The dilemma of scope and scale for construction professional service firms

Construction professional service (CPS) firms sell expertise and provide innovative solutions for projects founded on their knowledge, experience, and technical competences. Large CPS firms seeking to grow will often seek new opportunities in their domestic market and overseas by organic or inorganic growth through mergers, alliances, and acquisitions. Growth can also come from increasing market penetration through vertical, horizontal, and lateral diversification. Such growth, hopefully, leads to economies of scope and scale in the long term, but it can also lead to diseconomies, when the added cost of integration and the increased complexity of diversification no longer create tangible and intangible benefits. The aim of this research is to investigate the key influences impacting on the growth in scope and scale for large CPS firms. Qualitative data from the interviews were underpinned by secondary data from CPS firms’ annual reports and analysts’ findings. The findings showed five key influences on the scope and scale of a CPS firm: the importance of growth as a driver; the influence of the ownership of the firm on the decision for growth in scope and scale; the optimization of resources and capabilities; the need to serve changing clients’ needs; and the importance of localization. The research provides valuable insights into the growth strategies of international CPS firms. A major finding of the research is the influence of ownership on CPS firms’ growth strategies which has not been highlighted in previous research.

Sustainable construction: exploring the capabilities of Nigerian construction firms

As the built environment accounts for much of the world's emissions, resource consumption and waste, concerns remain as to how sustainable the sector is. Understanding how such concerns can be better managed is complex, with a range of competing agendas and institutional forces at play. This is especially the case in Nigeria where there are often differing priorities, weak regulations and institutions to deal with this challenge. Construction firms are in competition with each other in a market that is growing in size and sophistication yearly. The business case for sustainability has been argued severally in literature. However, the capability of construction firms with respect to sustainability in Nigeria has not been studied. This paper presents the preliminary findings of an exploratory multi-case study carried out to understand the firm's views on sustainability as a source of competitive advantage. A international firm and a lower medium-sized indigenous firm were selected for this purpose. Qualitative interviews were conducted with top-level management of both firms, with key themes from the sustainable construction and dynamic capabilities literature informing the case study protocol. The interviews were transcribed and analysed with the use of NVivo software. The findings suggest that the multinational firm is better grounded in sustainability knowledge. Although the level of awareness and demand for sustainable construction is generally very poor, few international clients are beginning to stimulate interest in sustainable buildings. This has triggered both firms to build their capabilities in that regard, albeit in an unhurried manner. Both firms agree on the potentials of market-driven sustainability in the long term. Nonetheless, more drastic actions are required to accelerate the sustainable construction agenda in Nigeria.

STABILITY ANALYSIS WITH APPLICATIONS OF A TWO-DIMENSIONAL DYNAMICAL SYSTEM ARISING FROM A STOCHASTIC MODEL FOR AN ASSET MARKET

We analyze the stability properties of equilibrium solutions and periodicity of orbits in a two-dimensional dynamical system whose orbits mimic the evolution of the price of an asset and the excess demand for that asset. The construction of the system is grounded upon a heterogeneous interacting agent model for a single risky asset market. An advantage of this construction procedure is that the resulting dynamical system becomes a macroscopic market model which mirrors the market quantities and qualities that would typically be taken into account solely at the microscopic level of modeling. The system`s parameters correspond to: (a) the proportion of speculators in a market; (b) the traders` speculative trend; (c) the degree of heterogeneity of idiosyncratic evaluations of the market agents with respect to the asset`s fundamental value; and (d) the strength of the feedback of the population excess demand on the asset price update increment. This correspondence allows us to employ our results in order to infer plausible causes for the emergence of price and demand fluctuations in a real asset market. The employment of dynamical systems for studying evolution of stochastic models of socio-economic phenomena is quite usual in the area of heterogeneous interacting agent models. However, in the vast majority of the cases present in the literature, these dynamical systems are one-dimensional. Our work is among the few in the area that construct and study analytically a two-dimensional dynamical system and apply it for explanation of socio-economic phenomena.

The risks and rewards of international construction from an Australian perspective

Very little research has been carried out regarding the risks and rewards of the international construction industry/market from an Australian perspective. A survey was sent to Australian based construction companies known to be operating internationally, to obtain their insights and perspectives on the risks and rewards of the international construction industry/market and international construction projects. Australian based companies have expanded their operations in order to benefit from inducements such as growth, profit and diversification. Continuing globalization and the openness of new markets has also provided significant opportunities to expand for Australian companies. Those Australian construction companies that have been operating abroad have been doing so for 20+ years in the Asia-Pacific and Australasian regions. This is significant as it shows that easily accessible markets are a stepping stone for further overseas expansion. The most commonly rated rewards for operating overseas were growth and profit; which matched the initial reason most companies chose to expand overseas. It was established that the ability to increase long term profitability through diversification was the biggest inducement for Australian construction companies expanding their operations overseas. When asked to rate the risks associated with international construction not one risk was rated significantly higher than the rest which supports the conclusion that the types of risks and rewards associated with each market rarely vary; only the severity and likelihood of occurrence. From an overall Australian perspective this research has established that the reasons and rewards for expanding overseas were the identical. Further that the risks associated with international construction were established as being different and varied depending on the market.

Preparing construction project managers to document professional growth

Deakin University’s School of Architecture and Building is renowned for producing graduates who possess relevant attributes that make them job ready for the building and construction industry. Graduate destination surveys indicate that in the last eight (8) years, 100% of all Infrastructure Logistics (Construction and Facility Management) course graduates found relevant employment. This success is a direct result of a curriculum that is responsive to industry needs alongside educational methodology that focuses on excellent teaching and research while seeking new ways of developing and delivering courses.

The Infrastructure Logistics course prepares graduates to successfully compete in today’s global job market, and allows them to showcase relevant knowledge and skills that are critical in seeking and sustaining employment. Traditionally, tailored resumes served this purpose; however, in many professional fields, professional portfolios are now becoming a more desirable way of providing a summary of relevant attributes alongside evidence of professional abilities.

Sustaining employment, appraisals, and applying for a promotion are often subject to adequate evidence of professional standards and growth. Professional bodies require records of contribution to Continuing Professional Development (CPD) schemes; and accrediting organisations require professionals applying for professional registration to provide documented evidence of their relevant experience and abilities. The Australian Institute of Project Management (AIPM 2007) requires candidates wanting to become Registered Project Managers (RegPM) to demonstrate their current work-based experience and competencies.

This paper reports on a teaching strategy adopted in the Project Management (PM) stream, offered as part of Infrastructure Logistic courses. The teaching strategy is based on a combination of constructivism theory of learning, problem and project based learning, and active learning. The strategy requires systematic reflection and conscious creation of documented evidence of PM attributes and competences in the form of a portfolio.

Preliminary results of action research monitoring the effectiveness of systematic reflection indicate that students respond very positively to the idea of professional journals and professional portfolios. Preliminary results also indicate that students accept reflection and conscious documentation of their achievements as an integral part of their study and future practice.

Secrecy and illusion : Second Life and the construction of unreality

This paper analyses the main Second Life Grid-an Internet-based business platform with dynamic social, techno-economic, sensual-aesthetic, and psychological complexities-as an example of public relations. It argues that Second Life is a more subversive, politically oriented, and powerful form of public relations, because it invisibly exploits and invades the process of the formation of public opinion. The paper argues that Australian organisations such as Telstra, the Australian Broadcasting Corporation (ABC), and the Australian Film Television and Radio School (AFTRS), which lend Second Life credibility through their recruitment, need to ask critical questions about the ethical implications of promoting this market-driven cyber-illusion. The paper begins by defining public relations (Habermas, 1995, 1984, 1989; Gramsci in Storey, 2006) and investigating any links between public relations and Second Life. In particular, it investigates Second Life's defining claim that it is 'imagined, created and owned by its residents', and concludes with a series of questions that organisations seeking involvement in Second Life should consider as part of their decision-making.

Internationalisation process for construction design service SMES on multi national projects

The internationalisation process has four key factors including market selection, decision to enter, entry modes and factors affecting entry modes. Small and medium sizes enterprises (SMEs) in the architectural engineering construction design services sector have demonstrated an increasing involvement in international markets. Consequently, activities and processes involved in internationalisation of these SME types present important issues for understanding from entrepreneurial, managerial and research perspectives. A research gap exists, however, through emphasis in past research having been given to large firms, and in particular those within manufacturing. This investigation identified similarities and differences between two construction design service SMEs who have been exporting to various localities including Eastern Europe, Africa, Middle East, UK, Asia and South America for typically more than two decades. Similarities and differences were identified within eight major constructs including: purpose, firm type, market image and design philosophy, entry mode strategy, institutional arrangement, factors affecting mode of entry, marketing selection and firm strategy in relation to project selection. The primary reasons for firms in both cases working in international markets were associated with the firms' motivations related to growth and enhancement of financial viability. Both firms were categorized as client following. This paper discusses the various internationalization processes and explains the reasons intrinsic to each case study. The two firms have been highly successful in the internationalization processes on multi-national projects die to a reflexive capability philosophy which incorporates continuous analysis and alignment between firm and locality characteristic to transform traditional barriers into enablers of success.

Construction supply chain modeling : a research review and interdisciplinary research agenda

Supply chain management has emerged as a popular and useful concept in the construction industry and research community since the mid 1990s. Research in construction supply chain management draws from a broad range of disciplines, notably: (1) Industrial organization economics to better understand market structure and forces and their effect on firm and supply chain behavior and (2) Analytic modeling of supply chains to improve supply chain performance along metrics such as speed, cost, reliability, quality, etc. Both industrial organization and analytic modeling provide useful but ultimately incomplete perspectives and prescriptions for construction supply chain management. As such, this paper proposes development of an interdisciplinary research agenda that draws from both fields. Towards that agenda, a review of research is presented to introduce the main ideas, relevant literature, and theory and methods in each of the two areas. From these independent reviews, applications that could benefit from a combined perspective are identified and used as a basis for development of an interdisciplinary research agenda.

The development of a neo-industrial organisation methodology for describing and comparing structural and behavioural characteristics of construction supply chains

The model draws from theories of industrial economics and supply chain literature, and is an attempt to advance the construction supply chain field through the development of an industrial organisational methodology to describe construction supply chains.
Empirical studies have examined the industrial organisation of other industries, typically forming descriptions based upon vertical integration and horizontal market concentration. A review of the trends in the supply chain literature indicate there is a need to develop a model to describe the industrial organisation of the construction industry through supply chain structure. The merging of the supply chain concept with the industrial organisation model as a methodology for understanding the structural characteristics is an important contribution to construction economic theory. The paper begins to develop a language for describing the structure and behaviour of supply chains specific to the construction industry and is so doing suggests a neo-industrial organisation approach.

Construction supply chain management : a research review and interdisciplinary research agenda

Supply chain management has emerged as a popular and useful concept in the construction industry and research community since the mid 1990s. Research in construction supply chain management draws from a broad range of disciplines, notably: (1) industrial organization economics to better understand market structure and forces and their effect on firm and supply chain behavior and (2) Analytic modeling of supply chains to improve supply chain performance along metrics such as speed, cost, reliability, quality, etc. Both industrial organization and analytic modeling provide useful but ultimately incomplete perspectives and prescriptions for construction supply chain management. As such, this paper proposes development of an interdisciplinary research agenda that draws from both fields. Towards that agenda, a review of research is presented to introduce the main ideas, relevant literature, and theory and methods in each of the two areas. From these independent reviews, applications that could benefit from a combined perspective are identified and used as a basis for development of an interdisciplinary research agenda.

Joint European masters awards in construction management and construction economics : a positive step for surveying education?

The Royal Institution of Chartered Surveyors (RICS) 5th European Conference in November 2004 focussed on enhancing collaboration at master's level in real estate education across Europe. In a context of increased global economic activity and increasing ties within the EU, there are benefits to business and to students in offering this type of educational provision. But is this paradigm true for construction economics (CE) and construction management (CM)? This paper examined the potential for collaboration and joint European awards in CM and CE. There is a political will for collaboration in HE based on economic drivers for the growth of the EU and changes are being implemented to enhance transparency and mobility for students. Professional bodies are expanding their European presence. Globalisation has resulted in greater opportunities for international real estate, and construction and there is growth in these sectors for practitioners. The difficulties with joint European collaboration are short course duration and the need to cover extensive subject matter. Other barriers are university structures, quality assurance procedures, costs and finances issues as well as IT, student services and support issues. The survey revealed that there are no RICS accredited CM / CE courses outside of the UK which inhibits collaboration. The sample was split in perceived demand for collaboration and the European focus within the courses is limited, as are field trips outside the UK. Student exchange on courses is rare. Generally there is a lag between the political will to greater student mobility and collaboration and the market, which is showing growth in multinational organisations and demand for pan European construction services and a professional body keen to deliver and support this growth. Within academia the barriers and current economic climate in HE preclude the widespread adoption of greater collaboration and development of joint awards, however this position may change.

Construction supply chain modeling : a research review and interdisciplinary research agenda

Supply chain management has emerged as a popular and useful concept in the construction industry and research community since the mid 1990s. Research in construction supply chain management draws from a broad range of disciplines, notably: (1) industrial organization economics to better understand market structure and forces and their effect on firm and supply chain behavior and (2) Analytic modeling of supply chains to improve supply chain performance along metrics such as speed, cost, reliability, quality, etc. Both industrial organization and analytic modeling provide useful but
ultimately incomplete perspectives and prescriptions for construction supply chain management. As such, this paper proposes development of an interdisciplinary research agenda that draws from both fields. Towards that agenda, a review of research is presented to introduce the main ideas, relevant literature, and theory and methods in each of the two areas. From these independent reviews, applications that could benefit from a combined perspective are identified and used as a basis for development of an
interdisciplinary research agenda.

Developing reflexive capability for successful joint ventures between Australian and Malaysian property and construction professionals

Increasingly Malaysian property and construction firms are seeking to work internationally. Firms enter international markets through various strategies and typically property and construction professionals rely on developing various forms of cooperative and collaborative arrangements. The common modes of entry include international alliances, project joint ventures, partnerships, company joint ventures and large consortiums; which arise as a response to clients seeking expressions of interests from the international community or the firms seeking to internationalise approaching clients and/or potential host country partners. Increasingly project teams on international mega projects are composed of multiple key partners from different countries coming together to achieve a higher level of strategic flexibility. Establishing and maintaining local connections and business networks are therefore critical to ensure the success of exporting firms. This paper reports the findings of a project which explores factors affecting the performance of Malaysian property and construction professionals working internationally through effective joint ventures. The project seeks to develop a performance measurement framework to examine the extent to which Malaysian firms are developing sustainable business models internationally which adapt and respond to changing conditions. A generic framework was initially developed prior to this study through a grounded theory approach merging theory from internationalisation, design management and market knowledge literature followed by a case study empirical investigation and then further literature review based upon the themes which emerged from the case study analysis. A reflexive capability model for firms in managing both economic and non-economic capital; including social, cultural and intellectual capital was developed. This project seeks to build upon the reflexive model by adapting it to the unique contexts related to the specific geographic localities of exporting Malaysian firms. Specifically, the project explores the extent to which the performance measurement framework can be used to map capabilities Malaysian construction firms have and Which they need to develop in relation to developing and maintaining international collaborative partnerships. The preliminary results of one case study Malaysian architectural firm are discussed.

Towards the development of a construction supply chain transaction cost economic model for strategic infrastructure procurement evaluation

Australia has adopted public-private partnership (PPP) as a major strategy for procuring infrastructure for decades. However, even though considered to be a mature and sophisticated market, several major
failures have occurred resulting in increasing financial burdens on taxpayers. Failures have typically been traced back to economic evaluation and, in particular, value-for-money across the supply chain
in the original proposal. However, the literature review identified that there was no economic model that evaluated holistically the transaction costs of PPPs across the supply chain. In this paper, theories of transaction cost economics and construction supply chain economics are critiqued and analysed in order to develop a strategic infrastructure procurement evaluation model. The model will offer decision makers with an insight into project life cycle economic outcomes needed to successfully deliver PPPs.

Design management methodology to strengthen firm and industry competitiveness in the construction design services export sector

The aim of this research was to investigate strategies deployed by successful construction design-related firms towards achieving high levels of firm competitiveness in international markets. A reflexive capability model, developed through a critical analysis of related internationalisation literature, is composed of three key areas; internationalisation process, market knowledge and design management. Firm reflexive capability is explored through the management of social, cultural and intellectual capital. The concept of reflexivity is borrowed from sociology. Reflexivity is reinterpreted as the ‘firm’s’ ability to be aware, responsive and adaptable to self, market and project needs assessment. A cross case analysis explored the barriers and success factors through three constructs; internationalisation process, design management and market knowledge of three firms. This paper demonstrates that international firm competitiveness is dependent upon the strategic inter-relational management of social, cultural and intellectual capital for maximum advantage of the utilisation and leverage of one form of capital to gain another. This leads to the development of increasing reflexive capability to support internationalisation. An outcome of this research is the identification of the central relation between a level of reflexive capability within the firm and the firm’s level of success in international markets. This research is part of an ongoing program of research on international collaborative practice. A Reflexive Capability Matrix was developed from the findings of one research project and then validated through a second research project (only the capability matrix is presented in this paper though). The reflexive capability approach is appropriate to all firms but what is speculated upon is that the reflexive capability is particularly intrinsic to small to medium sized construction design firms who work globally. A reflexive capability is a characteristic of successful and innovative firms internationalising and working within global models of practice.