1.1 low allocation of resources in the housing

1.1 Introduction

This
chapter will introduce the study. It contains the background of the study,
statement of the problem, objectives of the study, research questions,
significance of the study and the limitations of the study.

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1.2 Background of the Study

The
construction industry is a major sector in the Kenyan economy accounting for
4.8% of the GDP (Kenya Investment Authority, 2015). It is a major employer for
a large number of people. According to Kenya Investment Authority (2015), Kenya
has a well-developed building and construction sector with proper engineering,
building and architectural designs being readily available. As a result, home
ownership in Kenya is achieved either through own construction by citizens
and/or mortgages by contractors/developers.

According
to the UN Habitat Report on Housing (2011), there is a low allocation of
resources in the housing sector largely due to lack of a growth encouraging
environment. In addition, In Africa, the affordability of houses is greatly hindered
by the high cost of both the construction land and building material which
constitutes about 80% of the cost (UN Habitat, 2011). Other myriad of factors
also affects the affordability of housing such as out-of-date construction
methods and codes, shunning of new technology due to a lack of understanding
and technical/competence challenges (UN Habitat, 2011). Currently, the cost of
housing purchase and/or construction is relatively high and out of reach to
ordinary citizens. The major contributor to this is the technology used for
construction (Aganto, 2013).

Traditionally
and by practice, Kenyan constructors prefer the brick and mortar technology. This
is slowly being overshadowed by Alternative Construction Methods (ACM) which
range from prefabricated building, fiber cement and galvanized steel
construction to

Expanded
Polystyrene (EPS) panel (Construction Business Review, 2014). Each construction
method is unique and has a variety of factors influencing the overall cost of
the construction project (Shnell, 2014). Kenya has been holding back on the
adoption of ACM with a strong inclination of still using the traditional brick
and mortar thus the low uptake.

ACM
refers to the procedures and techniques utilized during construction
distinguished from the traditional brick and mortar model (Shnell, 2014).
Different forms of ACM exist in the market. Globally; in the developing nations
specifically China and America; the use of ACM has been greatly advocated for
in construction of office blocks as well as a measure to influence
affordability of housing due to the fact it cuts down cost of construction by
over 30% (Construction Business Review, 2014). In the continent the use of ACM
is focused more in the Northern region with Egypt and Morocco being at the fore
front. In the Southern end; South Africa is the main country adopting ACM in
construction (Construction Business Review, 2014). There was a surge in Kenya in
2014 in the utilization of ACM due to their ability to reduce the overall cost
and time line by a significant margin and in turn tackle the house shortage
situation in Kenya that currently stands at a demand of 250 000 units against a
supply of 40 000 units (National Housing Construction,2014). Furthermore, there
has been adoption of ACM in professional building codes to guide construction
using ACM (Peter, 2015).

ACM
represents the next frontier in the construction sector due to its
comparatively cheaper cost in comparison to existing brick and mortar methods.
The construction industry has been on an upward trend following greater
emphasis on infrastructure by successful government administrations leading to
introduction of various new technological construction methods (Kenya
Investment Authority, 2015). Despite its affordability and cost saving aspect,
a number of factors have inhibited its uptake in Kenya. These factors highlight
the significance of an appropriate selection of construction methods for a
project since deficient methods for executing the work can cause significant
losses of efficiency and resources at project sites (Postcards, 2009).

The
ultimate goal of ACM is to provide affordable housing through various cost saving
aspects that not only reduce the turnaround time in completing construction
thus saving cost of material and labor; but also reduces wastage of material
thus promoting the environment (Noppen, 2012). Despite creation of awareness of
ACM by various quarters through advocacy of its benefits, adoption of ACM is
still not as anticipated.

1.2.1 Koto Housing Limited Company Profile

Koto
Housing Ltd is a Kenyan based construction firm-operating under a franchise
agreement with Koto Corporation based in Malaysia- that offers affordable cost
effective housing and construction services through the use of Expanded
Polystyrene Building System (EPS). Its core business is manufacturer of EPS
panels and building contractors. It offers a wide array of designs ranging from
villas, bungalows, apartments and maisonnette. The EPS panels are constructed
at the firm’s Mlolongo (Koto House along Mombasa road) based production company
(Koto Housing Limited profile, 2017).

The
key projects that the company has focused on are on government services such as
dispensaries, hostels and apartments with major projects including police
housing at Kamulu and Migori; ward construction at Bondo District Hospital and
Nanyuki Teaching and Referral Hospital; Kiriri Women University of Women and
Technology (Koto Housing Limited profile, 2017).

The
company’s vision is to be the preferred provider of affordable housing and building
solutions in the region whereas the mission is to transform life by providing efficient,
timely, affordable and innovative housing and building solutions through
strategic partnerships with the core values being passion, simplicity, collaboration, excellence, innovation
and integrity. The value proposition for its projects are speed, safety, lower
cost, lower skill set and environmental friendly (Koto Housing Limited profile,
2017). KOTO Company is a member of the Kenya Association of Manufacturers as
well as Kenya Property Developers Association.

The
company major business decision and growth strategies are strategized by the
Senior Management Team that comprises of the Board of Directors, Executive
Chair, Chief Executive Officer with implementation carried out by the various
Heads of the Units namely the Technical Director in charge of the technical
unit; while Head of Business and Corporate Support runs the sales front with
the Chief Accountant being in charge of the finances. For the purpose of this
study the sales team and the technical unit will be of most importance as they
are the key touch points in the driving the uptake of ACM in Kenya for they
have valuable knowledge in determining the factors affecting uptake in ACM in
Kenya.

Figure
1.1 Koto Housing Ltd Organizational Structure

Board
of Directors and Executive Chair

 

 

 

 

 

 

 

 

Chief executive Officer

 

Head of Business and Corporate
Support

Chief Accountant

Technical Director

 

 

Administration Assistant 

Technical Sales Executive

Accounts Assistant 

Project Managers Directors

Head of Factory

 

Site Supervisors 

Support Staff 

 

Production Supervisor 

Maintenance Supervisor  

 

Electrician  

Machine Operators  

 

Source: Koto Housing Limited
Company (2017)

1.3 Statement of the Problem

The
overall cost saving and time saving aspect/impact of ACM is a significant selling
point to potential stakeholders in comparison to conventional building methods.
According to Snell (2009) ACM results in reduction of cost of construction by
up to 30%. Each construction method has its pros and cons as well as a myriad
of factors that drive its uptake and/or its objection in use (Shnell, 2014).
ACM has significant savings on the overall cost of the construction though its
uptake is still low. Despite the cost savings aspects documented; there is
still a hindrance in the uptake of the ACM technology in Kenya specifically (National
Housing Construction, 2014). ACM has not been adopted by a significant number
of stakeholders in the construction industry. The support of the construction
stakeholders which would go a long way to make its adoption attractive and curb
the major housing deficit we have in the country which as of 2016 was at 200
000 units (Mwololo, 2016). Presently, over 95% of building materials in Kenya
are still dependent on brick and mortar technology as there is apprehension on
the part of property developers to adopt ACM technology (Construction Business
Review, 2015).

This research study will aim to establish the factors
affecting the uptake of the ACM so as to give a pointer to areas that need to
be addressed to drive up its uptake. Focus will be on Koto Housing Ltd that
utilizes the prefabricated building technology using EPS. The results of this
study will be of great importance to players in the construction sector as it
is a powerful tool to check the challenges they are likely to face in adoption
of new emerging technology.

1.4 Objectives of the Study 

1.4.1. General Objective

To
establish factors that influence the uptake of ACM in the housing industry in
Kenya focusing on Koto Housing Ltd.

1.4.2. Specific Objective

1.     
To determine influence of customer’s preference on the uptake
of ACM in Koto Housing Ltd.

2.     
To establish influence of technology access on the uptake of ACM
in Koto Housing Ltd.

3.     
To address the influence of pricing on the uptake of ACM in
Koto Housing Ltd.

4.     
To investigate influence of competence on the uptake of ACM
in Koto Housing Ltd.

1.5. Research Questions

1.     
How does customer preference influence the uptake of ACM in
Koto Housing Ltd?

2.     
How does technology access influence the uptake of ACM in
Koto Housing Ltd.?

3.     
How does the affordability influence the uptake of ACM in
Koto Housing Ltd.?

4.     
How does the user competence influence the uptake of ACM in
Koto housing?

1.6. Significance of the Study

1.6.1. Koto Housing Ltd Management

As
one of the advocates for use of ACM; the research will give Koto Housing Ltd
Management team a holistic view on the strategies they can adapt to address the
low uptake of ACM specifically their EPS technology through availing detailed
study on the factors influencing its uptake.

1.6.2. ACM Companies

These
companies are at the fore front of driving uptake of ACM. Thus of importance is
a review of the factors is necessary as to establish their overall impact on
the customer decision whether to uptake or decline the ACM. Hence, information
gotten on EPS will be used as a representation of the other ACM technology and
can therefore be used to aid in marketing of these ACM. In future studies, the
information can also be used to help in anticipating customer concerns on use
of ACM and/or in the packaging of ACM in such a way it’s attractive to the end
client.

1.6.3. Aspiring Home Owners

Future
home owners will find the review of ACM as a good tool to assess the option at
their disposals based on their available resources. Highlighting cost vs
benefits of ACM will aid in making an informed decision on whether to use ACM
or the conventional brick and mortar technology that will ultimately determine
the overall cost of the housing project.

1.6.4. Government

One
of the core deliverables of the government is provision of affordable housing
as shelter is a basic human right. Construction generally is a costly affair
due to the various procedures, techniques and approvals used. Conventional
brick and mortar is slowly being phased out by ACM in western countries especially
prefabricated technology which significantly reduces the time taken as well
overall cost of the construction. Greater awareness is needed to highlight the
overall benefits of these ACM so as to generate interest of the citizens
specifically through the NHC- the chief housing and construction government
agency.

1.6.5. Researchers and Scholars

The
study will be helpful to other researches and academic institution to learn on
ACM in Kenya Furthermore it will give guidance to other students intending to
pursue research in the ACM field either as reference point and/or as proper
read as the final completed research paper will be availed.

1.7. Limitations of the Study

1.7.1 Confidentiality

Some
respondent may hesitate to give information pertaining to ACM based on the
competitive nature of the industry with the assumption that the awareness strategy
information collected may be handed over to the other companies also involved
in the ACM industry and offer competitive advantage. To ally this fears and
mitigate this limitation the researcher will avail letter from the Kenya
Institute of Management detailing the academic purpose of the study.

1.7.2 Uncooperative Respondents

Some
of the respondents may be uncooperative to avail themselves for interviews and
participate in answering the study questionnaires because of lack of interest
in the study proposed and the busy nature of their schedule. To tackled this
limitation; the researcher will organize a session to give an explanation on
how they could gain by participating in this research study. In addition, the
researcher will strive to ensure good rapport with the respondents to ease
opening up on their end in availing the required information.

1.8. Scope of the study

The
study on the factors that influence the uptake of ACM in the housing industry
in Kenya focusing on Koto Housing Ltd will be carried out at the company head
office based at Mlolongo, Nairobi. Data will be gathered through interviews, questionnaires
and secondary data research. 2 Project Managers, 5 Technical Team and 6 Sales
Personnel will be included as respondents as they possess the necessary
expertise and information relevant to the objectives of the study. The study
will be conducted from December 2017 – February 2018.

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