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Cattell, David William; Bowen, Paul Anthony; Kaka, Ammar P.
doi: 10.1080/01446191003663264pmid: N/A
Unbalanced bidding models have largely ignored the risk aspect of item pricing. Many researchers have acknowledged that there are considerable risks associated with unbalancing a bid but little has been done to describe these risks, let alone model them. A new framework is proposed by which all of these risks can be assessed. It identifies that these risks comprise the risk of rejection, the risk of reaction, and the risk of being wrong. It is further proposed that the value‐at‐risk (‘VaR’) method of measuring risk is a convenient way by which to combine all of these risks into one composite assessment. This quantified assessment serves to describe the extent of risk generated by each level of each item’s price. Previous related research has proposed an unbalanced bidding model that has likewise provided a measurement of the expected reward generated by each level of each item’s price. By doing a summation of these, keeping in mind that the prices applied to all of a project’s component items must add up to the overall bid price, the contractor is able to assess both the risks as well as the rewards of all possible item price combinations.
Raisbeck, Peter; Duffield, Colin; Xu, Ming
doi: 10.1080/01446190903582731pmid: N/A
Empirical research comparing projects procured as public–private partnerships (PPPs) with other methods of procurement is important because Australian governments plan to spend $320 billion on infrastructure over the next decade and PPPs are perceived to be an appropriate form of delivery. Estimating cost and risks in Australian capital projects is often characterized by optimism bias—the tendency to be overly optimistic about planned actions—and is too often based on insufficient historical data on which to make decisions. Given this broad context it is important to begin to understand in detail how PPPs have performed against other forms of procurement. To achieve this, a detailed study has been undertaken to compare the project time and cost outcomes observed in the Australian PPP market with those projects delivered by governments via traditional procurement methods. Two sets or pools of projects were compared based on a detailed analysis of publicly available data for a sample of 21 PPP projects and 33 traditional projects. This selection was based on a consideration of previous studies, time and cost metrics, project size and the relative complexity of different project types. In comparing the two sets PPPs demonstrated superior cost efficiency over traditional procurement, which ranged from 30.8% when measured from project inception, to 11.4% when measured from contractual commitment to the final outcome. Between the signing of the final contract and project completion, PPPs were found to be completed 3.4% ahead of time on average, while traditional projects were completed 23.5% behind time. The overall conclusion is that PPPs provide superior performance in both the cost and time dimensions, and that the PPP advantage increases (in absolute terms) with the size and complexity of projects.
Cui, Qingbin; Hastak, Makarand; Halpin, Daniel
doi: 10.1080/01446191003702484pmid: N/A
Cash flow management is one of the most important determinants of the success of construction project management. Overdraft, retainage, financing, payment and billing policies constitute the most significant financial issues that contractors must plan, control and manage for the successful completion of construction jobs. Particularly, in an attempt to reduce project costs, contractors must balance cost savings of material discounts due to early payments and extra interest expenses because of additional overdraft. Through identifying feedback loops in project cash flows, a system dynamics model is developed for project cash flow management. The model is flexible to incorporate typical front‐end and back‐end loading cash flow management strategies and provides an interactive predication of project cash flows. A warehouse project is discussed to demonstrate how various cash flow strategies improve overdraft financing requirements and profitability. Especially, the analysis shows an 11% reduction on overdraft requirements while using an overbilling strategy, and 30% reduction if the trade credit strategy is implemented.
Lai, Ivan K.W.; Lam, Frankie K.S.
doi: 10.1080/01446190903521515pmid: N/A
All construction projects in Hong Kong have in common a cast of key contract participants, consisting of clients, consultants (designers) and contractors. The aim of this research is to examine, from different points of view, these practitioners in regard to the importance of perceived performance criteria and their respective performance outcomes in a construction project. A research model is structured based on nine performance criteria and their respective performances. The data were collected from 324 practitioners who have participated in construction projects in Hong Kong. One‐way analysis of variance (ANOVA) and repeated measures ANOVA are used to analyse the data. The relative importance of nine performance criteria and their performances are measured. Timely completion of the project is the most important performance criterion, followed by profit, environmental protection and quality. There are differences in the importance of the performance criteria with respect to performance. The differences in the perceptions of performance that are identified are: (i) among different practitioners in a construction project; (ii) due to different project types; and (iii) between different functional roles in the partnering organizations. In order to further understand the importance of the performance criteria with respect to performance, the status quo of project partnering and congeniality problems in the construction industry is reviewed. It is intended to stimulate interest in the further exploration of solutions to improve the overall performance of the construction industry in Hong Kong.
Dulaimi, Mohammed Fadhil; Alhashemi, Mohamed; Ling, Florence Yean Yng; Kumaraswamy, Mohan
doi: 10.1080/01446191003702492pmid: N/A
There are few public–private partnership (PPP) projects in the UAE, but the number is increasing. Recently government and public bodies have intensified their interest in PPPs to encourage more involvement of the private sector in the country’s development. The aim of the research is to evaluate the UAE experience in using PPP projects focusing on the critical success and failure factors for PPPs in the UAE. Three case studies were examined to identify the critical success factors and the failure factors. The results have shown that political support is the most important success factor followed by having a strong private consortium. The most important factor that causes PPP projects to fail in this context is when the consortium lacks the appropriate knowledge and skills. Hence, private consortia need to ensure that they assemble the relevant skills and knowledge of how to set up and manage a PPP as well as the crucial knowledge pertaining to the local business environment and political drivers.
doi: 10.1080/01446191003587752pmid: N/A
Unsafe worker actions contribute greatly to the frequency and severity of construction injuries. Recently, contractors have expressed concern with the high rate of injuries that occur when workers violate company safety policies. To enhance knowledge associated with this topic the following four objectives were targeted: (1) quantifying the current level of safety risk as perceived by construction workers; (2) quantifying the risk tolerance of workers and managers; (3) comparing the risk perceptions and tolerance of workers with managers; and (4) identifying factors that may affect one’s risk tolerance. Fifty‐one risk perceptions were gathered through interviews with managers and workers of nine different construction firms in the Pacific Northwest region of the United States. The results indicate that the level of current perceived risk is approximately five times higher than the tolerable risk value, workers are most dissatisfied with the frequency of high severity injuries, and there is a statistically significant difference in the risk tolerance between workers and managers. The findings presented can be used by project managers to increase awareness of risk tolerances, current areas where workers feel improvement is most needed, and for goal setting.
doi: 10.1080/01446190903365665pmid: N/A
The significance of whole‐life costs for building operation and maintenance (O&M) is well known. The causes of ill‐budgeted O&M resources, however, are often uncertain. An in‐depth exploration of the problems with budgeting O&M works for commercial buildings in Hong Kong was carried out, based on interviews with building owners, management companies and O&M contractors. The practice of historical‐based budgeting predominates among a variety of budgeting bases, and budgets are largely constrained by preceding budgets and predetermined budget ceilings. Budgetary costs are significant, which can be economized through bundling small contracts into larger procurement packages. The importance of satisfying O&M needs is usually recognized but the motivations of practitioners toward preparation of proper budgets are inadequate. Corresponding to the range of problems identified, a framework of improvement measures is outlined, which requires further development to help achieve proper budgeting for sustainable operation and maintenance of buildings.
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