The Need For Construction Firms Commerce Essay Example

an examination of the relationship between potential determinants of CSM. Additionally, the construction industry plays a significant role in many economies by contributing to GDP and employment rates. Specifically in Australia, it accounts for approximately 6.2% of annual GDP and employs around 7%. (ABU)The growth of the construction industry is essential for an economy's overall welfare as it is interconnected with other sectors like services and manufacturing (Hillebrandt, 2000). Ofori (1990) identified nine specific characteristics of this industry: large size, government influence as a client, high production cost, unique demand nature, unattractive work nature, wide range of technologies. This text discusses significant attributes in the construction industry. Firstly, it highlights the impermanent and multi-disciplinary nature of organizations in this sector. It also mentions the long production process and complex construction involved. Additionally, it points out that small and medium-sized enterprises (SMEs) constitute most construction businesses in Australia with 94% falling into this category. This suggests that the industry is likely fragmented overall. Furthermore, the text recognizes that construction organizations operate within a complex and dynamic environment resulting in high uncertainty when making decisions. These organizations must handle rapid changes and unexpected situations during their business activities. Although environmental dynamism can pose significant threats, it also presents strategic opportunities over time. Environmental dynamism refers to how quickly things change without a pattern or predictability in the environment itself.The behavior of construction firms is heavily influenced by their operating environment, which encompasses economic and industrial factors, government policies, societal and technological changes, external influences, and the development of the industry (Betts and Ofori1994). In the global construction sector, sustainability has emerged as a critical factor that affects

waste management, energy consumption, and greenhouse gas emissions (Wallace 2005). As a result of the negative environmental impact of construction activities, there is mounting pressure from clients, government bodies, and stakeholders for construction companies to take greater responsibility for their social and environmental impacts. This has led to the integration of sustainability criteria in contract selection processes. Overall, it can be concluded that multiple environmental factors shape the behavior of building administrations. The increasing societal awareness of environmental issues along with stringent government regulations on sustainability have created a higher demand for building administrations to construct environmentally friendly buildings and engage in low-carbon emission infrastructure projects. This transition towards sustainable management practices has been recognized as a competitive advantage (Zhang et al., 2000). Henceforth,it is crucial for building administrations to comprehend how changes in their business environment may affect their operations.Changes in the current economy have presented new challenges for the construction industry in recent years (Wang and Yang, 2006). These challenges include factors such as globalization, building demand, environmental sustainability and climate change, new materials and technologies, and administration and regulation which impact construction organizations. According to Thorpe and Ryan (2007), one significant implication of globalization for construction administrations is the transformation of the industry into a more globalized sector with larger firms. Additionally, globalization provides opportunities for construction companies to expand internationally due to advancements in transportation and communication that remove barriers to accessing information and markets, leading to minimal competition boundaries (Sillars and Kangari 1997).

Raftery et al. (1998) highlight that foreign contractors entering less developed countries has increased competition while also presenting opportunities and threats for construction companies. Gruneberg (2009) emphasizes that

changes in construction demand can be attributed to various factors including economic, political, demographic, technological, and environmental conditions.The challenges faced by human resource management in construction arise from the cyclic nature of demand (Loosemore et al., 2003). These challenges relate to long-term investments in core staff. The text explores these difficulties, specifically focusing on fluctuations in building demand and their impact on strategic planning for resource utilization and investment. It acknowledges that societal expectations and population growth play a role in influencing construction demand levels. Furthermore, it highlights how changes in social outlook resulting from economic growth have led to an increasing need for improved residential, non-residential, and infrastructure buildings. Population growth also contributes to increased demand for housing and educational facilities. As a result of these factors, accommodation prices, house prices, and land prices rise while shaping the overall demand for construction activity.

In addition to these considerations, sustainability has become an important issue within global politics. Developed countries' governments are exerting pressure to create a more sustainable environment. Consequently, there is now a higher demand for energy-saving features in construction projects which has prompted changes within the industry itself. The construction sector is a significant consumer of global energy resources and has substantial impacts on the environment. Approximately 30-40 percent of global energy production is consumed by the building industry which heavily relies on natural resources such as lumber, sand, and stone for its construction purposes.The extraction process in the building industry has negative effects on the environment, including ecological and scenic impacts (Langford et al., 1999). Additionally, activities such as material extraction, transportation, and on-site construction release pollutants like nitrogen and sulfur dioxide

(Ofori and Chan, 1998). This industry is also responsible for approximately half of global CFC emissions (Moughtin, 1996). These pollutants not only contaminate water and land but also contribute to environmental degradation (Langford et al., 1999).

Furthermore, due to its high energy consumption and resource utilization, the building industry puts significant pressure on the entire ecosystem. Waste generated by this sector accounts for a substantial percentage in different countries: about 29% in the USA, over 50% in the UK, and 20-30% in Australia according to Teo and Loosemore (2001). Chiveralls (2011) adds that Australia's construction and demolition sector alone accounted for more than a third of total waste at 43.8 million tons in 2006-2007. Unfortunately, a large portion of this waste ends up in landfills with only a small percentage being recycled or reused.

Despite offering economic and social development opportunities, mismanagement within the built environment significantly contributes to environmental problems today.According to Du Plessis (2007), it is important to address housing demand and urbanization needs responsibly, considering both social and ecological perspectives. Khalili (2011) defines sustainability as the impact of economic development and industrial growth on various aspects of society. To create a sustainable solution, all interconnected dimensions, such as natural systems, economy, and society, must be taken into account. However, these dimensions are often evaluated separately (Figure 1), which can lead to negative consequences by solving one problem while exacerbating another. For instance, constructing houses in wooded areas for societal needs can harm the environment. Additionally, there is a tendency to prioritize short-term goals without considering long-term consequences. This approach often results in conflicting interests where businesses argue that incorporating environmental and societal concerns limits

their economic growth. McElroy and Van Engelen (2012) state that sustainability is a social science or management discipline that evaluates human activities' impact on critical capitals worldwide to ensure human well-being according to established standards or norms. The concept of sustainability originated from studies conducted by Meadows et al.(1980) and gained popularity through the Brundtland Report in 1987 (WCED 1987).The report defines sustainable development as the act of meeting present needs without compromising the ability of future generations to meet their own needs. It emphasizes the importance of considering economic growth, environmental protection, and social well-being together in order to achieve sustainability. The text argues that sustainability is meaningless without taking into account the specific context in which it occurs. To incorporate context into sustainability direction and coverage, the authors propose a three-step process.

The first step involves identifying the critical capitals and their carrying capacities that an administration has an impact on. This includes considering stakeholder well-being and the capitals that need to be affected to ensure stakeholder well-being.

The second step is determining which populations are responsible for ensuring the quality and sufficiency of these capitals. These populations play a role in maintaining these resources.

Finally, the third step involves allocating appropriate portions of available stocks and flows, as well as burden portions for generating and maintaining them, to individual administrations.

Sustainable development emerged as a response to increasing awareness of environmental problems, socio-economic issues related to poverty and inequality, and concerns for future generations' wellbeing.The concept of sustainable development was first introduced in 1980 with the World Conservation Strategy. However, it gained popularity when the Brundtland Report was published in 1987. According to this report,

sustainable development involves meeting present needs while ensuring that future generations can meet their own needs. The text emphasizes the interconnectedness between economic growth, environmental protection, and social well-being in achieving sustainability.

Since 1980, there has been significant international focus on sustainable development through conferences like the UN Conference on Environment and Development in Rio de Janeiro (1992), the Kyoto conference on global heating (1997), the Johannesburg Earth Summit (2002), and the Washington Earth Observation Summit (2003). These conferences have encouraged countries to incorporate sustainable development principles into their industrial sectors.

The Brundtland Report defines sustainable development as meeting current needs without compromising future generations' ability to meet their own needs. Another commonly cited definition from "Caring for the Earth" (1991) states that it aims to improve quality of life while living within ecosystems' carrying capacity.Figure 2 illustrates three interconnected dimensions that must be fulfilled to achieve sustainable development, according to Au (1996). These dimensions - environmental, societal, and economic - are not just conditions or manipulations but rather objectives. Failing to meet any of these goals renders a development strategy unsustainable. The importance of a comprehensive approach that addresses all three dimensions is further emphasized in 2020. It is argued that tradeoffs between these dimensions should be minimized or eliminated for true sustainability. However, it is acknowledged that in practice, economic goals often take precedence over environmental and societal considerations.

To ensure meaningful action stemming from discussions on sustainable development, Moffat (1993) suggests the need for a dynamic methodology. This involves considering the length of the skyline in a theoretical model to encompass ecological and economic processes. The impact of policies embedded within this model can then

be assessed with regards to sustainable development pathways.

It is crucial for discussions on sustainable development to take place at the national level so that policies are accountable to those most affected by them (Hai et al., 2020).(2012) in Ghana identified various barriers to sustainable development in the construction industry, including limited awareness and understanding of sustainability concepts, inadequate government policies and regulations, lack of financial resources, and resistance to change from traditional practices.The study conducted in 2008 supports the conclusions that cost concerns, lack of awareness and understanding, and insufficient support from clients are major barriers to implementing EMS in construction companies. The surveyed construction companies in Singapore had a wait-and-see approach towards implementing ISO14000 EMS. They lacked knowledge about ISO14001 standards and faced challenges related to a shortage of qualified personnel and inefficiencies in the industry resulting in material waste and safety issues.

Ofori (2000) recommended using supply chain management to improve sustainable performance by greening the construction supply chain through initiatives such as best practices awards and education. Lam et al.(2010) stressed the importance of information and communication technologies, training, and development for enhancing business efficiency and productivity.

On the other hand, contractors in Hong Kong showed little inclination towards sustainability due to lack of client support. Their main performance criteria were cost and time, with limited capacity for implementing EMS according to Shen and Tam (2002) as well as Tam et al.(2002). These findings align with Christini et al.'s research (2008), which also identified cost concerns, lack of awareness, understanding, and client support as barriers to implementing EMS in construction companies.A study conducted in 2004 revealed that only a few construction companies have implemented

EMS in their operations due to limited resources and lack of commitment from industry partners. In 2010, Zainul Abidin conducted a study on sustainable building in Malaysia and found that the concept is not widely embraced by the industry. Many developers, especially small and medium-sized ones, are hesitant to adopt sustainable practices for various reasons such as lack of knowledge, poor enforcement of laws, and a culture of inaction within construction organizations.

According to a study conducted by Sakr et al. in 2009, there is limited dissemination of information about ISO 14001/EMS among top contractors in Australia because local institutions do not promote it. Hampson and Brandon (2004) emphasize the importance of construction organizations recognizing sustainable management as a strategy for enhanced competitiveness in Australia. They suggest that life cycle assessment is a useful tool for environmental management. However, potential obstacles to sustainable management include organizational inertia, lack of information, insufficient capacity, and government incentives (Petrovic-Lazarevic, 2008).

In Petrovic-Lazarevic's (2008) study with 17 major Australian building companies, interviews were conducted to understand their attitudes towards sustainability and the use of ISO14001 EMS as part of their corporate social responsibility initiatives.The majority of these companies have implemented ISO14001 EMS certification for various reasons, such as competition, quality improvement, community demands, increased public awareness, and customer requirements. According to Hill and Bowen (1997) and Sev (2008), construction companies need to change their behavior and attitudes towards sustainability in order to effectively manage sustainable performance. Positive behavior in this area can give a competitive advantage, especially as governments and public communities increasingly focus on environmental issues (Carmichael, 2009; Ngowi, 2001).

Researchers have developed several frameworks to help organizations achieve sustainability. These

frameworks are discussed in detail in this section. Table 1.4.1 provides a summary of these frameworks.

Environmental Management Systems (EMS) are processes and practices that assist organizations in improving efficiency by reducing emissions and environmental impacts. EMSs follow the Plan-Do-Check-Act (PDCA) methodology (Khalili and Melarango, 2011). The first EMS standard was established in the UK as BS 7750 in 1992. It was followed by regional standards like EMAS (European Union's Eco-management and Audit Scheme) (Hillary, 1997). In September 1996, the International Organization for Standardization (ISO) released ISO 14001 as the initial version of the Environmental Management Systems standard. An updated version was published in 2004.However, some researchers argue that EMSs are simply management systems without guaranteeing improvements in a construction company's environmental performance (Tam et al., 2002; Kollman et al., 2002). Freimann and Walters (2002) provide empirical evidence supporting the notion that implementing standardized EMSs is primarily seen as a financially beneficial investment by participating managers. While it is challenging to quantify the improvement of corporate environmental care, these systems bring added value.

According to the universal concern council for sustainable development, Corporate Social Responsibility (CSR) is an ongoing commitment by businesses to contribute to economic development while improving the quality of life of the workforce, their families, and the community and society as a whole. Petrovic-Lazarevic's definition in 2005 aligns with this definition, defining CSR as a set of principles established by an organization to meet social expectations of appropriate business behavior and achieve best practices through social benefits and sustained competitive advantage.

Corporate Social Performance (CPS) is not just an outcome but rather a combination of drivers, processes, and outcomes.According to Wood (1991), CPS refers to

the combination of principles of social responsibility, processes of social responsiveness, and policies, programs, and tangible outcomes that relate to a company's social relationship. In 2011, Khalili and Melaragno conducted research which presented strategic models for achieving sustainability. These models are displayed in Table 1. The EMS aims to reduce emissions and environmental impacts within an organization. The CSR framework provides guidance for business strategies, while the OHSMS ensures workplace safety. LCA identifies the environmental aspects and impacts of products throughout their life cycle. The SEA Framework incorporates sustainability components into planning actions for business sustainability and economic viability, particularly in project assessments. Corporate Social Performance evaluates a company's social performance. However, it is important to note that corporate social responsibility primarily focuses on motivating corporate behavior and pays less attention to environmental impacts compared to corporate sustainability models. On the other hand, corporate societal performance encompasses a wider range of factors including motivating principles driving corporate behaviors, societal reactivity processes, and outcomes resulting from those behaviors.The text emphasizes the need to distinguish between environmental and societal issues in various models. It explores how both external and internal factors can influence a company's strategic approach to sustainability management, including organizational culture, employee skills and attitudes, organizational structure, as well as tools and processes. However, these models do not present a business case for sustainability. Sustainability management aims to integrate an organization's efforts towards sustainability by enhancing performance in economic, environmental, and societal aspects. Unfortunately, during financial hardships, sustainability is often disregarded first. Yet when integrated into overall business management practices, sustainability becomes crucial for success and less prone to compromise. By incorporating sustainability into business

management strategies, organizations can simultaneously improve their ecological, societal,and economic objectives while making significant contributions across multiple dimensions of sustainability.Figge et al.(2002) highlights potential conflicts among the three pillars of sustainability but emphasizes that corporate sustainability management should prioritize and recognize opportunities for simultaneous enhancements in all three dimensions.Organizations possess the capacity to make substantial contributions to sustainability while simultaneously ensuring their economic stability and success.