Risk under performance-based contracting in the UK construction sector

As a method of procuring the services of the built environment, performance-based contracting (PBC) seeks to link the building supplier to longer term commitments than has traditionally been the case in the construction sector. By rewarding the building producer according to the way that building or structure delivers the users' requirements, rather than according to a list of assembled parts, a number of additional risks are taken by contractors, including fitness for purpose, costs and briefing. The extent to which contractors recognize these risks and their methods of dealing with them vary considerably and are influenced by their attitudes towards risk. As the risks associated with PBC are seen as large, uninsurable, and vulnerable to changing client requirements, the majority of respondents would reject the use of PBC as a method of contracting. Nevertheless, PBC may be used under particular conditions, where rewards are deemed sufficient to compensate for the additional risk to the contractor of undertaking work on the basis of a stream of payments paid over the life of a structure depending on the satisfactory performance of the building or as part of a private finance initiative.

The futures of construction: A critical review of construction future studies

Anticipating the future is increasingly being seen as a useful way to align, direct and improve current organizational strategy. Several such 'future studies' have been produced which envision various construction industry scenarios which result from technological and socio-economic trends and influences. Thirteen construction-related future studies are critically reviewed. Most studies fail to address the complexities and uncertainties of both the present and the future, and fail to explore the connections between global, local, construction-specific and more widespread factors. The methodological approaches used in these studies do not generate any significantly different advice or recommendations for the industry than those emerging from the much larger canon of non-future oriented construction research. As such, these reports are less about the future than the present. If future studies are to make a worthwhile contribution to construction, it is critical that they develop our appreciation of the practical ability of stakeholders to influence some aspects of the future and not others, and an awareness of the competing agendas and the relative benefits and disadvantages of specific futures within the construction sector. Only then can future studies provide insights and help in preparing for the opportunities and threats the future may bring.

Implementing innovation in construction: Contexts, relative boundedness and actor-network theory

Theoretical understanding of the implementation and use of innovations within construction contexts is discussed and developed. It is argued that both the rhetoric of the 'improvement agenda' within construction and theories of innovation fail to account for the complex contexts and disparate perspectives which characterize construction work. To address this, the concept of relative boundedness is offered. Relatively unbounded innovation is characterized by a lack of a coherent central driving force or mediator with the ability to reconcile potential conflicts and overcome resistance to implementation. This is a situation not exclusive to, but certainly indicative of, much construction project work. Drawing on empirical material from the implementation of new design and coordination technologies on a large construction project, the concept is developed, concentrating on the negotiations and translations implementation mobilized. An actor-network theory (ANT) approach is adopted, which emphasizes the roles that both human actors and non-human agents play in the performance and outcomes of these interactions. Three aspects of how relative boundedness is constituted and affected are described; through the robustness of existing practices and expectations, through the delegation of interests on to technological artefacts and through the mobilization of actors and artefacts to constrain and limit the scope of negotiations over new technology implementation.

The engineer under FDIC's conditions of contract for construction

FIDIC has over the years produced standard forms of contracts for the international procurement of projects. A source of continuing criticism of its Red Book concerns the duality in the traditional role of the engineer as the employer's agent and as an independent third party holding the balance fairly between the employer and the contractor. In response to this and other criticisms FIDIC produced a replacement for it in 1999. The role of the engineer under the new Red Book is critically examined in the light of relevant case law, expert commentaries and feedback from two multidisciplinary workshops with international participation. The examination identified three major changes: (1) a duty to act impartially has been replaced by a duty to make fair determination of certain matters; (2) it is open to parties to allow greater control of the engineer by the employer by stating in the appropriate part of the contract powers the engineer must not exercise without the employer's approval; (3) there is provision for a Dispute Adjudication Board (DAB) to which disputes may be referred. Although the duality has not been eliminated completely, the contract is structured flexibly enough to support those who wish to contract on the basis of the engineer acting solely as the agent of the employer.

Emergent discourses of construction competitiveness: localized learning and embeddedness

Research is described that sought to understand how senior managers within regional contracting firms conceptualize and enact competitiveness. Existing formal discourses of construction competitiveness include the discourse of 'best practice' and the various theories of competitiveness as routinely mobilized within the academic literature. Such discourses consistently underplay the influence of contextual factors in shaping how competitiveness is enacted. An alternative discourse of competitiveness is outlined based on the concepts of localized learning and embeddedness. Two case studies of regional construction firms provide new insights into the emergent discourses of construction competitiveness. The empirical findings resonate strongly with the concepts of localized learning and embeddedness. The case studies illustrate the importance of de-centralized structures which enable multiple business units to become embedded within localized markets. A significant degree of autonomy is essential to facilitate localized entrepreneurial behaviour. In essence, sustained competitiveness was found to depend upon the extent to which de-centralized business units enact ongoing processes of localized learning. Once local business units have become embedded within localized markets the essential challenge is how to encourage continued entrepreneurial behaviour while maintaining a degree of centralized control and coordination. Of key importance is the recognition that the capabilities that make companies competitive transcend organizational boundaries such that they become situated within complex networks of relational ties.

An entropy-based financial decision support system (e-FDSS) for project analysis in construction SMEs

Uncertainty contributes a major part in the accuracy of a decision-making process while its inconsistency is always difficult to be solved by existing decision-making tools. Entropy has been proved to be useful to evaluate the inconsistency of uncertainty among different respondents. The study demonstrates an entropy-based financial decision support system called e-FDSS. This integrated system provides decision support to evaluate attributes (funding options and multiple risks) available in projects. Fuzzy logic theory is included in the system to deal with the qualitative aspect of these options and risks. An adaptive genetic algorithm (AGA) is also employed to solve the decision algorithm in the system in order to provide optimal and consistent rates to these attributes. Seven simplified and parallel projects from a Hong Kong construction small and medium enterprise (SME) were assessed to evaluate the system. The result shows that the system calculates risk adjusted discount rates (RADR) of projects in an objective way. These rates discount project cash flow impartially. Inconsistency of uncertainty is also successfully evaluated by the use of the entropy method. Finally, the system identifies the favourable funding options that are managed by a scheme called SME Loan Guarantee Scheme (SGS). Based on these results, resource allocation could then be optimized and the best time to start a new project could also be identified throughout the overall project life cycle.