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~ @ . , ~ r ~ only c lag Ior omorr~: Cloha1 E~erpr~e and the D.S. ConstructionIndustry Co~lttee on the IDternatlona1 Construction Industry Bulldlug Research Board Co~slon on Englneerlug Ed ~cbulca1 Systems National Research Council NATIONAL ACADEMY PRESS ~sblngtoD, D.C. lg88

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National Academy Press 2101 Constitution Avenue, NW Washington, DC 20418 NOTICE: The project that is the subject of this report was approved by the Governing Board of the National Research Council, whose members are drawn from the councils of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The members of the committee responsible for the report were chosen for their special competences and with regard for appropriate balance. This report has been reviewed by a group other than the authors according to procedures approved by a Report Review Committee consisting of members of the National Academy of Sciences, the National Academy of Engineering, and the Institute of Medicine. The National Academy of Sciences is a private, nonprofit, self- perpetuating society of distinguished scholars engaged in scientific and engineering research, dedicated to the furtherance of science and technology and to their use for the general welfare. Upon the authority of the charter granted to it by the Congress in 1863, the Academy has a mandate that requires it to advise the federal government on scientific and technical matters. Dr. Frank Press is president of the National Academy of Sciences. The National Academy of Engineering was established in 1964, under the charter of the National Academy of Sciences, as a parallel organization of outstanding engineers. It is autonomous in its administration and in the selection of its members, sharing with the National Academy of Sciences the responsibility for advising the federal government. The National Academy of Engineering also sponsors engineering programs aimed at meeting national needs, encourages education and research, and recognizes the superior achievements of engineers. Dr. Robert M. White is president of the National Academy of Engineering. The Institute of Medicine was established in 1970 by the National Academy of Sciences to secure the services of eminent members of appropriate professions in the examination of policy matters pertaining to the health of the public. The Institute acts under the responsibility given to the National Academy of Sciences by its congressional charter to be an adviser to the federal government and upon its own initiative, to identify issues of medical care, research, and education. Dr. Samuel O. Thier is president of the Institute of Medicine. The National Research Council was established by the National Academy of Sciences in 1916 to associate the broad community of science and technology with the Academy's purposes of furthering knowledge and of advising the federal government. Functioning in accordance with general policies determined by the Academy, the Council has become the principal operating agency of both the National Academy of Sciences and the National Academy of Engineering in providing services to the government, the public, and the scientific and engineering communities. The Council is administered jointly by both Academies and the Institute of Medicine. Dr. Frank Press and Dr. Robert hi. White are chairman and vice-chairman, respectively, of the National Research Council. This report was supported by the Technology Agenda Program of the National Academy of Engineering and funded under the following agreements between the indi- cated federal agency and the National Academy of Sciences: U.S. Trade and Develop- ment Program, International Development Cooperation Agency Grant Agreement TDP 7712561; National Science Foundation Grants No. MSM-8612738 and MSM-8612783 under Master Agreement No. 8618641; Department of the Interior Bureau of Recla- mation Grant Agreements No. 6-FG-81-10310 and 7-FG-81-11950, U.S. Department of Agriculture Forest Service Grant No. 87-G-050. LIBRARY OF CONGRESS CATALOG CARD NUMBER 88-61728 INTERNATIONAL STANDARD BOOK NUMBER 0-309-03937-1 Coucr illmtratior~ by Tom Adams. Printed in the United States of America First Printing, July 1988 Second Printing, October 1988 Third Printing, May 1989

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BUILDING RESEARCH BOARD (1987-1988) RICHARD T. BAUM, Consultant, Jaros, Baum and Bolles, New York, New York (retired), Chairman L. GERALD CARLISLE, Secretary-Treasurer, International Union of Bricklayers and Allied Craftsmen, Washington, D.C. ROSS B. COROTIS, Chairman, Department of Civil Engineering, Johns Hopkins University, Baltimore, Maryland RAY F. DeBRUHL, Senior Vice-President, Davidson and Jones Corporation, Raleigh, North Carolina C. CHRISTOPHER DEGENHARDT, President, EDAW, Inc., San Francisco, California DAVID R. DIBNER, Senior Vice-President, Bernard Johnson, Inc., Bethesda, Maryland ROBERT C. DOBAN, Senior Vice-President for Science and Technology, Owens-Corning Fiberglas Corporation, Toledo Ohio EZRA D. EHRENKRANTZ, President, The Ehrenkrantz Group and Eckstut, New York, New York ELISHA C. FREEDMAN, Consultant, Associated Public Sector Consultants and University of Connecticut, West Hartford DENOS C. GAZIS, Assistant Director, Semiconductor Science and Technology, IBM Research Center, Yorktown Heights, New York GEORGE S. JENKINS, President, Consultation Networks, Washington, D.C. RICHARD H. JUDY, Director, Dade County Aviation Department, Miami, Florida FREDERICK KRIMGOLD, Associate Dean for Research and Extension, Virginia Polytechnic Institute and State University, Alexandria MILTON PIKARSKY, Distinguished Professor and Director, Institute of Transportation Systems, The City College of New York KENNETH F. REINSCHMIDT, Vice-President, Stone and Webster Engineering Corporation, Boston, Massachusetts RICHARD I`. TUCKER, Director, Construction Industry Institute, University of Texas, Austin - 111

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JAMES E. WOODS, Senior Engineering Manager, Building Controls Division, Honeywell, Inc., Golden Valley, Minnesota APRIL L. YOUNG, Vice-President, NVR Development, McLean, Virginia Staff ANDREW C. LEMER, Director JOHN P. EBERHARD, Former Director PETER H. SMEALLlE, Senior Program Officer GRETCHEN G. BANK, Program Associate JULLAN K. MORRISON, Principal Consultant; PATRICIA M. WHOLEY, Administrative Coordinator DONNA F. ALLEN, Senior Secretary JOANN CURRY, Senior Secretary 1V

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COMMITTEE ON THE INTERNATIONAL CONSTRUCTION INDUSTRY JOHN W. FISHER, Fritz Engineering Laboratory, Lehigh University, Bethlehem, Pennsylvania, Chairman DAVID P. BILLINGTON, School of Engineering and Applied Science, Princeton University, New Jersey ARTHUR J. FOX, Engineering News Record, New York, New York DONALD G. ISELIN, Santa Barbara, California ARNOLD K. JONES, Cary, North Carolina MICHAEL MACCOBY, Project on Technology, Work, and Character, Washington, D.C. HENRY L. MICHEL, Parsons Brinckerhoff, Inc., New York, New York FRED MOAVENZADEH, Center for Construction Research and Education, Department of Civil Engineering, Massachusetts Institute of Technology, Cambridge WILLIAM W. MOORE, Dames and Moore, San Francisco, California LOUIS J. MULKERN, RMD Associates, Washington, D.C. JOHN C. RICHARDS, Government and International Affairs, M. W. Kellogg Company, Hilton Head, South Carolina JOHN H. WINKLER, Skidmore, Owings and Merrill, New York, New York Liaison Representatives STANLEY BEAN, Forest Products and Harvesting Research, Forest Service, U.S. Department of Agriculture, Washington, D.C. MARY SAUNDERS, Capital Goods and International Construction, U.S. Department of Commerce, Washington, D.C. FRANK A. DIMATTEO, U.S. Army Corps of Engineers, Washington, D.C. CHARLES M. HESS, U.S. Army Corps of Engineers, Washington, D.C. CHRISTIAN R. HOLMES, International Development Corporation Agency, Washington, D.C. BETSY HORSMON, Tennessee Valley Authority, Washington, D.C. v

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THEODORE LETTES, Small Business Technology, U.S. Department of Commerce, Washington, D.C. RICHARD B. SELF, Executive Office of the President, Washington, D.C. DARRELL WEBBER, Bureau of Reclamation, U.S. Department of the Interior, Denver, Colorado Advisers to the Committee FRANK BOSWORTH, Virginia Polytechnic Institute and State University, Blacksburg MARION C. DIETRICH, Corporation for Innovation Development, Indianapolis, Indiana JOHN W. FONDAHL, Stanford University, California EDGAR J. GARBARINT, Bechte! Group, Inc., San Francisco. California THOMAS P. GUERIN, JR., Construction/Project Finance, BAll Banking Corporation, New York, New York H. PETER GUTTMANN, HPG Associates, Inc., Washington, D.C. GEORGE S. JENKINS, Consultation Networks, Inc., Washington, D.C. JOHN T. JOYCE, International Union of Bricklayers and Allied Craftsmen, Washington, D.C. FREDERICK KRIMGOLD, Virginia Polytechnic Institute and State University, Alexandria NICHOLAS LUDLOW, Development Bank Associates, Inc., Washington, D.C. RAY MARSHALL, LB] School of Public Affairs, University of Texas, Austin ALFRED T. MCNElLL, Turner Construction Company, New York, New York RICHARD TUCKER, Dames and Moore, Bethesda, Maryland RICHARD I.. TUCKER, Construction Industry Institute, University of Texas, Austin FRANK M. WARREN, JR., Construction Management Consultant, Charlotte, North Carolina JOHN WISNIEWSKI, Export-Import Bank, Washington, D.C. RICHARD N. WRIGHT, Center for Building Technology, National Bureau of Standards, Gaithersburg, Maryland V1

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Observers JESSE AUSUBEL, National Academy of Engineering, Washington, D.C. MARLENE R. B. BEAUDIN, National Academy of Engineering, Washington, D.C. WILLIAM BEDDOW, Caterpillar, Inc., Washington, D.C. LYNN S. BEEDLE, Lehigh University, Bethlehem, Pennsylvania TERRY CHAMBERLIN, Associated General Contractors, Washington, D.C. MARK CHALPIN, National Constructors Association, Washington, D.C. ROBERT GOLD, Arlington, Virginia WILLIAM PETERSON, Construction Industries Manufacturers Association Washington, D.C. CHARLES PINYAN, International Construction Week, New York, New York MARTIN J. THIBAULT, Bureau of Reclamation, U.S. Department of the Interior, Washington, D.C. - V11

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Foreword The U.S. construction industry plays a crucial role in the United States by supplying the structures that house and facilitate virtually all other economic and social activity. This industry has a historic role abroad as well, not only through its direct exports of U.S. goods and services, but also through its leadership in opening opportunities for other U.S. business and for intellectual exchange that improves international understanding. Reports of declining work by U.S. firms abroad and increasing penetration of foreign firms into the domestic construction market are therefore troubling. Although only a small fraction of the U.S. construction industry is actively involved in the international market, this participation yields a broad range of intangible benefits that go beyond any direct effect on the U.S. trade balance or other econorn~c statistic. These benefits include better knowledge of foreign firms' capabilities and business practices, enhanced skills development through exposure to foreign cultures and management styles, and increased understanding of technical problems arising from construction undertaken in diverse physical and social conditions. The reasons given for deterioration of the U.S. construction in- dustry's competitive position in an increasingly global marketplace are varied and complex, but the importance of technological lead- ership is widely recognized. These issues alone would justify an appraisal of the competitiveness of the U.S. construction industry. 1X

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x FOREWORD However, in requesting the Building Research Board to under- take this study, the National Academy of Engineering had more in mind: Emerging technologies in several fields offer the promise of significant advances in infrastructure and building, at a time when there is growing recognition of the need to renew and enhance these facilities here and abroad. The opportunities presented to U.S. in- dustry by this convergence of capability and need are substantial. The Academy requested this study as one element of a broader effort to identify these opportunities and contribute to the public debate about such issues. The Academy wishes to thank the National Science Foundation, U.S. Army Corps of Engineers, Bureau of Reclamation, International Cooperation Agency, and Forest Service for joining in the financial support of this study. Robert M. White President National Academy of Engineering

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Acknowledgments This study was conducted in two stages by committees under the chairmanships of William Moore, of Dames and Moore, and John Fisher, of Lehigh University. These committees and their chairmen deserve the particular appreciation of the Building Research Board (BRB) and the National Academy of Engineering (NAE) for their substantial work on this study. Financial support by the U.S. Army Corps of Engineers, Bureau of Reclamation, International Coopera- tion Agency through its Trade and Development Program, and For- est Service, combined with NAE's initiating funds, demonstrate the government's broad concern about the U.S. construction industry's international competitiveness and the importance of the committee's work. The committees were ably supported by John P. Eberhard, for- mer Director of the BRB, under whose guidance the study was conducted and who took a major part in preparation of this report. Andrew C. Lemer, currently Director of the BRB, also participated substantially in the report's preparation. Special thanks are due to Joann Curry for her outstanding work on the final manuscript. X1

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Contents EXECUTIVE SUMMARY - 1 INTRODUCTION oe~ee~eeeeaee~ e~eeeeeeeeee ~ee The Scale of World Construction, 11 The Changing Market, 15 CASE STUDY I: TECHNOLOGICAL ADVANTAGE PAYS OFF: M. W. KELLOGG AND THE OIL AND PETROCHEMICAL INDUSTRY 2 U.S. CONSTRUCTION IN INTERNATIONAL COMPETITION e The U.S. Industry, 23 A Short Historic Perspective, 25 Market Structure, 27 Construction Machinery, 31 Foreign Firms in the U.S. Market, 33 CASE STUDY 2: JAPAN'S ONBAYASHI GUMI: DOING CONSTRUCTION IN THE UNITED STATES FOR 20 YEARS.......................................................... 3 COMPETITION IN THE GLOBAL MARKET.. Common Characteristics, 38 Specific Cases, 39 Great Britain, 39 - ~ x~n .10 .19 23 35 ............ 38

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XIV France, 41 Italy, 41 Sweden, 42 Japan, 44 India, 45 The Soviet Union, 46 U.S. Response to Competition, 47 CASE STUDY S: SHIMIZU MEETS IBM'S NEEDS 4 RESEARCH AND DEVELOPMENT IN CONSTRUCTION ............................................ CONTENTS ............. 50 .55 U.S. Construction Research and Development, 56 Other Efforts Needed, 58 CASESTUDY4: THE BELL TELEPHONE LABORATORIES 63 EDUCATION AND TRAINING ......................... Programs of Study, 67 Engineering, 67 Architecture, 69 Engineering and Architecture Technology, 69 Continuing Education, 70 Issues in Civil Engineering, 71 Emphasis on Design, 71 Construction Management, 72 Issues in Architecture, 73 Specialization and Small Practices, 74 Architectural Research and Education, 75 Skills for Global Enterprise, 76 Cross-Cultural Training for the Construction Industry, 76 Acquiring Foreign I`anguages, 78 International Project Management, 79 CASE STUDY 5: BUILDING INTERNATIONAL RELA TIONSNIPS: PHILIPP NOLZMANN A G AND J. A. JONES CONSTR UCTION COMPANY ~ 6 PURSUIT OF INNOVATION........................ Nature of Innovation, 85 Opportunity in Infrastructure, 88 Global Partnership for Innovation, 93 CASE STUDY 6: COOPERATIVE EFFORT BETWEEN U.S. PUBLIC AND PRIVATE SECTORS: PROPOSAL FOR THE THR BE G OR GES PR O JE C T IN CHINA . . . . . . . . ..... 66 .81 .85 ..... 94

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CONTENTS NEEDED: INSTITUTIONAL STRUCTURE TO PROMOTE GLOBAL ENTERPRISE.......... Organized Focus of Diverse Interests, 100 Attitude of Opportunity, 102 Research and Development and Innovation, 103 Building for Tomorrow, 104 xv ..100

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