Five Forces Analysis of the Swedish Construction Industry

The final report revealed that corruption, organized crime, collusion, and influence peddling are widespread in Quebec's multi-billion public construction industry (Business Corruption in Canada, 2016).

A basic definition for the procurement is “the way the building is realised” and “involves assembling and organising the skills and services of a team of construction professionals”. (the Construction Round Table, 1995). More precisely, the construction industry describes procurement as “a system that establishes the roles and relationships which make up a project organisation”; hence the overall organisation and communication structure for the management, administration and control of a project is established by the procurement system. (D.C.H Coles, 2010)

First, it is important to define what corruption is. The term, “corruption” covers a broad range of human actions,

The construction industry depends a great deal on public money from federal, state, and local governments in view of the fact that they are responsible for building roads, schools, transportation systems, etc.

Freeman, M. (2012). Chapter 91: The Bell Tolls for Local Government Corruption. Mcgeorge Law Review, 43(3),

Political corruption was another common and favorable tactic amongst business owners. To prevent business-harming laws from being legalized or to pass beneficial laws, businessmen often bribed politicians “at the local, state, and national level”.[7] Politicians were given company stock, funds for elections, and free or reduced materials. Today historians most commonly associate the railroad industry with political corruption. To gain their business favor, railroad companies would offer free passage to

Utilizing public funds to invest in megaprojects has been a contentious topic for many cities who are tempted to endure years, if not decades, of construction and billions of dollars of debt to hopefully experience some economic and social advantages that other megaprojects have brought to fortunate cities and areas. However, from studies and research, it seems that megaprojects have higher likeliness to fail and bring economic turmoil to cities and areas that take the risk. Unless protocol for how such projects and associated contractors are held accountable improve, using public resources to fund megaprojects should cease. Too often does it occur that the burden of megaprojects falls on taxpayers where such funding could have been used for

In view of Quebec’s construction business culture linking organized crime, politicians, and construction companies, it can be said that the industry does provide signals enticing companies to engage in unethical activities. Since numerous construction companies in the Montreal region have been in the course of the last decades cultivating unlawful relationships with officials to obtain contracts, firms that are not doing so are disadvantaged when competing for projects (Van Praet, 2013). Furthermore, in the case of organized crime, these payments have been alluded to as protection money where companies were constrained to deals with the mafia in order to do business in the Montréal region (Van Praet, 2013).

In construction projects, mostly the firms (in this case the firms become client) do not have the skills or develop skills inside the firms to undertake the projects due to amount of the projects should be conducted or the complexity of the projects (Reve and Levitt, 1984). Therefore, the economic decision to conduct the projects is to procure them to third parties. However, more commonly the client agonize the final quality of the projects will meet standard requirements. Thus, impacts to involvement of complex contracts of construction procurement.

Supplier Power: This highlights that it is easy for suppliers to rise up their prices. This is determined by the number of suppliers, the uniqueness of their product, their control over the buyer, and the cost of changing from one buyer to another. The scarcer the supplier choices you might have, and the more you need the help and that

The bargaining power of buyers stands in a direct relationship with the bargaining power of suppliers. If the bargaining power of buyers is substantial it increases the opportunity cost of suppliers. The greater the buyers concentration the greater their bargaining power. This bargaining power is also increased in markets where the suppliers’ concentration is high. The bargaining power is also increased when the cost of switching from one supplier to another is low. In instances where backward vertical integration is possible i.e. buyers setting up their own chains of suppliers the bargaining power of the buyer increases in that their prices may become more competitive. In a market where the buyers are more concerned over quality than price their bargaining power decreases as they are less inclined to shop

There however are challenges in the industry occasioned by uncertainty on future spending on construction projects by the government. Moreover, the cost of doing business and the ability to increasingly make revenue have created a challenging environment for the construction firms. Therefore stakeholders in the construction industry are concerned with whether the government would increase its spending and whether the public construction projects will be available in the future since less than 10 percent are currently financing their clients.

Problems appear to be most acute in Bulgaria, the Czech Republic, Italy, Romania and Slovakia. 8 The current revision of the EU legislation on public procurement 9 presents an opportunity for European leaders to address these breakdowns and close the following integrity gaps. WEAK LEGISLATIVE FRAMEWORKS Legislative loopholes – as in the case of Romania – allow for the bypassing of procurement rules and raise the risk of corruption. For example, the Romanian government has the right to invoke a state of emergency, which allows it to negotiate contracts with only one single company. Allegations in other countries have also been raised about preference being given to a single vendor by micro-tailoring the tender criteria to match only that company’s profile. 10 Similar problems of legal gaps exist in the Czech Republic that has permitted corruption to arise in public procurement. According to a survey of small and medium-sized Czech companies, three out of five managers believe that it is impossible to win public contracts without resorting to bribery, a kickback or some other “incentive”. 11 The procurement loopholes that exist in Europe vary and lead to low levels of transparency and accountability, including limited access to information and public participation in the processes. Final public procurement contracts are not published in a number of European countries,

A study of the effect of bribery and corruption with lack of censorship in the governmental institution

The construction industry much like other industries is dependant with the distribution of “scarce resources” (Drake,1994). Many of its resources known as the factors or production i.e. labour, capital, land etc. are limited (Gregory-Mankiw, 2008), however, wants and desires within the industry are infinite (Myers, 2013). Kishtainy notes that this creates two problems; at any given time, there will be a fixed number of resource, against numerous wants. Sloman 2003 adds that in an effort to rectify this, he argues that we must make choices, in terms of choices within the construction industry Myers suggested that firms need to considered their investments made, how they construct and for whom they construct for.