Evaluating the whole-life cost implication of revocability and disruption in office retrofit building projects.

Retrofit buildings are becoming popular in the United Kingdom as well as many parts of the advanced economies. Existing whole-life costing models have however, not proven to be robust enough to deal with building retrofit scenarios. Recent research has made a case for the existence of revocability and disruption in building retrofit investments. This paper evaluates the whole-life cost implication of revocability and disruption in office retrofit building projects. The potential implication of revocability and disruption are evaluated based on probability and fuzzy logic principles respectively. Two case study projects are selected to appraise the economic potentials of revocability and disruption. It was found that the average cost of revocability relative to the initial capital cost can be up to 119% over a 60-year life. It was also found that the average cost of disruption relative to the initial capital cost can be up to 12%. Future studies will utilise sensitivity analysis in assessing the relative preference of building retrofit configurations in office building projects. The external validity of this work is moderate, as the intention is to establish analytical generalisation rather than statistical generalisation for office retrofit building projects

Dealing with construction cost overruns using data mining

One of the main aims of any construction client is to procure a project within the limits of a predefined budget. However, most construction projects routinely overrun their cost estimates. Existing theories on construction cost overrun suggest a number of causes ranging from technical difficulties, optimism bias, managerial incompetence and strategic misrepresentation. However, much of the budgetary decision-making process in the early stages of a project is carried out in an environment of high uncertainty with little available information for accurate estimation. Using non-parametric bootstrapping and ensemble modelling in artificial neural networks, final project cost-forecasting models were developed with 1600 completed projects. This helped to extract information embedded in data on completed construction projects, in an attempt to address the problem of the dearth of information in the early stages of a project. It was found that 92% of the 100 validation predictions were within ±10% of the actual final cost of the project while 77% were within ±5% of actual final cost. This indicates the models ability to generalize satisfactorily when validated with new data. The models are being deployed within the operations of the industry partner involved in this research to help increase the reliability and accuracy of initial cost estimates

Neural networks for modelling the final target cost of water projects

Producing reasonably accurate cost estimates at the planning stage of a project important for the subsequent success of the project. The estimator has to be able to make judgement on the cost influence of a number of factors including site conditions, procurement, risks, price changes, likely scope changes or type of contract. This can shroud the estimation process in uncertainty, which has often resulted in project cost overruns. The knowledge acquisition, generalization and forecasting capabilities of Artificial Neural Networks (ANN) are explored in this pilot study to build final cost estimation models that incorporate the cost effect of some of the factors mentioned above. Data was collected on ninety-eight water-related construction projects completed in Scotland between 2007-2011. Separate cost models were developed for normalized target cost and log of target costs. Variable transformation and weight decay regularization were then explored to improve the final model’s performance. As a prototype of a wider research, the final model’s performance was very satisfactory, demonstrating ANN ability to capture the interactions between the predictor variables and final cost. Ten input variables, all readily available or measurable at the planning stages for the project, were used within a Multilayer Perceptron Architecture and a Quasi-Newton training algorithm

Potential Risks to International Joint Ventures In Developing Economies: The Ghanaian Construction Industry Experience

International construction companies are increasingly entering into joint ventures with local companies in developing countries to explore perceived profitable opportunities overseas. Joint ventures generally offer a number of benefits but they can become very difficult to manage as a result of many complexities introduced by the association of two or more companies from different countries, with differing political, cultural and legal frameworks, technical and managerial capabilities, and national economic environments. This theoretical study assesses the risks associated with International Construction Joint Ventures in developing economies with particular reference to Ghana. The nature, strengths, weaknesses, opportunities and threats within the Ghanaian construction industry were reviewed. The economy, governance, business environment, infrastructure, resources, etc. of Ghana were also assessed. The main risks factors to International Joint Ventures (IJVs) identified in Ghana can be categorised into two: major risk factors including the microeconomic and financial risk factors and joint venture partner problems. The client’s ability to finance the projects and poor technical, financial and managerial capacities of Ghanaian construction firms were the main factors in this group. The minor risks factors include the availability and high cost of construction materials, issues of bribery and corruption, power supply problems and security

Towards methodological adventure in cost overrun research : linking process and product

The continued adoption of singular paradigms in the study of construction phenomena has elicited dialectical debates in scholarly literature. Calls have been made for more adventurous research methods, beyond the positivist versus interpretivist philosophical divide traditionally embraced by the industry. This study analyses the extensive scholarly debates, advancing and advocating philosophical positions to understand construction phenomena, and further narrows down the argument to within the specific domain of cost overrun research. A systematic and chronological literature review of the methodological/philosophical underpinnings of 41 papers was carried out. The papers were selected by following a staged exclusion criterion. The study outcome reveals that similar dialectical debates and methodological conservatism are still evident, with the predominance of mono-paradigm studies in the bulk of the empirical literature. Most of the empirical literature either provides interpretivist theoretical explanations from qualitative data or positivistically analyses quantitative data to provide technical explanations. To this end, mixed paradigm examples are spotlighted, demonstrating the relevance of linking process and product via methodological adventure in cost overrun research. Transcending the paradigmic divide is necessary to develop a more useful and contextually anchored view of practice, essential to mitigate and provide a holistic understanding of what drives cost overruns in public projects

Debunking fake news in a post-truth era: The plausible untruths of cost underestimation in transport infrastructure projects

© 2018 Elsevier Ltd The methodology, analysis, and the unfounded conclusions presented in the paper “Underestimating costs in public works projects: error or lie?” by Flyvbjerg, Holm, and Buhl (2002), published in the Journal of the American Planning Association are critically questioned. Flyvbjerg, Holm, and Buhl attribute the cause of cost underestimation in transport infrastructure projects to delusion (optimism bias) and deception (strategic misrepresentation). The bifurcation of the cost underestimation problem into error or lie presents a false dichotomy – an either/or choice that is invalid when juxtaposed with the real-world nature of procuring large infrastructure assets. Put simply, the conclusions presented by Flyvbjerg, Holm, and Buhl are akin to being fake news. Unfortunately, the persistent reverberation of these convenient narratives and factoids in both academia and media has led to these explanations becoming an accepted norm. In this paper, the claims made by Flyvbjerg, Holm, and Buhl are debunked. A call is made for policy-makers to embrace and utilize evidence-based research so that informed decisions about capital cost estimates and potential risks can be better ascertained at the front-end of major transport infrastructure projects

Life cycle option appraisal in retrofit buildings

© 2018 Elsevier B.V. Determining the economic benefits of building asset retrofitting has been a difficult task due to the paucity of reliable data and the inherent limitations of existing life-cycle costing models. For example, most life cycle costing models do not accommodate revocability (i.e. the economic impacts of reversing a decision previously made on a building configuration). Thus, the impact of revocability in the life cycle appraisal of a retrofit building project is assessed in this paper. Using a case-study approach, the economic impact of revocability is appraised using a real-options framework. The flexibility and non-flexibility of life cycle options are evaluated and compared. It is revealed that the cost of revocability may be as high as 27% in retrofit buildings. Flexible options have up to 50% chance of exceeding the performance of non-flexible retrofit options when fabric insulation measures and smart control installations are considered. The incorporation of renewable energy may undermine the performance of flexible options due to their inherent uncertainties in the cost and evolution in the future. There is, however, a need to develop holistic lifecycle option appraisal approaches for scenario feasiblility assessments to optimise the value of retrofit interventions in buildings

Planning for production in construction: controlling costs in major capital projects

© 2017 Informa UK Limited, trading as Taylor & Francis Group. There has been limited research that has examined how the public sector can guarantee their major capital projects are delivered within budget. A Strategic Asset Management Framework (SAMF) developed by the Western Australian State Government, was implemented that ensured their major capital projects were delivered within 5% of their budget. Interviews were conducted with stakeholders who had participated in the delivery of capital projects using the SAMF to understand how it had been used to successfully deliver projects. The interviews highlighted the importance of the SAMF in addressing optimism bias and strategic misrepresentation with the use of independent auditors. The research provides invaluable insights from practice that have been used to control and manage the capital expenditure of assets. Such knowledge is pivotal for ensuring strides are made forward to addressing the cost growth phenomenon that continues to plague major capital projects

Light rail transit cost performance: Opportunities for future-proofing

© 2017 Elsevier Ltd The cost performance of Light Rail Transit (LRT) systems have been scrutinized by the popular press and public sector infrastructure agencies as they have been prone to incurring cost increases in their capital expenditures (CAPEX). In tackling such increases, emphasis is placed on mitigating strategic misrepresentation and optimism bias, which has hindered the public sectors ability to embrace innovation, particularly with regard to the justification and adoption of LRT. More often than not, operational expenditure (OPEX) is neglected, and is not considered a part of the transportation cost performance literature. The aim of this paper is to examine the equivocality that surrounds the determination of cost performance of LRT projects. It is suggested that the public sector should move beyond focusing on strategic misrepresentation and optimism bias, as many governments worldwide now have in place mechanisms to address such issues, and instead focus on future-proofing their assets. It is suggested that the key enablers of future-proofing LRT are (1) private finance; (2) delivery strategy (e.g. design-build-finance-operate); (3) digitization (e.g. building information modelling); and (4) asset management (e.g. smart technologies). If the public sector is to provide an LRT system that is cost effective and able to respond to the demands imposed by climate change, then it needs to be considered from a life-cycle perspective and funding sought from the private sector to ensure its viability

Risk assessment in the maintenance of offshore caisson operations

Undertaking maintenance of offshore caissons is a pervasive challenge that involves an array of risks and uncertainties. Despite the adoption of standardised and routine maintenance procedures that are subject to on-going improvements, the rate of failure in offshore caissons remains relatively high. To manage the effect of risk and uncertainties associated with the maintenance of offshore caissons, expert judgment can be drawn upon to better understand and capture the issues that contribute to their failure. Using a case study of an offshore hydrocarbon discharge caisson in the North Sea of the United Kingdom, expert judgements from industry practitioners are obtained using the Delphi Interview and Analytic Hierarchy Process (AHP) technique to rank 14 possible recovery options. Sensitivity analysis is used to ascertain the suitability of each of the options. Results reveal that the Delphi technique employed provided a robust means to garner invaluable insights from experts about the issues associated with caisson failure. The corollary is the development of a framework that serves as a point of reference to identify and assess the risks in offshore caisson maintenance operations. This framework can also be used in conjunction with existing probabilistic methods to improve the effectiveness of decision-making during operations and maintenance