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Article
Publication date: 1 December 2004

Karl Blyth, John Lewis and Ammar Kaka

This paper reports on the development of a framework for a standardized programme of works for construction projects. A sample of 50 buildings, encompassing a total of 11…

Abstract

This paper reports on the development of a framework for a standardized programme of works for construction projects. A sample of 50 buildings, encompassing a total of 11 different project functions, were surveyed and analysed. The sample was then investigated further to assess the existence of similarities and repeated operations in each individual construction project. A minimum of 20 standardized elemental options were identified. From analysis of the data and the application of practitioners’ expertise, a logical sequence of activities, including their respective dependencies, was produced. A set of six new test projects was used to see if the initial methodology was sound. It could be concluded that despite each project being unique, most buildings retain cognate, elemental options that provide the basis for any structure, and these can be standardized and used as a basis for a universal programme of construction works. The standardization of activities would enable the automation of project planning processes and hence would result in reduced administration and management costs. This will encourage contractors and other project team members to undertake planning at earlier stages of the project, hence providing the basis for more accurate cash flow, duration and cost forecasts.

Details

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

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Article
Publication date: 1 January 1996

AMMAR P. KAKA and FARZAD KHOSROWSHAHI

This paper addresses the effect of different procurement methods (traditional, design and build and management contracting) on project cash flow. Historical data relating…

Abstract

This paper addresses the effect of different procurement methods (traditional, design and build and management contracting) on project cash flow. Historical data relating to the periodic cost of 150 construction projects were collected. Four criteria were identified to classify the projects: type of project, size, company and type of procurement. The effect of these criteria on the S‐curves was then examined using ANOVA. Results confirmed that differently procured projects with different sizes produce different patterns. The company and type of project did not significantly affect the shape of the S‐curve. Standard S‐curves were then modelled for the three aforementioned procurement routes. These curves were used to calculate the relevant cash flows using a computer based cash flow forecasting model. A series of simulation tests were conducted to evaluate the extent of variation in cash flow, given different contract conditions. Results revealed that, in some cases, the variation in procurement routes has a significant effect on contract cash flows.

Details

Engineering, Construction and Architectural Management, vol. 3 no. 1/2
Type: Research Article
ISSN: 0969-9988

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Article
Publication date: 2 November 2012

Henry Odeyinka, John Lowe and Ammar Kaka

Significant risk factors inherent in construction cost flow forecast were identified in this study. The aim of this paper is to develop regression models to assess the…

Abstract

Purpose

Significant risk factors inherent in construction cost flow forecast were identified in this study. The aim of this paper is to develop regression models to assess the impacts of the identified risks on the baseline forecast at the in‐progress stage of construction.

Design/methodology/approach

Two stages were involved in data collection. The first was a structured questionnaire survey administered on 370 UK contractors to identify significant risk factors inherent in cost flow forecast. The second stage was the collection of forecast and actual cost flow data from 55 case study projects. Variations between these pair of data sets were measured at 30 per cent, 50 per cent, 70 per cent and 100 per cent completion periods. Respondents were then requested to score on a Likert type scale, the extent of occurrence of the significant risk factors in the case study projects. This pair of data sets were used in regression modelling.

Findings

Significant risk factors were identified from the questionnaire survey analysis as: changes to initial design, variation to works, production target slippage, delay in agreeing variation/dayworks and delay in settling claims among others. Using the identified significant risk factors and the periodic variability measurements, multiple linear regression models were developed. The models were promising in that they helped to establish the fact that the phenomenon under consideration could be modelled. They also provided some insights in explaining the observed variability between the baseline cost flow forecast and actual cost flow based on risk impacts.

Research limitations/implications

The developed models showed a promising level of accuracy but also indicated that the phenomenon under consideration is not strictly linear and may need to explore some other form of modelling.

Practical implications

The developed models provide invaluable information to the construction contractors regarding the likely impacts of significant risk variables on cost flow baseline forecast at different stages of construction so that a pro active risk response can be put in place.

Originality/value

This study makes an original contribution of providing a modelling insight into the phenomenon of how risks inherent in construction could impact the baseline cost flow forecast at different stages of construction. The information is invaluable in making pro active risk response.

Details

Journal of Financial Management of Property and Construction, vol. 17 no. 3
Type: Research Article
ISSN: 1366-4387

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Article
Publication date: 1 December 2005

Henry A. Odeyinka and Ammar Kaka

Construction cash flow models developed in previous researches demonstrated that cash flow profiles vary for differing procurement methods. However, the issue of whether…

Abstract

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.

Details

Journal of Financial Management of Property and Construction, vol. 10 no. 3
Type: Research Article
ISSN: 1366-4387

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Article
Publication date: 1 January 2006

Karl Blyth and Ammar Kaka

Cash flow forecasting is an indispensable tool for construction companies, and is essential for the survival of any contractor at all stages of the work. A simple and fast…

Abstract

Purpose

Cash flow forecasting is an indispensable tool for construction companies, and is essential for the survival of any contractor at all stages of the work. A simple and fast technique of forecasting cash flow accurately is required, considering the short time available and the associated cost. Seeks to examine this issue.

Design/methodology/approach

The paper argues that instead of producing an S‐curve that is based on historical projects combined (state‐of‐the‐art is based on classifying projects into groups and producing a standard curve for each group simply by fitting one curve into the historical data), here the attempt is to produce an individual S‐curve for an individual project. A sample of data from 50 projects was collected and 20 criteria were identified to classify these projects. Using the most influential criteria, a multiple linear regression model was created to forecast the programme of works and hence the S‐curves. A further six projects were used to validate and test the model.

Findings

The results of the model developed in this paper were compared with previous models and evaluated. It is concluded that the model produced more accurate results than existing value and cost models.

Originality/value

The paper proposes an alternative and novel approach to the development of standard value and cost commitment S‐curves. This approach is based on a multiple linear regression model of the programmes of works.

Details

Engineering, Construction and Architectural Management, vol. 13 no. 1
Type: Research Article
ISSN: 0969-9988

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Article
Publication date: 9 January 2009

Ammar P. Kaka and F. Khosrowshahi

One of the main challenges facing construction contractors is incorporating future unknown contracts into their annual financial budgets. This paper sets out to review…

Abstract

Purpose

One of the main challenges facing construction contractors is incorporating future unknown contracts into their annual financial budgets. This paper sets out to review current academic work in this area and to argue that computer‐based simulation techniques are too complex to be adopted in the industry. Therefore, an alternative and a mathematically‐based technique needs to be developed and evaluated.

Design/methodology/approach

The paper proposes that, as the pattern of winning construction contracts lacks any seasonality, it may be possible to assume all future work to be starting at one point in time and, by using an average standard value build‐up curve, average duration and the total value work needed, contractors will be able to estimate the total value of contracts needed to achieve a target turnover. Based on the total value of contracts to be won, a proposed mathematical equation is then used to assess the levels of working capital requirements.

Findings

The paper evaluates the proposed mathematical model through a series of hypothetical scenarios (developed using a detailed and tested computer‐based simulation model). Results demonstrated the validity and reliability of the models.

Research limitations/implications

The working capital element of the proposed model applies to construction projects where traditional payment mechanisms have been applied (interim payments based on measurements).

Practical implications

The model is very practical in nature and will allow construction companies (particularly large ones) to assess the level of work (in terms of number and values of contracts) they will need to win for them to meet targets for turnover. The model also allows contractors to assess the associated level of funding required.

Originality/value

The mathematical model developed allows contractors to incorporate into their budgets future unknown contracts without the need for computer simulation.

Details

Engineering, Construction and Architectural Management, vol. 16 no. 1
Type: Research Article
ISSN: 0969-9988

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Article
Publication date: 1 August 2007

Yahaya M Ibrahim and Ammar P Kaka

Built upon theories from outside the construction management literature, this study assesses the impact of product diversification on the performance of construction firms…

Abstract

Built upon theories from outside the construction management literature, this study assesses the impact of product diversification on the performance of construction firms in the UK. Performance was measured based on financial ratios of management performance while diversification was measured by the specialisation ratio. The research involved the use of financial data of construction firms covering the period 1995‐2004. The choice of the period is informed by the economic stability during the period and also, by the fact that diversification is a long‐term strategy. The findings indicate that focused firms outperform both moderately and highly diversified firms based on return on total assets (ROTA) and profit margin (PM). However, no performance difference was found between the moderately diversified and highly diversified firms.

Details

Journal of Financial Management of Property and Construction, vol. 12 no. 2
Type: Research Article
ISSN: 1366-4387

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Article
Publication date: 30 June 2008

Henry A. Odeyinka, John Lowe and Ammar Kaka

The purpose of this paper is to identify and assess the extent of occurrence and impact of risk factors responsible for the variation between the forecast and actual…

Abstract

Purpose

The purpose of this paper is to identify and assess the extent of occurrence and impact of risk factors responsible for the variation between the forecast and actual construction cash flow.

Design/methodology/approach

The study was conducted through a structured questionnaire administered to UK contracting organizations. Adopting a project‐by‐project approach, respondents were asked to provide opinions on the extent of occurrence of some identified risk factors and their impacts on cash flow forecast. Respondents were split into three groups of small, medium and large contracting firms based on their annual turnover so as to be able to investigate statistical differences of opinions between the groups. Statistical analyses were carried out using mean response analysis and univariate analysis of variance (ANOVA) in order to determine significant risk factors and also to investigate differences of opinions between respondents' groupings.

Findings

The research identified 11 significant risk factors out of 26 research risk variables. These significant risk variables can be grouped under three generic factors of “changes in the design or specification”, “project complexity” and “natural inhibition”. The significant risk variables are those ranking high in “extent of occurrence” and with critical impacts on cash flow forecast. The research further showed that there is no statistically significant difference in the opinions of different categories of contractors regarding the extent of risk occurrence and impacts on cash flow forecast.

Research limitations/implications

The research showed that the order of extent of risk occurrence is different from the order of impact in case of occurrence. This suggests that further work needs to be done to measure the impact more objectively on a ratio scale so as to provide an avenue for a more quantitative measure of risk impacts on cash flow forecast. This objective is the next focus of this study.

Practical implications

Based on the finding, it is evident that the knowledge of the identified significant risk factors provides invaluable information to the construction contractor as regards what risk variables to focus attention on in cash flow forecasting.

Originality/value

The paper makes an original contribution of exploring the extent of risk occurrence and its impact on construction cash flow forecast from an objective point of view rather that the usual subjective point of view. The epistemic nature of the investigation makes the finding of practical value to the construction contractor in cash flow forecasting.

Details

Journal of Financial Management of Property and Construction, vol. 13 no. 1
Type: Research Article
ISSN: 1366-4387

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Article
Publication date: 11 January 2008

Ammar Kaka, Chee Wong, Chris Fortune and David Langford

The purpose of this paper is to show how practitioners have not fully responded to calls for change in culture. Given that construction teams are motivated by several key…

Abstract

Purpose

The purpose of this paper is to show how practitioners have not fully responded to calls for change in culture. Given that construction teams are motivated by several key factors including money, payment systems may play a major role in facilitating this change. Traditional pricing methods are still found to be the most popular system but often criticised for their contribution to the adversarial culture witnessed in the industry. Alternative pricing systems aimed at aligning constructors' behaviour with clients' objectives are emerging. As a result, the choice of an appropriate pricing system must be based on the circumstances surrounding the project and the likelihood that the system is to influence behaviour positively. This paper aims to propose an analytical hierarchic process (AHP) to help the industry do that.

Design/methodology/approach

The AHP consists of a MCDM hierarchy structure, pair‐wise comparisons, and the calculation of the relative priorities of MCDM attributes. The attributes used have been identified through a series of interviews followed by postal questionnaires.

Findings

The paper results in the development of a decision aid tool for use by the industry to select appropriate pricing systems. This tool identifies seven project objectives as being important for deciding on what pricing system to adopt.

Originality/value

There has been limited research on how pricing systems are being selected, or should be selected. The novelty of this paper stems from the subject area being addressed, rather than the methodologies being adopted.

Details

Engineering, Construction and Architectural Management, vol. 15 no. 1
Type: Research Article
ISSN: 0969-9988

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Article
Publication date: 22 August 2008

Ibrahim Motawa, Ammar Kaka and Chee Hong Wong

Several types of pricing and payment systems are used in the construction industry. However, the current practice is failing to utilise the potential of a link between…

Abstract

Purpose

Several types of pricing and payment systems are used in the construction industry. However, the current practice is failing to utilise the potential of a link between project performance and clients' satisfaction on one hand and stakeholders' cash flow on the other. Therefore, a paradigm shift in cash flow research is both timely and necessary. The purpose of this paper is to promote and facilitate the use of appropriate payment systems that satisfy all project members.

Design/methodology/approach

The research first investigates how payment systems are being selected, and the drivers for selecting innovative payment systems. A simulation and selection IT system is then developed that can be used to facilitate project stakeholders' satisfaction by selecting the most appropriate payment system for each project member. The proposed system considers alternative payment terms and conditions across the supply chain and in a transparent and negotiated manner.

Findings

The outcome should result in planning cash flows that satisfy all team members. The planned cash flow profiles are then used to monitor the implementation of the agreed payment system.

Originality/value

The main conclusion of the paper is that appropriate payment systems can act as a performance enabler and the provision of the simulation tool would result in project teams taking a more conscious and rational decision in selecting or designing these systems.

Details

Journal of Financial Management of Property and Construction, vol. 13 no. 2
Type: Research Article
ISSN: 1366-4387

Keywords

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