Akintoye, A., Holt, G. and Davis, P. (2016), "Editorial", Journal of Financial Management of Property and Construction, Vol. 21 No. 1. https://doi.org/10.1108/JFMPC-02-2016-0005Download as .RIS
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Article Type: Editorial From: Journal of Financial Management of Property and Construction, Volume 21, Issue 1
Welcome to The Journal of Financial Management of Property and Construction, Issue 1 of Volume 21, our first issue of 2016.
Combined, the papers in this issue present a wide range of subject matter that not only spans the “traditional” interests of the journal, but additionally illuminate a related and increasingly important subject, that of urban security and resilience. Two of the papers focus on the ability to forecast future costs and project viability, while project selection portfolio, real estate development finance and urban resilience are the subjects of the remaining three. The latter is a position paper and “call to arms” for the property, construction and other built environment disciplines – to work more closely in this subject area.
Among them, the five studies use both qualitative and quantitative methodologies, with desk study, semi-structured interviews, questionnaire surveys, exploratory factor analysis and the analytic hierarchy process featured among them. This assorted methodological perspective also uses case studies as a means to reinforce some findings, and in so doing represent an “applied” research nature with “real world” application.
All of the papers taken together address one key challenge that unites the fields of real estate and construction: how to select, design, fund and deliver safe and profitable property and infrastructure developments in an increasingly uncertain world.
The first paper is authored by Lim, Nepal, Skitmore and Xiong who examine the accuracy of developers’ early-stage cost estimates for residential construction projects. This has a pleasing resonance with the final paper of our previous issue [20(3)], which examined the causes of delay (a principal driver of cost) in such projects, albeit in a different setting. The research is significant because early cost estimates are an important and sensitive input into development feasibility and financial appraisals – ultimately influencing the decision to develop, the nature and scale of the development, and the price to be paid for development land. These estimates influence client thinking and set the scene for project management activity. The research established key accuracy drivers from the literature and tested these using cost data and semi-structured interviews in two case study projects. Findings suggest that uncertainty criteria identified for large-scale projects do not necessarily “map down” to smaller scale projects, and that developers remain reliant on “established” approaches to pricing house designs. This research is important in identifying scale-related differences that affect such forecasting activity. Clearly, one size does not necessarily fit all, in this regard.
The second paper by Maroof, Said and Ismail pre-empts a later paper in this issue by examining the cost of providing security within the context of sustainable development. Exploratory factor analysis and principal component analysis are applied to questionnaire data, to explore the design process of security requirements, safety of life and property and fear of crime. Key aspects identified include aesthetics, height, location and use of building. Against rising security threats, both real and perceived, it is important to adopt a more holistic approach to development design and delivery. This research contributes to that agenda, by focussing on how security concerns can be met without destroying socio-economic vibrancy and without incurring exorbitant cost.
Parvaneh and El-Sayegh provide the third paper, who apply the analytic hierarchy process and linear programming to project selection. This combined approach mixes quantitative and qualitative methods to verify a predefined set of selection criteria. The result of this is a decision-making framework – subsequently deployed and verified in a case study setting. The research illuminates the limitations of purely quantitative approaches in this subject context and allows users of the framework to add qualitative insights into their capital expenditure decision-making.
The fourth paper is by Squires, Hutchison, Adair, Berry, McGreal and Organ. They examine the use of innovative finance for large-scale real estate projects. This research utilises qualitative approaches to identify an increasing use of blended funding, which subsequently highlights greater use of equity funding, more complex international consortia and multi-bank structures. Outcomes of the study suggest that such approaches are needed due to capital budget constraints combined with the huge scale of financing needed to tackle the largest of projects (such as the iconic Battersea Power Station site which forms one of the case study projects). Globalisation and increased sophistication of real estate development finance also feature – particularly among the largest schemes with an international profile.
The final paper by Coaffee, Clarke and Davis elucidates a research approach advanced by the HARMONISE (A Holistic Approach to Resilience and Systematic Actions to Make Large-Scale Urban Built Infrastructure Secure) project. HARMONISE is funded by the European Seventh Framework Programme of Research (FP7). It is developing applications to help a range of built environment professionals adopt more holistic approaches to urban resilience, in both infrastructure and development projects. Informed by international case studies, HARMONISE has worked with planning, architectural, surveying and construction professionals. This “position paper” highlights numerous gaps in policy and practice that need “plugging” if we are to deliver cities that are more resilient.
Peadar T. Davis
SCOBE, University of Ulster, Newtownabbey, UK, and
Akintola Akintoye and Gary D. Holt
The Grenfell-Baines School of Architecture, Construction and Environment, University of Central Lancashire, Preston, UK