BUYUSA.GOV -- U.S. Commercial Service

Japan Local time: 06:25 PM

Major Projects

REPORT HIGHLIGHTS

(for full report, please access our Market Research Library )

Public Works
In 1995, the Government of Japan invested 35,200 billion yen (374,628 million US dollar) on public construction works projects to boost country’s slowed economy.  Twelve years on, this figure has been halved.  In the fiscal 2007, public works spending is estimated to be 17,230 billion yen (146,314 million US dollar).  The figure will keep falling in 2008 to 16,450 billion yen (139,691 million US dollar), a 4.5% decreased compared to 2007.
The year 2007 turned out to be one of the most difficult years for Japanese construction companies and the industry as a whole.  Along with the decrease in the number of public works projects, a series of recent accidents and scandals inside the country and changes in the political environment indicate that traditional Japanese general contracting companies - known as “gene-con”- business practices may be ripe for change. 
The Ministry of Land, Infrastructure and Transport (MLIT) has successfully encouraged governmental or semi-governmental procuring entities to expand usage of  “general competition bidding” when selecting bid winners.  This is one of ways to ensure competitiveness, transparency and fairness of bids.  To ensure procurement in which both price and quality offered excel, more bidders are now judged under the Overall-Greatest Value Method (OGVM).    As the newly revised Business Evaluation Score - effective in April 2008- will show, construction companies with sound technical expertise and healthier business performance will be granted higher scores.  Lowest price alone will not be enough to secure bids.

Private Projects
Non-residential private construction investment is expected to be 15,020 billion yen (127,548 million US dollar) in 2007, a 1.8% increase compared to the previous year.  This growth trend will continue in 2008 to 16,450 billion yen (139,691 million US dollar), a further 3 % increase.
It is fair to say civil construction prospects are abundant, especially in large metropolitan cities such as Tokyo, Osaka and Nagoya, due to recent economic recovery in the country as well as the Urban Redevelopment Special Law, which aims to develop a hi-tech urban landscape with an improved residential environment.  Recent development projects have used a project management scheme, whereby the developers have more control.  Project developers monitor budget-control more strictly and evaluate bidder’s technical expertise critically, whereas construction companies rely on a traditional “all-in-one project undertaking” method.  Tokyo’s most fashionable areas such as Ginza, Roppongi Hills and Tokyo Mid-Town are the recent examples built under the scheme of Project Management, a more objectively-oriented practice well established in the US and Europe.  Japan is on the verge of introducing this method in public sector, encouraged by MLIT.  

Keywords for Construction Projects
The Revised Construction Standards Law, Revised Business Evaluation Score (Keishin), General Competition Bidding System, Overall-Greatest Value Method (OGVM), Green Building, Design Architect, Project Management, Construction Management.  These are the key terms necessary to understand to have a good grasp of Japan’s most recent developments in construction, engineering, and architectural design.

USEFUL LINKS

CS JAPAN CONTACTS 

Commercial Attache : Pat Cassidy
Commercial Specialist: Takahiko Suzuki