Local Content and Social Procurement Challenges in Construction
Q1. Procedures to be adopted to ensure the highest ethical standards
The Procedures To Be Adopted For Ensuring The Highest Ethical Standards Will Be Maintained In The Jakarta Office.
Maintaining the ethical standard in the construction sector is essential and crucial for several reasons. Ethical standard is defined as the code for conducting that helps to adopt the means of inspiring trust and even involves the mutual respect bonding amongst two different parties. In case of maintaining the ethical standard in a setting of business, the organisation will adopt those ethical codes which help to exhibit traits like kindness, and fairness along with the good behaviour of the company in such a way that the expectations of the clients can fulfil their targets. The main scope of maintaining those values is to build a proper structure of the rules and regulations related to the particular company.
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Setting the value of the ethical standard in the construction company helps to set good values for the organisation. Those good values involve some qualities such as kindness, honesty, integrity, respectfulness and many others. These are the things that a particular company is giving priorities and even expects from their workers as well. This factor even helps for promotional matters which directly involve the potential clients of that specific organisation. In the construction sector, for example, in the Jakarta office, implementing the ethical standard and even maintaining the values in a proper way helps to set a transparent bonding between the parties who are involved with the particular Jakarta office. Often it is noticed that a particular construction project can suffer as one of the parties is involved in unethical practices.
Figure1: process of ethical values
The relationship between the parties can even break down due to those unethical behaviours. This can even be the reason for breaking down the trust among the parties in the sector. This is the reason, why maintaining the ethical standard on the construction sector of construction is becoming very important. According to Lestari, 2020, the death rate of the workers involved in the sector of the construction industry will increase hugely. That is the reason, this is very essential to remember this factor for the new branch of the company. In the matter of safety, the value of ethical standards helps to ensure that the construction projects are executed with the highest regard for safety. The work in the construction project can be often dangerous. The value of ethical standards helps to make sure that the workers are provided with great safety conditions while working. Proper safety protocols are such as quality, compliance, reputation and even environmental sustainability.
Quality: the value of ethical standards in that specific company helps to ensure that the construction projects are executed with the highest quality materials and even follow great workmanship. According to Longo, 2020, the industrial setting will really play a huge role in maintaining quality control. In that particular sector, it can even be said that this helps to maintain a proper ethical standard for the company itself. This is even making sure that the final result of the project or even the final end products consists of a high-quality material and even meets the required standard along with the specification regarding the specific project. That helps the particular new office to attract more clients towards their new brand.
Compliance: the value of the ethical standard even also involves a significant role for the new office which is going to open in Jakarta. This specific feature helps to make sure that the construction project is carried out in compliance with some applicable laws, rules regulations and even some codes. According to Wan, 2019, the culture of the corporate sector can set several ethical values that help to interact with other companies and even with the shareholders of the market. In that particular way, the new company can communicate with other parties so that they can operate their newly started office in a smooth way and even can gain the profit value. Compliance with legal requirements even helps to prevent several legal issues that can arise from the matter of noncompliance.
Reputation: maintaining the value of the ethical standard in the office of Jakarta also helps to maintain the reputation of that particular construction company. This specific sector is very competitive and it is essential to maintain a really good reputation for attracting new clients and even for retaining the existing ones.
The matter of environmental sustainability: the maintenance of the value of ethical standards in the new branch of construction also helps to make sure that the construction projects are executed with the utmost regard for environmental sustainability. The particular office can even have a significant impact on the environment. According to Newman, 2019 reputation formation for an industry is really important when opening a new branch or regional office. Moreover, the proper maintenance of the value ethical standards even helps to mitigate the impact on the company.
The proper maintenance of the value of the ethical standard also helps in developing the management of the supply chain. According to Maddikunta, 2022 also mentioned the same thing in a research work previously. Regarding that statement, it can easily be said that in the case of the management of the supply chain for the new branch or the newly opened regional office, it is really necessary to implement a proper ethical standard to the company.
Conclusion
The whole chapter helps to provide information that ensures the importance of implementing the value of the ethical standard in the company while opening a new branch in Jakarta. There are also some issues regarding the ethical standard of the company like the very common evidence of conducting the sector of construction covering the price along with the bid cutting and even the poor documentation and even the short payments. Solving these kinds of problems can help to operate the industry in an optimum way while the company is opening a new branch in another state.
Q 2. Advantages and disadvantages of a local content requirement clause
Advantages and Disadvantages Of Local Content Requirement To The Country
The really fastest growing requirement includes the policies which help to imposed by the governments that require the firms to use it domestically and even manufacture the goods and supply the services in such an order that helps to operate with respect to maintain good economic value. It can even form a contract for the project of the construction industry with the sector of finance provided by the multilateral development bank to a low-income country. This particular form of contract involves both the advantages and the disadvantages. Here, in this topic, all those matters are going to be discussed.
The clause of the local content requirement for the major construction project involves some advantages as well as some disadvantages. The advantages are the following:
Boosting the local economy: the local content requirement clause can help to stimulate the local economy by creating multiple job opportunities for the local people and even in the business sector. This can help to reduce unemployment and even ensure the rate of increase in the income of the local communities.
Developing local skills and expertise: the requirement for local content can also help to develop local skills and even the expertise in the industry of the major construction. Local workers along with the companies can even gain such valuable experiences as well as knowledge through their involvement in the project work. According to Nyadera, 2022, the development of a bank can have an impact on the movement of people, products and even services. That can be leveraged for so many future projects and helps to contribute to the long-term development of the low-income county.
Figure 2: local content requirement
Encouraging the transfer of technology: requiring a certain percentage of local content, the multilateral development bank can encourage the transfer of technology transfer to the host country. According to Tian, 2020, the infrastructure is really essential as it helps to alleviate poverty and helps to generate long-term growth for the low-income country. This can even help to build local capacity in areas like the sector of engineering, designing and even in the management of the project. That helps the country which belongs to the low income, for their further development in such a great way.
Increasing accountability: local content requirements can also help to increase accountability in the construction project by ensuring that the local companies and even the workers are held to the same standard as their international counterparts. This can even help to improve the quality of work and reduce the risk of corruption or other unethical practices.
Strengthening local partnership: working with local companies and with the suppliers, the multilateral development bank helps to build stronger partnerships with the local communities. According to Kim, 2021, being sustainable in the industrialised countries will help to release a great amount fundamentally. Furthermore, it helps the low-income country for the transition of energy as for them it can be a little bit challenging. The multilateral development bank helps low-income countries in this matter. This can even help to create a more sustainable and mutually beneficial development model that supports the long-term growth of the country.
There are also several disadvantages. Such as:
Cost increasing: requiring a certain percentage of local content clause can lead to an increase the cost as the local suppliers may charge higher prices due to the limitation of the competition, higher transportation costs and even lower productivity. According to Duggan, 2022, implementing a new approach helps to highlight the structural power. This is the power of the economy. That is the cause of the increase in cost. That can affect the low-income country as well.
Reduction of the quality: the use of local content may result in lower quality materials, services and even equipment compared to imported alternatives, as the local suppliers may not have access to the latest technology, quality control systems or even the same level of expertise.
Delays and disruption of projects: sourcing the local content can be really challenging in a low-income country with limited infrastructure and a poor supply chain. Delays may occur here if the local suppliers are unable to deliver stuff on time or if they lack the capacity to meet the requirements of the project then which can be caused by the disruption of the project.
Reduced competitiveness: the requirement of local content can limit the competition. That is even making it difficult for foreign companies to participate in the project. According to Michaelowa, 2020, investment can be beneficial for the development of the state. In addition, it creates issues while leading to a limited pool of bidders, and even the potentiality can also be affected by reducing the competitiveness of the bidding process.
Violation of trade agreements: local content requirements can be seen as a violation of international trade agreements, which typically aim to promote free trade, open markets and even equal treatment of the suppliers regardless of their origin.
Limited transfer of technology: foreign companies may be more likely to bring new innovative technology and knowledge to the country, which could lead to long-term benefits like the development of new industries and the transfer of skills and knowledge to local workers. The local content requirement may discourage foreign investments, limiting the transfer of technology and even expertise to the country.
Corruption: the implementation of the local content requirements can create multiple opportunities for corruption, as local suppliers may seek to secure contracts through other unethical means. That can be the reason for the lack of transparency and accountability.
Conclusion
This chapter helps to know about the advantages as well as the disadvantages of the requirement of the local content clause in the form of a contract for a major construction project, with finance provided by a multilateral development bank in a low-income country. Multiple rules and regulations are discussed here in this topic which can help the low-income country to overcome poverty, unemployment and even the development of the country.
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Q 3. Social procurement for construction and the challenges in Pakistan
The Principles Of Social Procurement For Construction, And The Challenges Of Implementing Social Procurement For Construction Projects In Pakistan. The Pakistan government is now considering introducing the requirement of social procurement for the construction work of their country. There is still not any kind of governmental policies in the sector of the social procurement of the construction sector. It is typically a practice that involves the social as well as the environmental goals. There are some principles of the process of social procurement that can use the power of the purchase for public agencies. This answer provides a clear discussion about the implementation of social procurement for the construction sector in Pakistan. Here, even the challenges that the country can face while implementing such ideas in their public construction sector.
Social procurement for construction is a practice that involves using public spending to promote social and environmental goals. The principle of social procurement is to use the purchasing power of public agencies to drive positive social and even environmental outcomes by requiring that contractors and suppliers demonstrate a commitment to ethical and sustainable practices in the operation as per their country.
Figure 3: procurement management
The social procurement aims to create a more inclusive economy by supporting local businesses, creating jobs for disadvantaged and even marginalised groups and encouraging environmental sustainability in the construction projects. This approach can also help to address multiple social issues such as poverty and inequality, while at the same time delivering high-quality infrastructure and even services (Edwards, D.J., et al 2022). Implementing social procurements for the construction sector presents multiple challenges as well. One of the main challenges is the news for clear and consistent guidelines that help to define the social outcomes that are sought and how they are measured. This requires the collaboration between different shareholders including the public agencies, contractors and even the community organizations. Another challenge is the need to balance social and even environmental goals with economic considerations like cost and efficiency. This can even require several innovative approaches like the alternative procurement models and the use of performance based on the construction (Khan, A., et al 2019). That helps to make sure that the contractors are incentivized to deliver on the social and environmental objectives. Another potential challenge is the need for capacity building and training for the contractors along with the suppliers, particularly those who may not have any kind of experience in meeting both social and environmental standards. This can even require investment in training and some supportive programs as well as ongoing monitoring and evaluation to make sure that the contractors are meeting their obligations.
In brief, it can be said that social procurement for construction offers significant potential for driving positive social and environmental outcomes. In addition, it requires careful palling, engagement with the shareholders of the market, and ongoing monitoring and evaluation to ensure success. The procurement even involves multiple risk factors for the sector of the construction such as increasing the construction cost(Kannan, D., et al 2021). This typically means that it is inadequate in the analysis of the estimation. That is if the estimation of the materials that are used in the construction site does not perform well or involves any fault, then there can be a void related to the estimating of the materials. That can cause an excess amount of the material used for the construction work. That is the reason the cost of the materials is increasing. This thing even can affect the deadline of the construction work(Amor, B., et al 2020). If the proper analysis cannot be performed, then it is very obvious that the constructed project works within a particular time. That can be the reason for the corruption of the procurement process. Due to that reason, there must be some contingency planning which helps to adjust the financial and economic decisions which are related to external events with the help of implementing strategies like the cash flow and even readjusting the methods of payment that are relevant to the project work. In addition, there must be some prevention ideas regarding the reduction of the initial costs and that can help to generate a proper balance for the primary budget as well. Another factor is considering inflation in such a way as a risk of macro-environmental factors. There is some agreement between the parties which helps to allow the proper estimation of the project along with the verification process and the curve of flexibility.
On the other hand, there are multiple advantages such as:
Improvement of social outcomes: social procurement can help to deliver improved social outcomes like employment opportunities promoting diversity and even supporting the local business (Dijm?rescu, I., et al 2020). Giving major priority to the social value of the construction project can contribute to creating a positive social impact in the communities where such planning’s. It often has a significant impact on the surrounding communities. Incorporating the social procurement practice into the project helps to improve the relationship with the community by demonstrating a proper commitment to local economic development and even community involvement (Bacchus, L., et al 2019). On the other hand, it can even lead to saving the costs by creating more efficient supply chains and even reducing the risk and even helping to improve the project outcomes.
Conclusion
This project involves all the advantages and the challenging issues regarding the implementation of procurement management in the construction sector of the country Pakistan. That involves multiple risk factors. Here the necessary steps to avoid the risks regarding the issues are also mentioned which can be implemented.
Reference list
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