Supplier integrity due diligence in public procurement: limiting the criminal risk to Australia

The potential for criminals and terrorism financiers to secure lucrativegovernment contracts poses a risk to Australia’s anti-money laundering,anti-corruption and counter-terrorism financing objectives. This articlecompares the customer due diligence measures that banks are required to implement to prevent money laundering and terrorism financing with the general supplier due diligence practices and processes of key Australian government departments and agencies. It identifies various weaknesses in current procurement practices relating to standard contracts and argues that these render Australian public procurement vulnerable to criminal abuse, threaten compliance with its sanctions regime and potentially undermine the crime combating objectives of its money laundering and terrorism financinglaws. The article recommends that the national interest calls for awhole-of-government approach to improve supplier due diligence in public procurement.

Implementation of China's new policies on organ procurement: An important but challenging step forward

In the last decade, health authorities in China have made a series of policy announcements concerning organ procurement programs and changes in practice have been intermittently reported (1). The international community of transplant professionals has followed these reports closely, preoccupied with one fundamental issue: the procurement of organs from executed prisoners, a practice that for many years has provided the majority of organs transplanted in China. Sharif et al. describe this practice as “ethically indefensible” (2), an evaluation that reflects the position embraced by the international community for more than two decades (3-5). Sharif et al. express concern that whilst some transplant programs in China have ceased using organs from executed prisoners, others continue to do so, and that all organs procured from the deceased may be allocated through a collective pool as part of the new China Organ Transplant Response System, effectively “laundering” organs obtained from prisoners. They also note that one of the new strategies to encourage deceased donation of organs among the Chinese public has involved financial incentives for donor families, another practice that has been strongly critiqued by the international professional community and global health authorities (6,7).

In China and in the United States, proponents of organ procurement from executed prisoners have argued that prisoners should not be denied the option to donate organs after their death if they so choose, as this may provide them or their families solace and an opportunity for moral, spiritual or social redemption (8,9). However, the predominant argument in favour of the practice appears to be essentially pragmatic: prisoners condemned to death represent an additional pool of potential “donors” with organs that will otherwise “go to waste” (10). In contrast, international professional societies and the World Health Organization among others have argued that the practice not only violates the core principles of medical ethics but also thereby undermines efforts to establish a sufficient supply of deceased donor organs. In this commentary, we reaffirm the ethics policy of The Transplantation Society (TTS) concerning organ procurement from executed prisoners (4), and briefly discuss the implications of this policy for international professional engagement with China at this time of significant evolution of Chinese organ procurement programs.

Value chain supply procurement strategies in international construction: cases of foreign constructors in China

Purpose – Firms compete using a variety of strategies. Typically they aim to provide something different, to be better, or simply cheaper. In the construction industry, the performance characteristics, quality and cost of the final delivered project will be the outcome of the interplay of capabilities of all the firms involved in the project. Consequently, in order to improve competitiveness, firms must pay attention to not only their own competitive advantage but to those of the firms, both up-stream and down-stream, on whom they depend in delivering their projects. For foreign constructors in China, those competitive considerations will be informed by circumstances different from home. How then do foreign constructors adapt themselves to the problem of sourcing competitively when located within a China-based supply chain? The paper aims to discuss these issues.

Design/methodology/approach – In this study 60 foreign enterprises operating within the Chinese construction sector were investigated by using a comparative case study approach.

Findings – Four generic procurement strategies were identified. First, firms adapt themselves in the search for optimal supply sources by replicating home-based suppliers, controlling local suppliers, or by remaining agile and non-aligned. Second, firms develop niche supply monopolies through market dominance, uniquely differentiated offerings, or by integration with down-stream providers. Third, firms find opportunities to bring in off-shore technology intensive procurements, where that technology is either protected, improved upon, or sold. Finally, firms also seek to transit to China as a procurement base in order to reduce local supply cost, service world-wide operations, or as part of a total strategy of China relocation.

Originality/value – The identification of this rich range of procurement approaches will be of interest to internationalization strategists, as well as to industry practitioners looking to find appropriate business models for off-shore operations.

A framework for material management in the building demolition industry

Conventional mechanical building demolition produces numerous solid wastes, most of which are sent to landfill directly and severely degrade the living environment. Just-in-time building demolition has been developed recently with a management strategy to facilitate waste reuse. Procurement management plays a significant role in just-in-time building demolition. In particular, the demolition tendering selection needs to consider contractors' environmental performance in addition to project costs. Moreover, the flow of building materials in a demolition project may be regarded as a supply chain involving the building owner, demolition contractor and material demanders. This paper develops a framework for salvaged materials management in the emerging demolition industry. The research is to promote the recycling and reuse of building demolition materials in order to achieve better environmental and financial performance for building demolition projects.

Analysis of stakeholder concerns with a view to avoid organisational conflict in B2B systems

In recent years there has been a remarkable increase in information exchange between organizations due to changes in market structures and new forms of business relationships. The increase in the volume of business-to-business (B2B) transactions has contributed significantly to the expanding need for electronic systems that could effectively support communication between collaborating organizations. Examples of such collaborating systems include those that offer various types of business-to-business services, e.g. electronic commerce, electronic procurement systems, electronic links between legacy systems, or outsourced systems providing data processing services via electronic media. Development and running of B2B electronic systems has not been problem free. One of the most intractable issues found in B2B systems is the prevalence of inter-organisational conflict reported to exist and persists between the participants of interorganisational electronic networks. There have been very few attempts, however, to prescribe any practical method of detecting the antecedents of such conflict early in B2B development to facilitate smooth construction and the subsequent operation of B2B services. The research reported in this paper focuses on the identification and analysis of antecedent conflict in a joint process involving different organizations in a B2B venture. The proposed method involves identification of domain stakeholders, capturing and packaging their views and concerns into a reusable form, and the application of captured domain experience in B2B systems development. The concepts and methods introduced in this paper have been illustrated with examples drawn from our study of six web-enabled payroll systems.

Effective and strategic use of electronic reverse auctions

This paper reports the findings of an empirical study of Electronic Reverse Auctions (e-RAs). This study seeks to better understand the underlying and emerging issues in e-RAs to comprehend the implications of e-RAs on organizational procurement. The study contributes to practice and research by providing insight into emerging e-RA adoption issues, and by discussing strategies for improving e-RA processes, thus improving the effectiveness of e-RAs.

Teaching building services to architecture and building students

Building environmental services can often be categorised as ‘one of the least desirable courses’ in the curriculum of architecture and building. Nevertheless, it is also one of the most important and confronting subjects in the procurement of real building projects. The principal message to designers is that of spatial requirements while to the builders it may become one of capital cost, installation specifications and maintenance of equipment. Getting these concepts across in a creative, yet project oriented, manner can be challenging to the students and to the lecturer. This paper presents the developments of ten years of teaching the subject, as well as the methods of delivery which have proven to be successful.

Knowledge management in a major construction firm in Tawian: a case study-examining the impacts of KM initiatives within the firm.

This paper addresses knowledge management (KM) in a project management organisation through a case study. The case study organisation is a small- edium sized Taiwanese-owned construction company (staff size of approximately 50) with an annual turnover of approximately TWD50 (AUD$1.85) billion. Approximately one half of the company comprised project-related staff (e.g. construction project management, project documentation, estimation, procurement, and design), while the other comprised administrative and business-related staff (e.g. office administration and management, business development, and finance and accounting). The researcher undertook a series of surveys and one-on-one interviews whilst ‘embedded’ for several months with the organisation. As part of a larger research project, this case study was one of four case studies conducted in major construction organisations in Singapore, Taiwan, and Australia. The study revealed the recognition, importance and commitment of organisational culture to KM, and the effects the knowledge management initiatives have on the organisation’s ability to manage knowledge across its projects and deliver the projects at various ‘levels’ of the organisation (individual, project, departmental, and corporate). It concludes that a technologically and functionally sound KM infrastructure does not necessarily assure an organisation with a capability to manage knowledge. Organisations need to ensure that the KM repository is made up of quality and relevant contents (not just quantity), and that corporate culture (especially the willingness of individuals to share what they know) is a critical determining factor to the organisation’s ability to share, apply and create knowledge (i.e. low sharing capability leads to low application and creation capabilities).

Are knowledge management infrastructructures capable of managing knowledge?: Case study of a major construction firm in Taiwan

This paper addresses knowledge management (KM) in a project management organisation through a case study.

The case study organisation is a small-medium sized Taiwanese-owned construction company (staff size of approximately 50) with an annual turnover of approximately TWD50 (AUD$1.85) billion. Approximately one half of the company comprised project-related staff (e.g. construction project management, project documentation, estimation, procurement, and design), while the other comprised administrative and business-related staff (e.g. office administration and management, business development, and finance and accounting).

The researcher undertook a series of surveys and one-on-one interviews whilst ‘embedded’ for several months with the organisation. This study is part of an on-going international comparison involving major construction organisations in Singapore, Australia, and Taiwan.

This study examines the recognition, importance and commitment of organisational culture to KM, and the effects the knowledge management initiatives have on the organisation’s ability to manage knowledge across its projects and deliver the projects at various ‘levels’ of the organisation (individual, project, departmental, and corporate).

It concludes that a technologically and functionally sound KM infrastructure did not necessarily assure that an organisation had a capability to manage knowledge. Organisations need to ensure that their KM repository is made up of relevant and quality contents (not just quantity), and that corporate culture (especially the willingness of individuals to share what they know) is a critical determining factor to the organisation’s ability to share, apply and create knowledge (i.e. low sharing capability leads to low application and creation capabilities).

Methodological issues in design-construction integration

A major contributory factor to poor project performance in the construction industry is known to be the lack of integration and coordination between the different disciplines involved in various stages of the procurement process. Attempts by researchers to address this problem have met with limited success, as they have focused mainly on adapting integration techniques originally developed for use in the manufacturing industry. There is therefore a need to develop a detailed understanding of the fundamental sciences that underpin the problem of integrating the procurement process across the construction project life cycle. Presents and discusses a research model for addressing major methodological issues in the analysis of design/construction relationships.

Auditing construction costs during building design : a case study of cost planning in action

Building cost planning was originally developed in the framework of traditional procurement methods with conventional documentation, tendering and administration processes. With the advent of alternative forms of procurement with more fluid approaches to design stages and documentation, the need for sound cost planning does not appear to diminish. As a process established on solid theoretical foundations, cost planning should be robust enough to adapt and flourish in a variety of procurement environments. However, little documentation and analysis of transformed and adapted forms of cost planning appear to have been made. This case study of a design-construct company in Melbourne, Australia, presents and explores a contemporary form of building cost planning integrated into a design cost management approach adopted by a construction company experienced in alternative forms of procurement. The article traces this process on a design-construct project from inception to the end of the design development stage and tender. Whilst the fundamental framework of cost planning remains intact, the focus and detail in each of the stages are guided by the company's priority for greater financial control over the cost and value implications of design and other decisions. This recently established working model of design cost management in this company has been designed to deliver added value to the client through a better balance of time, cost and quality in each project.

Culture-based fisheries in small reservoirs in northern Vietnam: effect of stocking densities and species combinations

This study was conducted in 20 reservoirs, ranging in size from 4 to 30 ha, in the mountainous, northern region of Vietnam, in ThaiNguyen and YenBai provinces, over two growth cycles in 2002/03 and 2003/04. The reservoirs are leased by farmers for fishery activities from the provincial administration, and the trials were managed by the lessee farmers. Three species combinations in ratios (by fingerling weight) of grass carp: silver carp: bighead carp: common carp: mrigal 1:2:1:1:3 (A), 1:3:1:1:2 (B) and 1:2:1:1:2 (C) were used as seed stock. The overall mean yield of stocked fish in 2002/03 and 2003/04 growth cycles in reservoirs in ThaiNguyen and YenBai provinces was 165 (±21) and 190 (39), and 287 (±22) and 325 (±24) kg ha⁻¹ respectively. The yield in reservoirs in both provinces, in both growth cycles and irrespective of the species combinations, increased in relation to stocking density. In reservoirs in ThaiNguyen Province, the species combination B gave the lowest yield (both growth cycles and overall), and differed significantly (P<0.05) from combinations A and C. The stocking efficiency (ratio of the yield of stocked fish in kg ha⁻¹ to the weight of the stocked fish in kg ha⁻¹) in reservoirs in ThaiNguyen Province ranged from 2.9 to 5.1 over the two growth cycles and that in YenBai from 2.8 to 3.9. There was no discernible trend between growth cycles and/or between species combinations. The major cost incurred was for fingerling procurement. In all instances, a net profit was accrued. The mean (±standard error (SE)) net profit ha⁻¹ (in 103VN dong; approximately 15 500 VND=1 US$) was 885 (±270) and 864 (±214), and 1322 (±176) and 1600 (±150) for the growth cycles 2002/03 and 2003/04 for reservoirs in ThaiNguyen and YenBai provinces respectively. Between the two growth cycles, the net profit increased in eight and three reservoirs from YenBai and ThaiNguyen, respectively, the maximum increase being recorded in Khuan Gio (165%) and Dong Man (39%) reservoirs.

Design management in a design-construct organization

As clients have become more aware and demanding of the construction industry, they are also less tolerant of the management of its problems and the risks involved in the delivery of major projects. Identification and allocation of risk is one of the most critical processes in the early stages of project development. Often it is the deciding factor in the selection of the building process and of the type of procurement method adopted to manage the various project risks. The emergence of different forms of procurement, and in particular, design-construct and novation, requires the design construct contractor to not only accept the risks associated with the construction of the works, but also of the design management during the design development of the project. With the increasing requirement for design-construct contractors to balance the cost management issues and design development through the various stages, the role of the design manager as information manager has evolved and expanded in importance. This paper presents a case study of design management within a design-construct organization on a large residential apartment project. It identifies and analyses issues concerned with the organization, responsibilities, relationships and stages of development in a typical design-construct project.

Estimating the increasing cost of commercial buildings in Australia due to greenhouse emissions trading

The ratification of the Kyoto Protocol by most industrial nations will result in an international greenhouse emissions trading market by or before 2008. Calculating the quantity of embodied energy in commercial buildings has therefore taken on added significance because it is in the creation of energy that most greenhouse gas that causes global warming is released. For energy efficient commercial buildings in Australia, the embodied energy can typically represent between 10 and 20 years of operational energy. When greenhouse emissions trading is introduced in Australia the cost of energy will rise significantly, particularly electricity which relies primarily on burning fossil fuels for generation. This will affect not only the operating energy costs of buildings (light, power & heating/cooling) but also the cost of building materials and construction. Early estimates of the potential cost of future greenhouse emission permits in Australia vary between $IO/tonne to $180Itonne. This cost would be imposed primarily on the producers of energy and passed on by them to consumers via higher energy costs. For a typical commercial building this could lead to an increase in the total procurement cost of buildings of up to 20% due to the energy embodied during the construction or refurbishment of the building. To assist in evaluating these potential cost increases McKean & Park, Sinclair Knight Merz and Deakin University have developed a web-based Carbon Cost Calculator for commercial buildings.