SWOT and Construction Management

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Table of Contents

Strengths
Weaknesses
Opportunities
Threats
References

The SWOT analysis is frequently employed in various management plans including construction projects. Every construction project comes with several internal and external issues. These issues and challenges apply to each construction project irrespective of its size. For instance, the construction project can involve either a big or a domestic construction.

The complexities involved in construction projects make it necessary to employ SWOT in the management practices. The SWOT analysis involves an evaluation of the strengths and weaknesses in a construction project. Any construction firm can use the ‘strengths, weaknesses, opportunities, and threats’ (SWOT) model as an evaluation mechanism.

The SWOT model can be used together with other construction management practices to help a company achieve its vision, goals, mission, and vision (White & Fortune 2002). This section evaluates the relevance SWOT has to the current construction management practices.

Strengths

Any good construction project has to make use of some vital management practices. These practices include “advanced project management skills, good relationships with subcontractors and suppliers, use of modern technology and machinery, and access to skilled employees” (White & Fortune 2002).

On the side of the construction investors, the management practices to be considered include meaningful contacts with both contractors and subcontractors. This practice ensures that the investor keeps track of the necessary licenses and permits for the entire construction project.

These management practices enable the investor to have a demand overview of the construction project. In addition, the investor will have the ability to track the financial progress of the project. Using SWOT to list these strengths in a construction project, the parties involved in a construction project can help to increase the success levels of a construction project.

Various studies have been conducted with the view of proving the relevance of SWOT in the evaluation of a project’s strengths. In a study of the construction companies in the United Arab Emirates, it was clear that the companies benefited from a SWOT analysis (Irshad & Shakeel 2010). This evaluation helped the studied companies to address the needs of their clients effectively.

This study also listed several areas that construction companies in the United Arab Emirates (UAE) focused during their SWOT analysis. The first aspect of this evaluation is the assessment of a construction company’s financial resources.

A construction company can achieve this evaluation using a local stock exchange company. When the company falls short of the expected financial levels, the company can make use of financial mergers and acquisitions. The mergers can be strategically conducted before undertaking a huge construction project. The study of UAE companies also found that the companies in the region needed to take stock of their experience.

This can be accomplished by utilizing the experience under the construction company’s dispensation. A good experience pool translates into an important internal strength for the company. The company can therefore use this pool of experience as a competitive edge against its competitors.

In another study that concentrated on the Azzaro Construction Project, contractors were asked to detail the relevance SWOT had on the effectiveness of the project (Milosevic 2011). The contractors involved in the project revealed that prior evaluation of a project’s strengths had many advantages. First, the contractors revealed that SWOT made it possible to conduct advanced project management.

For instance, on the Azzaro project some contractors were able to hire some of the “most experienced engineers and foremen and made excellent use of all employees on the project” (Milosevic 2011). The study also revealed that evaluating a project’s strengths always results in improved workforce stimulation.

When this project was underway, contractors were able to streamline wages using similar earlier projects. Moreover, the project was also able to utilize the services of a resourceful work force. The contractors also reported a better relationship with the suppliers that were involved in the Azzaro project.

Both case studies indicate the relevance of SWOT to real life construction projects. The UAE study indicated that companies usually relied on SWOT before undertaking any construction project. The studied companies also reported reaping major benefits from the SWOT analysis model. In the study of the Azzaro construction project, the contractors employed the SWOT analysis model to the letter.

Weaknesses

Weaknesses in a construction project are usually the factors that undo the strengths of a construction project. According to the SWOT model, the weaknesses often pose a threat to the success of any management practice. The most common weaknesses in a construction project are manifested through the refusal of contractors to adopt new management practices (White & Fortune 2002).

The weaknesses can also be manifested through lack of coordination, poor organization, bad correspondence with suppliers, and incompetent staff. The investor is also susceptible to weaknesses in the course of a construction project. Investors reveal weaknesses through lack of prospective clients, failure to adhere to regulations, and by hiring ‘inflexible’ contractors.

When these problems are exhibited by either the investor or contractor, they have the potential to undermine the success of a particular project. Nevertheless, it is should be noted that the SWOT analysis does not spell doom for the project.

Instead, the model points a contractor or an investor towards areas that might require extra attention. Both the UAE and Azzaro case studies reveal the relevance of the SWOT analysis to the prevailing construction management practices.

The results of the UAE research project revealed that the sampled construction companies were susceptible to weaknesses learnt through the SWOT analysis. The research indicated that lack of research and development was a major weakness for most of the sampled construction companies. Research and development is a vital tool in the building and construction industry.

Companies that ignored this aspect of the industry were faced by higher incidences of failure. The study on UAE construction companies suggested several remedies for this weakness. For instance, the research recommended that companies be on the lookout for new technologies. The study also suggested that companies should have long term plans that emphasized on the need for global research and development.

The other type of weakness outlined in this study involved incompetent or inexperienced employees. According to the study, this weakness manifested itself through loss of business to rival companies and inability to stick to the set deadlines. The study proposed training and retraining of employees. The construction companies were also advised to employ modern training mechanisms such as online training.

The study also found that construction companies in the UAE were lacking in efficient human resource management. This weakness was found to affect the companies’ overall output. As a counter measure against this weakness, the companies were advised to make their human resource departments priority areas that served definite functions.

The other weakness revealed by the UAE study indicated that local construction companies had the habit of waiting for “events that triggered strategic responses” (Irshad & Shakeel 2010). This habit translated to ineffective innovation. The research suggested that companies adopt a culture of innovation.

The Azzaro case study revealed weaknesses from both a contactor and an investor’s point of view. In this project, the contractors were faced with several weaknesses. Some of these weaknesses included high levels of ground water, lack of enough storage area, and constant changes in the scope of the original project.

On the other hand, the investors revealed their potential weaknesses. The investors in the Azzaro project indicated that their weaknesses included lack of determined buyers, inflexible contractors, and conflicts with the regulatory bodies.

The prior analysis by both contractors and investors gave the investment companies a clear advantage. The construction companies in UAE were able to access valuable proposals that had the ability to improve their overall efficiency.

In addition, the contractors and investors involved in the Azzaro project were able to evaluate the weaknesses they faced before undertaking the project (Milosevic 2011). The study reveals that the contactors and investors reaped huge benefits by employing the SWOT analysis.

Opportunities

Modern construction projects usually involve large teams of contractors, sub-contractors, and investors. If a team is able to navigate through all the construction management practices successfully, this means there is a bright future for such a team. The success of a whole team translates into probable opportunities for contractors and investors.

These opportunities may be in the form of future construction projects. A successful construction team might decide to reunite in another project. The second project is usually easier for the team because the involved team is already well coordinated (White & Fortune 2002). In addition, some construction projects have the ability to provide better housing options for the citizens.

The UAE research revealed that there were pending opportunities for local construction firms because of the coming into effect of the “General Agreement on Trade Services” (GATS) treaty (Irshad & Shakeel 2010). When the GATS regulations come into effect, the local construction firms will have an easier time venturing into overseas markets.

This would translate into increased revenues for the companies as well as increased room for diversification. The GATS regulations will also make it easier for the construction companies to source technical expertise from other countries.

The investors in the Azzaro project were asked about the opportunities they accrued from engaging in this construction project. Among the listed opportunities included the investors’ future chance to work with the contractors in the Azzaro project. The investors also had the chance of achieving good communication mechanisms with the parties that took part in the Azzaro project.

The study also indicated that the investors had the chance of scoring favourable contract terms in future construction projects. The contractors involved in the Azzaro project also reaped external opportunities because of their involvement in the Azzaro project (Milosevic 2011).

First, the SWOT analysis would enable the contractors to acquire favourable contract terms in future projects. The contractors also had the opportunity to gauge the reliability of the project’s investors. Finally, the analysis gave the contactors the chance to evaluate the method of financing that was compatible with the investors’ financing patterns.

By conducting a SWOT analysis, both the construction companies and the investors were able to evaluate the opportunities they accrued. The construction companies in the UAE were looking forward to the coming into effect of the GATS regulations. On the other hand, the investors and the contractors in the Azzaro project were looking forward to working together in future projects.

The familiarity between the two parties also made it possible for them to benefit from favourable-contract terms in their next project. Without conducting a SWOT analysis, it would be difficult for contractors and investors to take stock of such benefits.

Threats

In a construction project, threats refer to those difficulties that can be overcome. However, these problems can undermine the success of the management practices if they are not overcome. An example of a threat in a construction project is poor geographical location of a certain project (White & Fortune 2002).

In the UAE research, the construction companies faced the threat of having to compete with foreign and sometimes cheaper service providers. This was likely to happen after the GATS regulations came into effect. The GATS opened the lucrative UAE market to foreign investors and this posed a challenge to the local construction companies.

The Azzaro case study revealed eminent threats for both the contractors and investors. The contractors faced the threat of high levels of underground water and small storage area. On the other hand, the investors faced the threat of an “expiration of the time limit and reduced construction quality” (Milosevic 2011).

Overcoming the threats faced by both contractors and investors is mostly the secret to excellence. If a contractor or an investor is able to manoeuvre through these threats, this advantage is usually manifested in the project’s results.

References

Irshad, A & Shakeel, A 2010, “SWOT analysis of the large UAE construction firms”, International Review of Business Research Papers, vol.6 no. 2, pp. 221-238.

Milosevic, N 2011, “Practical application of SWOT analysis in the management of a construction project”, Leadership and Management in Engineering, vol.10 no. 2, pp. 78-86.

White, D & Fortune, J 2002, “Current practice in project management- an empirical study”, International Journal of Project Management, vol. 20 no. 1, pp. 1-11.

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