Akintoye, A. and Birnie, J. (2008), "Editorial", Journal of Financial Management of Property and Construction, Vol. 13 No. 1. https://doi.org/10.1108/jfmpc.2008.37613aaa.001
Emerald Group Publishing Limited
Copyright © 2008, Emerald Group Publishing Limited
Article Type: Editorial From: Journal of Financial Management of Property and Construction, Volume 13, Issue 1.
Welcome to the first issue of the journal published by Emerald Group Publishing. This marks another significant milestone in the life of the Journal of Financial Management of Property and Construction. A special thank you to all those authors and subscribers who have supported the journal over the last 12 years and trust you will continue your association with us. Since the inception of the journal in 1996 many changes have taken place in the academic and professional development of the subject area of the journal. The greater awareness of risk evaluation and the use of Private Finance Initiatives are but two. These have been reflected in the content of many recent papers published in the journal. The increasing globalisation of the subject of financial management of property and construction has resulted in papers from a growing number of different countries.
The international marketing expertise of Emerald will now be available to the editors to further promote the publication of leading research and practice development throughout the world.
The first paper in this issue by Odeyinka, Lowe and Kaka deals with methodologies used to predict cash flow accuracy in construction projects. The paper concentrates on the evaluation of risk occurrence and their impact on cash flow forecasting. Following a review and evaluation of previous models and methods used in forecasting, the authors describe their research methodology. This consisted of a structured questionnaire involving United Kingdom construction organisations. A total of 26 risk variables were analysed of which eleven were found to make a critical impact. The findings also showed that the contractors were agreed in their opinions regarding the extent and impact of the various risk factors that affected the cash flow.
The second paper by Voelker, Permana, Sachs and Tiong considers the perception of political risk in power projects in Indonesia. The need for developing countries such as Indonesia to attract foreign investment is crucial to such projects. This, however, has to be balanced by consideration of the attitude of the investor in regard to political risk in an unstable country. The authors describe the historical background to power plant development in the country in relation to investing, lending, and insurance. The methodology of using an appropriate questionnaire is described and the results then evaluated. The cost of the political risks were then assessed. The authors conclude that government support is necessary.
Enshassi, Abdul Aziz and El Karriri investigate the overhead construction costs of projects in Palestine. The authors sought to determine the level of contractor awareness of the concept of overhead cost, their perception of the main components and the methods used by them to manage and control them. The results, by others, of the amounts of overheads from previous research, is first considered. A questionnaire completed by forty contractors was analysed to determine the extent of overhead costs. This showed that the average amount to be around 11 percent of total project cost. Regarding the methods used by firms to control and manage costs, activity based costing was found to be most useful. The contractors conclude that knowledge of the research findings and applied training will further improve their awareness of the subject.
The next paper by Hui and Ng looks at the needs and benefits of a risk based option pricing framework for property developers which will help them achieve the most appropriate investment timings for a specific project. The research uses a high-class real estate residential project in Hong Kong as the main source of data. The use of real option analysis using the Samuelson-McKean closed form model is considered the most appropriate and relevant method of valuing a perpetual real option. An explanation regarding the model is then given. Following a detailed explanation of the variables used in the model, the authors present the results of nine different scenarios based on three different model inputs. This showed that the project viability is affected by the development cost, interest rate and property price volatility.
The final paper by Olatunji comes from Nigeria, a country in which construction work is playing a major part in its development. The author has carried out an extensive piece of research to ascertain the relationships between tender costs and final costs and also between predicted construction time and actual time. The research is based on data obtained from 95 construction and 42 associated supply contracts within the public sector, all carried out under a government prescribed procurement system. Following an extensive literature review and details of the architects, quantity surveyors and builders who took part in supplying predictive data, and the rationale for the variables used in the proposed regression model, the author then presents the results of the statistical analysis for the various cost and time relationships. As the predictive abilities of individuals ranged considerably, the results of the proposed models are a useful step forward.
Akintola Akintoye, Jim BirnieEditors