The topic of quality is of theoretical and practical interest to the construction industry. Rosenfeld demonstrates that there is a balance to be struck between the proactive cost of assuring quality and the resulting cost of non‐quality. He shows that up to a certain level, which can be empirically determined, expenditures on prevention and appraisal should be viewed as very fruitful investments by transforming waste into profit. Conscious investments in quality assurance prevent the negative consequences of internal failures and external failures, which include substantial hidden and indirect costs. Thus, savings of waste turn into profit. On the other hand, his findings also show that an excess of quality costs (prevention and appraisal) is wasteful. Above a certain level of investment, the extra benefits are marginal, and thus do not offset the extra costs. Rosenfeld's data shows that the optimal level of voluntary investment in quality is close to 4% of the total construction cost, and not less than 2% in any case.
Ofori and Toor review literature on cross‐cultural research in construction. Their review reveals that despite the criticism of Hofstede's work, the construction management literature is heavily dependent on his cultural dimensions and also suffers from methodological flaws and various conceptual shortcomings. Based on their review they go on to present a future research agenda to underscore the need for more interdisciplinary and interactionist perspectives on cross‐cultural issues. They call for the development of comprehensive research frameworks which can derive benefits from the methodologies being applied, and advances being made in cross‐cultural research.
Van Mossel and Straub evaluate the possibilities, and need, for customizing maintenance services. Through customization of maintenance service delivery, the match between users' expectations and the results of maintenance can be brought closer together. To this end, a survey was conducted among tenants of large housing associations in the Netherlands. The analysis of the survey returns enabled the authors to provide some definition for various customer segments. There are grounds for housing associations to differentiate in their maintenance (purchasing) policy. For sectors outside the social housing sector, e.g. the commercial housing sector, the possibilities for customization of maintenance may be even wider than for social housing. In commercial housing and office rental, landlords have more possibilities to combine upgraded services and rents. Additionally, this research may improve the match between supply and demand and thus help reduce costs that arise from holding vacant properties.
Warsame explores the role of different external forces on the organization structure of the municipal housing companies in Sweden during the period 1998‐2003. He contends that, from a transaction cost perspective, certain organization structures and supply chains can be more efficient. Internal factors such as the level of competence and flexibility, as well as other external forces such as competition, could play a big role in determining the appropriate organization structure. He suggests that organization structures depend on the level of project engagement, competence demanded by the preferred organization mode as well as the economic environment, and the level of construction activities.
A significant decline in construction activities is inevitable as a country's economy enters into a state of maturity. Construction is an industry closely related to economic prosperity and social stability of a country. It is the responsibility of policy‐makers and executives to formulate timely policies and strategic directions to cope with any structural changes in sector. Ng et al. capture the experiences of selected advanced economies, including Australia, Japan, Singapore, South Korea and the UK, in coping with structural changes in the construction sector. Based on a framework for long‐term construction industry development, strategies are classified into those which are related to the government and those related to industry. The authors indicate that governments should strive to speed up publicly funded projects, provide financial support to ease the burden of companies in the industry, and stimulate market demand. The industry also has a proactive role to play, especially in exploring different alternative market opportunities and by sharpening their competitive advantage locally and internationally. The strategies highlighted in this research serve as a valuable reference for rejuvenating the construction demand when phasing into a structural decline stage.
Robinson and Scott investigate the effectiveness of the performance monitoring mechanisms in a number of PFI/PPP projects in the service delivery or operational phase. They argue that theoretical value for money assessment at the planning phase depends on the effectiveness of the performance monitoring regime to ensure that practical value for money in service delivery is proven at the operational phase. They found that subjectivity in the output specification and the complexity of performance monitoring mechanisms raise questions about whether the low level of deductions truly reflect the actual level of services delivered. From the public client and private sector operator perspective, there are some practical implications. First, there is a need for improving the design of output specifications to reduce subjectivity and problems of interpretation in service delivery. Second, performance metrics should be simplified to reduce transaction costs and improve the effectiveness of performance monitoring. Third, public sector clients also need to provide sufficient resources as inadequate staffing for performance monitoring of service contracts undermines their ability to achieve practical value for money. Both the public sector clients and private sector operators are undergoing a learning process which should lead to improvements in the design of future PFI/PPP contracts.
Cash is crucial for the survival of construction contracting businesses. Alongside payments from their customers, contractors often procure additional funds from external sources, including banks. Typically, such cash incurs financing charges. Since cash is a scarce resource, contractors operate under cash‐constrained conditions. The most proactive operating strategy contractors can follow for financial planning is to devise project schedules based on cash availability. Unfortunately, this integration between scheduling and financing functions is entirely missing in the current research and the commercial scheduling software in construction. The concept and technique of finance‐based scheduling achieves the desired integration between scheduling and financing by incorporating financing costs into the project total cost as well as scheduling under cash constraints. Elazouni proposes a heuristic method, based on critical path networks, to implement the concept of finance‐based scheduling on multiple concurrent projects. Heuristics were utilized to overcome the drawbacks encountered in previous research upon the utilization of the integer programming technique. The method expands financing concerns to encompass all the contractor's concurrent projects rather than just an individual project. The proposed method offers the ultimate flexibility to enter cash flows, in and out, at the actual occurrence time, the ability to rationalize the scheduling process, the flexibility to either devise or update schedules, and the ability to schedule multiple projects on a practical scale.