Editorial

Citation

Akintoye, A. and Birnie, J. (2009), "Editorial", Journal of Financial Management of Property and Construction, Vol. 14 No. 1. https://doi.org/10.1108/jfmpc.2009.37614aaa.001

Editorial

Article Type: Editorial From: Journal of Financial Management of Property and Construction, Volume 14, Issue 1

In this the first issue of 2009, the editors would like to welcome all those who subscribe to the journal, be it in traditional paper or electronic format. Also to those who have supplied papers for publication and articles referees, once again we express our appreciation. The need for researchers to publish, in well-established academic journals, papers which are at the leading edge of research and practice, is undoubtedly a key objective of the journal. Equally important, however, is through readership of the journal to promote new and original thinking on topics covered by the papers. Whilst many papers may appear to be very specialised in their nature, the research techniques and methodology used can often have relevance to work in other topic areas.

The first paper of 2009 by Cheung, Chan and Kajewski presents findings of their research into how public private partnership (PPP) projects in Hong Kong and Australia improved the value for money to the client in using this method of procuring a project. Use of a previously designed questionnaire by other was given to participants from Hong Kong in which they were asked to rank order 18 value for money measures. The top five are highlighted, the authors noting that the top two were also ranked highly in Australia and also agreed with previous findings from the UK. The need for a clear specification of the expected output is of major importance. The authors then give statistical co-relations of agreement for each group and between groups. A full discussion of findings from results is given. They conclude that the most important factor is efficient risk allocation by allocating risk to those most able to manage it.

In the next paper, the authors Owusu and Badu, look at the strategy used by contractors in Ghana with regard to capital investment. Their research was conducted by means of a questionnaire given to 54 large size contracting firms. The findings were subject to factor analysis. Six uncorrelated variables namely financial policy, macro-economic indicators, financial condition/strength, bankruptcy costs, transaction costs and financial risk were found to exist. The different theories in regard to the correct balance debt and equity are discussed. In the current world economic crisis this is certainly a topical matter. A useful discourse of the presented results of the six component variables is then given, making references to established work and findings. The authors conclude that in developing countries such as Ghana, the importance of government controls and capital market cost constraints must be recognised.

The following paper also considers debt financing but this time in relation to PPP road projects in India. The authors, Singh and Kalidindi, focus particularly on the concerns of those bodies which lend the necessary monies with regard to the risks inherent in the project. The nature of the various risks and the debts inherent in same are considered. The research methodology used was a case-study approach involving four Indian financial institutions. The findings from the case study evidence highlighted six aspects namely construction technology and operational factors, financial strength, demand risk, political and economic environment, contractual foundation and counterparty exposure. Each of these is then discussed at length. The findings are also presented in tabular format which readers may find easier to assimilate and practitioners useful to consider for possible future projects. The paper provides a detailed coverage of the inherent risk outcomes which should prove invaluable to financial institutions considering lending provisions.

The fourth paper by Lahdenpera and Koppinen from Finland also looks at road projects. The authors examine different procurement systems in relation to project delivery. These include design bid build, construction management, design and build, and design build operate. These are considered in terms of operational and financial performances. They especially consider factors other than just initial capital cost by looking at costs in use, maintenance costs, project delivery time and the benefits to both client and road user. To ensure comparability of results all future costs are discounted to present day value. Following a discussion of the various alternative procurement systems in use, the findings from interviews held with 66 persons involved in road project delivery are given. The findings based on a relatively large road project are then presented. The authors conclude that design build operate is the most appropriate project delivery system.

The final paper (voted the best paper at the CIB W65/55 Symposium in Dubai in 2008) comes from Ireland. Matipa, Kelliher and Keane present their findings into the management by the various professionals responsible for the design, build and operate of buildings which meet the European Parliament Directive with regard to “Green Buildings.” The authors focus particularly on the quantity surveying profession and the cost management systems used by them in total life cycle cost analysis and control.

The authors’ first review traditional cost modelling techniques before considering how integrated systems using IT could improve the service. Results of a questionnaire given to senior quantity surveyors are presented and the findings discussed. The extent to which the use of IT systems encourages information sharing is statistically analysed. The authors conclude that the use of a well-designed system is the way forward for the profession but they also recognise that problems regarding its acceptance and implementation will arise.

Akintola Akintoye, Jim Birnie