Development of Project Logistics in Engineering, Procurement and Construction Projects

The aim of this Master’s Thesis is to develop project logistics functions in large scale en-gineering, procurement and construction projects. The background of the research topic is compounded from two separate subjects; OPAL Program and case study of an actual EPC project. The purpose is to examine Project Logistics process in accordance with OPAL Program as well as logistics process in focus EPC project. Both entities are researched by using the case study research methodology. Logistics process of the focus EPC project is described as well as presented and in addi-tion, logistics related findings and observations are introduced. Significant findings and observations are found from logistics costs as well as shipment volume estimations in the early phase of the focus ECP project. A notable finding is also that because goods were transported as readily assembled as possible it caused expensive oversized cargo deliveries. From findings and observation of the focus EPC project it can be derived that logistics has to be involved in the early sales phase in order to receive more accurate logistics cost esti-mations for project deliveries. It is also noticed that in order to obtain savings in logistics costs, oversized deliveries must be avoided.

Place-Based Evaluation for Infrastructure and Spatial Projects: An Introduction

This book brings together experts in the fields of spatial planning, landuse and infrastructure management to explore the emerging agenda of spatially-oriented integrated evaluation. It weaves together the latest theories, case studies, methods, policy and practice to examine and assess the values, impacts, benefits and the overall success in integrated land-use management. In doing so, the book clarifies the nature and roles of evaluation and puts forward guidance for future policy and practice.

Risk sharing with Multilateral Financial Institutions in infrastructure and energy project financing : effect on capital relief for commercial banks

(Matsukawa and Habeck, 2007) analyse the main instruments for risk mitigation in infrastructure financing with Multilateral Financial Institutions (MFIs). Their review coincided with the global financial crisis of 2007-08, and is highly relevant in current times considering the sovereign debt crisis, the lack of available capital and the increases in bank regulation in Western economies. The current macroeconomic environment has seen a slowdown in the level of finance for infrastructure projects, as they pose a higher credit risk given their requirements for long term investments. The rationale for this work is to look for innovative solutions that are focused on the credit risk mitigation of infrastructure and energy projects whilst optimizing the economic capital allocation for commercial banks. This objective is achieved through risk-sharing with MFIs and looking for capital relief in project finance transactions. This research finds out the answer to the main question: "What is the impact of risk-sharing with MFIs on project finance transactions to increase their efficiency and viability?", and is developed from the perspective of a commercial bank assessing the economic capital used and analysing the relevant variables for it: Probability of Default, Loss Given Default and Recovery Rates, (Altman, 2010). An overview of project finance for the infrastructure and energy sectors in terms of the volume of transactions worldwide is outlined, along with a summary of risk-sharing financing with MFIs. A review of the current regulatory framework beneath risk-sharing in structured finance with MFIs is also analysed. From here, the impact of risk-sharing and the diversification effect in infrastructure and energy projects is assessed, from the perspective of economic capital allocation for a commercial bank. CreditMetrics (J. P. Morgan, 1997) is applied over an existing well diversified portfolio of project finance infrastructure and energy investments, working with the main risk capital measures: economic capital, RAROC, and EVA. The conclusions of this research show that economic capital allocation on a portfolio of project finance along with risk-sharing with MFIs have a huge impact on capital relief whilst increasing performance profitability for commercial banks. There is an outstanding diversification effect due to the portfolio, which is combined with risk mitigation and an improvement in recovery rates through Partial Credit Guarantees issued by MFIs. A stress test scenario analysis is applied to the current assumptions and credit risk model, considering a downgrade in the rating for the commercial bank (lender) and an increase of default in emerging countries, presenting a direct impact on economic capital, through an increase in expected loss and a decrease in performance profitability. Getting capital relief through risk-sharing makes it more viable for commercial banks to finance infrastructure and energy projects, with the beneficial effect of a direct impact of these investments on GDP growth and employment. The main contribution of this work is to promote a strategic economic capital allocation in infrastructure and energy financing through innovative risk-sharing with MFIs and economic pricing to create economic value added for banks, and to allow the financing of more infrastructure and energy projects. This work suggests several topics for further research in relation to issues analysed. (Matsukawa and Habeck, 2007) analizan los principales instrumentos de mitigación de riesgos en las Instituciones Financieras Multilaterales (IFMs) para la financiación de infraestructuras. Su presentación coincidió con el inicio de la crisis financiera en Agosto de 2007, y sus consecuencias persisten en la actualidad, destacando la deuda soberana en economías desarrolladas y los problemas capitalización de los bancos. Este entorno macroeconómico ha ralentizado la financiación de proyectos de infraestructuras. El actual trabajo de investigación tiene su motivación en la búsqueda de soluciones para la financiación de proyectos de infraestructuras y de energía, mitigando los riesgos inherentes, con el objeto de reducir el consumo de capital económico en los bancos financiadores. Este objetivo se alcanza compartiendo el riesgo de la financiación con IFMs, a través de estructuras de risk-sharing. La investigación responde la pregunta: "Cuál es el impacto de risk-sharing con IFMs, en la financiación de proyectos para aumentar su eficiencia y viabilidad?". El trabajo se desarrolla desde el enfoque de un banco comercial, estimando el consumo de capital económico en la financiación de proyectos y analizando las principales variables del riesgo de crédito, Probability of Default, Loss Given Default and Recovery Rates, (Altman, 2010). La investigación presenta las cifras globales de Project Finance en los sectores de infraestructuras y de energía, y analiza el marco regulatorio internacional en relación al consumo de capital económico en la financiación de proyectos en los que participan IFMs. A continuación, el trabajo modeliza una cartera real, bien diversificada, de Project Finance de infraestructuras y de energía, aplicando la metodología CreditMet- rics (J. P. Morgan, 1997). Su objeto es estimar el consumo de capital económico y la rentabilidad de la cartera de proyectos a través del RAROC y EVA. La modelización permite estimar el efecto diversificación y la liberación de capital económico consecuencia del risk-sharing. Los resultados muestran el enorme impacto del efecto diversificación de la cartera, así como de las garantías parciales de las IFMs que mitigan riesgos, mejoran el recovery rate de los proyectos y reducen el consumo de capital económico para el banco comercial, mientras aumentan la rentabilidad, RAROC, y crean valor económico, EVA. En escenarios económicos de inestabilidad, empeoramiento del rating de los bancos, aumentos de default en los proyectos y de correlación en las carteras, hay un impacto directo en el capital económico y en la pérdida de rentabilidad. La liberación de capital económico, como se plantea en la presente investigación, permitirá financiar más proyectos de infraestructuras y de energía, lo que repercutirá en un mayor crecimiento económico y creación de empleo. La principal contribución de este trabajo es promover la gestión activa del capital económico en la financiación de infraestructuras y de proyectos energéticos, a través de estructuras innovadoras de risk-sharing con IFMs y de creación de valor económico en los bancos comerciales, lo que mejoraría su eficiencia y capitalización. La aportación metodológica del trabajo se convierte por su originalidad en una contribución, que sugiere y facilita nuevas líneas de investigación académica en las principales variables del riesgo de crédito que afectan al capital económico en la financiación de proyectos.

Development of web services to help risk management of construction projects

Dissertação apresentada na Faculdade de Ciências e Tecnologia da Universidade Nova de Lisboa para obtenção do grau de Mestre em Engenharia Electrotécnica e de Computadores

Roles in construction projects: analysis and terminology

Standard form contracts are typically developed through a negotiated consensus, unless they are proffered by one specific interest group. Previously published plans of work and other descriptions of the processes in construction projects tend to focus on operational issues, or they tend to be prepared from the point of view of one or other of the dominant interest groups. Legal practice in the UK permits those who draft contracts to define their terms as they choose. There are no definitive rulings from the courts that give an indication as to the detailed responsibilities of project participants. The science of terminology offers useful guidance for discovering and describing terms and their meanings in their practical context, but has never been used for defining terms for responsibilities of participants in the construction project management process. Organizational analysis enables the management task to be deconstructed into its elemental parts in order that effective organizational structures can be developed. Organizational mapping offers a useful technique for reducing text-based descriptions of project management roles and responsibilities to a comparable basis. Research was carried out by means of a desk study, detailed analysis of nine plans of work and focus groups representing all aspects of the construction industry. No published plan of work offers definitive guidance. There is an enormous amount of variety in the way that terms are used for identifying responsibilities of project participants. A catalogue of concepts and terms (a “Terminology”) has been compiled and indexed to enable those who draft contracts to choose the most appropriate titles for project participants. The purpose of this terminology is to enable the selection and justification of appropriate terms in order to help define roles. The terminology brings an unprecedented clarity to the description of roles and responsibilities in construction projects and, as such, will be helpful for anyone seeking to assemble a team and specify roles for project participants.

Informal communication networks and the diffusion of innovations in UK construction projects: A research design

The UK industry has been criticised for being slow to adopt construction process innovations. Research shows that the idiosyncrasies of participants, their roles in the system and the contextual differences between sections of the industry make this a highly complex problem. There is considerable evidence that informal social networks play a key role in diffusion of innovations. The aim is to identify informal communication networks of project participants and the role these play in the diffusion of construction innovations. The characteristics of this network will be analysed in order to understand how they can be used to accelerate innovation diffusion within and between projects. Social Network Analysis is used to determine informal communication routes. Control and experiment case study projects are used within two different organizations. This allows informal communication routes concerning innovations to be mapped, whilst testing if the informal routes can facilitate diffusion. Analysis will focus upon understanding the combination of informal strong and weak ties, and how these impede or facilitate the diffusion of the innovation. Initial work suggests the presence of an informal communication network. Actors within this informal network, and the organization's management are unaware of its' existence and their informal roles within it. Thus, the network remains an untapped medium regarding innovation diffusion. It is proposed that successful innovation diffusion is dependent upon understanding informal strong and weak ties, at project, organization and industry level.

Learning across business sectors: facets of innovation in aerospace and construction

Innovation is notoriously difficult to define and is invariably intertwined with issues of knowledge creation, continuous improvement and organisational change. An extensive literature classifies numerous types of innovation and militates against any simplistic attempt at definition. It is widely accepted that innovation is at least partly dependent upon the surrounding environment. Industry recipes and institutionally embedded practices shape the environment within which innovation occurs. Recent research directions have addressed the diffusion of innovation and its dependence upon social and institutional structures. In this respect, it is highly pertinent to compare the way that innovation is interpreted and enacted in different industrial sectors. The comparison between UK aerospace and construction is especially revealing because the two sectors are so different and therefore constitute radically different climates for innovation. Empirical research is reported based on semi-structured interviews with practitioners from both sectors. Interpretations of innovation are found to differ dramatically between aerospace and construction. Within the context of an ongoing struggle to define innovation, both industries are striving to become more innovative. The aerospace sector is found to emphasise technical innovation whereas the construction sector emphasises process innovation. An overriding cultural bias in Western economies towards technological innovation results in the common perception that aerospace is much more innovative than construction. The experienced realities of practitioners in the two sectors are much more complex.

Role conflict and role ambiguity in construction projects

Role conflict happens when a person faces different and incompatible expectations regarding a particular social status which they occupy. The literature on role conflict is reviewed for a better understanding of project dynamics in construction teams. The discussion focuses on issues surrounding the miscommunication of role expectations and tensions owing to differences in expectations of the same role. This ongoing doctoral study involves a qualitative research design, based on interviews with practicing professionals. Analysis will focus on the relation between formal expectations, as evidenced in contracts and other types of written communication, and informal expectations as observed from the interviews. Insights from the literature review suggest: 1. that the differences between formal and informal expectations is a major sources of role conflict in construction teams and 2. that this effect is exacerbated by the failure of team members to recognise it and take it into account.

Auto ID-Bridging the physical and the digital on construction projects

This book looks at how auto-ID has evolved and how it can be used in the construction industry and across projects from the perspective of all the stakeholders, from owners to design consultants, contractors and the supply chain. It could help to improve efficiency, reduce costs, ensure quality, protect the environment, and enhance safety.

A proposal for improving safety in construction projects by strengthening coordinators’ competencies in health and safety issues

The figure of the coordinator in health and safety issues in the construction sector first appeared in our legislation through the incorporation of the European Directives (in our case Royal Decree 1627/97 on the minimum health and safety regulations in construction works), and is viewed differently in different countries of the European Union regarding the way they are hired and their role in the construction industry. Coordinating health and safety issues is also a management process that requires certain competencies that are not only based on technical or professional training, but which, taking account of the work environment, require the use of strategies and tools that are related to experience and personal skills. Through a piece of research that took account of expert opinions in the matter, we have found which competencies need to be possessed by the health and safety coordinator in order to improve the safety in the works they are coordinating. The conclusions of the analyses performed using the appropriate statistical methods (comparing means and multivariate analysis techniques), will enable training programmes to be designed and ensure that the health and safety coordinators selected have the competencies required to carry out their duties.

A proposal for improving safety in construction projects by strengthening coordinators’ competencies in health and safety issues

The figure of the coordinator in health and safety issues in the construction sector first appeared in our legislation through the incorporation of the European Directives (in our case Royal Decree 1627/97 on the minimum health and safety regulations in construction works), and is viewed differently in different countries of the European Union regarding the way they are hired and their role in the construction industry. Coordinating health and safety issues is also a management process that requires certain competencies that are not only based on technical or professional training, but which, taking account of the work environment, require the use of strategies and tools that are related to experience and personal skills. Through a piece of research that took account of expert opinions in the matter, we have found which competencies need to be possessed by the health and safety coordinator in order to improve the safety in the works they are coordinating. The conclusions of the analyses performed using the appropriate statistical methods (comparing means and multivariate analysis techniques), will enable training programmes to be designed and ensure that the health and safety coordinators selected have the competencies required to carry out their duties.