Stakeholders in the construction industry
This article aims to identify the main stakeholders in the construction industry. The global construction industry has many different stakeholders, and the key to engaging them is to get them involved early in the project. Their interest and power may vary depending on different factors and circumstances; however, it is very important that they are recognised so that the engagement with them is smooth, and should there be any challenges, they are dealt with appropriately.
Global construction industry
Construction is a massive global industry. Its worth is expected to reach around $14.4 trillion by 2030 (Statista, 2022). It has over 100 million job opportunities globally and contributes immensely to the GDP of both developed and developing countries. In the UK alone, it offers around 3 million jobs. It also contributes around 7% to the country’s GDP.
According to the Associated General Contractors of America- AGC (2022) there are more than 745,000 construction employers in the USA which offers job opportunities to over 7.6 million people. The construction market in China (the largest in the world) contributes over 25% to the country’s GDP. It is also one of the dominant industries in India.
Main stakeholders in the construction industry
The clients are the people or organisations who commission and fund a project. They are also referred to as developer, owner, project sponsor, and customer. They have huge interests and power concerning a project as they own and finance it.
There are two types of clients in the construction industry i.e. commercial client and domestic client. Commercial clients get the construction projects done in connection with a business. On the other hand, domestic clients do not get the projects done in connection with a business. Rather their work is usually done at their own home or the home of a family member (HSE, 2022).
The contractors are responsible for executing the construction work. In many ways, they are just as important as the owners. They work according to the specifications in the construction documents. They hire subcontractors to carry out areas of work which are perhaps not within their expertise.
Employees of construction companies and other workers play a big role in the development of projects. Without them, project work cannot start at all. However, hiring the right employees is a massive challenge for many construction companies.
According to ManpowerGroup (2020) aging workforce and labour shortages have been a big problem for the construction companies in the UK for a long time. Similarly, gender diversity is another challenge as around 99% of people working in building sites are men which re-enforces the prejudice that the construction industry is not suitable for women.
Architects are usually appointed by the client. They are responsible for the design of the project and the architectural drawings. As they have a high level of responsibility and, they must have experience in the construction industry. They also need to know how to use modelling software.
A variety of raw materials such as cement, bricks, gravel, limestone, wood, and electrical appliances are required to construct a building. These materials are usually provided by different suppliers who have massive interests in the success of a project as success creates opportunities for them with new contracts.
End-users are very important stakeholders in the construction industry. They are the ones who stay in a typical domestic building on a permanent or long-term basis. They are usually very interested in the safety and convenience offered by the building. Clients therefore need to construct buildings that are safe and provide the end users with great experience.
Local authorities and government
The government works with the local authorities to regulate the industry. Together they make sure that the construction projects are safe, proper construction standards are maintained, and the project adheres to the rules and regulations.
Trade unions can also play an important role sometimes in the construction industry. Though they are not directly involved with any projects, they advocate the welfare of their members who work in the industry. Unite, a famous trade union, carries out collective bargaining across the whole of the UK construction industry on behalf of its members. The Laborers’ International Union of North America (LIUNA) represents over half-a-million members in the USA and Canada.
Roles and responsibilities of stakeholders in construction projects
Construction stakeholders play important roles in the design, construction, and management of a project. The owner/client is often the same person who has initiated the project. The contractors are responsible for executing the work according to the design and plans.
Suppliers are very important as contractors cannot start a project without the raw materials. On the other hand, raw materials are in fact useless unless the project design is completed by the architects. Likewise, design and raw materials will be useless unless construction workers bring them in line with each other to construct the building. This shows that different stakeholders play different roles in the construction industry, and they need to be engaged in line with their power and interest.
Summary of stakeholders in the Construction Industry
In summary, the construction industry has many different stakeholders. Engaging them ensures that a project gets the best out of every stakeholder. However, it is neither easy nor required to engage with everyone of them equally and similarly. The engagement will be determined by the role they play, and their power and interest they have in the project.
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PESTEL analysis of the construction industry
Last update: 21 July 2022
HSE (2022) Are you a domestic client, available at: https://www.hse.gov.uk/construction/areyou/client.htm# (accessed 21 July 2022)
ManpowerGroup (2020) 5 major challenges in the construction industry, available at: https://www.manpowergroup.co.uk/the-word-on-work/manpower-tech-expertise-5-major-challenges-construction-industry/ (accessed 19 July 2022)
Statista (2022) Size of the global construction market…, available at: https://www.statista.com/statistics/1290105/global-construction-market-size-with-forecasts/ (accessed 20 July 2022)
The Associated General Contractors of America (2022) Construction data, available at: https://www.agc.org/learn/construction-data# (accessed 20 July 2022)
Author: M Rahman
M Rahman writes extensively online and offline with an emphasis on business management, marketing, and tourism. He is a lecturer in Management and Marketing. He holds an MSc in Tourism & Hospitality from the University of Sunderland. Also, graduated from Leeds Metropolitan University with a BA in Business & Management Studies and completed a DTLLS (Diploma in Teaching in the Life-Long Learning Sector) from London South Bank University.