Journal of Financial Management of Property and Construction

M Mawdesley; O Hernandez; S. Al‐Jibouri

2005 Journal of Financial Management of Property and Construction

doi: 10.1108/13664380580001071

This paper deals with the process followed to select investment projects within the construction industry with emphasis on the characteristics of infrastructure projects in developing countries. It presents an overview of the current practices in the main areas concerned with the process, namely project evaluation and decision‐making. The research carried out shows a process with a narrow scope and a lack of integration between the different techniques. The methodology described in this paper is developed to overcome such diffi culties and reduce some of the uncertainty that surrounds the selection of engineering projects. The proposed methodology has been tested and validated and results of the testing have been discussed and conclusions are drawn.

F Pretorius; W.M. So; K.W. Chau

2005 Journal of Financial Management of Property and Construction

doi: 10.1108/13664380580001072

A distinctive feature of mortgages as assets is the existence of prepayment risk, typically viewed as a borrower’s call option to pay the outstanding mortgage balance at any time during the term. While previous research identified important causes for prepayment, these studies are mostly based on fixed‐rate mortgages, with little work on variable‐rate or floating‐rate mortgages and even less work on prepayment in countries other than the USA. This paper presents an analysis of prepayment based on the historical aggregate pre‐payment experience of a sample of variable rate mortgages in Hong Kong, which func‐tions under a Currency Board Mechanism that determines exogenously the level and term structure of interest rates. With variable rate mortgages, it is expected that there will not be a prepayment incentive with decreases in interest rates, unlike the case with fixed‐rate mortgages. However, we argue that observed interest rate movements remain a key factor that affects prepayment decisions, because current interest changes influence expected future interest rates. Furthermore, drawing on quasi‐rational and behavioral economics concepts, we expect the effect on prepayment of expected upward movement in interest rates to be stronger than that of expected downward movements. Empirical evidence from the adjustable rate residential mortgage sample from Hong Kong supports these expected relationships.

Mohammed Kishk; Robert Pollock; Jummai Atta; Laurie Power

2005 Journal of Financial Management of Property and Construction

doi: 10.1108/13664380580001073

Property performance assessment has become increasingly important in property management because of the emergence of a number of trends as issues of concern of property owners and occupiers. There are, however, many problems facing the consideration of performance measurement. Perhaps the main obstacle is the lack of a structured process for property performance measurement. The prime objective of the research work that underpins this paper therefore is to address this gap by the development of a structured model for property performance measurement. This involved three main steps. First, basic characteristics of an effective performance assessment in property managements are identified and the framework for a generic model is outlined. Next, key processes of performance measurement and property management tasks are identified. Then, these processes are set out into steps for better understanding and applicability of the model to actual property management practices. Some unique features of the model include consideration of clients and tenants requirements, integration of the functions of property management in the model and the inclusion of two property and resource databases to aid storage and retrieval of information. Besides, it is the first step in developing a dedicated computer tool for property performance assessment.

Henry A. Odeyinka; Ammar Kaka

2005 Journal of Financial Management of Property and Construction

doi: 10.1108/13664380580001074

Construction cash flow models developed in previous researches demonstrated that cash flow profiles vary for differing procurement methods. However, the issue of whether contractors are satisfied or dissatisfied with payment terms impacting cash flows in differing procurement methods is yet to be investigated. This is the concern of this study. The study identified from literature, payment terms potentially thought to impact construction cash flow. Using a 6‐point Likert‐type scale, a questionnaire survey was administered to UK construction contractors in order to assess their level of satisfaction with identified payment terms influencing construction cash flow. Responses from the survey, which focused on traditional and design and build procurement methods were analysed using mean response analysis and one‐way analysis of variance. Results showed that while contractors were satisfied with most of the contractual factors investigated under both procurement systems, they were dissatisfied with two of the factors, namely, time lag between entitlement to receive and actually receiving cash payment and percentage of contract sum retained. This dissatisfaction calls for action to consider devising alternative means of dealing with retention and delay payments.

Elizabeth Heron; Paul Bowen; David Lincoln

2005 Journal of Financial Management of Property and Construction

doi: 10.1108/13664380580001075

This study presents findings on the spatial distribution of vandalism and the nature and extent of vandalism within Manenberg, a residential township in the Western Cape province of South Africa. The focus of the study is on the impact of the design of the built environment on vandalism. Design factors of the built environment, most notably, the distribution and type of buildings and open spaces are examined as possible influences on the incidence of vandalism, and population density, type and size of household, and property ownership are considered as relevant demographic variables. The methodology adopted for the study involves the collection and interpretation of official police statistics of vandalism over a seven‐year period (1992‐1999). The statistical data are combined with the 1996 population census for the area. The statistical data are examined and presented in three focus areas: the frequency of vandalism, the nature of vandalism, and the location of vandalism. The study then examines the association between the design of the built environment and vandalism levels. In conclusion, the likely cost implications of vandalism are discussed.