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Article
Publication date: 11 October 2018

Mohammad Vahdatmanesh and Afshin Firouzi

Railroad transit infrastructures are amongst major capital-intensive projects worldwide, which impose significant risks to the contractors of build-operate-transfer…

Abstract

Purpose

Railroad transit infrastructures are amongst major capital-intensive projects worldwide, which impose significant risks to the contractors of build-operate-transfer projects because of the fluctuations in steel price fluctuation. The purpose of this paper is to introduce a methodology for hedging steel price risk using financial derivatives.

Design/methodology/approach

Cox–Ross valuation lattice has been used as an option valuation model for determining option’s price for the construction companies involved in fixed-price railroad projects. A sensitivity analysis has been conducted using the financial option Greeks to evaluate the impacts of option’s pricing factors in the total price of option.

Findings

The result of valuation shows that European options cost to safeguard against the effects of price risk is only a fraction in contrast to the total cost of steel procurement for a typical railroad construction company. This confirms that using this kind of financial derivative is a beneficial yet effective approach for hedging steel price risk for railroad construction companies.

Practical implications

The applicability of the financial derivatives, both exchange-traded and over-the-counter instruments, is evident in broad financial industry. This paper shows how European options can be readily used for risk management of a typical railroad project, and explains the methodology in a step-by-step procedure.

Originality/value

Although the financial engineering literature is rife of theory and application of derivatives in various contexts, to the best knowledge of authors there is only few papers on the application of these well-developed financial instruments for risk management in construction industry. This study intends to illustrate how financial derivatives can add value to risky construction projects and shed new light in this important application area.

Details

Journal of Financial Management of Property and Construction, vol. 23 no. 3
Type: Research Article
ISSN: 1366-4387

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Article
Publication date: 1 March 2010

Ahmed Doko Ibrahim, Andrew Price, Malik M. A. Khalfan and Andrew Dainty

In the UK healthcare sector, funding and provision of public care facilities has been primarily the responsibility of government through the National Health Service (NHS)…

Abstract

In the UK healthcare sector, funding and provision of public care facilities has been primarily the responsibility of government through the National Health Service (NHS). After decades of under-investment and consequent effects on the quality of care, new procurement routes are currently being used to improve the standards of facilities to meet the requirements of modern care services. This paper critically reviews these new procurement routes in terms of concepts and suitable areas of application, and examines how the principal procurement methods have evolved into the forms used for UK healthcare facilities. The paper outlines recommendations for further research in assessing the suitability or otherwise of these new procurement methods, both for construction projects generally and specifically for healthcare facilities.

Details

Journal of Public Procurement, vol. 10 no. 1
Type: Research Article
ISSN: 1535-0118

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Article
Publication date: 1 December 2006

A D Ibrahim, A D F Price and A R J Dainty

Governments throughout the world are being forced to review how to fund the increasing demand and rising expectations of their citizens. This is especially relevant for…

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1681

Abstract

Governments throughout the world are being forced to review how to fund the increasing demand and rising expectations of their citizens. This is especially relevant for developing countries, which often have limited capital resources to meet the soaring needs for essential infrastructure. This has consequently led to increased involvement of the private sector in the provision of public services, using various forms of Public‐Private Partnerships (PPPs). It is, however, important for both the public and private sectors to understand the various risks associated with PPPs throughout the whole life cycle of the projects in order to guarantee long‐term success. This is especially true in Nigeria and other countries where the use of PPPs are still in the early stages of development. Sixty‐one PPP risk factors were identified from literature and classified into exogenous and endogenous risks. This paper presents the results of the questionnaire survey that investigated the perception of Nigerian construction professionals on the relative importance of the identified risks and their preferences of allocation between the public and private sectors. The results show that the three most important PPP risk factors in Nigeria are “unstable government”, “inadequate experience in PPP” and “availability of finnance”. The respondents’ risk allocation preferences show that while most of the endogenous risk factors could be assigned to the private sector partner, the public sector should retain political and site acquisition risks, while relation‐ship‐based risks should be shared between the private and public sector partners

Details

Journal of Financial Management of Property and Construction, vol. 11 no. 3
Type: Research Article
ISSN: 1366-4387

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Article
Publication date: 7 October 2013

Gul Polat and Befrin Neval Bingol

The main objective of this paper is to show how fuzzy logic and multiple regression analysis (MRA) techniques can be used by construction companies for determining the…

Abstract

Purpose

The main objective of this paper is to show how fuzzy logic and multiple regression analysis (MRA) techniques can be used by construction companies for determining the size of contingency that will be included in bid prices for international construction projects in a more systematic way and to compare their modelling performances.

Design/methodology/approach

The steps followed in the execution of this study mainly consists of: conducting a literature review on international construction in order to identify the factors that may affect contingency amounts that will be included in bid prices for international construction projects; developing the general framework of the proposed contingency estimation model; designing a questionnaire based on the information gathered from the literature review, delivering these questionnaires to construction experts, and obtaining the actual data of 36 international construction projects; developing a fuzzy logic model based on expert judgments and three multiple regression analysis models (MRAM) using the collected data; and comparing the performances of these approaches.

Findings

In this study, a fuzzy logic model and three MRAM were developed. Their modelling performances were compared using actual data obtained from 36 international construction projects that had been completed by 20 large-scale Turkish construction companies in 14 different countries. It is found that the developed fuzzy logic model outperforms the MRAM built for the studied projects.

Originality/value

This study shows that fuzzy logic and MRA techniques can be successfully used by construction companies, which predominantly do business in foreign countries, for estimating the size of cost contingency that will be included in bid prices for international construction projects. The modelling performances of fuzzy logic and MRAM are also compared.

Details

Construction Innovation, vol. 13 no. 4
Type: Research Article
ISSN: 1471-4175

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Article
Publication date: 7 September 2015

Edward G. Ochieng, Andrew D.F. Price, Charles O. Egbu, Ximing Ruan and Tarila Zuofa

The purpose of this paper was to examine UK shale gas viability. The recent commitment to shale gas exploration in the UK through fracking has given rise to…

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1182

Abstract

Purpose

The purpose of this paper was to examine UK shale gas viability. The recent commitment to shale gas exploration in the UK through fracking has given rise to well-publicised economic benefits and environmental concerns. There is potential for shale gas exploration in different parts of the UK over the next couple of decades. As argued in this study, if it does, it would transform the energy market and provide long-term energy security at affordable cost.

Design/methodology/approach

Interviews with senior practitioners and local communities were recorded, transcribed and entered into qualitative research software Nvivo. Validity and reliability were achieved by first assessing the plausibility in terms of already existing knowledge on some of the economic and environmental issues raised by participants.

Findings

Findings from this study suggest that environmental, health and safety risks can be managed effectively provided operational best practices are implemented and monitored by the Health and Safety Executive; Department of Energy, Climate Change; and the Mineral Planning Authorities. Participants further suggested that the integration of shale gas technology will protect consumers against rising energy prices and ensure that government does not get exposed to long-term geopolitical risks.

Practical implications

The present study corroborates the position that environmental, health and safety risks can be managed effectively provided operational best practices are implemented and monitored by the Health and Safety Executive; Department of Energy, Climate Change; and the Mineral Planning Authorities.

Social implications

The present study confirms that the government is committed to ensuring that the nation maximises the opportunity that cost-effective shale gas technology presents, not just investment, cheap energy bills and jobs but providing an energy mix that will underpin the UK long-term economic prosperity.

Originality/value

The present study corroborates the position that environmental, health and safety risks can be managed effectively provided operational best practices are implemented and monitored by the Health and Safety Executive; Department of Energy, Climate Change; and the Mineral Planning Authorities. As shown in this study, the UK has a very strong regulatory regime compared to USA; therefore, environmental, health and safety risks will be very well managed and unlikely to escalate into the crisis being envisioned.

Details

International Journal of Energy Sector Management, vol. 9 no. 3
Type: Research Article
ISSN: 1750-6220

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Article
Publication date: 1 March 2006

Albert P.C. Chan, Y.H. Chiang, Stephen W.K. Mak, Lennon H.T. Choy and M.W.W James

Efficient manpower planning has been recognized as a critical aspect for the development of an economy. In 2001, the Works Bureau of the Hong Kong SAR Government…

Abstract

Efficient manpower planning has been recognized as a critical aspect for the development of an economy. In 2001, the Works Bureau of the Hong Kong SAR Government (predecessor of Environment, Transport and Works Bureau) commissioned an HKPolyU consultancy team to develop a computer‐based model to estimate the demand for different categories of construction personnel. This article presents the concept and features of the manpower demand‐forecasting model developed for the construction industry of Hong Kong. The forecasting model is formulated on the basis of the labour multiplier approach by deriving the relationship between the number of workers required and the project expenditure in the given project duration. Multipliers for 61 project types were derived for 38 labour trades using completed project data. The labour demand by occupation for each project can then be estimated by multiplying the corresponding multipliers and the estimated project expenditure. Several unique features of the model have been developed, including “normalization” and “contract cost adjustment factor”. Normalizing the labour multipliers can facilitate the prediction of occupational labour requirements at different stages of a construction project. The adjustment factor is introduced to eliminate the discrepancy between the original estimates and final contract values so as to enhance the estimation accuracy. The model can also be used to predict the number of jobs created for a given level of investment. The government can apply this model to check and compare which project types will generate most jobs before committing public money. This model could be easily adopted and adapted by foreign construction authorities while planning manpower.

Details

Construction Innovation, vol. 6 no. 1
Type: Research Article
ISSN: 1471-4175

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Article
Publication date: 29 April 2021

Nadeeshani Wanigarathna, Fred Sherratt, Andrew D.F. Price and Simon Austin

A substantial amount of research argues that built environmental interventions can improve the outcomes of patients and other users of healthcare facilities, supporting…

Abstract

Purpose

A substantial amount of research argues that built environmental interventions can improve the outcomes of patients and other users of healthcare facilities, supporting the concept of evidence-based design (EBD). However, the sources of such evidence and its flow into healthcare design are less well understood. This paper aims to provide insights to both the sources and flow of EBD used in three healthcare projects, to reveal practicalities of use and the relationships between them in practice.

Design/methodology/approach

Three healthcare case study projects provided empirical data on the design of a number of different elements. Inductive thematic analysis was used to identify the source and flow of evidence used in this design, which was subsequently quantised to reveal the dominant patterns therein.

Findings

Healthcare design teams use evidence from various sources, the knowledge and experience of the members of the design team being the most common due to both ease of access and thus flow. Practice-based research and peer-reviewed published research flow both directly and indirectly into the design process, whilst collaborations with researchers and research institutions nurture the credibility of the latter.

Practical implications

The findings can be used to enhance activities that aim to design, conduct and disseminate future EBD research to improve their flow to healthcare designers.

Originality/value

This research contributes to understandings of EBD by exploring the flow of research from various sources in conflation and within real-life environments.

Details

Built Environment Project and Asset Management, vol. 11 no. 5
Type: Research Article
ISSN: 2044-124X

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Article
Publication date: 4 August 2014

Daniel W.M. Chan, Joseph H.L. Chan and Tony Ma

This paper aims to develop a fuzzy risk assessment model for construction projects procured with target cost contracts and guaranteed maximum price contracts (TCC/GMP…

Abstract

Purpose

This paper aims to develop a fuzzy risk assessment model for construction projects procured with target cost contracts and guaranteed maximum price contracts (TCC/GMP) using the fuzzy synthetic evaluation method, based on an empirical questionnaire survey with relevant industrial practitioners in South Australia.

Design/methodology/approach

A total of 34 major risk factors inherent with TCC/GMP contracts were identified through an extensive literature review and a series of structured interviews. A questionnaire survey was then launched to solicit the opinions of industrial practitioners on risk assessment of such risk factors.

Findings

The most important 14 key risk factors after the computation of normalised values were selected for undertaking fuzzy evaluation analysis. Five key risk groups (KRGs) were then generated in descending order of importance as: physical risks, lack of experience of contracting parties throughout TCC/GMP procurement process, design risks, contractual risks and delayed payment on contracts. These survey findings also revealed that physical risks may be the major hurdle to the success of TCC/GMP projects in South Australia.

Practical implications

Although the fuzzy risk assessment model was developed for those new-build construction projects procured by TCC/GMP contracts in this paper, the same research methodology may be applied to other contracts within the wide spectrum of facilities management or building maintenance services under the target cost-based model. Therefore, the contribution from this paper could be extended to the discipline of facilities management as well.

Originality/value

An overall risk index associated with TCC/GMP construction projects and the risk indices of individual KRGs can be generated from the model for reference. An objective and a holistic assessment can be achieved. The model has provided a solid platform to measure, evaluate and reduce the risk levels of TCC/GMP projects based on objective evidence instead of subjective judgements. The research methodology could be replicated in other countries or regions to produce similar models for international comparisons, and the assessment of risk levels for different types of TCC/GMP projects (including new-build or maintenance) worldwide.

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Article
Publication date: 1 March 2000

E. PALANEESWARAN and M.M. KUMARASWAMY

Benchmarking of best practices has proved useful in the business and manufacturing sectors. However, benchmarking is not established in the construction industry in…

Abstract

Benchmarking of best practices has proved useful in the business and manufacturing sectors. However, benchmarking is not established in the construction industry in general and in government organizations in particular. A study of the contractor selection methodologies used by various clients confirms the multiplicity of approaches in practice. This paper aims at identifying some relevant ‘best’ practices and highlighting ‘innovative’ contractor selection approaches that have been used by large public clients. A ‘co‐operative’ and ‘non‐competitive’ conceptual benchmarking model is formulated and presented with a view to encouraging continuous improvement in contractor selection for construction projects.

Details

Engineering, Construction and Architectural Management, vol. 7 no. 3
Type: Research Article
ISSN: 0969-9988

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Article
Publication date: 1 August 2016

Efthimia Pantzartzis, Andrew D.F. Price and Federica Pascale

This paper aims to identify costs related to dementia care provision and explore how purpose-built environment investments can help control these costs and improve quality…

Abstract

Purpose

This paper aims to identify costs related to dementia care provision and explore how purpose-built environment investments can help control these costs and improve quality of life and clinical outcomes.

Design/methodology/approach

This research adopts a multi-method approach where the findings of a literature review drove the analysis of data obtained from the 115 pilot projects funded by the Department of Health England’s National Dementia Capital Investment Programme.

Findings

Under the UK Government’s new productivity challenge, it is fundamental to identify actions that provide value for money to prioritise policy and practice. This paper identifies healthcare spaces (e.g. bathroom) where the impact of the built environment on healthcare costs are most evident and building elements (e.g. lighting) to which these costs can be directly associated. The paper advocates the development of evidence and decision support tools capable of: linking built environment interventions to the healthcare costs; and helping the healthcare and social care sectors to develop effective and efficient capital investment strategies.

Research Limitations/implications

Further work needs to develop more systematic ways of rationalising proactive and timely built environment interventions capable of mitigating dementia (and older people) care cost escalation.

Originality/value

This research takes an innovative view on capital investment for care environments and suggests that appropriate built environment interventions can have a profound impact on costs associated with dementia care provision.

Details

Journal of Financial Management of Property and Construction, vol. 21 no. 2
Type: Research Article
ISSN: 1366-4387

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