Syazwani Abdul Raman, Abdul Rahim Abdul Hamid ...

AN OVERVIEW AND IMPACT OF INNOVATION, RESEARCH AND DEVELOPMENT IN CONSTRUCTION INDUSTRY Syazwani Abdul Raman, Abdul Rahim Abdul Hamid *, Mohd Khairul Anas Mohd Badroldin, Rozana Zakaria & Saeed Reza Mohandes Department of Structures and Materials, Faculty of Civil Engineering, University Teknologi Malaysia, 81310 Johor Bahru, Johor, Malaysia. * Corresponding Author: [email protected]

Abstract: Innovation is a success of new ideas. In constructions, innovation can be generated from the research and development (R&D) done by the key player. Some innovation barrier is when the parties cannot adapt themselves due to the fast innovations happened in the industry. The aim of this study is to determine the overview and impact of innovation, research and development in the Malaysia construction industry. Forty eight (48) set of questionnaire had been collected among the construction professionals in the Klang Valley and Selangor area. The collected data were analysed by using frequency distribution and relative important index (RII). The Data then was tabulated in the table and illustrated in the form of charts. The result of the study show that majority of the respondent believe that innovation, research and development are very important for their organization and construction industry. However, the amount of money they are willing to spend for the research and development in construction is only about up to RM15,000. Respondents also believe that the organisation who should invest and hold responsibility for carrying out R&D are product manufacturers, government agencies, professional bodies and academic institutions. While, contractors and the consultant seem to be just the end user for R&D products.The majority of respondents chooses technology as the main driver of innovation. Innovation, research and development give more impact in the increase of productivity. Keywords: Innovation, Research and Development, Construction Industry, Malaysia.

1.0

Introduction

In Malaysia, construction industry is one of major industry that contributes to the economic growth development (Chin and Hamid, 2015; Hamid et al, 2015). Every building activity may create its own unique set of requirements and circumstance. Various sectors and stakeholders such as employer, contractors, suppliers and manufacturers, professional have their own interests which are very often divergent and

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Abdul Raman S et al.

competing in nature(Gambatese and Hallowell, 2011).The construction industry is being increasingly challenged to successfully innovate in order to satisfy the aspirations and needs of society and clients, and to improve the competitiveness(Rose and Manley, 2010). Construction firms often innovate at the project level because their work is always unique, always delivered to bespoke designs, and always achieves something new (Keegan and Turner, 2002). Innovation has long been recognized as one of the key factors contributing to national economic growth, competitiveness, and higher living standards, and has recently been at the heart of the knowledge-based economy. It is generally accepted that innovation is the implementation of significant new processes, products or management approaches in order to increase efficiency of an organisation (Seaden, 2003). Research and development (R&D) in construction refer to activities that improve the quality, productivity, efficiency and management of the construction project. R&D is a process to impose innovation to the industry. The improvement of the technology also needs to be considered in order to adapt with the environment concern and statutory requirements (Rundquistet al., 2013). R&D in construction is beneficial in term time and the quality of the end product.R&D in construction is not referring to generate profit but to make changes in the procedures and technology used. The improvement of the technology also needs to be considered in order to adapt with the environment concern and statutory requirement (Toole et al., 2013). More innovation has been done from the research in the construction industry. Some restrictions are also faced by them. From a study (Innovation in the UK: Indicators and Insights, 2006), (Hughes, 1998) states that only 6% of construction enterprises introduced new process innovations in 2005. The problem arose when the innovation in the construction industry is important, but how the innovation affects the construction industry and what is the issues from the parties involved in the industry. According to Ofori (1999), construction industry had many problems and special requirements, there are some board in developing countries such as the Construction Industry Development Board of Malaysia (CIDB) and National Construction Council of Tanzania that need to improve their responsibility and levels of authority. According to Minister of Public Works, Shaziman Abu Mansor in 2009, the innovation in today‟s industry is very challenging that need to be faced together. The changes happen in the Malaysian construction industry are very drastic until we could not understand it. Therefore, more innovations need to be produced from the local private and public sector. The construction industry, which makes up approximately 2.7% or RM 3.88 billion (3rd Quarter 2006) of our country‟s Gross Domestic Product (GDP – at current prices), and the multiplying effect it generates on other sectors such as manufacturing, transport, retail, hotel, real estate and restaurants, continues to play an important role in our economy (Gue, 2007). From MASTIC (2014) websites, Gross Domestic Expenditure on Research and Development (GERD) show a continuous increase from 2000 until 2011. In 2011, GERD value reaches RM9,422 million, which is triple the value of GERD in 2006 which is RM646.70 million. A national R&D activity intensity which is the percentage of GERD to

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GDP (GERD/GDP) also shows improvement from year 2004 (MOSTI, 2008). In year 2011 GERD/GDP has achieved 1.07%, an increase of 67.19% compared to year 2006 (0.64%). This already achieved the GERD/GDP that was set by the Economic Planning Unit (EPU) in the 10th Malaysia Planat 1.0% towards the year 2015. The aim of this study is to determine the overview and impact of innovation and research and development in the Malaysian construction industry. The scope of research would be focusing on the stakeholders‟ viewpoint of construction industry representing clients, consultants and contractors. This study will concentrate on projects in the public and private sector. The scopes for respondents were focused on companies located in Klang Valley and Selangor area.

2.0

Innovation, Research and Development

The construction industry has long been regarded as a “slow to change sector” (Gann, 1994; 2000; Gann and Salter, 2000) and “under-achieves” (Vakola and Rezgui, 2000). Moreover, at the same time, learning from one project to another is important for the reduction of errors and to manage the organisation. Other than that, its influence on work quality and innovation. Innovation and Research and Development (R&D) had been put forward as an important part in Malaysia where the Construction Industry Master Plan (CIMP) 2006-2015 has initiate tool to generate the innovativeness that improve the quality, performance and standard of the construction industry through R&D. Therefore, Construction Research Institute of Malaysia (CREAM) had initiated a theme and title for R&D in the construction industry where these efforts will cultivate culture of R&D construction especially in the academic institution. The themes were initiated after a series of workshop and seminar held by CREAM. Based on 2015 budget report, R&D expenditure in Malaysia as a share of GDP is low, compared with advanced economies such as Japan and South Korea. The Government had allocated RM1.3 billion to the Ministry of Science, Technology and Innovation to implement several related programmes (MOF, 2014). Meanwhile, the 2016 budget has proposed implementing three measures to boost productivity through innovation. The target is to attain an annual labour productivity growth of 3.7 per cent (Ibrahim, 2015). One is to accelerate innovation and entrepreneurship and that is why RM1.5 billion is allocated to the Science, Technology and Innovation Ministry (MOSTI).The Global Competitiveness Report 2014-2015 has moved Malaysia up four notches from 24 th place out of 144 countries in 2013-2014 to 20thplace in 2014-2015. Malaysia‟s progress can be best seen in how it scored in Innovation. The report showed that the nation improved in each of the criteria measured with a score of 4.7 out of 7 points in Pillar 12 : Innovation. Although Malaysia has seen a rise in gross expenditure in R&D per gross domestic product (GERD/GDP) from 0.5% in 2000 to 1.13% 2012, the country is still far from achieving its desired GERD/GDP of 2.0% by 2020. The average R&D spending in G20 countries was 2.04% in 2012 and in comparison, Malaysia has relatively low R&D expenditure. The

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11th Malaysia Plan 2016-2020, will focus on translating innovation to wealth through strengthening relational capital to foster stronger linkages, collaboration and trust among stakeholders. Stronger relational capital will improve coordination and enable the sharing and testing of ideas across multiple stakeholders and disciplines which will improve the national innovation ecosystem. This enables Malaysia to bring creative outputs to market and share the available resources. This is indeed in line with the National Science, Technology and Innovation Policy aims for Malaysia to achieve Gross Expenditure on R&D (GERD) of at least 2.0 percent by 2020 (MIDA, 2016). Recent studies of innovation have pointed to the use of new forms of organisation to cope with increasing complexity of production, communications and technology (Hedlund, 1994). These suggest that firms have become increasingly reliant upon projects to organise the production of complex products and systems. There are coherent bodies of knowledge about innovation in projects, project management and the management of projects within firms (Morris, 1994). The application of innovation to the construction industry is not straight forward, despite the importance of this sector in the development and growth of the economy. Every construction project is different, which means that construction companies have to adapt their processes and resources to suit each project. Every site is a singular criteria that changes over time. Construction works are located in different places and involve the constant movement of personnel and machinery. In addition, the weather and other factors can prevent consultants from applying previous experience effectively. This means that although innovative solutions to specific problems add to the overall experience and practices of a company, as innovation is undertaken on a one-off basis, it does not necessarily benefit the company as much as might be expected unless it is possible to incorporate it into the organisation standard management processes(Goodrum et al., 2011).Innovation needs to change from being just the application of good ideas to a process that can be managed, measured and controlled systematically. Consequently, the standardization of innovation is very important. The key factor in considering innovation is a management process. Each part of the organisation can control and improve different aspects of innovation and integrate them into the rest of the company‟s processes. The question of how a firm can become more innovative is a complicated to explain. To innovate is to carry out into practice an idea for a new product or a new process (Fagerberg, 2005). Innovation thus involves both the development of new ideas and the process of turning them into “good currency” for the firm (Winch, 1998; 2003). This process can be either a top-down process, or a bottom-up process. Top-down processes involve adopting information from external sources, and implementing these ideas within the firm. Examples of external sources of information can be formal R&D processes, or copying from leading innovators in the sector. However, innovation can also happen as a bottom-up process, where problem solving through the everyday construction work becomes the source of innovation. The implementation of these ideas involves a learning process, where knowledge developed in projects is transferred to the firm.

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The contribution from R&D to the development of the construction industry is immense as it leads the path to enhance the effectiveness of construction organisations and to raise the international competitiveness through technological advances and managerial development (Murphy et al., 2011). Further, R&D acts as a valuable input for the construction organisation by developing new products, materials, advanced construction processes, to meet the customer requirements and to address the economic, environmental and resource constraints. Therefore, Fairclough (2002) argues that the “Construction industry has a key role to play in society in providing a better built environment”. The challenges placed upon construction industry are forcing the industry to change its traditional approaches to design, construction, refurbishment, and maintenance (Faireclough, 2002). These challenges are setting new targets and creating new scope for designers, engineers, manufacturers, contractors, technologist, and researchers (Fairclough, 2002). Further, these challenges demands innovation and effective research and development (R&D) activities for construction organisations to compete in the market and to meet the social needs (Laing, 2001).

3.0

Methodology of Study

In this study, a survey had been done to determine an overview and impact of innovation, research and development in the Malaysian construction industry from the viewpoint of the construction industry professionals. The scope of research focus on the stakeholders of the construction industry, which are clients, consultants and contractors. This study was concentrated on projects in the public and private sector. The scopes for respondents were focused on organisations located in the Klang Valley and Selangor area. The sample size was based on convenience sampling. Convenience sampling (sometimes called accidental sampling) is the selection of a sample of participants from a population based on how convenient and readily available that group of participants is. It is a type of nonprobability sampling that focuses on a sample that is easy to access and readily available. The questionnaire is divided into three (3) sections which are section A which focused on the Respondent Information (4 Questions), section B focused on the overview (7 Questions) and section C focused on the impacts of innovation, research and development in the construction industry. The aim of section A is to identify the demographic of respondent, such as the company he/she works with and the position of the respondent in the company. Questions in this section were in close-ended type of question.The aim of section B is to study the current state of research and development due to the innovation in the company such as how important is research and development in the construction industry. Questions in this section were in combination of close-ended and Likert scale that used unimportant (1), of little importance (2), moderately important (3), important (4) and very important (5).The aim of section C is to identify the impact of research and development in the industry such as how the innovation encouraged in the construction industry due to research and development. Questions in this section are in form of Likert

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scale that used were strongly disagree (1), disagree (2), slightly agree (3), agree (4) and strongly agree (5). The method of data analysis used are percentage frequency distribution and relative important index (RII) method and scale rating as shown in Table 2. Percentage frequency distribution is a method that specify the percentage for the grouping data point. It is useful to express the relative frequency of the data. The data will be illustrated in many forms such as table, pie charts and bar charts. The process by dividing the number of observations within each data point or grouping of data points by the total number of observations. The sum of the percentage should be 100%. The percentage frequency distribution formula (Eq. 1): % = Number of observations x 100 Total number of observations

(1)

Information gathered from the questionnaire was analysed using Relative Importance Index method that represent 0.2 to 1.0 for each question, which 1.0 reflect to 100% strongly agree with all respondents and 0.2 reflect to 100% strongly disagree. Proportion to the questionnaire is important to assist in reviewing payment practices in construction. Azhan (2004) explained that the relative important index formula (Eq. 2). RII = ∑(1n1 + 2n2 + 3n3 + 4n4 + 5n5) (2) 5 (n1 + n2 + n3 + n4 + n5) Where, RII = relative index of inequality; n1, n2, n3…= total respondents agreed with x RII was categorized by the range of 0.2 to 1.0, where it reflects the tendency RII feedback from the level of agreement on the facts presented. RII value approaching 0.2 indicates a low likelihood of consent of the facts presented and vice versa for RII approaching 1.0 based on Nesan (1997) and Holt et. al. (1996). This method was chosen as the most appropriate method to analyse the questions using a Likert scale. In addition, the results produced are more specific and precise. To ease the analysis carried out, computer software was utilized. This software analyses the data collected statistics. It also presents the analysis results in the form of graphs, tables and charts that are easier to understand. The classification scale of the index is as shown in Table 1: Relative Index Range

Table 1: Scale of the RIIindex Attribute 1

Attribute 2

0:00 ≤ relative index < 0.20

Unimportant

Strongly Disagree


Of Little Importance

Disagree


Moderately Important

Slightly Agree

0.60 ≤ relative index < 0.80

Important

Agree

0.80 ≤ relative index ≤ 1.00

Very Important

Strongly Agree

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4.0

Results and Discussion

This study is to determine an overview and impact of innovation, research and development in the Malaysian construction industry from the perspective of the construction industry professionals.About 100 questionnaires sets were distributed to professionals who work with the developers, consultants and contractors in the Klang Valley area but only 48 responses were returned back. The percentage of the questionnaires received is almost 50%. The results from the questionnaire obtained is discussed below based on the objective of the study. 4.1

Respondents Background

Figure 1 illustrates category of respondents, number of respondent and percentage of respondents according to their position. Among 48 respondents, the highest position who answered the questionnaire are others which consists of Quantity Surveyor, Architect, Contract Administrator (38 percent) followed by the Engineer (35 percent). The rest was answered by the Project Manager (17 percent) and Director (8 percent). The purpose of variety of the position because to examine the perception on innovation and R&D in construction. Figure 2 shows the organisation where the respondent work where 21 percent were working with the developer while the percentage of them who working with the consultant and contractor are 54 percent and 21 percent respectively. Figure 3 shows the respondent experience in the construction industry. The highest percentage is about 77 percent where the respondents only work less than 5 years, followed by 10 percent who already works for 10 to 15 years. The percentage for those who work about 5-10 years and more than 15 years are the same which is 6 percent. The purpose to know the experience of the respondent because the study need to know the variety of ideas and view from different working experience. Figure 4 shows the number of staff employed in the respondents‟ organisation. About 33 percent of the organisation employed 20 to 50 people followed by 31 percent, which employed less than 20 people in the organisation. The percentage of staff employed in a range of 50 to 100 people and more than 150 people are the same which were 13 percent for both respectively. There is 10 percent of the respondents organisation employed about 100 to 150 people.

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Number of Respondent


20 15 10 5 0

17

18

9 4 Director

Project Engineer Manager Respondents' Position

Others

Figure 1:Respondents position

Figure 2: Type of Organisation Figure 3: Respondents Experience in Construction Industry

Figure 4: Number of Staff Employed at Respondent Organisation

4.2

Overview of Innovation, Research and Developmentin Construction Industry

Figure 5 and 6 shows the result of the importance of research and development in the construction industry and also the importance of research and development in respondents‟ organisation. About 58% respondents agreed that R&D are very important in the construction industry and only 29% agreed that R&D is very important in their organisation.

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*Unimportant (UI), Of Little Importance (LI), Moderately Important (MI), Important (I) and Very Important (VI)

Figure 5: Importance of Research and Development in Construction Industry

* Unimportant (UI), Of Little Importance (LI), Moderately Important (MI), Important (I) and Very Important (VI)

Figure 6: Importance of Research and Development in Respondent Organisation

Figure 7 shows the amount of investment by respondents‟ organisation in R&D. About 31 percent of the organisation invests up to RM 15,000 and more than RM 15,000 on R&D respectively. Then followed by 21 percent, which invest about RM 5,000 to RM 10,000 and 17 percent invest RM 10,000 to RM 15,000 on R&D. Figure 8 shows the how much should their organisation invest on R&D. 48 percent suggests that their organisation should invest more on R&D followed by 38 percent, which should invest some amount on R&D and lastly only 17 percent thinks that only less amount of money should be invested on R&D.

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Figure 7: Organisation Investment on R&DFigure 8: Suggestion of Amount of Investment on R&D

Figure 9 shows the organisation who should produce more innovation through R&D. About 22% of respondents choose product manufacturers are the one who need to produce more innovation followed by government bodies which is about 21 percent. About 19% choose academic institutions, then 15% choose professional bodies who need to produce more innovation. 14% thinks that developer need to produce more innovation. Lastly, 4% choose a contractor and consultant respectively.

Figure 9:Organisation Who Should Produce More Innovation through R&D

Figure 10 shows the organisation who holds responsibility for carrying out R&D. About 19% of respondents choose product manufacturers are the one who that hold the responsibility to carry out R&D followed by government bodies and professional bodies which is about 18% respectively. About 15% choose developer then 14% choose academic institutions as who that hold responsibility to carry out R&D. Lastly, 8% and 7% choose contractor and consultant respectively.

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Figure 10: Organisation Who Should Hold Responsibility for Carrying out R&D

Figure 11 shows the main driver of innovation. Majority of respondents chooses technology as the main driver of innovation with 25 percent, followed by sustainability which 17 percent. 15 percent choose cost efficiency as the drive of innovation, then 14 percent is time constraints. End user and Competition have same percent, which is 10 percent respectively. Only 9 percent of respondents think that client demands are the main driver of innovation.

Figure 11: Main driver of innovation

4.2

Impact of Innovation, Research and Development in Construction Industry

Figure 12 show the impact of innovation and R&D in the construction industry. The high impact of innovation is increase in productivity (RII=0.875) followed by modern plant and machinery (RII=0.863) and proper management (RII=0.854). The least impact of innovation is collaboration/ partnering (RII=0.783) and environmentally friendly (RII=0. 783). Most respondents strongly agreed that innovation, research and development generate positive impact to the construction industry.

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4.0

Item

Table 2:Impact of Innovation and R&D in Construction Industry Impact RII Overall Rank

1

Increase productivity

0.88

1

2

Modern plant and machinery

0.86

2

3

Proper management

0.85

3

4

New construction method and technology

0.85

4

5

Sustainability

0.85

5

6

Increase competitiveness

0.84

6

7

High profit

0.83

7

8

High capital for innovation

0.83

8

9

Reduction in delivery time

0.83

9

10

Awards/certified

0.82

10

11

Innovation programmes

0.82

11

12

Grants/funding

0.81

12

13

Collaboration/ partnering

0.78

13

14

Environmentally friendly

0.78

14

Conclusion

About 58 percent of respondents think that R&D is importance in the industry and 33 percent think that R&D is moderately important to the organisation. Only 21 percent of respondents‟ believe they are willing to invest more than RM 15,000 on R&D. 48 percent of respondents think that the company should invest more on R&D. The top three organisation who should produce more innovation through R&D are product manufacturers, government bodies and academic institutions while the top three organisation who should carrying out R&D are product manufacturers, government bodies and professional bodies. The top three main driver of innovation are technology, sustainability and cost efficiency. The top three main impact of innovation, R&D are increase in productivity, modernisation of plant and machineries and systematic management.

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