International Construction: Developing Countries Firms in Developed

This report examines the increasing significance of international construction, particularly the involvement of developing countries in developed nations' markets. It discusses the growth of the construction sector globally, with a focus on the faster expansion in developed countries. The report analyzes strategies for diversifying engagement between international and local construction industries, emphasizing joint projects. Factors such as favorable government policies, competence of international companies, and capital influx are identified as key drivers. The research highlights both positive impacts like improved project quality, funding, material supply, and technology transfer, and negative effects including labor importation and market loss for local industries. Challenges faced by international companies, such as language barriers and cultural differences, are also explored. The report concludes by assessing the overall impacts of international construction on local companies and provides insights into navigating the complexities of the global construction landscape. Desklib offers access to this and other solved assignments to aid students in their studies.

INTERNATIONAL CONSTRUCTION
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Executive Summary
International construction has started to assume great importance in recent years. The
construction sector has experienced growth over the last few decades. The construction
industry has, however, grown faster in developed countries than in developed countries.
The paper discusses the progress of the construction industry in both developing and
developed countries. Strategies that diversify engagement between the international
and local construction industry are discussed in detail. The main strategy is joint
projects between local and international construction companies. The factors influencing
the increased influx of international construction are discussed. They include;
favourable government policies, the competence of international companies and capital.
Positive and negative effects of the international construction industry were found
through research. The positive effects include; satisfactory end product, project funding,
the supply of material, cheaper rates, lesser time for project completion, training
employees, high completion, job opportunities, international network, new technologies
and skilled workers. Negative effects include; labour importation, discriminatory
management, and weaker completion, loss of market for local industries and lower cost
of projects. The challenges that the international companies face are the language
barrier, cultural differences, being outsiders, poor infrastructure, bureaucracy and
corruption.

Contents
Executive Summary...........................................................................................................2
The scope of Construction from developing countries in developed nations....................4
Introduction.....................................................................................................................4
The progress of Construction industry over the Last Decade........................................5
Legislation/ Agreements Affecting International Construction Industry.........................6
Strategies to Diversify Engagement in the International Construction Industry............7
Factors Influencing the Increased Influx of International Construction..........................8
Effects felt by developing countries when given a chance to engage with developed
countries construction firm.............................................................................................9
The positive effects felt by developing countries...........................................................9
Negative Effects of International Construction.............................................................11
Challenges That International Construction Companies Face....................................12
The impacts of international companies on the local companies................................14
Conclusion.......................................................................................................................15
List of References............................................................................................................15

The scope of Construction from developing countries in developed nations
Introduction
International construction has started to assume great importance in recent
years. There are more indications that this trend will progress. The competitions for
international projects have become intense and the global marketplace has flooded due
to the development of expertise and capability of firms from numerous emerging
countries (Abidin, 2010 p.77). The emerging firms can now export their services and
compete effectively with other established firms. For success in international
construction projects, the firms are required to address factors such as technical
expertise, managerial expertise, management of cultural issues and risk management.
They must be experts at management. The company should have a team of experts on
management in order to control a project of a large scope. The international companies
must be capable of managing issues of cultural differences so that they work well with
the local people (Sarala and Vaara 2010, p.92).
International construction also means that different countries can participate in
different parts of one project (Hillebrandt 2000, p.13). These parts may include;
providing construction materials, providing equipment, financing the construction
projects and outsourcing of the activities of design and development. In the construction
sector, the companies should have technical expertise, use information in a strategic
manner and have an expert to manage the construction to compete in the international
market. The companies must have technical expertise (Jung et al 2010, p.19). The
international construction company must be capable of finding solutions to unique
problems (Ravanshadnia, Rajaie and Abbasian 2010, p.21). They must be able to use
information in a strategic way and be able to come up with innovations.
The Chinese construction industry has experienced a sensational change caused
by internationalization as of late. Over the last 10 years, the Chinese construction
industry has made striking accomplishments, through drastically opening up and
becoming coordinated into the worldwide development market. Despite the Chinese
construction industry showing a noteworthy movement in the worldwide market in the

last decade following entry into the World Trade Organization (WTO), it is experiencing
some serious problems as compared to other developed nations. By 2007, the Gross
Output Value (GOV) of the Chinese construction industry was over$806 billion (NBSC,
2008). After the promotion to WTO in 2001, the yearly development rate of the GOV
expanded significantly, from 10% to over 20% (Zhang and London 2010, p.87).
Additionally, the Chinese construction industry gives a different scope of occupations
and offers numerous new chances. Before the end of 2007, there were in excess of 33
million individuals working in the Chinese construction industry (NBSC 2008). For
example, China Construction America works on the East Coast of the U.S and the Gulf
of Mexico, the Caribbean, and Latin America, having many completed and progressing
projects around the world.
The construction industry is one of the significant supporters of economic
progress in the world. Its commitment ranges from empowering the obtainment of
merchandise and ventures to the arrangement of structures and other frameworks, in
this way giving business chances to its work drive while colossally expanding Gross
Domestic Product. This paper seek to discuss the scope of construction from
developing countries to developed nations and how they manage to cope with
construction firms in the developed nations.
The progress of Construction industry over the Last Decade
Over the past decade, the progress of the construction industry has grown
tremendously in developed and developing countries due to increased demand for
housing and infrastructure as a result of population growth. The construction industry is
one of the major sectors that a country relies on for their economic growth. The current
situation is such that the governments in different countries are finding ways of making
a suitable environment for the growth of the industry. In developing countries, there has
been an increased need for better housing and infrastructure (Horta et al 2012, p.40
and Edwards 2011, p.18). The countries are, to a large extent, trying to construct better
roads and housing in various parts of the countries.
There are major challenges experienced in this process. These challenges
include; lack of skilled labor required locally, lack of funding for the projects, the bad
state of infrastructure and a high number of construction projects that are left without

being completed. Fletcher and Vyakarnam (2013, p.53) believe that the main
opportunities to construction development in developing countries are related to market
demand, language, firm age, management skills, resources, regulations, decision-
making policies, experience, and timing.
In the developed countries, the construction industries have gone through a
major growth. This has resulted in better infrastructure, the rise of many skyscrapers
and better housing for the residents. However, these countries also have challenges like
shortage of employees in the construction industry. This is forcing them to depend
greatly on the immigration of people into these countries to provide for labor (Cheng and
Li 2012, p.29).
The challenges that both the developing and developed countries are facing,
encourages international construction. The developing countries look for skilled labor
and finance from international construction companies (Le Hoai et al 2008, p. 26). The
developing countries also get building materials that are not locally available, from
foreign countries. On the other hand, the developed countries get the labor needed by
construction companies from foreign countries. This need for more employees is
caused by a large number of construction projects being carried out at the same time.
The developing countries provide the market needed by international companies.
The developing countries depend on the construction industry to boost their economic
growth (Izik et al 2010). Apart from that, providing good roads and better housing has
become an urgent need in the developing countries. Most of these countries have tried
to do away with informal settlements, especially in their urban areas. Lack of funding
has led to projects being left without completion (Ameh, Soyingbe and Odusami 2010,
p. 32).
Legislation/ Agreements Affecting International Construction Industry
Over the past few decades, many countries have revised their policies on
international trade and construction. This has been made possible by the realization that
the challenges being faced in different countries can be solved through international
cooperation (Fellini, Ferro and Fullin 2007, p.77). These policies have ensured that
these agreements are beneficial to both the host country and the international company.
The international construction companies get to undertake projects in foreign countries;

a chance to build their image by producing quality work as well as gaining profit from the
construction projects undertaken (Park and Ghauri 2015, p. 47). Apart from that, the
international construction companies gain a larger market.
The host countries also get benefits from these agreements. The international
construction companies provide financing for the projects in the host countries. This
ensures that projects are not left incomplete. The local construction companies also
gain new knowledge and experience from working with international construction
companies (Corkin 2012, p.17). This improves the skills of the locals, bridging the gap
between the skilled labor required and the available labor. The competition brought by
the presence of international construction companies challenges the local construction
industries to raise their standards.
In Ukraine, International construction companies operating in Ukraine and,
increasingly, local Ukrainian contractors are seeking to limit their liability and warranty
undertakings, both in terms of the period of liability and the financial amount (Sood,
Chua and Peng 2012). Much effort has been taken by the legislature over the past few
years to foster investment into the construction industry by way of industry deregulation
and thus to help keep the industry afloat (Chan 2009, p.36). In the U.K, there has been
a functioning Society of Construction Law since 1983, and there is currently a European
Society of Construction Law, and Societies of Construction Law in Australia, Hong
Kong, Singapore, and the UAE. The Joint Contracts Tribunal deals with the most
famous kind of standard development contracts and the most recent suite of
agreements from the JCT are the 2016 releases (Carbon 2005, p.11). The type of
agreement most supported by open bodies is the NEC contract suit (Hilland Bowen
2016, p.81). Albeit some observe Construction Law as another type of general contract
law, it is a much-particular region and a great many people requiring exhortation on
development law in the UK would look for counsel from development law authorities.
Strategies to Diversify Engagement in the International Construction
Industry
Over the last decade, the international construction industry has changed
drastically in many ways from the terms of competition rules to delivery systems for the
selection of contractors, financial resource diversity, leading contractors in the revenue

rankings, the key products, and new emerging markets. There are various strategies
that can be implemented to diversify the construction industry in both developed and
developing countries. One of the strategies is collaborating with the local construction
companies in both developed countries and developed countries (Van Doren 2016,
p.56). The construction industries can experience setbacks if it does not collaborate with
the local companies. Other companies can invade their market and take over the major
construction projects.
In such situations, the locals do not benefit whatsoever in this kind of
arrangement. This leads to the locals trying to find a way to do away with the
international construction. This can manifest through the foreign laborers being attacked
by the residents (Le-Hoai, Dai Lee and Lee 2008). For example, Singapore and
Botswana are examples of nations where governments have energized nearby
development firms, who were offered inclination, to work in joint endeavors with remote
temporary workers meaning to profit by the innovation exchange through the execution
of open tasks (Govender and Watermeyer, 2010, p. 8). Ofori et al. (2012, p. 86)
communicated his worries in regards to the successful exchange of innovation, and
trusted that joint endeavors do not really finish up such pointed outcomes; He referred
to joint endeavor understandings in Ghana and preparing plans in Singapore to help his
contention. In the United States, China needs to figure out how to adjust the economic,
legal, social, and technological condition alongside changes achieved by contenders'
advances and new needs of clients. They also need to build up their capacity to survey
the chances, to anchor their solid development, to survive, and achieve benefits.
This can be solved by involving with the credible and competent construction
companies in the host countries. This is done by undertaking joint projects. The
international construction companies should seek to familiarise themselves with the
processes of negotiation that take place in the host country. The international
construction companies should seek to employ more workers from the host countries
rather than importing most or all the workers from their home country (Gertler and
Trigari 2009, p.28). This will make the locals feel more involved apart from providing
them with work experience. The local construction companies want a partnership with
international construction companies, which will provide room for learning and sharing

of knowledge. The benefit of international construction companies' gain from such
partnerships is that the local companies are more familiar with issues like availability of
land and the construction regulations in their country.
Factors Influencing the Increased Influx of International Construction
There are numerous factors that can increase the development of construction
industry both in the developing and developed countries. Firstly, the construction firm
should have technical expertise which will give them the surety of providing quality work
(Abdul-Rahman 2012, p. 23). Provision of quality work will give the construction firms in
the developing countries a chance to participate in international construction. The
quality of their completed works also greatly encourages the developed countries to be
open to the international construction industries from developing countries (Bowers and
Cohen 2009, p.37). Additionally, the ability to fund projects is another critical factor for
the increased influx of international construction. Construction companies that have
extended their services on the global scale will be at a better position to get funding
from their countries.
Another factor that is increasing the increased influx of international construction
is having better managerial expertise that can control projects, inputs, and logistic
procurement and human resource management. Risk management involves access to
insurance at reasonable rates and experience in anticipating and dealing with risks.
The government in some countries do not control the number of companies moving in.
This has played part in the influx of international construction companies. (Friedman
2010, p.79). On the other hand, investors also prefer foreign construction companies.
This is because the local companies already have a record of poor performance in the
past and poor quality of workmanship.
For example, a drastic demand for advancement worldwide has gained the
interest of Malaysian development firms to extend into the global construction platform.
Recognizing and examining significant determinants of the company's interior and outer
variables are critical to facilitate the complexities in worldwide market extension. from
the responses received by thirty-one (31) Class An and Grade 7 Malaysian
development firms enrolled with CIDB Malaysia in 2010, findings show that specialist

expertise, international network, and good track record are influential factors for the
organization to successfully compete in the global market.
Effects felt by developing countries when given a chance to engage with
developed countries construction firm
There are various effects that will be noted if the construction firm from
developing countries is allowed to engage with the construction firm in the developed
countries. However, the effects may be either is positive or negative. The positive
effects that will be experienced by construction firms in developing countries include
improved quality of products, creating an international network, have an extensive
supply of construction material and create more job opportunities.
The positive effects felt by developing countries
The developed countries are known to produce high-quality construction works.
Allowing the construction firms in developing countries to partner with them in the
construction works will help to them improve in every aspect of construction. The
construction firms have sophisticated equipment and machinery that they use in
performing construction. This will give the construction firms in the developing countries
an opportunity to learn as well as acquire skills which they use to improve the
construction works.
The partnership of construction firms in developing countries with those in the
developed countries will increase material supply for the construction projects. The
construction firms in developed countries produce adequate materials needed for
construction and allowing them to engage with construction firms in the developing
countries will enable them to to be supplied or import the raw materials needed for
construction projects. The construction firms in developing countries will be able to use
the specified material as shown in the design drawings. Additionally, the construction
firms in the developed countries provide cheaper rates for construction projects due to
the availability of materials (Spencer 2008, p.90). Therefore, engaging the construction
firms in the developing countries with this developed countries construction firms will
enable them to offer cheaper rates.
Alongside cheaper rates in the construction projects, the construction firms in the
developing countries will experience lesser time for project completion due to sufficient

labor provided and use of machinery. The construction firm in the developing case will
only concentrate on the construction while the construction firms in developed countries
help them in funding the projects (Hassan et al. 2016, p.49). The delay of some
construction projects is caused by the boycott of workers because of the failure of
construction companies to pay them for the work done.
Giving a chance for construction firms in developing countries to engage with
those in developed countries will also expand and further create job opportunities. The
developing countries can provide labor for the construction firms in the developed
countries to perform tasks that are involved in construction. A lot of skilled and unskilled
labor is needed in the construction projects and the construction firms in developing
countries will provide the same (Liang 2017 et al., p.23). The more the projects they
undertake, the more the people needed for the labor required. The fact that employment
opportunities are created by international construction companies is a positive outcome.
Allowing the construction firms in the developing a chance to engage with those
in developed countries helps them to create an international network. This will allow
them to work with experts from other foreign countries (Smith et al. 2011, p.45). The
frequent meetings of contractors, architect, and engineers from other countries help the
construction firms from developing to have a wide scope. The diverse origin of different
professionals makes it a resourceful experience for local professionals. This
engagement will create a strong network between foreign and local professionals. The
contact will be maintained even after their contract is over. They will be able to update
each other on various international opportunities in the construction sector.
The engagement between the construction firms in the developing countries with
those in the developed countries will enable developing countries firms to incorporate
new technologies in the construction sector. The technologies used by the construction
firms in the developed countries will be transferred in the market of the developing
countries. New technologies make construction projects less expensive as well as save
time. The new technologies will make it possible to manufacture durable building
materials in the shortest time possible (Azhar et al 2008, p. 51). The construction firms
in developed countries will help construction firms in the developing countries to
introduce construction software that allows better management of the projects.

The software also allows for documentation of the progress of a particular
project. Computer-aided designs even allow for the designer to project how the project
will look like even before ground is broken. There are also heavy machines that can do
the lifting of heavy materials instead of risking human life to do the task of lifting. In most
cases, some construction projects fail to be undertaken in a suitable manner because of
the lack of skilled manpower needed. Therefore, giving the construction firms in the
developing countries a chance will help them to import skilled labor required for the
development of projects (Jung et al 2010, p.46). This will be beneficial for the
construction firms in the developing countries because people from developing
countries will work with skilled workers from the developed countries and learn those
skills from them.
Negative Effects of International Construction
As much as the engagement of the construction firms in developed countries
avails numerous benefits to developing countries, they further have negative effects on
the international construction companies in the developed countries. The negative
effects include importation of labor from the developing countries, discriminatory
management, weaker competition in the host country and loss of market for some local
industries. In some cases, the engagement may not be of mutual benefits between the
constructions firms in developing countries and developed countries (Darko 2017, p.42).
These developed countries construction companies prefer to import laborers from their
own countries. The international construction companies from the developing countries
may feel that the local laborers are not used to hard work. The international construction
companies see this as a culture that delays the project (Ofori 2012). They prefer to work
continuously until the deadlines are met.
Likewise, discriminatory management may result if the developing countries
construction firms are given chance to engage with developed countries construction
firms. The management of international construction industries is seen to only employ
professionals from their countries in their top positions. The locals get the lowest
possible employment positions, for example, the locals would just be employed as office
messengers and people preparing tea even when these people have more
qualifications for better jobs. This denies the local professionals from having a working