mouth publicity as on hard selling strategies. The market is sending out positive signs. The number of enquires are increasing. It all depends upon the ability of marketing their new products whatever it may be a villa or an apartment.

USE COMPETENCY MODEL TO ACHIEVE STRATEGIC GOALS

A successful company is one whose workforce demonstrates the knowledge and competencies that are necessary to achieve strategic business objectives. Competencies are nothing but the skills, knowledge, personal characteristics and attitudes that are needed to perform a job in the most effective manner. A competency model is the blue print of competencies required for the superlative performance on the job. There are several tools that can help organizations achieve operational efficiency and excellence.

Creation of competency models can help streamline hiring and training practices and achieve better job person fit within the organization. It can help in identifying competency gaps in mission critical operations and help managers to align talent to strategic business objectives. It helps in improving human resource utilization, talent retention and succession planning within the organization and at a very basic level. Technology and readily available expertise have made competency modeling cost effective and easy on organizational resources.
Secondly, unique competency models are rarely required for all individual jobs .Competency models in general contain critical competencies for job clusters or families (eg: - management, marketing, HR)
A lot of research and care must go into the selection competencies. Effective competencies models focus only on the absolutely critical skills that make the difference to success and failure in a job and donot get caught up with all the nice to have skills attributes.
Competency models need to be connected to the organizations strategic direction and work best with a top down approach, where people who are aware of both business strategies and the roles play key role in shaping competency models.
For leaders competency models can help in selection of the right people for jobs, and help them develop the skills that can pave the way for increase effectiveness and productivity.
With more and more sophisticated technology, measuring systems and research data becoming available, competency models have evolved. So competency models have become the key stone of recruitment, talent management and training for many large organizations across the world.









INDUSTRY STRUCTURE

The construction industry which is one of the major sectors in India has a wide range of people as resources. The hierarchy starts from Managing Director to the customers.

1. Managing Director
2. CEO
3. Finance Manager
4. HR Manager
5. Marketing Manager
6. Chief Architect
7. Civil Engineers
8. Supervisors
9. Laborers
10. Customers


Construction companies are license based companies. Now in Kerala new rules have been formulated by government. The decision of state government to put on hold the proposal to increase property tax has been welcomed by builders and real estate developers. Most builders said the proposal of the government allowing the local bodies to collect tax based on the carpet area of the building was a scientific one unlike the existing one based on annual rental yield. Infact the government came out with the order after holding several rounds of discussions with the gramapanchayat presidents, municipal chairmen and mayors. Basically, the new system of assessing property tax was not a rate reform, but a tax reform.
The system is based on dividing the civic body into primary, secondary and territory zones depending on the location of the places such as those having government buildings educational institutions commercial complexes markets bus and railway stations and hospitals.


The proposal for an area in the primary zone is between Rs.8 & Rs.20 a square meter for residential buildings, Rs.16 to 40 for industries and Rs.32 to 160 for commercial buildings concession rates have been proposed for secondary and tertiary zones. This system appears to be scientific since it has been brought out after a gap of several years.
Another serious issue which the government needs to look into is the demarcation of zones in most cities and towns based on the master plans and town planning schemes which have been drawn up before three decades. Some of the master plans have become obsolete. Strangely, even plots that fetch Rs.10 lakhs a cent in the heart of the city have not been zoned for residential purpose. Steps to bring about a change have been going for the past ten years. Nothing positive has emerged out of the proposals. Builders want the revision of master plans and town plans if the government is serious about propping up of the real estate sector.

CUSTOMER INDUSTRY WANTS EXEMPTION FROM CUSTOMS DUTY

Indian construction players has moved up the value chain both in terms of scale as well as area of work such as roads, irrigation, power plants, tunnels, urban infrastructure etc and currently sit on healthy order books.

INDUSTRY EXPECTATIONS

a. Introduce common goods and service tax at the earliest. It will help the construction industry rationalize its tax structure and simplify the procedures for tax compliance.
b. Rationalize dividend distribution tax so as to remove the current cascading effect.
c. Provisions of tax deduction at source under section 194C for the construction industry with paid up capital above Rs. 5 crore may be removed.
d. Infrastructure SPV’s should be allowed to qualify for reduced tax rates applicable to capital gains for listed companies.The SPV’s should be treated as deemed listed companies and the developer or investor should be entitled to reduce capital gains.

PROBLEMS FACED BY THE INDUSTRY.

Construction industry suffers from capacity constraints, lack of trained manpower and managerial skills with performance much below international level. Though there are islands of excellence in a sea of mediocrity. Our companies must become global players by modernizing, intensive training of their manpower, enhancing their turnover and change of mindset. The industry is starved of finance. Small and medium contracts do not have the wherewithal to upgrade their capability both hard and soft, to undertake value time bound projects FIDIC conditions are not being rigorously follow and the contract agreements continue to be heavily loaded in favour of the owner or client. Quality, safety, environment and social aspects are also not being addressed properly. The problem of sand mining is one of the issues raised by environmentalist. Issues of child labour and low wages for workers coming from other states create lot of social problems. So business laws should be effectively implemented.

IMPACT OF RISING PRICES OF STEEL AND CEMENT

The cost of projects is likely to increase as a result of the increase in prices of steel and cement, the two basic materials used in construction. However such increase in costs has to be compatible with international prices in view of WTO imperative. At the same time the agencies will have to enhance their efficiency and competitiveness and optimize project costs so as to maintain their position in face of stiff global competition knocking at our doors.


MAJOR CONSTRUCTION COMPANIES IN KERALA

 HEERA CONSTRUCSTIONS
 SFS HOMES
 INFRA CONSTRUCTIONS PVT
 ARTEC GROUP
 PTC CONSTRUCTIONS
 CORDIAL CONSTRUCTIONS
 SHWAS HOMES PVT Ltd
 FUTURE FOUNDATIONS
 FAVUORITE CONSTRUCTIONS PVT Ltd
 NIKUNJAM CONSTRUCTIONS PVT Ltd



INDUSTRIAL ATTRACTIVENESS

Result of a survey conducted by a leading magazine in five IT companies
YEAR PEOPLE WHO PREFER APARTMENT
2000 1050
2005 3115
2009 6445


This data shows the progress of construction industry in the recent years. Due to different policies of government it is now difficult to acquire land and apartments provide much more safety and comfort for people living alone also. Home loans provided by the private and nationalized banks also add to the advantage. More eco friendly projects are also started. The concept of ‘BHAGAVATHA GRAMAM’ is a new venture to
unite the worldly and spiritual aspects.


FUTURE OF THIS INDUSTRY

From the above analysis we come to know that it is one of the most developing industries that provide job opportunities to many people. The role of this industry in increasing the GDP of our nation is very high. The future of this industry is therefore secure. The development of this industry contributes to the growth of GDP which will enhance the industry and also the overall performance of our country and economy.