What are the Common Challenges Faced by Commercial Builders?

By Himani

The Indian construction Industry employs approximately 7.1 crore workers and also contributes 8 to 9% to the country’s GDP. In a nutshell, the construction sector is vital to write the growth story of India and commercial builders are cogs in the wheel for this growth. But, for builders the sector is rife with challenges. In this post we will discuss the common challenges faced by a Construction company in mohali which are reflective of issues builders face across India.

Skill Gap

As mentioned earlier, the construction sector employs around 7.1 crore workers which means it is the second largest employer in India. But there is a huge skill shortage. As per a report released by real estate construction consultant Knight Frank India and Royal Institution of Chartered Surveyors (RICS), 81% of the construction workforce is unskilled. A builder has to look constantly to bridge this skill gap.

Regulatory Compliances

Commercial Builders have to adhere to various laws and regulations. From Land Acquisition Act 2013, to Environment Protection Act to Real Estate (Regulation and Development) Act 2016, there are numerous laws that guide the construction sector. Violating these laws can have severe consequences for commercial builders. For instance, the Supertech twin towers in Noida were ordered to be demolished by the Supreme Court due to breach of local building codes.

Project Delays

Project delays are not just a nuisance for buyers but they are a headache for builders too. As per a report by McKinsey Global Institute 30% of large construction projects in India experience delays. This happens due to delay in land acquisition, regulatory approval and sometimes due to natural elements like Monsoon. The delay results in cost overruns and increases costs.

Technological Adaptation

Advanced technologies like Virtual Reality, Lidar Imaging and 3D printing have also penetrated the construction sector. But adoption of such technologies happens at a very slow pace due to cost considerations and lack of experts. For instance as per Deloitte only about 15% of Indian construction firms are fully adopting advanced technologies like Building Information Modeling (BIM) or project management software. Big companies like L&T are adopting these technologies at a fast pace but the situation is dire for small firms. These technologies have the potential to bring building costs lower and can make the process more efficient.

Logistical Challenges

The construction sector depends on regular supply of materials like metals, cement, concrete and other essential components like plumbing and electrical systems. But Indian commercial builders face logistical challenges which impact the projects negatively. To put this in perspective a report from the Indian Construction Equipment Manufacturers Association (ICEMA) says logistics-related issues can lead to up to a 20% increase in project costs. That means the profit margin for a commercial builder will decrease.

Financial Difficulties

Commercial builders take huge loans to fund their construction projects. As per a report by CRISIL, around 50% of construction firms face cash flow problems due to delayed payments from clients whether they are individual buyers or government itself. Many small contractors working on government projects have reported not receiving payments for months, leading to financial distress and project halts.

Quality Control Issues

Quality of the construction projects is a big concern for commercial builders in India. As per rating and auditing agency KPMG 70% of construction projects in India fail to meet quality standards due to poor supervision and lack of skilled labor. Every day loss of lives are reported due to poor building quality of residential complexes. But there are firms like RS Builders who have delivered exceptional projects like Never Never Cube with top-notch quality.  

Health and Safety Risks

Workers’ health and safety must be the biggest concern for any commercial builder. They need to adhere to regulations like Occupational Safety, Health and Working Conditions Code, 2020, but implementation is poor due to lack of awareness. Every day accidents are reported from construction sites, resulting in loss of lives and limbs of workers. The lack of implementation of workers safety laws not just puts the lives of workers at risk but also dent the reputation of a builder.

Environmental Challenges

On top of everything extreme weather conditions like rain, floods are the biggest risks for builders and the intensity of these extreme weather events have increased by over 50% in recent years. It causes the delay in delivery and also increases the project costs, sometimes rendering the whole project unfeasible.

These are some of the biggest challenges commercial builders face while executing construction projects.

In conclusion, commercial builders face a plethora of challenges in India, ranging from regulatory compliance, environmental challenges to financial difficulties. Resolving these takes utmost dedication and expertise which comes with a cost. Construction companies like R.S builders are a beacon of hope and have delivered numerous projects like Convergence, The Ribbon House successfully.