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

Citra Weddikkara, Kapila Devapriya


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.

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