The price of risk in construction projects: contingency approximation model (CAM)

Little attention has been focussed on a precise definition and evaluation mechanism for project management risk specifically related to contractors. When bidding, contractors traditionally price risks using unsystematic approaches. The high business failure rate our industry records may indicate that the current unsystematic mechanisms contractors use for building up contingencies may be inadequate. The reluctance of some contractors to include a price for risk in their tenders when bidding for work competitively may also not be a useful approach. Here, instead, we first define the meaning of contractor contingency, and then we develop a facile quantitative technique that contractors can use to estimate a price for project risk. This model will help contractors analyse their exposure to project risks; and help them express the risk in monetary terms for management action. When bidding for work, they can decide how to allocate contingencies strategically in a way that balances risk and reward.

Digital infrastructure and changing practices in engineering design

New skills are needed to compete, as integrated software solutions provide a digital infrastructure for projects. This changes the practice of information management and engineering design on next generation projects.

SPICE: a business process diagnostic tool for construction projects

The construction sector is under growing pressure to increase productivity and improve quality, most notably in reports by Latham (1994, Constructing the Team, HMSO, London) and Egan (1998, Rethinking Construction, HMSO, London). A major problem for construction companies is the lack of project predictability. One method of increasing predictability and delivering increased customer value is through the systematic management of construction processes. However, the industry has no methodological mechanism to assess process capability and prioritise process improvements. Standardized Process Improvement for Construction Enterprises (SPICE) is a research project that is attempting to develop a stepwise process improvement framework for the construction industry, utilizing experience from the software industry, and in particular the Capability Maturity Model (CMM), which has resulted in significant productivity improvements in the software industry. This paper introduces SPICE concepts and presents the results from two case studies conducted on design and build projects. These studies have provided further in-sight into the relevance and accuracy of the framework, as well as its value for the construction sector.

Rethinking construction: the Generic Design and Construction Process Protocol

The complexity of construction projects and the fragmentation of the construction industry undertaking those projects has effectively resulted in linear, uncoordinated and highly variable project processes in the UK construction sector. Research undertaken at the University of Salford resulted in the development of an improved project process, the Process Protocol, which considers the whole lifecycle of a construction project whilst integrating its participants under a common framework. The Process Protocol identifies the various phases of a construction project with particular emphasis on what is described in the manufacturing industry as the ‘fuzzy front end’. The participants in the process are described in terms of the activities that need to be undertaken in order to achieve a successful project and process execution. In addition, the decision-making mechanisms, from a client perspective, are illustrated and the foundations for a learning organization/industry are facilitated within a consistent Process Protocol.

Multiple-project discount rates for cost-benefit analysis in construction projects: A formal risk model for microgeneration renewable energy technologies

The traditional economic approach for appraising the costs and benefits of construction project Net Present Values involves the calculation of net returns for each investment option under different discount rates. An alternative approach consists of multiple-project discount rates based on risk modelling. The example of a portfolio of microgeneration renewable energy technology (MRET) is presented to demonstrate that risks and future available budget for re-investment can be taken into account when setting discount rates for construction project specifications in presence of uncertainty. A formal demonstration is carried out through a reversed intertemporal approach of applied general equilibrium. It is demonstrated that risk and the estimated available budget for future re-investment can be included in the simultaneous assessment of the costs and benefits of multiple projects.

Nexus between contracting and construction professional service businesses: empirical evidence from international market

he construction market around the world has witnessed the growing eminence of construction professional services (CPSs), such as urban planning, architecture, engineering, and consultancy, while the traditional contracting sector remains strong. Nowadays, it is not uncommon to see a design firm taking over the work of a traditional main contractor, or vice versa, of overseeing the delivery of a project. Although the two sectors of contracting and CPS share the same purpose of materializing the built environment, they are as different as they are interrelated. Much has been mentioned about the nexus between the two but little has been done to articulate it using empirical evidence. This study examined the nexus between contracting and CPS businesses by offering and testing lead-lag effects between the two sectors in the international market. A longitudinal panel data composed of 23 top international contractors and CPS firms was adopted. Surprisingly, results of the panel data analyses show that CPS business does not have a significant positive causal effect on contracting as a downstream business, and vice versa. CPS and contracting subsidiaries, although within the same company, do not necessarily form a consortium to undertake the same project; rather, they often collaborate with other CPS or contracting counterparts to undertake projects. This paper provides valuable insights into the sophisticated nexus between contracting and CPS in the international construction market. It will support business executives’ rational decision making for selecting proper contracting or CPS allies, or a proper mergers and acquisitions strategy in the international market. The paper also provides a fresh perspective through which researchers can better investigate the diversification strategies adopted by international contracting and CPS firms.

Infection Control in design and construction work

Objective: To clarify how infection control requirements are represented, communicated, and understood in work interactions through the medical facility construction project life cycle. To assist project participants with effective infection control management by highlighting the nature of such requirements and presenting recommendations to aid practice. Background: A 4-year study regarding client requirement representation and use on National Health Service construction projects in the United Kingdom provided empirical evidence of infection control requirement communication and understanding through design and construction work interactions. Methods: An analysis of construction project resources (e.g., infection control regulations and room data sheets) was combined with semi-structured interviews with hospital client employees and design and construction professionals to provide valuable insights into the management of infection control issues. Results: Infection control requirements are representationally indistinct but also omnipresent through all phases of the construction project life cycle: Failure to recognize their nature, relevance, and significance can result in delays, stoppages, and redesign work. Construction project resources (e.g., regulatory guidance and room data sheets) can mask or obscure the meaning of infection control issues. Conclusions: A preemptive identification of issues combined with knowledge sharing activities among project stakeholders can enable infection control requirements to be properly understood and addressed. Such initiatives should also reference existing infection control regulatory guidance and advice.

Perspectives on the specification of Building Integrated Photovoltaic (BIPV) technology in construction projects

Innovative, low carbon technologies are already available for use in the construction of buildings, but the impact of their specification on construction projects is unclear. This exploratory research identifies issues which arise following the specification of BIPV in non-residential construction projects. Rather than treating the inclusion of a new technology as a technical problem, the research explores the issue from a socio-technical perspective to understand the accommodations which the project team makes and their effect on the building and the technology. The paper is part of a larger research project which uses a Social Construction of Technology Approach (SCOT) to explore the accommodations made to working practices and design when Building Integrated PhotoVoltaic (BIPV) technology is introduced. The approach explores how the requirements of the technology from different groups of actors (Relevant Social Groups or RSG's) give rise to problems and create solutions. As such it rejects the notion of a rational linear view of innovation diffusion; instead it suggests that the variety and composition of the Relevant Social Groups set the agenda for problem solving and solutions as the project progresses. The research explores the experiences of three people who have extensive histories of involvement with BIPV in construction, looks at how SCOT can inform our understanding of the issues involved and identifies themes and issues in the specification of BIPV on construction projects. A key finding concerns the alignment of inflection points at which interviewees have found themselves changing from one RSG to another as new problems and solutions are identified. The points at which they change RSG often occurred at points which mirror conventional construction categories (in terms of project specification, tender, design and construction).