Developing Construction Industry in least developing countries case

Developing Construction Industry in least developing countries (case of Sudan) Annual meeting (43), Islamic Development Bank Tunis 2018 Presenting by : Eng. Malik Ali Dongla ( BSc(Hon) , MSc , FSES , FCIOB , CCM ) Chairman Organizing Council for Engineering Works Contractors ( OCEWC ) Sudan

Out Lines • • • • About Sudan. Over view of Sudanese Construction Industry. Challenges Facing Sudanese Construction Industry. Project Samples. Challenges facing Contractual arrangements in the industry. Recommendations for solving the problem facing the contractual arrangements. Element matrix and solution. Developing the Sudanese Construction Industry (SCI). Using System Dynamic Approach (SDM). Using Genetic Algorithms Approach (Gas). Developing The SDM SCI to be as a policy appraisal tool. Recommendations. Expected outcome.

1 - About Sudan

About Sudan • Area: • 1, 881, 000 square km reduced by 25% after separation of South. • Neighbouring : • Its neighbours are Chad and the Central African Republic on the West, Egypt and Libya on the North, Ethiopia, Eritrea, and the Red Sea on the East, and South Sudan on the South. • Population: • is about 37. 20 million capita.

About Sudan • Capital of Sudan: • The capital is Khartoum, which is in the heart of Sudan at the conjunction of Blue and White Nile. • The centre of politics, economics, industry, and commercial activities in the country. • Languages and religions: • Arabic is the official language, while English is widely used as a second language. • Majority are Muslims (97%) of totals.

Terminology of word less developed countries: according to the (WB) developing countries were defined as those countries outside Europe with a per capita gross national product (GNP) of less than 7000 USD. Although the World Bank use it, applying the GNP as a measure of development is under severe criticism (and therefore not conducive to sustainability), These countries are also generically referred to as "The-South", even though many falls in the northern hemisphere. The term "The-North" is used for Europe, North America and high-income countries in Asia and Oceania. Despite its geographical inaccuracy, the north-south terminology is increasingly preferred in development circles, as the United Nation’s (UN) terminology implies that countries in Europe, North America and Australasia are superior "developed" to other "developing "or" less developed" countries.

Construction Share on GDP in Developed countries CI shares on GDP – in developing Countries ( the South ) CI shares on GDP – developed Countries ( the North ) Country Share on GDP % Australia 7% Saudi Arabia UK 6% UAE USA 4. 6% Algeria China 6% Qatar Canada 7. 1% Sudan India 6. 9% Share on GDP % 16. 5% 10. 6% 11. 1% 10% 0. 4 % Sudan Classified as Least Developing Country according to (WB and UN)

Construction Share on GDP in the north and the south Share on GDP % 8% 18. 00% 7% 16. 00% 6% 14. 00% 5% 12. 00% 4% 3% 7% 6% 2% 4. 60% 6% 7. 10% 10. 00% 6. 90% Australia Share on GDP % 7% 16. 50% 6. 00% 10. 60% 11. 10% 4. 00% 1% 0% 8. 00% 10% 4. 00% 2. 00% UK UK 6% USA 5% China 6% Canada 7% CI shares on GDP – developed Countries ( the North ) India 7% 0. 00% Share on GDP % Saudi Arabia 16. 50% Arabia UAE 10. 60% Algeria 11. 10% Qatar 10. 00% CI shares on GDP – in developing Countries ( the South ) Sudan 4. 00%

2 - Over view of Sudanese Construction Industry

2 -Over view of Sudanese Construction Industry The construction industry is an important sector that contributes to the economic growth of a nation and it has great effects on materials manufacturing. It is an investment-led sector, where governments all over the world show high interest to develop the construction industry in Sudan. In recent years, many projects have been implemented, especially in the field of infrastructure such as roads, bridges, dams, railways, etc. , which are large, high-cost projects, the Sudanese contracting companies have contributed to the implementation of these projects. The construction sector is among the most important sectors of the economy. It is an integral part of the Sudanese economic movement. It has a significant contribution to the macro-economic movement through the establishment of infrastructure and building of the economy.

2 -Over view of Sudanese Construction Industry The sector is one of the most important sectors because of the size of the large and real investments that it employs and is a central pillar for achieving comprehensive development in a country like Sudan with its components, wealth and natural resources, and its capital of vast areas need more reconstruction projects, especially infrastructure projects. the sector has experienced successive losses. The sector is currently suffering from many problems such as weak financial investments because of weak research and studies related to construction, the absence of laws and legislation and the lack of a national database for the sector, in addition to the existence of failures in some clear clauses of the text of contracts.

2 -Over view of Sudanese Construction Industry • Sudan as one of the least developing country faces many deficulties. Although, in the past, it had a system to control and improve the way of providing CI in the whole Sudan. This system has collapsed due to many reasons; first decentralizing of governments in Sudan, and the central government has been dispersing the work to different bodies as illustrated in Figure.

2 -Over view of Sudanese Construction Industry GDP growth 12 8 GDP % • Figure behind, shows the Gross Domestic Products for Growth From period of 2001 ~ 2016. 10 6 4 2 0 1999 2001 2003 2005 2007 2009 Years 2011 2013 2015 Figure 3: GDP growth (2001 -2016) (CBOS, 2016) 2017

2 -Over view of Sudanese Construction Industry Inflation% 40 35 30 Inflation Rate % • Figure behind, shows the Macro-economic indicator ( Inflation rate , From period of 2000 ~ 2016. 25 20 15 10 5 0 1995 2000 2005 Years 2010 2015 Figure 4: Inflation rates (2000 -2016) 2020

2 -Over view of Sudanese Construction Industry Exchange rate VS Parallel Exchange rate Parallel exchange rate 18 13 14 12 SDG • Figure 5 , shows the rabidly differentiation between the official exchange rate VS Parallel Exchange rate from period from 2007 ~ 2016. 15. 5 16 9. 6 10 8 6. 2 6 4 2 0 2005 2. 01 2007 2. 18 2. 2 2009 2. 2 3. 2 2. 3 2011 4. 2 7. 2 5. 8 6. 2 4. 2 2013 2015 Figure 5: Rate of exchange during the years (2007 -2016) 2017

3 - Challenges Facing Sudanese Construction Industry

3 - Challenges Facing Sudanese Construction Industry • The performance of construction industry has been confronted by many challenges that reduce the efficiency of the construction policies in the developing countries. Thus, the SCI is faced with challenges that must be solved to maintain the optimum requirements for the construction industries to collaborate with the other sectors in the process of development and the growth of GDP.

3 - Challenges Facing Sudanese Construction Industry economic weaknesses Poor Performance of the Construction Industries Statutes and Regulations Increases in the Costs of Building Materials Challenges Availability of Infrastructure The gap between government understanding and industry requirement Public-Sector Capacity Globalisation The mismatch between Available Skills and Required

4 - Project Samples

4 - Project Samples • Infra structure Projects: (1) Soba-water works in Khartoum an Egyptian investment. (2) OMDURMAN–EL-MANARA water works (Sudanese investment). (3) bot national high-ways projects such as western salivation high way through foreign loan (Chinese financing).

4 - Project Samples of residential compounds as an example: (1) EL YASMIN joint investment project in Khartoum center. (Egypt _ Sudan). (2) EL HYGAZ_ towers (Egypt _Sudan investment). (3) SARYA projects (1) and (2) Sudanese investment partnership between – ministry of housing and Sudanese construction companies. (4) Economy residence (Rabak - White Nile State , Chinese Sudanese investment).

5 - Challenges facing Contractual arrangements in the industry

5 - Challenges facing Contractual arrangements in the industry • Changing the technical staff under which the classification was made • Change the technical staff during project • Complaints by consultants not to be included in lists • Many government projects are awarded to unqualified contractors technically and / or financially. • of transparency in pre-qualification

5 - Challenges facing Contractual arrangements in the industry • Prequalification • Selection of Contractor • The condition of the financing contractor • • • The prevailing currently Contracts Guarantees of construction contracts Variation in the unit prices during execution Amounts reserved for bank guarantees. Repayment of contractor's dues Protection of National Contractor

5 - Challenges facing Contractual arrangements in the industry • • • Financial guarantees for initial bid insurance 2% Of the tender value. Performance bond Advanced payment guarantees of the project Retention money, which is between 5% and 10% according to the contracts Defects liability certificate Price variations Business profit tax Deployment of advance payment Interim payments Payment by direct payment from the Client Payment by financing through commercial banks Dispute resolution and arbitration

6 - Recommendations for solving the problem facing the contractual arrangements

- 6 Recommendations for solving the problem facing the contractual arrangements • In an attempt by the government; to resolve the problems of the construction contractual procedures and contracts, the Ministry of Finance has formed a joint committee of all stakeholders to develop innovative and appropriate solutions to these problems. The study of the problems and obstacles to the construction contracts dealt with the following treatments and solutions:

- 6 Recommendations for solving the problem facing the contractual arrangements 1. To allow the guarantees of insurance companies in accordance with the latest fatwa issued by the Sharia Supervisory Board and to approve them as guarantors in addition to banks 4. Transparency in Prequalification and submission of tenders for construction projects. The pre-qualification procedures, bid sorting and awarding by adopting criteria should be included within the qualification documents 2. The contract shall be developed to deal with all the 5. The choice of the winning bid should not only be for problems. The FIDIC contract forms are a binding the lowest bid, but for the most technically qualified contract for all parties and guarantee the client and the tender and the most responsive bid national contractor right 3. Changing the technical staff, according to which the consultant or was classified is not acceptable. The selection of the consultant should not be according to the lowest price, but the most technically qualified and stronger response to the requirements of the tender should be awarded 6. Reducing the financial requirements of the guarantees issued by the banks and reducing their cost is a great burden on the contractor in relation to the complexities that accompany the issuance of the bank securities.

- 6 Recommendations for solving the problem facing the contractual arrangements 7. To solve the unexpected changes in the cost of 10. Protecting the national contractor from the great construction inputs during the implementation of the change of foreign contractors projects could be through adopting the FIDIC system. 8. Addressing the price variations due to variables that 11. Reduce the percentage of the guarantee of a are out of the hands of the contractor. performance bond to 5% of the value of the tender 9. To meet the payment of the Contractor's dues in the contracted times and compensate him in the event of delay in payment in an acceptable manner and according to a legitimate vision to achieve the jurisprudential rule (harm and damage). 12. Address the instability of the exchange rate by maintaining the advance payment of 10% -30% of the value of the project in order to motivate the contractor and also take into account national and global sovereign decisions

- 6 Recommendations for solving the problem facing the contractual arrangements 13. resolve the condition of Retention Money in construction 15. It is necessary to clarify how the value added tax shall be contracts in the national currency met by the client and to be detailed within the terms of the contract. 14. The Client obligation to pay the interim payments on due 16. Include arbitration as a means of resolving disputes in dates or to bear the consequent liability to compensation construction contracts and the adoption of the Sudanese Arbitration Act of 2005 as a reference law for arbitration procedures.

(E) Payment of contractor's entitlements NO. Item Element matrix and solution The problem The description and causes of the problem suggested solutions 1. Advance payment 2 2. Deployment of Contractors do not deploy advance Have a negative impact on the progress of the (A) Include binding conditions for the advance payment in project activities . and use project and slow progress of work done. contractor to employ the advance payment in payments to solve contractor financial the project. problems as solutions to other (B) Payment may be made in installments in obligations accordance with the contractor's implementation of the agreed work plan. (C) Linking the advance payment by moving equipment and technicians to the project site. Interim payments Irregularity of Interim payments The lack of financial and technical resources The projects should be awarded to qualified of the contractor leads to the non-fit of the contractors. project time with the actual achievement. 3. 4. 5. Payment by direct payment from the Client. Payment by financing through commercial banks Failure to pay advance payment after The Client did not make the necessary 10% - 30% of the contract must be provided as signing the contract which delays the arrangements for funds and finance required a advance payment according to the size of the start of the project and accordingly for the project schedule. Non-regularity of the interim payments. Delay or Interim payments leads to an increase in the project time and cost resulting from price fluctuations over time. Non-deployment of payment in the Slow pace of work and increase the time and project cost of the project despite the existence of funding The client obligation to pay such payments on due dates or to bear the legitimate consequences of compensation. Financing agreements with banks include conditions and a mechanism of partners (financier, client, consultant and contractor) to monitor the use of the payment for the project

7 - Developing Sudanese Construction Industry

Towards developing Sudanese Construction Industry STEP 1: Define factors influencing SCI STEP 2: Building System Dynamic Model using Genetic Algorithm Approach STEP 3: Developing The SDM SCI to be as a policy appraisal tool through linking the model to the output of the SCI share in GDP STEP 4: Recommended polices for each factor must be known. STEP 5: Strategies should be simulated, in order to develop the SCI.

7 - Developing Sudanese Construction Industry Defining factors influencing SCI STEP 1 • From regional and international experiences, determined factors affecting the CI are so much and different from country to another. • There are certain factors seem to be very important for an ideal model or a general system to develop the construction and the construction sector in a country considering the environmental and economical condition of the Sudan , so far there are main 16 Factors considered to be the most influential factor to SCI.

7 - Developing Sudanese Construction Industry Defining factors influencing SCI STEP 1 Transfer of technology is an important and influential factor in the construction industry. As the 2. Competitive Environment industry is based on accumulated experience. We 3. Regulation for the Sector find that many countries have preceded us in the 4. Foreign Direct Investment (FDI) development of the construction industry and have 5. Macroeconomic indicators (Inflation rate (IF) & exchange rate) accumulated experience that can be utilized 6. Engineering Education through the transfer of technology. 7. Production of constructions inputs materials 8. Human resource and employment The researchers stressed that the transfer of 9 - Training and Capacity Skill technology depends on the methods that can be 10 - Migration of Engineers and Technician transferred to the local construction industry. The 11 - Loss of Physical Infrastructure results of the studies have shown that countries 12 - Order of Law that have established a practical framework for 13 - Structuring System (to disturb the work according to standard transport technology have benefited from the classification) transfer of technology for the domestic construction 14 - Globalisation industry. 15 - Imbalance of private/public sectors 1. Transfer Technology (TT) 16 - Research and Development

7 - Developing Sudanese Construction Industry Defining factors influencing SCI 1. Transfer Technology (TT) 2. Competitive Environment 3. 4. Regulation for the Sector 5. 6. Macroeconomic indicators (Inflation rate (IF) & exchange rate) 7. 8. Production of constructions inputs materials Foreign Direct Investment (FDI) Engineering Education Human resource and employment 9 - Training and Capacity Skill 10 - Migration of Engineers and Technician 11 - Loss of Physical Infrastructure 12 - Order of Law 13 - Structuring System (to disturb the work according to standard classification) 14 - Globalisation 15 - Imbalance of private/public sectors 16 - Research and Development STEP 1 • The absence of control functions in practice and transparency is one of the factors affecting the construction industry, which requires the preparation of legislation and regulations governing the projects and the formulation of project procurement. Contractual format should be in international forms and must have a binding contractual formulas. • A competitive environment is a comprehensive term that varies between geographical locations and market segments. Construction sectors can be seen in terms of housing, general contracting and civil engineering.

7 - Developing Sudanese Construction Industry Defining factors influencing SCI 1. Transfer Technology (TT) 2. Competitive Environment 3. Regulation for the Sector 4. 5. Foreign Direct Investment (FDI) 6. 7. Engineering Education Macroeconomic indicators (Inflation rate (IF) & exchange rate) Production of constructions inputs materials 8. Human resource and employment 9 - Training and Capacity Skill 10 - Migration of Engineers and Technician 11 - Loss of Physical Infrastructure 12 - Order of Law 13 - Structuring System (to disturb the work according to standard classification) 14 - Globalisation 15 - Imbalance of private/public sectors 16 - Research and Development STEP 1 • No industry can develop without a sponsor and are clearly organized, the absence of the tasks of supervising the construction sector and the development of the general performance and the development of the workers who undertake the construction and construction industry and develop their capabilities and raise their potential and this absence has prevented the continuation of development and improvement. This factor is one of the factors affecting the construction industry.

7 - Developing Sudanese Construction Industry Defining factors influencing SCI 1. Transfer Technology (TT) 2. 3. Competitive Environment Regulation for the Sector 4. Foreign Direct Investment (FDI) 5. 6. Macroeconomic indicators (Inflation rate (IF) & exchange rate) 7. 8. Production of constructions inputs materials Engineering Education Human resource and employment 9 - Training and Capacity Skill 10 - Migration of Engineers and Technician 11 - Loss of Physical Infrastructure 12 - Order of Law 13 - Structuring System (to disturb the work according to standard classification) 14 - Globalisation 15 - Imbalance of private/public sectors 16 - Research and Development STEP 1 Economic and political shocks have greatly increased uncertainty and risk for both domestic firms and foreign investors. Missing institutional features (for instance, shortages of skilled labour, thin capital markets, infrastructure problems), as well as political and economic instability and public suspicion of foreign firms have deterred inward foreign direct investment (FDI). The main obstacle seems to be the lack of welldefined property rights, which convey exclusivity, portability and right quality. With the existence of long economic sanctions on Sudan have deprived Sudan foreign funds, which are important factors for the development of the construction industry.

7 - Developing Sudanese Construction Industry 1. 2. 3. 4. Defining factors influencing SCI Transfer Technology (TT) Competitive Environment Regulation for the Sector Foreign Direct Investment (FDI) 5. Macroeconomic indicators (Inflation rate (IF) & exchange rate) 6. Engineering Education 7. Production of constructions inputs materials 8. Human resource and employment 9 - Training and Capacity Skill 10 - Migration of Engineers and Technician 11 - Loss of Physical Infrastructure 12 - Order of Law 13 - Structuring System (to disturb the work according to standard classification) 14 - Globalisation 15 - Imbalance of private/public sectors 16 - Research and Development • STEP 1 Macroeconomic indicators are economic statistics that are issued regularly by government agencies and private organizations. These indicators provide a vision of the economic performance of a particular country or region and are considered factors affecting the construction industry. The value of currency exchange has changed, which has led to the devaluation of the Sudanese pound in recent years against foreign currencies, which led to a rise in the prices of building materials significantly and inflation in the cost of financial construction projects as the cost of the project is now estimated at billions of pounds. And thus can have a significant impact on the macroeconomic.

7 - Developing Sudanese Construction Industry Defining factors influencing SCI 1. Transfer Technology (TT) 2. 3. 4. 5. Competitive Environment Regulation for the Sector Foreign Direct Investment (FDI) Macroeconomic indicators (Inflation rate (IF) & exchange rate) 6. Engineering Education 7. Production of constructions inputs materials 8. Human resource and employment 9 - Training and Capacity Skill 10 - Migration of Engineers and Technician 11 - Loss of Physical Infrastructure 12 - Order of Law 13 - Structuring System (to disturb the work according to standard classification) 14 - Globalisation 15 - Imbalance of private/public sectors 16 - Research and Development STEP 1 Education in the field of construction is not new, it has long been part of engineering or architectural programs. This is confirmed by Dietz and Leitel (1976). They have enrolled at the Massachusetts Institute of Technology (MIT), While Union Wire pointed out that the training courses in the construction were developed early but focused on technology and construction processes without administrative content. The engineering industry depends entirely on engineering cadres of all classes. Engineering education is an important factor in this industry.

7 - Developing Sudanese Construction Industry 1. 2. 3. 4. 5. 6. Defining factors influencing SCI Transfer Technology (TT) Competitive Environment Regulation for the Sector Foreign Direct Investment (FDI) Macroeconomic indicators (Inflation rate (IF) & exchange rate) Engineering Education 7. Production of constructions inputs materials 8. Human resource and employment 9 - Training and Capacity Skill 10 - Migration of Engineers and Technician 11 - Loss of Physical Infrastructure 12 - Order of Law 13 - Structuring System (to disturb the work according to standard classification) 14 - Globalisation 15 - Imbalance of private/public sectors 16 - Research and Development STEP 1 The selection of building materials usually depends on the price of the material, regardless of the environmental impact, quality, thermal performance, durability, and life of the material. Most of the time this results in the cost increasing with variables of impacts over the environment during the life of the building. Therefore, considering the environmental impacts, social impacts, and economic impacts together in the selection of any building material is crucial (Balila and Vahdati, 2013). The construction materials industry in Sudan is still based mainly on traditional materials and methods of construction without the introduction of modern methods and methods to develop and promote the use of these materials. Essential materials are the cornerstones of the construction industry. The list of these materials includes: manufactured clay, cement, timber, structural steel (reinforcing steel, pipes, etc. ), aluminum, painting

7 - Developing Sudanese Construction Industry 1. Transfer Technology (TT) 2. 3. 4. 5. 6. 7. Competitive Environment Defining factors influencing SCI Regulation for the Sector Foreign Direct Investment (FDI) Macroeconomic indicators (Inflation rate (IF) & exchange rate) Engineering Education Production of constructions inputs materials 8. Human resource and employment 9 - Training and Capacity Skill 10 - Migration of Engineers and Technician 11 - Loss of Physical Infrastructure 12 - Order of Law 13 - Structuring System (to disturb the work according to standard classification) 14 - Globalisation 15 - Imbalance of private/public sectors 16 - Research and Development STEP 1 Corporate development is of crucial importance. Construction industries need companies which take a long-term view and are prepared to invest in human resource, equipment and research and development in order to improve their performance, However, the construction enterprises in developing countries are known for their lack of knowledge, short-term orientation, and lack of focus on construction. They are also unable to employ qualified personnel, and/or unwilling to appoint them to positions of responsibility. Management development should be a key concern in the construction firms of the developing countries (Ofori, 2000). Sudan now lacks sufficient skilled workers and technicians who have acquired expertise and acquired modern technology, especially in the field of infrastructure, also in the field of work which involves the installation of equipment, machinery, sanitary installations and electromechanical works. The absence of theory of the right man in the right place led to the confusion in the system of organization and management in the construction works.

7 - Developing Sudanese Construction Industry Defining factors influencing SCI 1. Transfer Technology (TT) 2. 3. 4. 5. 6. 7. 8. • Competitive Environment Regulation for the Sector Foreign Direct Investment (FDI) Macroeconomic indicators (Inflation rate (IF) & exchange rate) Engineering Education Production of constructions inputs materials Human resource and employment 9. Training and Capacity Skill 10 - Migration of Engineers and Technician 11 - Loss of Physical Infrastructure 12 - Order of Law 13 - Structuring System (to disturb the work according to standard classification) 14 - Globalisation 15 - Imbalance of private/public sectors 16 - Research and Development • STEP 1 Insufficient training and adequate qualification for national employment The lack of qualified and specialized training centers will require training to develop skills in order to fully implement building regulations requirements for renewable energy systems, low energy technologies, options, building physics, project planning, building ethics and communication skills and IT skills. The scarcity of trained and skilled human resources is due to the migration of most, if not all, skilled national workers to oil and Western European countries. Despite the adverse effects of the migration of trained workers, Sudan will reap the positive results in the future after the return of these voluntary and optional labor to Sudan. In addition to the new experiences, Sudan has gained self-confidence and a profitable economic return that will make it a productive and productive category.

7 - Developing Sudanese Construction Industry Defining factors influencing SCI 1. Transfer Technology (TT) 2. 3. Competitive Environment 4. 5. Foreign Direct Investment (FDI) 6. 7. Engineering Education Regulation for the Sector Macroeconomic indicators (Inflation rate (IF) & exchange rate) Production of constructions inputs materials 8. Human resource and employment 9 - Training and Capacity Skill 10 - Migration of Engineers and Technician 11 - Loss of Physical Infrastructure 12 - Order of Law 13 - Structuring System (to disturb the work according to standard classification) 14 - Globalisation 15 - Imbalance of private/public sectors 16 - Research and Development STEP 1 The scarcity of trained and skilled human resources is due to the migration of most, if not all, skilled national workers to oil and Western European countries. Despite the adverse effects of the migration of trained workers, Sudan will reap the positive results in the future after the return of these voluntary and optional labor to Sudan. In addition to the new experiences, Sudan has gained self-confidence and a profitable economic return that will make it a productive.

7 - Developing Sudanese Construction Industry Defining factors influencing SCI 1. Transfer Technology (TT) 2. 3. Competitive Environment 4. 5. Foreign Direct Investment (FDI) 6. 7. Engineering Education Regulation for the Sector Macroeconomic indicators (Inflation rate (IF) & exchange rate) Production of constructions inputs materials 8. Human resource and employment 9 - Training and Capacity Skill 10 - Migration of Engineers and Technician 11 - Loss of Physical Infrastructure 12 - Order of Law 13 - Structuring System (to disturb the work according to standard classification) 14 - Globalisation 15 - Imbalance of private/public sectors 16 - Research and Development STEP 1 In developing economies, local competitors may have developed capabilities for relationship-based management in their environment that substitute for the lack of institutional infrastructure. These assets may be used domestically or in transferring abroad to other emerging economies where such assets would likewise be useful (Hoskisson et al. 2000).

7 - Developing Sudanese Construction Industry Defining factors influencing SCI 1. Transfer Technology (TT) 2. Competitive Environment 3. Regulation for the Sector 4. Foreign Direct Investment (FDI) 5. Macroeconomic indicators (Inflation rate (IF) & exchange rate) 6. Engineering Education 7. Production of constructions inputs materials 8. Human resource and employment 9 - Training and Capacity Skill 10 - Migration of Engineers and Technician 11 - Loss of Physical Infrastructure 12 - Order of Law 13 - Structuring System (to disturb the work according to standard classification) 14 - Globalisation 15 - Imbalance of private/public sectors 16 - Research and Development STEP 1 The absence of mechanisms for the integration of the systems, laws and legislation of the sector. This is reflected in the lack of regulations and laws and the legal problems, disputes and disputes in contracts. These include the system of competition and procurement and the system of classification of contractors and contracts between the parties of the sector. Hence, construction is faced with increasingly complex regulations and greater government intervention through legislation, regulations, taxes, and tariffs. Standards and codes are very important as they can directly affect the future public safety and affordability of every public building. They can afford protection from substandard housing, poor sanitation, and unnecessary risk of fire or loss of life from natural (or man-made) disasters. Codes and code enforcement can either facilitate or restrict the introduction and use of safe, durable, and innovative building products, technologies, and processes. In the past 10 years, there has been a plethora of regulation imposed on the CI influencing health and safety, environmental impact, and ethical standards leading to

7 - Developing Sudanese Construction Industry Defining factors influencing SCI 1. Transfer Technology (TT) 2. Competitive Environment 3. Regulation for the Sector 4. Foreign Direct Investment (FDI) 5. Macroeconomic indicators (Inflation rate (IF) & exchange rate) 6. Engineering Education 7. Production of constructions inputs materials 8. Human resource and employment 9 - Training and Capacity Skill 10 - Migration of Engineers and Technician 11 - Loss of Physical Infrastructure 12 - Order of Law 13 - Structuring System (to disturb the work according to standard classification) 14 - Globalisation 15 - Imbalance of private/public sectors 16 - Research and Development STEP 1 The absence of a uniform system for the specifications and standards of the construction and construction operations. This complicates the legal transactions system, and controls the production or importation of building materials without being subject to known and unified controls. Now there are many types of building materials manufactured locally or imported, which are used by citizens and there is no one to disclose them from the technical point of view. As well as the lack of transparency and different conditions of tenders and tenders for state and state projects where each government department determines conditions consistent with its policies and wishes. These policies may not achieve justice among the institutions of the construction sector. There is also lack of interest in the documentation system, Legal handling in accordance with construction contracts, which leads to irregularities and excesses, As well as the obvious weakness in the mechanism of rehabilitation of the majority of the parties in the implementation of construction and construction projects (public or private sector alike) and ensure the technical and financial efficiency and control of its activities during implementation, which is directly reflected on the quality of projects in terms of technical and delayed most of them and the failure of their achievement and the emergence of many defects before investment And the restriction of many bidders on the condition of the minimum price without clearly linking it to the efficiency of the implementing agency is reflected negatively on the quality of the majority of the engineering projects.

7 - Developing Sudanese Construction Industry Defining factors influencing SCI 1. Transfer Technology (TT) 2. Competitive Environment 3. Regulation for the Sector 4. Foreign Direct Investment (FDI) 5. Macroeconomic indicators (Inflation rate (IF) & exchange rate) 6. Engineering Education 7. Production of constructions inputs materials 8. Human resource and employment 9 - Training and Capacity Skill 10 - Migration of Engineers and Technician 11 - Loss of Physical Infrastructure 12 - Order of Law 13 - Structuring System (to disturb the work according to standard classification) 14 - Globalisation 15 - Imbalance of private/public sectors 16 - Research and Development STEP 1 Globalisation has renovated the world and national economies and had a great impact on the way we live. The CI has been part of this revolution, driven by a number of factors. The globalization concept does not precisely apply to the CI, as construction is not a product that can be operated across international markets. Neither does it spread itself to international combined production, as production in CI takes place on site, within each country (Strassman and Wells, 1988). Nevertheless, the CI has changed in response to globalization. The impact of globalization is transforming project delivery in Africa. Clients are becoming more demanding and requiring greater transparency and accountability. Overseas companies see the African continent as a huge opportunity with its growing population, a wealth of natural resources, and aspiration to improve the quality of life of its residents. Chinese companies have shown that they have the capacity to build at very competitive prices and to transform the construction landscape in many countries (Flanagan, 2013).

7 - Developing Sudanese Construction Industry Defining factors influencing SCI 1. Transfer Technology (TT) 2. 3. Competitive Environment 4. 5. Foreign Direct Investment (FDI) 6. 7. Engineering Education • • Regulation for the Sector Macroeconomic indicators (Inflation rate (IF) & exchange rate) Production of constructions inputs materials 8. Human resource and employment 9 - Training and Capacity Skill 10 - Migration of Engineers and Technician 11 - Loss of Physical Infrastructure • 12 - Order of Law • 13 - Structuring System (to disturb the work according to standard classification) 14 - Globalisation 15 - Imbalance of private/public sectors 16 - Research and Development • STEP 1 Sudan, like other countries in the world, has applied privatization policies in order to increase efficiency in the use of resources and overcome internal and external imbalances. Especially after the large deficit in the balance of payments and the intensification of inflationary pressures and the decline in the rate of trade and the accumulation of external debt and slowing growth. Most of the Arab countries have started despite the relative delay compared to other countries in the world by allowing the private sector to finance projects and implement the infrastructure that was previously a stone on the public sector Policies often change only to make it clear that policy has led to the recovery of some private sector projects. Legislators and executives forget that the success of private sector projects is a genuine goal of the state. Their harmony in accordance with plans and priorities will be stimulating and encouraging. It is now known that the five-year program has led the leadership of the transformation of the private sector, in line with the state's policies that ruled the government not to compete with the private sector. Government gains from private sector projects are not only tax. Taxation is the least that the private sector provides to the economy. It is the center of production and provision of goods and services in the economy. This goal should not be overlooked at any time. These projects create employment opportunities in the community and tax is not equal to the benefits achieved by all partners in the production of goods and services, it is a wide movement of activities; all stages include production of ( raw materials, manufacturing, transport, handling, transport, storage, distribution, etc. . ) These are broad employment opportunities that generate income for members of society, fight poverty and make families stable. It is an original goal that is at the top of the country's strategic goals (sustainable development goals) and should be given priority if it conflicts with any other objective.

7 - Developing Sudanese Construction Industry Defining factors influencing SCI 1. Transfer Technology (TT) 2. 3. Competitive Environment 4. 5. Foreign Direct Investment (FDI) 6. 7. Engineering Education Regulation for the Sector Macroeconomic indicators (Inflation rate (IF) & exchange rate) Production of constructions inputs materials 8. Human resource and employment 9 - Training and Capacity Skill 10 - Migration of Engineers and Technician 11 - Loss of Physical Infrastructure 12 - Order of Law 13 - Structuring System (to disturb the work according to standard classification) 14 - Globalisation 15 - Imbalance of private/public sectors 16 - Research and Development STEP 1 Research and experimental development (R&D) comprise creative work undertaken on a systematic basis in order to increase the stock of knowledge, including knowledge of man, culture and the use of this stock of knowledge to devise new applications”. The definitions widely used by the Higher Education Statistical Agency (HESA), and also recognized by Higher Education Funding Council for England (HEFCE) and the Department of Education, Science, and Training (DEST) in Australia are also based on this definition (Ho Park, n. d. ). The level of technological development of the industries is also low. This is due to inadequate R&D facilities and programmes, poor linkage between research and practice and foreign exchange difficulties which hinder the importation of equipment and spares (Elkhalifa, 2013).

7 - Developing Sudanese Construction Industry Building System Dynamic Model using Genetic Algorithm Approach • Why using System Dynamic Approach ? 1 - System dynamics is a technique for strategic and policy simulation modeling based on feedback systems theory. 2 - to enhance learning in complex systems. 3 - Construction is inherently dynamic, involving multiple feedbacks (Sterman 1992). 4 - The environments of the construction industries are dynamic, and the tasks facing them are continuously being transformed. 5 -A system dynamics model provides an analytic solution for complex, nonlinear, and dynamic systems by focusing on interactions among variables and understanding their structures (Sterman 2000). STEP 2

7 - Developing Sudanese Construction Industry Building System Dynamic Model using Genetic Algorithm Approach STEP 2 • Genetic Algorithm Approach? • Genetic Algorithms are the heuristic search and optimization techniques that mimic the process of natural evolution. Genetic algorithms implement the optimization strategies by simulating evolution of variables through natural selection. In our research we employed Genetic algorithm technique in order to determine the most accurate equations that deem to represent the relationships between factors. “Select The Best, Discard The Rest”

7 - Developing Sudanese Construction Industry Developing The SDM SCI to be as a policy appraisal tool through linking the model to the output of the SCI share in GDP The Researches are going on for building System Dynamic Models ( SDM) , Using Genetic Approach ( GAs ). Research is being carried using the defined factors influencing SCI to build a SDM - SCI to understand the behavior of SCI. Then , The SDM SCI model is linked to the share of SCI in National Gross Domestic Products GDP so as to predict the share through implication of certain polices Recommendation Drawn from this research showed that SCI is Dynamic in nature, and can be predict its GDP share if certain strategies are been applied through a proper Policies. To develop the CI dynamically; it should be takled in strategies rather than takling each factor influencing. STEP 3

7 - Developing Sudanese Construction Industry Factor Recommended policies for each factor STEP 4 Recommended Policy Transfer of Technology to improve the local construction manufacturing sector by supporting the transfer of technology Competitive Environment adopting the e-tendering approach. Regulation of the sector establishment of a higher Council at the state level with the role of developing the vision, strategies and long-term plans for the SCI Foreign Direct Investment providing an attractive and stable investment environment to encourage foreign capital Macroeconomic indicators taking economic measures and policies that stabilise the exchange rate and reduce inflation Production of building materials Establishment of empowered standardisation and specification system Human resources establishment of the decent living environment and salary packages for workers in the sectors especially engineers by lifting sanctions on the financing of cars and real estate

7 - Developing Sudanese Construction Industry Factor Recommended policies for each factor STEP 4 Recommended Policy Training and skills capacity adopt a mandatory unified training program for the sector as seen in the medical sector. Also, the amendment of labour law to encourage the private sector to invest in this field. Globalisation the proper adoption of international standard forms of contracts The imbalance between private and public sector passing the decree of public-private partnership (PPP) Absence of system that disturbs the work amend the purchase and contracting law so that no project shall be assigned. Loss of infrastructure preparing building codes and Sudanese specifications for construction projects and introducing mechanisms for funding Research and Development encouraging the establishment of construction research centres in some government departments and universities. Also supporting holding international and national conferences, seminars and workshops.

Strategies provided to Develop the SCI

7 - Developing Sudanese Construction Industry STEP 5 Strategies Due to the dynamic behaviour of SCI the best way to develop it, is through strategies rather than tackling each factor separately. From Research and studies in neighbouring countries; four strategies have been examined in order to make the development of construction industry. These strategies were chosen as scenarios for developing SCI. 1) Regulating the SCI 2) Coordinating laws and orders for the SCI 3) Financing the SCI 4) Developing the human recourses and training skills

7 - Developing Sudanese Construction Industry Special Strategy For SCI Strategies The four tested strategies weren’t achieve the development of SCI STEP 5

7 - Developing Sudanese Construction Industry Special Strategy For SCI Strategies STEP 5 • Hence, there is a need for a vision using a concept of a game changer to develop a new strategy to improve the SCI to maximize its GDP(Construction) by focusing the strong factors in the SDM model in such a way where it can be controlled by certain relevant policies. Four factors (regulation of the sector, foreign direct investment, competitive environment, transfer of technology. After the simulation of the model, the expected GDP(Construction) was found to be 6. 2% as shown in figure below.

7 - Developing Sudanese Construction Industry Special Strategy For SCI Strategies STEP 5 Developing new strategy: (Strategy number five) Then we Developed new strategy to fit SCI dealing with its nature. Hence, Four factors (regulation of the sector, foreign direct investment, competitive environment, transfer of technology. After the simulation of the model, the expected GDP(Construction) was found to be 6. 2% as shown in figure below.

7 - Developing Sudanese Construction Industry Strategies STEP 4 • This strategy gives the maximum expected share of SCI on Gross Domestic Product, which can be compared to the share of the construction industry in developing countries. Figure 7 : expected share of SCI on GDP up to 6. 2%

7 - Developing Sudanese Construction Industry Recommendations based on strategy STEP 4

7 - Developing Sudanese Construction Industry Factor Recommendations based on strategy STEP 5 Recommended Policy Sector regulation strategy The formation of the Construction Industry Development Board (CIDB) shall be under the umbrella of a sovereign authority whose decisions; shall be effective and empowered; shall include all existing construction councils and professional institutions in the sector, and shall build the necessary policies for the development of the sector. Sector Finance Strategy The State adopts a financing policy for the construction sector; raising the capital of the Real Estate Bank and returning to its main roles in financing the sector and providing it with long-term investment portfolios to finance projects, contractors and real estate development.

7 - Developing Sudanese Construction Industry Factor Recommendations based on strategy STEP 5 Recommended Policy Standardisation and regulation of laws in the sector The Ministry of Justice assembles and consolidates all laws and regulations pertaining to the sector, eliminating conflicts between them, and issuing a unified law that encourages and assists the growth and development of the industry Training and qualification strategy in the sector The State shall adopt a training and qualification schemes for all cadres in the sector. It shall be mandatory and amend the restricted laws in the sector to allow the private sector to invest in training its cadres and skilled labour and compel foreign companies to assign a reasonable proportion of the work to local contractors to transfer knowledge and expertise

Excepted outcome 7 - Developing Sudanese Construction Industry Result SCI sahres on GDP Real Share on GDP Expected share on GDP 7 6 Share on GDP % 5 4 3 4. 1 4 3. 35 3. 7 3. 1 3. 2 2 1 Real SCI share on GDP ( 2004 ~ 2014 ) 3. 4 3. 3 3. 47 3. 65 3. 84 4. 02 4. 21 4. 40 4. 59 4. 78 4. 97 5. 23 5. 42 5. 62 5. 88 6. 20 3. 35 Expected SCI share on GDP ( 2014 ~ 2028 ) 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 Years Figure 8: Expected share of SCI on GDP up to 6. 2%

7 - Developing Sudanese Construction Industry Excepted outcome • Finally, we can say that the construction sector in the Sudan has recovered, with the adoption of modern mechanisms and tools of scientific researches, and we have a great ambition in the future to strengthen these results through our long-established relations with neighboring countries, to raise the capacity of the sector to serve the countries of the region and to promote investments Between countries with common interests. Result

Thank you for your lestining Presenting by : Eng. Malik Ali Dongla ( BSc(Hon) , MSc , FSES , FCIOB , CCM ) Chairman Organizing Council for Engineering Works Contractors ( OCEWC ) Sudan