Performance Benchmarking of Australian Business Regulation : Submission to the Productivity Commission

The need to “reduce red tape” and regulatory inconsistencies is a desirable outcome (OECD 1997) for developed countries. The costs normally associated with regulatory regimes are compliance costs and direct charges. Geiger and Hoffman (1998) have noted that the extent of regulation in an industry tends to be negatively associated with firm performance. Typically, approaches to estimation of the cost of regulations examine direct costs, such as fees and charges, together with indirect costs, such as compliance costs. However, in a fragmented system, such as Australia, costs can also be incurred due to procedural delays, either by government, or by industry having to adapt documentation for different spheres of government; lack of predictable outcomes, with variations occurring between spheres of government and sometimes within the same government agency; and lost business opportunities, with delays and red tape preventing realisation of business opportunities (OECD 1997). In this submission these costs are termed adaptation costs. The adaptation costs of complying with variations in regulations between the states has been estimated by the Building Product Innovation Council (2003) as being up to $600 million per annum for building product manufacturers alone. Productivity gains from increased harmonisation of the regulatory system have been estimated in the hundreds of millions of dollars (ABCB 2003). This argument is supported by international research which found that increasing the harmonisation of legislation in a federal system of government reduces what we have termed adaptation costs (OECD 2001). Research reports into the construction industry in Australia have likewise argued that improved consistency in the regulatory environment could lead to improvements in innovation (PriceWaterhouseCoopers 2002), and that research into this area should be given high priority (Hampson & Brandon 2004). The opinion of industry in Australia has consistently held that the current regulatory environment inhibits innovation (Manley 2004). As a first step in advancing improvements to the current situation, a summary of the current costs experienced by industry needs to be articulated. This executive summary seeks to outline these costs in the hope that the Productivity Commission would be able to identify the best tools to quantify the actual costs to industry.

Submission to the House of Representatives Standing Committee on Environment and Heritage : Inquiry into a Sustainability Charter by the Cooperative Research Centre for Construction Innovation

The Cooperative Research Centre for Construction Innovation1 (hereafter called Construction Innovation) supports the notion of the establishment of a Sustainability Charter for Australia and is interested in working collaboratively to achieve this outcome. A number of challenges need to be addressed to develop this Charter. This submission outlines these challenges and possible responses to them by a Sustainability Commission.

FM as a Business Enabler

As a functioning performing arts centre, commercial enterprise, tourist attraction and major national asset, Sydney Opera House must continue to demonstrate the optimal use and effectiveness of its facilities management (FM) to provide value for its stakeholders. To better achieve this, the Cooperative Research Centre for Construction Innovation focussed on the following three themes for investigation in the FM Exemplar Project — Sydney Opera House: digital modelling — developing a building information model capable of integrating information from disparate software systems and hard copy, and combining this with a spatial 3D computeraided design (CAD)/geographic information system (GIS) platform. This model offers a visual representation of the building and its component elements in 3D, and provides comprehensive information on each element. The model can work collaboratively through an open data exchange standard (common to all compliant software) in order to mine the data required to further FM objectives (such as maintenance) more efficiently and effectively. services procurement — developing a multi-criteria performance-based procurement framework aligned with organisational objectives for FM service delivery performance benchmarking — developing an FM benchmarking framework that enables facilities/ organisations to develop key performance indicators (KPIs) to identify better practice and improvement strategies. These three research stream outcomes were then aligned within the broader context of Sydney Opera House’s Total Asset Management (TAM) Plan and Strategic Asset Maintenance (SAM) Plan in arriving at a business framework aligned with, and in support of, organisational objectives. The Sydney Opera House is managed by the Sydney Opera House Trust on behalf of the Government of the State of New South Wales. Within the framework of the TAM Plan prepared in accordance with NSW Treasury Guidelines, the assimilation of these three themes provides an integrated FM solution capable of supporting Sydney Opera House’s business objectives and functional requirements. FM as a business enabler showcases innovative methods in improving FM performance, a better alignment of service and performance objectives and provides a better-practice model to support the business enterprise.

Can governments use their construction contracts to improve training outcomes?

This paper explores the likely efficacy of government agencies using their contracting relationships with private firms to affect training outcomes in the construction industry. Specifically, it reports on the results of a study of two training policies of theWestern Australian government. Empirical data is drawn from the government’s Tender Registration System between 1997 and 2006. The main finding of the quantitative analysis is that in the absence of strong industry commitment to policy objectives, the contracting approach is likely to result in high levels of avoidance activity and generate very few benefits. The results of a qualitative investigation also support these findings.

Multi-Outcome Construction Policies : Industry-Focused Research Summary

The Multi-outcomes Construction Policies research project, funded by the Cooperative Research Centre for Construction Innovation (Project 2006-036-A), sought to explore the costs and benefits of leveraging social outcomes on public construction contracts. The context of the research project was the trend towards the contracting out of public construction works and the attempts that have been made to use new contractual arrangements with construction companies to construction achieve a wide range of social outcomes. In federal and state jurisdictions it is now common for governments to impose a range of additional requirements on public works contractors that relate to broad social/community objectives. These requirements include commitments to train apprentices and trainees; to provide local and/or indigenous employment opportunities; to buy local materials; and to include art works. The cost and benefits of using public construction contracts to achieve social/community goals have, to our knowledge, not been thoroughly researched in an Australian context. This is likely to reflect in large part the relatively short history of contracting out public works. As Jensen and Stonecash (2004) explain, most previous empirical studies of contracting out have attempted to measure the cost savings achieved through privatization, as this was the focus of policy debate in the 1980s and 1990s. Relatively few studies have addressed the ability of contracting arrangements to ensure the delivery of desired ‘quality’ outcomes1, or the costs of achieving these outcomes via contracting arrangements. One of the potential costs of attempting to leverage social/community outcomes on public construction projects is a reduction in the amount of competition for these projects, with obvious consequences for average bid prices and choice. In jurisdictions, such as Western Australia and Queensland, where currently construction market conditions are already

Discourse practice gaps in work life balance : comparative case studies in the Australian construction industry

Perspectives on work-life balance (WLB) reflected in political, media and organisational discourse, would maintain that WLB is on the agenda because of broad social, economic and political factors (Fleetwood 2007). In contrast, critical scholarship which examines work-life balance (WLB) and its associated practices maintains that workplace flexibility is more than a quasi-functionalist response to contemporary problems faced by individuals, families or organisations. For example, the literature identifies where flexible work arrangements have not lived up to expectations of a panacea for work-home conflicts, being characterised as much by employer-driven working conditions that disadvantage workers and constrain balance, as they are by employee friendly practices that enable it (Charlesworth 1997). Further, even where generous organisational work-life balance policies exist, under-utilisation is an issue (Schaefer et al, 2007). Compounding these issues is that many employees perceive their paid work as becoming more intense, pressured and demanding (Townsend et al 2003).

The relationship between construction firm strategies and innovation outcomes

Survey results provide a preliminary assessment of the relative contribution of a range of tactical business strategies to innovation performance by firms in the Australian construction industry. Over 1,300 firms were surveyed in 2004, resulting in a response rate of 29%. Respondents were classified as high, medium or low innovators according to an innovation index based on the novelty and impact of their innovations and their adoption of listed technological and organizational advances. The relative significance of 23 business strategies concerning (1) employees, (2) marketing, (3) technology, (4) knowledge and (5) relationships was examined by determining the extent to which they distinguished high innovators from low innovators. The individual business strategies that most strongly distinguished high innovators were (1) ‘investing in R&D’, (2) ‘participating in partnering and alliances on projects’, (3) ‘ensuring project learnings are transferred into continuous business processes’, (4) ‘monitoring international best practice’, and (5) ‘recruiting new graduates’. Of the five types of strategies assessed, marketing strategies were the least significant in supporting innovation. The results provide practical guidance to managers in project-based industries wishing to improve their innovation performance.

Joint venture behaviour in construction industry : an Australia case study

Joint ventures can take many forms and can be formed for different reasons, from sharing resources to creating future business opportunities. At the same time, there is increasing interest and discussion of alternative procurement methods, moving away from traditional procurement systems to relational approaches. Business systems and strategies need to be redefined and move from a short-term project to project culture to a more strategic, long-term perspective. Joint ventures of construction organisations, global and local, have become increasingly popular to deliver large-scale infrastructure construction projects. However, successful strategic collaborations require project organisations to formulate a fit between contractual and operational arrangements for each situation. This study reviews the movement from traditional procurement methods towards relational contracting approaches in Queensland, Australia. The study examines the organisational factors that facilitates sustainable relationship between project organisations and hence, lead to long-term business success. This paper reports on initial findings captured from a survey undertaken with construction contracting organisations in Australia, focusing on the supply chain relationships. Contractors’ perceptions of the relationship management process and the engagement of the supply chain are also presented.

Measuring quality : how does this improve construction performance?

The paper charts the history and development of the Hong Kong Housing Department (HKHD) Performance Assessment Scoring System (PASS) from 1990 to the present day and examines its effect on facilitating change to the quality of construction work of building contractors engaged in the production of public sector housing projects Hong Kong. The paper builds partly on empirical research carried out by the author as part of a doctoral thesis from 2000 to 2005, on experiential knowledge and also on some relevant case studies. The outcomes from this earlier research and validation of PASS based on results derived from the system since the research was originally undertaken are of benefit to practitioners and academics working and studying in the areas of performance assessment and organisational culture and change. The conclusions presented in the paper further underpin the connection established in previous research between strong organisational culture and project and corporate success. Organisational culture was measured using a survey instrument originally developed by Denison and Neale (1994), adapted for the environment of the study, and corporate success was measured by the PASS system mentioned above. The major results of the original study indicate that there is significant linkage between strong organisational cultures and business success and the detailed findings were that, (1) strong organisational culture was positively associated a high level of company effectiveness, (2) a high level of company effectiveness was positively associated with the cultural traits of ‘consistency’, ‘adaptability’ and ‘mission’, and (3) a high level of company effectiveness was positively associated with the combined cultural traits represented by the dimensions of ‘external focus’ and ‘stable culture’. Several opportunities to take forward this research have been identified, including extending the study to other countries and also longitudinally re-evaluating some of the original case studies to ascertain how organisational cultures have changed or further developed in relation to the changing construction climate in Hong Kong.

Project culture in the Chinese construction industry : perceptions of contractors

In recent years culture has become one of the most studied topics in project management research. Some studies have investigated the influence of culture at different levels – such as national culture, industry culture, organisational culture and professional culture. As a project-based industry, the construction industry needs to have more insight concerning cultural issues at the project level and their influence on the performance of construction projects. Few studies, however, have focused on culture at the project level. This paper uses a questionnaire survey to determine the perceptions of Chinese contractors about the impact of project culture on the performance of local construction projects. This is augmented by a series of in-depth interviews with senior executive managers in the industry. The findings indicate that specific project culture does contribute significantly towards project outcomes. In particular, goal orientation and flexibility, as two dimensions of project culture, have a negative statistical correlation with perceived satisfaction of the process, commercial success, future business opportunities, lessons learnt from the project, satisfaction with the relationships, and overall performance. This paper also indicates that the affordability of developing an appropriate project culture is a major concern for industry practitioners.

Understanding Organisational Culture in the Construction Industry

Since the early 1980s, researchers and practitioners in the organisational and management fields have presumed a link between organisational, or corporate, culture and organisational performance. Whilst many believe this exists, other authors have been critical of the validity of such studies. Part of this doubt stems from a reliance on measures of organisational performance that are based purely on financial measures of business growth. Using the construction industry as the subject of his research, Vaughan Coffey traces the development of the literature on organisational culture and business effectiveness and investigates the culture–performance link using a new and highly objective measure of company performance and an evaluation of organisational culture, which is largely behaviourally-based. Providing a theoretical contribution to the field, this work shows that various cultural traits appear to be closely linked to objectively measured organisational effectiveness. This book will be valuable to professionals and researchers in the fields of management and public policy. It indicates directions for construction companies to develop and change, and in doing so strengthen their chances of remaining strong when opportunities for work might deplete and only the most successful companies will be able to survive.---- Selected Contents: 1. An Introduction to Organizations, Culture, Performance and Construction 2. Organizations, Culture and Climate 3. Organizational Culture Studies 4. Measuring Organizational Performance and Effectiveness 5. Organizational Culture and Effectiveness – The Link Between Them 6. Research on the Relationship between Organizational Culture and Performance in Hong Kong Construction Companies 7. The Hong Kong Experiment – Presentation of Demographic Data, Overall Results and some Descriptive and Qualitative Analysis 8. Detailed Statistical Analysis of the Docs and Pass Data in Relation to the Major Research Questions 9. Four Hong Kong Construction Mini-Case Studies 10. Conclusions and Future Research Directions

Analysing strategic alliances in building construction

Building construction is a highly competitive and risky business. This competitiveness is compounded where conflicting objectives amongst contracting and subcontracting firms sets the stage for an adversarial and potentially destructive approach. There is a need for change in the construction industry—not only to a more cooperative approach to build mutual trust, respect and good faith—but also from a confrontationist and adversarial attitude to a harmonious relationship. It is necessary to change the culture to create a win-win situation. “Strategic Alliances” is one such concept. A strategic alliance is a cooperative arrangement between two or more organisations that forms part of their overall strategies, and contributes to achieving their major goals and objectives. This paper begins with an overview of the Australian building construction industry, then reviews the literature and describes an analysis framework comprising six attributes of strategic alliances—trust, commitment, interdependence, cooperation, communication, and joint problem solving. Given the trend towards greater emphasis on broader contracting firm performance criteria, indicators are proposed as a component of the tender evaluation process for public works.

Construction performance and organisational culture

The purpose of this paper is to summarize the outcomes of a detailed research study carried out as part of the fulfilment of a doctoral programme which examined the relationships between, and impacts of organisational culture on construction performance within a Hong Kong context. The research used a mixed methodology approach consisting of an organisational culture survey using an adapted validated and reliable measurement instrument (the Denison Organisational Culture Survey), mini-case studies in four Hong Kong construction companies and correlated the derived culture scores against performance scores measured by the Hong Kong Housing Department Performance Assessment Scoring System (PASS). The significance of the research was to advance knowledge of the importance of organisational culture strength as a performance driver in the construction industry and the further proof of the culture performance links using a set of measures of the latter which were not financially-based. The findings of the research make a contribution to theory by further validating the work by Denison (1990) and others, not only in that a successful link between organisational culture and performance was demonstrated, but it also identifies particular cultural factors in organisations that appear to be significantly responsible for achieving successful outcomes and reveals opportunities for further research into the organisational culture of construction companies Keywords: organisational culture, construction performance, business success.