Challenges in the North and East construction industry and possible approaches to meeting them:

Encourage private sector investments

Eng. (Dr.) P. Mervyn Gunasekera

Paper presented at the 22nd Annual Session of the OPA held on October 10, 2009.

With the ending of the three-decade old war in the North and East, professionals have a responsibility to support the relevant authorities to build up these areas to not only help to raise the living standards of the people of the area but also to enhance the economic development of the whole country.

In the development activities in the North and East areas, the construction industry will have a major role to play which includes reconstruction of the damaged structures and facilities, construction of houses and common facilities such as hospitals, schools and infrastructure facilities etc.

Development activities

When considering the magnitude of the development activities that need to be completed, providing the resources and the planning inputs required to successfully complete these development activities as scheduled is a challenge. Some of the challenges that the construction industry faces are: lack of resources such as materials, skilled/semi-skilled workers (especially in plumbing, electrical, welding, formwork, steel and metal work, concreting, equipment operating), plant and equipment and quality testing facilities, etc.

Furthermore, almost all the infrastructure facilities and utility systems in the North and East are in a disused condition. And also, before commencing construction work, de-mining the affected areas must be completed.

One other major challenge that the Government will face is to find the required capital for development. Even though there are donors and the loans received may be available to carry out some of the major activities, the Government too will have to provide a fair share of financial support for the construction activities.

Therefore, it is necessary to find ways and means of formulating a comprehensively phased development strategy with milestones to encourage private sector investments in the North and East, which will be directly linked to the construction activities so that not only will the investors be assured of adequate returns on their investments, but also those investments will pave the path to overcome a number of challenges mentioned above so that the construction work can be easily planned and completed as scheduled according to required standards.

The purpose of this paper is to discuss some of the possible approaches not only to encourage the investment opportunities in the North and East construction work but also to ensure that the required facilities are available for consultants and constructors to facilitate construction industry activities and complete the work as scheduled.

Since most of the construction work in the Eastern Province has been planned and some of the work has already been completed or/and about to be completed, this paper concentrates on the construction activities in the Northern Province.

Present status

In the Northern Province, there are approximately 300,000 internally displaced persons (IDPs) presently living in temporary camps or with relatives and friends in other areas. The Government has already started resettling these IDPs.

It must also be noted that Government buildings and other public facilities including infrastructure facilities and utilities are completely or partially destroyed and/or damaged as a result of three decades of war. Most structures, facilities and utilities are in an unsuitable condition because of non-existence of maintenance work.

Owing to the absence or paucity of construction activities (other than the work relating to the war), a limited local skilled/semi-skilled labour force is available in the area for deployment in new development activities. It is required to carry out a detailed manpower survey in the province to support the construction activities. At the same time, it is necessary to undertake a comprehensive survey of existing local material sources to ascertain the available quantities and qualities so that the supply of materials for construction work can be planned accordingly.

Areas that were under LTTE control are heavily mined. Unless these areas are totally de-mined, it is not possible to commence any activity in these areas. The Government, with foreign assistance, is very effectively carrying out de-mining operations but it is not an easy task that can be done quickly.

Planning work

The development activities in the war-affected areas, in general, can be categorized into three stages as stated below:

I. Short-term Development (immediate requirements)

II. Transition Period

III. Long-term Development

Short-term requirements are those that are needed to be done immediately. The Government has already provided the required basic facilities but there are issues that need careful attention. It is not possible to keep IDPs for a long period of time in temporary camps and therefore, semi permanent facilities need to be provided for a minimum period (transition period) of one year or more until such time permanent facilities are made available. It is necessary to design and construct semi-permanent housing units with basic facilities such as sanitation and potable water systems so that IDPs can move from the temporary camps to semi permanent housing units. This is mainly because it will take a minimum of 2-3 years to plan and build permanent housing units with the required facilities. When selecting the locations for semi-permanent and/or permanent facilities it is very important to select places convenient for IDPs and minimise the environmental impact due to construction and subsequent use of those facilities. In this regard, recycling of materials, minimizing of waste, controlling of ground pollution and preventing mosquito breeding should be on the priority list.

Strategies for long term planning should be based on the social, cultural, political and security requirements of the people living in the area. Furthermore, livelihood development of the people and also economic development of the area should be integrated with the country's total development.

It is observed that at present almost all the relevant Government organizations have planned out their work in the Northern Province. For example, under the Uthuru Wasanthaya program, "the proposed plan to rehabilitate and improve highways and to provide support and technical assistance to improve rural roads in the Northern Province," prepared by the Ministry of Highways and Road Development, is in two stages. State 1 covers the road projects that could be completed or commenced within the first 180 days to expedite the relief program. Stage 2 covers a further 3-year road development program in the province to facilitate resettlement, livelihood development and regional growth. Similarly, other organizations also have completed or are completing their plans for contributing to the development effort. At the same time, some programs are under way with the assistance of donor countries and organizations, for commencing reconstruction work.

Possible approach

Responsible Unit

The author's view is that it is necessary to establish an Authority with total regulatory powers to co-ordinate, regulate and monitor the construction activities in the Northern Province.

Under this Authority, to establish a Planning and Monitoring Unit (PMU) responsible not only for planning and monitoring all development activities in the Province, but also responsible for approving development projects after reviewing the project proposals for consistency with Government policy and practice.

Detailed planning

The PMU shall prepare a master program incorporating all proposed construction work in the Province, after obtaining the following information from the project implementing organizations.

a. Project description;

b. Detailed programs with relevant major activities, their time frames and estimates;

c. Proposed procurement systems; and

d. Approximate quantities of the required resources and the time frame for their acquisitions.

In general, the main resources required by contractors are:

- Supervisory Staff;
- Skilled workers (masons, carpenters, plumbers, electricians, steel workers, formwork fixers, painters etc.);
- Ready-mix concrete;
- Road construction materials;
- Sand, cement, metal;
- Cement blocks;
- Bricks;
- Roofing materials'
- Timber;
- Pre-cast components;
- Reinforcement and structural steel;
- PVC pipes and fittings;
- Plumbing fixtures; and
- Electrical items.

e. Other information that is required for PMU activities.

After obtaining the abovementioned information/data from the relevant organizations, the PMU should not only use this information/data to plan and monitor the construction work, but they can also utilize them to invite prospective investors to Build, Operate and Manage, Support Industries to provide the required resources, goods and services for the construction industry.

For example, it is estimated that about 80,000 permanent housing units are required to provide housing for all IDPs. Constructing 80,000 housing units each having 70 sqm of floor area during the next 1-5 years will require approx. 20 million bags or cement, 1.2 million M3 of sand and 4.5 million litres of paint etc.

Resources for other buildings such as, schools, community centres, commercial buildings, public buildings etc., will also be needed.

Investor guide

It is estimated that when constructing the Northern line from Vavuniya to Kankesanturai including back line from Medawachchiya to Talaimannar, Sri Lanka Railways is planning to construct 320 buildings (Stations, Living Quarters and other buildings). Furthermore, they need 441,750 pre-stressed concrete sleepers to complete the abovementioned network.

If the PMU can prepare an Investor Guide, without commitments, providing the above information/data with relevant time frames, that will be a very effective marketing tool to motivate investors to Invest in, Build, Operate and Manage Support Industries. Why? Data relating to the market is available, pay back period and profit can be easily fixed and risk involved in the investment can be early assessed, then it will be a very easy task to take decisions.

Possible Support Industries/Facilities that can be set up in the Northern Province are:

- Ready-mix plants;
- Cement block making;
- Pre-cast concrete components (Hume pipes, slabs, structural components, fence posts etc);
- Timber stores;
- Testing laboratory facilities;
- Plant and equipment hiring/leasing facilities;
- Warehousing;
- Cement stores;
- Work/repair shops;
- PVC pipes fitting shops;
- Electrical shops;
- Accommodation camps for staff and workers;

Some of the important areas that should be considered when preparing the "Investor Guide" to Build, Operate and Manage Support Industries in the Northern Province are:

a. Clearly defined investment opportunities in the construction industry with their time frames;

b. Develop and establish appropriate regulations (for example, environmental, safety, security and quality requirements and also price control of products/services) providing standards that should be maintained during construction and operations;

c. Permit more than one supplier/producer to set up their industries in the support industry park, so that the price and service competiton can be maintained. However, the number of competitors should not exceed the demand levels; otherwise, investors will be discouraged to invest their money to provide goods and services;

d. Zoning of Support Industry parks depending on the type of operations of the industries in relation to environmental impacts;

e. Facilities available for investors and their cost (electricity, water, road access, security, etc.);

f. Government to provide incentives such as development grants, tax benefits, low interest loans etc., for investors;

g. Training of locals shall be an integral part of the industry operation.

Optimising local resource usage

To reduce the construction cost as well as time, other areas that need to be considered are:

* In Sri Lanka, standard technical specifications are being used throughout the country for construction activities. It is important to make changes as appropriate to the technical specifications to accommodate locally (North and East) available material by doing necessary design changes. This will help not only optimise the material usage but also it will cut down cost and time taken for construction activities.

* When reconstructing roads, railway tracks and other services, the question is, is to necessary to follow the same old routes or to consider new routes, which will provide more cost and time effective construction with direct links to the total development plan of the North and East. In general, what can be seen is, reconstruction is being carried out along the same old routes established by British rulers.

The author is a Past President of the Institution of Engineers Sri Lanka and Past President of Federation of Engineering Institutions of South and Central Asia.