Risk analysis in cost planning and its effect on efficiency in capital cost budgeting

Builds on earlier work which reported on the experience of the Hong Kong Government in using risk analysis techniques in capital cost estimating. In 1993 the Hong Kong Government implemented a methodology for capital cost estimating using risk analysis (ERA) in its public works planning. This calculated amount replaces the pre-1993 contingency allowance, which was merely a percentage addition on top of the base estimate of a project. Adopts a team approach to identify, classify and cost the uncertainties associated with a project. The sum of the average risk allowance for the identified risk events thus becomes the contingency. A study of the effect of ERA was carried out to compare the variability and consistency of the contingency estimates between non-ERA and ERA projects. The preliminary results of a survey showed a highly significant difference in variation and consistency between these groups. This analysis indicates the successful use of the ERA method for public works projects to reduce unnecessary and  exaggerated allowance for risk. However, the contingency allowance for ERA projects was also considered high. Adds data from the UK with descriptions of 41 private sector projects which fall into the non-ERA category and reflect better performance in the determining of contingency allowances.

The teaching of cost planning using the building cost information service on-line system

This paper describes teaching and learning in building design cost management for undergraduate construction economics, construction management and architecture students using the WorldWideWeb based Building Cost Information Service. The paper also discusses the benefits of using such an authentic learning strategy to achieve specified learning outcomes which are considered by t he a uthors to be of considerable benefit in the teaching of this important subject area. Although there are a number of limitations in the application of building design cost management, as considered in this paper, some of which are discussed below, to date no satisfactory alternative has been developed, and therefore, a clear understanding of what the process is and how it is applied, is essential.

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.

Cost planning and control : case study of design economics for constructability and prefabrication construction

Cost management includes planning and control, and constructability1 and prefabrication construction are two main design economics factors for early cost planning decision. Despite the fact that constructability and prefabrication have been considered in design and cost planning, there is no guarantee if the intention meets the expectation. This requires on-going control during construction stage. In fact, prefabrication construction has been encouraged for some years, application is not always positive. One of the reasons is its constructability. This paper investigates the appropriate research methodology to determine how design for prefabrication and constructability will contribute to cost planning through control and review during construction stage. Through a study of an Australian residential project using prefabrication in structural concrete, internal partitioning and internal fit-out, this research concludes that case study is a viable choice. Prefabrication construction does provide a positive impact on the major project objectives: time, cost and quality. Cost reduction is due to saving in time related preliminaries as a direct result of time reduction of onsite activities whilst quality is ensured due to better control of prefabricated components inside the factories. However, it can only be achieved after considering constructability: suitable materials choice, design for available skills, use of available plant, and clear communication. The keys are through plan at design phase and control in construction stage.

Factors impacting on the effectiveness of computer-assisted courseware

The level of satisfaction of computer-assisted tutorial courseware that is used as part of the undergraduate property and construction course at the University of Melbourne. It is important to determine if the computer-assisted teaching model improves the learning experience for students. This research examines the levels of satisfaction with a courseware model for teaching construction cost planning. The conclusions suggest that the advantages of the use of the model must be identified and actively supported throughout the whole course. In addition, further development of computer-based courseware is pointless unless the problems associated with their use can be minimized.

Aggregate planning for seasonal demand : reconciling theory with practice

Purpose: The paper reports on the ramifications for production planning when monthly sales exhibit predictable seasonal highs and lows. The literature first acknowledged and dealt with the (aggregate planning) problem 50 years ago. Nevertheless, there is neither evidence that industry has adopted any of the mathematical techniques that were subsequently developed, nor a convincing explanation as to why not. Hence this research sets out to discover the methods manufacturers use to cope with seasonal demand, and how germane the published algorithms really are.

Design/methodology/approach: Forty-two case studies were compiled by interviewing senior managers and then conducting plant tours. No prior assumptions were made and the list of questions covered the gamut of production planning.

Findings: The main finding is that manufacturers select a straightforward production strategy, right from the outset, so the fundamental cost-balancing format is not relevant. The majority pick a “chase” strategy, since most organizations subscribe to a “just in time” ethos. Whenever a different strategy is preferred the rationale springs from skilled labour considerations or binding facilities constraints. The chosen strategy serves as a road map for resources acquisitions, and the master production schedule is constructed directly. So, the complex issue of how to disaggregate an optimal aggregate plan never even arises. Managers do not seek perfect solutions, but strive to eliminate, or contain, the most significant marginal costs. The nature of the business determines the most appropriate tactics to employ.

Originality/value: These findings break the mould as far as orthodox aggregate planning is concerned and show why theory is at odds with practice, whilst reaffirming the importance of concepts such as “flexibility”, “integration”, and “just-in-time production”.

Solution to robotic landmine detection through use of path planning and motor control

Low cost robotic detectors are a promising new approach to combat the disturbing landmine crisis. In this paper a low-cost robotic solution is proposed, we present several control techniques used to improve the precision of the robotic motion. A P and PD controller is applied, and it is concluded that a cascaded control system provides a more stable and accurate response. Two search patterns for landmine detection are considered, rectangular and spiral, these are used to analyse the effectiveness of the control system.

Cost of stroke in Australia from a societal perspective: results from the north east Melbourne stroke incidence study (NEMESIS)

Background and Purpose—— Accurate information about resource use and costs of stroke is necessary for informed health service planning. The purpose of this study was to determine the patterns of resource use among stroke patients and to estimate the total costs (direct service use and indirect production losses) of stroke (excluding SAH) in Australia for 1997.

Methods—— An incidence-based cost-of-illness model was developed, incorporating data obtained from the North East Melbourne Stroke Incidence Study (NEMESIS). The costs of stroke during the first year after stroke and the present value of total lifetime costs of stroke were estimated.

Results—— The total first-year costs of all first-ever-in-a lifetime strokes (SAH excluded) that occurred in Australia during 1997 were estimated to be A$555 million (US$420 million), and the present value of lifetime costs was estimated to be A$1.3 billion (US$985 million). The average cost per case during the first 12 months and over a lifetime was A$18 956 (US$14 361) and A$44 428 (US$33 658), respectively. The most important categories of cost during the first year were acute hospitalization (A$154 million), inpatient rehabilitation (A$150 million), and nursing home care (A$63 million). The present value of lifetime indirect costs was estimated to be A$34 million.

Conclusions—— Similar to other studies, hospital and nursing home costs contributed most to the total cost of stroke (excluding SAH) in Australia. Inpatient rehabilitation accounts for {approx}27% of total first-year costs. Given the magnitude of these costs, investigation of the cost-effectiveness of rehabilitation services should become a priority in this community.

The use of analytic hierarchy process to incorporate stakeholder preferences into regional forest planning

Forest management decisions are often characterised by complexity, irreversibility and uncertainty. Much of the complexity arises from the multiple-use nature of forest goods and services, difficulty in monetary valuation of ecological services and the involvement of numerous stakeholders. Under these circumstances, conventional methods such as cost-benefit analysis are ill-suited to evaluate forest decisions. The Analytic Hierarchy Process (AHP), can be useful in regional forest planing as it can accommodate conflictual, multidimensional, incommensurable and incomparable set of objectives. The objective of this paper is to examine the scope and feasibility of the AHP in incorporating stakeholder preferences into regional forest planning. The Australian Regional Forest Agreement Programme is taken as an illustrative case for the analysis. The results show that the AHP can formalize public participation in decision making and increase the transparency and the credibility of the process.

MRP-production planning in agile manufacturing

The research studied a production planning problem in a manufacturing firm. Some production planning software was developed that enabled the efficient and rapid reproduction of an optimum production forecast. Not only was the production cost reduced but a significant length of planning time cn be saved using the software.

Proposal of a tiered conceptual framework for sustainable design and planning of large-scale development projects in the metropolitan context

The overwhelming threat posed by climate change means that increasingly, emphasis is being placed on the need to integrate sustainability considerations into all areas of policy making, planning and development. Actors in the built environment are progressively considering environmental and social issues alongside functional and economic aspects of development projects. However, to date in Australia and internationally, there have been few practical examples of integrated applications of sustainability principles in the built environment across design, planning, construction, operation and de-construction phases. Notable initiatives have tended to be narrow in scope, focusing on either mitigation or adaptation strategies. Integrated considerations of impacts from component and building scales to city and regional scales and across physical and socio-economic dimensions are urgently needed, particularly for long-life major infrastructure projects. This paper proposes a conceptual framework based on the principal that early intervention is the most cost-effective and efficient means of implementing effective strategies for mitigation and adaptation. A Strategic Environmental Assessment (SEA) approach is forwarded as an umbrella analytical framework, assembled from analytical methods which are strategically ‘tiered’ to inform different stages of the planning and decision-making process. Techniques such as Ecological footprint, Life cycle costing and Risk analysis may be applied to integrate sustainable design, construction and planning considerations which address both mitigation and adaptation dimensions, results of each analysis ultimately being collated into the overall SEA. This integrated conceptual framework for sustainable, resilient and cost-effective infrastructure development will in practice be applied to assess selected case-studies of major development projects in Australia, focusing on the area of stadium development. Practically applied and timed accordingly, the framework would allow assessments to be targeted towards appropriate decision making levels and enable better decision-making and more efficient resource allocation for major infrastructure development projects.

Integrated modelling of cost-effective siting and operation of flow-control infrastructure for river ecosystem conservation

Wetland and floodplain ecosystems along many regulated rivers are highly stressed, primarily due to a lack of environmental flows of appropriate magnitude, frequency, duration, and timing to support ecological functions. In the absence of increased environmental flows, the ecological health of river ecosystems can be enhanced by the operation of existing and new flow-control infrastructure (weirs and regulators) to return more natural environmental flow regimes to specific areas. However, determining the optimal investment and operation strategies over time is a complex task due to several factors including the multiple environmental values attached to wetlands, spatial and temporal heterogeneity and dependencies, nonlinearity, and time-dependent decisions. This makes for a very large number of decision variables over a long planning horizon. The focus of this paper is the development of a nonlinear integer programming model that accommodates these complexities. The mathematical objective aims to return the natural flow regime of key components of river ecosystems in terms of flood timing, flood duration, and interflood period. We applied a 2-stage recursive heuristic using tabu search to solve the model and tested it on the entire South Australian River Murray floodplain. We conclude that modern meta-heuristics can be used to solve the very complex nonlinear problems with spatial and temporal dependencies typical of environmental flow allocation in regulated river ecosystems. The model has been used to inform the investment in, and operation of, flow-control infrastructure in the South Australian River Murray.