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.

Ownership rights in performance-based contracting: A case study of English law

Clients and contractors need to be aware of the project’s legal environment because the viability of a procurement strategy can be vitiated by legal rules. This is particularly true regarding Performance-Based Contracting (PBC) whose viability may be threatened by rules of property law: while the PBC concept does not require that the contractor transfers the ownership in the building materials used to the client, the rules of property law often lead to an automatic transfer of ownership. But does the legal environment really render PBC unfeasible? In particular, is PBC unfeasible because contractors lose their materials as assets? These questions need to be answered with respect to the applicable property law. As a case study, English property law has been chosen. Under English law, the rule which governs the automatic transfer of ownership is called quicquid plantatur solo, solo credit (whatever is fixed to the soil belongs to the soil). An analysis of this rule reveals that not all materials which are affixed to land become part of the land. This fate only occurs in relation to materials which have been affixed with the intention of permanently improving the land. Five fictitious PBC cases have been considered in terms of the legal status of the materials involved, and several subsequent legal questions have been addressed. The results suggest that English law does actually threaten the feasibility of PBC in some cases. However, it is also shown that the law provides means to circumvent the unwanted results which flow from the rules of property law. In particular, contractors who are interested in keeping their materials as assets can insist on agreeing a property right in the client’s land, i.e. a contractor’s lien. Therefore, the outcome is that English property law does not render the implementation of the PBC concept unfeasible. At a broader level, the results contribute to the theoretical framework of PBC as an increasingly used procurement strategy.

Performance-based contracting in the construction sector

Construction procurement is complex and there is a very wide range of options available to procurers. Inappropriate choices about how to procure may limit practical opportunities for innovation. In particular, traditional approaches to construction procurement set up many obstacles for technology suppliers to provide innovative solutions. This is because they are often employed as sub-contractors simply to provide and install equipment to specifications developed before the point at which they become involved in a project. A research team at the University of Reading has developed a procurement framework that comprehensively defines the various options open to procurers in a more fine-grained way than has been known in the past. This enables informed decisions that can establish tailor-made procurement approaches that take into account the needs of specific clients. It enables risk and reward structures to be aligned so that contracts and payment mechanisms are aligned precisely with what a client seeks to achieve. This is not a “one-size-fits-all” approach. Rather, it is an approach that enables informed decisions about how to organize individual procurements that are appropriate to particular circumstances, acknowledging that they differ for each client and for each procurement exercise. Within this context, performance-based contracting (PBC) is explored in terms of the different ways in which technology suppliers within constructed facilities might be encouraged and rewarded for the kinds of innovation sought by the ultimate clients. Examples from various industry sectors are presented, from public sector and from private sector, with a commentary about what they sought to achieve and the extent to which they were successful. The lessons from these examples are presented in terms of feasibility in relation to financial issues, governance, economics, strategic issues, contractual issues and cash flow issues for clients and for contractors. Further background documents and more detailed readings are provided in an appendix for those who wish to find out more.

What is the right balance for performance and isolation with virtualization in HPC?

The use of virtualization in high-performance computing (HPC) has been suggested as a means to provide tailored services and added functionality that many users expect from full-featured Linux cluster environments. The use of virtual machines in HPC can offer several benefits, but maintaining performance is a crucial factor. In some instances the performance criteria are placed above the isolation properties. This selective relaxation of isolation for performance is an important characteristic when considering resilience for HPC environments that employ virtualization. In this paper we consider some of the factors associated with balancing performance and isolation in configurations that employ virtual machines. In this context, we propose a classification of errors based on the concept of “error zones”, as well as a detailed analysis of the trade-offs between resilience and performance based on the level of isolation provided by virtualization solutions. Finally, a set of experiments are performed using different virtualization solutions to elucidate the discussion.

Counting Her Dresses and other plays

Counting Her Dresses and other plays, devised by Lib Taylor, is a short, mixed-media, promenade performance based on theatre writings by Gertrude Stein. Gertrude Stein was an American writer who lived in Paris for most of her adult life and was a significant figure in the development of early twentieth century modernism. She was an artists’ patron and one of the first collectors of paintings by Picasso, Matisse, Cezanne and others. She wrote novels, short stories, poetry and criticism, as well as a number of very short ‘plays’ and opera libretti. Even though her plays are very rarely performed they have been very influential in the development of avant-garde theatre. The performance juxtaposes a soundcape of voices, live performance, an ‘exhibition’ of paintings and mediated images projected onto and across the space to evoke Stein’s sense of theatre as a place of experience and emotion, not as a place of story and action. The performance comprises five theatre fragments which have been combined in a collage that alludes to the experimental art that Stein promoted.

Surviving Objects

Surviving Objects (2012) is a devised multi-media practice-as-research performance based on extensive interviews conducted with my elderly mother and recorded on a hand-held device. Our conversations concern her experiences as a child refugee following violent deportation by the Soviet Army from Eastern Poland to Siberia (1941), and her subsequent route, via Persia, to a British-run refugee camp in Northern Rhodesia, where she remained for 6 years before arriving in the UK. In order to aid my mother’s reflections, our recorded conversations focus on the objects remaining from that period in her life – my ‘inheritance’. The material presence of this handful of objects is central to the ninety-minute performance. Surviving Objects constitutes my attempt to locate a theatrical form through which to root/re-route this engagement with my mother’s marginalised voice. The end-on performance haptically navigates themes of intimacy and failing memory – navigates, indeed, my constantly shifting relationship with my mother. It searches for new cross-medial pathways along which her experience, and my experience of her, can play-out. Surviving Objects involves: 1. live performance (two silent female actors handling/presenting my mother’s objects); 2. Film (two synchronously-playing, large-scale projections exploring the objects by means of a highly-magnifying macro lens); 3. Pre-recorded sound (my mother’s voice, taken from our recorded interviews, which were conducted in Polish, with my own verbal contribution meticulously editorially excised from those conversations); 4. My translation of her stories (appearing periodically as written text that ‘overlays’ - rather than sub- or surtitles - the projected imagery).

Neural basis of the undermining effect of monetary reward on intrinsic motivation

Contrary to the widespread belief that people are positively motivated by reward incentives, some studies have shown that performance-based extrinsic reward can actually undermine a person's intrinsic motivation to engage in a task. This “undermining effect” has timely practical implications, given the burgeoning of performance-based incentive systems in contemporary society. It also presents a theoretical challenge for economic and reinforcement learning theories, which tend to assume that monetary incentives monotonically increase motivation. Despite the practical and theoretical importance of this provocative phenomenon, however, little is known about its neural basis. Herein we induced the behavioral undermining effect using a newly developed task, and we tracked its neural correlates using functional MRI. Our results show that performance-based monetary reward indeed undermines intrinsic motivation, as assessed by the number of voluntary engagements in the task. We found that activity in the anterior striatum and the prefrontal areas decreased along with this behavioral undermining effect. These findings suggest that the corticobasal ganglia valuation system underlies the undermining effect through the integration of extrinsic reward value and intrinsic task value.

Selecting valuable information to remember: age-related differences and similarities in self-regulated learning

It is often necessary to selectively attend to important information, at the expense of less important information, especially if you know you cannot remember large amounts of information. The present study examined how younger and older adults select valuable information to study, when given unrestricted choices about how to allocate study time. Participants were shown a display of point values ranging from 1–30. Participants could choose which values to study, and the associated word was then shown. Study time, and the choice to restudy words, was under the participant's control during the 2-minute study session. Overall, both age groups selected high value words to study and studied these more than the lower value words. However, older adults allocated a disproportionately greater amount of study time to the higher-value words, and age-differences in recall were reduced or eliminated for the highest value words. In addition, older adults capitalized on recency effects in a strategic manner, by studying high-value items often but also immediately before the test. A multilevel mediation analysis indicated that participants strategically remembered items with higher point value, and older adults showed similar or even stronger strategic process that may help to compensate for poorer memory. These results demonstrate efficient (and different) metacognitive control operations in younger and older adults, which can allow for strategic regulation of study choices and allocation of study time when remembering important information. The findings are interpreted in terms of life span models of agenda-based regulation and discussed in terms of practical applications. (PsycINFO Database Record (c) 2013 APA, all rights reserved)(journal abstract)

Knowledge intensive processes characteristics and improvement: a banking best practice example

This paper identifies characteristics of knowledge intensive processes and a method to improve their performance based on analysis of investment banking front office processes. The inability to improve these processes using standard process improvement techniques confirmed that much of the process was not codified and depended on tacit knowledge and skills. This led to the use of a semi-structured analysis of the characteristics of the processes via a questionnaire to identify knowledge intensive processes characteristics that adds to existing theory. Further work identified innovative process analysis and change techniques that could generate improvements based on an analysis of their properties and the issue drivers. An improvement methodology was developed to harness a number of techniques that were found to effective in resolving the issue drivers and improving these knowledge intensive processes.

Paying for long-term performance: restructuring bankers’ pay for risk regulation

The purpose of this paper is to propose hybrid capital securities as a new approach to compensation for senior bank executives and risk-takers instead of cash or equity-based compensation currently adopted by the industry. The global financial turmoil indicated that misaligned pay-for-performance compensation arrangements encouraged management short-termism and rewarded excessive risk-taking behaviour in Anglo-Saxon system. Rather than regulating specific instruments and processes, we believe that it is much more efficient to overhaul the compensation scheme to align it with risk management and governance. This empirical paper investigates the European hybrid market by employing data from the Merrill Lynch Global Index System from 2000 to 2010. Our paper contributes to both literature and practices by designing a structured scheme to tie the executive’s interests to long-term performance of the bank, the goal of regulators and the economy at large which consequently reduce the probability of future bank failures.