BUIL02 - APPRAISAL OF E-COMMENCE IN THE NIGERIAN CONSTRUCTION INDUSTRY

APPRAISAL OF E-COMMENCE IN THE NIGERIAN CONSTRUCTION INDUSTRY

CHAPTER ONE

1.0.    Introduction

The construction industry in Nigeria is characterized by a multiplicity of small firms (Ayarkwa et al., 2010). According to van Egmond and Erkelens (2007) out of a total of fifteen thousand and ninety five (15095) construction firms registered in Nigeria, ninety per cent (90%) are small contractors who belong to lower classes and undertake less complex construction jobs with tender sums up to one million dollars ($1,000,000.00). This was confirmed by Amoah et al. (2011) in their work “factors affecting construction performance in Nigeria: the perspective of small-scale building contractor”. Effective development brought about the needed and effectual means of e-commerce usage in the construction industry.

Recent technological advances have improved performance within construction industry (Adzroe and Goulding, 2004, Goulding and Lou, 2013). Technological issues within construction have become ever more critical and ranging debates among researchers and construction industry professionals are still underway at different levels within the construction sector. For example, Smyth (2010) recently pointed out that, there have been several innovative initiatives within construction in many countries in the last two decades to introduce technological reforms to improve industry performance. Substantial evidence in technology transfer literature suggest that technological know-how relating to developing countries construction industries is similar to the situation in Nigeria. Technology transfer remains an essential component in the development of the construction industries in developing countries (Carrillo, 1996). One of the technologies that has the potential to achieve significant improvement in performance in the construction industry is ‘e-business’. E-Business in this context refers to exploiting the capabilities of Information Commuication Technology[ICT] and the Internet to aid business process to be more efficient and responsive.

E-Business was originally coined by IBM in 1997. IBM explained e-business to mean the value “customers derive from network computing” (IBM, 1997). Since then several definitions of e- Business emerged. For example DTI 2000 believes that it is the utilization of ICT facilities in collaboration with the internet to processes of any business including construction. According to Aranda-Mena and Stewart (2004) and Li (2007) the terms e-business and e-commerce have created misconceptions. They explained that the misconceptions include the lack of understanding of the difference between ‘e-business’ and ‘e-commerce’.

E-Commerce is essentially a part of e-business that is concerned with financial transactions and therefore does not require shared or redesigned business processes. Typically, e-business is anchored on the capabilities of ICT facilities to thrive and this has been demonstrated in many economic sectors (Aranda-Mena and Stewart, 2004, Li, 2007). e- Business essentially has the potential to streamline organisations processes through integration thereby enhancing the traditional processes (Ruikar and Anumba, 2008). E-Business aims at ensuring optimisation of communication and sharing information without making any reservation of the traditional barriers that exist between design, engineering and construction within the construction industry (Worst, 2009). It is obvious that e-business has a solution to fragmented and geographical barriers within construction industries (Electronic Data Interchangeran and Odusami, 2005) Worst, 2009).

1.1.   Statement of the Problem

The uptake of electronic commerce in the construction industry has been relatively limited and ineffective as compared to other engineering sectors such as the automotive or the aerospace industry. One of the reasons for this could be the fragmented nature of the construction industry and the one-off nature of the product. The benefits are potentially huge from E-commerce. It also improve the productivity of the Nigeria construction industry.

The emergence of the internet enabled by the merger of these technologies is changing the way the business used to be conducted. The internet has become a household commodity. It has enabled any individual to have access to the information never imagined of before. It is an economical real-time communication channel which has previously not been affordable. The changes from internet usage have forced businesses to improvise traditional trading processes, continuously improve the products and services, and create new business strategies. The result is a new business medium known as Electronic Commerce or E-commerce, and businesses on a worldwide scale are keen to make most from this innovative medium. Construction is a major industrial sector. It makes a huge contribution to the world economy. The growth in construction activity is considered and the productivity cannot be increased. Government initiatives especially in the developed countries are encouraging the electronic switch over of businesses. Major construction clients are also embracing E-commerce, therefore the construction industry simply cannot afford to stay behind in the rapidly growing field of E-commerce.

1.2   Research Question

a.         What are the benefits of e-commerce in the construction industry?

b.         What is the level of e-commerce adoption in the construction industry in Nigeria?

c.         What are the problems facing the adoption of e-commerce in the Nigerian construction industry?

1.3.    Aim of the study

The aim of this study is the appraisal of E-Commence in the Nigerian construction industry. It will help to determine the benefit and values of e-commerce in the construction industry in the process of elevating the standard of communication channel between the parties within the construction. It will enhance quick purchase, adequate response to effective delivery of goods and services within the construction for effective construction project delivery.

1.4.    Objective of the study

a.         To appraise the benefit of e-commerce in the Nigeria construction industry.

b.         To access the level of e-commerce adoption in the Nigeria construction industry.

c.         To identify the problems facing the usage and compliances of e-commerce in the Nigeria construction industry.

1.5.      Hypothesis

H₀:       Adoption of e-commerce is low in the Nigeria construction industry.

H₁:       Adoption of e-commerce is not low in the Nigeria construction industry.

1.6.     Significant of the Study

E-commerce has become a household name over the past few years, partly due to the phenomenal growth of the internet and advanced electronic communications. Various new business models and approaches for E-commerce have appeared and are now being embraced, representing a digital economy to replace the industrial economy of the last century. For traditional business around the world, E-commerce has sometimes been perceived as an opportunity or a threat. The rapid emergence of dot com culture has forced traditional big businesses, including construction organisations, to seriously consider E-commerce solutions as part of their business operations. While the construction industry plays an important role in the well being of the economy, the traditional image of the construction industry has often been one of an under-developed industrial sector. The emergence of E-commerce may therefore have the potential of bringing construction on par with other developed industries.

E-commerce is not only about trading over the internet, but it is the use of any of the electronic channels for trading transactions. Electronic Data Interchange, developed two decades ago, can be called as the start of E-commerce. However, initially, it could not be fully developed in construction because of many factors, including:

a.       Point to point nature of communication (difficult to work within)

b.      Multi-party construction projects.

c.       High initial investment for the construction industry.

d.      Hub and spoke nature of its working (not greatly beneficial to most)

e.       Construction companies (except the large ones with a large supply chain)

f.       Agreement on standards required, for sending structured and formatted documents.

1.8.1                Scope of the study

In order to complete the research within the stipulated time frame, this research will focus attention on the study appraisal of e-commence adoption in the construction industry in Nigeria.

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