The significant of public asset management framework application for Indonesian local governments : Opportunities and challenges

The purpose of this paper is to emphasis the significance of public asset management in Indonesia that is by identifying opportunities and challenges of Indonesian local governments in adopting current practice of Public Asset Management System. A Case Study, in South Sulawesi Provincial government was used as the approach to achieve the research objective. The case study involved two data collection techniques i.e. interviews followed by study on documents. The result of the study indicates there are some significant opportunities and challenges that Indonesian local government might deal with in adopting current practice of public asset management. There are opportunities that can lead to more effective and efficient local government, accountable and auditable local government organization, increase local government portfolio, and improve the quality of public services. The challenges include no clear institutional and legal framework to support the asset management application, non-profit principle of public assets, cross jurisdictions in public asset management, complexity of local government objectives, and unavailability of data for managing public property. The study only covers condition of South Sulawesi Province, which could not represent exactly the whole local governments’ condition in Indonesia. Findings from this study provide useful input for the policy makers, scholars and asset management practitioners in Indonesia to establish a public asset management framework that suitable for Indonesia.

The public sector’s perspective on procuring public works projects : comparing the views of practitioners in Hong Kong and Australia

Hong Kong has been one of the early jurisdictions to adopt Public Private Partnership (PPP) model for delivering large public infrastructure projects. The development of this procurement approach in Hong Kong has followed an intricate path. As such, it is believed that there are a number of areas which are interesting to unveil. As part of a comprehensive research study looking at implementing PPPs, interviews with experienced local industrial practitioners from the public sector were conducted to realize their perspective on the topic of procuring public works projects. Amongst these interviews, fourteen were launched government officials and advisers. The interview findings show that the majority of the Hong Kong and Australian interviewees had previously conducted some kind of research in the field of PPP. Both groups of interviewees agreed that “PPPs gain private sector’s added efficiency/expertise/management skills” when compared to projects procured traditionally. Also, both groups of interviewees felt that projects best suited to use PPP are those that have an “Economic business case”. The interviewees believed that “Contractor’s performance” could be used as key performance indicators for PPP projects. A large number of critical success factors were identified by the interviewees for PPP projects; two of these were similar for both groups of interviewees. These included “Project objectives well defined” and “Partnership spirit/commitment/trust”. Finally it was found that in-house guidance materials were more common in the organizations of the Australian interviewees compared to the Hong Kong ones. This paper studies the views of the public sector towards the topic of PPPs in Hong Kong and Australia, which helps to answer some of the queries that both academics and the private sector in these jurisdictions are keen to know. As a result the private sector can be more prepared when negotiating with the public sector and realise their needs better, academics on the other hand are provided a wider perspective of this topic benefiting the research industry at large.

The researcher’s perspective on procuring public works projects

Purpose: As part of a comprehensive research study looking at implementing PPPs, interviews with experienced researchers were conducted to realize their views on private sector involvement in public works projects. Design / methodology / approach: Amongst these interviews, five were launched with academics from Hong Kong and Australia, and two were conducted with Legislative Councillors of the Hong Kong Special Administration Region (HKSAR) government. Findings: The interview findings show that both Hong Kong and Australian interviewees had previously conducted some kind of research in the field of PPP. The interviewees highlighted that “Different risk profiles” and “Private sector more innovative / efficient” were the main differences between projects that were procured by PPP and traditionally. Other differences include risk transfer. In a PPP arrangement the public sector passes on a substantial amount of the project risks to the private sector, whereas in a traditional case the public sector would take the largest responsibility in bearing these risks. Another common feature of the private sector is that they tend to be more efficient and innovative when compared to the public sector hence their expertise is often reflected in PPP projects. The interviewees agreed that the key performance indicators for PPP projects were unique depending on the individual project. The critical success factors mentioned by both groups of interviewees included “Transparent process”, “Project dependent” and “Market need”. Due to the fact that PPP projects tend to be large scaled costly projects, adequate transparency in the process is necessary in order to demonstrate that a fair selection and tendering process is conducted. A market need for the project is also important to ensure that the project will be financially secure and that the private sector can make a reasonable profit to cover their project expenditure. Originality / value: The findings from this study have enabled a comparative analysis between the views of researchers in two completely different jurisdictions. With the growing popularity to implement PPP projects, it is believed that the results presented in this paper would be of interest to the industry at large.

An assessment of construction labour productivity in Malaysia

The construction industry is one of major strategic importance. Its level of productivity has a significant effect on national economic growth. The analysis of published census/biannual surveys of construction by the Department of Statistics of Malaysia shows that Malaysia managed to achieve construction labour productivity growth between 1996 and 2005 despite increases in cost per employee. The decrease in unit labour costs is attributed to the value added improvement per worker through the increase in capital intensity. The marginal decline in capital productivity is due to the gestation period and the overcapacity of the industry. The civil engineering sub-sector recorded the highest labour productivity and is the most labour competitive in terms of unit labour cost and added value per labour cost. The residential sub-sectors recorded greatest change in the productivity indicators between 1996 and 2005.

Marketing VM services to achieve competitive advantage in the Malaysian Construction Sector

Value Management (VM) has been proven to provide a structured framework, together with supporting tools and techniques that facilitate effective decision-making in many types of projects, thus achieving ‘best value’ for clients. It is identified at International level as a natural career progression for the construction service provider and as an opportunity in developing leading-edge skills. The services offered by contractors and consultants in the construction sector have been expanding. In an increasingly competitive and global marketplace, firms are seeking ways to differentiate their services to ever more knowledgeable and demanding clients. The traditional demarcations have given way, and the old definition of what contractors, designers, engineers and quantity surveyors can, and cannot do in terms of their market offering has changed. Project management, design and cost and safety consultancy services, are being delivered by a diverse range of suppliers. Value management services have been developing in various sectors in industry; from manufacturing to the military and now construction. Given the growing evidence that VM has been successful in delivering value-for-money to the client, VM would appear to be gaining some momentum as an essential management tool in the Malaysian construction sector. The recently issued VM Circular 3/2009 by the Economic Planning Unit Malaysia (EPU) possibly marks a new beginning in public sector client acceptance on the strength of VM in construction. This paper therefore attempts to study the prospects of marketing the benefits of VM by construction service providers, and how it may provide an edge in an increasingly competitive Malaysian construction industry.

Evaluation of risk factors leading to cost overrun in delivery of highway construction projects

Accurate owner budget estimates are critical to the initial decision-to-build process for highway construction projects. However, transportation projects have historically experienced significant construction cost overruns from the time the decision to build has been taken by the owner. This paper addresses the problem of why highway projects overrun their predicted costs. It identifies the owner risk variables that contribute to significant cost overrun and then uses factor analysis, expert elicitation, and the nominal group technique to establish groups of importance ranked owner risks. Stepwise multivariate regression analysis is also used to investigate any correlation of the percentage of cost overrun with risks, together with attributes such as highway project type, indexed cost, geographics location, and project delivery method. The research results indicate a correlation between the reciprocal of project budgets size and percentage cost overrun. This can be useful for owners in determining more realistic decision-to-build highway budget estimates by taking into account the economies of scale associated with larger projects.

An empirical test of causal relationships of factors affecting ICT adoption for building project management : an Indian SME case study

Purpose - Building project management (BPM) requires effective coordination and collaboration between multiple project team organisations which can be achieved by real time information flow between all participants. In the present scenario, this can be achieved by the use of information communication technologies (ICT). The purpose of this paper is to present part of a research project conducted to study the causal relationships between factors affecting ICT adoption for BPM by small and medium enterprises. Design/methodology/approach - This paper discusses structural equation modelling (SEM) analysis conducted to test the causal relationships between quantitative factors. Data for quantitative analysis were gathered through a questionnaire survey conducted in the Indian construction industry. Findings - SEM analysis results help in demonstrating that an increased and matured use of ICT for general administration within the organisation would lead to: an improved ICT infrastructure within the organisation; development of electronic databases; and a staff that is confident of using information technology (IT) tools. In such a scenario, staff would use advanced software and IT technologies for project management (PM) processes and that would lead to an increased adoption of ICT for PM processes. But, for general administration also, ICT adoption would be enhanced if the organisation is interacting more with geographically separated agencies and senior management perceives that significant benefits would accrue by adoption of ICT. All the factors are inter-related and their effect cannot be maximized in isolation. Originality/value - The results provide direction to building project managements for strategically adopting the effective use of ICT within their organisations and for BPM general.

Sustainable relationship : an Australian case study

Successful construction project managers often stress the importance of team working, relationship management, project environment and senior management commitment as being key determinants of project success. However, it is generally accepted that the construction industry has stronger preference for displaying distrust rather than emancipating the full benefits of cooperation. In the research domain, the impact of culture and organisation on project performance is becoming an increasingly important topic for the establishment of a sound relational approach to projects. Relational procurement strategies emphasise the importance of sustainable relationships. However, the efficacy of relational contracting is, so far, unproven. This study examines the organisational factors that facilitates sustainable relationship between project organisations and hence, lead to long-term business success. Initial findings captured from a survey undertaken with construction contracting organisations in Australia, where the perceptions of professional personnel and supply chain relationships are reported in this paper. A four-level project performance effectiveness model developed in this research is also presented.

Innovation in construction : a case study of the Australian context

The dominant economic paradigm currently guiding industry policy making in Australia and much of the rest of the world is the neoclassical approach. Although neoclassical theories acknowledge that growth is driven by innovation, such innovation is exogenous to their standard models and hence often not explored. Instead the focus is on the allocation of scarce resources, where innovation is perceived as an external shock to the system. Indeed, analysis of innovation is largely undertaken by other disciplines, such as evolutionary economics and institutional economics. As more has become known about innovation processes, linear models, based on research and development or market demand, have been replaced by more complex interactive models which emphasise the existence of feedback loops between the actors and activities involved in the commercialisation of ideas (Manley 2003). Currently dominant among these approaches is the national or sectoral innovation system model (Breschi and Malerba 2000; Nelson 1993), which is based on the notion of increasingly open innovation systems (Chesbrough, Vanhaverbeke, and West 2008). This chapter reports on the ‘BRITE Survey’ funded by the Cooperative Research Centre for Construction Innovation which investigated the open sectoral innovation system operating in the Australian construction industry. The BRITE Survey was undertaken in 2004 and it is the largest construction innovation survey ever conducted in Australia. The results reported here give an indication of how construction innovation processes operate, as an example that should be of interest to international audiences interested in construction economics. The questionnaire was based on a broad range of indicators recommended in the OECD’s Community Innovation Survey guidelines (OECD/Eurostat 2005). Although the ABS has recently begun to undertake regular innovation surveys that include the construction industry (2006), they employ a very narrow definition of the industry and only collect very basic data compared to that provided by the BRITE Survey, which is presented in this chapter. The term ‘innovation’ is defined here as a new or significantly improved technology or organisational practice, based broadly on OECD definitions (OECD/Eurostat 2005). Innovation may be technological or organisational in nature and it may be new to the world, or just new to the industry or the business concerned. The definition thus includes the simple adoption of existing technological and organisational advancements. The survey collected information about respondents’ perceptions of innovation determinants in the industry, comprising various aspects of business strategy and business environment. It builds on a pilot innovation survey undertaken by PricewaterhouseCoopers (PWC) for the Australian Construction Industry Forum on behalf of the Australian Commonwealth Department of Industry Tourism and Resources, in 2001 (PWC 2002). The survey responds to an identified need within the Australian construction industry to have accurate and timely innovation data upon which to base effective management strategies and public policies (Focus Group 2004).

Strategic infrastructure asset management: the way forward

Organisations owning and managing infrastructure asset are constantly striving to obtain the greatest lifetime value from their infrastructure assets. Many such organisations have adopted the concept of “asset management” with the aim of improving the performance of their infrastructure assets. This paper evaluates the adoption of asset management to improve performance in the context of organisations managing infrastructure assets. Relevant previous research studies on main barriers to the adoption of asset management are reviewed. Analysis of these findings, together with deductive reasoning, leads to the development of the proposed improvement strategies. Three issues were identified as barrier to the advancement of the concept of asset management. They are (1) lack of recognition, (2) fragmentation; and (3) growing complexity. To overcome these issues, this paper suggests that the organisations manage infrastructure assets must (1) adopt a more strategic approach in the management of infrastructure assets, (2) develop a framework of strategic infrastructure asset management processes, and (3) identify the core capabilities needed in the management of infrastructure assets. This paper presents the direction for further research to advance the concept of asset management in the management of infrastructure asset.

Asset identification : addressing the climate change in public asset management process

Climate change is becoming increasingly apparent that is largely caused by human activities such as asset management processes, from planning to disposal, of property and infrastructure. One essential component of asset management process is asset identification. The aims of the study are to identify the information needed in asset identification and inventory as one of public asset management process in addressing the climate change issue; and to examine its deliverability in developing countries’ local governments. In order to achieve its aims, this study employs a case study in Indonesia. This study only discusses one medium size provincial government in Indonesia. The information is gathered through interviews of the local government representatives in South Sulawesi Province, Indonesia and document analysis provided by interview participants. The study found that for local government, improving the system in managing their assets is one of emerging biggest challenge. Having the right information in the right place and at the right time are critical factors in response to this challenge. Therefore, asset identification as the frontline step in public asset management system is holding an important and critical role. Furthermore, an asset identification system should be developed to support the mainstream of adaptation to climate change vulnerability and to help local government officers to be environmentally sensitive. Finally, findings from this study provide useful input for the policy makers, scholars and asset management practitioners to develop an asset inventory system as a part of public asset management process in addressing the climate change.

The application of public asset management in Indonesian local government : a case study in South Sulawesi Province

Purpose To identify the challenges faced by local government in Indonesia when adopting a Public Asset Management Framework. Design A Case Study in South Sulawesi Provincial Government was used as the approach to achieving the research objective. The case study involved two data collection techniques - interviews and document analysis. Findings The result of the study indicates there are significant challenges that the Indonesian local government need to manage when adopting a public asset management framework. Those challenges are: absence of an institutional and legal framework to support the asset management application; non-profit principle of public assets; multiple jurisdictions involved in the public asset management processes; the complexity of local government objectives; unavailability of data for managing public property; and limited human resources. Research Limitation This research is limited to one case study. It is a preliminary study from larger research that uses multiple case studies. The main research also investigates opportunities for local government by adopting and implementing public asset management. Originality/Value Findings from this study provide useful input for the policy makers, academics and asset management practitioners in Indonesia to establish a public asset management framework resulting in efficient and effective organizations, as well as an increase of public services quality. This study has a potential application for other developing countries.

The impact of contractor’s characteristics in gauging level satisfaction

The outcomes of the construction projects can be evaluated in numerous ways. One method is to measure the satisfaction of participants as represented by the differences between their expectations and perceptions. This measurement is used widely in construction as it promises benefits, such as the improvement of product delivery, and enhances services quality by identifying some necessary changes. Commonly satisfaction measurement is gauged by evaluating the level of client satisfaction of construction performance. The measurement of customer satisfaction on the other hand, is based on the quality of the end product. This evaluation is used to encourage contractors to improve their performance to a required level and to ensure that the projects are delivered as expected- in terms of time, budget and quality. Several studies of performance measurement have indicated that contractor performance is still not satisfactory, as the outcome delivered is not as required (because of cost overruns, time overruns or because it is generally unsatisfactory). This drawback may be due to the contractors’ lack of expertise, motivation and/or satisfaction. The measurement of performance based on contractor satisfaction levels is still new and very few studies have yet taken place in the construction industry. This paper examines how the characteristics of a contracting organisation – namely its experience in the industry, background, past performance, size of organisation and financial stability- may influence its satisfaction levels with regards to project performance. Previous literature reviews and interviews are used as research tools in the preliminary investigation. The outcome is expected to present a basic understanding of contractor satisfaction measurement and its potential for improving the performance of project outcomes.

The importance of project governance framework in project procurement planning

Project Procurement is a ‘great’ environment for ethical issues with its low-price state of mind and competition. It has many opportunities that could contribute to illegal activities or unethical behavior especially in the construction industry. In 2006 alone, 17.3% of 417 Malaysian government contract projects were considered sick due to the poor performance by the contractors. Therefore it is important to govern the project procurement, especially the plan procurement stage to ensure the accountability and transparency of the decision made in awarding the right contract to the best contractor. This is where project governance framework (PGF) is really needed in project procurement planning. Project governance is a subset of corporate governance focusing on the areas of corporate governance related to project activities, including: portfolio direction, project sponsorship, project and program management and efficiency and disclosure and reporting. This paper highlights the importance of implementing project governance framework (PGF) to ensure that the decision makers are answerable and accountable to the stakeholders, and the decision making is transparent to avoid any ethical issues arises. A comprehensive preliminary literature is carried out to discover the importance of executing PGF in project procurement in Malaysian public sector. By understanding the important of PGF, it is hoped that this will bring a signal to other developing countries to implement the similar method in ensuring the transparency of the decision making in project procurement planning in their countries.

The identification of Malaysian contractor satisfaction dimensions : a strategy for continuous improvement

The unique characteristics of the construction industry - such as the fragmentation of its processes, varied scope of works and diversity of its participants - are contributory factors to poor project performance. Several issues are unresolved due to the lack of a comprehensive technique to measure project outcomes including: inefficient decision making, insufficient communication, uncertain site conditions, a continuously changing environment, inharmonious working relationships, mismatched objectives within the project team and a blame culture. One approach to overcoming these problems appears to be to measure performance by gauging contractor satisfaction (Co-S) levels, but this has not been widely investigated as yet. Additionally, the key Co-S dimensions at the project level are still not fully identified. ----- ----- This paper concerns a study of satisfaction dimensions, primarily by a postal questionnaire survey of construction contractors registered by the Malaysian Construction Industry Development Board (CIDB). Eight satisfaction dimensions are identified that are significantly and substantially relate to these contractors - comprising: project cost performance, schedule performance, product performance, design satisfaction, site safety, project profitability, business performance and relationships between participants. -Each of these dimensions is accorded different priority levels of satisfaction by different contractors. ----- ----- The output of this study will be useful in raising the awareness and understanding of project teams regarding contractors’ needs, mutual objectives and open communication to help to deliver a successful project.