Australian construction industry KPIs

The Australian Construction Industry Forum (which is a peak industry association) and the Australian Procurement and Construction Council (which is a peak government organisation) have jointly agreed on a set of KPIs for the Australian Construction Industry. The goal of such a process is to work collaboratively in order to lift industry performance overall, and thereby bring about economic and social benefits to the industry and broader community. This paper seeks to underpin the process of KPI measurement by providing: an overview of international approaches to KPI measurement, summary of difficulties identified in performance measurement together with possible responses to these problems, and finally a discussion on the various methods for reporting KPIs. A number of findings throughout the paper, based on the review, made in order to advance the goal of performance measurement in the construction industry in Australia. Such findings would be relevant to other countries considering a KPI measurement process as well.

Diversity interventions for a socially sustainable construction industry

Major construction sites in Australia have an above average presence of ethnic minorities. These groups and the interfaces between them require effective management in order to meet the social imperatives of sustainable design and construction. A survey of 1155 workers and 204 managers on Sydney construction sites respectively, found a significant level of normalisation of negative forms of cross cultural interaction. Yet it was also found that anti-racism programs are not currently a management priority and that they generally lack sophisticated community relations aspects. This paper presents the results of a desk-top study of leading global companies within and outside the construction sector which have won international awards and recognition for their cultural diversity strategies. A key insight is that the companies profiled see diversity as a key resource and as an opportunity rather than a risk which is best harnessed through long-term and on-going commitment of senior management. These leading companies also recognise that cultural diversity strategies operate at three levels - in terms of its relationship with its own workforce; its relationship with its clients and; its relationships with the communities in which it operates - and if properly managed it can be a source of competitive advantage.

Social outcomes in the construction industry : the case of the Western Australia ‘Percent for Art’ policy

Social outcomes, in particular intangible social outcomes, are generally difficult to achieve in the construction industry due to the predominantly episodic, fragmented and heavily regulated nature of construction that presupposes a tendency towards mainstream construction processes and design. The Western Australian ‘Percent for Art’ policy is recognized for stimulating social outcomes, by creating richer and more aesthetically pleasing social environments through the incorporation of artwork into public buildings. A case study of four Percent for Art projects highlights the role of the Artwork Selection Committee in incorporating artwork into construction. A total of 20 semi-structured interviews were conducted with committee members and policy officers. Data analysis involved a combination of pattern coding and matrix categorization, and resulted in the identification of the committee’s three key elements of collaborative communication, democratic decision-making and project champions. The findings suggest these key elements foster the interaction, communication and relationships needed to facilitate feedback, enhance relationships, create cross-functional teams and lower project resistance, which are all necessary to overcome constraints to social outcomes in construction. The findings provide greater insight into the mechanisms for achieving social outcomes and a basis for future discussion about the processes for achieving social outcomes in the construction industry.

Government Influence on the Construction Industry during the Economic Recession 2007 - 2013

Due to the high degree of international and economic integration across the globe, the 2007 global financial crisis quickly spread, causing recessions and widespread credit restrictions in advanced nations. During recessions, economic fluctuations cause dramatic changes to the market structure of industries, in particular, that of the construction sector. These structural changes can be further influenced by government strategies and policies; which if used incorrectly, can serve to fuel and exacerbate downturns. In contrasting form, during an economic recession, government strategies and policies can also be used to aid in exiting such economic turbulence. From an extensive review of literature it became apparent that very little research offered a comprehensive and systematic overview of Irish and UK construction related government policies and strategies adopted during recessions; hence the emergence of this topic. As part of an ongoing research PhD, the purpose of this paper is to collate and group Irish and UK Government strategies and policies adopted for the construction sector during the recession period 2007-2013; resulting in the establishment of a construction industry development framework and a taxonomic framework. The results reveal serious problems with the national strategic plan for the Irish construction industry, given that there is no overseeing body or target dates for implementation of the proposed actions. Furthermore, both countries failed to prioritize the proposed key actions within their strategic plans. The findings of this paper can be applied in the context of the construction sector to address shortcomings in the respective sub-sectors, while also aiding policy makers and company executives in mapping out future strategic milestones.

The impact of market and supply configurations on the costs of tendering in the construction industry

The cost of tendering in the construction industry is widely suspected to be excessive, but there is little robust empirical evidence to demonstrate this. It also seems that innovative working practices may reduce the costs of undertaking construction projects and the consequent improvement in relationships should increase overall value for money. The aim of this proposed research project is to develop mechanisms for measuring the true costs of tendering based upon extensive in-house data collection undertaken in a range of different construction firms. The output from this research will enable all participants in the construction process to make better decisions about how to select members of the team and identify the price and scope of their obligations.

Developing a system for assessing the costs associated with different procurement routes in the construction industry

In developing techniques for monitoring the costs associated with different procurement routes, the central task is disentangling the various project costs incurred by organizations taking part in construction projects. While all firms are familiar with the need to analyse their own costs, it is unusual to apply the same kind of analysis to projects. The purpose of this research is to examine the claims that new ways of working such as strategic alliancing and partnering bring positive business benefits. This requires that costs associated with marketing, estimating, pricing, negotiation of terms, monitoring of performance and enforcement of contract are collected for a cross-section of projects under differing arrangements, and from those in the supply chain from clients to consultants, contractors, sub-contractors and suppliers. Collaboration with industrial partners forms the basis for developing a research instrument, based on time sheets, which will be relevant for all those taking part in the work. The signs are that costs associated with tendering are highly variable, 1-15%, depending upon what precisely is taken into account. The research to date reveals that there are mechanisms for measuring the costs of transactions and these will generate useful data for subsequent analysis.

Developing a system for assessing the costs associated with different procurement routes in the construction industry

In developing techniques for monitoring the costs associated with different procurement routes, the central task is disentangling the various project costs incurred by organizations taking part in construction projects. While all firms are familiar with the need to analyse their own costs, it is unusual to apply the same kind of analysis to projects. The purpose of this research is to examine the claims that new, ways of working such as strategic alliancing and partnering bring positive business benefits. This requires that costs associated with marketing, estimating, pricing, negotiation of terms, monitoring of performance and enforcement of contract are collected for a cross-section of projects under differing arrangements, and from those in the supply, chain from clients to consultants, contractors, subcontractors and suppliers. Collaboration with industrial partners forms the basis for developing a research instrument, bused on time sheets, which will be relevant for all those taking part in the work. The signs are that costs associated with,with tendering are highly variable, 1-15%, depending upon what precisely, is taken into account. The research to date reveals that there are mechanisms for measuring the costs of transactions and these will generate useful data for subsequent analysis.

Incentive or deterrent: which encourages greater focus on health and safety in the Victorian construction industry?

The Australian Government commissioned a Royal Commission into the building industry in Australia that reported to Parliament in August 2002. Volume 6 of this report, released in February 2003, discussed certain aspects in occupational health and safety in Australia and leaned toward deterrents as a means of achieving reform. This research defines both incentives and deterrents used to increase awareness of, and improve safety on, building sites in Victoria, a state of Australia. A pilot survey questionnaire was developed following a literature review and industry employer representatives were invited to participate. Industry awareness of Government incentive programmes was found to be low, with less than a quarter stating they read Government strategies. One fund that provides actual research monies into health and safety was known to very few of the respondents. Of the employers surveyed, the majority agreed that financial fines do act as a valid deterrent. Increases in worker compensation premiums were seen as the greatest deterrent due to the effect on company overheads and thus competitive tendering bids. Deterrent programmes were more readily acknowledged by employers as they had an element of self promotion with employers attempting to avoid their application.

A comparative study of construction industry size and structure between the UK and Australia and the significance of industry fragmentation

While comparing both the size and structure between the UK and Australian construction industries, this study reveals that the UK construction industry is about two and a half times larger than the Australian construction industry, and both industries are dominated by the proportion of small firms. The issue of fragmentation is characteristic of the construction industries in these two countries, and beyond. This study then develops a self recruiting-subletting cost indifference point model to explain why fragmentation occurs. Although the high proportion of small firms in the construction industry has been criticised as it prevents the exploitation of economies of scale, the self recruiting-subletting cost indifference point model theoretically proposes that subletting is usually profitable for construction firms. Thus the size distribution of the construction industry has a propensity to skew towards small firms.

Can you seek security for costs in international arbitration in Australia?

International arbitrations can be conducted under either federal or State legislation in Australia. In both cases complexities arise in the resolution of procedural questions, such as whether security for costs can be granted. There is scant Australian case law on such issues. This article considers whether an arbitral tribunal or a court has the power [*2] to order security for costs in an international arbitration in Australia. After analysing Australia's international arbitration laws and discussing New Zealand and House of Lords' authority, it is argued that unless the parties have specifically empowered the arbitral tribunal to order security for costs, only the relevant court has that power, and even that is uncertain.

An industrial organisation economic supply chain approach for the construction industry : a review

Understanding industries in terms of the concepts of chains, clusters and networks is becoming increasingly important in economies around the world. Supply chain management for an individual organization is an
emerging field of research in the construction management discipline, but less attention has been devoted to investigating the nature of the construction supply chains and their industrial organizational economic environment. This selected review of construction and mainstream management supply chain literature is organized around four themes; distribution, production, strategic procurement management and industrial
organization economics, and highlights the need to develop an industrial organization economic supply chain framework for construction. The merging of the supply chain concept with the industrial organization model
as a methodology for understanding firm conduct and industry structure and performance is an important contribution to both construction supply chain and construction economic theory. Much of the industrial organization supply chain literature has tended to focus upon manufacturing industries, where typically firms are permanent organizations. This raises issues as to the differences between industries founded upon temporary compared with permanent organizations. There is potential for the development of an industrial organization methodology applicable to the project based industry. Ultimately industrial organization research seeks to have direct implications for industry performance and government policies.

Productivity measurement of the construction industry in Australia

This research adopts the Malmquist total factor productivity model with Lovell's decomposition and renovated partial factor model to evaluate changes of productivity levels in Australia's construction industry. Research results find that the average annual productivity levels for Australian states are slowly growing, except for Queensland's total factor and capital productivities.