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Article
Publication date: 1 January 1994

ANTONY MERNA and NIGEL J. SMITH

Concession contracts provide a mechanism for transferring the traditional public sector client roles of market research, project appraisal, project financing, operation and…

377

Abstract

Concession contracts provide a mechanism for transferring the traditional public sector client roles of market research, project appraisal, project financing, operation and maintenance, and revenue generation associated with power station projects to the private sector organizations, formerly only responsible for turnkey design and construction. The recent research work undertaken in the Project Management Group, UMIST, has developed and validated a mechanism for the rapid appraisal of concession contracts. A case study example is presented to illustrate the significant features of the procurement of power projects using concession contracts.

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Engineering, Construction and Architectural Management, vol. 1 no. 1
Type: Research Article
ISSN: 0969-9988

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Article
Publication date: 1 March 1997

G. OWEN and A. MERNA

This paper outlines the concept of the Private Finance Initiative. It covers some of the basic PFI mechanisms and provides the reader with a general understanding of PFI and the…

863

Abstract

This paper outlines the concept of the Private Finance Initiative. It covers some of the basic PFI mechanisms and provides the reader with a general understanding of PFI and the purpose it serves. The paper will look at how the policy has been received specifically within the construction industry and the problems highlighted to date.

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Engineering, Construction and Architectural Management, vol. 4 no. 3
Type: Research Article
ISSN: 0969-9988

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Article
Publication date: 1 April 2004

Giustina G.S. Consoli

A number of Australian states have employed private correctional companies to both manage, and design and construct their own facilities. Such projects have employed alternative…

1077

Abstract

A number of Australian states have employed private correctional companies to both manage, and design and construct their own facilities. Such projects have employed alternative delivery methods from what had been traditionally procured state facilities. The study highlights private prison operators' responses to the evaluation of their Request for Proposal by state governments. The findings reveal that although the evaluation of tender bids by the participating state governments was appropriate, various problems were encountered with the evaluation methodology employed to assess and award tenders. The study shows that the areas of concern include the: suitability and reliability of the evaluation methods; reactions to the bid outcomes; appropriateness of the debriefing sessions. The study shows that operators would prefer fundamental changes to the evaluation methodologies of the design and construction component of the private prison request for proposal evaluation.

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Facilities, vol. 22 no. 5/6
Type: Research Article
ISSN: 0263-2772

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Article
Publication date: 1 March 1999

FARZAD KHOSROWSHAHI

The way in which clients or their consultants undertake to select firms to tender for a given project is a highly complex process and can be very problematic. This is also true

233

Abstract

The way in which clients or their consultants undertake to select firms to tender for a given project is a highly complex process and can be very problematic. This is also true for public authorities as, for them, ‘compulsory competitive tendering’ is a relatively new concept. Despite its importance, contractors' prequalification is often based on heuristic techniques combining experience, judgement and intuition of the decision makers. This, primarily, stems from the fact that prequalification is not an exact science. For any project, the right choice of the contractor is one of the most important decisions that the client has to make. Therefore, it is envisaged that the development of an effective decision‐support model for contractor prequalification can yield significant benefits to the client. By implication, such a model can also be of considerable use to contractors: a model of this nature is an effective marketing tool for contractors to enhance their chances of success to obtain new work. To this end, this work offers a decision‐support model that predicts whether or not a contractor should be selected for tendering projects. The focus is on local authorities because, in the absence of a viable universal selection system, there are significant variations in the way they conduct prequalification. The model is based on the use of artificial neural networks (ANN) and uses data relating to 42 local authorities (clients). With the aid of a questionnaire and a scaling system, the prequalification attributes that are considered to be important by clients are identified. The survey indicates significant variations in the level of importance given to different attributes. Statistical methods are adopted to generate additional data representing disqualified instances. Following a preprocessing exercise, the data form the basis of the input and output layers for training the neural‐net model. An independent set of data is subjected to a similar preprocessing for testing the model. Tests reveal that the model has a highly satisfactory predictive accuracy and that the ANN technique is a viable tool for the prediction of success or failure of the contractor to qualify to tender for local authority projects.

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Engineering, Construction and Architectural Management, vol. 6 no. 3
Type: Research Article
ISSN: 0969-9988

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Article
Publication date: 1 April 2001

CHEE H. WONG, GARY D. HOLT and PHIL HARRIS

The ‘lowest‐price wins’ philosophy has been a consistent theme of contractor selection over the years. To comprehensively elucidate this selection preference and compare it with…

1596

Abstract

The ‘lowest‐price wins’ philosophy has been a consistent theme of contractor selection over the years. To comprehensively elucidate this selection preference and compare it with the use of a multi‐criteria selection (MCS) approach in the tenderer evaluation process, this paper investigates MCS tender price selection preferences. That is, project‐specific criteria (PSC) and lowest‐price wins selection practices of UK construction clients, in both building and civil engineering works at in detail via results of the empirical survey. The investigation provides further insight into the evaluation of contractors' attributes (i.e. PSC). Levels of importance assigned (LIA) for each criterion were analysed (i.e. quantitative analysis of the differences in opinions and, variance amongst the respondents) in a multivariate statistical method. Importance attached by construction clients to the ‘lowest‐price wins’ philosophy is also presented. Contrast was made between the MCS approach and the ‘lowest‐price wins’ option amongst the surveyed construction clients. It was found that increased awareness of the use of PSC prevailed amongst the survey construction clients. This indicated that cost has to be tempered with the evaluation of PSC and the attempt of construction clients searching for a new evaluation paradigm (i.e. adoption of MCS approach rather than basing on the lowest‐price wins alone).

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Engineering, Construction and Architectural Management, vol. 8 no. 4
Type: Research Article
ISSN: 0969-9988

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Book part
Publication date: 10 November 2020

Suresh Mony and Narayani Ramachandran

The attraction of public private partnerships (PPPs) for governments is that the on-ground fructification of infrastructure projects is far higher than the traditional…

Abstract

The attraction of public private partnerships (PPPs) for governments is that the on-ground fructification of infrastructure projects is far higher than the traditional implementation route through public sector or departmental undertakings. Besides, time overruns are also considerably reduced. However, empirical evidence does not clearly establish that PPPs are cost efficient. This coupled with the risk intensity has impacted the long run flow of private capital to infrastructure PPPs and it therefore calls for a more scientific approach to management of profitability related risks. Appropriate management control systems (MCS) could be the answer, provided they can favorably impact profitability. Aggregating data from road, ports, airports, urban infrastructure, railways and power PPP ventures implemented in India, this chapter attempts to study the relationship between MCS and returns to sponsors through regression analysis. The study concludes that multiple MCS have a significant relationship with sponsors’ profitability.

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Financial Issues in Emerging Economies: Special Issue Including Selected Papers from II International Conference on Economics and Finance, 2019, Bengaluru, India
Type: Book
ISBN: 978-1-83867-960-6

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Article
Publication date: 28 October 2013

Aayushi Gupta, Mahesh Chandra Gupta and Ranjan Agrawal

– The study aims to identify and rank the critical success factors (CSFs) for BOT projects in India.

2023

Abstract

Purpose

The study aims to identify and rank the critical success factors (CSFs) for BOT projects in India.

Design/methodology/approach

The study was conducted based on an extensive literature review and focus group discussions. Through structured questionnaire, a survey was conducted with executives from leading construction, consultancy and government organizations. A total of 150 questionnaires were sent out of which 60 responses were received. Analytical hierarchy process method was used to analyze the data.

Findings

Concession agreement, short-construction period, selection procedure of concessionaire, sufficient long-term demand and sufficient net cash inflow emerged as the top five factors critical for the success of the BOT projects in India.

Practical implications

The identified CSFs should influence the policy development towards BOT projects and are expected to enhance the success rate of these projects.

Originality/value

The study has made much-needed contribution to the extant literature on BOT projects. The findings would be valuable in assisting government (owner) and private participants to have a better understanding of the critical factors leading to success of these projects. The results from the current study are crucial as not many studies have been conducted in India as compared to China and West.

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Management Research Review, vol. 36 no. 11
Type: Research Article
ISSN: 2040-8269

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Article
Publication date: 1 February 2002

MARTIN SKITMORE and H.P. LO

Construction contract auctions are characterized by (1) a heavy emphasis on the lowest bid as it is that which usually determines the winner of the auction, (2) anticipated high…

201

Abstract

Construction contract auctions are characterized by (1) a heavy emphasis on the lowest bid as it is that which usually determines the winner of the auction, (2) anticipated high outliers because of the presence of non‐competitive bids, (3) very small samples, and (4) uncertainty of the appropriate underlying density function model of the bids. This paper describes a method for simultaneously identifying outliers and density function by systematically identifying and removing candidate (high) outliers and examining the composite goodness‐of‐fit of the resulting reduced samples with censored normal and lognormal density function. The special importance of the lowest bid value in this context is utilized in the goodness‐of‐fit test by the probability of the lowest bid recorded for each auction as a lowest order statistic. Six different identification strategies are tested empirically by application, both independently and in pooled form, to eight sets of auction data gathered from around the world. The results indicate the most conservative identification strategy to be a multiple of the auction standard deviation assuming a lognormal composite density. Surprisingly, the normal density alternative was the second most conservative solution. The method is also used to evaluate some methods used in practice and to identify potential improvements.

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Engineering, Construction and Architectural Management, vol. 9 no. 2
Type: Research Article
ISSN: 0969-9988

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Article
Publication date: 1 January 1994

GARY D. HOLT, PAUL O. OLOMOLAIYE and FRANK C. HARRIS

A quantitative contractor selection technique which embraces the pre‐qualification, evaluation and final selection processes is being developed. The emphasis is on evaluating…

774

Abstract

A quantitative contractor selection technique which embraces the pre‐qualification, evaluation and final selection processes is being developed. The emphasis is on evaluating contractors' performance potential in terms of their ability to achieve time, cost and quality standards. This approach is in contrast to the majority of current selection techniques which tend to prequalify, then discriminate predominantly on the cost component of tenders. The conceptual model is applied to a hypothetical but realistic scenario of a contractor competing for a small industrial contract. This illustrates the mechanics of the new technique, emphasizing that contractor selection should include identifying the contractor with the best performance potential and not merely the lowest bidder.

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Engineering, Construction and Architectural Management, vol. 1 no. 1
Type: Research Article
ISSN: 0969-9988

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Article
Publication date: 1 January 1998

COLIN DUFFIELD

This paper presents a detailed case study of how a European heating contractor analysed the commercial viability of privately financing a critical component of the construction of…

585

Abstract

This paper presents a detailed case study of how a European heating contractor analysed the commercial viability of privately financing a critical component of the construction of new apartment heating systems in return for ongoing maintenance contracts. The adaptation of some of the concepts of more complex concession or Build Own Operate and Transfer (BOOT) contract arrangements for use on a small scale project are discussed. Some details of this simple form of privately financed contact are presented. Specifics of the funding mix between construction and fitout costs, capital equipment costs and ongoing maintenance agreements are discussed and related to the market price for energy. The example demonstrates the potential for this type of delivery mechanism for small scale construction. The constructor maintained a reasonable margin and profit during a period of economic recession, new clientele was developed and business expanded to provide a whole of life service. The developer was able to renovate a facility for a lower capital cost than would otherwise have been possible, and the user gained a state of the art heating system without any increase in heating costs.

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Engineering, Construction and Architectural Management, vol. 5 no. 1
Type: Research Article
ISSN: 0969-9988

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