Developing a life-cycle costing analysis model for sustainability enhancement in road infrastructure project

With increasing pressure to provide environmentally responsible infrastructure products and services, stakeholders are putting significant foci on the early identification of financial viability and outcome of infrastructure projects. Traditionally, there has been an imbalance between sustainable measures and project budget. On one hand, the industry tends to employ the first-cost mentality and approach to developing infrastructure projects. On the other, environmental experts and technology innovators often push for the ultimately green products and systems without much of a concern for cost. This situation is being quickly changed as the industry is under pressure to continue to return profit, while better adapting to current and emerging global issues of sustainability. For the infrastructure sector to contribute to sustainable development, it will need to increase value and efficiency. Thus, there is a great need for tools that will enable decision makers evaluate competing initiatives and identify the most sustainable approaches to procuring infrastructure projects. In order to ensure that these objectives are achieved, the concept of life-cycle costing analysis (LCCA) will play significant roles in the economics of an infrastructure project. Recently, a few research initiatives have applied the LCCA models for road infrastructure that focused on the traditional economics of a project. There is little coverage of life-cycle costing as a method to evaluate the criteria and assess the economic implications of pursuing sustainability in road infrastructure projects. To rectify this problem, this paper reviews the theoretical basis of previous LCCA models before discussing their inability to determinate the sustainability indicators in road infrastructure project. It then introduces an on-going research aimed at developing a new model to integrate the various new cost elements based on the sustainability indicators with the traditional and proven LCCA approach. It is expected that the research will generate a working model for sustainability based life-cycle cost analysis.

Incorporating sustainability measures in life-cycle financial decision making for highway construction

Public awareness and the nature of highway construction works demand that sustainability measures are first on the development agenda. However, in the current economic climate, individual volition and enthusiasm for such high capital investments do not present as strong cases for decision making as the financial pictures of pursuing sustainability. Some stakeholders consider sustainability to be extra work that costs additional money. Though, stakeholders realised its importance in infrastructure development. They are keen to identify the available alternatives and financial implications on a lifecycle basis. Highway infrastructure development is a complex rocess which requires expertise and tools to evaluate investment options, such as environmentally sustainable features for road and highway development. Life-cycle cost analysis (LCCA) is a valuable approach for investment decision making for construction works. However, LCCA applications in highway development are still limited. Current models, for example focus on economic issues alone and do not deal with sustainability factors, which are more difficult to quantify and encapsulate in estimation modules. This paper reports the research which identifies sustainability related factors in highway construction projects, in quantitative and qualitative forms of a multi-criteria analysis. These factors are then incorporated into past and proven LCCA models to produce a new long term decision support model. The research via questionnaire, model building, analytical hierarchy processes (AHP) and case studies have identified, evaluated and then processed highway sustainability related cost elements. These cost elements need to be verified by industry before being integrated for further development of the model. Then the Australian construction industry will have a practical tool to evaluate investment decisions which provide an optimum balance between financial viability and sustainability deliverables.

Compliance with international financial reporting standards (IFRS) and the value relevance of accounting information in emerging stock markets : evidence from Kuwait

Since the 1960s, the value relevance of accounting information has been an important topic in accounting research. The value relevance research provides evidence as to whether accounting numbers relate to corporate value in a predicted manner (Beaver, 2002). Such research is not only important for investors but also provides useful insights into accounting reporting effectiveness for standard setters and other users. Both the quality of accounting standards used and the effectiveness associated with implementing these standards are fundamental prerequisites for high value relevance (Hellstrom, 2006). However, while the literature comprehensively documents the value relevance of accounting information in developed markets, little attention has been given to emerging markets where the quality of accounting standards and their enforcement are questionable. Moreover, there is currently no known research that explores the association between level of compliance with International Financial Reporting Standards (IFRS) and the value relevance of accounting information. Motivated by the lack of research on the value relevance of accounting information in emerging markets and the unique institutional setting in Kuwait, this study has three objectives. First, it investigates the extent of compliance with IFRS with respect to firms listed on the Kuwait Stock Exchange (KSE). Second, it examines the value relevance of accounting information produced by KSE-listed firms over the 1995 to 2006 period. The third objective links the first two and explores the association between the level of compliance with IFRS and the value relevance of accounting information to market participants. Since it is among the first countries to adopt IFRS, Kuwait provides an ideal setting in which to explore these objectives. In addition, the Kuwaiti accounting environment provides an interesting regulatory context in which each KSE-listed firm is required to appoint at least two external auditors from separate auditing firms. Based on the research objectives, five research questions (RQs) are addressed. RQ1 and RQ2 aim to determine the extent to which KSE-listed firms comply with IFRS and factors contributing to variations in compliance levels. These factors include firm attributes (firm age, leverage, size, profitability, liquidity), the number of brand name (Big-4) auditing firms auditing a firm’s financial statements, and industry categorization. RQ3 and RQ4 address the value relevance of IFRS-based financial statements to investors. RQ5 addresses whether the level of compliance with IFRS contributes to the value relevance of accounting information provided to investors. Based on the potential improvement in value relevance from adopting and complying with IFRS, it is predicted that the higher the level of compliance with IFRS, the greater the value relevance of book values and earnings. The research design of the study consists of two parts. First, in accordance with prior disclosure research, the level of compliance with mandatory IFRS is examined using a disclosure index. Second, the value relevance of financial statement information, specifically, earnings and book value, is examined empirically using two valuation models: price and returns models. The combined empirical evidence that results from the application of both models provides comprehensive insights into value relevance of accounting information in an emerging market setting. Consistent with expectations, the results show the average level of compliance with IFRS mandatory disclosures for all KSE-listed firms in 2006 was 72.6 percent; thus, indicating KSE-listed firms generally did not fully comply with all requirements. Significant variations in the extent of compliance are observed among firms and across accounting standards. As predicted, older, highly leveraged, larger, and profitable KSE-listed firms are more likely to comply with IFRS required disclosures. Interestingly, significant differences in the level of compliance are observed across the three possible auditor combinations of two Big-4, two non-Big 4, and mixed audit firm types. The results for the price and returns models provide evidence that earnings and book values are significant factors in the valuation of KSE-listed firms during the 1995 to 2006 period. However, the results show that the value relevance of earnings and book values decreased significantly during that period, suggesting that investors rely less on financial statements, possibly due to the increase in the available non-financial statement sources. Notwithstanding this decline, a significant association is observed between the level of compliance with IFRS and the value relevance of earnings and book value to KSE investors. The findings make several important contributions. First, they raise concerns about the effectiveness of the regulatory body that oversees compliance with IFRS in Kuwait. Second, they challenge the effectiveness of the two-auditor requirement in promoting compliance with regulations as well as the associated cost-benefit of this requirement for firms. Third, they provide the first known empirical evidence linking the level of IFRS compliance with the value relevance of financial statement information. Finally, the findings are relevant for standard setters and for their current review of KSE regulations. In particular, they highlight the importance of establishing and maintaining adequate monitoring and enforcement mechanisms to ensure compliance with accounting standards. In addition, the finding that stricter compliance with IFRS improves the value relevance of accounting information highlights the importance of full compliance with IFRS and not just mere adoption.

Rethinking financial literacy in the aftermath of the Global Financial Crisis

Systemic risks and other factors that contributed to the global financial crisis have highlighted the need to reconsider the scope and nature of financial literacy initiatives and programs. In this article, we argue the case for rethinking financial literacy and the need for integrated solutions that explicitly incorporate solutions to behavioural shortcomings exhibited by individuals in their financial decision-making. While recognising the need to consider behavioural biases in individuals’ financial decisions, to date regulatory responses have largely ignored those biases in their proposed education and other strategies designed to address poor financial literacy and improve financial disclosure that, in turn, will improve financial decision-making.

Key competitiveness indicators for new real estate developers

Purpose – The paper aims to explore the key competitiveness indicators (KCIs) that provide the guidelines for helping new real estate developers (REDs) achieve competitiveness during their inception stage in which the organisations start their business. Design/methodology/approach – The research was conducted using a combination of various methods. A literature review was undertaken to provide a proper theoretical understanding of organisational competitiveness within RED's activities and developed a framework of competitiveness indicators (CIs) for REDs. The Delphi forecasting method is employed to investigate a group of 20 experts' perception on the relative importance between CIs. Findings – The results show that the KCIs of new REDs are capital operation capability, entrepreneurship, land reserve capability, high sales revenue from the first real estate development project, and innovation capability. Originality/value – The five KCIs of new REDs are new. In practical terms, the examination of these KCIs would help the business managers of new REDs to effectively plan their business by focusing their efforts on these key indicators. The KCIs can also help REDs provide theoretical constructs of the knowledge base on organisational competitiveness from a dynamic perspective, and assist in providing valuable experiences and in formulating feasible strategies for survival and growth.

Client recommendations for financial incentives on construction projects

Purpose: To provide recommendations for construction clients who design and implement financial incentive mechanisms (FIMs) on projects. ---------- Methodology: Four large Australian building projects commissioned by government clients under managing contractor contracts and completed between 2001 and 2005 were examined to explore the ‘drivers’ that promoted motivation toward financial incentive goals. The results were triangulated across data sources, projects and stakeholder types. ---------- Findings: FIM design should incorporate: 1. flexibility to modify goals and measurement procedures over time, 2. multiple goals covering different project areas, 3. distribution of rewards across all the key organizations contributing to team performance (e.g. potentially not just the contractor, but the subcontractors and consultants) and a reward amount sufficient to be valued by potential recipients. FIM benefits are maximized through the following complementary procurement initiatives: 4. equitable contract risk allocation, 5. early contractor involvement in design, 6. value-driven tender selection, 7. relationship workshops, and 8. future work opportunities.---------- Research Limitations: This paper provides practical recommendations to industry and hence does not emphasize theoretical aspects.---------- Practical Implications: The uptake of these recommendations is likely to increase the impact of FIMs on motivation and improve project and industry outcomes. Although the study focuses on government clients of building projects, all the recommendations would seem to apply equally to private-sector clients and to non-building projects.---------- Originality: In order to improve motivation and reward high performance, clients are increasingly using FIM in their construction contracts. Despite the rising use of financial incentives, there is a lack of comprehensive construction-specific knowledge available to help clients maximize outcomes. The study addresses this gap in the literature.

Motivation toward financial incentive goals on construction projects

Construction industry observers tout the use of financial incentives as promoters of motivation and commitment on projects. Yet, little empirical evidence exists concerning their effectiveness. What are the drivers of motivation on construction projects? The reasons that construction project participants are motivated to pursue voluntary incentive goals are examined through four Australian case studies. The results demonstrate the critical role played by project relationships and equitable contract conditions in promoting the effectiveness of financial incentives. In the context of a construction project, this study finds financial incentives to be less important to motivation and performance than relationship enhancement initiatives. This finding is unexpected and has implications for the design of project procurement strategies. These results suggest if project clients ignore the importance of relationship quality between participants, the impact of any financial incentive will be compromised.

Strategic entrepreneurship in New Zealand's state-owned enterprises : underlying elements and financial implications

The concept of strategic entrepreneurship has received increased attention over the past ten yeras. Viewed as the intersection of entrepreneurship and strategy this field of research is populated by conceptual studies which focus mainly on the nature and perceived benefits of strategic entrepreneurship. Similarly the study of entrepreneurship in a public sector context has gained increasing support in recent years but also remains underexplored. To address these gaps this thesis considers : what are the underlying elements and financial implications of strategic entrepreneurship in New Zealand's state-owned enterprises, New Zealand's SOE sector comprising 17 government-owned,commercially focused organisations, is considered to be a prime subject for this research. Well known for their implementation of new public management, many New Zealand SOEs have also been publicly recognised as both innovative and entrepreneurial. The research question is addressed by first developing a preliminary framework of strategic entrepreneurship from literature on entrepreneurhsip and strategy. The framework is then examined in the context of case studies on activity.

Financial planning and well-being

The aim of this paper is to provide a review of the theoretical and research literature on the ways in which financial planning can enhance well-being. In reviewing the literature, the paper develops a conceptual framework for thinking about the extended value of financial planning, beyond financial outcomes, by examining the process of planning in the financial domain and its relationship to life satisfaction, living an intentional life, attainment of life goals, and the development of a sense of mastery. An essential element of psychological well-being is engagement in life tasks and roles. Planning can be considered a life management strategy that enables individuals to control and structure their lives. Having meaningful goals and the plans to achieve those goals enable individuals to experience higher levels of life engagement and well-being (MacLeod et al., 2008). Recent research on well-being suggests that domain-specific behaviours contribute to domain-specific satisfactions, which in turn contribute to an individual’s overall satisfaction with life (Easterlin, 2003; 2006). Thus changes in domain satisfaction, such as financial satisfaction, are likely to effect changes in life satisfaction.

An analysis of the Brisbane residential property market and the global financial crisis

The period from 2007 to 2009 covered the residential property boom from early 2000, to the property recession following the Global Financial Crisis. Since late 2008, a number of residential property markets have suffered significant falls in house prices, buth this has not been consistent across all market sectors. This paper will analyze the housing market in Brisbane Australia to determine the impact, similarities and differences that the4 GFC had on range of residential sectors across a divesified property market. Data analysis will provide an overview of residential property prices, sales and listing volumes over the study period and will provide a comparison of median house price performance across the geographic and socio-economic areas of Brisbane.

The regulation of insurance intermediaries in the Australian financial services market

The insurance industry discharges a critical role in the Australian economy and is a significant part of the Australian financial services market. The industry relies upon intermediaries, the principal types being brokers and agents, to promote, arrange and distribute their products and services in the market. The pivotal role that they play in this context and sensitivities associated with the consumer oriented products, such as house and contents insurance, has ensured close regulatory attention. Of particular importance was the passage of the Insurance (Agents and Brokers) Act 1984 (Cth), a comprehensive attempt to address the responsibilities of intermediaries as well as particular problem areas associated with the handling of money. However, with the introduction of financial services and market reform early in the new millennium this insurance intermediary specific regulatory approach was abandoned in favour of a market-wide strategy; that is, market reform was based upon across-the-board licensing, disclosure, conduct and fairness standards, and all financial products and services are now regulated at a generic level under Ch 7 of the Corporations Act 2001 (Cth). This article briefly explores the categories of insurance intermediaries and the relevant distinctions between them but focuses mainly upon the regulatory context in which they operate. This context transcends a strictly legal framework as the regulatory body, the Australian Securities and Investments Commission (ASIC), has sought to inform and guide the market through Policy Statements and Regulatory Guides. The usefulness of these guides as an adjunct to the legislation in explaining the scope and operation of regulatory framework is examined. In addition, the article looks at the self-regulatory and dispute resolution practices in this area and their impact. In conclusion an assessment of this across-the-board regulatory regime is advanced.