Multicriteria Financial Portfolio Risk Management for International Projects

While opportunities for international construction firms have been growing with globalization, the risks involved with international construction projects are increasing significantly. However, due to the complex skein of various risks, it is difficult to evaluate the severity of risk variables at the corporate level and to examine key success factors in an attempt to maximize a firm’s value under the challenging global business environment. This paper focuses on a financial portfolio risk management for international projects to integrate the risk hierarchy of both individual projects and at the corporate level, which applies a multicriteria decision making method to maximize the total value of firms. To demonstrate the approach, a case study is conducted based on real projects collected from a multinational general contractor. Finally, we present lessons learned as well as guidelines for the application of these lessons to future projects through a workshop with industry practitioners.     

What Is Preproject Planning, Anyway?

The importance of preproject planning in the capital facility delivery process and its potential impact on project success has long been recognized by industry practitioners. Nevertheless, the preproject planning process varies significantly throughout the construction industry from one organization to another, and from one business sector to another. This paper will summarize lessons learned from five research projects conducted during the past 14?years regarding the preproject planning process. These research projects were based on data from more than 200 capital projects, representing approximately 8.7 billion U.S. dollars; input from more than 500 industry practitioners; and reviews of the project planning processes used by more than 100 organizations. The positive relationship between thorough preproject planning and enhanced project performance is demonstrated. Findings are presented, including key requirements, processes, and scope definition elements that comprise thorough preproject planning. Similarities and differences in the scope definition of building and industrial projects are outlined. Conclusions of the research effort and recommendations to industry practitioners are provided.     

Benchmarking Initiatives in the Construction Industry: Lessons Learned and Improvement Opportunities

Benchmarking is a systematic process of measuring and comparing an organization’s performance against that of other similar organizations in key business activities. The lessons learned from other companies can be used to establish improvement targets and to promote changes in the organization. The benchmarking process can create a fertile ground for ideas, but only in a receptive environment; companies that share good practices and compare their performance against others benefit most. Recently, industry groups in several different countries have initiated benchmarking programs focused mainly on construction performance measures. This paper describes the scope of these initiatives and discusses the lessons learned and improvement opportunities that were identified in their design and implementation. This investigation is focused on four initiatives, carried out in Brazil, Chile, the United Kingdom, and the United States. This paper concludes by recommending some further directions on this research topic.     

Sustainability in Construction Education

It is widely recognized that sustainability should be incorporated into engineering education. To prepare students with sustainability knowledge and techniques, engineering educators need to develop appropriate class contents and effective teaching techniques. Based on experience from developing and teaching a sustainability course within the construction management program in the civil engineering department, this paper discusses the process of identifying sustainability knowledge areas, course planning, and lessons learned from the class. The paper also includes main class topics as well as students’ feedbacks, both of which may serve as a starting point for continuous improvement of sustainability education in construction.     

Budget and Schedule Success for Small Capital-Facility Projects

The project management environment of small capital projects is unique in many ways. One unique aspect is the total administrative burden they place on resources for approvals, reviews, and execution relative to the overall value of the capital works program. Administratively, many organizations follow a prescribed approval process for all capital project expenditures regardless of size. For these organizations, small capital projects constitute 80% of the projects executed per year but only account for approximately 16% of the capital projects’ budget expenditures. The opportunity to improve organizational performance through more effective project execution on small capital projects could provide substantial savings within individual small capital-project programs. This paper reports on data collected from active small project-program personnel as well as project success factors identified in the literature. By means of analysis and comparison between the data collected and the project success factors identified in the literature, a comprehensive list of small-project success factors was developed. Sixteen factors were identified from project success factors listed by various authors in project management literature. These factors are used as a baseline for evaluating the findings from a questionnaire and interview process conducted with a diverse group of project management personnel. The paper concludes that the factors on small projects are not unlike those on large projects. The key differences noted were related to the frequency of process implementation, which affects the timing and execution of the project work phases for small projects. The area holding the greatest potential for performance improvement for small projects is the front-end planning process.     

Understanding and Improving Your Risk Management Capability: Assessment Model for Construction Organizations

Implementing risk management in construction projects and organizations may bring a number of benefits and therefore it is necessary to have risk management as an integral part of a construction organization’s management practice. The aim of this paper is to develop a risk management maturity assessment model for construction organizations. The paper describes the development process of a Web-based RM3 (risk management maturity model), including its contents, its validation and testing, as well as its applications. The RM3 developed has five attributes namely, management, risk culture, ability to identify risk, ability to analyze risk, and application of standardized risk management process/system. These attributes are measured against four levels: initial, repeated, managed, and optimized. It is found that the proposed RM3 was suitable and useful. Using the RM3, it is found that the Australian construction industry’s overall risk management maturity level was relatively low (where 32% rated at Level 2 and 52% rated at Level 3). Furthermore, it is found that the weakest attribute was “analyzing risks” followed by “application of standardized risk management process.” It is therefore necessary to provide more training on qualitative and quantitative risk analysis to construction personnel and to develop and apply standardized enterprise risk management. It is concluded that the proposed RM3 is suitable for construction organizations to assess their risk management maturity levels and find ways for improvement.     

Pedagogy of Teaching Value Management in Postgraduate Construction and Property Program

As value management (VM) has been increasingly applied to enhance value in public construction projects, the core subject entitled “Value Management for Construction and Property” is being offered to postgraduate students in the Department of Building and Real Estate at the Hong Kong Polytechnic University. Under the new outcome-based curriculum, the learning outcomes, pedagogy of teaching VM, and activities of the VM workshops for the subject are described in this paper. The results of a questionnaire survey of the students’ feedback on the performance of the workshops for the academic year 2007–2008 are presented and discussed. Students believed that value management workshops are essential in the curriculum. They expressed that it was a valuable experience to participate in the VM workshop which enabled them to have a better understanding of the subject. Some improvement is also recommended for future organization and management of workshops based on the lessons learned in these workshops.     

Life-Cycle Management of Construction Projects Based on Virtual Prototyping Technology

Life-cycle management (LCM) has been employed in the management of construction projects for many years in order to reduce whole life cost, time, risk and improve the service to owners. However, owing to lack of an effective information sharing platform, the current LCM of construction projects is not effectively used in the construction industry. Based upon the analysis of the information flow of LCM, a virtual prototyping (VP)-based communication and collaboration information platform is proposed. Following this, the platform is customized using DASSAULT software. The whole process of implementing the VP-based LCM of projects is analyzed via the application to a real-life construction project. The advantages of implementing a VP-based LCM are also discussed and, from a simple case study, it is demonstrated that the VP-based communication and collaboration information platform is an effective tool to support the LCM of construction projects.     

Project Management in the Chinese Construction Industry: Six-Case Study

Originating from the West, project management was introduced into China after the country’s economic reforms in the 1980’s and has since spread quickly throughout the whole country, particularly in the construction industry. However, despite the wide adoption of project management practices by construction organizations and the growing recognition of the importance of project management as an enabler of organizational success, empirical studies on project management in the context of the Chinese construction industry have been inadequate. This paper presents the results of an empirical study of six Chinese construction organizations in order to come to a more comprehensive and sophisticated understanding of project management practices in the Chinese construction industry. The findings revealed: (1) a good appreciation of the role of projects and project management and satisfaction with current project management practices; (2) 11 key aspects of project management implementation; (3) 12 resultant value and benefits; and (4) five aspects of the main challenges facing the organizations. Meanwhile, variations in project management practices and the resultant organizational value were identified, first between the three owner- and the three contractor-case study organizations, then between the two construction contractor organizations and the one design contractor organization.     

Lessons Learned from Principled Negotiation in International Construction Projects

Compared with other dispute resolution approaches, negotiation is still the easiest, most efficient, and most time- and cost-saving approach, if conducted appropriately. However, dispute resolution in international construction projects faces many unique challenges. This requires effective negotiation approaches, principles, and strategies. Although principled negotiation has been developed for more than two decades and is widely accepted by academics as an effective approach to solving conflicts and disputes, its applications in industries are still very limited. Practitioners need applicable guidelines and lessons learned. This paper, by reviewing and analyzing the negotiation processes in two international projects, discusses the key challenges facing construction dispute negotiation and the applications and limitations of principled negotiation in dispute resolution.     

Strategic Management in Construction

The traditional philosophy of management in construction, both in academia and in industry, places great emphasis on the ability to plan and execute projects. In contrast, a similar emphasis on strategic management has received less attention in the construction industry. Although the pressures of project performance can often obscure the broader social, economic, and professional context in which strategic management is undertaken, it is these broad contextual areas that make strategic management an essential issue for construction organizations. Rapidly changing social and technological issues are creating a professional environment that will look very different in the coming decades from that experienced in today's organizations. This paper introduces a study of the current strategic management practices of construction organizations. This paper also introduces the concept of strategic management and the areas that organizations must address to compete in the global marketplace. A summary of an industry survey is documented together with the background research that prompted the investigation of these topics.     

Management and Construction of the Three Gorges Project

The owner-responsibility system is conducted for implementation of the Three Gorges Project (TGP). For the construction management of the project, the contracting system, the contract administration system, and the construction supervision system are executed for the project management. Contractors for civil projects are determined through bidding and contracting. The permanent equipment and construction materials are purchased through bidding. Some of large-sized construction machines and mechanical and electrical equipment are procured by the international competitive bids. Qualified engineers from qualified engineering bodies, scientific research organizations, and construction companies are selected for the construction supervision. This paper covers the construction of the TGP in some detail, particularly the main dam structure, diversion work, the construction program, and management, project cost, and financing.     

Exploiting Knowledge Management: The Engineering and Construction Perspective

Construction companies have always relied on their knowledge assets to provide services to clients. In recent years the terminology “knowledge management” has been introduced. Knowledge management (KM) seeks to formalize the manner in which companies exploit their knowledge assets by harnessing organizational knowledge, promoting greater collaboration between groups with similar interests, capturing and using lessons learned on previous projects, etc. This paper investigates how major United States engineering design and construction firms are implementing knowledge management initiatives in order to identify best practice. It adopts a case study methodology to investigate companies’ strategy and implementation, people aspects, and metrics for performance. The study finds that there is a clear distinction between the knowledge management activities undertaken by large engineering design firms and those of construction firms. There is also a much greater emphasis on knowledge sharing, which is just one component of knowledge management. Moreover, some companies have specific KM initiatives while others have activities that are part of their normal business processes.     

Construction Management Program

The typical limitations of the existing construction management programs are the lack of an integrated approach to managerial decisions in real life construction environment, not enough emphasis on engineering design, construction methods and communication skills, and poor coordination between the undergraduate and the graduate studies. An effective construction management program should. integrate teaching on undergraduate and graduate levels and research. On the undergraduate level it should provide the students with a good insight into all managerial tasks in civil engineering projects. On the graduate level it should allow specialization in the various areas of interest both to the practicing engineers and also to students who wish to pursue an academic career. The program should strongly interact with research and engineering practice.     

Critical Review of Collaborative Working in Construction Projects: Business Environment and Human Behaviors

The changing business environment characterized by tense competitiveness and wide global links requires construction organizations to establish effective and efficient interorganization collaborative management systems. Collaborative working (CW), as a new term and especially as a working model, is emerging for improving performance and enhancing competitiveness by responding to the changing environment in construction. This research presents the definition of CW underpinned by the principle of collaboration. Through a thorough literature review of selected papers from the well-known academic journals in construction management, the business environment and human behavior are identified as two key areas which impact the performance of CW in construction projects. Critical reviews on these areas are presented by focusing on different subcategories in each area to investigate the state of the art and trends of CW in construction projects. Some limits of research and practice on CW in construction projects are discussed and future research directions are recommended.     

Predicting Profit Performance for Selecting Candidate International Construction Projects

International projects are inherently exposed to unpredictable and complicated risk scenarios. To minimize possible losses due to these risk exposures, construction firms have their own procedures or basic tools for selecting potential projects, but they are usually based on the experience and knowledge of the firm’s engineers and decision makers that are often very subjective and lack scientific basis. This paper presents a quantitative profit prediction model for the early stage of an international project as a systematic risk-screening tool that involves the processes of defining, analyzing, and evaluating various profit-influencing risk variables. Various successful and unsuccessful international project cases with respect to profit levels are collected. Then, a scale-based profit prediction model to select candidate overseas projects is developed through factor analysis and a multiple regression analysis. Finally, this paper provides implications for global project management and lessons learned from case studies to improve profitability for international projects.     

Making a transition from quality assurance to quality improvement

Health care leaders now recognize the importance of adding continuous quality improvement activities and the measurement of clinical outcomes to their longstanding quality programs. From other industry leaders, they have learned that there is great promise on quality/cost returns when quality programs focus on measuring performance outcomes rather than just using the longstanding process of measuring variation in staff and system capacity processes. The purpose of this article is to describe how one urban acute care hospital is taking steps to change its quality paradigm and therefore change its quality program, which until recently consisted largely of unrelated quality assurance activities and projects. The new system will be a truly coordinated hospital wide continuous quality improvement program that will align quality activities with the mission of the organization and focus on the measurement of outcomes.     

Design Review Checking System with Corporate Lessons Learned

Design reviews are critical to the success of a construction project. They eliminate costly rework and conflicts, and promote creative and innovative design and construction. This paper discusses a unique way to improve design reviews by gathering and including direct corporate experience that can be used company- and industry-wide. The Design Review Checking System (DrChecks) and the system called Corporate Lessons Learned (CLL) were developed by the U.S. Army Construction Engineering Research Laboratory to collect personal experiences and lessons learned on projects and incorporate these data into corporate knowledge, expressly for the design review process. DrChecks provides a framework for a standardized review process. Typically, exchanges of personal experience and knowledge have occurred informally by word of mouth. With DrChecks and CLL, direct personal experience can be collected into a database while the design review process is on-going. Lessons learned, success stories, and good work practices, which can be identified easily by experienced staff members, can then be shared throughout the organization. DrChecks and CLL both take advantage of the Internet and facilitate the management of design review process and the collection and reuse of corporate lessons learned asynchronously and remotely.     

Using Gaussian and Hyperbolic Distributions for Quality Improvement in Construction: Case Study Approach

The Gaussian distribution and the 6σ principle have been widely used in the field of construction quality management with great success. This paper proposes a theoretical study on a new hyperbolic distribution using the 6σ principle to improve quality in construction management. The hyperbolic and Gaussian distributions are then numerically compared by estimating their important statistical properties, such as population in range, number of defects, yield percentage, and defects per million opportunities. The impacts of these factors are briefly discussed to give guidance to organizations in the construction industry on how to lower cost and improve project quality by prevention. A case study showing the cost data of a construction consultant company is presented. The data’s population in range and defects per million opportunities are estimated using Gaussian and hyperbolic distributions. In this particular case study, the hyperbolic distribution is shown to be more effective in quality improvement by prevention than the Gaussian distribution. This also validates the hyperbolic distribution as a suitable distribution for construction quality management.