On being balanced in an unbalanced world

This paper examines the case of a procurement auction for a single project, in which the breakdown of the winning bid into its component items determines the value of payments subsequently made to bidder as the work progresses. Unbalanced bidding, or bid skewing, involves the uneven distribution of mark-up among the component items in such a way as to attempt to derive increased benefit to the unbalancer but without involving any change in the total bid. One form of unbalanced bidding for example, termed Front Loading (FL), is thought to be widespread in practice. This involves overpricing the work items that occur early in the project and underpricing the work items that occur later in the project in order to enhance the bidder's cash flow. Naturally, auctioners attempt to protect themselves from the effects of unbalancing-typically reserving the right to reject a bid that has been detected as unbalanced. As a result, models have been developed to both unbalance bids and detect unbalanced bids but virtually nothing is known of their use, success or otherwise. This is of particular concern for the detection methods as, without testing, there is no way of knowing the extent to which unbalanced bids are remaining undetected or balanced bids are being falsely detected as unbalanced. This paper reports on a simulation study aimed at demonstrating the likely effects of unbalanced bid detection models in a deterministic environment involving FL unbalancing in a Texas DOT detection setting, in which bids are deemed to be unbalanced if an item exceeds a maximum (or fails to reach a minimum) cut-off value determined by the Texas method. A proportion of bids are automatically and maximally unbalanced over a long series of simulated contract projects and the profits and detection rates of both the balancers and unbalancers are compared. The results show that, as expected, the balanced bids are often incorrectly detected as unbalanced, with the rate of (mis)detection increasing with the proportion of FL bidders in the auction. It is also shown that, while the profit for balanced bidders remains the same irrespective of the number of FL bidders involved, the FL bidder's profit increases with the greater proportion of FL bidders present in the auction. Sensitivity tests show the results to be generally robust, with (mis)detection rates increasing further when there are fewer bidders in the auction and when more data are averaged to determine the baseline value, but being smaller or larger with increased cut-off values and increased cost and estimate variability depending on the number of FL bidders involved. The FL bidder's expected benefit from unbalancing, on the other hand, increases, when there are fewer bidders in the auction. It also increases when the cut-off rate and discount rate is increased, when there is less variability in the costs and their estimates, and when less data are used in setting the baseline values.</p

Professional Ethics in the Construction Industry

The results are provided of a small, but reprersentative, questionnaire survey of typical project managers, architects and building contractors concerning their views and experiences on a range of ethical issues surrounding construction industry activities. Most (90%) subscribed to a professional Code of Ethics and many (45%) had an Ethical Code of Conduct in their employing organisations, with the majority (84%) considering good ethical practice to be an important organisational goal. 93% of the respondents agreed that "Business Ethics" should be driven or governed by "Personal Ethics", with 84% of respondents stating that a balance of both the requirements of the client and the impact on the public should be maintained. No respondents were aware of any cases of employers attempting to force their employees to initiate, or participate in, unethical conduct. Despite this, all the respondents had witnessed or experienced some degree of unethical conduct, in the form of unfair conduct (81%), negligence (67%), conflict of interest (48%), collusive tendering (44%), fraud (35%), confidentiality and propriety breach (32%), bribery (26%) and violation of environmental ethics (20%)

Barriers to expanding partnerships for affordable rental housing investment

The recent housing boom, experienced across Australian metropolitan markets, has attracted many new investors and resulted in increasing prices across the full range of residential sub-markets for both owner-occupation and investment categories. Of particular concern from a social perspective is the consequential pressure generated in the affordable housing rental market. Moreover, high vacancy rates and modest rental growth in rental housing has caused a deterioration in the investor’s rental yield given these increasing house prices (Powall and Withers, 2004, p.7). In this difficult situation, traditional delivery methods for rental housing are unlikely to continue to attract more investment in this area. Although some innovative proposals - such as public private partnerships in the affordable housing area - have been put forward as solutions, many stakeholders continue to hold doubts about the specious attractions of such approaches (Susilawati and Armitage, 2004). This paper reports the results of a survey of affordable housing providers drawn from a range of backgrounds: namely the private sector, government and non-for-profit organisations. Using in-depth interviews, it compares the opinions of these supply side groups regarding their experiences of the barriers to entry to such partnerships. The findings show agreement across the sector that, for a range of reasons, they have failed to produce better outcomes than would have been expected without the partnership. Further analysis using two-way and three-way cross-tabulation is then used to investigate the importance level between sub-groups

Multi-stakeholder partnerships in affordable rental housing: An investigation using soft systems framework

Queensland Department of Housing has proposed the use of partnerships as one possible option to deliver affordable housing outcomes. Although this initiative is supported by other stakeholders, many constraints have impeded its implementation for the delivery of real projects. Whilst it might find application for mixed housing projects with some relaxation on tax and/ or planning requirements, in general, affordable housing has not been seen as a valuable investment. Moreover, the partnerships require stakeholders to work across boundaries and outside their comfort zones.\ud \ud This initial study examines the use of soft systems framework to explore stakeholders’ views of multi-stakeholder partnerships in affordable rental housing. A series of in-depth interviews with major stakeholders representing housing providers, regulators and users in Queensland has been conducted. \ud \ud Soft systems methodology has been used to express the unstructured problem by using systematic thinking to develop a conceptual model to solve the problem. A complex problem is broken down into role, social system and political system analyses. This study provides an example of using systematic thinking in solving conflicting problems. The gap between the conceptual model and implementation in the real world situation was also investigated. Major changes in the socio-cultural aspects of the broader community as well as between stakeholders were required to implement the further development of multi-stakeholder partnerships for affordable rental housing

Partnerships in Affordable Housing: The Impact of Conflicting Investment Criteria

Accessibility to housing for lower income groups in Australia has been experiencing a severe decline in the last few years. On the supply side the public sector has been reducing its commitment to the direct provision of public housing at a time when market demand has strengthened, creating substantial price increases in all sectors of the housing market and in most urban centres. One possible solution to address the problem of reduced accessibility to affordable housing has been through the development of partnerships but recent investigation of the literature (Susilawati and Armitage, 2004a) and previous research by the author (Susilawati and Armitage, 2004b) suggest that the attractions of this approach may be specious. The research reported in this paper investigates the nature and incidence of these impediments as presented by survey of a number of stakeholders who have been involved in partnership arrangements in the Queensland affordable housing sector. By means of a series of in-depth interviews, the investment criteria and the impediments to achieving the desired outcomes of the participants in the partnerships are identified. Interestingly, the incidence of conflict and diversity between partners has elicited some unanticipated outcomes and responses which have ironically strengthened the process. Some of the negativity attached to future commitment to such partnerships has been found to be the anticipation of a worse outcome than that expected from independent action

Varianza analitica y aproximada del costo total de un proyecto

La varianza estadística del costo total de un proyecto usualmente se estima por medio de la simulación de Monte Carlo, bajo el supuesto de que los acercamientos analíticos son demasiado complicados. Este artículo analiza este supuesto y muestra que, contrario a lo esperado, la solución analítica es relativamente directa. También se muestra que el coeficiente de variación no se ve afectado por el tamaño (área superficial) del proyecto cuando se usan los costos de los componentes estandarizados. Se provee un caso de estudio en el cual se analizan los costos reales de los componentes para obtener la varianza del costo total requerida. Los resultados confirman trabajos previos al mostrar que la aproximación del segundo momento (varianza) bajo el supuesto de independencia subestima considerablemente el valor exacto. El análisis continua examinando los efectos del juicio profesional y con los datos simulados utilizados, la aproximación resulta razonablemente exacta - el juicio profesional absorbe la mayor parte de las intercorrelaciones involucradas. También se da un ejemplo en el cual las cantidades de los componentes unitarios son valoradas por sus costos unitarios promedios y muestra, una vez más, que la aproximación es cercana al valor real. Finalmente, el trabajo se extiende mostrando cómo obtener, para cada proyecto, las varianzas exactas del costo total