Risk pricing practices in finance, insurance and construction

A review of current risk pricing practices in the financial, insurance and construction sectors is conducted through a comprehensive literature review. The purpose was to inform a study on risk and price in the tendering processes of contractors: specifically, how contractors take account of risk when they are calculating their bids for construction work. The reference to mainstream literature was in view of construction management research as a field of application rather than a fundamental academic discipline. Analytical models are used for risk pricing in the financial sector. Certain mathematical laws and principles of insurance are used to price risk in the insurance sector. construction contractors and practitioners are described to traditionally price allowances for project risk using mechanisms such as intuition and experience. Project risk analysis models have proliferated in recent years. However, they are rarely used because of problems practitioners face when confronted with them. A discussion of practices across the three sectors shows that the construction industry does not approach risk according to the sophisticated mechanisms of the two other sectors. This is not a poor situation in itself. However, knowledge transfer from finance and insurance can help construction practitioners. But also, formal risk models for contractors should be informed by the commercial exigencies and unique characteristics of the construction sector.

The north Atlantic marine oundary layer experiment (NAMBLEX): Overview of the campaign held at Mace Head, Ireland, in summer 2002

The North Atlantic Marine Boundary Layer Experiment (NAMBLEX), involving over 50 scientists from 12 institutions, took place at Mace Head, Ireland (53.32° N, 9.90° W), between 23 July and 4 September 2002. A wide range of state-of-the-art instrumentation enabled detailed measurements of the boundary layer structure and atmospheric composition in the gas and aerosol phase to be made, providing one of the most comprehensive in situ studies of the marine boundary layer to date. This overview paper describes the aims of the NAMBLEX project in the context of previous field campaigns in the Marine Boundary Layer (MBL), the overall layout of the site, a summary of the instrumentation deployed, the temporal coverage of the measurement data, and the numerical models used to interpret the field data. Measurements of some trace species were made for the first time during the campaign, which was characterised by predominantly clean air of marine origin, but more polluted air with higher levels of NOx originating from continental regions was also experienced. This paper provides a summary of the meteorological measurements and Planetary Boundary Layer (PBL) structure measurements, presents time series of some of the longer-lived trace species (O3, CO, H2, DMS, CH4, NMHC, NOx, NOy, PAN) and summarises measurements of other species that are described in more detail in other papers within this special issue, namely oxygenated VOCs, HCHO, peroxides, organo-halogenated species, a range of shorter lived halogen species (I2, OIO, IO, BrO), NO3 radicals, photolysis frequencies, the free radicals OH, HO2 and (HO2+Σ RO2), as well as a summary of the aerosol measurements. NAMBLEX was supported by measurements made in the vicinity of Mace Head using the NERC Dornier-228 aircraft. Using ECMWF wind-fields, calculations were made of the air-mass trajectories arriving at Mace Head during NAMBLEX, and were analysed together with both meteorological and trace-gas measurements. In this paper a chemical climatology for the duration of the campaign is presented to interpret the distribution of air-mass origins and emission sources, and to provide a convenient framework of air-mass classification that is used by other papers in this issue for the interpretation of observed variability in levels of trace gases and aerosols.

Entropy application to improve construction finance decisions

In financial decision-making processes, the adopted weights of the objective functions have significant impacts on the final decision outcome. However, conventional rating and weighting methods exhibit difficulty in deriving appropriate weights for complex decision-making problems with imprecise information. Entropy is a quantitative measure of uncertainty and has been useful in exploring weights of attributes in decision making. A fuzzy and entropy-based mathematical approach is employed to solve the weighting problem of the objective functions in an overall cash-flow model. The multiproject being undertaken by a medium-size construction firm in Hong Kong was used as a real case study to demonstrate the application of entropy. Its application in multiproject cash flow situations is demonstrated. The results indicate that the overall before-tax profit was HK$ 0.11 millions lower after the introduction of appropriate weights. In addition, the best time to invest in new projects arising from positive cash flow was identified to be two working months earlier than the nonweight system.

Tracer concentration profiles measured in central London as part of the REPARTEE campaign

There have been relatively few tracer experiments carried out that have looked at vertical plume spread in urban areas. In this paper we present results from two tracer (cyclic perfluorocarbon) experiments carried out in 2006 and 2007 in central London centred on the BT Tower as part of the REPARTEE (Regent’s Park and Tower Environmental Experiment) campaign. The height of the tower gives a unique opportunity to study vertical dispersion profiles and transport times in central London. Vertical gradients are contrasted with the relevant Pasquill stability classes. Estimation of lateral advection and vertical mixing times are made and compared with previous measurements. Data are then compared with a simple operational dispersion model and contrasted with data taken in central London as part of the DAPPLE campaign. This correlates dosage with non-dimensionalised distance from source. Such analyses illustrate the feasibility of the use of these empirical correlations over these prescribed distances in central London.