2021年4月29日 星期四

 Will "Civil Engineering as a Vocation" be honored in Taiwan。土木工程作為一種志業在台灣可行嗎?


MT. Kao, CEO, Sinotech Incorporation(Former Section Chief Overseas Department, RSEA; President Pan Asia Corporation; Chairman, RESI Consultant)

1. Pre-words

Young men drift to the world always have feelings of curiosity, strangeness, and nervousness after graduation. Engineering graduates feel better because they’re considered to be more promising in term of income and status compared with other social groups. 

But it is true that the wealth generated by investment, ventures and rent collecting has been more prominent and professionals are not sitting on the upper rungs of social ladder as comfortable as before. 

This lecture tries to impart knowledge based on the facts taking place everywhere, and quest whether or not the vocation Civil Engineers would worth to start with as the general public may not respect the profession for which the students may devote their entire life. It’s the lecturer’s wish that young men will know how to adapt in a changing economic system.

序言: 工程學科畢業者於就業機會、待遇與社會地位,一向被視為較其他學科為佳;但近年演變,投資、投機,特權尋租所得,竟較專業為優。故以下講詞將探討在台灣以土木工程作為志業而付出,是否值得?

2. Proficiency, Income, and Social Status of Engineer in 21st Century

1) Difference between Income through Investment, Speculation and Bequests, and that from Personal Capability and Efforts, since beginning of the Industrial Revolution.

1) Difference between Income through Personal Capability and Efforts, and that from Investment, Speculation and Bequests since beginning of the Industrial Revolution.

-  The said ratio kept constant since beginning of the industrial revolution for 100 years until World War I and a downward trend started cutting it by half until it surged again in 1980. Now it goes back to the same level as 1790. 

-  After World War I the professionals continued to increase their income and wealth by their own merit, people started to herald it as the beginning of a new era of more inclusive capitalism and trust the trend would not revert. But what happened between 1980 and now proving that it was just a transitory deviation. 


2) Factors affect Income Distribution and Talent allocation:

- Continuous Technology Improvement

Technology is a major driver of productivity and economic growth. The top riches no more need so many people to attend them and mid income people can enjoy comfortable life. 

However, the saying (by Voltaire) “the comfort of the rich depends upon an abundant supply of the poor” still remain true. Inequality exists and people are exasperated because they consider Technology Improvement is s the culprit.

- Super Managers and their Rise in Modern Commercial World

The new era favors more skilled over less skilled; it increases the return to capital owners over labor; it enables or turbo-charge globalization, reducing employment and constraining wage-able services; it increases the income advantages of superstars and the super-lucky; it generates rents in highly imperfect markets. Among them, the super managers with winner take all mentality popular in US deserve our attention.

- Can “Meritocratic Extremism” be achieved to save Professionalism?     

The income generated by digital capital shared with certain kinds of complementary human capital, including innovators, entrepreneurs, and top executives. They’re few but pride their success for having unique merit and education. It’s dangerous because many people in society accept the so called “meritocratic extremism”; actually, it’s a super roulette that professionalism and intellect fell back before it.

- Digitalization and AI

But now that significant share of the income shaped by skill-biased and capital augmenting technical; the professionals of conventional definition may not be in a steering position, that software, tradable programs and even AI will do much of the engineers’ job diminishing their clout in retaining work opportunities and sharing income. So, would fear of people like Luddites justifiable because the skills of their craft would go dumb or the smart machine and AI would replace them in this Second Machine Age?

Is basic universal income a solution?


3) Cultivation and Preservation of Professionalism 

- Devotion and Passion paid to nurture Intelligent Students during Academic Education.

Young professionals must try to learn from the beginning that at the democracy or open society, the elite, instead of accumulation of people, must settle and conclude for government policies, economic agenda and public works. And engineers are part of them and not those to be informed and ruled, in the process contributing intelligence.

However, engineers having to be people of integrity need to know social norms, market rules, and not the least, regulations and laws. And it’s long and difficult process, that they shall be honored and paid with reasonable material reward; not apparent in today’s Taiwan.

- Pursuance of Career and Profit at the Expense of Clarity and Conviction that must be associate with Engineer.

The “information technology’ demanding more return than from human capitals previously formed by employed engineers; corporate governance practices and social norms will change allowing more rent-seeking behavior because there will be less humanity control by smart machine and AI. 

Will the alienation caused by machine detecting and responding to the environment and occupational to access massive data replace human brain clarity and engineers’ dutiful and faithful behavior?

- Code of Engineering Ethic in terms of Faith, Integrity, Law abiding

Engineering ethic request the engineers to take responsibility toward society, environment and the colleagues. Will it be the same easy to and simple for professionals to follow code of engineering ethic when their sharing in total company income much less than before?

- Will MBA graduates, Lawyers, Financing Expert be regarded as Intruders to the Professional or they’re just Supporting? 

The modern construction industry essentially is governed with human distrust: terms of contracts, laws, certificates, checks, guarantees, tests, investigations and reports, are used to stimulate the antagonism between, and also to protect, parties with confronting interests.


3. Civil Engineering as a Vocation in Taiwan

1) Power to Decide Fate of Public Works in Descending Orders

-  Citizens with Liberal and Egalitarian nature but much less Fraternity

-  Media, Councilor, Elected Officials, Civil Servant and Law-enforcers

-  Self-regarded Professionals

-  Engineers 

2)  Pay and Responsibility/Liability

3)  Major Players in Construction Industry 

- Frontage Players: Contractors, Consultants, Architects, Specialty Companies,   Work Gangs 

- Supporting Entities: Banks, Insurance Company, O & M Contractors

-  Third Party Participants: Notaries, Lawyers, Inspectors, Laboratories, Certifiers, Appraiser, Unions, Arbitrators.

 4)  Origin and Background attached to History, Culture and Politic        

     - Discrepancies found in between regarding construction performed by “Low Context Culture” Professionals or” High Context” Occupational?

-  Remnant of Peasantry Economy: People Regard only Tangible Construction is valuable and worth to pay.   

-  Over-competition is encouraged by Public, Media, Politicians, down to Civil Servant, and People believe it will bring Price Cut.

- Civil Servants aren’t Allowed to Correct Errors at Early Stage, Misinformed Politicians Aggravate the Mistakes, and General Public demand nothing other than Consequence

- Pay are too low for Engineers and Academics, nobody bothered to give Independent Voices; the Vicious Cycle Prevent any Possibility of it.

4. Will Professional Career Worth to Start with?

1) To Overcome the Facts: 

- The Engineer’s Career Path will be associated with Loneliness and Criticism, rarely will it receive Loud Applaud along the way.

- Public Work Construction is part of the Charity; more than One-sided Contract Terms and Condition, the Dealing must Serve the Public Interest First

- Non-Engineers are everywhere in the Industry, eager for Speculation and Compel other Parties to Share the Risks together. Decimation of them to play the Frontage Role is not possible as Tradition Cynically won’t break anyone’s Rice Bowl.

- Professionals need to learn “Knowledge” through Education and Training; “Skill” to Apply Correctly the Concept and Information obtained; and to exercise “judgement” based on Experience, Analysis and Computation for Project Assignment. But what will happen when Software and Cold Calculation will do everything, and Engineering Firms become Factory?

- Sad to say Passion and Inspiration wouldn’t be a Part of Engineering

2) Engineering will be subject to Unprecedented Changes

- Relevant small Taiwanese Construction Market Size Starts to Push its Integration with Neighboring Country in an Invisible way as Projects become more Sophisticated and Sizable. Companies have to Share the Resource and Expertise with Foreigners having Experience in bigger Market. That is the Opposite way Successive Governments Encourage Construction Industry to go abroad.

- Short Supply of Labors and Tightening Restraint on Work Sites Oblige Engineers to Swerve Solutions from Current Practice

- Investment will be honored if not Guaranteed. Added value in Engineering Contract, will be Created by other Professionals such as Lawyers and Financing People.

- Real Professional will be Reduced in Number as Automation and Digitalization Dominate the Industry, need not the same number of Engineers to do Planning and Design Works. 

3) Beliefs and Altitude

- With Time and Patience, Engineers in Taiwan can Claim back its Authority in Project Execution. Past Decades We witnessed the Changes in the Construction Industry in favor of Engineers, though slowly.

- Income of Engineers in Taiwan Remains Low and also their Social Status. People have to fight hardly for them though there is Tendency that the Technology, Financial and Business Evolution will reduce relevant Share of Payment to Engineers Globally.   

- Whether or not the Construction Market will be more Concentrated or Fragmented is not sure, but it’s important that Engineers shall not only care about Technical Matters, and need to Learn more about Coordination and Communication in and out of their Organization.

- The Understanding that Passion and Work must be linked together applies for both Engineering and Art, which many Young talent are Crazy run after now. But Engineers know they have to Quest Incessantly for “Progress” in the course of Engineering because every Achievement Praised for now will be overtaken not so long after. That’s a Sense of Superiority that this Dull and Low Reward Profession Can Offer. 

2021年4月26日 星期一

Part 6-2. Features of Construction Industry explained in 5M, Advanced Civil Engineering, (NTUST, 5908701)


MT KAO (Blog: http://mtkaoforum31.blogspot.tw/) (mtkaoforum31@gmail.com)

2) Machine

(1) Prototype, bespoke; portable, fixed.

a. Machine, prototype

People in construction industry need to know machine, plant and equipment for their manipulation, size, cost, productivity and supplies required. 

The general contractors used to own machines, in the days they're expensive relative to human cost.

When a country start to build infrastructures, they need to move earth, lift heavy weight, paving concrete and asphalt, and confront water or inaccessible. There're machines typical to do these jobs and we call them the prototypes: bulldozers, cranes, graders, trucks, mixing plants, paving machines, compactors, working boats etc. 

The works are many in fledging economies, so the machines are welcome for repeating usages in seemingly endless construction. They’re powerful to replace manpower and quick to deliver the landmark projects. So when machines with international brands such as Caterpillar and Komatzu appear at construction sites, they symbolize the government’s commitment to the economic growth.

b. Machine, bespoke

As countries proceed to build infrastructures projects of more sophisticated nature, the machines and the method employed may need special design and fabrication, we called the order and the makes bespoken. The usages are limited unless market is big and construction is in succeeding, but it will finish the works for that human won’t be accessible or to do. The most obvious one is tunnel boring machine of different diameters and shapes at restrained spaces. 

c. Machine, fixed type, mobilization and assembling cost

Most of machines can be transported to construction sites, either by self-driving or mounting on trailer for long distance, we call them portable, such as dump trucks, excavators, dozers, loaders, etc. For mixing plants, TBM, tower crane, or machines too big for transportation, they're divided in parts or compartments, and then hauled to the site for erection; we call them fixed type of machine.

Engineers must take into consideration the cost and time required to mobilize, install and demobilize construction machine. Sometimes in the remote area or hazardous places disembarkation and the installation of plants and equipment can be difficult and costly that the engineers have to think about the solution. The damages possibly incurred to the parts or entire plants during transportation shall be foreseen and at least insured against accidents. 

Also people need to know the value of certain fixed plants decimated very much in single usage, and the remaining value after one project could be only the material cost after dissection.

(2) Operation, maintenance and repair.

a. Owning Cost: Depreciation, Interest, Productivity

In the days when the value of machine and spare parts far exceeded cost of people serving them: operators and crew for maintenance and repair, only companies big enough would buy machines as main asset and source of revenue. For two historical reasons the machine ownership had to be overtaken by specialty companies: 1. Facing rising human cost and fastidious labor and safety laws, only companies able to concentrate effort to manage problems related to operation, maintenance and repair are in a position to handle the machines. 2. Company owning big fleet of machine wouldn’t have chances to share costs with other companies through rental arrangement. 

The machine owning cost shall be calculated as buying price plus interest payment over the machine's service life. One is called flat depreciation method, use the buying price divided by estimated remaining service life; the other is weighted depreciation method, assuming the first 2 or 3 years the machine will have high productivity and place the cost depreciated certain fraction more in such 2 or 3 years. 

However, the taxation offices legally also have power to decide amount permitted for depreciation for different equipment. It affects how the owners should have decided on to charge their equipment.

Interest payment can be considered for each company outside of the machine cost calculation.

b. Maintenance and Repair Cost

Machines need operators to move them, the owners must pay to the operators the hourly wage and overtime. And machines also needs daily, or periodical maintenance; the related cost are the wages of the workers responsible for maintenance and amounts covering for consumable, lubricant and tool. Repair cost in general is low when machine is new, but it will be accelerated when machine's condition become less fair in later part of work life. The elements of repair cost consist of mainly two parts; one is labor, and the other will be that of spare parts. In developed economy, the repair cost shall be between 100% and 200% of the initial cost according to statistic, depending on different equipment. 

In developing countries where machine price is high compared to human cost, the wage of operator can be 4-5 times of that of manual labor and output of machines will be higher than what can be achieved in advanced economy. Because when machine is expensive, the owners don’t care to give higher payment to operators, which can be easily covered by revenues from higher machine productivity.

(3) Rental and owning.

Started from 70's last century, general contractors ceased to own construction machine themselves in consideration of big investment over uncertain business opportunity, difficulties to handle labor relationship with operators, maintenance and repair workers, and judgement based on specialty knowledge over replacement or repair of major parts.

The bosses of equipment rental companies always start to acquire construction machines with blessing from big construction companies guarantee the continuity of the works. It's important in Asian countries that this kind of company were operator com maintenance workers, being able to keep equipment and trucks in good conditions with their entrepreneurship. 

Furthermore, they may work with their supra contractor on quantity and rate. The arrangement is costly efficient but not assured schedule wise especially massive amount of mechanic works to proceed. 

It is proven that the general contractors have no way to replace the small owner for construction machine maneuver involving operation/ maintenance/repair. Nowadays the rental rates can be as high as that 2 years charges may be equal to the buying price of a plant. 

(4) Construction method and machine selected.

a. Selection of Work Method and Construction Machines.

Designing an efficient construction method is key to successful deliver of infrastructure works: right construction sequence, get through most critical part of work, minimize undue outside interference, and avoid hazardous incident from happening shall be considered when the plan is drawn. Engineers may have wide range to select machines for construction method; however, it will be influenced by the market availability for machine itself and operators, for example, in Taiwan excavators are everywhere but dozers and loaders not frequently to see contrary to North America. The reasons could be incidental that maybe the ones first introduce them to Taiwan prefer them and others just followed, or the operators are dexterous to maneuver the machines in congest excavation site in Taiwan.

Market size and available replacement could play a part, the use of tower crane was another example, because the maintenance and mobilization cost shared by small number become significant and mobile crane can be substitute, so the tower cranes are not so many in the island. 

In Taiwan, selection of machine once accepted by the officials, budgeting and supervision for that particular item will be almost fixed in public works. Changes to another machine or method will have to be accommodated to the bureaucracy; adding another point that people and work gangs aren’t so innovative to create new construction plans. Another proof that civil contracts is local and conventional. 

b. Machine and Manual Labor

In countries like India, machines face strong competition from man power; Bulldozers and earth moving machine are levied with high import duty and surcharges, that men and their assistant with hoes and dustpan will have chances to outperform construction method based mainly on mechanization as cost is concerned.

When owning a machine become expensive, the efficiency will decide its survivability. 

So, in the case of India construction market, the wages pays to the machine operators won’t be significant compare to the revenue generated by extra output brought by the operator’s better performance. Thus the wages of operators can be 5 times of the common labors in developing economies.

c. Cost factors in Prototype and Bespoken Machines

There is situation that prototype machines will not meet construction requirement, the bespoken one will be the solution. 

But engineers need to know: 1. Lead time to design and build the plant is long; they’re not available at once like ordinary plants on the market. 2. When one part goes down, entire system will idle or fail. 3. Though people will try to re-use it for next project but the chance is slim. 4. The whole value of the bespoken plant can be high and when it scraps after one project, the depreciation allowed can hardly be claimed. 5. Turnkey contracts become popular these days; the contractors will have chances to design structure sections optimal and fit into owned bespoken equipment.

3) Material

(1) Local and Conventional Material shall be chosen for Construction.

a. Transportation Cost and Locally Available Material 

Material for construction is bulky and transportation cost is high, so they have to be obtained from local for maximum extent as quality and property may not differ so much from the outside world.

Attention shall be drawn to the fact that sometimes the overwhelmed material requirement of a gigantic project may tilt the supply/demand balance drastically in an isolated area. Investment in term of time and money shall be considered before projects start to assure a quality and punctual completion.  

However, material prices can be fluctuated from time to time either in the case of limited supply, such as aggregate and sand, or as a result of global boom like steel and rebar. It can be deadly to an ignorant contractors, that the risk can only be addressed through contracts with so called escalation clause giving minimum protection for the builders.  

Because the projects are there for economic development so that the employment of local artisans and labors shall be considered as early as in the design stage.  Engineers must think about the possibility to use traditional technique involving local people and product even to the point to edit the specification to show respect to the tradition. For example, the Baku piles were used in Southeast Asia for soil retaining and promote compaction effect in embankment, it has been used in international class projects for its convenience to install.

b. Continuous Evolution for Material used in Construction

In old days, human's weight lifting capacity was limited,  long distance hauling capability also prohibitively expensive and could only go through waterway. People had to use small and light material from local, like timer, brick and mortars for buildings and structures in most of the cases. Granite and basalt were used in part of Europe especially for churches, castles or monumental structures. 

Wooden structure was erected in Asia for aristocrats and land lord, but the timber size reduced as a result of deforestation. In general the masses had to live in hut and dens for which they built with any material they could pick up from nearby area. 

Discovery and use of steel in civil engineering works change the world. They replace traditional construction material resulting in great cost and time saving. Steel in the form of rebar, sections and strains give buildings and structure new dimensions and spatial aesthetics. People still think of innovation for construction material better than steel, such as fiber glass or high strength concrete, commercially one day it would be popular as steel used today.

Mankind are smart to utilize everything from nature but sometimes it can be tragic. For instance, there’re countries like Bangladesh where hard stones and sand difficult to obtain. So the local people extract and burn clay from alluvium into brick like material. Then women and children will use hammers to break them into sizes of and utilize them as aggregates and sand. Then they mix them with cement to obtain concrete. The solution risks human life because buildings and bridges sometimes collapse for the weak strength those improvised materials provided. It's wrong type of localization; poverty force people to continue the practice.

c. Green Consideration

Nowadays, carbon reduction is an issue, the material used in the projects shall be considered climate friendly, and engineers need green knowledge to incorporate construction material made from renewable, waste or need less processing.

Commercial calculation won’t be the only consideration.

(2) Material and Equipment to be incorporated into Permanent Project.

a. Project More Sophisticated

As economy advances in a country, the construction work won't be simple structural work again; many systems and equipment will be installed in addition to steel and concrete. So, procurement will be more complicated than dealing with composition, dimension and strength of material. At the time of procurement or before that, tender, delivery of well functioned system, operation and maintenance, shall be arranged with assistance of reliable makers or specialty contractors. 

An experienced general contractor will know there will be risk hard to control during the course of make, transportation, installation, inspection, monitor, test run and commissioning of the complicated equipment and systems in modern construction contracts. So, the contractor has to be in cooperation with firms working in different field and the partnership may include consortium, main and sub-tier, or something in between to minimize the risk burdened by a single entity. 

b. Nominated Subcontractor

In practice the owner may actually designate the maker of the system and equipment based on confidence and trust the brand bearers have exhibited. After award the winning contractor has to sign the sub or supply contract with the specified makers at least to overtake the partial responsibility of delivery, which always include risks begin with engineering, then making, shipment, installation, commissioning, test run and until operation.

In other words, the signing parties has to share whatever may have happened with the owner: strike, sabotage, mistakes, bad performance, act of god, all kind of disruption that may occur.

When someone is asked to buy aggregate, steel or tiles, he's not supposed to spend or provide so much in monitor and control as in the cases of buying a system. And under the circumstance, we call it handling charges as it will include cost for persons assigned for coordination and communication, bank guarantees, insurance premium, legal expense for the nominated subcontract. 

However, many people are still ignorant about modern day project. During budget establishment, there will be bureaucrats, design consultant, auditors and financing people reject the idea that the contractor need overhead to handle the nominated subcontract. They consider the frontage contractor won't increase anything physical on the equipment or system to be installed and thus added no value on the works. 

The denying of invisible cost stemmed from the days the economic output mainly counted on agriculture and manufacturing. The ignorance causes big problem in pushing the works forward; another proof that the fix for engineering and construction contract must come from culture and mentality changes.

2021年4月18日 星期日

 Part 6-1. Features of Construction Industry explained in 5M


MT KAO (Blog: http://mtkaoforum31.blogspot.tw/) (mtkaoforum31@gmail.com)

1). Man:

(1) Power to drive Individuals and Organizations to achieve Business Goal

a. Nature of Power

Man loves power, unlike animal’s content with existence and reproduction; human desires are essentially boundless and incapable of complete satisfaction.

A large proportion of the human race is obliged to work so hard in obtaining necessaries that little energy is left over for other purposes; but those whose livelihood is assured do not cease to be active, they look to power and glory. So young people start to drift in the world will wonder why the needs of obtaining the two become imperative for those have something.

The easiest way to obtain glory is to obtain power; this is especially the case as regards the men who are active in relation to public events. The desire for glory, prompts the same actions by the desire for power, and the two motives may be regarded as one.

Power exhibits in many forms, such as wealth, civil authority, and influence on opinion. No one of these can be regarded as subordinate to any other, and there is no one form from which the others are derivative.


b. Power and the Organization

Among the phenomena featuring construction industry, "Man" is most relevant.  Because people can't be alone to work out big and complicated structure and buildings, they have to be molded into "organizations", to synchronize different expertise and sized up strength, then are capable of serving the society as a meaningful member of construction industry.

To make them functional and contributive, organizations need to be given goals, compatible resource, and rules for participants accepting rewards and punishments as inducements. So, there must be leader, hierarchy, and systems in an organization; it means the engineers won't be immune from influence of power maneuver, which an innocent engineering debutant may hesitate to touch.


c. Organization and Leaders

However, in an organization where technology and experience are regarded as highly important, naked power manifested on the leader assigned not with assent of the members but through investment, heritance or tradition will have to share power with doyens of superior skill and knowledges. It's the same that commercial people will get their part of power apportioning when profitability is major concern. 

When the organizations become big and complicated, power from creeds and over opinions of public will be another origin. As a result, the leaders or candidates for them will be restrained for the power, and the organizations' behavior will have to be institutionalized. 

So, the entire system become more business-oriented at least in this part of capitalist world because we are sure that any organization, be public or private, shall perform according to the principle of utilitarianism that worth taxpayer, shareholders or expert's trust. 


d. Power Distance between Levels of Employees

Although it takes on different guises from person to person, there's possibility that the leaders may pursue and profit from enacting their own agenda using their naked and traditional power, and it won't be conflicting that the follow employees who gains nothing will be cooperative as they seem to gain vicariously from the superficial achievements of the leaders.

It's fact that "genuinely cooperative enterprise" often appeared in Asian countries where "power distance" can be big between each layer of management and the young startups are always taught only to listen and learn. But the deliberation of power in an engineering organization will affect its benefit, loss, even survival. On the other hand, individuals always humbly don't like to touch non-technical issues and think by so they can be shielded from power manipulation of imperious person.

So, people shall care about the leadership and history of organizations he wants to join and make judgement whether or not it's an organization worth fighting with.  

And it has to be noted, as organizations differ in size and type, common to them all is the tendency for inequality of power to increase as membership increases. It's a confusion to young people who may have justice and fraternity in mind and consider big company management rogue. 

The general effect of an organization, is either to increase the well-being of persons, or to aid the survival of the organization itself, apart from those resulting from governmental self-preservation.


(2) Managerial cadre, Professional, Occupational.

a. Inflated Titles for Professionals

A successful engineering company requires good balance between managers, professionals and occupational. But the balance could only be achieved when number and quality of the "man" employed matched operational requirement.

Among all, loyalties to the company or the boss personally in an industry where small entrepreneurs are everywhere, are most important. It means steady employment that the "man" can be recruited and assigned to work places for required period under reasonable conditions. Qualification to fit the jobs is basic, and more than that, the hired must be trusted for many inter-person deeds taking places every day in construction industry.

In Taiwan, there're 2,845 Class A Contractors, 1243 Class B Contractors, 7,057 Class C Contractors, and 547 Specialty Contractors toward the end of 2019. Also not a smaller number of Consulting Firms, Architects and independent PE Offices have been registered. That it means thousands post of which qualification levels equal to general managers, managers and senior engineers are wanted in the industry. The side effects under the circumstance can be that the construction companies or consultants cannot hire managers or engineers experienced enough for their positions; and people also don't have opportunities to learn management or technical skills in their career.


b. Recruitment in Fragmented Construction Market

Under the circumstance, market fragmentation is ensured as many small companies or institutions in the industry struggle for survival. But people still cherish their titles such as vice presidents or directors of the companies even the jobs require them to do works of more occupational content than professional ones.

The situation further worsens when impatient authority tried to introduce project management system supposed compatible with international practice. The problem is unless there is an overhaul in construction related companies to stop the vicious cycle of professionalism tumbling, make it plain, the decimation of underperformed companies following the restructure of enduring ones should be required first to transform the disciplines, grade, and initiative of engineers, and then proceed to neat, clean and efficient 21st century construction


(3) Disciplines, expertise, project-based management, functional department-oriented management.

a. The Dwarfed General Contractor in Taiwan

As it evolves, emergence of the subcontractors to undertake the field work in lieu of the main contractor becomes a trend seeming irreversible. And when competition goes further, many of the main contractors withdraw to the point that they don't keep sufficient engineers to stay in lowest notch of expertise. The educated retained by the companies won't bear the works in line with disciplines, levels and grades truly demanded by the complicated system.

The recent project management system imposed by government to supervise public work has intention originally to assign more engineers for different discipline of work so as to developed expertise over the course. But the companies cannot follow the system because careful and elaborated division of works require more engineers to fit the jobs thus weaken related parties' competence if strictly enforced. Also It's a fact that there're more than10, 000 constructors, consultants and architects existing in a small market, making the recruitment seems difficult if not impossible. 

To say it more candidly, most of the young engineers cannot learn proper construction knowledge throughout their careers because they're "generalist" under current practice. The problems come from, first, people are allured by the positions that a small organization will offer in their earlier days; and second, they're more than willing to stay near their hometown or municipality causing perfect match with highly localized companies who never hear of functional department-oriented management.


b. Diploma Over-Trump Proficiency

Conventionally, general public always consider diploma is equal to people's ability and it compels the authority to accept the idea that expertise can be tested through examination. So, for convenience the project owner and the party responsible for supervision wouldn’t look into the true curriculum of job candidate. The outcome that bureaucrats waive their power to judge the adequacy of proposed project staff, is that they have to use all the tools and weapon to safeguard the quality and progress of the works, but in vain.


c. Matrix Management Structure

Only a few companies in Taiwan have fortune to expand their organization into big, and sophisticated matrix structure, in which both project-based and functional department-oriented management co-existed and support each other.

As we show above, many entrepreneur-led companies with limited business volume have to adopt project-based management, of which, the practice is to assign people to site offices meeting minimum of client's requirement. The project offices are presumed to gain technical and management backup from knowledgeable engineers in each functional department, however, it couldn't be done as malign competition has hallowed head offices, and the veterans disappear in the long run.

Consequently, people are reduced only to work on projects of which the design and construction are general and routine because they don't hold engineers have or capable to develop know-hows of projects with posh nature. And in reality, the companies undertake the engineering or construction contracts have to be affordable to establish something similar to matrix organization embracing both project-base and functional department-oriented system. 


(4) Personal and organizational behaviors, coordination and communication under high or low context culture. 

a. Sizes does Matter for Company Culture 

Personal behaviors are different from person to person, also in different time for the same person. When an organization is formed, it behaves as a person but like persons it will have different faces overtime. It depends on the leaders very much; especially the way he handles coordination and communication. 

Organization mainly consist of engineers and ruled by them can be stiff and fastidious in giving orders and executing them. The reason and the result maybe it will avoid mistakes from happening and push things forward. But people with more liberal or creative thought may not appreciate, which is not good to the business development and technological innovation. To mitigate that coordination and communication in a big company with byzantine structure have to be improved.


b. High and Low Context Cultures 

When organization is small, cultures can be defined as "high context”, more inclined toward relational and collectivist. Message can be spread effectively aiding by gestures, relations, body language, verbal messages, or non-verbal messages between individuals.

But when organization grow big, communication shall be more explicit, direct, and elaborate; because under the circumstance the individuals are not expected to have knowledge of each other's histories or background, and communication can't be shaped by long-standing relationships between speakers, they depend more on the words being spoken rather than on the interpretation of more subtle or unspoken cues. In such case, the organizations need low context culture.

"High" and "low" context cultures typically refer to language groups, nationalities, or regional communities. However, they have also been applied to corporations, professions and other cultural groups. Though not all individuals in a culture can be defined by cultural stereotypes, it can roughly classify: 

-When we're in elementary school, classmates and teacher fixed in the same classroom all day will know more each other, it's high context; and in university, people come and go, with professors and classmates the communication is made in lower context.

-In smallest companies, boss know every employee, give orders and evaluate performance themselves, it's high context; in big companies, departments and levels are many, between them the communication needs to be made in meetings with minutes or written mails, power must be delegated and the bosses reduced to figurehead. 

-The lawyers and accountants talk and writes to identify the truth must be precise in words and numbers, they're of the lower context; the engineers and businessman next, while the farmers deal with the same lands and climates for life can be higher context.

-In nations or societies where harmony and the well-being of the group is preferred over individual achievement, higher context cultures can be more prevailing in Asian countries, that many of them subsistent on peasantry economy historically. While European and North American countries long developed their industry, the culture can be lower context. 

People grow up in different context of culture will have distinct response toward the organization which he is hired; however, he can judge how or whether he has to change himself in behavior if he knows more about the cultural group the organization belong to; people will have flexibility for change when he is young.


(5) Labor laws, quality, incentives, unions, big bosses.

a. Labor and Taxation Laws in Taiwan

Working at site as construction people or supervisors will have to follow the weather instead of the calendar for their agenda. There's considerable improvement for employees on the aspect as labor law and regulation interfere; but the employer especially the big companies may not be able to observe to the law completely. It's also one of the reasons that sub-contractors and work gangs are introduced to the project for execution as they may be more "flexible' to follow the law. 

More than law abiding for overtime assignment, smaller company in Taiwan can pay corporation tax in deemed amount in exchange of lax scrutiny into their books. It means sometimes they can neglect or under report their employees' personal tax, retire fund or health care premium. And beyond monetary obligation evaded, they can be freer to recruit employees especially for blue collar people that many of them illegal foreign labors.

A well-organized company in construction industry will consider laws amended in favor of employees are draconian, and tend to be meticulous toward recruitment even for white collar professionals. So, when construction or design companies have to rely on dispatched people to fulfill minimum contract requirement, they actually leave the responsibility to lay off people to manpower dispatch agencies; which is big departure to the professionalism.


b. Docile Professionals 

Professionals also have their problem to learn things needed to develop their expertise; first people are lack of patience in demanding titles and income, or they simply want to stay near municipality or hometown. And in Taiwan, many need to share with spouse for family chores and thus work on regular hours. When those to be hired demand something for little and the employers have to be compromising and the easiest way is to sacrifice the work quality propped by professionals.

Fortunately, in Taiwan, union or engineer's' association aren't so active; the management won't be much teased interacting with their own employees, those of subcontractors or of any third party. Furthermore, for an industry notorious for its connections with mafia or packs leaders, the annoyance wasn’t so disastrous thanks to the stricter law enforcement for the last decades.

Taiwanese engineers received fair education since young and they will have potential and chances to claim back their dominance on the realm with patience and time. 


2021年4月1日 星期四

 Part 5-2, Advanced Civil Engineering Construction,台科大高等土木施工學教材(2021)

MT KAO (Blog: http://mtkaoforum31.blogspot.tw/) (mtkaoforum31@gmail.com)1)

5:The Modern Construction Industry and its Major Players.
1)  Frontage Players: general contractors, consulting engineers, architects, specialty contractors, labor gangs,  investors.

2)      Supporting Entities:

(1). Banks

Banks offer credit lines, grant loans, and acting as agents to collect or pay bills, draft, and cheques to companies or individuals doing business related to construction and engineering.

Banks issue guarantee letters or cheques to the clients for bid bond, performance bond, advance payment bond, and warranty bond at the request of construction entities such as construction companies, design consultants, professional engineers, and architects.

In many cases, banks will issue letter of credit for contractors to buy equipment, material and service required to complete the project. There will be overdraft facilities for companies to pay outstanding amount reasonably required in performing contracts with ultimate owners, the main contractors or upper tier contractors.

Banks will evaluate the profitability, sizes, collateral, and reputation of the company, and grant them amount of credit and rates of premium and interest; there will be fluctuation of their offer over time.

There is possibility that the banks agreeing to offer loans for BT, BOT, or BOO projects, based mainly on feasibility, completion guarantee, and the ultimate owner of the projects. Usually commercial banks need backups of fund, investment companies or even state.

When construction related entities wouldn't obtain the credit lines as required or they're sharply reduced the existing credit amount, it's pushing them toward insolvency. The consequence usually is very serious and could probably invoke chain reactions for subcontractors and sub vendors for several times the amount main contractors indebted.


If the state won't go for rescue, banks, subcontractors, vendors, their employees will be induced for great damages like the case happened to the second biggest contractor, Carillion of UK. But normally in a democracy, no sane politicians will vote continuing to finance the troublemaker, that's why banks are cautious in Taiwan.


(2).  Insurance Company

All the construction contracts need insurance company to provide coverage for damages to property and persons related to the projects unless it happens due to excepted risks.

The employers wish themselves and the contractors to be compensated for maximum and paying minimal fee. The public work owners are big customer so they will prescribe what they want in the contract document, and supposed insurance companies and the follow contractors will comply the stipulation.


However, in many occasions the crooked contracting parties seeking improper profit will ask acquiescent insurers to provide conforming policies with internal agreement deleting the critical clauses demanded by the employers. Though the insurance companies are more law abiding but there are brokers sticking to the old way doing business, its a headache for employers and reasonable contractors.


Compensation to the contracting parties when perils occur spelled another trouble for contractors, too. The appraisers' proffer can be wide ranged and unpredictable. On the other hand, some of the contractors in Taiwan didn't invest sufficient in construction facilities to avoid risk but later come up with plump figures for compensation and made money with obvious and intentional negligence of the insurers.


There were stories that the re-insurer like Lloyd's of London rejected to re-insure tunnel work construction of Taiwan in 90's as many "names" losing so much money. We don't know the root reasons of tunnel failure are the result that they're too hard to drill or the peril mostly caused by insured, appraisers and insurers yet.


In the United States, the project surety is issued mainly by insurance company or bondsman for the full contract amount or its double. It's under different philosophy that in US, the employers want to be guaranteed for a completed project so the insurer or bondsman need to provide greater than or equal amount of project value to convince the employers that they've ability to finish the works.

And in place like Taiwan, the employers demand pay immediately an amount considered to be their loss in the project with reservation that they can claim the difference of their loss later. Once people in Taiwan advocated that the insurance company can issue policies to serve as performance bond or for other purpose but found it difficult to implement, so it only remained on the law.

The insurance companies provide so much in the construction projects, they're indispensable, but many in the industry including high ranking persons have wrong concept toward the insurance; biggest problem is they can't distinguish the difference between contingency cost and insurance premium paid, the mistakes come from that they considered everything can be covered by insurance.


They recognize there should be price escalation and it has been covered by inflation formula, and any other risk shall be identified and priced in the work items so there's no proper position for the risk that can't be named but a veteran constructor will perceive  that it is a cost finally will happen according to his understanding of the market and industry.


(3). Investment Company or Fund

The international investment company or fund strolled around the globe seeking opportunity for investment in infrastructure projects as they felt they should be lucrative. But they were meticulous in Taiwan for such investment as they cared about the risks like design, construction and operation that can go wrong during construction phase.


The tedious regulations imposed by the government and "not in my backyard" populism would also aggravate the budget and deadline problem. And as projects procrastinate, the impact could range from returns that are lower than expected, to bankruptcy in the most extreme cases.

So the international investment company or fund including Japanese trading houses have to wait until recent that they start to buy shares of solar power plants, wind mills and sewage system when they see government and grass root are more matured with regards to PPP initiative.


The international investment company or fund, despite its low investment in infrastructure projects here bring in another risk mitigation concept: placing more emphasize on unanticipated and disadvantageous market changes in demand or supply, and the long term interest rates and the underlying asset value; subject to variation in the so called risky macro environment.

In Taiwan the real estate business elicit capital and people for its high growth and profitability. Developers are busy to hunt lands, deal with building codes, handle design and construction, sell house and mansions, that they're not so interested in PPP initiative as released by the government, otherwise there will be forces pulling the government for un-conventional procurement. That's the reason why international investment company or fund only settle themselves, in stock and security investment.

(4). Operator

After completing the public facilities, the government agencies or the private plants or building owners need people to do operation, functional checks, servicing, repairing or replacing of necessary devices, equipment, machinery, building infrastructure, and supporting utilities in industrial, business, governmental, and residential installations. The requirement hasten the delivery of the company operating for new facilities while many of the owners don't have experience and also restrained by financial condition.

They're O&M companies, inseparable part of construction industry, always working under the poor financial conditions as politicians and capitalists over the world are good at dispense money for new fund buildings and facilities but less generous for their operation and maintenance.

(世界上的政客與資本家對新建工程都較有興趣,前要投入運轉、維修會較計較,但也證明這部分市場被低估,O&M 公司大有可為。)

The Engineers and the Contractors alike need the Operators' feed back to get sufficient knowledge for new facilities. And it's a tendency that the government prefer to using public–private partnership for O&M of the facilities to solve problems of increasing financial constraint and employees admission.

Over the years, the owners, government or private will ask the contractors to offer engineering, construction, plus O&M; there will be different models, and more sophisticated management contract will include improvements in efficiency and performance.

As it evolved, the Operator may be required to collect bills on behalf of the utility company, and may accept some collection risk, especially the clients are governmental, and the customers will be general public.


Engineers of next generation must think about whatever will he be, it will tell that an engineer of tomorrow won't be confined for doing structural calculation; that only realizing the profession is service oriented, i.e. to follow money's lead, he has future.


3)      Third Party Participants: notaries, law firms, inspectors, laboratories, certifiers, appraisers, unions, arbitrators

The modern construction contract bring in piles of paper plus those un-printed storing in the computer, most of them presented as letters, reports, records, sketches, lists, certificates, diagrams, affidavits, pamphlets, photos, books, all of them filled with words, lines, symbol, sound, totem enough to decide the success or failure of the projects, though nobody is able to read through.


It's more than computer technology that the frontage players, supporting entities and participants of construction contracts all help to fuel the flame by asking more document. For example, when contractors want to get loans, the banks may ask them to get reports from law firms to examine the contract conditions and to testify that the conditions are fair. Or in the case that the clients may demand the records of successful operation in completed facilities, certain laboratories may be asked to do the inspection works and submit the reports accordingly.


When the required documents bearing the names of the supposed unbiased and independent party and showing the subject party has met the requests are received by person in charge of the enquirer, it will be deemed as true and authentic. And as it evolves, there will be development such as:


* The party which demand information only trust issues from certain parties, because the former now depend on the latter for legitimization problem that theoretically could be surfaced for each document from strangers or aliens.

* Though that the the verifying party shall be independent and only responded to the requesting party, but the demanding party will have a big say to recommend the "right" verifying party; and in most of the cases, the requesting party will conform.

* If the verifying party has long working relationship with the requesting party, he would have more confidence on and become easier to what he is required to verify, though they are independent and neutral. It happens to law firms, inspectors, laboratories, certifiers, appraisers, and arbitrators.

The industry reward frequent customer, so big companies that always have more chances to contact third party participants will find it's easier and more swiftly to work out require document demanded by their clients; it's the same that the so called independent parties or organizations enjoying prestige in their domain also receive more recommendation from establishment, thus more opportunities for their works.


Languages and culture should be the problem but not the only, the reality of the world is that the westerners will go to international arena using contracts, codes, standards, specification and practice the same as what they're doing in their homeland, if that's not enough, also out-flanked by parties or organizations claimed to be independent to ensure adaptability.


As a first timer Asian contractor to go out to compete international giant, he would have encountered invisible barricades, sometimes deadly in performing the works, because he may be strong technically together with his subcontractor and vendors but he wouldn't be familiar to and get supported by the western third party participants who historically are not accustomed to working with oriental minnows.


Despite its laissez-faire appearance, 21st century capitalism is complicated in its work division, in construction industry there's no exception that the added value are invented to the extent that will outweigh the substantial works in the form of "norm", "standard", and "proof", out of the mutual distrust created by the businessman


4) Stakeholders: Public, Authority, Neighborhood and Locals.

(1). Public

The public is volatile and can't be reliable that one day it's warm and next day cold. Technical people have to leave the job to convince the public to politicians, who, seems to be invincible for some time, but many of them ebbed after elections, and it's a war of attrition that politician's career life expectancy is lower than the technical people like us, from which we may find comfort.

The professionals in Taiwan all but lose their prestige facing public, the media, councilors and TV host will be much louder in all technical aspects. Because the public demand 100% perfect over construction projects: budget, progress, durability, aesthetic, and functional for all purpose, that only politicians will be answerable.

The politicians will take chance at the expense of the professionals, who will be depicted as pedant never knowing the true requirement of the people. And then the public will be awaken learning politicians won't meet their commitment; but the professionals has been tainted during the process that their credit will never be recovered though the media, councilors and TV host as accomplice also will go to hell.

Infrastructure construction is always associated with corruption, and some of the professionals are not innocent in the scandal, giving impression that engineers may be not cleaner than the pandemic officials and councilors. The industry also have problem when supervision is not in place, collusion would happen that's why the public will be always suspicious.

(2). Authority

The Authority referred here means the government agencies responsible to award permits, edit regulations that the owner and his contractors shall be observed for planning, design, construction, occupation and operation during initial, completion or operation phases.

Land acquisition for public works shall be local government's responsibility, and usually they don't do well and procrastination is unavoidable, maybe 5% of recalcitrant landowner will stop 100% of the works for commencement, and it's daily life you see in Taiwan.

Safety measures are among the critical issues the government will interfere and the contractors have to follow though always overdone. Traffic diversion plans around the site in congested towns and area can be critical which the foreign companies coming to Taiwan will have difficulty to think about; but the commuters are sacrosanct.

And disposal for wasted and surplus material shall be subject to the stipulations of local government; in general, the cost of excavated soil dumping is calculated by people close to mafia and hardly the outcome is rational.

Utilities authority poses another problem for the developers and the contractor; outstanding drawings and missing locations cause the digs and laying delaying and costly and sometimes dangers emerged. License for buildings and plants shall go through the utility authority to ensure links with existing system. In Taiwan utility company is called company, but people would think it's a kind of authority, not least they are run by government.

The fishing, agriculture and irrigation cooperative surely are the juridical association member-ed by ordinary people, but they are born with rights for fishing, agriculture and irrigation in their premises, to which any encroachment shall be bought with exorbitant price through hard negotiation.

In rural area down to the village level, public or private project investors shall work amicably with the authority.

(3). Neighborhood and Locals

The mentality of Nimby (Not in my back yard) affected construction very much; nuclear power plants and its refusal treatment can't be solved. Roads, parks and sewers can't be built in many places as people don't want be disturbed even for short time. The stories may be dated back when the ex-ruling party and regime abuse the power conscript land and suppress people against construction.

And now it goes another extremity, for example, people don't want to accept any deflection or slight damages in their house when the excavation nearby produce them even within the tolerable value. Some of the people consider the contractors will abuse like before, and exercise extra judicial means to stop the works. It happens in chemical and power plants the neighborhood always cemented together to bar or interrupt construction and operation.

The governments of all level are relatively weak because the officers and councilors need votes; temples and churches for their grass root nature always sided with neighborhood defying the legitimate development. It's devastating but foreign and sometimes people from big city not well aware they don't stand on the moral high ground when they discover god and priest are in the opposite front.

Many people even started to miss gloomy days of martial law and thought any sort of construction back then wouldn't have any problem. But it's democracy that people have made choice and nothing is more important than liberty and egalitarianism embraced by the people; so that the developers and contractors have to have patience and take it soft to convince the neighborhood and locals for their cooperation.