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.

Model car-exhaust catalyst studied by TPD and TP-RAIRS: Surface reactions of NO on clean and O-covered Ir{100}

The adsorption of NO on Ir{100} has been studied as a function of NO coverage and temperature using temperature programmed reflection absorption infrared spectroscopy (TP-RAIRS), low energy electron diffraction (LEED) and temperature programmed desorption (TPD). After saturating the clean (1 x 5)-reconstructed surface with NO at 95 K. two N-2, desorption peaks are observed upon heating. The first N-2 peak at 346 K results from the decomposition of bridge-bonded NO, and the second at 475 K from the decomposition of atop-bonded NO molecules. NO decomposition is proposed to be the rate limiting step for both N-2 desorption states. For high NO coverages on the (1 x 5) surface, the narrow width of the first N-2 desorption peak is indicative of an autocatalytic process for which the parallel formation of N2O appears to be the crucial step. When NO is adsorbed on the metastable unreconstructed (1 x 1) phase of clean Ir{100} N-2 desorption starts at lower temperatures, indicating that this surface modification is more reactive. When a high coverage of oxygen, near 0.5 ML, is pre-adsorbed on the surface, the decomposition of NO is inhibited and mainly desorption of intact NO is observed.

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.