Investment decision-making under risk (reliability) and uncertainty for infrastructure asset management

Risks and uncertainties are inevitable in engineering projects and infrastructure investments. Decisions about investment in infrastructure such as for maintenance, rehabilitation and construction works can pose risks, and may generate significant impacts on social, cultural, environmental and other related issues. This report presents the results of a literature review of current practice in identifying, quantifying and managing risks and predicting impacts as part of the planning and assessment process for infrastructure investment proposals. In assessing proposals for investment in infrastructure, it is necessary to consider social, cultural and environmental risks and impacts to the overall community, as well as financial risks to the investor. The report defines and explains the concept of risk and uncertainty, and describes the three main methodology approaches to the analysis of risk and uncertainty in investment planning for infrastructure, viz examining a range of scenarios or options, sensitivity analysis, and a statistical probability approach, listed here in order of increasing merit and complexity. Forecasts of costs, benefits and community impacts of infrastructure are recognised as central aspects of developing and assessing investment proposals. Increasingly complex modelling techniques are being used for investment evaluation. The literature review identified forecasting errors as the major cause of risk. The report contains a summary of the broad nature of decision-making tools used by governments and other organisations in Australia, New Zealand, Europe and North America, and shows their overall approach to risk assessment in assessing public infrastructure proposals. While there are established techniques to quantify financial and economic risks, quantification is far less developed for political, social and environmental risks and impacts. The report contains a summary of the broad nature of decision-making tools used by governments and other organisations in Australia, New Zealand, Europe and North America, and shows their overall approach to risk assessment in assessing public infrastructure proposals. While there are established techniques to quantify financial and economic risks, quantification is far less developed for political, social and environmental risks and impacts. For risks that cannot be readily quantified, assessment techniques commonly include classification or rating systems for likelihood and consequence. The report outlines the system used by the Australian Defence Organisation and in the Australian Standard on risk management. After each risk is identified and quantified or rated, consideration can be given to reducing the risk, and managing any remaining risk as part of the scope of the project. The literature review identified use of risk mapping techniques by a North American chemical company and by the Australian Defence Organisation. This literature review has enabled a risk assessment strategy to be developed, and will underpin an examination of the feasibility of developing a risk assessment capability using a probability approach.

Framework for investment decision-making under risk and uncertainty for infrastructure asset management

A study has been conducted to investigate current practices on decision-making under risk and uncertainty for infrastructure project investments. It was found that many European countries such as the UK, France, Germany including Australia use scenarios for the investigation of the effects of risk and uncertainty of project investments. Different alternative scenarios are mostly considered during the engineering economic cost-benefit analysis stage. For instance, the World Bank requires an analysis of risks in all project appraisals. Risk in economic evaluation needs to be addressed by calculating sensitivity of the rate of return for a number of events. Risks and uncertainties of project developments arise from various sources of errors including data, model and forecasting errors. It was found that the most influential factors affecting risk and uncertainty resulted from forecasting errors. Data errors and model errors have trivial effects. It was argued by many analysts that scenarios do not forecast what will happen but scenarios indicate only what can happen from given alternatives. It was suggested that the probability distributions of end-products of the project appraisal, such as cost-benefit ratios that take forecasting errors into account, are feasible decision tools for economic evaluation. Political, social, environmental as well as economic and other related risk issues have been addressed and included in decision-making frameworks, such as in a multi-criteria decisionmaking framework. But no suggestion has been made on how to incorporate risk into the investment decision-making process.

Incorporating an economic model in the health impact assessment approach

The current policy decision making in Australia regarding non-health public investments (for example, transport/housing/social welfare programmes) does not quantify health benefits and costs systematically. To address this knowledge gap, this study proposes an economic model for quantifying health impacts of public policies in terms of dollar value. The intention is to enable policy-makers in conducting economic evaluation of health effects of non-health policies and in implementing policies those reduce health inequalities as well as enhance positive health gains of the target population. Health Impact Assessment (HIA) provides an appropriate framework for this study since HIA assesses the beneficial and adverse effects of a programme/policy on public health and on health inequalities through the distribution of those effects. However, HIA usually tries to influence the decision making process using its scientific findings, mostly epidemiological and toxicological evidence. In reality, this evidence can not establish causal links between policy and health impacts since it can not explain how an individual or a community reacts to changing circumstances. The proposed economic model addresses this health-policy linkage using a consumer choice approach that can explain changes in group and individual behaviour in a given economic set up. The economic model suggested in this paper links epidemiological findings with economic analysis to estimate the health costs and benefits of public investment policies. That is, estimating dollar impacts when health status of the exposed population group changes by public programmes – for example, transport initiatives to reduce congestion by building new roads/ highways/ tunnels etc. or by imposing congestion taxes. For policy evaluation purposes, the model is incorporated in the HIA framework by establishing association among identified factors, which drive changes in the behaviour of target population group and in turn, in the health outcomes. The economic variables identified to estimate the health inequality and health costs are levels of income, unemployment, education, age groups, disadvantaged population groups, mortality/morbidity etc. However, though the model validation using case studies and/or available database from Australian non-health policy (say, transport) arena is in the future tasks agenda, it is beyond the scope of this current paper.

Debate on statutory control of the surveying profession in Queensland : 1907 to 1975

This article was written in 1997. After a 2009 review the content was left mostly unchanged - apart from this re-written abstract, restructured headings and a table of contents. The article deals directly with professional registration of surveyors; but it also relates to government procurement of professional services. The issues include public service and professional ethics; setting of professional fees; quality assurance; official corruption; and professional recruitment, education and training. Debate on the Land Surveyors Act 1908 (Qld) and its amendments to 1916 occurred at a time when industrial unrest of the 1890s and common market principles of the new Commonwealth were fresh in peoples’ minds. Industrial issues led to a constitutional crisis in the Queensland’s then bicameral legislature and frustrated a first attempt to pass a Surveyors Bill in 1907. The Bill was re-introduced in 1908 after fresh elections and Kidston’s return as state premier. Co-ordinated immigration and land settlement polices of the colonies were discontinued when the Commonwealth gained power over immigration in 1901. Concerns shifted to protecting jobs from foreign competition. Debate on 1974 amendments to the Act reflected concerns about skill shortages and professional accreditation. However, in times of economic downturn, a so-called ‘chronic shortage of surveyors’ could rapidly degenerate into oversupply and unemployment. Theorists championed a naïve ‘capture theory’ where the professions captured governments to create legislative barriers to entry to the professions. Supposedly, this allowed rent-seeking and monopoly profits through lack of competition. However, historical evidence suggests that governments have been capable of capturing and exploiting surveyors. More enlightened institutional arrangements are needed if the community is to receive benefits commensurate with sizable co-investments of public and private resources in developing human capital.

An empirical study : a role of financial and non-financial performance measurement and perceived innovation effectiveness

Practitioners and academics often assume that investments in innovation will lead to organizational improvements. However, previous research has often shown that implemented innovations fail to realise these potential improvements. On the other hand, organisation, perhaps, has been growing and productive because of the innovation, but traditional measurements have failed to capture that growth. In order to help organizations capture their innovation performance effectively, this study examined the organizations which employ different types of performance measurement and their perception of innovation effectiveness.

Comparing "socially responsible" and "sustainable" commercial property investment

Purpose – The purpose of this paper is to set out to explore the similarities and differences between jargon used to describe future-focussed commercial building product. This is not so much an exercise in semantics as an attempt to demonstrate that responses to challenges facing the construction and property sectors may have more to do with language than is generally appreciated. Design/methodology/approach – This is a conceptual analysis which draws upon relevant literature. Findings – Social responsibility and sustainability are often held to be much the same thing, with each term presupposing the existence of the other. Clearly, however, there are incidences where sustainable commercial property investment (SCPI) may not be particularly socially responsible, despite being understood as an environmentally friendly initiative. By contrast, socially responsible assets, at least in theory, should always be more sustainable than mainstream non-ethically based investment. Put simply, the expression of social responsibility in the built environment may evoke, and thereby deliver, a more sustainable product, as defined by wider socially inclusive parameters. Practical implications – The findings show that promoting an ethic of social responsibility may well result in more SCPI. Thus, the further articulation and celebration of social responsibility concepts may well help to further advance a sustainable property investment agenda, which is arguably more concerned about demonstrability of efficiency than wider public good outcomes. Originality/value – The idea that jargon affects outcomes is not new. However, this idea has rarely, if ever, been applied to the distinctions between social responsibility and sustainability. Even a moderate re-emphasis on social responsibility in preference to sustainability may well provide significant future benefits with respect to the investment, building and refurbishment of commercial property.

Nature's experiment? Handedness and early childhood development

In recent years a large body of research has investigated the various factors affecting child development and the consequent impact of child development on future educational and labour market outcomes. In this article we contribute to this literature by investigating the effect of handedness on a child and given recent research demonstrating that child development strongly affects adult outcomes. Using a large nationally representative sample of young children we find that the probability of a child being left-handed is not significantly related to child health at birth, family composition, parental employment or household income. We also find robust evidence that left-handed (and mixed handed) children perform significantly worse in nearly all measures of development than right-handed children with the relative disadvantage being larger for boys than girls. Importantly these differentials cannot be explained by different socioeconomic characteristics of the household, parental attitudes or investments in learning resources.

Digital kids, analogue students : a mixed methods study of students' engagement with a school-based Web 2.0 learning innovation

The inquiry documented in this thesis is located at the nexus of technological innovation and traditional schooling. As we enter the second decade of a new century, few would argue against the increasingly urgent need to integrate digital literacies with traditional academic knowledge. Yet, despite substantial investments from governments and businesses, the adoption and diffusion of contemporary digital tools in formal schooling remain sluggish. To date, research on technology adoption in schools tends to take a deficit perspective of schools and teachers, with the lack of resources and teacher ‘technophobia’ most commonly cited as barriers to digital uptake. Corresponding interventions that focus on increasing funding and upskilling teachers, however, have made little difference to adoption trends in the last decade. Empirical evidence that explicates the cultural and pedagogical complexities of innovation diffusion within long-established conventions of mainstream schooling, particularly from the standpoint of students, is wanting. To address this knowledge gap, this thesis inquires into how students evaluate and account for the constraints and affordances of contemporary digital tools when they engage with them as part of their conventional schooling. It documents the attempted integration of a student-led Web 2.0 learning initiative, known as the Student Media Centre (SMC), into the schooling practices of a long-established, high-performing independent senior boys’ school in urban Australia. The study employed an ‘explanatory’ two-phase research design (Creswell, 2003) that combined complementary quantitative and qualitative methods to achieve both breadth of measurement and richness of characterisation. In the initial quantitative phase, a self-reported questionnaire was administered to the senior school student population to determine adoption trends and predictors of SMC usage (N=481). Measurement constructs included individual learning dispositions (learning and performance goals, cognitive playfulness and personal innovativeness), as well as social and technological variables (peer support, perceived usefulness and ease of use). Incremental predictive models of SMC usage were conducted using Classification and Regression Tree (CART) modelling: (i) individual-level predictors, (ii) individual and social predictors, and (iii) individual, social and technological predictors. Peer support emerged as the best predictor of SMC usage. Other salient predictors include perceived ease of use and usefulness, cognitive playfulness and learning goals. On the whole, an overwhelming proportion of students reported low usage levels, low perceived usefulness and a lack of peer support for engaging with the digital learning initiative. The small minority of frequent users reported having high levels of peer support and robust learning goal orientations, rather than being predominantly driven by performance goals. These findings indicate that tensions around social validation, digital learning and academic performance pressures influence students’ engagement with the Web 2.0 learning initiative. The qualitative phase that followed provided insights into these tensions by shifting the analytics from individual attitudes and behaviours to shared social and cultural reasoning practices that explain students’ engagement with the innovation. Six indepth focus groups, comprising 60 students with different levels of SMC usage, were conducted, audio-recorded and transcribed. Textual data were analysed using Membership Categorisation Analysis. Students’ accounts converged around a key proposition. The Web 2.0 learning initiative was useful-in-principle but useless-in-practice. While students endorsed the usefulness of the SMC for enhancing multimodal engagement, extending peer-topeer networks and acquiring real-world skills, they also called attention to a number of constraints that obfuscated the realisation of these design affordances in practice. These constraints were cast in terms of three binary formulations of social and cultural imperatives at play within the school: (i) ‘cool/uncool’, (ii) ‘dominant staff/compliant student’, and (iii) ‘digital learning/academic performance’. The first formulation foregrounds the social stigma of the SMC among peers and its resultant lack of positive network benefits. The second relates to students’ perception of the school culture as authoritarian and punitive with adverse effects on the very student agency required to drive the innovation. The third points to academic performance pressures in a crowded curriculum with tight timelines. Taken together, findings from both phases of the study provide the following key insights. First, students endorsed the learning affordances of contemporary digital tools such as the SMC for enhancing their current schooling practices. For the majority of students, however, these learning affordances were overshadowed by the performative demands of schooling, both social and academic. The student participants saw engagement with the SMC in-school as distinct from, even oppositional to, the conventional social and academic performance indicators of schooling, namely (i) being ‘cool’ (or at least ‘not uncool’), (ii) sufficiently ‘compliant’, and (iii) achieving good academic grades. Their reasoned response therefore, was simply to resist engagement with the digital learning innovation. Second, a small minority of students seemed dispositionally inclined to negotiate the learning affordances and performance constraints of digital learning and traditional schooling more effectively than others. These students were able to engage more frequently and meaningfully with the SMC in school. Their ability to adapt and traverse seemingly incommensurate social and institutional identities and norms is theorised as cultural agility – a dispositional construct that comprises personal innovativeness, cognitive playfulness and learning goals orientation. The logic then is ‘both and’ rather than ‘either or’ for these individuals with a capacity to accommodate both learning and performance in school, whether in terms of digital engagement and academic excellence, or successful brokerage across multiple social identities and institutional affiliations within the school. In sum, this study takes us beyond the familiar terrain of deficit discourses that tend to blame institutional conservatism, lack of resourcing and teacher resistance for low uptake of digital technologies in schools. It does so by providing an empirical base for the development of a ‘third way’ of theorising technological and pedagogical innovation in schools, one which is more informed by students as critical stakeholders and thus more relevant to the lived culture within the school, and its complex relationship to students’ lives outside of school. It is in this relationship that we find an explanation for how these individuals can, at the one time, be digital kids and analogue students.

Choosing to become a 'lost cause': the perverse effects of benefit preconditions

This paper argues that preconditions for welfare benefit entitlements based on labour market prospects can be counterproductive when they create an incentive for individuals to abstain from any investment earlier in life that could improve future prospects. Benefit entitlements based partly on investments made prior to labour market entry are then Pareto-improving.

Extending life-cycle costing (LCC) analysis for sustainability considerations in road infrastructure projects

Sustainable development is about making societal investments. These investments should be in synchronization with the natural environment, trends of social development, as well as organisational and local economies over a long time span. Traditionally in the eyes of clients, project development will need to produce the required profit margins, with some degrees of consideration for other impacts. This is being changed as all citizens of our society are becoming more aware of concepts and challenges such as the climate change, greenhouse footprints, and social dimensions of sustainability, and will in turn demand answers to these issues in built facilities. A large number of R&D projects have focused on the technical advancement and environmental assessment of products and built facilities. It is equally important address the cost/benefit issue, as developers in the world would not want to loose money by investing in built assets. For infrastructure projects, due to its significant cost of development and lengthy delivery time, presenting the full money story of going green is of vital importance. Traditional views of life-cycle costing tend to focus on the pure economics of a construction project. Sustainability concepts are not broadly integrated with the current LCCA in the construction sector. To rectify this problem, this paper reports on the progress to date of developing and extending contemporary LCCA models in the evaluation of road infrastructure sustainability. The suggested new model development is based on sustainability indicators identified through previous research, and incorporating industry verified cost elements of sustainability measures. The on-going project aims to design and a working model for sustainability life-cycle costing analysis for this type of infrastructure projects.

On importer trust and commitment : a comparative study of two developing countries

Purpose: Relationship trust and commitment are two key dimensions of international exchanges. Both have been extensively investigated from an exporter (as opposed to importer) perspective in developed country (as opposed to developing country) contexts. To address these gaps, this study aims to develop a model of antecedents and outcomes of importer trust and commitment in two developing countries.---------- Design/methodology: The authors test the proposed model using data from Chile and Bangladesh. Hypotheses were tested using structural equation modeling (SEM).---------- Findings: SEM analysis revealed that most of the hypotheses were supported in both the Bangladeshi and Chilean context. The findings of this study also suggest that the effects of importer transaction-specific investments on importer commitment are distinct in the Bangladeshi context. Practical implications: Practically, these results show that trust and commitment are essential for enhancing importer relationship performance in developing countries. Importer trust in a foreign supplier is effective when suppliers are competent and provide relatively superior facilities, as opposed to opportunistic proclivity. Importer commitment to a foreign supplier is stronger when importers perceive that the foreign supplier is not opportunistic, but is knowledgeable and experienced with the importer market, and they perceive that it is an advantage importing from that supplier. Cultural similarity between importers and foreign suppliers improves importer trust in both countries. However, importer commitment in Chile increases with importer transaction-specific investment, but this is not found to be the case in Bangladesh.---------- Originality/value: This study contributes to the importer-exporter exchange relationship literature by testing a model of antecedents and outcomes of importer trust and commitment. The tested model is one of few that considers developing country contexts and incorporates two novel antecedents of trust and commitment: importer knowledge and experience, and supplier resource competency.

Australian foundations and the downturn

Building on the investigation of the Charity Commission (2009) on the effects of the economic downturn on the largest trusts and foundation in the United Kingdom, the purpose of this research was to assess the extent to which Australian trusts and foundations were taking an actively strategic approach to their investments and pursuit of mission (including grant-making), and the relationship between the two in the context of the economic downturn. Focus was given to identifying the issues raised as a consequence of the economic downturn, rather than providing a generalised snapshot of the ‘average’ foundations response. In September 2009, semi-structured, in depth interviews were conducted with executives of 23 grant making trusts and foundations. The interviews for this research focused on the largest grant makers in terms of grant expenditure, however included foundations from different geographical locations and from across different cause areas. It is important to stress at the outset that this was not a representative sample of foundations; the study aimed to identify issues rather than to present a representative picture of the ‘average’ foundation’s response. It is also important to note that the study was undertaken in September 2009 at a time when many foundations were beginning to feel more optimistic about the longer term future, but aware of continuing and possibly worsening short term income problems. But whatever the financial future, some of the underlying issues, concerning investment and grant making management practices, raised in this report will be of continuing relevance worthy of wider discussion. If a crisis is too good to waste, it is also too good to forget. One other introductory point – as previously noted, interviews for this study were conducted in September 2009 – just one month prior to the introduction of the new Private Ancillary Fund (PAF) legislation which replaced the previous Prescribed Private Fund (PPF) arrangement1. References to PAFs and/or PPFs reflect that time.

The mystery of polygamy

The economic literature on marriage identifies a number of benefits of marriage and discusses mechanisms that cause societies to prefer certain marital structures such as polygamy or monogamy. In principle, however, these benefits and mechanisms might lead societies towards polyandry and even cenogamy. The rareness of polyandry and the absence of cenogamy, however, clearly indicate that important aspects of marriage are omitted. This paper argues that the reproductive nature of marital arrangements must be taken into account when analyzing the foundations of marriage. Monogamy always achieves efficient parental investments in offspring. For polygamous arrangements this might be often true. It fails, however, in polyandry because paternity cannot be established with certainty. Cenogamy is shown to be an unstable arrangement.

Regulatory multiplicities in telecommunications reforms in Indonesia and China

Telecommunications is a key component in any country's economic infrastructure, requiring a vast amount of capital injection and ongoing technical support and innovation. Many developing countries experience handicaps in accessing capital and sustaining the required technical capability in their industralisation process. Therefore, attracting both capital investments and expertise by attuning the developing country's economic policies and legal environment to meet investors' expectations is a priority. Privatisation has been seen as a triumph by international institutions such as the World Bank, and a major requirement for developing economies to industrialise. However from a regulatory perspective, this process is far from straightforward. Implementing economic policies requires a number of regulations and regulatory instruments to be in place. Apart from the need for an independent regulator, regulatory outcomes are often dependent on the willingness of various stakeholders to comply with the course of actions undertaken by authorities. This article examines the factors steering the processes and changes in the telecommunication reforms of Indonesia and China.