Financial protection in the UK building industry: bonds, retentions and guarantees

Financial Protection in the UK Building Industry provides comprehensive treatment of a complex aspect of construction management which is increasingly important in modern construction contracts. The term 'Financial Protection' refers to refers to the various mechanisms by which funds are made available to ensure the due performance of a partys contractual obligations. This book is based on material written for a research project funded by the Reading Construction Forum. Financial Protection in the UK Building Industry looks at the legal and economic background to the problem of providing financial protection to clients to guard against poor performance and or the insolvency of contractors, consultants and sub-contractors. The inclusion of practical guidance notes and summaries makes this a valuable guide for the construction professional as well as for the researcher. * provides in-depth analysis of financial protection measures * explores the ways in which financial protection can increase efficiency in the industry * financial protection in construction is beset with problems - this book points toward practical solutions

Achieving satisfactory contractual terms for the engineer's role

An international survey of clients, consultants and contractors produced wide-ranging data on the views of users of the FIDIC form of contract. The purpose of the survey was to elicit views on a range of issues, prior to revising the model form, to ensure that the contract drafters produce a form that is satisfactory for its users. Those questions that focus upon the role of the engineer have been subjected to detailed statistical analysis. The analysis shows that, contrary to popular belief, the views of contract users from common law jurisdictions do not differ from those in civil code jurisdictions. The engineer’s role is not generally perceived as neutral in the contractual relationships between clients and contractors. Contractors would prefer someone other than the engineer to be the first-line settler of disputes in contracts.

What are the costs of procurement and who bears them?

The costs of procurement are transaction costs which are separate from the direct costs of a project. In this paper discussion is concentrated on costs of tendering. Types of cost, including money costs and opportunity costs, short-term and long-term costs, private and social costs are defined and examined in relation to various types of product and methods of procurement. The costs of the contractor and of the client are considered and tentative conclusions drawn as to who bears these costs in the short-run and in the long run. They may fall on the parties to the process for the particular project, on other contractors and clients or on society as a whole.

The impact of contract duration on the cost of cash retention

Cash retention is a common means of protecting an employer from a contractor's insolvency as well as ensuring that contractors finish the work that they start. Similarly, contractors withhold part of payments due to their sub-contractors. Larger contracts tend to be subjected to smaller rates of retention. By calculating the cost of retention as an amount per year of a contract, it is shown that retention is far more expensive for firms whose work consists of short contracts. The extra cost is multiplied when the final payment is delayed, as it often is for those whose work takes place at the beginning of a project. This may explain why it is that main contractors are a lot less interested than sub-contractors in alternatives to cash retention, such as retention bonds

Contemporary organizational theory in the management of construction projects

The level of insolvencies in the construction industry is high, when compared to other industry sectors. Given the management expertise and experience that is available to the construction industry, it seems strange that, according to the literature, the major causes of failure are lack of financial control and poor management. This indicates that with a good cash flow management, companies could be kept operating and financially healthy. It is possible to prevent failure. Although there are financial models that can be used to predict failure, they are based on company accounts, which have been shown to be an unreliable source of data. There are models available for cash flow management and forecasting and these could be used as a starting point for managers in rethinking their cash flow management practices. The research reported here has reached the stage of formulating researchable questions for an in-depth study including issues such as how contractors manage their cash flow, how payment practices can be managed without damaging others in the supply chain and the relationships between companies" financial structures and the payment regimes to which they are subjected.

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.

Cash flow management in construction firms

The level of insolvencies in the construction industry is high, when compared to other industry sectors. Given the management expertise and experience that is available to the construction industry, it seems strange that, according to the literature, the major causes of failure are lack of financial control and poor management. This indicates that with a good cash flow management, companies could be kept operating and financially healthy. It is possible to prevent failure. Although there are financial models that can be used to predict failure, they are based on company accounts, which have been shown to be an unreliable source of data. There are models available for cash flow management and forecasting and these could be used as a starting point for managers in rethinking their cash flow management practices. The research reported here has reached the stage of formulating researchable questions for an in-depth study including issues such as how contractors manage their cash flow, how payment practices can be managed without damaging others in the supply chain and the relationships between companies’ financial structures and the payment regimes to which they are subjected.

Reconciling internalization theory and the eclectic paradigm

The eclectic paradigm of Dunning (1980) (with its OLI and four motives for FDI framework) can be reconciled with the firm and country matrix of Rugman (1981). However, the fit is not perfect. The main reason for misalignment is that Dunning is focused upon outward FDI into host economies, whereas Rugman’s matrix is for firm-level strategy covering MNE activity in both home and host countries.

Intellectual property management in M&A transactions

Purpose – The purpose of this paper is to focus on the intellectual property (IP) aspects of mergers and acquisitions (M&A) transactions. Design/methodology/approach – A holistic approach is proposed that embraces IP as an integral part of the M&A process in the form of a roadmap for the strategic and purposeful management of IP assets in M&A deals. Findings – Addressing IP issues in transactions in isolation can lead to undesirable consequences (e.g. considerable costs for unplanned purchases of rights). IP due diligence and IP integration project processes can be automated using collaborative software solutions. Thereby, risk can be reduced through the creation of a high level of transparency and predefined responsibilities. Practical implications – Although the proposed IP management framework is based on intellectual property matters relevant to German jurisdiction, conclusions derived and the proposed roadmap are transferable to other jurisdictions and hence have a broader relevance. Evidence for this is provided by the successful application of the roadmap in the context of the multinational transaction stated above. Originality/value – This paper is based on the authors' collective experience, insight and reflected observation of M&A practice gained in advisory M&A roles in management consultancies over a period of more than a decade. The paper summarizes the authors' reflections and observations and brings these into the context of the current management literature. Moreover, this paper builds on earlier published research.

Observations of the inter-ocean exchange around South Africa

There is growing evidence that the interocean exchange south of Africa is an important link in the global overturning circulation of the ocean, the so‐called ocean conveyer belt. At this location, warm and salty Indian Ocean waters enter the South Atlantic and are pulled by currents that eventually reach the North Atlantic, where water cools and sinks. A major contributor to the exchange is the frequent shedding of ring eddies from the termination of the Agulhas Current south of the tip of Africa. This shedding is controlled by developments far upstream in the Indian Ocean, and variations in this ‘Agulhas Leakage’ can lead to changes in the rate and stability of the Atlantic overturning, with possible associated global climate variations [Weijer et al., 1999]. Regional climate variations in the tropical and subtropical Indian Ocean are known to affect the whole system of the Agulhas Current, including the interocean exchanges. This article reports on some of the seminal results of ongoing multinational, multidisciplinary projects that explore these issues.

Strained relations: a critical analysis of the mining conflict in Prestea, Ghana

This paper examines the dynamics of the ongoing conflict in Prestea, Ghana, where indigenous galamsey mining groups are operating illegally on a concession awarded to Bogoso Gold Limited (BGL), property of the Canadian-listed multinational Gold Star Resources. Despite being issued firm orders by the authorities to abandon their activities, galamsey leaders maintain that they are working areas of the concession that are of little interest to the company; they further counter that there are few alternative sources of local employment, which is why they are mining in the first place. Whilst the Ghanaian Government is in the process of setting aside plots to relocate illegal mining parties and is developing alternative livelihood projects, efforts are far from encouraging: in addition to a series of overlooked logistical problems, the areas earmarked for relocation have not yet been prospected to ascertain gold content, and the alternative income-earning activities identified are inappropriate. As has been the case throughout mineral-rich sub-Saharan Africa, the conflict in Prestea has come about largely because the national mining sector reform program, which prioritizes the expansion of predominantly foreign-controlled large-scale projects, has neglected the concerns of indigenous subsistence groups.

'To move or not to move': Reflections on the resettlement of artisanal miners in the western region of Ghana

This article critically reflects upon the shortcomings of the 'Prestea Action Plan', an ambitious initiative undertaken to facilitate the resettlement of artisanal miners operating in the Western Region of Ghana. The aim of the exercise was to identify viable areas for the thousands of operators who were working illegally in the town of Prestea, an area under concession to the US-based multinational, Golden Star Resources Ltd. At the time of its launch, it was one of the few support initiatives to target artisanal miners, whose claims to land are generally not recognized by governments. It was a particularly significant exercise in Ghana because it suggested that the authorities, who traditionally have exercised a policy of non-negotiation with such groups, had finally recognized that dialogue was needed if the growing rift between the country's indigenous artisanal miners, foreign mining companies and government bodies was to be bridged. It soon emerged, however, that despite its commendable policy objectives, the Plan was fundamentally flawed-problems which would undermine the entire exercise.

The need of sustainable buildings construction in the Kingdom of Bahrain

This thesis is aimed to initiate implementing sustainable building construction in the kingdom of Bahrain, i.e. Building-Integration PhotoVoltaic (BIPV) or Wind Energy (BIWE). It highlights the main constrains that discourage such modern concept in building and construction. Three groups have been questioned using a questionnaire. These are the policy and decision makers, the leading consultants and the contractors. The main constrains of the dissemination of BIVP and BIWE, according to the policy and decision makers, are: lack of knowledge and awareness of the public in sustainable technology, low cost of electricity, low cost of gas and oil and difficulty in applying local environmental taxes. The consultants had attributed the constrains to ignorance of life cycle cost of PV and Wind turbines systems, lack of education and knowledge in sustainable design, political system, shortage of markets importing sustainable technologies and client worries in profitability and pay-back period. The contractors are found to be very enthusiastic and ready to take over any sustainable building project and prefer to have a construction manger to coordinate between the design and contracting team. Design and Build is found the favorable procurement method in Bahrain for conducting BIPV or BIWE projects.

Mapping IT innovation in Facilities Management

Over the past decade there has been significant growth in the facilities management (FM) sector resulting in a diverse and highly competitive marketplace. This marketplace engages contractors, in-house teams, suppliers, consultants and professional institutions. Many of these organisations have had to innovate to differentiate themselves from competitors. The subject of this paper is facilities management innovation. More specifically, it examines the introduction of information technology (IT) to support such innovations. Our understanding of how such innovations are brought about is scant. The intention of this paper is to examine the motivations and factors which have brought about ‘information system’ innovations in the sector based on an examination of a small but diverse collection of case studies. The study specifically considers the route by which the selected innovations came about and the way in which the innovation has diffused throughout the rest of the organisation. The IT innovations identified in case studies include whole life cost modelling, a content management solution, open book partnering, management information portal (fmNet), RFID technology, and capacity and capability planning. Taken together they characterise a sector that is using IT to codify and standardise information such that useful knowledge becomes widely dispersed.

Deconstruction plan assessment using multi-criteria decision-making methods

The purpose of this paper is to present two multi-criteria decision-making models, including an Analytic Hierarchy Process (AHP) model and an Analytic Network Process (ANP) model for the assessment of deconstruction plans and to make a comparison between the two models with an experimental case study. Deconstruction planning is under pressure to reduce operation costs, adverse environmental impacts and duration, in the meanwhile to improve productivity and safety in accordance with structure characteristics, site conditions and past experiences. To achieve these targets in deconstruction projects, there is an impending need to develop a formal procedure for contractors to select a most appropriate deconstruction plan. Because numbers of factors influence the selection of deconstruction techniques, engineers definitely need effective tools to conduct the selection process. In this regard, multi-criteria decision-making methods such as AHP have been adopted to effectively support deconstruction technique selection in previous researches. in which it has been proved that AHP method can help decision-makers to make informed decisions on deconstruction technique selection based on a sound technical framework. In this paper, the authors present the application and comparison of two decision-making models including the AHP model and the ANP model for deconstruction plan assessment. The paper concludes that both AHP and ANP are viable and capable tools for deconstruction plan assessment under the same set of evaluation criteria. However, although the ANP can measure relationship among selection criteria and their sub-criteria, which is normally ignored in the AHP, the authors also indicate that whether the ANP model can provide a more accurate result should be examined in further research.