Ratnesh Kumar, K. Chandrashekhar Iyer and Surya Prakash Singh
In construction management, risks and claims are treated separately, but several studies tacitly acknowledge a strong link between the two. In this context, this research intends…
Abstract
Purpose
In construction management, risks and claims are treated separately, but several studies tacitly acknowledge a strong link between the two. In this context, this research intends to investigate whether risks and claims have a causal relationship? Based on this causal relationship, a claim-based risk assessment model (C-RAM) is developed to quantify occurrences and cost implications of risks using project data.
Design/methodology/approach
First, the causal relationship between risks and claims is established through a conceptual framework for content analysis of the literature on risk management (RM) and claim management (CM). Then, a C-RAM is developed based on the content analysis of 234 claims from 24 settled arbitration awards.
Findings
Risks and claims are found to be two stages in the same chain of uncertain events that affect projects, subsequently revealing a causal relationship between risks and claims. Due to this causal relationship, claim documents become a potential source of risk information from past projects. Proposed C-RAM quantifies occurrences of risks with three parameters: number of projects in which a risk occurs, number of ways in which a risk occurs, and number of claims a risk causes if it occurs. Also, cost implications of risks are quantified as percentage of contract sums for interpretation as tangible values.
Research limitations/implications
Though C-RAM is applicable to all types of claims, the results in this paper are based on impacts of risks in past projects that caused claims and reached to arbitration stage.
Practical implications
The causal relationship between risks and claims will encourage integration of knowledge on RM and CM which is currently treated separately. Practitioners can now visualize claims as cost implications of risks that occurred in projects. Further, C-RAM makes risk assessment (RA) more objective by quantifying the cost implications of risks as percentage of contract sums which can be readily used for contingency estimation.
Originality/value
The relationship between risks and claims, and the potential of claim documents as a source of project risk information, can initiate a new paradigm in RM research based on project data.
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Morteza Bayat, Mostafa Khanzadi, Farnad Nasirzadeh and Ali Chavoshian
This study aims to determine the optimal value of concession period length in combination with capital structure in build–operate–transfer (BOT) contracts, based on direct…
Abstract
Purpose
This study aims to determine the optimal value of concession period length in combination with capital structure in build–operate–transfer (BOT) contracts, based on direct negotiation procurement and considering the conflicting financial interests of different parties involved in the project.
Design/methodology/approach
The financial model of a BOT project is developed considering all the influencing factors. Then, fuzzy set theory is used to take into account the existing risks and uncertainties. Bilateral bargaining game based on alternating-offers protocol is applied between the government and the sponsor to divide project financial benefit considering the lender’s requirements. Finally, concession period and equity level will be determined simultaneously according to the sponsor’s and government’s share of project financial benefit and the lender’s requirements.
Findings
The proposed model is implemented on a real case study, and a fair and efficient agreement on concession period length and capital structure is achieved between the government and the sponsor considering the lender’s requirements. It is revealed that being the first proposer in the bargaining process will affect the concession period length; however, it will not affect the equity level. Moreover, it is shown that considering income tax as a part of government’s financial benefit increases the length of concession period.
Research limitations/implications
The presented model concentrates on direct negotiation procurement in BOT projects where the sponsor and government bargain on dividing financial benefits of project. It is assumed that the product/service price is determined before according to market analysis or users’ affordability. All the revenue of project during concession period is assumed to belong to the sponsor.
Practical implications
The proposed model provides a practical tool to aid BOT participants to reach a fair and efficient agreement on concession period and capital structure. This could prevent failing or prolonging the negotiation and costly renegotiation.
Originality/value
By investigation of previous studies, it is revealed that none of them can determine the optimal value of concession period length and capital structure simultaneously considering the BOT negotiation process and different financial interests of parties involved in the project. The proposed model presents a new approach to determine the financial variables considering the conflicting interests of involved parties. The other novelty aspects of the presented model are as follows: introducing a new approach for calculating the sponsor and the government’s share of project financial benefit that will affect the determination of the concession period length and considering the effect of existing risks and uncertainties on final agreement between the involved parties using fuzzy set theory.
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Sanjay Bhattacharya, Kirankumar S. Momaya and K.C. Iyer
Successful handling and delivery of projects requires commensurate growth in the business capabilities of construction companies. The current scenario of exponential…
Abstract
Purpose
Successful handling and delivery of projects requires commensurate growth in the business capabilities of construction companies. The current scenario of exponential infrastructure boom in India necessitates scaling up to meet the challenges of competitiveness. The objectives of this study are to (1) identify the enablers of sustainable business growth among Indian construction companies, (2) identify gaps in the deployment of the enablers in comparison to competitive successful international construction companies and (3) suggest strategic initiatives to top management of companies and policymakers for promoting business growth and industry competitiveness.
Design/methodology/approach
A detailed literature review first identifies an adapted framework for enablers of growth and growth performance of successful international construction companies on basis of industry trends. Thereafter, a questionnaire survey was administered on the leading construction companies in India to assess the deployment of enablers and gaps thereof. A total of 108 valid responses were obtained from top management executives of the companies and analysed through descriptive statistics and hypothesis testing.
Findings
Studies indicate that anticipation of new demands and capabilities; business opportunity scanning and human resource skills and capabilities are among the most important enablers of growth. The role of leadership vision and focus on development of human resources is critical to competitiveness and growth. The successful international construction companies have delivered growth utilising their ability to deploy multiple strategies, diversification and new business opportunities. These are sparingly deployed by Indian companies.
Research limitations/implications
The study is limited to the opinion and perceptions of the top management personnel of the construction companies.
Practical implications
High economic growth context offers a unique opportunity for domestic Indian construction companies to leverage. The valuable insights gained from this study provide hints to the top management of these companies to draw managerial implications for facing the challenges ahead and delivering projects in the dynamic and hyper-competitive construction industry. The policymakers on their part are responsible to support and promote initiatives for sustainable growth.
Originality/value
The study suggests business growth enablers to construction companies in India to improve their international competitiveness.
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Sanjay Bhattacharya, Kirankumar S. Momaya and K. Chandrasekhar Iyer
To suggest a conceptual framework to benchmark enablers of growth and link them to performance metrics, duly supported theoretically with definitions and literature review. The…
Abstract
Purpose
To suggest a conceptual framework to benchmark enablers of growth and link them to performance metrics, duly supported theoretically with definitions and literature review. The sub-objectives of the study are the following:
To identify enablers based on theories and antecedents of growth
To establish key leads on how the identified enablers have been deployed by leading construction companies, basis their stages of growth and economic context
To identify which enablers have higher potential to contribute to competitiveness and growth in an effort to benchmark performance
To establish if the enablers deployed is dependent on the market maturity and economic context
To identify enablers based on theories and antecedents of growth
To establish key leads on how the identified enablers have been deployed by leading construction companies, basis their stages of growth and economic context
To identify which enablers have higher potential to contribute to competitiveness and growth in an effort to benchmark performance
To establish if the enablers deployed is dependent on the market maturity and economic context
Design/methodology/approach
The enabler-mix-based approach is evolved through literature review, inputs from industry practitioners, and subsequent empirical analysis. To explore relationships, the primary methodology suggested is building theory from practice, justified in specific industry and regional economic context. Content analysis has been used for validation of the framework.
Findings
Traditional strategy literature suffers from the limitations in terms of applicability and specific contextual settings. In a rapidly changing and varied environment coupled with the context of emerging countries, there is a need for a benchmarked framework for strategy and growth. The evidence toward utility of the framework has been established through a quick analysis of leading construction companies. Capabilities for “operational and process excellence,” “unique products and services,” and “visionary leadership” emerged to be the higher ranked core growth enablers. However, the deployment of these enablers is dependent on the maturity of the company and its economic context.
Research limitations/implications
This simpler and generic framework analyzes the relative impact on performance, as well as the inter-enabler interaction and substitution effects, in the context of construction companies.
Practical implications
In the context of industries that are volatile in nature (like the construction industry), strategy tools need to be simple and generic towards practical and uncomplicated application for the managers, to achieve positive outcomes.
Originality/value
This paper offers fresh perspectives to benchmarking literature in terms of enablers to deliver growth performance, in the context of construction companies. It attempts to fill the gap in evolving simple strategy tools to ensure sustainable growth performance in industries having nascent research support and less availability of data so far. In the context of industries that are volatile in nature (like the construction industry), strategy tools need to be simple and generic toward practical and uncomplicated application for the managers to achieve positive outcomes.
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Qianqian Shi, Longyu Yao, Changwei Bi and Jianbo Zhu
The construction of megaprojects often involves substantial risks. While insurance plays an important role as a traditional risk transfer means, owners and insurance companies may…
Abstract
Purpose
The construction of megaprojects often involves substantial risks. While insurance plays an important role as a traditional risk transfer means, owners and insurance companies may still suffer huge losses during the risk management process. Therefore, considering the strong motivation of insurance companies to participate in the on-site risk management of megaprojects, this study aims to propose a collaborative incentive mechanism involving insurance companies, to optimize the risk management effect and reduce the risk of accidents in megaprojects.
Design/methodology/approach
Based on principal-agent theory, the research develops the static and dynamic incentive models for risk management in megaprojects, involving both the owner and insurance company. The study examines the primary factors influencing incentive efficiency. The results are numerically simulated with a validation case. Finally, the impact of parameter changes on the stakeholders' benefits is analyzed.
Findings
The results indicate that the dynamic incentive model is available to the achievement of a flexible mechanism to ensure the benefits of contractors while protecting the benefits of the owner and insurance company. Adjusting the incentive coefficients for owners and insurance companies within a specified range promotes the growth of benefits for all parties involved. The management cost and economic benefit allocation coefficients have a positive effect on the adjustment range of the incentive coefficient, which helps implement a more flexible dynamic incentive mechanism to motivate contractors to carry out risk management to reduce risk losses.
Originality/value
This study makes up for the absence of important stakeholders in risk management. Different from traditional megaproject risk management, this model uses insurance companies as bridges to break the island effect of risk management among multiple megaprojects. This study contributes to the body of knowledge by designing appropriate dynamic incentive mechanisms in megaproject risk management through insurance company participation, and provides practical implications to both owner and insurance company on incentive contract making, thus achieving better risk governance of megaprojects.
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Kamal K. Mukherjee, K.C. Iyer and Anil Sawhney
A perceived uniqueness of real estate (RE) projects has led to a view among RE practitioners that since no two RE projects are the same, they must all follow their own unique set…
Abstract
Purpose
A perceived uniqueness of real estate (RE) projects has led to a view among RE practitioners that since no two RE projects are the same, they must all follow their own unique set of processes. Further, local exigencies often result in the very processes agreed at the beginning of every project being changed, thereby making projects unpredictable for delivery within time and budget, or to the standards of quality expected. Maintaining the need to follow pre-defined standard processes in RE operations, the purpose of this paper is to focus on two converging tracks: the first track studies available sector-level competitiveness frameworks appropriate for RE to formulate RE sector objectives; and the second track retains the process standardisation perspective to comprehensively identify a set of factors that influence the defined sector objectives.
Design/methodology/approach
The research methodology adopted comprises, respectively, for the two tracks, a focussed literature review and semi-structured interviews with 30 Indian RE sector practitioners working at levels of consequence, supported by qualitative interpretive analysis. As a sustained development requires all stakeholders to have their concerns addressed, this research leads to the formulation of four sector objectives, one for each stakeholder group identified. Furthermore, two sets of factors (inhibiting and enabling) are deduced from stakeholder interviews reinforced by secondary literature as those that would influence the realisation of the objectives from the standpoint of processes and their standardisation.
Findings
It is thought that factors identified here will inform actionable strategies for a transformation to the long-elusive process and standards-based delivery in the Indian RE sector. Such strategies will not only lead to the next spate of improvements from innovative processes and standards thereof but will also equip RE players with the wherewithal to successfully engage globally.
Originality/value
This work extends the earlier research to shift from a function to process orientation in RE and bridges research gaps in each of the tracks mentioned above: the articulation of RE sector objectives, and identification of factors influencing the objectives.
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S.K. Breja, D.K. Banwet and K.C. Iyer
This paper aims to address the issue of sustainability of excellence in today's turbulent environment and evaluates the effectiveness (to achieve objectives) of quality strategy…
Abstract
Purpose
This paper aims to address the issue of sustainability of excellence in today's turbulent environment and evaluates the effectiveness (to achieve objectives) of quality strategy in a DAP‐winning company.
Design/methodology/approach
A face‐to‐face interview and a literature review were carried out in a case study mode.
Findings
The paper finds that total quality management (TQM) implemented in the Deming Application Prize (DAP) framework has a positive effect on business performance. To sustain excellence, it is important to maintain strategic focus, match strategic options with aspirations, link the human resource mission with the company vision, and work for transformation.
Research limitations/implications
Information provided/reported by the case company is fully relied upon and the required data are extracted.
Originality/value
Working definitions of TQM and business excellence are presented and the issue of “transformation” is explored. The study adopts creative approach for identifying critical success factors, discovers the possibility of including “flexibility” as the fifth angle in DAP examination, and proposes a framework for further research.
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The provision of air transport services in small and regional airports is a major concern worldwide as regional aviation is challenged with inadequate revenues. This chapter aims…
Abstract
The provision of air transport services in small and regional airports is a major concern worldwide as regional aviation is challenged with inadequate revenues. This chapter aims to identify the driving factors for sustaining regional airlines and airports. Nine factors are identified through literature review and expert opinion. Fuzzy-total interpretive structural modeling is used to develop a hierarchical relationship among the factors. Truncated population of the region, national subsidies, and airport infrastructure development have been found to be the strongest drivers for promoting regional airports. This hierarchical model provides a logical structure to the factors.
Avirag Bajpai, Subhas Chandra Misra and Dong-Young Kim
The purpose of this research article is to investigate the critical risk factors associated with the digitalization impact on the Indian construction industry, as these firm plans…
Abstract
Purpose
The purpose of this research article is to investigate the critical risk factors associated with the digitalization impact on the Indian construction industry, as these firm plans to implement digitalization in order to improve their construction management processes.
Design/methodology/approach
In this research article, risk factors and dimensions are taken from diverse industries and validated in the construction domain by industry and academic experts. Further, multi-criteria decision-making techniques are employed to assess the Indian construction sector scenario quantitatively. The interrelationship and weightage of risk factors and dimensions are determined by the Fuzzy Decision-making Trial and Evaluation Laboratory Analytic Network Process (DANP) method. However, the method Grey Technique for the Order of Prioritization by Similarity to Ideal Solution (TOPSIS) is used to determine the ranking of each risk factor.
Findings
This study finds 14 critical risk factors along with four risk dimensions. Operational and financial dimensions are significant risk dimensions. Whereas the threat of high outlay and low yield is a significant risk factor in construction. Besides that, the interrelationship among risk factors, the weightage of each factor and the ranking of critical risk factors are also identified.
Research limitations/implications
This research article uses Fuzzy DANP and Grey TOPSIS techniques as exploratory research methods with a limited group of construction professionals from a leading Indian construction firm. Furthermore, comprehensive confirmatory research can also be performed with a large group of construction experts using advanced analytical techniques to validate the ranking of critical risk factors.
Practical implications
The findings of this study provide insight into the knowledge of construction firms by emphasizing significant risk factors related to digitalization in construction operations. Another finding of this study shows that the risks associated with digitalization in construction are similar to those in manufacturing, where high outlay and low yield hold a significant role in the transformation process.
Originality/value
The research is unique since there have only been limited studies in the Indian construction scenario to analyze the significant risks associated with digitalization. Furthermore, this study demonstrates that the combination of Fuzzy DANP and Grey TOPSIS techniques may be used successfully to prioritize risks in construction digitalization, which is still in its early phases.