INTRODUCTION

Construction is a diverse industry that includes activities ranging from mining, quarrying, forestry
to the construction of the infrastructure and buildings, the manufacture and supply of products, as
well as maintenance and operation.

The organization structure of the construction company is well planned to ensure that the right
expert resources are available in the areas required.
Primary Producers and Consumers / Secondary Producers and Consumers

Primary producers

A primary producer is involved in production of raw materials.

In the construction industry the primary producers include; mining companies, quarrying
companies, timber producing companies steel producing companies and cement producing
companies.

Examples of primary companies includes

Quarrying companies

Ndarugo quarry it is the leading producer of machine cut stones in Kenya. It is located in Juja
area in Kiambu county.

Bamburi Cement It was listed at the NSE in 1970. It is the leading cement producer in Kenya in
terms of production. In terms of shareholding.

East Africa Portland Cement produces Blue Triangle cement. Founded in 1933, EAPCC was
initially a cement importer before it established its first production plant in Athi River in 1956.
EAPCC shareholders include Lafarge Group (14.6 percent), the Government of Kenya’s
Treasury (25.3 percent) and NSSF (27 percent). Bamburi Cement has a 12.5 percent stake in the
company. EAPCC controls 24 percent of the cement market.

ARM Cement PLC (formerly Athi River Mining) is the third largest cement producing
company in Kenya with a 15.5 percent market share. Its flagship brand is Rhino cement.

ARM Cement operates in Kenya, Rwanda and Tanzania

ARM Cement is riding on the three countries supportive macro-economic trends- a young,
growing and increasingly urban population coupled with improving economic performance
indicators to drive its growth.

Mombasa Cement is the fourth largest producer controlling 13 percent of the cement market.
Although it was founded in 2007, its plant was opened in 2013 in Athi River. It produces
Nyumba cement. It is a subsidiary of Uganda’s Tororo Cement Limited.

National Cement is the producer of the Simba cement. It was formed in 2008 by the Devki
Group of Companies in Athi River.

Secondary producers

They facilitate the primary producers, and transform the products from the primary producers.

They are mainly;

1. Consultants
2. Contractors
Primary consumers

This is mostly the project owner who invested in the project. They benefit from the project from
the profits realized after the project completion. They could be individuals, a company or a group
of people.

Secondary consumers

This are the ones who benefits directly from the outcome of the project. They are mostly tenants
and they mostly rent spaces they desire for their day to day activities.

They also include buyers of properties.

NATIONAL GOVERNMENT PARTICIPATION IN THE CONSTRUCTION INDUSTRY.

The mandate of the National government is here to actually provide a ministry that deals with

land, housing and physical planning sector that is further devolved to Land Surveying and

mapping, boundaries and fencing, housing and city planning. Actually a relevant organizational

framework that has a main role of funding and seeing to it that the projects undertaken in the

required fashion.

Organizational structures are designed to provide:

i.) Functional satisfaction

ii.) Aesthetical value

iii.) Meet deadlines

iv.) Meet budget lines and be of approved quality

Kenya as a country has witnessed substantial increase in the number of stalled projects due to

inappropriate project Organisation structures and ineffective leadership. There is evidence that

the performance of the construction in Kenya is poor as time and cost performance of projects

are to the extent that over 70% of the projects initiated are likely to escalate in time with a

magnitude of over 50% and over 50% of the projects likely to escalate in cost with a magnitude

of over 20%.

In Kenya, the construction industry is regulated by the National Construction Authority

(NCA). The NCA is established under Act No.41 of 2011 Laws of Kenya. NCA’s mandate is

to regulate, streamline and build capacity in the construction industry. The NCA also

registers and regulates the performance of local and foreign contractors and accredits skilled

construction workers and site supervisors. It has segregated construction firms into

categories based on the contract value they are allowed to undertake as well as the academic

requirements for the owners of the companies

In a nutshell, the regulations outline how the following should be done: -

i) Registration of contractors
ii) Joint ventures
iii) Identification and reporting of construction works, contractors or projects by owner
iv) Certification and accreditation of skilled construction workers and construction site
supervisors
v) Enforcement of fees.
STATUTORY BODIES AND INDUSTRY ASSOCIATIONS

In Kenya, the construction industry is regulated by various other parastatals in addition to

the NCA. These institutions are mandated to manage, develop, rehabilitate and maintain

public roads, develop and maintain public buildings as well as residential houses. These

institutions include National Housing Corporation (NHC), Kenya Urban Roads Authority

(KURA), Kenya Rural Roads Authority (KERRA), and Kenya National Highways Authority

(KENHA).

In addition to government parastatals, there are governing boards and industry associations

that are mandated to regulate the market and monitor the conduct of players in the industry.

These include Board of Registration for Architects and Quantity Surveyors, Engineers Board

of Kenya(EBK), Architectural Association of Kenya(AAK) and the Institute of Quantity

Surveyors of Kenya (IQSK). These boards are established in order to execute the scheme and

curriculum for professional education and other activities of matters of continuous training

for the registered persons and examinations for those wishing to be registered. All applicants

interested to venture into the construction industry are also vetted by these Boards, before

seeking registration with the NCA.

The Board of Registration For Architects And Quantity Surveyors

The Board was established in 1934 under Cap 525 Laws of Kenya. The Boards mandate is to

regulate the professions of Architecture and Quantity Surveying through training,

registration and enhancement of ethical practice. It is established in order to execute the

scheme and curriculum for professional education and other activities of matters of
continuous training for the registered persons and examinations for those wishing to be

registered as provided for in sec.10 of the Act16

The main Roles and Functions of the Board include: -

i) Training and licensing

ii) Ensures continuous professional development
iii) Enhancement of ethical practice
iv) Upholding scale of fees
v) Ensure observation of contract conditions

Engineers Board of Kenya

The Board’s mission is “To ensure production of competent engineers and quality engineering

services through regulation, capacity building and enforcing compliance with set engineering

standards for improved socio-economic development”.

The Mandate of the Board is derived from the core functions asset out in the Engineers Act.

Architectural Association of Kenya (AAK)

The Association is registered under the Societies Act and brings together professionals from

the Private Sector, Public Sector and Academia. It is Kenya’s leading Association for

professionals in the built and natural environment in Kenya in cooperating Architects,

Quantity Surveyors, Town Planners, Engineers, Landscape Architects and Environmental

Design Consultants and Construction Project Managers.

The Associational so acts as a link between professionals and stakeholders in the

construction industry: Including policy makers, manufacturers, real estate developers, financial
institutions, and soon.

The Architects and Quantity Surveyor’s Act Cap 525 of the laws of Kenya. The act clearly

outlines that, one must undergo through a degree of not less than five years. Thereafter, work

under a registered architect for a minimum period of eighteen (18) months and sit for a

professional exam administered by the Board of Registration for Architects and Quantity

Surveyors. Passing the exam entitles one to a practice certificate and a registration number.

The board also regulates the practice by disciplining errant professionals.

Institute of Quantity Surveyors of Kenya (IQSK)

The Institute of Quantity Surveyors of Kenya (IQSK) is an organization specifically charged

with promoting and safeguarding the interests of the Kenyan Quantity Surveyor. The

primary objective of IQSK is to promote the advancement of the practice of Quantity

Surveying and its application in Kenya.

The Institute of Quantity Surveyors of Kenya (IQSK) was founded in 1994 as a non-political

and non-profit making organization whose primary objective is to promote the general

advancement of the practice of Quantity Surveying and its application in Kenya including

facilitating the exchange of information between the institute and otherwise.

COUNTY GOVERNMENT PARTICIPATION IN A CONSTRUCTION INDUSTRY.

The construction industry in Kenya is regulated by the county governments and the National
Construction Authority.
The county government issues the construction permit but one has to register the project with the
National Construction Authority which issues compliance certificate to enable one to commence
construction works.
Registration with National Construction Authority (NCA)
National Construction Authority (NCA) is a statutory body whose main function is to regulate,
streamline and build capacity in the construction industry. In order to do this; the authority registers
projects, provides supervisors and workers accreditation and also does contractor registration.
All construction projects should be registered with the National Construction Authority. Once the
application for project registration has been done as per the set criteria; one is issued with a
preliminary compliance certificate. The construction works can start as one waits for issuance of
the compliance certificate.

SERVICE PROVIDERS IN THE INDUSTRY

Construction companies are the main service providers in the construction industry.

Service Providers- A service provider in terms of the construction industry with consulting, legal,
real estate, communications, storage, processing.

Examples of construction companies;

 Prism Construction Ltd

Prism Construction is a dynamic, brisk company whose expertise lies in managing the construction
process for renovating or building new facilities from the Healthcare to Commercial and Industrial
markets. We commence by comprehending your project goals and budget constraints in their
entirety. We then develop ingenious solutions to exceed your expectations. Our creative approach
in consonance with our ability to bring a team of project specific experts to your assignment whilst
keeping costs in check forms the core of our Unique Selling Proposition: “Reliable Partners”

 Paveway Kenya Ltd

Paveway Kenya Ltd is a company that provides high quality road marking and construction
services. Paveway Kenya offers the following:

 Road marking
 Road maintenance and construction
 Road Furniture
Paveway Kenya LTD is a company leading in road marking and construction industry by offering
a wide array of services. Our vision and goal is to become a premier road marking and construction
company in East Africa.

PARTICIPANTS IN THE CONSTRUCTION INDUSTRY

Professionals have a mandate to oversee the projects from start to end on behalf of a client with an
identification of the objectives of the client in terms of utility, quality, function, cost and timing.
professionals ensure a relationship between resources, integrating, monitoring and controlling of
the contributors of the project and their output, evaluating and selecting alternatives in pursuit of
a client’s satisfaction with the project outcome.

 Their aim is mostly to;

 Enhance productivity
 Attract future clients
 Maintain existing clients
 Improve services.
 Satisfy client’s needs

They include;

 Client
 Project Manager
 Architect
 Quantity Surveyor
 Structural Engineer
 Mechanical Engineer
 Electrical Engineer
 Contractor
 Financiers/donors
ROLE OF EACH OF THE PARTICIPANTS

Project Manager

 Must ensure a comprehensive project plan.

 Risk management by responding to potential issues throughout the project.

 Ensures that time is well managed and project is delivered on time.

 Support the development of the leadership both in site and in the office.

 Plan and arrange for benchmarks to check on project performance.

 Should effectively procure and allocate resources.

 Must keep track on finance spending hence managing the budget.

 Managing and 4ensuring effective communication.

Architect

 Create the overall aesthetic and look of buildings and other structures.

 Responsible for visual appearance of buildings and structures before its completion.

 Creating of detailed drawings and testing feasibility based on client’s needs.

 To consult with and advice the employer on the proposed work.

 To examine the site, sub-soil, and surroundings.

 To supply the builder with copies of the contract drawings and specifications. Supply
further instructions to the construction processes.

 Can help during the contract negotiation phase and may suggest and choose contractors for
different activities.

Quantity Surveyor

 Preliminary cost advice.

 Cost planning such as investment appraisal.

 Procurement and tendering procedures.

 Contract documentation.

 Tender evaluation.

 Cash flow forecasting, financial reporting and interim payments.

 Final accounting and settlement of contractual disputes.

 Cost advice during use by the client.

 Technical auditing.

Structural Engineer

 Design – deal with design of structures by calculating loads and stresses.

 Investigation – survey the building site to determine the suitability of the soil for the
upcoming project.

 Communication – co-ordinate and consult other members including environmental

scientists, architects. Also help government in their inspection of the project.

 Management – responsible for delivery of materials and equipment for the needs of the
construction project.

Mechanical Engineer

 Planning of raw steel, fabrication of structures and checking its quality.

 Inspection of civil works like drainage, road developments.

 Executes piping, ductility works.

 Involved in government dealings like clearance, inspection and audit.

 Ensure equipment is erected, pre-commissioned, tested, and commissioned in accordance
with agreed contract.

 Facilitates s all installations and construction of machines and equipment at site.

Electrical Engineer

 Plans the execution of all electrical related works.

 Coordinates with the client/consultant’s representatives for any site inspection.

 Ensures that all the works done are in accordance with the approved drawing on time and
on budget.

 Review inspection and test plans in order to perform all required inspection and
witnessing.

 Review inspection reports and records of quality control.

 Quality assurance

 Final documentation and billing works.

Contractor

 Plan, manage, and monitor all work carried out by their workers.

 Check that all workers they appoint have skills, knowledge, training and experience to do
the work.

 Provide appropriate supervision, information and instructions to their workers.

 Make sure the client is aware of the client duties before work starts.

 Ensure suitable welfare facilities are provided from the start for workers under their
control and maintain them throughout.

 Ensures safety at the work site.

 Providing for temporary utilities on site.

DEMAND AND SUPPLY ANALYSIS OF THE STRUCTURE OF THE CONSTRUCTION
INDUSTRY

Kenya has been going through a construction boom which can be attributed to inadequate
infrastructure (comprising of rail, roads and ports) presenting opportunities for continued
development in the building and construction sector and the rapid growth in population presenting
an opportunity to the housing development sector.

Demand in the Structure Of The Construction Industry

Demand- this is the quantity of a good/service that consumers are willing and are able to purchase
at various prices during a given period of time.

Law of demand- higher prices, a lower quantity will be demanded than at lower prices (and vice
versa), other things being equal.

Determinants of demand;

 Population growth/urbanization

 Government expenditure

 Financial resources

 Skills and technology advancement

Population growth/urbanization

With a high population the demand for public utilities increases. Urbanisation also puts some
pressure on the construction industry as some urban areas have a high demand for construction
products and services. Seen from the table below the demand for private buildings in Nairobi is
more than the demand for public buildings. Previous research shows that the nationwide housing
deficit stands at 200,000 units annually with only 50,000 new residential units being constructed
every year most of which target the higher income segment leading to an accumulated deficit of
over 2 million units with the largest demand being for affordable housing to cater for the 61% of
urban dwellers who live in slums and shortage in student accommodation accounting for 40% of
the deficit meaning the demand for affordable housing is at an all-time high.
Table 11.5: Reported Private and Public Buildings1 Completed, 2013 – 2017

Government policies/expenditure

The government’s big four agenda which focuses on; affordable housing, manufacturing sector,
food security and universal healthcare have facilitated the increment in government spending in
infrastructure especially in road and rail construction (standard gauge railway and Lamu port,
south Sudan, Ethiopia transport (lappset) corridor)

Table 11.1: Selected Key Economic Indicators in Building and Construction, 2013 - 2017

Source economic survey 2018

Financial resources

An increment in the amount of credit offered o the sector by banks has been illustrated in the table
above. A survey conducted by the National Construction Authority established that the main
sources of project financing are banks through loans/overdrafts which contribute to 52% with 78%
of the developers relying on credit financing.

The increment in financing has resulted in the increment in the number of completed building
works as seen in the table.

project financing sources

bank loan/overdraft

past projects proceeds

bank loan/overdrafts & proceeds from

past projects
others

Source; construction industry capacity survey, 2014

Skills and Technology advancement

Employment in the construction industry has been increasing. According to a construction industry
survey conducted by the National Construction Authority, the construction sector currently has a
total of 511,676 workers employed as Skilled, Semi-skilled and Unskilled Artisans and depends
mainly on unskilled laborers, who account for 42% of the employed labor force within the sector.
Skilled workers account for 25% whilst Semi-skilled workers are 33%.

With the advancement in technology, and the big infrastructure projects coming up it’s evident
that there is the need for skilled workers since the country currently hires foreign workers for the
work.

The private sector is seen to be major employer as compared to the public sector.
 distribution of construction
workers by skill

SKILLED SEMI-SKILLED UNSKILLED

Source construction industry capacity survey-2014

Source construction industry capacity survey-2014

Supply in the Structure of the Construction Industry

Generally, there is a mismatch between the job market needs and training, a situation that policy
makers need to look at. Architects, engineers and contractors are relatively in plenty supply while
the artisans are minimal, a situation which affects the quality of projects significantly.

As of 2017 for instance, at the Coast there were at least 1,000 architects and engineers compared
to about 200 trained artisans specializing in masonry, plumbing and painting, a situation that
should ordinarily be the other way round.

According to KFMB there are about 5,000 engineers and architects countrywide compared to less
than 2,000 trained plumbers, painters and masons.
However, despite the apparent surge in supply of architects and engineers, when it comes to major
projects such as the SGR and other railways, LAPSSET, construction of roads, Konza city
development, Greenfield Terminal at JKIA, Dongo Kundu free port, Lamu Port, among others
Kenya outsources. According to a report released last year by Oxford Business Group, Kenya
relies heavily on contracted workers from abroad, thus increasing the wage bill and the overall
cost of construction.

The Roads and Civil Engineering Contractors Association (Raceca) recently complained that able
local contractors are increasingly being left out in the tendering of public infrastructure deals –
concerns that have been restated by the African Development Bank (AfDB). In April 2013, Raceca
moved to court seeking to have Chinese and other foreign contractors barred from handling
government-funded road projects.

Some of the most prominent Chinese companies in the local construction scene include China Wu
Yi, Sinohydro Corporation, and China Communication Construction Company.

The Kenya Federation of Master Builders (KFMB) is also concerned about the skills gap and is
undertaking training programmes in collaboration with other stakeholders to try and bridge the
gap.

According to the KNBS data, a total of 148, 022 contractors were involved in the building and
construction sector, up from 106,114 in 2012 – a 34.49 per cent growth.

Supply of skilled workers in the likes of artisans, skilled masons, electricians, plumbers, painters,
and other construction workers has become a great issue since the Kibaki regime when most
vocational training schools were promoted to universities.

Additionally, the global recession in the economy in the 2008-2011 period (Kenya was also
recovering from the post-election violence) also led to the predominant shortage of skilled labor.
At this time most laborers also sought other means to earn and have never looked back.

This has seen the labor prices rise from an average of 600 back in 2010 to an average of 1200 in
2019 with the prices reaching extremes in urban areas. A recent study by Construction Kenya
found that daily dues for certified artisans had more than tripled to between Sh2,500 and Sh3,000
from Sh500 to Sh1,000 in 2012
This holds back the country when more is being put to infrastructure and housing, with the big 4
agenda and Vision 2030 in mind. The lack of qualified construction workers is the second leading
challenge experienced by the developers as per Construction Kenya report from an online
questionnaire.

The labor crisis has been blamed on recent trends where students shun technical education in favor
of courses leading to office jobs.

Real estate players in Kenya are highly experienced and market volumes are dominated by
affiliates of international players, including Knight Frank, Broll Africa and Axis Real Estate,
formerly CB Richard Ellis. There are also a number of individuals operating as independent real
estate agents. The industry is regulated by the Estate Agents Registration Board (EARB), a
statutory body that enforces the Estate Agents Act (Chapter 533) of 1984. The EARB maintains a
publicly accessible database of all individual registered agents and property valuers, providing the
registration number, qualifications and address of each person.

Supply Side Determinant

 Project procurement

 Role of the contracting firms -Where the firms can easily join together in team building,
with the availability of this, they can be able to come with buildings in a quick way. This
means less time is used on the project which can mean that more projects can be easily
done in less time.
 Project delivery process - This includes the quality of the ok done. With a supply of quality
buildings, it ensures that more buildings of the same standard can also be designed or made.
The value of reported new buildings completed in Nairobi registered a growth of 7.6 per
cent to stand at KSh 76.2 billion in 2016.
 Technological application - With application of new technology in the construction
industry it necessitates the change in supply. This is because with appropriate use of
technology, it brings about cost effectiveness and efficiency in the construction industry.
 Usage of construction materials -Increasing private investment coupled with favourable
economic conditions will result in importing a considerable amount of materials and using
a lot of heavy construction equipment.
References

Brensen M., Mand Marshal, N2000 (a) Building Partnerships in Construction Management and
Economics

Danny Meyers. .Construction economics a new approach (2008)

George Tubei Article. Kenya hit with sharp shortage of plumbers, painters and artisans despite job
highly demanded (2017) .Pulse live

Judy Mwende Article. Chinese grip on Kenya projects upsets local builders. (2019). Construction
Kenya

Peter Muiruri Report. Shortage of Construction for Big Projects Hurting Economy. (2019). The
Standard Newspaper