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Construction Canada, 27, January 1, pp. 31-3, 1985-01-01
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Is there enough research done in construction?
Rakhra, A. S.
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https://nrc-publications.canada.ca/eng/view/object/?id=63f67f10-7169-46e9-b497-6253353ebc39 https://publications-cnrc.canada.ca/fra/voir/objet/?id=63f67f10-7169-46e9-b497-6253353ebc39S e r
THI.
N21d
no.
1265
1
National Research
Conseil national
c , 2
1
Council Canada
de recherches Canada
IS THERE ENOUGH RESEARCH DONE I N CONSTRUCTION ?
by
A.S. Rakhra
ANALYZED
Appeared in
Construction Canada
No. 1, 1985,
p.31
-
33
.Reprinted with permission
DBR Paper No. 1265
Division
of Building ResearchABSTRACT
C o n s t r u c t i o n r e l a t e d
Rand
De x p e n d i t u r e s i n Canada a r e
e s t i m a t e d f o r t h e p e r i o d 1968-1980.
V a r i o u s methods of
d e t e r m i n i n g t h e adequacy of
Rand
Di n c o n s t r u c t i o n a r e
d i s c u s s e d .
Iti s s u g g e s t e d t h a t l i n k a g e s of c o n s t r u c t i o n
R
and
Dw i t h o t h e r s e c t o r s of t h e economy be s t u d i e d and r a t e s
of r e t u r n on
Rand
TI
i n c o n s t r u c t i o n compared w i t h t h o s e i n
o t h e r s e c t o r s b e f o r e d e c i d i n g t h e p r o p e r l e v e l s of
Rand
Di n
c o n s t r u c t i o n .
Ce document p r 6 s e n t e une G v a l u a t i o n d e s dGpenses de
Re t
Dau
Canada dans l e domaine d e
l ac o n s t r u c t i o n e n t r e 1968
e t1980,
a i n s i que d i v e r s e s mkthodes pour d 6 t e r m i n e r
l ebien-fond6 d e s
a c t i v i t g s d e
R e t Ddans c e domaine.
On y recommande d 1 6 t u d i e r
l e s
l i e n s e x i s t a n t s e n t r e l a
Re t
Ddans
l e domaine de l a
c o n s t r u c t i o n
e tl e s a u t r e s s e c t e u r s d e 1'6conomie e t d ' e n
cornparer
les t a u x d e rendement a v a n t d e d 6 f i n i r 1 ' 6 t e n d u e d e s
t r a v a u x de
R e t Ddans
l edomaine d e l a c o n s t r u c t i o n .
Is there enough research done
in construction?
by A.S. Rakhra, P h . D . ,
T h e prevailing view of the con- struction sector of many industrial- ized nations is that the current research and development funding is insufficient to solve the problems of the sector. A recent Swedish study (I) says that the low priority given R and D in construction is "a matter of great concern." I t suggests that only an extensive increase in both industry and government R and D will ensure that the building sector retains its international com- petitiveness.
Similar concerns have been ex- pressed in Canada. A newly released study by the Construction Industry and Development Council (CIDC) (2) says governments should "recog- nize the importance of construction R and D; ensure that their research budget . . , i s not less than0.2'%, of construction volume.. . ."
Before an appropriate lcvel of funding can be agreed on, however, the current Rand D figures must bc estimated and understood; there is more to consider than just funding as a percentage of GNP Construc- tion funding should be analyzed with regards to its contribution to society as compared to other sectors o f the economy. 'The interaction of teclinology developecl by the con- struction industry and others must also be studied before passing judge- ment on the adequacy of K and I> in construction.
Mr. Rakra
(Research Officer, D i v i s i o n o f B u i l d i n g R e s e a r c h , N.R.C.C.)
The share of construction-related I< ;tnd I > performed by universities and provincial governments did not change much between 1967 and
1970. About 55'X, of the fcderal share was performed by the Natio- nal Research Council's IXvision of Building Kesearch Other federal support came through university grants ( L 5 % ) , NRC's Industrial Research Assistance Program (IRAP) (2,5'%)), Program for Industry/I.abo- r;ttory I'rojccts (I'I1.P) (IS1%,), and thc kcieral clep;rrtrncnts of Encrgy, Mines and Resources and the Envi- ronment (2.5'%). Recently, the Iintcrprise 1)evclol~ment 1'rogr;tm (1:1>I'), aclministercd I)y the 1)epart-
7uhle 1
CONSTRUCTION-RELATED R AND D
by
PERFORMANCE SECTOR FOR 1 9 6 7 AND 1 9 7 6
Performance sector Percentage of total1967 1976 Federal 5 7 48 Industry 2 4 3
6
University I 5 13 Provincial-
4-
3 TOTAL 100 100ment of Regional Industrial Expan- sion, has begun providing assis- tance to construction firms.
Estimates and
Sources of
Construction
R
and
D
in Canada
Statistics Canada publishes Rand D expenditures grouped by industry type, but unfortunately does not provide separate figures for con- struction. The agency classifies con- struction R and D in the broad category of "other non-manufac- turing industries".
Two estimates for 1973-1974 by the Science Council of Canada
(3)
put the total funding for construc- tion Rand D at $25430 million, but this was later changed to $25-850 million.
Estimates by the author indicate that construction-related Rand D expenditures (in current dollars) rose from $18 million in 1967 to $42 million in 1976, and reached about $52 million in 1980 (see Figure 1). This apparent increase becomes much smaller, however, when the figures are recalculated in terms of constant (1971) dollars. In constant dollars, the amount was $21.5 million in 1967, increasing to $26.3 million in 1976 and L~lling I)-K~ to $25.8 ~liillion in 1980, a scant $2.3 million (10.7%) higher thxn the 1967 estimate.
Kcse;~rch by the author shows a breakdown of K and I> expenditures by sector (7ublc 1). This indicates that the federal government is the bingle largest performer of construction-related R and D, fol- lowed by industry, universities and provincial governments. The share of the federal government declined from 57% to 48% between 1967 and 1976, however, while that of in- dustry moved up from 24% to 36%.
Is It Enough?
Some members of the construc- tion community contend that there is not enough money for research and development, compared with Construction Canada 85 1
using sectors. It revealed that in 1974, the American construction in- dustry used technology resulting from $432.9 million of R and D, while it developed technology worth only $266 million, much of
it exclusively for medical services and of no use to construction. The construction industry, therefore, does not 17~)ducc much technology for its own use, perhaps because i t can easily benefit by using technol- ogy developed by other sectors. This indirect assistance does not ap- pear in the R and D figures either, because the industry is scattered and its products heterogeneous. In addition, a majority of its actors (designers, contractors, owners) cannot afford R and D expenditures.
Expenditures on R and D are viewed as investments designed to increase knowledge. There are indi- cations, however, that the construc- tion industry is slow in adding to that knowledge by adopting exist- ing technologies. A recent American study (5) found that R and D ac- counts for only 27'X of advances in housing technology. There is no guarantee, therefore, that increased R and D funding will help the con- struction industry.
Perhaps efforts should thus be fo- cused on funding for innovative uses of existing technology. The au- thor of "Why Homebuilders don't Innovate", John Landis, says ". . . it is not an invention problem at all. Rather it is a problem of diffusion - overcoming those barriers, both market and nonmarket, which dis- courage home builders from trying new products or new procedures." (6) The question of adequacy and sources of funding of construction R and D is therefore difficult to resolve.
More funding for construction will be justified if, for any addi- tional R and D dollar in construc- tion, the benefits to society (in the form of less expensive and higher quality products for the consumer and higher profits for the producer) are greater than the benefits if the same R and D dollar is invested in other industries.
If i t is established that additional R and D funding is justified, the question of sources becomes rela- tively easy. The social and private
benefits per unit cost of R and D, normally known as social rate of re- turn and private rate of return, can be compared. If the social rate of return of construction R and D is greater than the private rate of re- turn (i.e. profits t o private industry or firms per unit of cost of con- struction R and I)), a strong case can then be maclc for the govcrn- ment to finance additional con- struction R and D. In the absence o f government funding, additional K
and D in construction would not be undertaken by private industry. Government funding is a "must" in this case. In other cases when the social rate of return is less than or equal to the private rate of return, private industry can provide the R and D dollars needed.
A study of 37 innovations in the llnited States (7) has shown that the social rate of return on R and D ex- penditure on construction materials is much greater than the private rate of return, 96% versus 9%. This vast difference clearly points out the responsibility of government R and
D funding for construction. Accord- ing to a recent report by a federal task force, R and D in federal laboratories set up to support in- dustry is justified if, in addition to being in national interest, (a) risks or expenditures are too high, or the potential pay-off too small or too far down the road, to attract the pri- vate industry; (b) the industry is too fragmented to undertake the neces- sary R and D (8). The construction industry seems to fulfill the second condition.
The adequacy of construction- related R and D in Canada is a diffi- cult question. The usual method of comparing R and D spending as a percentage of output in one sector to that of other sectors is simplistic; it should be supplemented with analyses of the relationship of con- struction R and D to other sectors of the economy. Case studies o n rates of return o n R and D in con- struction should be undertaken as part of the process of establishing the proper level of R and D funding in construction.
Acknowledgement
This paper is a contribution from the Division of Building Research, National Research Council of
Cawdda, and is published with the approval of the Director of the Division.
References
(1) The Swedish Building Sec- tor in 1990, Swedish Coun- cil for Building Research, Stockholm, 1983.
(2) Construction Industry and Development Council,
Canada Constructs,
Ottawa, 1984.
(3) A.D. Boyd and A.H. Wilson,
Ethnology Transfer in Construction, Background Study No. 32, Science Council of Canada, Ottawa, 1975
F.M. Scherer, "Inter- industry Technology Flows in the United States",
Research Policy, 11 (1982), pp. 227-245.
trial Innovations,
(Washington, D.C.: National Science Foundation, 1969). (6) John Landis, "Why
Homebuilders Don't Inno- vate'', Built-Environment, Vol. 8, No. 1, (1983), ,pp. 46-53 (7) Edwin Mainfield et al.,
"Social and Private Rates of Return from Industrial Innovations': Quarterly
Journal of Economics, May 1977, p. 221.
Ministry of State Science and Technology Canada,
Report of the Task Force on Federal Policies and Programs for Technology Development, Supply and
(5) Summer Myers and Don Services Canada, Ottawa, Marquis, Successful Itrdus- 1984.
T h i s paper, w h i l e being d i s t r i b u t e d i n r e p r i n t form by t h e D i v i s i o n of B u i l d i n g Research, remains t h e c o p y r i g h t of t h e o r i g i n a l p u b l i s h e r . It should n o t be reproduced i n whole o r i n p a r t w i t h o u t t h e permission of t h e p u b l i s h e r . A
