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GLOBAL DRIVERS OF CHANGE: THEIR IMPLICATIONS FOR THE

ZAMBIAN CONSTRUCTION INDUSTRY

Authors: W Shakantu1, S Zulu2, WM Matipa3


1
Address: Department of Construction Economics and Management, University
of Cape Town
2
Department of Building Engineering and Surveying, Heriot-Watt
University
3
Informatics Research Unit in Sustainable Engineering [IRUSE],
National University of Ireland, Cork
1
E-mail address: wshakant@eng.uct.ac.za
2
s.zulu@hw.ac.uk
3
w.matipa@mars.ucc.ie
Keywords: Drivers of change, change management, globalisation, knowledge
management, e-commerce, re-engineering, paradigm shifts

ABSTRACT
As the winds of change sweep through Southern Africa, the Zambian Construction Industry is
experiencing obsolescence of the old construction corporation, the eruption of information
technology, globalisation, new and intense competition, changing societal and customer
expectations. Technological developments, financial constraints, restructuring and mergers, new
philosophies and government intervention have hit the industry.

This paper suggests the efforts that the social, technical and business architecture should be
making to realign itself to meet the demands of change. Innovation in production, increased
competitiveness and technological and knowledge based change is imperative.

The paper concludes by stressing that it is of strategic importance that the Zambian construction
organisations anticipate the need to review their business models to proactively create advantage.
Collaborative leadership, intellectual capital and knowledge management baselines will require a
systemic change effort. Fundamental business transformations tightly integrating customers, supply
chains and partnerships on one hand and an e-commerce revolution coupled with paradigmatic
business process re-engineering on the other will be inevitable.

INTRODUCTION

Zambia: country profile


The Republic of Zambia is a land locked state occupying elevated plateau country in South Central
2
Africa. Zambia has an area of 752 600 km . The country is irregularly shaped and shares a
boundary with eight other countries.

The topography of Zambia is dominated by even skylines of uplifted planation surfaces. Highest
elevations are reached at 2164 m above sea level. Ancient, largely pre-Cambrian sedimentary and
metamorphic rocks, with localised igneous intrusions, are exposed over most areas. Younger karoo
sedimentaries floor the rift troughs of the basins, while a basalt floor of this age has been incised by
the Zambezi Valley below the Victoria Falls to form spectacular gorges.

Zambia’s main resource is its land. The country is the world’s third largest producer of copper.
Zambia is the third most urbanised country in mainland black Africa with 60% of the population of
10 million living in towns. The total Gross Domestic Product (GDP) is US$5 billion.
The Zambian construction industry
The construction sector in Zambia consists of five main sub-sectors, namely, the design, assembly,
manufacturing, supply and clientele. Like all other construction industries worldwide, the Zambian

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construction industry is concerned with the delivery and maintenance of buildings and infrastructure
such as roads, railways, airports, bridges, dams and power stations. However, because Zambia is a
Third World country the main construction business is infrastructure development providing basic
human needs such as water supply and sanitation (Nsabika, 2002), and steps towards self-
sufficiency and wealth creation.

The production process that facilitates the construction industry involves legal and institutional
relationships among clients, architects, engineers, surveyors, planners, contractors, manufacturers
and material suppliers.

Literature shows that from the 1980s to date, the Zambian economy, under which the construction
industry operates, has been on the decline. The research indicated that GDP per capita has been
fluctuating. The most recent released economic report shows that GDP, from 1980 to 1999, has
been fluctuating between -8.6% and +2.45, as depicted in Table 1.

Table 1: Real GDP Growth Rates for Zambia: Weighted 1990 at 2.6%
Year 1981-90 1991 1992 1993 1994 1995 1996 1997 1998 1999
Percentage 1.0 -0.2 -1.7 0.8 -8.6 -4.3 6.5 3.5 -1.8 2.4
Source: Ministry of Finance and Economic Development, January 2000, Lusaka

Inflation rates have also varied greatly in the said time period, with the lowest closing year figure of
18.1 % in 1997, while the highest was 191.5% in 1992, (Nsabika, 2000) as indicated in Table 2.

Table 2: Inflation Rates for Zambia in the 1990s


Year 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001
Percentage 93.4 191.5 138.1 35.2 46.0 35.2 18.1 30.6 20.6 30.0* 18.0*
Source: Matipa (2000, p 93), (*Preliminary figures; Chomba (2002) Sunday-Mail, August 18)

CONCEPTUAL FRAMEWORK
The framework adopted for this research, i.e. environmental complexity analysis, follows the
perspective of organisations. It is based on developments to the work of Fellows et al. (1983),
Lansley, (1987) and Hughes (1990) which emphasise that factors in the environment are crucially
important to business. Lansley (1987) argued that the framework views the environment in terms of
the nature of the effect on the business organisation of changes, which take place within the
environment. The rationale for the argument is that a changing environment means that
construction organisations need to be responsive and dynamic (Hughes, 1990). In fact, the
construction industry in Zambia has experienced four quite different business environments during
the past 40 years (TNDP, 1978). Each environment (1960s, 1970s, 1980s, and 1990s) demanded
different corporate strategies, which in turn required firms to structure their operations to adapt to it.
As a result, managers had to adapt to different management styles and their management teams
formulated different problem solving initiatives (Lansley, 1987).

In the mid to late 1990s there were and still are far reaching revolutions in the evolution of the
construction environment world-wide and changes in world economic order which have far reaching
implications for the way construction business is procured and managed. The Zambian
Construction Industry (ZCI) has not been immune to these revolutions. Moreover, it has been
subjected to regional economic as well as political instability (The Post, 2002).

This paper outlines the global drivers of change impacting on the Zambian construction industry
and suggests the efforts that the industry should be making to realign itself to meet the demands of
change.

GLOBAL DRIVERS OF CHANGE


The 1990s have been described as the decade of change and turbulence. However, whatever the
exact parameters of the period have been, a common set of forces has been driving the changes
(Coyle et al., 1996). These changes have affected the functional areas of the construction corporate
organisation. As the winds of change sweep through, the Zambian construction industry has been

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experiencing obsolescence of the old construction corporation and the emergence of a brand new
construction landscape. The issues that have been driving change include: the changing nature of
the market place; globalisation of the economy and markets; the upsurge of technology including
information technology (IT); the changes in government policy including privatisation and
liberalisation and strategic changes in supply chains.
The changing nature of the market place
With the liberalisation and privatisation programmes which were put into effect in the early 1990s
almost complete, construction customers no longer have to stay loyal to their former sister
companies under the Zambia Industrial and Mining Corporation (ZIMCO) group of companies, the
Industrial Development Corporation (INDECO) group of companies or the Zambia Consolidated
Copper Mines (ZCCM). INDECO and ZCCM jointly formed ZIMCO, which until its unbundling and
subsequent privatisation of the individual corporations was the second largest corporation in Africa.

Essentially, the changes have a fundamental implication on the way ZIMCO construction
contractors used to conduct business. The privatised companies have become increasingly more
knowledgeable about construction products and have become much more demanding about price
and quality. Quality and delivery are and will remain the most critical factors in the market (Nsabika,
2002). Moreover, they have a free market from which to choose contractors from.
Globalisation of the economy and markets
As the winds of change sweep through Southern Africa, there are no stones unturned. The
Zambian economy is experiencing the full effects of globalisation such as floatation of the Kwacha
on the exchange market (Chonya, 2002). International players have entered the Zambian
construction market and are a serious threat to the local contractors (Mashamba, 2001). The
number of international firms winning multimillion projects (The Post, 2002), especially donor funded
as well as projects attracting international financial investment, is on the increase (Shachinda,
2002). Suddenly, local contractors require an international credibility beyond the profile and
reputation that they used to enjoy in Zambia. Moreover, they find they need to adapt to meet the
requirements of clients from different cultures and with disparate values (CIRIA, DETR, 1999).

On the other hand, the Zambian financial market has not been very successful, and this has made
the raising of capital and attraction of private sector investment difficult (Nsabika, 2002). Krebs, who
is quoted by Nsabika (Ibid), argued that government bonds and treasury bills, which have a
negative effect on the whole Zambian economy, dominated the financial markets. As observed
above, there are serious threats and opportunities in the globalised Zambian economy and
construction market, and this requires paradigm shifts in business alignment and operations.
Technological developments including IT
A key driver of transformation for the Zambian construction industry is technological change. Global
telephony, satellite communications and video links are now widely available (Shakantu, 2000).
Information and communication technology (ICT) is significantly influencing technological change
(CIRIA, DTER, 1999). Already, it has a pronounced effect on the way the industry communicates
and its ability to access information. Improvements in communication capabilities have released the
potential for construction professionals to have greater access to data, knowledge and other
support nationally and otherwise. The developments in information technology are facilitating
information flow through all aspects of the Zambian construction industry including design,
construction, deployment, decommissioning, finance, marketing and sales as completely integrated
packages. There is an argument for potentially using the Internet as a tool to raise efficiency of the
industry. Overby et al. (2001) suggest that the Internet commerce revolution could transform
organisations and organisational processes and create new opportunities and challenges for
international marketers.

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Nowhere in day-to-day business operations is the force of technological change more apparent
than in data processing and information systems. The impact of changing computer technology on
the construction industry has been far reaching. Complex tasks such as scheduling are much more
routine due to the use of desktop computers. Simulations of entire construction processes and
systems can be developed to determine the optimal approach to achieving desired performance
(Shakantu, 2000; Fisher, 1993; Coyle et al., 1996). A range of IT to support the complete range of
business activities and help revolutionise ways of working has been rapidly developing (Bowersox
and Closs, 1996).

Unfortunately, technological uptake on Zambian projects has been slow despite the documented
benefits of this resource (Matipa and Zulu, 2000). Industry operations have largely remained
traditional, with low technology applications used to run construction business, as argued by
Kashweka (2001) and Gondwe (1999).
Changes in government policy including privatisation and liberalisation
Another driver of change has been the shift in government policy. Economic regulation was
drastically reduced in favour of privatisation and liberalisation. The reform agenda has extended
beyond issues of stabilisation and prudent economic management to regarding the private sector
activity as the main engine for growth (Shakantu, 1993). The government is concerned about fiscal
and monetary policy discipline. Monetary control is tightening spending (Shakantu, 2000).

As client organisations’ construction budgets decrease, economics is winning over tradition. Clients
are demanding real improvement in key areas of interest to them. Among the major effects of these
economic changes has been the adjustment of procurement strategies to those emphasising value
for money (Mukalula, 1996). There has also been a reduction in expenditure on capital projects
(Mashamba, 2001) save for donor funded infrastructure projects such as rural road networks and
water reticulation (Chola, 2002).
Strategic changes in supply chains
Supply chain management is the management of activities that transform raw materials into
intermediate goods and final products and that deliver those final products to customers (Dornier et
al., 1998). As globalisation takes root, agile supply systems have become of the essence. There is
customer emphasis upon time compression resulting in improved cycle time (Coyle et al., 1996).
Concurrent with the pressure for reduced lead-time; there has been a significant trend to emphasise
quality in the production of products. Environmental concerns with efficiency in the supply chain
have led to legislation towards improved ‘cradle to grave’ responsibilities (Murphy et al., 1995).
‘Cradle to grave’ issues focus on supply chain management and are currently being used to
respond to sustainable production in reverse logistics of materials, reduction of consumption and re-
using of materials (Murphy et al., 1995).

Siamuzwe’s (2001) research findings on the Zambian contractor’s supply chain revealed that it is
characterised by random, short-term, poorly managed relationships that ultimately result in loss of
competitiveness on the part of the local Zambian contractor.
Sustainable construction
As the sustainable development agenda unfolds, the issues of sustainability in construction industry
come to the fore (Greenbuilding.com, 2002). Sustainable development refers to ‘development,
which meets the needs of the present without compromising the ability of future generations to meet
their own needs' (Ibid). At the core of this is the issue of social progress that recognises the needs
of all stakeholders; effective protection of the environment; prudent use of natural resources; and
maintenance of high and stable levels of economic growth and employment (DTI, 2001).

Sustainability in construction, according to Lee and Kua (2002), means managing environmental
facets of production such as ecological protection, optimum usage of economic features of
production such as costs and materials, and meeting social and cultural demands of comfort and
health protection as well as preservation of values. Due to reliance on external suppliers of
construction inputs, construction business has not been economically sustainable. Local suppliers
face hardships in meeting customer demand for material (The Post, 2002).

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STRATEGIC RESPONSES TO MEET THE DEMANDS OF CHANGE
In general, the ability of most construction industries to manage change has been the subject of
controversy and debate for many years (Latham, 1994; Egan, 1998). Construction has been
regarded as characteristically unresponsive to winds of change; an industry full of contracts,
contractual documents, rules, regulations, claims and counterclaims. Its traditional ways have been
shown not to work from the standpoint of efficiency, quality and profitability while its forms of
contract have been viewed as adversarial and dominated by confrontation and conflict. The industry
has been noted as notoriously hazardous (Shakantu, 2000).

Several attempts have been made to deal with such an image. Moreover, there have been attempts
to address the issue of culture change and customer service within organisations. New and
progressive ways of managing complex construction work requires innovation in management
methods.

There is an urgent need in Zambia to respond to change. It is of strategic importance that the
Zambian Construction Corporation anticipates the need to review their business models to
proactively create advantage. There is a need for systemic change effort to meet the demands of
change. The business, technical and social infrastructure will need to realign itself to proactively
meet the demands of change.

The traditional Zambian Construction Corporation has reached a fork in the road. One turn leads to
a slow decline, the other to a prospect of long-term success (Hope and Hope, 1997). It is a critical
time for construction management to confront the challenges of change. The critical management
areas they will need to focus on in the perspective of change are: strategy; knowledge
management; staff, skills training and development; sustainability (Ecological, Economic and Social
or Cultural); innovation and customer satisfaction.
Strategy
There is a need to build core competencies and avoid core rigidities. The emphasis should be on
building competency-based platforms. It is necessary to invest in knowledge-based competencies
to satisfy the customer needs profitably. Core competencies comprise a set of skills and expertise
that would enable a company to deliver exceptional value to customers (Hope and Hope, 1997). In
this case strategies such as Supply Chain Management (Siamuzwe, 2001), Re-engineering
business operations and such others could be used individually or severally to meet the challenges
of change.

Loosemore’s (1995) strategic reaction process model has often proved to be a useful tool for
managing conversion to competitiveness. The model below (Figure 1) shows how players in the
construction industry can proactively manage change in the construction market and become more
competitive using reaction process modelling, firstly, by;
(i) Monitoring the global business trends and the factors affecting business worldwide.
(ii) Monitoring the regional markets and the factors affecting business in Southern Africa,
(iii) Monitoring the local business trends, and the factors affecting business such as economic
malaise, political mismanagement and social constraints.

Secondly these three steps should be combined and used to assess the company goals, using the
reaction process model adopted from Loosemore (1995). Should the need to improve company
operations arise, the next phase would become vital.

The firm should after careful analysis consider the strategies, and set strategic goals such as
attaining sustainability and meeting customer demands. The colouring of the model helps in the
identification of the three stages.

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Knowledge management
Companies would be encouraged to leverage knowledge for competitive advantage by solving
problems using special knowledge based diagnostic systems (Hope and Hope, 1997). The
knowledge-based organisation is able to monitor the performance of its value adding business units
and teams.

Economic success is driven by improvements in private sector productivity. Crucial to this is world-
class managerial performance that knows how to leverage knowledge for competitive advantage.
Moreover, in globalised competition, the highest standards of efficiency are necessary. Design
needs to be efficient, cost effective and waste sensitive (Shakantu and Talukhaba, 2002). It is also
necessary that construction and procurement methods eliminate waste. Improved production
methods that pay attention to constructability and lean production would drive out inefficiencies and
fulfil customer best interest (Male and Stocks, 1991).

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Paradigm Sustainable Integrated / Innovation Global Technology Others
Shifts construction Collaborative Economic Uptake
Operation Constraints

FACTORS AFFECTING GLOBAL CONSTRUCTION BUSINESS

REGIONAL
NATIONAL FACTORS
FACTORS AFFECTING
AFFECTING
CONSTRUCTION
CONSTRUCTION
BUSINESS Monitoring BUSINESS

MONITORS
Politics
Economic
e.g. Competition
(Liberalisation No Do
Privatisation) Conflicts

Social & Company Goals Decision-making Access to the


Cultural sea
Comparator Effectors
Environmental Other factors

Politics React

Poor Services
Implementing
Agriculture Project Members **
Improvement Feedback-
Demand in
production

STRATEGIES TO USE STRATEGIC GOALS TO ATTAIN

Supply Benchmarking Re-engineering Technological Customer Sustainability


Chain Uptake satisfaction
Management

Paradigm Change Knowledge Technical Others


Shift Management Management Skills and
Training

Innovation Others

GLOBALLY COMPETITIVE ZAMBIAN CONSTRUCTION INDUSTRY

Figure 1: Three Phase Strategic Reaction Model for achieving competitiveness in the Zambian
Construction Industry
Source: Adapted from (** Loosemore, 1995).

Benchmarking could be used as an instrument for strategic and operative improvement (Shakantu
and Talukhaba, 2002). It helps achieve superior performance through careful selection and
manipulation of alternatives, comparison measures and calibration of key delivery best practices.
Through audits, non-conformity can be identified. A climate where active learning towards best
practices can take place is thus created (Hiltrop and Despres, 1995). Sharing this knowledge would
benefit the whole industry (Kashweka, 2002).

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Staff, skills training and development
Intellectual capital is an important factor in the success of companies. Having an appropriately
skilled staff is vital to the success of any changing organisation. The pace of change in the
construction industry particularly in terms of skills needed makes it more important for organisations
to identify their skills and capability requirements and to have appropriate mechanisms in place to
deliver them (CIRIA, DETR, 1999). Much of the challenge of providing these skills rests with
companies and the two universities to some extent (Novosa et al., 2002).
Sustainable construction
The increasing emphasis on environmental issues worldwide will mean that companies will be
subject to even greater scrutiny in the future. Inappropriate environmental actions could lead to
adverse publicity resulting in serious commercial damage to the company brand and reputation.
Development of appropriate environmental policies and practices is essential.

Environmental, social and economic issues will become increasingly important, as the concepts of
sustainability become better and more widely understood. Having strong sustainability credentials
such as sound environmental policies, community care policies and wealth contribution to the
nation could enhance competitive advantage.

The construction industry should also take it upon itself to support the different legislation that deal
with sustainable development. Such a sectoral approach would help the construction industry focus
on sustainable construction. Because government is a major player in the construction industry,
there is considerable scope for its policies (DTI, 2001) to have an effect on sustainable
construction. Sustainability in the Zambian Construction Industry can be achieved by meeting the
Agenda 21 ideals (Toakley and Aroni, 1998).
Innovation
A key driver of transformation of the construction industry to achieving competitiveness is
innovation. Porter (1990) identifies innovation as technological, organisational, process or product
related. Technological innovation is that which utilises new knowledge or techniques to provide
higher quality. Technological change is creating new possibilities for design, production, delivery,
marketing and ancillary service of products.

Organisational innovation could foster change of the relationship between behaviours, attitudes and
values. New types of organisation, new forms of contract and procurement could become evident.

Process innovations could increase efficiency while product innovations could enhance quality and
result in superior products. Innovation in the supply chain can help improve site productivity through
improved material flow and materials management (Bowersox and Closs, 1996). Reduction of cost
through application of agile and lean construction practices and benchmarking best practices are
also innovative ways of achieving a competitive advantage (Shakantu and Talukhaba, 2002). The
improvement of processes should not just concentrate on the final product but should encompass
the whole construction process from management to technology and construction (Zulu and Brown,
2002).
Customer satisfaction
Customer satisfaction is the surest weapon to success in competitive environments. To achieve it
however, there is a need to change business architecture. The concept of a delivery process, which
never fails to meet customer requirements and yet operates within minimum cycle time, cost and
inventory is essential (Hewitt, 1995). Further, it is important to provide higher value to customers
and to develop better working relationships and ultimately partnerships that improve contractor
performance and that of the industry. Re-engineering – the redesign of processes to make them
simpler and more effective assists in this regard.

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The Zambian government, which is the largest client of infrastructure projects, is encouraging water
utilities to adopt commercial principles available to improve the quality of the services while
maintaining an affordable service to the users (Nsabika, 2002). Therefore, focus on the customer as
a strategic goal for business entities cannot be over emphasised.

CONCLUSION
Until recently, construction projects in Zambia have in the main been managed in the traditional
general contractor approach with the client approaching consultants to produce the design of the
proposed works and supervise the construction phase while actual translation of the design into the
finished product was carried out by the contractor. Most projects were either parastatal or
government funded. As global drivers of change sweep through the country, a previously content
construction industry is being hit by financial, technical, cultural and performance related demands
for change.

The paper has highlighted the major drivers of this change and the implications for the Zambian
construction industry. Clearly, collaborative leadership, intellectual capital and knowledge baselines
will require a systemic change effort. Fundamental business transformations tightly integrating
customers, supply chains and partnerships on one hand and an e-commerce revolution coupled
with paradigmatic business process re-engineering on the other will be inevitable.

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