Demand and Supply Trends and Construction Industry Development: A Case Study in the Sri Lankan Construction Industry

Abstract

The construction sectors in the developing countries (DCs) have recently demonstrated numerous trends towards globalisation, raising considerable concern in the field. However, the nature of the effect of demand on supply characteristics of the domestic industry has not been sufficiently discussed with respect to what development measures are needed in the context of constraints that originate locally to accommodate the global trends in DCs. This paper therefore analyses reasons for these trends and attempts to identify the necessary industry developments to benefit from them locally. For this purpose, the Sri Lankan construction industry has been taken as a case study and a demand and supply framework is being used to analyse the case. The analysis reveals that while government policies contribute intrusively in stimulating demand side trends, the role of the contracting firms together with project delivery process and project procurement process are also subject to change as a result of these demand determinants. In this context, the main focus is concentrated on corporate developments, while wider industry development is also necessary to support them. As a consequence, both institutional reforms and capacity building are required to enhance firms’ technological and managerial capacity. The necessity for these development measures reflects in partly the underdeveloped framework of the construction industry in DCs. Nevertheless, they could still foster indigenous construction capacity within the context of global trends. 91