Malik Ranasinghe

Impact of ISO 14000 on construction enterprises in Singapore

As construction activity has a significant impact on the environment it is vital to consider how to improve the environmental performance of organizations in the construction industry. The ISO 14000 series of standards on environmental management provides construction enterprises with the tool to address in a structured manner the adverse impacts of their operations and to attain sustainable construction. In this study, a survey was conducted to ascertain the perceptions of construction enterprises in Singapore on the impact of the implementation of ISO 14000 on their operations. Major problems were identified, and recommendations are made for the future development of environmental management systems (EMS) in the Singapore construction industry.

Culture and foreign companies' choice of entry mode: the case of the Singapore building and construction industry

Recent studies have shown that culture has an effect on the choice of foreign investment venture structure. Cultural distance has been identified as a primary determinant in the selection of shared control over wholly foreign owned investment. The data from these studies indicate, however, that individual cultural characteristics of investor countries may be more important than the difference in culture. In this study, a sample of Singaporean building and construction firms is utilized to explore whether joint venture (JV) formations correspond more to the uncertainty avoidance dimension of the investors culture than to cultural distance. The results show that an investors cultural aversion to risk may be more influential in explaining the propensity for firms from certain countries to engage in JVs, rather than other cultural factors.

Private sector participation in infrastructure projects: a methodology to analyse viability of BOT

Many developing countries are now attempting to finance new infrastructure projects through private sector participation. This paper outlines a methodology based on financial and risk analyses that a government or a government utility can use to analyse the viability of private sector participation in new infrastructure projects. The water supply projects in Sri Lanka are used for the case study to outline the methodology. Financial analyses of a bulk water supply project and a water distribution project are carried out to estimate subsidy percentages that are required to make the projects viable, using a model developed for the investment analysis of all types of infrastructure project. This analysis looks at four pricing options for the bulk supply project, and sixteen procurement options for the distribution project, from the view point of the utility, for three cases of non-revenue water (35% as base case, 50% and 25% as extreme cases). The risk analysis takes into account the risk and uncertainty in non-revenue water, cost and demand estimates, rate of debt and forecasts of escalation. These analyses show that the best option for the utility is to obtain both bulk supply and distribution projects through private sector participation using BOT arrangements.

Total project cost: a simplified model for decision makers

A simplified model for total project cost is developed in this paper to meet the numerous requests from decision makers for a model that can be used to estimate the total project cost from the estimated cash flows and, more importantly, to check the accuracy of the project cost estimates in feasibility studies that require prudent decisions. It begins with a base cost estimate in constant dollars and discrete cash flows with discrete inflation rates as practised by the construction industry. The discrete inflation rates are used to estimate the current dollar costs of the project. The effects of inflation are estimated as escalation during construction. Using the future value concept, interest during construction is estimated, in a simplified approach, to estimate the total project cost. Data from an actual feasibility study is used to highlight the strengths and weaknesses of the simplified model. The model is extended to treat discrete cash flows with continuous inflation rates.

Maintainability risks of condominiums in Sri Lanka

Purpose – With increased architectural, design and functional requirements and complexities, maintaining a modern building can easily become a costly affair. There is much evidence in the literature review as well as from the factual data, showing the significant increase of the maintenance budget in the recent past. This is due to the fact that, these complexities eventually generate many deficiencies and difficulties and, in turn, creates a tremendous maintenance workload and an undue budget. Therefore, the purpose of this paper is to discuss factors related to such issues in the form of risks involved in the maintainability of buildings and further, explore several strategies and industry actions at the industry level to resolve this burning problem. This paper is focused to address the condominium properties.Design/methodology/approach – This approach of investigation of the risk factors was based on exploring the causes of existing defects and problems, which tend to lower the maintainability. Existi...

Impact of correlation and induced correlation on the estimation of project cost of buildings

Treatment of correlation between variables is necessary for deriving any theoretical distribution of the project cost of buildings. This paper highlights some often ignored theoretical requirements necessary for a rigorous treatment of correlations. The condition for a positive definite correlation matrix is described, along with an analytical procedure and a computer program developed to verify the positive definite condition when correlation coefficients between input variables are estimated using historical data. The analytical procedure and the developed computer program can be used in any application that obtains correlation information from historical data or as subjective judgements to be used in a functional relationship. A new concept called induced correlation is suggested to define and to treat correlation between derived variables that arise from the common (shared) primary variables in their functional forms. A published numerical example is used to highlight the stages where correlation between variables can have an impact on the estimation of moments (estimated expected value and estimated standard deviation) for the project cost of buildings, and to demonstrate the improvement in the estimation of the standard deviation of project cost as a result of treating correlations in risk analysis.

Elicitation of subjective probabilities for economic risk analysis: An investigation

This paper investigates three major issues regarding the elicitation of expert knowledge for economic risk analysis: (1) recognition of some of the implicit assumptions and beliefs; (2) development of an approach to elicit expert knowledge as accurate, calibrated and coherent subjective probabilities; and (3)a study to explore human ability to predict future events and the validity of the implicit assumptions and beliefs in the context of the expert judgements. The proposed elicitation approach combines the theoretical requirements for valid subjective probabilities with a practical process. The recognition that some of the implicit assumptions and beliefs in engineering risk analysis should be explored when dealing with the human ability to predict future events, and the inherent difficulties in developing experiments and methods to test such beliefs arc some of the benefits of the study. Directions for future work are suggested.

Quantification and management of uncertainty in activity duration networks

This paper develops a theoretical basis for three issues that are important in the quantification and management of uncertainty in activity duration networks. Firstly, the uncertainty in activity durations is quantified. Secondly, the quantification of uncertainty in project duration is developed. Thirdly, how these quantifications can be used for allocation and management of contingency in activity durations is demonstrated. A published numerical example is used to illustrate the application of this development to a construction project. While this idea challenges the popular longest path (PERT) approach, it provides a robust theoretical foundation and introduces a logical framework to the quantification and management of uncertainty in activity duration networks.

Analytical approach for economic risk quantification of large engineering projects: validation

Validation and the computational efficiency of an analytical alternative to Monte Carlo simulation for quantifying risks in project performance measures such as time, cost, net present value and internal rate of return are explored in this paper. The analytical approach is based on the use of the Pearson family of distributions, a four moment characterization of uncertainty for input and output variables and a modified version of the PNET algorithm for modelling time uncertainty. The approach is applied to a generalized hierarchical description of a projects economic structure. Results show that the analytical approach can duplicate results of a full-scale Monte Carlo simulation with approximately 0.033 of the computational effort.

TREATMENT OF CORRELATION FOR RISK ANALYSIS OF ENGINEERING PROJECTS

Abstract Treatment of correlations between variables is necessary to establish realistic quantifications of uncertainty of decision variables such as project duration, cost and internal rate of return during the planning stages of an engineering project. This paper highlights some often ignored theoretical requirements necessary for a rigorous consideration of correlations and presents a general analytical procedure for eliciting and treating correlations between variables which is applicable to a broad class of engineering problems. The general case of a decision variable Y expressed in terms of an arbitrary function g(X) is examined, where X is a vector of random variables, some or all of which may be correlated. The theoretical requirement for a positive definite correlation matrix is described, along with a two stage process that leads to the elicitation of such a matrix. A variable transformation approach for treating correlations in moment analysis is used to derive the first four moments of Y. The ...