Construction Management & Economics

Bowles, G.; Dagpunar, J.S.; Gow, H.

doi: 10.1080/014461997372872pmid: N/A

Since the Housing Act 1988, UK housing associations (HAs) have been responsible, with the removal of government grants, for funding all maintenance necessary for the upkeep of new stock over its lifespan. Sinking funds (SFs) have to be created, out of rental income, that are adequate to finance the long term projected maintenance demand. This paper reviews the use of SFs for building asset management with particular reference to the requirements being made of HAs. Current assumptions of what constitutes an adequate level of SF investment by their funding agencies are questioned with an analysis of case study data. Using linear-programming, the benefits of modelling an SF over merely calculating it are demonstrated. The technique is used to formulate SF strategies, some of which admit the possibility of going into deficit in the future, and these are compared with results from conventional SF projections. Finally, the effect that varying element and component lifespans can have on SF projections are investigated by using Monte Carlo methods to simulate profiles of long term maintenance expenditure, and observing how well funds projected with the original SF strategy match them. The results show the importance of reviewing regularly the SF policy in order that it remains relevant to the needs of the stock.

Hatush, Zedan; Skitmore, Martin

doi: 10.1080/014461997372881pmid: N/A

A methodology for assessing and evaluating contractor data for the purpose of prequalification and bid evaluation is presented. The PERT approach is used to develop a linear model for the assessment of contractor data. The model incorporates a multiple ratings permitting the uncertainty in contractor data to be evaluated. An empirical study investigating the importance of different contractor criteria is described. A lexicographical ordering with aspiration levels and risk analysis with sensitivity methods are used to evaluate and select or rank-order contractors against the main client goals of time, cost, and quality. A literature review is reported regarding client goals and current evaluation strategies. The assumptions, advantages and disadvantages of this work as well as an example are also presented.

Griffith, A.; Headley, J.D.

doi: 10.1080/014461997372890pmid: N/A

This paper focuses on the selection of procurement methods for small building works. While a range of procurement methods is needed to accommodate different types of small works, and procurement methods often are applied across different types, for any particular small works job (or group of jobs), there should be an optimum method of procurement. An optimum method is one that not only considers the characteristics of the small works in themselves, but also considers the impact of the works upon the wider organization and its business operations. In doing so, the small works organization is assisted to deliver an efficient effective service which adds value to the client organization. The client, to be in a position to select the method of procurement that best meets a particular type of works, needs to consider the realistic measure of performance of each of the procurement methods which it could employ. This paper proposes the use of a weighted score model as an aid to selecting procurement methods for small building works. From this paper, client organizations should become more aware of the potential to select, with reliability and consistency over time, the optimum procurement method for a particular type of small works, given those criteria which they identify as being important at the time and in consideration of not only the characteristics of the small works themselves, but the works in the context of the organization's ongoing business.

Punwani, Anita

doi: 10.1080/014461997372908pmid: N/A

This paper compares the relationship between growth, investment and financing of the contracting operations with that of the housebuilding operations in the large, diversified UK construction groups during the 1980s. A graphical presentation of a financial analysis of the contracting and housebuilding divisions' company accounts illustrates significant changes in the levels of capital investment and the sources and uses of finance of these two activities during a period of marked growth in turnover. It is established that the major contractors not only achieved significant growth in their turnover with negligible recourse to additional capital investment but in fact generated surplus funds which could be diverted into other businesses in their respective construction group's portfolio of business activities. It is shown that their ‘cash-requiring’ speculative housebuilding businesses relied on such intra-group funds as a main source of finance for investment in land during the 1980s.

Bajaj, D.; Oluwoye, J.; Lenard, D.

doi: 10.1080/014461997372917pmid: N/A

This study addresses the process of risk identification at the tendering and estimating stage, which is the first stage of the risk management process, and for the risk management process be of benefit and for the project objectives to be achieved, the risk identification stage should be very detailed and thorough. The aim of this study is to identify, investigate and evaluate the process of risk identification at the tendering and estimating stage for construction contractors in the NSW region. The data for this were collected during the months of December '94 and January '95 using a sample survey of a cross-section of 19 construction contractors, and the results were analysed using frequency distribution. The results show that the most frequently used methods of risk identification are the top-down approach techniques, where the project is analysed from an overall point of view. Techniques based on top-down approach lead to guesswork in terms of contingency for risks accepted by the construction contractors. Bottom-up risk identification techniques are not popular except for a questionnaire and check-list approach. Also, it was unlikely that the contractors would discuss risk allocation with the clients. All the contractors interviewed agreed that when a risk identification process is followed it improves the accuracy of their estimates.

Tse, Raymond Y.C.; Ganesan, Sivaguru

doi: 10.1080/014461997372926pmid: N/A

Granger causality methodology is used to investigate lead-lag relationships between construction activity and aggregate economy. Using data from Hong Kong, the results of this paper suggest strongly that the GDP tends to lead the construction flow not vice versa. Our finding is contrary to the view that construction is more volatile than the GDP. However, our results show that the construction volatility after 1990 is smaller than that in the period 1983–1989, a result that is particularly important for policymakers in that it is the macroeconomic policy of government that affects output, and influences the construction activity, and not vice versa.

Songer, Anthony D.; Diekmann, James; Pecsok, Roger S.

doi: 10.1080/014461997372935pmid: N/A

Recent trends in the construction industry indicate continued use of alternative procurement methods such as design-build, construction management, build-operate-transfer, and privatization. Increased use of these evolving methods produces higher levels of uncertainty with respect to long term performance and profitability. The uncertainties inherent in implementing new procurement methods necessitate investigation of enhanced methods of pre-project planning and analysis. This is particularly true for revenue dependent privatization projects such as toll roads. Poor initial performance of toll road projects suggests traditional methods of project analysis are inadequate. Sustaining investor and stakeholder support of privatized revenue dependent projects is dependent upon successful financial performance. Enhanced risk analysis tools provide improved information for pre-project decision making and performance outcome. One such risk analysis method is the Monte Carlo. Monte Carlo methods are especially useful in evaluating which of several uncertain quantities most significantly contributes to the overall risk of the project. This paper demonstrates a Monte Carlo risk assessment methodology for revenue dependent infrastructure projects.

Fenn, Peter

doi: 10.1080/014461997372944pmid: N/A

This note discusses rigour in research and in the peer review of academic journals by examining current research into construction conflict and disputes. Comments are made on a paper by Alkass, S., Mazerolle, M. and Harris, F.C. (1996) Construction Management and Economics, 14, 375-394. The paucity of research in this field is discussed and the current literature is reviewed. The note concludes that: more work is required in this area; the lack of data is no excuse for subjective theorizing; basic rules of research must be complied with for research to retain its integrity; and the value of peer reviewed journals is reduced by the publication of papers which ignore these points.

Wing, Chau Kwong

doi: 10.1080/014461997372953pmid: N/A

The quality of construction management journals is assessed using a questionnaire survey approach. Construction management is broadly defined to include studies of the human aspects of the construction process. Twenty-two journals related to construction management are identified. Questionnaires were sent to potential respondents by e-mail. Respondents were asked to assess the quality of the journals that they are familiar with. Although there is some evidence showing that respondents who are editorial board members or authors of a journal tend to give a slightly higher score to that journal, the relative ranking of the journals is not affected substantially by such tendency. Some statistically significant results on the ranking of the journals are obtained irrespective of the relatively small sample size compared with some surveys of other main stream journals.