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Ghanaian Construction Industry, Concrete, Accra Metropolis, Kumasi Metropolis, Sunyani Municipality, Differential Pricings

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Ghanaian Construction Industry, Concrete, Accra Metropolis, Kumasi Metropolis, Sunyani Municipality, Differential Pricings International Journal of Construction Engineering and Management 2020, 9(5): 135-141 DOI: 10.5923/j.ijcem.20200905.01 Differential Pricing of Concrete Products within the Ghanaian Construction Industry E. K. Nyantakyi1,*, N. K. Obeng-Ahenkora1, A. Obiri-Yeboah2, G. A. Mohammed2, M. K. Domfeh1, R. K. Osei3 1Department of Civil and Environmental Engineering, University of Energy and Natural Resources, Sunyani, Ghana 2Department of Civil Engineering, Kumasi Technical University, Ghana 3Department of Construction and Wood Technology, University of Education Winneba, Kumasi, Ghana Abstract Concrete is an essential widely used material in the construction industry worldwide. Notable concrete products used in Ghana’s construction industry are precast septic tanks, box and pipe culverts, fence posts, concrete poles, roof tiles, precast beams and columns, pavement blocks and slabs etc. Though the variety is large, there exists significant price disparities for the same materials across markets in Ghana. This study assessed differential pricing of concrete products on the Ghanaian construction market with the objective of ascertaining the determinants and causes of differential pricings, and the effects of these differentials on the construction industry in three major cities (Accra, Kumasi and Sunyani) in Ghana. Price data was collected, collated and analyzed from the three cities and the determinants, causes and effects of differential pricings were assessed and ranked based on existing literature. An overall assessment indicated that the main determinant of differential pricings was material input, whereas cost of production was the highest ranked cause of differential pricing. Uncertainties during project estimation which include taxes was also seen to be the highest ranked effect of differential pricing. It is recommended that drastic steps be taken by Government to reduce the uncertainties such as subsidizing some taxes on the importation of raw materials and the use of other inputs in producing concrete products. Keywords Ghanaian construction industry, Concrete, Accra Metropolis, Kumasi Metropolis, Sunyani Municipality, Differential pricings Concrete is a blend of smashed stone, sand, cement and 1. Introduction water that solidifies as a result of chemical responses between the cement and water (Kumar, 2009). Additionally, Concrete plays a vital part in our daily lives in any it is the basis of an expansive commercial industry, with all functioning society. It’s benefits to society are immense; its positive and negative properties. Within the United they are used to build schools, hospitals, apartment blocks, States alone, concrete generation may be a $30 billion per bridges, tunnels, dams, sewerage systems, pavements, year industry, considering, as it were, the esteem of the runways, roads and many more (Baikerikar, 2018). Twice ready-mixed concrete sold each year (Syverson, 2008). as much concrete is used around the world than the total of Designers from around the globe incorporate concrete all other building materials, including wood, steel, plastic products in construction projects ranging from commercial and aluminum (Petkar, 2014). Few people realize that and educational through to residential. Concrete products concrete is in fact the most widely used fabricated material used in the construction industry could be precast concrete in the world, with nearly three tons used annually for each beams, pavement slabs, wall copings, precast columns, man, woman and child (Morsali, 2019). No other material concrete curbs, concrete pavement blocks, prestressed can replace concrete in terms of its effectiveness, price and concrete pressure pipes (PCCP) and concrete hollow and performance. To put it simply, Banthia et al, (2014) wrote solid blocks (Lopez-Mesa et al. 2009). Given the measure “concrete is the material mostly used in the construction of the concrete industry, and the basic way concrete is industry and is one of the foremost strong building utilized to shape the foundations of the construction world, materials”. It gives predominant fire resistance compared it is troubling to underrate the part this fabric plays with wooden structures and picks up quality over time. nowadays. Most developing countries including Ghana, face acute * Corresponding author: [email protected] (E. K. Nyantakyi) housing problems, especially in the larger cities (Atiemo, Received: Sep. 10, 2020; Accepted: Oct. 2, 2020; Published: Oct. 26, 2020 2013). The degree of housing shortage varies from location Published online at http://journal.sapub.org/ijcem to location and has indirectly contributed to the varying 136 E. K. Nyantakyi et al.: Differential Pricing of Concrete Products within the Ghanaian Construction Industry prices of concrete products and components. In marketing, a Differential pricing is the strategy of selling the same product is anything that can be offered to a market that product to different customers within different locations at might satisfy a want or need (Kotler and Amstrong, 2011). different prices. It can also mean charging relatively higher Prices of concrete products are dictated by components of rates to customers who have fewer competitive options than the economy other than components that trigger prices of to customers with more competitive options (A.A.R, 2013). these products in the construction industry. Field and Ofori The most straightforward form of differential pricing (1988) stated that construction makes a clear contribution to consists of charging different consumers different prices the economic output of a country; it generates employment to access the same good or service. A more subtle form and incomes for the people. Relatively, the effects of consists of charging different consumers different prices for changes within the housing industry on the economy occur different versions of the same good or service when the in the least levels and in virtually all aspects of life (Chen, price gap is greater than can be explained by differences 1998; Rameezdeen et al, 2006). in the cost of the versions (Huan and Jianhua, 2013). The Most contractors in the industry are victims of various immediate impact is that it increases the bid prices (Miti price differences on individual concrete products. and Chanda, 2013) and creates competitions among Difference in prices in various cities affects contractors contractors and suppliers. The essence of this research is to tendering processes for different localities. Today, most investigate and determine the various derivatives affecting construction works have been abandoned due to rapid and differences in concrete product pricing in the Ghanaian varying prices of concrete products. The initial perception construction industry. fails to take into account the negative impact of the variation in prices throughout the construction process. Different prices will result in delays of consumers’ plan to 2. Materials and Methods build houses, add more rooms and renovate (Dipasquale, 2.1. Description of Study Sites 1999). Shekhar (2013) discovered various factors responsible Accra, Kumasi and Sunyani (see Figure 1) were cities in for pricing building materials such as cost of production, Ghana selected for the study. These study areas were chosen competition, product substitution, exchange rate and due to their active participation in the construction industry demographics. Cost of product or service is an important in Ghana. Accra and Kumasi, the two most populous cities, consideration for pricing decisions. Total cost includes cost have hosted a lot of high profited construction projects in of raw materials, labour, transportation cost, fixed cost and the country which demanded the use of huge volumes of variable cost among others. For the short term, recovery concrete and concrete products. Differential pricing has cost may be ignored in order to capture maximum market either created positive or negative impacts on construction share. In case of monopoly or less competition, projects undertaken in these cities. Also, Sunyani has turned international companies could set high prices. However, in out to be one of the areas now encountering a lift in the case of intense competitions, lower prices may be set. construction industry with a great deal of progressive Non-availability of substitute products will obviously lead developmental works. It has already encountered some to high pricing. Nevertheless, if there are better and cheaper overwhelming development works such as the Ultra-Modern substitute products, prices will be forced downward. Regional Hospital, the Sunyani Coronation Park, the Jubilee Different currency exchange rates result in different values Park, the Cocoa Board Building and Queen of Peace at different times thereby affecting product pricing. Building among others. Sunyani was also chosen because of Demographics of targeted customers will indisputably its current involvement as a new player in the construction influence pricing of products. Demographic factors to industry so as to keep a proper balance while removing all consider before product pricing include targeted age bracket bias. of customers, business location and educational status 2.2. Methods of Data Collection among others. Differential pricing allows retailers to gain sales and Questionnaires were administered to stakeholders and profits (Yuan-shuh and Erin, 2009). According to Carrol designers in the construction industry in the three cities and Coates (1999), most industries
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