BUIL 4012 - Construction Marketing & Procurement Strategies in GFC

This report investigates the marketing and procurement strategies used by Australian construction industries during the 2009 Global Financial Crisis (GFC), focusing on potential strategies for future crises. It uses frameworks like SWOT and PESTLE analysis to examine the industry's response to the GFC, including government incentives and interest rate reductions. The report analyzes organizational structures, procurement techniques (conventional lump sum, design and structural, and construction management), and ethical considerations within construction firms during economic downturns. It highlights the importance of ethical practices, transparency, and government support in maintaining stability and preventing unethical behavior in the construction sector during financial crises, drawing comparisons with other countries' responses and emphasizing the need for adaptable strategies.

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Introduction
The major objectives of this report is investigating on the procurement and marketing
strategies employed by the Australian construction industries. Most importantly the entire
report will be specifically be grounded on the 2009 financial crisis. Additionally;, it is
presumed that there are probable chances that the same GFC may occur in the near future
thus effective measures should be reinstated so that to ensure such does not happen again.
Therefore, some of the most common frameworks to be used are the SWOT and the PESTLE
analysis. Immediately after the downfall of the Lehman Brothers, the GFC factor commenced
in America specifically due to housing market downturn. As a result the Australian
government provided incentives in order to aid augment the economy while the reserve banks
decreased its interest levels.
Thus market assessment is core of the market in that it is executed so that a clear plan could
be created for the business. Due to the fact that Australia has 35465 firms, its GDP
contributes greatly to its performance. Consequently, the industry is very competitive,
although with Porter’s five forces it will be effective in analysing the company’s competitive
advantage. Considering the GFC environment, limited amount of work available can compel
employee in great competition. Thus some of the probable procurement techniques include:
the conventional lump sum, design and structural, and construction management. Although,
structure only happened in two stages that are the corporate level and the project procurement
structure.
Structural Analysis
Generally, organizational structure is a system along an organization which takes into
account how sole operations are handled and assets are being distributed. Hence, relating to
GFC it is clear that firms will struggle to ensure that the challenge is handled and effective
measures are reinstated in order to solve the problem. However, based on organizational

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problems, no framework that is universal because of a single accurate structure that relies on
the problem that each organization encounters. Moreover, administration structure occurs in
two respective stages that is the corporate level, entailing the company’s organizational plans
and the project level that incorporate project procurement arrangements. Thus it is essential
that the organizational structure must be dismantled in order to identify the best probable
structure for the administration to be focused within the entire construction enterprise so that
we could endure the provoking GFC period.
De Valence & Best (2011), explains that for construction firms, there should be selection of
effective procurement techniques in order to be certain that the client’s requirement have
been attained and chosen procurement techniques must probably expound the chances of the
project attained efficiently and fruitfully within the GFC period. Consequently, figuring out
about the need from clients and the project nature for instance, advantages and risks, the
procurement tactics will thus be selected. Moreover, there are vast numbers of factors that
must be included in the process of evaluating the procurement techniques within the GFC
period (Bartol, 2007).
 Project Features – this include the originality of the project, location, size, and
complexity
 External factors – some of the factors to be considered include, legal, political, social,
and technological factors
 Scope – this is prepared by the customer and the design transition capability
1. Corporate Level – Firm’s organizational charts
A firm’s organizational chart is basically a graphical diagram that exhibits the structure of the
firm and linkage and relative position of its levels. In every firm such a chart is significant
and crucial as it permits individuals in envisioning the general organization a single chart

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(Chart, 2017). Additionally, two specular structures that poses its own merits and demerits
that takes into account the department organization chart and the vertical organization chart
has been considered. Initially, vertical organization that comprises of structure basically relies
on the administrator’s directives and person at the top-most position in the chart thus showing
great authority who probably can be the sole owner of the enterprise as exhibited by figure 8
below.
On the other hand, every company representative comprise of the same involvement on how
a firm can be governed through operating in groups and very person does not have a clearly
explained role although a departmentalised firm chart comprises of reduced chain of
command. Consequently, within the chart structure staff members are prospected to encircle
dissimilar roles and rather than reporting to the boss they can instead report to a number of
supervisors as illustrated in figure 9.
Figure 8: Firm’s organizational Chart
Source (Chart, 2017)

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Figure 9: Organization Chart
Source: (Chart, 2017)
2. The project procurement structure
De Valence & Best (2011), competitive strategists competing to similar jobs, then project
procurement structure is important section of the organization specifically when the DFC is
occurring within the construction industry. In such a way, not only limiting the slightest
tender but also restricting the customers risks to absolute minimal is a complementary
technique for the organization to win the prospective deal. Thus, according to this report the 5
procurement structures analysed through considering its effects (high, medium, and low) on
the customers.
a. Cost certainty
b. Allocation of the risk
c. Capability of making probable changes
d. Flexibility in designing
e. Time certainty
Thus below and the above 5 will thus be represented in order to provide a visual
understanding of the probable risk the customers can cherish through selection of a project
procurement structural mechanism. The main idea of being in a position to provide 5 utmost
procurement structures to the customers is for them to agree on the most probable substitute

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for a particular project in an event of a GFC. Prior analysing the effect to the customer the
two most probable project procurement techniques and structure will be the Design and
construct and the conventional management structure as exhibited in the figure below.
Nonetheless, considering that fact that cost certainty, allocation of the risk, capability of
making probable changes, flexibility in designing, and time certainty are low while the
capability of making the changes within the firm will aim at construction and project designs.
While opposing the GFC the design and construct is probably recommendable structure for
the customer.
Figure 10: Conventional Management Structure and Project Management
Figure 11: Design, construct, and BOOT structure
Figure 12: Construction Management
3. Procurement structure during GFC
Having a vertical organizational structure is effective since the entire decisions are made by
the general manager and each individual who have power; moreover having a strong
leadership position enables effective control of the entire business model. On the other hand,

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firms aim greatly on acquiring the whole team to be engaged, although this is important in
seeking advice to the entire department, through getting professional recommendation which
aids in providing a flatter structure in an event of encountering the GFC. Nevertheless, in an
event of the GFC it is superbly hard for a person to implement entire choices for the firm,
thus a horizontal organization structure will be upheld. Additionally, when encountering GFC
it important that all strategies should be put in position in order to overwhelm the problems
(De Valence & Best, 2011). Contrary to this it is also essential to consider adjustable
structure during the GFC as all structures and the firm will be inexpensive. Moreover, it is
important have the capability of providing the customer more and an efficient strategy within
the GFC since it is very competitive in accessing jobs within the construction.
Company Behaviours & Ethics
Possibly greater than other piece of the economy, the business construction can be impacted
by the financial cycle and particularly the money related conditions made by the GFC. Thus
the effect of construction business is exceptionally huge and at times construction experts
abstain from considering moral practices so as to remain active in the market or to make more
benefits. As indicated by Adnan et al. (2012, p. 724), the construction board management of
America assigned over 80% of around 300 construction business specialists including
designers, contractual workers and modellers had actually seen unscrupulous conduct in
2011. The issues of master ethics in the development business impact a scope of people. The
open works division, neighbourhood specialists, advisors, temporary workers, customer
association, homebuyers, providers and clients of open foundation are on the whole inside the
degree of master ethics. Such a calling should have an abnormal state of control to run its
master exercises without undue effect from different callings. Adnan et al. (2012, p. 723)
states, various sorts of deceitful practices and good dilemmas are related inside the Australian
development industry, for example, pay off, carelessness, defilement, under offering,

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irreconcilable circumstance, spread estimating, frontloading, tricky offering, offer shopping
and so on.
Firms will do anything so as to get by in the midst of the financial turndown especially to get
a delicate or to get ventures from the public segments. For example, at the season of 2009
GFC propositions turned out to be exceedingly aggressive and employment was rare in the
Australian construction sector. Furthermore the BER program got new contestants getting
into the business, which made very difficult in accessing a prospective tender. Consequently,
construction firms were not capable to maintain their private customers. Chileshe and
Yorston (2014), state that in the midst of GFC head contractual workers were experiencing
tension from both bigger and littler temporary workers in light of the fact that various
manufacturers were pushing the points of confinement and have become too enormous
excessively quick.
Everyone ought to perceive their degree and learn off the associations that break theirs. For
example, at amid BER, a level one electrical association utilized a subcontractor where the
undertaking size was $(AUS) 500,000 to $50m anyway level 2 organizations can offer for
tasks worth up to $10m in contract esteem. Consequently, construction firms were looking
for any possible techniques to win the tenders or get ventures without offering through
deceptive conduct amid the GFC. Hence, figure underneath shows the importance of morals
in project implementation which is fourth most basic estimation within the task.

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Figure 2: Ethics in Task Implementation
Source:(Thangaraj & Chan 2012)
For transparency, responsibility and decency for any organizational contract, guidelines are
fundamental, particularly in aggressive and centred construction conditions. Achievement of
these properties can be via different frameworks of consistence. It exhibits certain code of
conducts and other statutory instruments. For example the accompanying code of conduct
that came vigorously so outline decency and transparency inside the Australian construction
industry particularly if the GFC is prospected to occur (Koufikadis 2018).
 Code of conduct, 2012 (Lend lease)
 Code of Practice, 2013 (DPTI)
 The ACA approach of Ethics, 2012 (ACA)
 Rules and policies of expert competence and conduct, 2012 (CIB)
 Code of professional conduct, 2012 (ACA)
The Australian government ought to be applauded for measures endeavoured in the midst of
the GFC in 2009, for example, the National Structure and Occupations Plan advancement, the

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short lived fix of financial lift expected at development enterprises posed high hazard to
temporary worker's powerlessness in managing the related issues and pursue on effects. A
decent occurrence of how the legislature can extend burning through fiscal lift could be the
BER program as endeavoured in Australia (Thangaraj and Chan 2012, p. 19). Money related
lift includes an administration trying to help the economy out of subsidence and counteract
the conceivable untrustworthy conduct in the development business amid GFC. Australian
motivating force bundle set out to impact nearby economies the nation over by mixing cash
to improve work rate.
Drawn upon all-inclusive cases, Canadian Development industry pursued like money related
example to Australia after the worldwide budgetary emergency. Studies demonstrate that the
development business is most tricky industry around the world (Chileshe and Yorston 2014).
The deceptive conduct diagram increments exponentially at the season of GFC along these
lines, it is extremely essential for each development experts and firms to act likewise and take
their social duties intense. Past research attempted underlined that less development
organizations made arrangements for the gauge droop, anyway this was clearly erroneous.
Proposals proposed recommend that huge lack recognized was the nonappearance of a decent
key administration executed by the development associations post improvement.

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Reference
Adnan, H, Hashim, N, Mohd, N, Yusuwan, N & Ahmad, N 2012, 'Ethical Issues in the
Construction Industry: Contractor's Perspective', Procedia - Social and Behavioral Sciences,
vol. 35, no. 2, pp. 719-727.
Bartol, K., 2007. Understanding internal and external environments. In: Management : a
Pacific Rim focus. North Ryde, N.S.W: McGraw-Hill Education, pp. Ch. 3, pp. 72-106.
Chart, O., 2017. CONSTRUCTION COMPANY ORGANIZATIONAL CHART
INTRODUCTION AND EXAMPLE. [Online]
Available at: http://www.orgcharting.com/construction-company-org-chart/
[Accessed 23 May 2018].
Chileshe, N, Yorston, N & Annual, S2 2014, Lessons learned from building the education
revolution (BER) program by the South Australia construction firms, Association of
Researchers for Construction Management, UK 1471-1480.
De Valence, G & Runeson, G 2011, 'On the state of the building industry after the GFC and
the Euro crisis', Australasian Journal of Construction Economics and Building, The, vol. 11,
no. 4, pp. 102-113.
de Valence, G. & Best, R., 2011. Procurement strategies. In: Building in value : pre-design
issues. London: Routledge: s.n., pp. Ch. 4, pp. 37-61.
Koufikadis, J 2018, Strategic Management, BUIL4012, Lecture slides, University of South
Australia, viewed 19 May
2018,<https://lo.unisa.edu.au/pluginfile.php/1824531/mod_resource/

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Thangaraj, RK & Chan, TK 2012, 'The effects of the global financial crisis on the Australian
building construction supply chain', Australasian Journal of Construction Economics and
Building, The, vol. 12, no. 3, pp. 16-30.