top of page

China's construction pain point

With the recent Chinese construction industry reform, a large number of restrictions have been put into effect, which has put a lot of "tight spells" on the construction industry. Simultaneously, due to the intraday stagnation of the upstream real estate market, the demand for the construction industry from the market side has further shrunk, leading to a comprehensive shuffle in the market. It is now more and more difficult to work on projects, and the competition is also fierce. Many construction

enterprises have fallen into such a dilemma: not to do it—waiting to be starved to death; to do it—high probability of failure. Especially for this year, under the epidemic situation, the market demand has declined dramatically, and the problem of difficulty in recruiting workers has been further amplified. The construction side has ushered an all-industry "capacity reduction". What caused this ruthless status? This article will reveal the pain points of the construction side in China.

1. The price compression due to “low price bidding”

So far, with the industry restructure and quality improvement, low price bidding has become the norm of the construction industry. The low price bid was always been a nightmare of the construction side — keeping high price, you cannot win the bid; pressing at price low, you cannot be profitable. Although we all know that bidding at a low price would result in“both defeats”between you and competitors, but as long as you already fell into this trap, you have to try pressing price low all the time to follow the game theory. On the other hand, although the human resoureces and raw materials for recent years are increasing continuously, the project quotas have not expaned yet, and even more, the price bedding is getting lower and lower constractly. Under such situation, it is whimsical to be able to make excellent projects. Under the low price bidding, and the squeezed profit margin after entering the field, for cost considerations, many builders have undergone several rounds of optimization before entering the field, and conducted many “plan Bs” after entering the field. In order to extract some profits in such a narrow space, as well as to survive, there have been a lot of cut corners, and all parties have shirk their responsibilities, and therefore created a lot of “jerry-built projects”!

2. The raising raw material cost has pressed profit further

As we all know, the material cost of construction usually accounts for a large proportion of the project cost around 60% to 70%. Therefore, the unit price change of materials of the projects can directly determine the "life and death" of construction enterprises. And we all know that during the construction of the project, the prices of steel, concrete, cement, river sand, stones and other materials always change with time or other external conditions. However in some cases, the contract issuer of some projects did not consider this factor but rather make no adjustment towards the material price fluctuations.

For example, in Anhui Province, construction companies jointly filed with the government for help because of rising materials beyond the scope of construction units. Because since 2007, Anhui Province government-invested projects have adopted a fix-price material contract model. In the construction contract signed with Party A, the sub-heading '' Price adjustment '' all stipulates '' no adjustment '', which means that once the price of building materials rises sharply, the winning bidder will bear huge risks.

3. The force-to-die “life-long quality” system

Since August 25, 2014, the Ministry of Housing and Urban-Rural Development issued the "Interim Measures for Quality and Lifetime Responsibility of Project Leaders of Five-Party Responsible Subjects" (hereinafter referred to as "Measures"). After the official publishment, many companies have begun to appear that builders, especially the youth group, reluctanted to participate in project bidding and take office of project managers. This situation has begun to affect the company's normal operation and management.

The “life-long quality” system is to have lifelong responsibility for the quality of the projects managed. Once the quality problems of the project occur, you may be revoked of your qualification certificate, fined millions of yuan, or even face prison. The remuneration of the project manager in the project is only a normal salary (except for the sloppy door), but it is responsible for the entire project quality for life. In other words, the remuneration received by the manager at work is not equal to the responsibilities he may have to bear, as well as the career and life risks he may face. So the result is obviously, who is willing to participate it such theory?

4. Strict environmental protection leads to construction difficulties

Environmental protection code adding, dust control

The current project works are completely different from the past, whether it is useful or not, reasonable and unreasonable, all the mixing station and the powder silo need to be closed in just a word of the owner. The project department's resident construction should have a series of additional requirements such as greening, sports facilities (basketball court, football court), parking spaces, and beautiful appearance. These were irrelevant in the past, as long as the project was going smoothly without safety accidents.

Of course, we are not saying that the standardization of the construction site is wrong, but the high standardization requirements nowadays directly lead to a 20% -30% increase in the cost of the construction deprtments. However, the bidding price of the project has not followed the rising costs. The profit can only come from the main project construction, you know how! The nowadays dust control is following the “one-size-fits-all” mode. Once the PM2.5 exceeds the standard, all the project processes have to stop. When the construction side requently stops projects, all the mechanical costs, labor costs, and capital costs can be virtually losted!

5. Labor shortages lead to no one unavailabilities

Today it can be hard to recruit workers on the construction site. Recently, some construction sites in Beijing have set a standard of 500 yuan a day to recruit suitable workers, but it is still difficult to attract labors. With the expanding of construction sites, the difficulty of recruiting workers has become a common phenomenon, especially for technical jobs. Traditionally we think that migrant workers were unwilling to work for long-term because they were afraid of not receiving permanent salaries. Now, with the improvement of various systems, wage arrears are no longer the biggest worry for migrant workers. However, with the aging problems, the current labor main forces on the construction side are mainly contributed by 80s and 90s, the group that need to consider both marriage and having children, therefore the "strong labor" is becoming less and less.

With the aging of the original migrant workers, many older migrant workers no longer regard construction sites as their first job option. The labor shortage is just a beginning, the continuously increased high labor cost would be the bigger problem later on! Obviously, the aging phenomenon of workers has become the Achilles heel of the current development of the construction industry. How to break through the personnel barriers of the construction industry itself? AI may be ale to help putting forward the "most optimal solution".

6. AI saves the construction industry

With the deepening of automation, artificial intelligence and automation equipment will gradually take over the construction site and bring a new era of highly autonomous construction. Because of the powerful analysis, collation and application capabilities, AI must have a "promising future" in the construction industry. In the case of insufficient labor forces, AI can simplify or even replace part of the human manipulations.

1) AI helps BIM modeling

Building Information Modeling (BIM) is a 3D model-based process that provides effective planning, design, construction and management of buildings and infrastructure for construction, engineering and construction (AEC) professionals.

2) Computer instead of human works

Robots, as programmed system hardware, have advantages such as high strength, high efficiency, and small error rate that humans cannot compare with. It is undoubtedly an important field of artificial intelligence development. Nowadays, with China's construction industry moving towards a "smart site" in an all-round technological iteration and upgrade, a group of "posting" construction robots have been brought together. Including "AI site process monitoring analyst", "safety supervisor", and the actual operation of "ceiling installer", "welder", "porter" and so on.

3) AI multi-label construction site

The application of AI in on-site construction is reflected in that it can use machine learning, voice and image recognition to automatically mark the photos and videos on the construction site in order to organize data and search. For example, AI can use deep learning mode to analyze images and voice to automatically tag construction data and proactively provide customers with safety measures.

In short, a construction project is huge and complex, and the various applications of AI technology can help improving the construction status in many process chains. This will also be a gradual replacing movement — AI helps to design, build, supervise, operate and maintain. Although the use of AI for project engineering in the construction side started quite late, the future impacts cannot be underestimated.

165 views0 comments


bottom of page