System dynamics model of construction output in Kenya

This study investigates fluctuations of construction output, and growth of the output in Kenya. Fluctuation and growth of construction activity are matters of concern in construction industries of many countries in the developing as well as in the developed world. The construction industry of Kenya is therefore an exemplifying case for this phenomenon. Construction activity in Kenya fluctuates excessively and grows very slowly. This remains a big challenge to policy makers, developers, consultants and contractors in their decision-making processes. In this study, systems thinking was applied to investigate the problem of excessive fluctuations and stunted growth of construction output in Kenya. The study developed a system dynamics model to simulate the construction output problem behaviour. The historical behaviour of the construction industry was described using construction output data of a 40-year period - from 1964 to 2003. Line graphs of the historical data exhibited profiles that helped to identify the system archetypes operating in the industry. From the profiles, it was deduced that the problem of fluctuations and slow growth of construction output in Kenya is encapsulated in two system archetypes, namely: balancing process with a delay, and limits to growth. The relationship between construction output and its determinant factors from the construction industry's environment was investigated using time series regression, which involved autoregressive integrated moving average (ARIMA) regression and multiple regression modelling of the output. On the basis of the historical data analysis and the system archetypes identified, a system dynamics (SD) model was developed to replicate the problem of fluctuations and slow growth in the construction output. The data used to develop the system dynamics model was annual construction output in Kenya from 1964 to 2003. The model was then used: to appraise policy changes suggested by construction industry participants in Kenya, and to project construction output in Kenya from year 2004 to year 2050, in order to establish the expected future fluctuations and growth trends of the construction output. It was observed that three fundamental changes are necessary in the system structure of the construction industry of Kenya, in order to minimize fluctuations and foster growth in construction output in the country, in the long run. The changes are: setting long-term targets of annual construction output in the industry as a whole, incorporating reserve capacity in the production process, and expanding the system structure to capture a larger construction market. The study recommends regulation of the response of the construction industry of Kenya to changes in construction demand in the market, and expansion of the construction industry's market into the African region and beyond.