AJCEB Vol2 No2 28-11-02

EDITORIAL
The publication of this second issue for 2002 completes our commission as editors of the journal for now. Once again we were faced with the daunting prospect of selecting from a substantial number of papers submitted (21 in total) and we hope that the papers that we have chosen, in consultation with our referees, will be both interesting useful. As was the case with the previous issue, we have been fortunate in having a panel of eminent people from various countries to referee the papers in addition to the many staff of the Faculty of Design Architecture and Building at UTS who assisted in the refereeing process. In reviewing the contributions and selecting papers for publication we were faced with some fundamental questions, not the least of which was the question of exactly what criteria we would use in assessing papers. It may seem simple: separate the good papers from the bad papers (the wheat from the chaff) and print the former. There are, however, some other concerns that need to addressed before we even get to the point of thinking about what constitutes a good or bad paper. The most important of these is related to the nature of the journal itself: it is a refereed journal but one that serves two professional bodies, the AIB and the AIQS, and therefore we should give consideration to presenting papers that will be of interest to their members, and not only to academics. On the other hand, as both bodies have their own professional journals, in which practitioner papers and articles regularly appear, we have generally steered away from papers that we feel fall into that category. In assessing papers for publication we have always looked for those that have a clear objective and that then investigate or pursue that objective in a clear and logical manner. In keeping with our aim of publishing papers that will be of some interest to all our readers we have also looked for clarity in the writing and reporting of research outcomes. It is unfortunate that often what is good research (in our opinion and that of our referees) is devalued because the reporting of it is unclear or just simply difficult to read. The end result is a paper with content that makes it worthy of publication but an outcome that is, overall, too muddy for anyone but a dedicated editor, or perhaps another researcher, to plough through. It could be argued that writing papers for refereed journals is all about content and not about style, i.e., that it is the research and the conclusions drawn from the research that are important. Further it may be argued that it is not the purpose of serious research to produce light reading matter, however, construction is a practical business and if the people in the professions that serve the industry are to benefit from research then surely the research outcomes need to be communicated to those may make use of themotherwise what purpose does the research serve apart from looking good on academic resumes? This is not to say that we have rejected more than half of the papers submitted because we thought they were poorly writtenseveral were very well written but were basically literature reviews that will eventually form part of a thesis for the authors postgraduate degrees. Others did not clearly follow their stated objectives; a few were just not original enough or rigorous enough to displace papers that did report original research well. In any case we have tried to be fair and consistent, or at least fairly consistent. Our thanks must again go the Editorial Board plus the UTS referees who willingly donated their time and expertise, the contributors who accepted our decisions and suggestions with good grace, and Sally Beech, who has done her usual professional job of putting the issue into printable format. Producing the 2002 issues of the journal has been a challenging but edifying job, and we wish our colleagues at RMIT every success with Volume 3.
Rick Best Goran Runeson December 2002
THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2 i
INDEX
Editorial Abstracts
Determining the Optimal Fee-Technical Proposal Combination in Two Envelope Fee Bidding Professor Derek S. Drew, Connie W.K. Kwong and Patrick X.W. Zou, University of New South Wales L.Y. Shen, The Hong Kong Polytechnic University Outdoor Workers and Sun Protection: Knowledge and Behaviour Dr Jane Cioffi, Professor Lesley Wilkes and Ms Jess Hartcher-OBrien The University of Western Sydney The Crisis Management Practices of Australian Construction Companies M. Loosemore, University of New South Wales M. M. M. Teo, Building Construction Authority, Singapore An Investigation into Factors Influencing Construction Costs Based on Japanese, UK and US Contractor Practice Hong Xiao and David Proverbs, University of Wolverhampton The Impact of Culture on International Management: A Survey of Project Communications in Singapore Duc Tran and Professor Martin Skitmore, Queensland University of Technology Perceptions of Time, Cost and Quality Management on Building Projects Professor P.A. Bowen and Associate Professor K.S. Cattel, University of Cape Town K.A. Hall, The University of New South Wales Associate Professor P.J. Edwards, Royal Melbourne Institute of Technology Professor R.G. Pearl, University of Natal Building a House Prices Forecasting Model in Hong Kong Xin Janet Ge and Associate Professor Ka-Chi Lam, City University of Hong Kong. Barriers to the Development of SMEs in the Australian Construction Industry Anthony Mills and Jim Smith, University of Melbourne Associate Professor Peter Love, Edith Cowan University BOOK REVIEW Red Man Green Man by Jayne Cox, David Fell and Mark Thurstain-Goodwin Reviewer: Professor Craig Langston, Deakin University Instructions/guidelines for authors to the Australian Journal of Construction Economics and Building
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ii THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2
ABSTRACTS DETERMINING THE OPTIMAL FEE-TECHNICAL PROPOSAL COMBINATION IN TWO ENVELOPE FEE BIDDING
Professor Derek S. Drew, Connie W.K. Kwong and Patrick X.W. Zou, University of New South Wales L.Y. Shen, The Hong Kong Polytechnic University
Two envelope fee bidding is a mechanism used by construction clients to allocate commissions to willing consultants such as architects, engineers and surveyors. In two envelope fee bidding the client scores the competing consultants fees and technical proposals. The fee and technical proposal scores are weighted and aggregated and the consultant obtaining the highest aggregated score normally wins the commission. The consultants objective in bidding, therefore, is to obtain the highest aggregated score possible since this maximizes the chance of winning the commission. Given that fee and technical proposal scores are to some extent correlated, consultants can submit any one from a number of different feetechnical proposal combinations, ranging from a low feelow scored technical proposal combination to a high feehigh scored technical proposal combination. Only one possible combination will result in the highest aggregated score. Drew et al (2002b) offered consultants a model to determine this optimum fee-technical proposal combination for any given commission. This paper tests the proposed model using data collected from a leading Hong Kong consultant. The analysis, based on 51 bidding attempts, indicates that had the consultant adopted the proposed optimization model, the overall average improvement on the consultants original total scores was 7.07%. The optimum strategy was to aim for an absolute low feelow scored technical proposal on 20 occasions, absolute high scored technical proposalhigh fee on 21 occasions and somewhere between these two extremes on the remaining 10 occasions. The extent to which fees scores and technical scores vary relative to each other has an important influence on the optimum feetechnical proposal combination. However, the clients change from a 70/30 to a 50/50 predetermined weighting appears to have little effect on the consultants optimum bidding strategy.
OUTDOOR WORKERS AND SUN PROTECTION: KNOWLEDGE AND BEHAVIOUR

Dr Jane Cioffi, Professor Lesley Wilkes and Ms Jess Hartcher-OBrien The University of Western Sydney
Outdoor workers are at high risk of developing skin cancer. Primary prevention can potentially reduce the incidence of skin cancer in this group. This study aimed to determine the knowledge and sun protective behaviour of outdoor workers towards skin cancer. A short questionnaire was used to collect data from workers on construction sites during working hours. Despite workers having knowledge of the risks of skin cancer their use of sun protection was less than satisfactory, particularly considering their cumulative exposure. Workplace health education programs for outdoor workers addressing sun protection are indicated, as is further research to increase understanding of issues workers have with sun protection in the workplace.
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THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2 iii
THE CRISIS MANAGEMENT PRACTICES OF AUSTRALIAN CONSTRUCTION COMPANIES

M. Loosemore, University of New South Wales M. M. M. Teo, Building Construction Authority, Singapore
Recent world events in the international relations arena and the subsequent knock-on affect on the insurance industry, have sent shock-waves through Australias business community, elevating crisis management to the top of the managerial agenda. This paper presents the findings of exploratory research, which investigated the crisis management practices of construction companies. Using a diagnostic model of crisis preparedness which has been developed and tested across a broad range of industries, it concludes that if the sample surveyed is typical, then crisis planning is rudimentary and undertaken in an insular, informal, fragmented fashion, supported by few resources and little strategic guidance. Consequently, many construction companies will have an inadequate understanding of their crisis exposure, of how to cope with crises when they happen and of how to learn and recover from their aftermath.
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AN INVESTIGATION INTO FACTORS INFLUENCING CONSTRUCTION COSTS BASED ON JAPANESE, UK AND US CONTRACTOR PRACTICE
Hong Xiao and David Proverbs University of Wolverhampton
Construction cost is a major concern to both clients and contractors. Based on a hypothetical construction project (a six-storey concrete framed office building), cost and other related information was collected through a survey of contractors in Japan, the UK and the US. Using multiple regression analysis it was found that lower overheads, less prefabricated components, and fewer design variations could reduce construction cost. Overheads largely represent indirect costs to contractors and if reduced can lead to increased profit levels and improved competitiveness. The use of prefabricated components may be problematic where there are delays in production, insufficient coordination between design and construction, and congested transportation on site. Design variations during construction bring about uncertainties and are disruptive to the construction process. These factors have paramount impact on construction cost and demand close attention and consideration. Contractors are advised to reduce the costs of their overheads and utilise prefabrication appropriately, while clients and designers should minimise the number of design variations during construction if better cost performance is desired.
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iv THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2
THE IMPACT OF CULTURE ON INTERNATIONAL MANAGEMENT: A SURVEY OF PROJECT COMMUNICATIONS IN SINGAPORE

Duc Tran and Professor Martin Skitmore Queensland University of Technology
This paper provides the results of an exploratory survey of construction industry managers in Singapore to isolate some of the common effects of national and organisational culture, together with the personal characteristics of managers, on the efficacy of project communication. By examination of significant correlation coefficients, the various types of influences are identified. The results of the research suggest that the managers attitude and behaviours toward communication may be guided to large extent by their level of competence. The study also provides evidence to suggest that the individuals understanding of the communication process and its barriers, the way they behave with other individuals and expect to be treated, varies according to national cultures.
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PERCEPTIONS OF TIME, COST AND QUALITY MANAGEMENT ON BUILDING PROJECTS

Professor P.A. Bowen and Associate Professor K.S. Cattel, University of Cape Town K.A. Hall, The University of New South Wales Associate Professor P.J. Edwards, Royal Melbourne Institute of Technology Professor R.G. Pearl, University of Natal
This paper examines the relative intrinsic importance of the effective management of project time, cost and quality in the attainment of client objectives. The findings from a questionnaire survey are presented. The survey explored the perceptions of South African clients concerning their objectives and the project time, cost and quality management associated with building procurement systems in South Africa. The findings indicate that mis-perceptions exist between clients, contractors and building professionals regarding the time, cost and quality management associated with building projects, and the contribution this makes to the attainment of client objectives.
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THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2 v
BUILDING A HOUSE PRICES FORECASTING MODEL IN HONG KONG

Xin Janet Ge and Associate Professor Ka-Chi Lam City University of Hong Kong
This paper builds a house prices forecasting model for private residential houses in Hong Kong, based on general macroeconomic indicators, housing related data and demographic factors for the period of 1980 to 2001. A reduce form economic model has been derived from a multiple regression analysis where three sets and eight models were derived for analysis and comparison. It is found that household income, land supply, population and movements in the Hang Seng Index play an important role in explaining house price movements in Hong Kong. In addition, political events, as identified, cannot be ignored. However, the results of the models are unstable. It is suggested that the OLS may not a best method for house prices model in Hong Kong situation. Alternative methods are suggested.
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BARRIERS TO THE DEVELOPMENT OF SMES IN THE AUSTRALIAN CONSTRUCTION INDUSTRY

Anthony Mills and Jim Smith, University of Melbourne Associate Professor Peter Love, Edith Cowan University
Small and medium sized companies (SMEs) operating in the construction industry in regional areas of Australia often struggle to compete against city-based companies for construction work. This paper identifies the barriers that confront SMEs in areas outside major cities, specifically in regional areas of Victoria (Australia) where local firms often compete unsuccessfully against large Melbourne-based organisations. The authors also look at the possibility of using e-commerce solutions to give regional SMEs greater competitiveness as well as considering possible policy initiatives that may assist these companies to be more successful in tendering against city-based competition.
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DETERMINING THE OPTIMAL FEE-TECHNICAL PROPOSAL COMBINATION IN TWO ENVELOPE FEE BIDDING
Professor Derek S. Drew, Connie W.K. Kwong and Patrick X.W. Zou University of New South Wales L.Y. Shen, The Hong Kong Polytechnic University INTRODUCTION
Bid strategy modelling has traditionally been concerned with setting the mark up level to a value that is likely to provide the best pay off. Famous construction bid strategy models include those proposed by Friedman (1956), Gates (1961) and Carr (1982). More recently bid strategy modelling has expanded to encompass contracts awarded on a multi-criteria basis. For example, construction clients are increasingly calling for bids that require competing contractors to submit both bid price and contract time (Shen et al., 1999). In such cases contractors bid prices and proposed contract times are commonly assessed in accordance with the following equation (Herbsman et al., 1995): TCB = p + (UTV x t) where TCB = Total combined bid p = price UTV = unit time value specified by the client (such as liquidated damages rate) t = time The contractor with the lowest TCB is awarded the contract. Shen et al. (1999) have considered this from a contractors bid strategy viewpoint by relating the contractors price-time curve to the clients pricetime curve and from this they have developed a mathematical bid optimisation model. The rationale behind the model is illustrated in Figure 1. It is widely accepted (e.g. Callahan et al., 1991) that every competing contractor has an optimum pricetime point for each construction contract. The price-time curve of a contractor is shown in Figure 1 as being S1 with the optimum point as B1 and the corresponding bid price-time combination as p1, t1. The liquidated damages rate, commonly used to (1) represent UTV, is shown as a straight line (S2) since it is a constant rate. The total combined bid curve S (i.e. assessed cost to the client) becomes S1 + S2. The optimum point at which the contractor is most competitive from the clients viewpoint is B0. The contractor should, therefore, submit the bid price-time combination p0, t0 to the client. Consultants are faced with a similar problem in two envelope fee bidding given that the commission is awarded on the combined basis of price (i.e. fee) and quality (i.e. technical proposal). Consultants are required to submit to the client one envelope containing the technical proposal and a second envelope containing the fee. Each competing consultants technical proposal and fee is then converted by the client to a score and aggregated. The consultant with the highest overall score is then awarded the commission (see, for example, Construction Industry Board (1996) for a detailed explanation of two envelope fee bidding procedures). Bid strategy decision making is more complicated in price-time contracts and two envelope fee bidding. In addition to setting the mark up level to provide the best pay off, bidders need to make an additional decision with regard to the second criterion. For example, they must decide whether to submit a higher (or lower) tender price with a shorter (or longer) contract period, or in the case of two envelope fee bidding, on whether to aim for a higher technical score (which is likely to require a higher fee) or submit a lower fee (which is likely to result in a lower technical score). The objective of an optimum bid strategy model is to provide the bidder with an optimal solution, whether it be optimum mark-up (as with traditional price only models) or optimum price-time or fee-technical score combination (with biparameter models).
THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2 1
DEREK S. DREW, CONNIE W.K. KWONG, PATRICK X.W. ZOU AND L.Y. SHEN
Figure 1: The price-time relationship between the contractors price-time curve (S1) and the clients price-time curve (S) (Source: Shen et al. 1999)
Tender price P
Total combined bid curve (S1 + S2) S
b1 TCB1 TCB0 P0 P1 b0 B0 B1 Price-time curve S1 S2 Time value curve (LDR x t)
t0
Based on the same logic proposed by Shen et al. (1999), Drew et al. (2002b) offered consultants an optimum bid strategy model for two envelope fee bidding. They show that consultants have a choice of aiming for a low scored technical proposal-low fee combination or a high scored technical proposal-high fee combination or a combination in between, and that only one of these combinations will result in the highest possible aggregated score. They claim that if consultants follow the modelling approach set out in their paper, they should be in a position to better identify their optimum feetechnical score combination, thereby increasing their chances of winning the commission. Drew et al. (2002b) introduced the modelling approach using hypothetical examples. This paper sets out to test the modelling approach using data supplied by a Hong Kong quantity surveying consultant.
t1
Construction time t
formulations. A commonly used formulation (Connaughton, 1994), also used by the Hong Kong Housing Authority (one of Hong Kongs largest public sector clients), is: CA = Wqq/qmax + Wf fmin/f where qmax q f fmin Wq Wf CA = = = = = = = highest technical score consultants technical score consultants fee lowest fee predetermined weighting for technical score predetermined weighting for fees total score (2)
Aggregating fees and technical score

Construction clients set out the two envelope bidding procedures that consultants are required to follow. This includes using a particular formulation with which to aggregate the fees and technical scores. Drew et al. (2001) identified seven different feetechnical score formulations from the literature and also suggested two more new
The consultant with the highest CA value wins the contract. For example, suppose there were four competing consultants labelled A, B, C and D who submitted respective fees of $5.43, $5.14, $4.42 and $4.62 million and whose technical proposals were given scores of 82, 76, 69 and 73. Suppose also that the technical score/fee predetermined weightings were 70/30 respectively. Table 1 shows Consultant A winning the competition.
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Table 1: Aggregating fee and technical score using Equation 2 Consultant Identities A B C D TM 82 76 69 73 F$M 5.43 5.14 4.42 4.62 TSc 70.0 65.1 58.8 62.3 FSc 24.3 25.8 30.0 28.7 TotSc 94.30 90.90 88.80 91.00 Rank 1 3 4 2
The example also shows that fees and technical scores are, to some extent, positively correlated (i.e. Consultant A submitted the highest fee and obtained the highest technical score, Consultant C submitted the lowest fee and obtained the lowest technical score and Consultants B and D somewhere in between). It can be seen that this becomes a negative correlation when converted to a ratio since the fee ratio is an inverse ratio. An important reason for such a correlation is that architectural, engineering and surveying commissions are regarded as a complex intellectual process (Construction Industry Board, 1996) and as such, in order to deliver a good quality service, two important variables are total time spent on the commission, and experience of the consultant. With a lower fee the consultant will not be able to spend so much time on the commission and/or use less experienced staff. Spending less time and/or using less experienced staff should result in the consultant receiving a lower raw technical score. On the other hand, greater experience and more involvement are likely to result in a consultant receiving a higher technical score. Since experienced staff are normally paid higher salaries this is likely to require a larger fee. A higher technical score therefore requires a larger fee, and fees are likely to go up at an increasing rate according to the technical score (because of the increased rate of salary differences between lower and higher paid staff). This suggests that there is a positive convex correlation between fee and raw technical score. The fee-raw technical score correlation that is often produced when consultants are in competition with one another will also occur with a particular consultant deciding on whether to aim for a low scored technical proposal-low fee combination or a high scored technical proposal-high fee combination or something in between. For example, suppose Consultant A had developed three technical proposals for the
commission just described. The three technical proposals may attract full fees of say $4.43, $5.43 and $6.43 million respectively. If all three technical proposals were scored it is quite likely that the raw technical scores and corresponding fees would, to some extent, be positively correlated.
Determining the optimum fee and technical score

The consultants objective in two envelope fee bidding is to get the highest possible total score since this maximizes the chance of winning the commission. In the previous example the consultant would submit the fee-technical proposal combination that it thought would result in the highest score. Drew et al. (2002b) claim that consultants can actually determine the highest scoring fee-technical proposal combination for a particular commission by following the following seven steps: 1. Assemble the technical proposal and calculate the corresponding fee in the normal way, then estimate the corresponding technical score. 2. Determine the absolute lowest full fee for the commission and estimate the corresponding technical score 3. Estimate the absolute highest technical score for the commission and determine the corresponding full fee. 4. Use the clients formulation (e.g. Equation 2) and calculate the three respective total scores using (1) the original fee and corresponding technical score, (2) absolute lowest fee and corresponding technical score and (3) absolute highest technical score and corresponding fee.
Figure 2: Possible optimum fee outcomes (Source: Drew et al. 2002b)
Case 36
Case 37
Optimum Fee Outcome 2
Total score
Fee ($)
5. Regress the three total scores against the fee to produce a total score continuum. Since the continuum, represented by a line, is regressed on three points it will almost certainly be curvilinear in shape, being either concave or convex. Figure 2 shows that there are three possible outcomes. If concave, the optimum fee will fall at the highest point along the continuum (i.e. Outcome 1). If, however, the continuum is convex, the optimum fee will fall at either the low end (i.e. Outcome 2) or high end (i.e. Outcome 3) of the continuum. 6. Determine the optimum fee for Outcome 1 using differentiation since the total score continuum, represented by a curvilinear regression line, is based on the equation: Y = a + bx +cx2 where Y = total score x = fee For Outcome 2 and 3 the optimum fee is simply that shown at either the low end (i.e. Outcome 2) or high end (i.e. Outcome 3) of the continuum. 7. Determine the optimum technical score for Outcome 1 by inserting the optimum fee and total score into the clients formulation to find the corresponding technical score. For Outcome 2 and 3 the optimum technical score is the one already estimated. The (3)
original technical proposal should then be adjusted to reflect the optimum technical score. This may involve including more/less staff with greater/less experience and/or spending more or less time on the commission. The optimum fee and the adjusted technical proposal should then be submitted to the procurer. In addition to illustrating the foregoing approach using hypothetical examples, Drew et al. (2002b) were able to show the effect of using the optimum bid strategy on bidding performance. They identified that this could be done by measuring the optimum total score percentage increase on the original total score. This seven step approach will be replicated and developed in this paper using data collected from a leading Hong Kong quantity surveying consultant.
DATA COLLECTION
The consultant, who regularly tenders for Hong Kong Housing Authority commissions, provided the following data for 51 bidding attempts: 1. Original fee 2. Estimated raw score 3. Absolute low fee 4. Corresponding estimated technical score 5. Absolute high estimated technical score 6. Corresponding fee
7. Fee/technical score predetermined weighting 8. Tender date The commissions were tendered for between September 1997 and April 2001. The Hong Kong Housing Authority used feetechnical score predetermined weightings of 30/70 for 14 cases and 50/50 for the remaining 37 cases. The fees submitted ranged from just under HK$1 million to just under HK$17 million. The Hong Kong Housing Authority uses Equation 2 to aggregate fees and technical scores.
REPRESENTATIVE CASES ILLUSTRATING THE THREE DIFFERENT OUTCOMES

The three possible outcomes are illustrated with cases 36, 37 and 38. Table 2 shows the (1) original fee/estimated raw score, (2) absolute low fee/corresponding estimated technical score and (3) absolute high estimated technical score/corresponding fee combinations for these three representative cases. The fees and technical marks are converted into fee, technical and total scores using Equation 2. For Case 36 it can be seen the consultants original fee and estimated raw score produced the highest score, while for Case 37 the absolute high estimated technical score and corresponding fee resulted in the highest total score and for Case 38 the absolute lowest fee/corresponding technical score combination yielded the highest total score. Regression analysis is used to produce the total score continuums. Figure 3 shows a concave curve for Case 36 (i.e. Outcome 1), a positive convex curve for Case 37 (i.e. Outcome 3) and a negative convex curve for Case 38 (i.e. Outcome 2). For Case 36 the regression equation coefficients generated by the Excel software package are: Y = -1397.81 + 890.84x 132.60x2 (4)
ANALYSIS
The analysis is in three parts. Three representative cases are used in the first part of the analysis to illustrate each of the three possible outcomes (i.e. Outcome 1 = in between absolute low fee/absolute high technical score, Outcome 2 = absolute low fee/low technical score, Outcome 3 = absolute high technical score/high fee). The frequency of the three possible outcomes and the effect of the predetermined weightings are considered in the second part of the analysis. The last part considers the effect that the optimum bidding strategy has on the consultants original bidding performance.
Table 2: Technical Scores, Fee Scores and Total Scores for Competition Nos. 36, 37 and 38 using Equation 2 with a 50/50 predetermined weighting Case No. TM 45.00 46.95 50.00 F$M 3.20 3.24 3.50 Mean SD SD Ratio 5.40 6.06 6.50 Mean SD SD Ratio 4.00 6.23 7.00 Mean SD SD Ratio TSc 45.00 46.95 50.00 47.32 2.52 1.08 40.00 42.53 50.00 44.18 5.20 1.21 38.89 43.18 50.00 44.02 5.60 0.49 FSc 50.00 49.43 45.71 48.38 2.33 50.00 44.59 41.54 45.38 4.29 50.00 32.09 28.57 36.89 11.49 TotSc 95.00 96.38 95.71 Rank 3 1 2
36
37
40.00 42.53 50.00
90.00 87.12 91.54
2 3 1
38
35.00 38.86 45.00
88.89 75.27 78.57
1 3 2
Figure 3: Total score continuums for Cases 36, 37 and 38
100.00 95.00 90.00 85.00 80.00 75.00 70.00 2.50 3.00 3.50 4.00 4.50 5.00 5.50 6.00 6.50 7.00 7.50
Total Score
Fee $ M
Using differentiation the optimum fee becomes: Y1 = 890.84 265.20x x = 890.84/265.20 x = 3.359 (5) (6) (7)
With an optimum fee of $3.359 million, the optimum total score becomes: Y = -1397.81 + (890.84 x 3.359) (132.60 x 3.3592) (8) Y = -1397.81 + 2992.33 1496.11 Y = 98.41 (9) (10)
For Cases 37 and 38 the solution is much simpler since the highest score occurs at the either end of the continuum. For Case 37 the consultant should submit a fee of $6.5 million and adjust the technical proposal to obtain a raw score of 50.00. For Case 38 the consultant should put in a fee of $4.00 million and adjust the technical proposal to obtain a raw score of 35.00.
FREQUENCY OF THE THREE DIFFERENT OUTCOMES AND EFFECT OF THE PREDETERMINED WEIGHTINGS
The three cases illustrate each of the possible outcomes. The same approach was used to analyse all 51 cases. Interestingly Table 3 shows that in only 10 cases did the optimum total score fall in between absolute low fee and absolute high technical score (i.e. Outcome 1), while in 20 cases it aligned with absolute low fee (i.e. Outcome 2) and in 21 cases with absolute high technical score (i.e. Outcome 3). The results show that the optimum fee technical proposal combination will most likely occur at one end of the consultants continuum and there is an almost even chance of it occurring either at the low fee or high technical score end of the continuum.
Given an optimum fee of $3.359 million and an optimum total score of 98.41, the corresponding technical score can be found by using Equation 2 i.e. 98.41 = 50 (q / 50) + 50 (3.00 / 3.359) (11) 98.41 = q + 44.66 q = 98.41 44.66 q = 53.75 (12) (13) (14)
The original technical proposal should be amended to achieve a raw score of 53.75. The amended technical proposal and a fee of $3.359 million should be submitted to the client.
The reason why there are only 10 cases that produce a result in between absolute low fee and absolute high technical score (i.e. Outcome 1) is because of the variability differences between fees and technical score. This can be explained by referring back to the three representative cases. Table 2 shows the respective fee and technical score standard deviations of 2.52 and 2.33 for Case 36. This produces a standard deviation ratio of 1.08 meaning that fee and technical scores are almost equal in terms of variability (see Drew et al. 2002a for adetailed treatment of this aspect). For Case 37 it can be seen that technical scores vary more than fee score meaning that technical score is more dominant in the aggregation and for Case 38 fee score varies more than technical score meaning that fees are more dominant in the aggregation. In other words, Outcome 1 (i.e. in between) will be most likely to occur where the fee/technical score variability is more or less equal. However, where fee score varies more than technical score, Outcome 2 (i.e. absolute low fee) is likely to occur and where technical score varies more than fee score, Outcome 3 (i.e. absolute high technical score) is likely to occur.
The even split of 15 low fee competitions to 15 high technical score competitions for 50/50 and corresponding 5 to 6 for 70/30 indicates that the change in weightings from 70/30 to 50/50 has very little effect on the proportion of competitions that require a low fee or high technical score.
The effect of optimum bidding strategy on original bidding performance

Tables 4 and 5 show the actual and percentage differences between optimal total scores and original total scores obtained by the consultant for the 70/30 and 50/50 predetermined weightings. For 70/30 predetermined weightings Table 5 shows that the consultants overall total score increased from 88.08 to 92.19 giving an average improvement of 4.84%. For 50/50 Table 6 shows that the consultants overall score increased from 82.61 to 88.74 making an average improvement of 7.90%. Tables 5 and 6 also show that the overall improvement range is from 30.80% to just 0.41%. Interestingly there were eleven competitions whereby the original total score could be improved on by more than 10%. The average improvement of optimal total score on original total score over the 51 cases was 7.07%.
Table 3: Effect of predetermined weightings on optimum bid strategy outcome Weightings 50 / 50 70 / 30 Total Absolute Low Fee 15 5 20 Absolute High Technical Score 15 6 21 In-between 7 3 10 Total 37 14 51
Table 4: Original total score/ optimum total score comparisons using 70/30 predetermined weightings Competition No 1 2 3 4 5 43 44 45 46 47 48 49 50 51 Average Optimal Score 88.00 88.20 88.36 85.83 88.24 95.00 94.00 95.00 93.64 95.45 95.92 95.00 93.99 94.00 92.19 Original Score 86.77 80.27 87.09 78.56 81.92 85.07 87.33 93.65 88.67 94.47 95.53 92.01 92.75 88.98 88.08 Actual Difference 1.23 7.93 1.27 7.27 6.32 9.93 6.67 1.35 4.96 0.98 0.39 2.99 1.24 5.03 4.11 Percentage change 1.41 9.88 1.46 9.25 7.71 11.67 7.64 1.45 5.60 1.04 0.41 3.25 1.34 5.65 4.84
Table 5: Original total score/ optimum total score comparisons using 50/50 predetermined weightings Competition No 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 Average Optimal Score 85.63 78.69 80.25 80.00 80.19 84.68 84.87 90.83 91.55 86.84 99.74 87.50 95.65 86.96 86.96 88.64 87.56 86.96 86.96 86.96 89.47 86.96 90.80 86.96 88.46 88.89 92.94 86.96 87.50 91.82 98.41 91.54 88.89 88.89 96.43 96.43 95.00 88.74 Original Score 80.03 73.39 71.49 68.54 76.44 77.56 81.63 86.76 84.74 66.39 90.58 83.50 92.14 83.50 85.26 87.82 86.30 81.66 83.51 85.11 86.04 81.87 89.28 67.30 86.66 82.23 81.97 73.24 85.57 88.92 96.44 87.12 75.27 78.18 94.98 85.97 89.20 82.61 Actual Difference 5.60 5.30 8.76 11.46 3.75 7.11 3.24 4.07 6.81 20.45 9.16 4.00 3.51 3.46 1.70 0.82 1.27 5.29 3.44 1.85 3.43 5.09 1.52 19.66 1.81 6.66 10.97 13.71 1.93 2.89 1.97 4.42 13.62 10.71 1.45 10.46 5.80 6.13 Percentage change 7.00 7.22 12.26 16.72 4.90 9.17 3.97 4.70 8.04 30.80 10.12 4.80 3.81 4.15 1.99 0.94 1.47 6.48 4.12 2.17 3.99 6.21 1.71 29.21 2.08 8.10 13.38 18.72 2.25 3.25 2.05 5.07 18.09 13.70 1.53 12.17 6.50 7.90
CONCLUSIONS
Drew et al. (2002b) proposed an optimal two envelope fee bid strategy model using hypothetical examples. 51 bidding attempts, supplied by a Hong Kong quantity surveying consultant, were used in this paper to test the model. It was found that consultants could improve there total score by an average of 7.07%. The difference in total score improvement varies from just 0.41% to 30.80%. There are eleven competitions
where the consultants original total score could be improved by more than 10%. It was found that when fee scores vary more than technical scores, fees become the dominant variable. In such cases the optimum strategy is to aim for an absolute low feelow scored technical proposal combination. Where technical scores vary more than fees, the optimum strategy is to aim for an absolute high technical scorehigh fee combination. Where the variability of fee
scores and technical scores are more or less equal, the optimum strategy is to aim somewhere in between these two extremes. The optimum strategy was to aim for an absolute low feelow scored technical proposal on 21 occasions, absolute high scored technical proposalhigh fee on 20 occasions and somewhere between these two extremes on the remaining ten occasions. A key reason for the optimum bidding strategy being at the end of the consultants total score continuum for the vast majority of competitions is the differences in fee and technical score variability. A limitation of this model is that the consultants total score continuum is represented by three points, the minimum number required to produce a quadratic equation. In addition this model is based on the consultants best estimates of the clients technical score. Suggestions for further research are to improve the models reliability by (1) including additional combinations of fees and technical scores and measure the effect on the optimum total score and (2) measure the consultants accuracy of the consultants estimate of the clients technical score, determine the reasons for the inaccuracy and then attempt to improve the accuracy. The analysis could also be extended by comparing the competing consultants optimal fee/technical score with those of the successful consultants.
Drew, D.S., Ho, L.C.Y. and Skitmore, R.M. (2001) Analysing a consultants competitiveness in two envelope fee tendering. Construction Management and Economics, 19, 503510. Drew, D.S., Tang, S.L.Y. and Lo, H.P. (2002a) Developing a tendering strategy in two envelope fee tendering based on technical score fee variability. Construction Management and Economics, 20, 6781. Drew, D.S., Shen L.Y. and Zou, P.X.W. (2002b) Developing an optimal bidding strategy in two envelope fee bidding. Construction Management and Economics (accepted for publication). Friedman, L. (1956) A competitive bidding strategy. Operations Research, 1 (4), 104 112. Gates, M. (1967) Bidding strategies and probabilities. Journal of the Construction Division, American Society of Civil Engineers, 93, 75107. Herbsman, Z.J., Chen, W.T. and Epstien, W.C. (1995) Time is money: innovative contracting methods in highway construction. ASCE
Journal of Construction Engineering and Management, 121 (3), pp.273281.

Hong Kong Government (1993) Handbook on
Selection, Appointment and Administration of Architectural and Associated Consultants.

Architectural Services Department, Hong Kong Government. Hoxley, M. (1998) Value for Money? The Impact of Competitive Fee Tendering on Construction Professional Service Quality. The Royal Institution of Chartered Surveyors, London. Shen, L.Y., Drew D.S. and Zhang Z.H. (1999) An optimal bid model for price-time biparameter construction contracts. ASCE
REFERENCES
Callahan, M.T., Quackenbush, D.G. and Rowings, J.E. (1992) Construction Project Scheduling. McGraw-Hill, New York. Carr, R. I. (1982) General bidding model, Journal of the Construction Division. American Society of Civil Engineers, 108, 639650. Connaughton, J. (1994) Value by Competition. Construction Industry Research and Information Association, London. Construction Industry Board (1996) Select-
Journal of Construction Engineering and Management, 125 (3), pp.204209.
ing Consultants for the Team: Balancing Quality and Price. Construction Industry
Board, Thomas Telford Publishing, London. Drew, D.S., Li, H. and Shen, L.Y. (2000) Feedback in competitive fee tendering. Journal of Construction Procurement, 6 (2), 220230.
DR JANE CIOFFI, LESLEY WILKES AND JESS HARTCHER-OBRIEN

Dr Jane Cioffi, Professor Lesley Wilkes and Jess Hartcher-OBrien The University of Western Sydney INTRODUCTION
Due to Australias close proximity to the equator New South Wales (NSW) has very high levels of solar ultra violet radiation (UVR) (Gies et al., 1997). A major effect of UVR is skin cancer. In Australia, new cases of skin cancer outnumber all other forms of cancer by more than three to one. Currently there are around 1,300 deaths each year from this disease, with 2,807 new cases of skin melanoma in NSW (The Cancer Council NSW and NSW Health Department, 2001). For adult males (2054 years) melanoma of the skin is the most common form of cancer (Coates and Armstrong, 2000; Marks et al., 1993). The single most important modifiable risk factor for skin cancer is unprotected exposure to solar ultraviolet radiation. A group at high risk of skin cancer is adults who have high cumulative exposure to UVR in the workplace. Outdoor workers are part of this high risk group and are targeted in the Skin Cancer Prevention Strategic Plan for NSW 20012005 (The Cancer Council NSW and NSW Health Department, 2001). This study describes outdoor construction workers knowledge and sun protective behaviour associated with their risk of skin cancer. had surveyed outdoor workers in NSW to assess their knowledge and sun protective behaviour associated with their risk of skin cancer. In Australia, sun protection precautionary measures were self-reported by a majority of people (82% of males and 83% of females) (Australian Bureau of Statistics, 1999). Specifically in NSW, 59% of males protected themselves against the sun with a cap or hat, 38.6% applied sunscreen and 54.2% reported having a skin check (NSW Health Department, 2000). Other Australian studies have shown males as a subgroup tend to spend more time in the sun and employ fewer sun-protective measures except for wearing a hat (Hill et al., 1992; Scholfield et al., 2001; Wentworth Area Health Service, 2000). Hence, males in the community do not generally practise sun protection at acceptable levels. Unprotected sun-exposure has been found to be treated as advantageous where the prevalent perception correlates a tan with health, looking sexy and mood improvement (Sahn, 1995). In such a context the inherent dangers that come with sun exposure are not always acknowledged. This attitude, if present in outdoor workers, would influence behaviour and further increase their risk of skin cancer as resistance to sun protection strategies has been found to be associated with a sun culture (Dobbinson and Knight, 2001). In the occupational context of outdoor workers, the implications of the high levels of sun exposure are an occupational health and safety concern that has legislative support in NSW. Recommendations for workplace sun protection outlined in the Skin Cancer Prevention Strategic Plan for NSW 20012005 are engineering controls including provision and use of shade; administrative controls including rescheduling work to less UV intense times; and personal protection including use of protective clothing and equipment such as long sleeved protective shirts and trousers, broad brimmed hats,
LITERATURE REVIEW
Some studies were found that addressed outdoor workers in Australia (Dobbinson and Knight, 2001; Parisi et al., 1999; Kimlin et al., 1998; Airey et al., 1997; Green et al., 1996; Wong et al., 1996; Girgis et al., 1994; Borland et al., 1991). These studies were carried out mostly in Queensland, with two in Victoria and another in NSW. Outdoor workers who participated included farmers, Telecom lines staff, and tradespersons. The focus of five of these studies was exposure to UVR (Parisi et al., 1999; Kimlin et al., 1998; Airey et al., 1997; Green et al. 1996; Wong et al., 1996) with the remaining studies focusing on the effects of an interventions on outdoor workers sun protective behaviour (Girgis et al., 1994; Borland et al., 1991) and organisational change (Dobbinson and Knight, 2001). No study was found that
sunglasses and sunscreen (The Cancer Council NSW and NSW Health Department, 2001). Organisations, therefore, have a responsibility to support workers sun protection. Over the last five years local government and the construction industry in NSW have been targeted with the development of policies and implementation of programs for sun protection (The Cancer Council NSW and NSW Health Department, 2001). No evaluation of these programs was found. However, an evaluation of a program in Victoria aimed at achieving positive policy and behavioural changes in workplace settings found 40% had a sun protection policy in place, 18% were developing a policy. Personal protective equipment was the most common strategy and changes to work schedules or training were less commonly provided. Problems were being experienced with compliance and policy implementation including resistance to the provision and use of protective clothing (especially in the heat), a sun culture and lack of awareness or denial of the risks of UV exposure (Dobbinson and Knight, 2001). This suggests changing workplace culture may meet resistance and may require careful strategic planning. However, in Australia two studies have shown the sun protection behaviour of outdoor workers can be significantly increased (Girgis et al., 1994; Borland et al., 1991). The interventions used in the randomised control trial (Girgis et al., 1994) was an individual skin screening by a dermatologist and an education session, and in the quasi experimental study, a campaign using marketing techniques (Borland et al., 1991). This suggests that health education programs of similar design would be effective in achieving changes in the sun protective behaviour of outdoor workers. Information about skin cancer and sun protection provides people with the opportunity to understand the value of sun protection. According to the Skin Cancer Prevention Strategic Plan for NSW 20012005, mass media, particularly television advertising, has played an important role in the last 20 years in raising and maintaining high levels of community awareness of the importance of sun protection (The Cancer Council NSW and NSW Health Department, 2001). WorkCover in NSW has been encouraging workplaces to adopt structures and practices to improve the safety and health of employees. A resultant acceptance and use of protective
clothing has been attributed to this intervention (The Cancer Council NSW and NSW Health Department, 2001). No study was found that reported outdoor workers level of awareness of the dangers of skin cancer as measured by knowledge and sun protective work behaviour.
METHOD
Design: A survey design using questionnaires was used to determine outdoor workers level of awareness of the dangers of skin cancer as measured by knowledge of and attitudes to skin cancer and sun protection behaviour.
Sample: Outdoor workers (n=142) working

on construction sites in northwest and western Sydney who consented to complete the questionnaire formed the convenience sample. Only a few workers who were approached declined to join the study, usually giving tight schedules as the reason.
Instrument: A short close-ended questionnaire was designed to address behaviour (nine items), shade equipment (one item), sources of information (two items) and knowledge (six items) to determine, respectively, use of protective measures and shade equipment available, sources of information and basic knowledge of skin cancer and sun protection. Some items were adapted from the 1997 NSW Health Survey Questionnaire (NSW Health Department, 2000) and others were developed based on study findings (Moehrle et al., 2000; Rosenthal et al., 1988). The questionnaire was deliberately designed to take no more than five minutes to administer to each worker on site.
Data Collection Procedure: At each site

workers who volunteered to join the study most usually requested that each item on the questionnaire be read to them whilst they continued to work. They then indicated their responses, which were recorded by the research assistant.
Data Analysis: Frequencies and percentages

were used to summarise responses to questionnaire items.
RESULTS
Of the 142 outdoor construction workers who participated in the study, 139 were males and three were females. Respondents were from a variety of trades including bricklaying, plumbing and painting and most were in the 31 to 40 years age range.
Table 1: Frequencies and percentages for sun protective behaviour at work Item Wore a brimmed hat Wore a baseball cap Wore sunglasses Wore a sleeved shirt# Used sun lotion# Used a shade device# # 1 non response present Twenty six percent reported getting sunburnt frequently/always, 48% occasionally and 25% never. Sun protective work behaviours reported by workers showed they frequently/always wore a brimmed hat (56%), a baseball cap (50%), sunglasses (61%), sleeved shirt (11%), sun lotion (34%) and used a shade device (5%) to protect themselves against UVR (See Table 1). Workers showed they did not exclusively use a brimmed hat or a cap at work but were inclined to use them interchangeably. Other protective behaviour reported was the use of machinery fitted with a shade device (14%), awareness of the UV index in the daily weather report (65%) and a skin check in the last 12 months (33%). Nineteen percent of the workers had previously had a skin lesion removed. Workers showed they knew working without sunglasses caused eye damage (85%), their risk of skin cancer was increased by working in middle of the day (94%), and important areas to cover are head and chest (82%). However, fewer workers knew sweating increased their risk of sunburn (43%). Forty four percent of workers considered a tanned body was healthy and 72% stated a tan improved appearance. Sources from which workers had received information about skin cancer were television (78%), radio (0%), newspaper (35%) with others being pamphlets (6%), local doctor (4%), parents (4%) and WorkCover (3%). However, only 44 % reported receiving information about skin cancer recently, that is during the last year. Never f = (%) 50 (35) 59 (41) 27 (19) 107 (75) 35 (25) 122 (86) Occasionally f = (%) 15 (11) 27 (19) 28 (20) 19 (13) 57 (40) 12 (9) Frequently f = (%) 17 (12) 18 (13) 30 (21) 4 (3) 19 (13) 6 (4) Always f = (%) 60 (42) 38 (27) 57 (40) 11 (8) 30 (21) 1 (1)
Discussion
The main findings showed some form of head apparel and sunglasses were the most common sun protection used by workers. However, their use was not as high as would be desirable. About a third applied sun lotion and there was only poor use of sleeved shirts and shade devices. The low use of sun lotion may be attributed to workers perception that it could be harmful. A comment from one worker reflects this view, Sunscreen is more unhealthy for you than skin damage accumulates in liver. So I wont wear it. Application of sunscreen by males was similar to that reported in NSW Health Survey (1997) with the use of a cap or hat being slightly below (NSW Health Department, 2000). This suggests male sun protection behaviour has altered little in the last five years. Personal strategies employed by outdoor workers need to be increased to reduce high cumulative exposure in the workplace. Workers knowledge of sun protection and risk was on the whole quite high which may reflect information they had received about skin cancer mostly from television, radio and the newspaper, respectively. The recency of receiving this information was less than desirable as just below half had received this information in the last year. Knowledge, however, did not directly translate into sun protective behaviour. In addition, nearly three-quarters of the workers reported some episodes of sunburn and a marked number of workers perceived a tan to be healthy and attractive. Workers commented for example that its healthy
cause when you look good, you feel good. and A tanned body is healthy. Were in Australia! This suggests there is some resistance to the acknowledgement of the importance of the information received. Worker resistance similar to this was previously found by Dobbinson and Knight (2001) and Borland et al. (1991). Such resistance may be due to factors such as a lack of motivation and a competing value or norm such as the bronze image culture. The receipt of skin checks by a third of the workers in the last year indicates some engagement in screening activities. Skin checks reported by workers were much lower than that reported by males in NSW in 1997 (NSW Health Department, 2000). A higher uptake of skin screening in these workers needs to be encouraged through health education programs in the workplace that are aimed at workers accepting responsibility for their own risk assessments. Accessing workers directly on site was found to be most successful. Prior to this an initial distribution approach was attempted through the head offices of main construction firms operating in the area, however, this was not successful, largely due to the subcontracting of work by these firms. The use of a short questionnaire was found to elicit strong participation from workers. Additional items to consider in future questionnaires could include the estimated period of time employed as outdoor worker, daily average working hours and details of time of day exposed to sun. This would provide insight into workers cumulative exposure risk. Items from other questionnaires and studies addressing sun protection were used; however, the validity and reliability of the questionnaire were not tested. The generalisability of the findings to all outdoor workers is restricted as a convenience sample and only one type of outdoor worker was included. Despite the limitations of this survey it can be considered that outdoor construction workers need to improve patterns of sun protective behaviour in the workplace. It is recommended that research needs to be planned to address issues that outdoor workers have with using sun protective strategies. Such studies need to provide further insight and understanding of outdoor workers and sun protection to inform future health promotion programs. Such programs
maybe more effective if they are implemented on actual construction sites and include strategies that actively coach workers to use better sun protective practices. Ethics approvals for this study were obtained from The University of Western Sydney Human Research Ethics Committee.
ACKNOWLEDGMENTS
To the construction workers who took part in the study. To Ms Shantala Mohan for her support of the project.
REFERENCES
Airey, D.K., Wong, J.C., Fleming, R.A. and Meldrum, L. R. (1997) An estimate of the total UV-B exposure for outdoor workers during a south-east Queensland summer. Health Physics, 72, 5449. Australian Bureau of Statistics (1999) National Health Survey: Cancer related information. Special article. September. Borland, R. M., Hocking, B., Godkin, G. A., Gibbs, A. F. and Hill, D. J. (1991) The impact of a skin cancer control education package for outdoor workers. Medical Journal of Australia, 154, 6868. Coates, M. S. and Armstrong, B. K. (2000) Cancer in NSW. Incidence and mortality 1997. NSW Cancer Council, Sydney. Dobbinson, S, and Knight, K. (2001) Protecting workers from ultraviolet radiation in sunlight. Journal of Occupational Health SafetyAustralia and New Zealand, 17, 587 589. Gies, P. H., Roy, C. R., Toomey, S. and McLennan, A. (1997) Protection against solar UV radiation. Sun Protection Seminar Papers. Australian Cancer Society. Girgis, A., Sanson-Fisher, R. W., and Watson, A. (1994) A workplace intervention for increasing outdoor workers use of solar protection. American Journal of Public Health, 84, 7781. Green, A., Battistutta, D., Hart, V., Leslie, D. and Weedon, D. (1996) Skin cancer in a subtropical Australian population: Incidence and lack of association with occupation. The Nambour Study Group. American Journal of Epidemiology, 144, 103440.
Hill, D., White, V., Marks, R., Theobald, T., Borland, R. and Roy, C. (1992) Melanoma prevention: Behavioural and nonbehavioural factors in sunburn among an Australian urban population. Preventive Medicine, 21, 654669. Kimlin, M. G., Parisi, A.V. and Wong, J. C. (1998) Quantification of personal solar UV exposure of outdoor workers, indoor workers and adolescents at two locations in south-east Queensland. Photodermatology, Photoimmunology, Photomedicine, 14, 711. Marks, R., Staples, M., and Giles, G.G.(1993) Trends in non-melanocytic skin cancer treated in Australia: the second national survey. International Journal of Cancer, 53, 585590. Moehrle, M., Koehle, W., Dietz, K. and Lischka, G. (2000). Reduction of erythema dose by sweating. Photodermatology, Photoimmunology, Photomedicine, 16, 260262. NSW Health Department (2000) Public Health Division, Report on the 1997 and 1998 NSW Health Surveys. http://www.health.nsw/gov.au/publicnswhs/sun_intro.htm. Parisi, A. V., Meldrum, L.R., Wong, J.C., Aitken, J. and Fleming R. A. (1999) Lifetime ultraviolet exposure estimates for selected population groups in south-east Queensland. Physics in Medicine and Biology, 44, 294753. Rosenthal, F.S., Phoon, C., Bakaaalian, A. E. and Taylor, H. R. (1988) The ocular dose of ultraviolet radiation to outdoor workers. In-
Wong, J.C., Airey, D.K., and Fleming, R.A. (1996) Annual reduction of solar UV exposure to the facial area of outdoor workers in southeast Queensland by wearing a hat.
Photodermatology, Photoimmunology, Photomedicine, 12, 1315.
vestigative Ophthalmology and Visual Science, 29, 64956.

Sahn, E. (1995) Why teenagers embrace suns dangers. In Skin cancerThe need for continuing education. Hill, M. Dermatology Nursing, 7, 220222. Schofield, P. E., Freeman, J. L., Dixon, H.G., Borland, R. and Hill, D.J. (2001) Trends in sun protection behaviour among Australian young adults, Australian and New Zealand Journal of Public Health, 25, 6265. The Cancer Council NSW and NSW Health Department (2001) Skin Cancer Prevention Strategic Plan for NSW 20012005. Wentworth Area Health Service (2000) Health profile: Wentworth Area Health Service 19931998 Penrith, NSW.

M. Loosemore, University of New South Wales M. M. M. Teo, Building Construction Authority, Singapore INTRODUCTION
Events such as September 11th, high-profile corporate collapses such as HIH, the subsequent turmoil in our insurance industry and the recent financial reporting debacle in the USA, have acted as a stark and sudden reminder of the unpredictability of the world around us and of the construction industrys vulnerability to it. Those companies that have over relied on insurance to manage uncertainty are now counting the costs and are being forced to review their risk management practices by financers and insurance companies that are reconsidering their risk coverage, reducing claim payments and increasing their fees (Lawson, 2002). While risk management is increasingly practised in the construction industry, albeit in an unsophisticated way, knowledge of crisis management practices is less widespread (Loosemore, 2000). Given the current security concerns surrounding major buildings and infrastructure in Australia, this is an aspect of risk management which justifies special attention at the moment. However, even in normal times, it is an area of practice to which construction companies should give more attention. Organisational crises are a special type of risk which manifest themselves into decisive periods of acute difficulty that threaten the viability of an organisation, its business units or key products and even the lives of people (Fink, 1986; Aguilera and Messick, 1986). They are low probability, high impact events which create the need for critical and rapid analytical decision-making skills, the results of which are likely to fall under extensive public, media and/or government scrutiny (Perrow, 1984; Pauchant and Mitroff, 1992; Irving, 1997; Pearson and Clair, 1998). Consequently, crises are characterised by an extreme sense of urgency which hyper-extend an organisations coping capabilities, producing stress and anxiety among organisational actors and stakeholders (Allen, 1990; Pearson et al., 1997). Although most companies would prefer to avoid a crisis, there is an increasing realisation that crises are becoming an inevitable and healthy part of organisational life, which have to be planned for (Frazer and Hippel, 1984; Pascale, 1993; Furze and Gale, 1996; Lerbinger, 1997). This planning should be part of an integrated and thoroughly implemented risk management process but evidence suggests that many organisations exist in a low state of crisis preparedness, having an inadequate understanding of their risk exposure, of how to mitigate those risks and of the internal systems needed to cope with and learn and recover from their eventuality. While crises can destroy unprepared organisations they can strengthen those that are well prepared since a well conceived crisis management plan should harness potential opportunities as well as ensure survival (Pascale, 1993; Furze and Gale, 1996). It is within this context that an investigation of the crisis preparedness of construction companies was undertaken in Sydney. The objectives were to gauge attitudes towards crisis management and the adequacy of systems used to plan for and manage them.
The signs of crisis proneness

All construction companies are prone to crisis but to different extents, depending upon the nature of work they are engaged in. For example, a company involved in large complex inner city projects is likely to be more prone to crises than a company involved in house building. However, this is largely dependent upon the way an organisation is managed and Pauchant and Mitroff (1992), Mitroff and Pearson (1993) and Person et al. (1997) have found that crisis-prone organisations have certain characteristics in common. In particular, they tend to be sceptical about risk management and characterised by a culture of managerial invincibility and fatalism. Such organisations also tend to have task-orientated cultures which consistently stress the importance of profits
M. LOOSEMORE AND M. M. M. TEO
over other corporate goals. The mind-set that is nurtured is that crises are essentially negative in nature, that company size and past successes provide protection from future crises, that crises happen to others, that good management and hard work prevents crises and that desirable business ends justify the taking of high-risk business means. People in crisis-prone organisations also believe that crisis management is someone elses responsibility and that they have the power to offload risks onto other parties, thereby insulating themselves from their environment. For these organisations, crisis management plans are considered a sign of weakness because crises are seen as a sign of managerial failure. To a crisisprone organisation, there is little justification for the re-examination of existing organisational practices in the aftermath of a crisis, and rather than learning lessons for the future the priority is to maintain the organisations public image and to ensure that internal operations remain intact. In essence, crisis-prone organisations have an inappropriate structure and culture in relation to their risks and do not dedicate sufficient resources to proactive crisis management planning. Consequently, crisis management plans represent little more than a managerial faade and have minimal impact upon day-to-day organisational practices and attitudes. As Mitroff and Pearson (1993, xvii) point out, in such organisations, CM (crisis management sic) activities may be designed to fool everyone, but ultimately they fool no one at all.
often have a permanent crisis management team, charged with the responsibility of creating a comprehensive crisis management plan and to continuously communicate, coordinate and review crisis management efforts. As Osborne (1991) argues, centrally co-ordinated guidance is critical in creating corporate attitudes and managerial inclinations that are able to unite an organisation in a decisive and immediate crisis response at a time of strong divisive and procrastinating forces. Another characteristic of crisis-prepared organisations is their flexibility and willingness to let go of formal, standardised systems and procedures which serve them well in normal times but which become restrictive and counter-productive during a crisis (Mintzberg, 1976; Sagan, 1991). However, total flexibility may result in a loss of managerial control and a disjointed crisis response, meaning that a delicate balance between formality and informality is necessary. Such a balance facilitates effective horizontal and vertical communications with external and internal stakeholders at a time when existing information systems are stressed to the limit. During a crisis, effective communication is essential but difficult and companies with a track record of effective communication as an intrinsic part of their day-to-day life are most likely to survive (Mindszenthy et al., 1988; Aspery and Woodhouse, 1992; Sikich, 1993). Effective communication systems are particularly important in dealing with external stakeholders such as emergency services, the public, the media and existing and potential customers. The media, in particular, play an important role in constructing the publics image of events, and poor communications can result in distortions of the truth, unjustified mistrust, suspicion and irrevocable damage to customer relations. In essence, a crisis-prepared organisation has well developed and widely understood crisis management plans which keep them in constant touch with what type of crisis it faces, when they begin, why they occur and who they affect (Mitroff and Pearson, 1993). It is the state of knowledge in these areas which represents the fundamental difference between crisis-prone and crisis-prepared organisations.
Crisis-prepared organisations
In contrast to crisis-prone organisations, those which are prepared have a culture of openness, awareness and sensitivity to organisational risks and of their social and financial responsibilities to stakeholders and the wider environment (Ginn, 1989; Lerbinger, 1997; Pearson et al., 1997). Proactive risk management is systematically incorporated into strategic planning processes and championed by senior executives so that it is an integral part of organisational life at all levels (More, 1995). In this sense, senior executives provide the drive and support for crisis management by providing sufficient resources and clear statements of fundamentally held core beliefs and attitudes relating to organisational priorities. For example, crisis-prepared organisations
Crisis management planning

The importance of a well-conceived crisis management plan cannot be overstated and it represents one of the defining characteristics of a crisis-prepared organisation. This has been illustrated many times, such as in the Occidental Piper Alpha disaster where appropriate operating manuals on how to interrupt a potentially catastrophic sequence of events were almost totally lacking (Bea, 1994). Having a preconceived plan that can be automatically implemented takes away some of the initial pressure and shock associated with the early phases of a crisis. This creates a valuable breathingspace within which people can calmly investigate the problem and agree on an appropriate response. The importance of a good start in crisis management cannot be over-stated. During a crisis, every second counts and the first few hours are particularly critical. This is especially true if external constituencies are involved because initial impressions play a disproportionately large role in shaping their judgments of competence and blame. If initial impressions are bad then an organisation will be judged guilty until proven innocent and in many instances this can intensify a crisis and accelerate its escalation (Loosemore, 2000). Many organisations in high-risk industries have a permanent disaster committee that is responsible for championing the need for crisis management, identifying current preparedness and vulnerabilities, devising disaster plans, and coordinating people during a crisis (Kutner, 1996). The membership of such committees is an important factor in determining their ability to do this, and they should consist of senior managers, managers from all functional departments, and external professionals who have experience of crisis management, public relations, the law, and physical and mental health issues. In particular, commitment from the top of an organisation is essential if the activities of a disaster committee are to be taken seriously and if they are to have a chance of success. The various aspects of these activities are discussed below. Conducting crisis audits and creating crisis portfolios A crisis audit assesses an organisations crisis capabilities and identifies the inherent risk factors in its environment, internal
activities, technology, infrastructure, and culture that need to be addressed to improve its crisis preparedness (Mitroff and Pearson, 1993). The first stage in this process should be to develop a working definition of a crisis from the organisations viewpoint and to then identify and rank, in probability and consequence terms, the types of crises the organisation is vulnerable to. This involves learning from past events, looking into the future and exploring unusual combinations of events that may seem unlikely, but could combine to produce a serious crisis. Ranking allows appropriate judgments to be made about the relative costs and benefits of constructing a crisis management plan in each case because planning for every possible crisis is not economically rational. Establishing monitoring systems and standard operating procedures One aspect of the disaster committees job is to establish monitoring systems to detect potential crises. The disaster committee should also develop standard procedures that define precisely who should be involved in a crisis response, what they should be doing, when they should be doing it, and how they should be doing it. These procedures, in effect, establish a pre-defined emergency communication network that needs to be followed during a crisis early but critical phases, when people are disorientated by events. The intention is to buy the organisation some time to come to terms with events, to allow people to re-orientate themselves, and to ensure that appropriate resources are mobilised quickly and that they are commensurate with a crisis scale. To do this, the procedures should be achievable, simple, flexible, and understandable by all internal and external stakeholders. For example, in Australia and Singapore, construction sites have many migrant workers and this may require the production of manuals in a range of different languages. Creating a command centre During a crisis, information is constantly being generated from a multitude of sources and it is critical that it is supplied live to the correct place, at the correct time, and in an understandable format (Davis, 1995). In this sense, a key aspect of a disaster committees job during a crisis is to identify a clear command centre that represents a single point of responsibility for
decision-making and information management. Such centres are a critical coordination mechanism that helps facilitate a unified crisis management effort since one of the greatest problems that can emerge during a crisis is the tendency for people to act independently. For example, in the case of a fire emergency, the command centre should have the sole responsibility for contacting emergency services and to coordinate individual supervisors who are charged with clearing certain areas of the site. In the case of an economic crisis, such as the bankruptcy of a major subcontractor, the command centre should be responsible for re-organizing work and employing another sub-contractor. In addition to being of practical importance during a crisis, command centres also play an important symbolic role. Nicodemus (1997) provides an example of a company that faced a crisis and named their command centre the war room, where they declared war on the problem. Security Security is another important issue for a disaster committee to consider since interference from unwanted elements can exacerbate a crisis or, at the very least, interfere with its management. This involves identifying external constituencies who feel that they have a stake in a crisis outcome but who cannot contribute to its solution. While all stakeholders must be managed and kept informed, those involved in crisis management efforts should be insulated from these disruptive elements so they can develop a strong focus on the problem. In some situations, it is also important that the site of a crisis is physically cut off from these elements, particularly when it continues to represent a danger to the public. In such situations, evacuation procedures may need implementing and it is essential that they are clearly communicated to everyone on a project and reinforced by regular training and mock drills. For example, public address systems, sirens and horns can be used to notify people of an incident if they are placed at strategic locations so everyone can hear them. Whatever signal is used, it must be as simple and as unequivocal as possible. Responsibilities for using them must be clear, as should appropriate back up if, as Murphys Law dictates, key people are away on the day of an incident or if
essential equipment malfunctions. An important part of evacuation is the clear labelling of exit routes from all parts of the site. In particular, people should know that mechanical hoists cannot not be used in an evacuation and that all potentially dangerous machinery in the vicinity of escape routes must be switched off. Since a construction site is a constantly changing physical environment, the positions of notices and their maintenance needs constant monitoring. Furthermore, all evacuation routes should follow the shortest possible route to checkpoints where roll calls can be taken in safety. They should also be wide enough to facilitate an orderly evacuation of the building. On inner city sites this may be the street, and the hazards to the public, to traffic, and to site workers must be assessed in association with public services such as the police. The potential danger of not having adequately thought out evacuation plans and well-marked evacuation routes was demonstrated in the Beverly Hills Supper Club fire in May 1977 which killed 164 people. The official investigation report reveals that the club had no evacuation plan and that employees were not schooled or drilled in the duties they were to perform in the case of fire. Furthermore, means of egress were not marked and the escape route itself was too narrow to take the number of people who were in the building at that particular point in time (Best, 1977). Developing a culture of collective responsibility The need to insulate a disaster response team from unwanted elements does not mean it should be allowed to become introverted. Consideration also needs to be given to the re-organisation of non-crisis management activities so the remainder of an organisation can function as normally as possible. Crises inevitably drain a considerable amount of energy from other functional areas within an organisation, demanding special efforts from the people who operate there. Clearly, without a considerable degree of peripheral goodwill and a sense of collective responsibility, the impact of a crisis can spread to other parts of an organisation. Such goodwill cannot be expected if it did not exist before a crisis, and in this sense the crisis management process needs to be continuous.
One way of developing a culture of collective responsibility is to communicate everyones interdependency during a crisis and to clarify and, ideally, share project risks as much as possible. Most crises demand an injection of extra resources into a project and if the disaster committee does not identify their source in advance, then a crisis will stimulate negotiations and potential conflicts that will delay a response. Decisions concerning risk distribution are particularly relevant to economic crises, and earlier we provided evidence to suggest that they have been a major cause of conflict within construction projects. We also identified a series of principles to guide risk decision-making. These principles apply at all points along the contractual chain, and to consultants as well as contractors. It is also important to realise that the clients initial risk management practices are inevitably transferred along the contractual chain. For example, if a contractor is employed under a high-risk contract and has not been given the opportunity to price for those risks, then it is likely that they will attempt to transfer those risks along the chain by using backto-back contracts and similar employment practices with their sub-contractors. Indeed, sub-contractors may do the same and so on, until all project risks have been dissipated to the end of the contractual chain. Unfortunately, it is here that the most vulnerable, crisis-prone organisations exist, and when problems begin to occur that demand extra resources, the end result of this risk-cascade is inevitably a backlash of conflict up the contractual chain as parties deny any responsibility for them. Public relations Public relations are an essential aspect of crisis management since most types of crises have implications beyond an organisations boundaries. In essence, the three publics that need to be involved in a crisis are employees not directly affected by it, external and quasi-external interest groups and the general public. We have already discussed the first two publics and it would be foolish to ignore the third. As Aspery (1993, p. 18) argues, crisis communications built on well-established relationships with key audiences stand a better chance of protecting, even enhancing your reputation during difficult times. A company which decides to start communicating during a crisis will have little credibility.
Unfortunately, construction companies tend to attach little importance to the building of sound relationships with the media, seeing it as a non value-adding activity and perceiving most journalists as dangerous, untrustworthy, and irresponsible (Moodely and Preece, 1996). This rejection of the media tends to be particularly strong during a crisis when organisations look inward and consciously hide from the public, seeing them as an unnecessary distraction to rescue efforts. However, this is precisely the time when it is most dangerous to ignore the media, since in the aftermath of a crisis, the public has a tendency to embark on a process of ritual damnation. This is particularly true of high-profile, publicly financed projects in which people may feel a greater right to recrimination as a result of having paid their taxes to finance it. As HorlickJones (1996, p. 61) notes, since the abolition of capital punishment, the British public has turned to those in charge during lurid disasters to satisfy its lust for retribution. Find someone to blame, cries the mob, and off runs Whitehall to offer up someone for lynching. Poor public relations have been the downfall of many organisations that have underestimated the power of the media in shaping public opinion of how a crisis is being handled. The media The construction industry is particularly vulnerable to poor media coverage because of its very negative public image. Furthermore, there is increasing scrutiny of the industry as a result of the ever-greater appreciation of its impact on the built and natural environment (Moodley and Preece, 1996). This, coupled with growing sympathies with the environmental movement amongst the general population, has resulted in increasing numbers of confrontations with the public, particularly on large infrastructure, mining and housing projects. Notably, in many of these increasingly common and public confrontations, the media has portrayed construction companies in a heavy-handed and unsympathetic way and there is little doubt that the future viability of many projects will have been affected by this coverage. In this sense, media relations is an area of traditional neglect to which companies operating in the construction industry must turn their attention. Construction managers cannot rely upon the media to put their case and a continued reluctance to communicate with
the media will almost certainly lead to negative reporting of the industrys activities. In contrast, open relationships with the press and more sensitivity to environmental issues will enable managers to better shape the publics attitudes and thereby obtain a more balanced presentation of the facts from the media during a crisis. One way of ensuring open communication with the press during a crisis is to establish a 24-hour-a-day press office, which has the responsibility of providing factual and up-todate information to the media and to employees. If managed well, such an office should be able to turn media inquiries into opportunities rather than problems by initiating, rather than reacting to, press, radio, and TV coverage. Public relations are best handled by one trained person who is named as an official spokesperson and who has skills in dealing with the media. TV interviews with untrained staff who appear uncaring, flustered and unsure of the facts are damaging to the publics perception of competence whereas a trained person with experience of such events can portray a positive image. The importance of identifying such a person was illustrated during the aftermath of the TWA flight 800 crash when the rush of distraught families, an eager press, and an interested public were left to the management of one chief ticket agent who, through no fault of his own, released inaccurate information which fuelled uncertainty, anxiety and false speculation about the handling of the affair (Bobo, 1997). This was a primary reason for TWA being widely criticised afterward by public relations counsellors, crash victims families and the media for having an uncaring attitude. Post-crisis management After a crisis, a disaster committee should organise follow-up meetings so lessons can be learned and fed into subsequent crisis management efforts. Everyone affected by a crisis must be involved in this process. In addition to managing the learning process, the disaster committee should also turn its attention to the recovery. This can be a
lengthy and sensitive process that is likely to be influenced by how well a crisis was managed. For example, it may involve delicate challenges such as conducting investigations into causes, mending damaged relationships, re-organizing the project program, settling on-going disputes and reassessing project requirements. At the same time, attention must be given to the long-term consequences of a crisis such as rectifying damage to the environment, or dealing with government or legal investigations. Clearly, the less effectively a crisis is managed, the more arduous is the recovery process.
Research method
Mitroff and Pearson (1993) provided a conceptual framework for investigating crisisproneness and understanding the major factors which contribute to effective crisis management. Essentially, they argued that effective crisis management is determined by:
Attitudes towards crisis management and the extent to which an organisation understands the types of crises which it should prepare for, given its mission and its industry.
The extent to which an organisation resources crisis management activities and effectively manages the five distinct phases through which all crises pass, namely, signal detection, preparation and prevention, damage containment, recovery and learning.
The extent to which priorities and interactions between the technological, the individual/human and the organisational/cultural systems are understood and managed.
The relative perceptions of organisational responsibilities to external and internal stakeholders. On the basis of these factors, Mitroff and Pearson produced a diagnostic model which identified the factors in an ideal crisis management program (See Table 1):
Table 1: Factors in an ideal crisis management (CM) program (Adapted from Mitroff and Pearson 1993, p.114) Elements of an integrated crisis management program Strategic actions Key questions to ask in an integrated crisis management program Is crisis management integrated into corporate philosophy, mission statements, strategic planning and notions of corporate excellence? Is there a dedicated CM unit or team? Are outsiders included on the Board and/or CM unit team? Is training conducted in CM? Are there regular crisis simulations? Are there any diversification and portfolio strategies? Has a dedicated budget for CM been created? Are steps taken to continually develop and change emergency policies and manuals? Are there computerised inventories of plant, employees, products and capabilities? Is there a strategic emergency room or facility? Are steps taken to reduce hazardous products, services and production processes? Are steps taken to improve overall design and safety of products and production? Is there technological redundancy (such as computer backup)? Are outside experts and services in CM used? Are legal and financial audits of threats and liabilities conducted? Are there continuous reviews and modifications of insurance policies and coverage? Are environmental impact audits conducted? Is there ranking of the most critical activities necessary for daily operations? Is there any early warning signal detection, scanning and issues management system in place? Is there dedicated research on potential hidden dangers? Is there critical follow-up and learning from past crises? Is there media training for CM? Are there major efforts in public relations? Is there extensive information on local communities? Are there good relationships with intervening stakeholder groups? Is there extensive collaboration and lobbying among stakeholders? Are new communication technologies and channels used? Is there strong top management commitment to CM? Are there good relationships with activist groups? Are whistleblowers accepted? Is there access to knowledge of potential criminal behaviour? Is the human and emotional impact of crises recognised? Is there psychological support for employees? Is there stress management and management of anxiety? Is there a corporate memory of past crises and dangers?
Technical and structural actions
Evaluation and diagnostic actions
Communication actions
Psychological and cultural actions
Table 2: Sample company profiles Company A B C D E Workforce 112 300 600 400 1000 Annual Turnover (AU$mill) 60 250 900 300 1500 Company age (years) 80 72 47 42 40
On the basis of Mitroff and Pearsons diagnostic model and key questions, semistructured interviews were conducted with fourteen senior managers, in five large and well-established international construction companies based in Sydney, Australia. Company documents relating to crisis management systems were also inspected. Those interviewed were selected because of their seniority and specific responsibility for risk management in their company. This targeted sampling strategy ensured that respondents had a good understanding of their organisations crisis management systems. The purpose of the interviews was to investigate attitudes towards crisis management activities and the adequacy of any existing crisis management systems. The company profiles are provided in Table 2 and were selected because their risk exposures would justify crisis management policies of a sophistication equivalent to those advocated in Mitroff and Pearsons model. Smaller companies involved in relatively low risk projects would not justify systems of the type advocated by Mitroff and Pearson.
respond to crises as they arose and that crisis plans were best developed on an ad hoc basis in response to the peculiar problems which each crisis presented. These respondents also felt that insurance provisions were adequate to cover the costs of a crisis, an attitude which is all too typical in the construction industry. This reliance upon insurance is worrying given recent world events and research which indicates that the average insurance payout only covers approximately 60% of the costs of an insured event (Odeyinka, 2000). Even more worrying was the belief that crisis management was a specialised activity that was the province of very large companies in higher risk industries and that policies of not overcommitting to excessive workloads or single contracts, above a certain proportion of turnover, insulated them from the occurrence of serious crises. The respondents were working in the largest 5% of companies in one of Australias most high-risk industries. Resources for crisis management There was no evidence in any company of permanent crisis management teams and little evidence of any corporate crisis management planning. Rather, crisis management was treated as a reactive activity and the assumption was made that in the event of a crisis, the organisation would be able to respond adequately with existing resources and that plans could be created on-thespot. Crisis management planning was at best rudimentary, crisis plans taking the form of general informal procedures and unwritten policies incorporated into the mainstream operating procedures of each company. The vast majority of managerial effort had been invested in the formulation of company policies for health and safety problems (46%) industrial relations disputes (40%) and IT failure (14%), rather than in detailed contingency plans.
DISCUSSION OF RESULTS
What follows is a general discussion of the strengths and deficiencies which emerged in the crisis management planning of the sampled companies. These are organised around attitudes towards crisis management, resources dedicated to crisis management activities and learning processes instigated during the aftermath of crises. Attitudes towards crisis management 56% of respondents believed that crises were inevitable and 65% believed it possible and worthwhile to plan for their eventuality. Although this indicates reasonably low levels of managerial complacency, 28% had considerable sympathy with the idea that crises could be eliminated and 21% considered it difficult to plan for their eventuality. Their attitude was that it was best to
Although there was little evidence of thorough crisis management planning, two companies had attempted to create workimprovement teams to facilitate communication between different functional areas, and with union delegates, and to enable employees to highlight potential problems with, and solutions and improvements for working practices. However, respondents felt that company cultures were unsympathetic to the communication of bad news and that this largely mitigated the benefits of such activities. To avoid this problem, one company had developed plans through a consultative team that permitted workers to voice their concerns with impunity so that issues could be raised before they became a potential threat. Crisis management training was also rare, although in one company chief executives had undergone extensive media and worstcase scenario training and had experienced simulations of potential crises. Similarly, another company held risk-awareness workshops every six months for chief executives. However, in all cases such training was insular, being confined to the most senior levels, thereby limiting its potential value and impact. Only one company had an integrated communications policy, which involved issuing strict guidelines to all organisational levels about dealing with the media. This company also provided lists of emergency phone numbers for contact during a crisis, and specialised training at all organisational levels, particularly in the areas of industrial relations and health and safety but not specifically in crisis management. None of the companies maintained regular and planned contact with external stakeholder groups, all confining policy communications with personnel employed on a consistent basis in their normal day-today activities. In this sense, little account seemed to be taken of a companys potential impact upon and responsibilities to the emergency services, general community, minority groups and the environment. Learning from past crises 93% of respondents were aware of past crises, causes being classified as accidents (46%), economic conditions (38%), disputes (industrial and others) (8%) and financial management (8%). Those with direct experience of these past crisis indicated that the problems of crisis management had been in damage containment rather than in
detection, because they had been largely anticipated in existence but not in impact. However, two companies had tackled this problem in the area of industrial disputes by developing plans to prevent them spreading between sites. In terms of learning and recovering from crises, the general perception was that this was a natural long-term process which necessitated little assistance. However, there was considerable evidence to indicate that learning had become a problem in many of the companies. Despite there being widespread confidence in being less vulnerable to similar future crises (58%), few of the interviewees had direct experience of past crises and had only become aware of them through company folklore and informal communication networks. Furthermore, although there was a widespread (65%) and encouraging perception that the uniqueness of crises does not preclude lessons being learnt for the future, only 8% of respondents had any knowledge or experience of an organised learning process in the aftermath of a past crisis or were able to provide details of consequent changes to company procedures. As one respondent said, learning from a crisis is the biggest job that we dont do and those changes that were highlighted by respondents were considered to be relatively minor and part of an ongoing process of evolutionary development. Other evidence of crisis vulnerability exists in comments which directly reflect the rationalisations discovered by Mitroff and Pearson (1993) that hinder effective crisis management. For example, 65% of respondents considered that their companys size afforded protection against crises. Only one respondent saw a crisis as a unique learning process which provided a test of its plans and an opportunity to improve its plans. Finally, most respondents considered that most crises were caused by the actions of an individual who may, for unknown reasons, have uncharacteristically made an error in performing a task. This reflected a widespread belief that past crises had been freak events which were beyond managerial control and that existing systems had, and would, continue to avert many other crises.
CONCLUSION
The study reported within this paper explored the crisis preparedness of five large, international construction companies operating within Australia. Due to the limited
sample, the extent to which the mindsets and systems that were discovered predominate within the construction industry is unclear. However, considering the relatively high levels of risk to which these types of companies are exposed, the investigation suggests that their state of crisis preparedness is inadequate and unlikely to improve without external intervention. Corporate philosophies evidenced in this study do not seem to support crisis management and there exists a predominant attitude that a long-standing record of continued survival is sufficient justification for maintaining the status quo. Furthermore, there appears to be a general belief that effective risk management practices can and should eliminate crises. The contemporary and alternative belief that crises are an inevitable and healthy part of organisational life is not widely espoused. Essentially, crisis management does not appear to be taken seriously and is undertaken in an informal, fragmented fashion with few resources and little strategic guidance and support. The limited activities that are undertaken are preventative in focus and give little consideration to coping with the eventuality of a crisis. Furthermore, they are insular and non-integrative in their development, being confined to senior management and are limited in scope to issues such as safety, industrial relations and, to a lesser extent, cost control. They also appear to be limited to a narrow range of stakeholders and to largely ignore the impact of a crisis upon the wider community. In essence, there appears to be relatively little effort invested in exploring the full range of risks which face companies at their various hierarchical levels, little understanding of the interdependency between these risks and little attempt to plan for their eventuality. Mitroff and Pearsons (1993) work suggests, that in the construction companies investigated in this research, a crisis would be likely to stimulate a period of reactionary chaos, social dislocation and disjointedness, at least in the short term. During this period, which would prevent any rational and coordinated response, costs would escalate and people would be guided by unwritten rules and procedures and information provided through informal communication networks. The managerial challenge during this period would be to re-establish an element of control and co-ordination in
peoples activities by attempting to communicate policies which may have been developed in isolation at a senior managerial level, if at all. However, in the dynamic environment of a construction firm, communication is difficult, but particularly so during the pressures and high stakes of a crisis. Indeed, if the source of a crisis is at site level, then these problems would be further exacerbated by the obscurity of relationships between crisis planning at site and company level and by the need to coordinate the activities of sub-contracted organisations with a wide range of conflicting interests. While many construction companies may have survived and indeed prospered for some time with the above mindset, continued success in an increasingly changeable and competitive world will demand the elimination of potential resource wastage and the maximisation of potential opportunities. Highly successful companies are able to turn problems to their advantage and fully exploit any opportunities they encounter. Crisis management capabilities are important in this respect because crises present both threats and opportunities and mismanagement can impart a heavy monetary and psychological toll upon an organisation and in extreme cases, destroy its viability. Complacency is dangerous and it is evident that construction companies could benefit from systematically incorporating crisis management activity as a part of their strategic planning process so that it is an integral and continuous part of organisational life at all levels. Such a change needs to be driven by senior management, supported by appropriate resources and guided by clearly explicated mission statements of central core beliefs, attitudes and organisational priorities and well conceived, fully integrated crisis management strategies, systems and procedures. There is also a role for research in bringing about this change. In particular, research is needed into how to make the construction industrys culture more optimistic, less inwardly and short-term orientated, and less cost-driven. Such research would have to be broad-ranging and cover issues such as employment and contractual practices, methods of organisation and procurement systems, attitudes towards risk and risk management practices, training, education, the nature of construction markets and corporate strategy.
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Hong Xiao and David Proverbs University of Wolverhampton INTRODUCTION
Construction cost is known to be the top priority for construction clients (Davenport, 1997) because it determines the return on their investments. It is also a major concern to contractors as construction cost relates closely to their competitiveness and profitability. While affected by many internal and external factors, construction cost is considered a reliable and measurable indicator of contractor performance (Ahmed and Kangari, 1995; Tam and Harris, 1996). Through careful cost prediction and planning before the commencement of construction, and strict cost control and management during construction, contractors can realise their aspirations in this regard. Contractors may also reduce construction cost through technological innovation and improvements in productivity and management (CIDA, 1993). Improved cost performance benefits both clients and contractors, since this can lead to more competitive pricing for clients (Akintoye, 1995). In the past two decades research on cost modelling has mainly been concerned with predicting and estimating the cost of construction projects at different phases. The cost model developed by Singh (1990) was used for cost estimation of reinforced concrete beam and slab structural systems in high-rise commercial buildings. Elhag and Boussabaine (1998) developed artificial neural network (ANN) models to predict tender price of education building projects. Adeli and Wu (1998) formulated a regularization neural network model to estimate the cost of construction projects. The parametric cost-estimating model developed by Hegazy and Ayed (1998) allowed users to reoptimise to their particular environment and predict budget costs of highway projects. Chau (1999) used the plan shape index to forecast building construction cost during the early design stage. However, there has also been much effort directed towards identifying those factors found to influence project costs. For example, Ireland (1985) developed a model for high-rise commercial building projects to investigate the effects of managerial actions on cost reduction. The cost model from Dissanayaka and Kumaraswamy (1999) was created to compare the impact of procurement and nonprocurement variables on time and cost performance in building projects in Hong Kong. The aim of this research is to compare and evaluate contractor performance internationally and to develop best performance models for contractors. This paper focuses on modelling cost performance. Here, a multiple regression model for construction cost is developed based on the construction practices found in the worlds leading construction industries, namely Japan, the UK and the US, to identify the factors paramount to the construction cost of high-rise building projects. After briefly introducing the research methodology used, this paper presents the development of the model, followed by a discussion of the measures found to improve cost performance.
METHODOLOGY
As used by Proverbs (1998) and by OECD/Eurostat (Edkins and Winch, 1999; Vermande and Van Mulligen, 1999), this research uses an appropriate hypothetical project (a six-storey concrete framed office building considered common to the three countries) as the basis for a semistructured questionnaire survey for accruing the performance data. A broad, but carefully worded description of the project, including its location, gross floor area, height, and some basic technological characteristics is provided. A certain degree of flexibility, such as whether the concrete elements are pre-cast or in situ, facilitates the inclusion of some national vernacular characteristics into the design. Respondents (project managers of general contractors) are invited to answer questions related to the construction of the hypothetical project. Relative figures in the form of percentages and ratios are used as much as possible to maintain the comparability of data and to
HONG XIAO AND DAVID PROVERBS
remove the need to identify matching or concurrent cases. This balances the requirements of the comparability and representativeness of data. Details of the hypothetical project and the questionnaire can be found in Xiao et al. (2000 and 2002). In the questionnaire, respondents were asked to estimate the construction cost, assuming that they were the general contractor for the hypothetical project. Other information relevant to contractors management and production practices, such as the average number of design variations encountered during construction, the frequency of meetings with subcontractors and project teams, and preferred construction methods, was also sought. A survey was conducted simultaneously in Japan, the UK and the US. In Japan, translated versions of the questionnaires were distributed to contractors of the Building Contractors Society (BCS). General contractors in the US were contacted by means of a large contracting body, The Associated General Contractors of America (AGC). In the UK, companies listed in the Kompass Directory (Reed Business Information, 1999) and members of the CIOB (Chartered Institute of Building, 2000) were targeted in the survey. Detailed information about the distribution and response to the survey is shown in Table 1. The relatively low response rate was not unexpected, considering the complexity and volume of the questionnaire. This, however, should not invalidate the outcome of the survey. Rather, it does imply that the questionnaire had been taken seriously and the responses received were both valid and reliable. A cost model was subsequently developed to identify the relationships between construction cost (i.e., dependent variables) and contractors preferred practices and methods (i.e., independent variables) in the building Table 1: Questionnaire survey Distributed No. 129 417 113 659 Received No. 26 34 38 98 % 20.2 8.2 33.6 14.9
process. The aim of the model was to facilitate investigation as to what factors are important for achieving outstanding cost performance. The model can also assist in determining the importance of these factors to contractor cost performance. Here, data used for modelling was based on an identical hypothetical construction project to minimise disturbance from the differences in project characteristics. Factors considered included both technical (such as construction methods and communication tools) and managerial (such as quality management and procurement methods) aspects. Findings from the research can demonstrate how contractors from these three countries (and possibly others) can improve their cost performance on buildings of the type considered.
MULTIPLE REGRESSION ANALYSIS

Multiple regression analysis is by far the most widely used multivariate technique used to analyse the relationship between a single dependent variable and several independent variables (Hair, Jr. et al., 1995). It is usually used to predict a single dependent value through independent variables whose values are known. In addition to its predictive power, multiple regression analysis can also be used objectively to help explain the degree and character of the relationship between dependent and independent variables (Hair, Jr. et al., 1995; Johnson and Wichern, 1998). The independent variables, in addition to their collective prediction of the dependent variable, may also be considered for their individual contribution to the variate and its predictions. Interpretation of the variate may rely on any of three perspectives: the importance of the independent variables, the types of relationships found, or the interrelationships among the independent variables.
Japan UK US Total
Held back for validation No. % 4 15.4 2 5.9 6 15.8 12 12.2
Used in analyses No. 22 32 32 86 % 84.6 94.1 84.2 87.8
In this research, the explanation function of multiple regression analysis was utilised. As the dependent variable is the unit price for a hypothetical project, it would be of little practical meaning to use the model to predict the unit price of the hypothetical project in other circumstances. But through multiple regression analysis, the factors influencing contractor performance can be identified, the relationships between dependent and independent variables can be established, and the relative importance of each independent variable can be determined. With such, contractors can identify areas in need of improvement. As multiple regression analysis is suitable only for modelling with metric variables, nominal variables need to be transformed by means of dummy variables. For questions with only Yes and No answers (e.g., whether the component is precast), the dummy variable can be defined as: Xi=1 for Yes, and Xi=0 for No. For questions with more than two optional choices (e.g., Often, Occasionally, and None for the use of different procurement methods), in order to make the analysis simpler, the answers are merged into two categories (Often or Occasionally and None) so that only one dummy variable is needed for each such variable. The analysis was conducted with the aid of the Statistical Package for Social Sciences (SPSS 10). Only those independent variables which were significantly related to the unit price were incorporated into the modelling process. The Pearson correlation (r) test is the most commonly used correlation coefficient that measures the strength of a linear association and was thus selected. The significance level was 0.05 (2-tailed). Multicollinearity among independent variables was assessed by means of the tolerance value with those less than 0.1 being omitted from the multiple regression analysis. As the aim of this research is to derive best practice among contractors internationally, their nationalities were not discriminated. That is, measurement of association and the modelling procedure were performed on the aggregated response.
terms of unit price. Unit price was chosen because it was considered suitable for the assessment of contractor cost performance (Ireland, 1985; Naoum and Mustapha, 1995). Given that the exchange rates do not usually reflect the relative purchasing powers of currencies and constantly fluctuate (Kravis, 1984), the unit prices were adjusted by purchasing power parities (PPPs) (Xiao and Proverbs, 2002). Purchasing power parities (PPPs) are key statistical tools for international comparisons. They represent the rates of currency conversion that eliminate differences in price levels between countries. PPPs are a geometric average of price relatives of various products and services in a national economy including consumer goods and services, government services, equipment goods and construction projects. When prices of a product or service in different countries converted by PPPs are compared, they are all being valued at a common set of prices and they are not affected by the relative prices of tradable goods and by factors such as interest rates, financial flows, etc. (OECD, 2001). Pearson correlation (r) tests identified ten independent variables significantly related to unit price (refer to Table 2). A stepwise multiple regression procedure was applied. Under the selection criteria (to enter, F < =0.050; to move, F > =0.100), four independent variables were selected, namely the percentage of overhead in unit price, the prefabrication of inner walls, the amount of design variation in construction, and the prefabrication of columns. The resulting R 2 was 0.408, signifying that 41% of the total variation in the unit price could be explained by these four independent variables. The final regression model can be presented as:
Y (Unit price in PPPs) = 523.417 + 20.636

(OVERHEAD) + 267.891 (INNERWA1) + 1.114 (DVARIATI) + 94.406 (COLUMNS1) Here, OVERHEAD represents the percentage of overhead in unit price, DVARIATI represents the amount of design variations in construction, and INNERWA1 and COLUMNS1 are dummy variables which equal one if the inner walls and columns are prefabricated and zero if otherwise. The six variables eliminated in the regression were (i) the percentage of materials in unit price, (ii) the percentage of plant in unit
RESULTS
To investigate what factors influence the construction cost of building projects, multiple regression analysis was applied to the dependent variable of construction cost in
price, (iii) the number of working days per week, (iv) whether the contractors possessed Quality Assurance certificates, (v) the use of management contracting procurement, and (vi) the use of design and management procurement. The regression analysis results are summarised in Table 3. The bell shaped and symmetrical histogram of standardized residuals for unit price in PPPs (refer to Figure 1) and the normal probability (P-P) plot for unit price in PPPs (refer to Figure 2) with points closely clustered to the diagonal line demonstrate that
the model does not violate the assumption of normality. The random pattern of the data points in the plot of studentised residuals versus predicted values for unit price in PPPs (refer to Figure 3) indicates that the assumption of constant variance is not violated (Hair, Jr. et al. 1995; Norusis, 1995). As the data were collected simultaneously from different contractors in different countries, it can be assumed that all the observations are independent, and the Durbin-Watson test (1.672) also confirmed this (Norusis, 1995).
Table 2: Matrix of correlation for unit price in PPPs 1 PPPS 2 MATERIAL 3 PLANT 4 OVERHEAD 5 DVARIATI 6 WDAYS 7 CERTIFI2 8 COLUMNS1 9 INNERWA1 10 MANACON1 11 DESIMAN1 1 1.000 -.236a .223a .397b .298b .257a .300b .252a .371b .246a .212a 2 1.000 -.476b -.251a -.043 -.163 .043 .120 -.142 -.047 .054 3 4 5 6 7 8 9 10 11
1.000 .342b -.112 .117 .267a -.017 .487b .179 .070
1.000 -.030 .220a .239a .111 .130 .002 -.055
1.000 .057 .046 .033 -.098 .123 .027
1.000 .407b .023 .249a .151 .173
1.000 -.089 .246a .470b .368b
1.000 .085 1.000 .060 .105 1.000 .026 .159 .612a 1.000
a Correlation is significant at the 0.05 level (2-tailed). b Correlation is significant at the 0.01 level (2-tailed). Table 3: Regression analysis results of unit price in PPPs Multiple R
Durbin-Watson Analysis of variance Regression Residual F = 13.962, Sig. F = 0.000 Variables in the B equation (Constant) 523.417 OVERHEAD 20.636 INNERWA1 267.891 DVARIATI 1.114 COLUMNS1 94.406
0.639 0.408 1.672 DF 4 81 SEB 51.080 5.207 67.571 0.285 47.062
Standard error Adjusted R 2
205.9904 0.379
Sum of squares Mean square 2369672.7 592418.177 3436996.3 42432.053 Beta
t
10.247 3.963 3.965 3.913 2.006
Sig. 0.000 0.000 0.000 0.000 0.048
Tolerance VIF
0.344 0.344 0.336 0.173
0.972 0.969 0.988 0.981
1.028 1.032 1.012 1.020
Figure 1: Histogram of standardized residuals for unit price in PPPs

16 14 12 10 8 6 Frequency 4 2 0
2.50 2.00 1.50 1.00 -.50 0.00 .50 1.00 1.50 2.00
Std. Dev=.98 Mean=0.00 N=86.00

2.50
Regression Standardized
Figure 2: Normal probability (P-P) plot for unit price in PPPs

1.00
.75
.50
Expected Cum Prob
.25
0.00 0.00 .25 .50 .75 1.00 Observed Cum Prob
Figure 3: Studentized residuals versus predicted values for unit price in PPPs
Regression Studentized Residual 3 2 1 0 -1 -2 -3 -2 -1 0 1 2 3 4
Regression Standardized Predicted Value
DUC TRAN AND MARTIN SKITMORE
It is acknowledged that the resulting adjusted R2 of the model is just moderate. However, it is unrealistic to assume that the complex nature of any economic relationships can be described accurately by a simple linear form (Newbold and Bos, 1990). For example, when Ball et al. (2000) used firm and industry characteristics to predict firm profitability, the adjusted R2s of regression were as low as 0.27 and 0.18. Considering the international feature of this research, and the influence of differences in culture and values, the results of the modelling were deemed reasonable.
productivity. For example, the just-in-time (JIT) system, which means having the right items of the right quality and quantity in the right place and at the right time, can be implemented in construction projects to reduce overheads by eliminating non-valueadded activities, minimising inventory levels and improving productivity (Akintoye, 1995; Low and Mok, 1999).
Use of prefabrication
From this analysis, higher levels of prefabrication (specifically for inner walls and columns) will increase the cost of this type of building project (a six-storey concrete framed office building). This concurs with Arditi et al. (2000) who found that almost half of the contractors investigated claimed not to achieve cost savings by using prefabrication. Prefabrication removes the work from the site to the more controlled environment of the factory so that components and assemblies are manufactured off site or by the construction of temporary workshops or production units such as concrete precasting plant. Prefabricated components have been mainly used in industrialised residential buildings and large mass production is needed to achieve the proclaimed economic benefits (Ishai, 1989). However, delays in production can affect erection schedules and a lack of communication at the design stage can have negative effects on any cost saving. Fluctuations in the market make the production of prefabricated components unstable, and the increased cost in the production process has to be passed down the chain to contractors and clients. Furthermore, prefabricated concrete components are normally large, bulky and heavy and require the use of expensive cranes for hoisting, and the long delivery vehicles often pose problems to the traffic flow on site (Low and Choong, 2001). Prefabrication also demands higher costs in terms of transportation and factory overheads (dArcy, 1995). Greater co-ordination between clients, designers, manufacturers and contractors is needed before prefabrication can fully demonstrate its potential. Contractors need to carefully consider the use of prefabrication and plan this effectively into the production process if the desired results are to be achieved.
DISCUSSION
Multiple regression analysis revealed that overheads in the unit price and the use of prefabricated inner walls had the most significant impact on unit price with a beta coefficient of 0.344, followed closely by design variations (0.336). The beta coefficient for prefabricated columns was 0.173. These results provide guidance to contractors on how to reduce the cost of their building projects.
Overheads in unit price

The results of multiple regression analysis showed that the unit price of building projects (converted by PPPs) increased with the percentage of overheads. Overheads are the costs associated with the off-site expense of managing a company or facilitating the construction project, and include the costs of maintaining a head office, workshop and offsite storage compound for plant and materials (Ashworth, 1996; Brook, 1998). Overheads are recovered from projects undertaken by contractors in terms of percentage of turnover and may vary from project to project under different market situations. There are not many differences in direct cost (labour, plant, materials and subcontractors) estimating methods between contractors nowadays because they normally have access to the same labour supply, use the same type of equipment and obtain supplies and materials from the same sources (Tah et al., 1994). To make sufficient profit while maintaining a competitive position in the market, contractors need to reduce overheads in order to keep construction costs to an absolute minimum. Contractors should improve the efficiency of their management teams and effectiveness of their management systems, and concentrate on activities that can improve
Design variations in construction

The model indicated that design variations during construction increase the unit price of building projects, which is consistent with the findings of Ireland (1985). Variations were defined by Wallace (1995) as works which are not expressly or impliedly included in the original contract and therefore are not included in the contract price, whether they represent a change or alteration of the original work or simply an addition to or omission from it. Nearly all construction projects witness a number of design variations because of various problems such as the thoroughness of the predesign site investigation, the completeness of working drawings available at the time of estimate, and generally unpredictable circumstances during construction (Kaming et al., 1997). These changes after construction has commenced are disruptive to the planned construction process, leading to cost and time overruns (Ireland, 1985). With increasingly lower profitability under the current sluggish economic growth and highly competitive market conditions, the rate of make up is already low and cost overruns caused by design variations and other sources may lead to losses for contractors (Akinci and Fischer, 1998). Therefore, it is crucial that design variations are kept to a minimum in order to reduce construction costs and improve contractor cost performance. A clear and thorough brief, quality contract documentation, and the use of a independent cost manager were perceived as the three most important strategies for reducing design variations by Australian practitioners (Chan and Yeong, 1995) and may be considered effective in other countries.
factors found to influence contractor cost performance and to highlight possible ways for improvement. Multiple regression analysis revealed that the percentage of overheads in the unit price, the number of design variations during construction, and the use of prefabrication for the hypothetical project were identified as being closely related to contractor cost performance. Overheads are mainly indirect costs and can be reduced through more effective site management. The use of prefabrication may lead to increased construction cost due to difficulties caused by transportation, poor co-ordination among the participants, and delays to the construction process. Design variations during construction bring more uncertainties and will unavoidably increase the construction cost to both clients and contractors. While these findings in themselves are not totally surprising, they will be of interest to practitioners and clients alike. Constructers need to reduce their overheads and look at ways of improving their use of prefabrication. Clients and designers need to reduce or at least minimise the number of design variations issued during construction. Findings reported herein, suggested that these will lead to a significant reduction in construction cost.
ACKNOWLEDGEMENTS
The authors acknowledge the support of Mr Kenichi Matsui of the Public Works Research Institute of the Ministry of Construction of Japan and also numerous project managers in Japan, the UK and the US for their generous cooperation and contributions to this research.
CONCLUSION
Construction cost is a major concern to both clients and contractors due to its obvious economic impact on them. This research aimed to identify the factors influencing the construction cost of building projects. Based on a hypothetical six-storey concrete framed building project, a questionnaire survey was conducted in the three leading construction industries, namely Japan, the UK and the US, to collect contractor cost performance data and other relevant information. A construction cost model was developed based on the practices of contractors in the three countries, which identified the paramount
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Duc Tran and Professor Martin Skitmore Queensland University of Technology INTRODUCTION
Right across industry, the attitude of senior management to their corporate affairs is evolving in response to the globalisation of business, the spread of information technologies, the growth of shareholder activism and increased intrusiveness of international and national governments in key areas of business management. A misfit of cultures is often a cause of failure (Cartwright and Cooper, 1996; Cartwright and Cooper, 1993; Olie, 1994). In particular, managers strong preference for culturally similar environments has been identified as a major problem (Oudenhoven and De Boer, 1995). A major challenge of doing business internationally is clearly to adapt effectively to different cultures. Such adaptation requires an understanding of cultural diversity, perception and values (Granell, 2000). In Australia, historically high levels of protection, particularly in the form of tariffs, have been the mainstay of Australian industry policy (Buxey, 2000). The consequence of this protectionism has been an inwardlooking industry with a low level of competitiveness in international markets. For many corporations in the 1990s, the highest priority was to develop an Asian focusthe socalled Asian Challenge. However, international knowledge in Australia is biased in favour of Europe and there has been slow progress in developing significant and meaningful changes in attitudes, knowledge and awareness of Asian ways (Edwards et al., 1997). The tendency to date has been to take those management concepts and techniques that worked at home into other countries and cultures. It is now apparent, both from practice and cross-cultural research, that a single, universal style of management, at least across cultures, is not tenable (Adler, 1997). One of the most important skills for project managers in the international marketplace is that of effective communication (Harris and Kumra, 2000). Communication takes on special important in cross-culture management because of the difficulties in conveying meanings between parties from different cultures. The problems of misinterpretation and error are compounded in the international context. To overcome this, cross-cultural managers have to adapt and be flexible in the new environment; in addition to having the required functional and survival skills. Thus, cross-cultural managers require an understanding of the meanings and dimensions of culture, organizational culture and diversity, and intercultural communication. With intensified internationalisation of business, there has been a notable increase of research interest in the relationship between national culture, values and managerial orientations and behaviour. The more recent work by Hall and Hall (1994a), Trompenaars and Hampden-Turner (1998b), Hofstede (1991) and Laurent (1983) explicitly links broad cultural value dimensions to management issues. Apart from Loosemore and Muslmanis (1999) work in the Persian Gulf region, however, little has been done to date to document the inter-cultural communication issues in construction project management. To rectify this situation, in the Australian context, the research described in this paper aimed to explore the impact of national culture, organizational culture and inter-cultural communication on the management of a company by means of a small empirical study of the correlation between the culture diversity and intercultural communication and its barriers. This involved a questionnaire survey derived from synthesis of culture dimensions from Trompenaars and Hampden-Turner (1998b), Hofstede (1980; 1991) and Schein (1992). These dimensions enable us to describe and compare critical manifestations of organizational and national culture.
DATA Questionnaire
The questionnaire was divided into three sections, comprising background information, with questions concerning nationality,
employment status, field of profession and years of experience; culture, with questions relating to aspects of national culture, organisational culture and personal characteristics; and communications, with questions relating to communications in general, in projects and barriers to communication. Following Hofstede (1991), the aspects of national culture elicited were, on a five-point scale, the degree of uncertainty avoidance, individualism/collectivism, power distance and masculinity/feminity. Similarly, the aspects of organisational culture elicited were external/internal emphasis, task/ social focus, individuality/conformity, risk/safety and adhockery/planning. Personal characteristics concerned introversion/extroversion, sensing/intuition, thinking/ feeling and judging/perceiving.
RESULTS
Respondents were allocated into Far Eastern (46%) and Anglo (54%) groups (after Ronen and Shenkar, 1985). Sample correlation coefficients were then computed between the cultural variables (National,
Organisational and Personal Characteristics) and communication variables (Communication in General, Project Based Communications and Barriers) for Pooled Data, Anglo Cluster and Far Eastern Cluster.
Effects of cultural factors on communication

As Hall (1959) has noted, many intercultural communication difficulties stem from the lack of knowledge of how to communicate with people in other countries. Behaviours and orientations considered appropriate in one culture can be offensive to people from another culture. Obtaining knowledge about the communicative styles and orientations of persons in other cultures should help to reduce this happening inadvertently, as well as the misinterpretation of communication behaviours and orientations of people from other cultures. It is important, therefore, to examine, interculturally, those factors that have been found to have a significant (p<0.05) influence on communication behaviours. In focusing on these, the results are presented for the three dimensions in the questionnaireNational, Organisational and Personal. National Culture The correlation between Uncertainty Avoidance and the general "Communication to the external of the organisation is vital" (Table 2) is positive (r=0.41), which may reflect relatively low uncertainty-avoidance cultures encouraging their personnel to use their own initiative and assume responsibility for their actions. On the other hand, the correlation between Uncertainty Avoidance and the communication barrier "Lack of trust" is negative (r=-0.32), reflecting that relatively low uncertainty-avoidance cultures, being founded on trusting relationships, suffer the most when their trust is misplaced. Relatively higher uncertaintyavoidance cultures, however, where lack of trust is endemic, require more formal ways of communication, e.g., writing, in anticipation of possible future litigation.
Research population sample

Singapore was chosen for the survey as:
It has a high power distance/low individualism culture, in contrast with the position of most western nations (Hofstede, 1980). It is a region known for its cultural diversity.

The high English literacy rates among Singaporean managers enable a survey to be conducted in English, avoiding possible interpretation problems associated with the translation of questionnaires into other languages (Chow et al., 1991). The targeted research sample consisted, variously, of project managers, construction managers, consultants and architects. Both local and foreign respondents within Singapore were targeted. A hundred questionnaires were forwarded to individual professionals currently working in the Singapore construction industry. Strict anonymity was observed.
Response rate
Thirty-nine responses were received. The respondents are from geographically and culturally diverse backgrounds, with a diversity of management experience, and with an average of 9 years of cross-cultural experience per respondent (Table 1). There are a variety of nationalities involved, with two major response groups being Australian (23%) and Singaporean (22%). The majority are project managers, with 85% having five or more years of experience in the construction industry.
The correlation between Individualism/Collectivism and the project variable "Effective communication" is positive, indicating that the more collectivist cultures perceive effective communication to be more important than those more individualistically inclined. Certainly, in collectivist cultures, people tend to take time for Table 1: Characteristics of the respondents Characteristics Respondent 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 Q1 Nationality Singaporean Singaporean Singaporean American Singaporean Australian Australian/Vietnamese Singaporean Australian Australian Australian Indonesian Australian American Vietnamese Korean British American Singaporean Vietnamese Vietnamese Australian/Vietnamese British Singaporean Singaporean Malaysian Australian Vietnamese Australian Australian/Vietnamese Vietnamese American/Vietnamese Australian Australian American/Vietnamese Bulgarian Malaysian American Singaporean Q2
consulting with, and gaining consent of, their group members. Clearly then this suggests that people from cultures with high individualism, and therefore with lesser regard or ability for effective communication, are likely to experience difficulties in communicating with those from collectivist cultures.
Q3 Field of Professions Construction Manager Developer Project Manager Country Manager Project Manager Architect Construction Manager Developer Consultant Project Manager Construction Manager Project Manager Project Manager Project Manager Project Manager Architect Construction Manager Consultant Construction Manager Project Manager Developer Project Manager Architect Project Manager Project Manager Consultant Consultant Project Manager Consultant Architect Project Manager Developer Consultant Project Manager Construction Manager Project Manager Architect Project Manager Project Manager
Q4 Yrs. Exp. 15 4 11 10 7 7 14 10 11 9 10 2 10 15 6 2 10 23 5 7 9 16 7 8 6 8 13 10 13 4 7 19 8 4 14 4 15 5 6
Status Local Local Local Expatriate Local Local Local Local Expatriate Expatriate Local Expatriate Expatriate Expatriate Local Expatriate Expatriate Local Local Local Expatriate Local Expatriate Local Local Local Local Local Local Local Expatriate Expatriate Expatriate Local Expatriate Expatriate Local Expatriate Local
Table 2: Correlations between National Cultures and Communication variables Item Uncertainty Avoidance Individualism/ Collectivism r +0.41** Communication "Communication to the external of the organization is vital" "Lack of trust" "Effective communication" "Information filtering" "Lack of personal skills" "Limited resources"
+0.32* +0.33* -0.32* -0.32* Power distance Masculinity/ +0.40* Femininity ** p<0.01 (2-tailed) * p<0.05 (2-tailed) The correlation between IndividualismCollectivism and the communication barrier "Information filtering" is negative. Hall and Hall (1994b) noted that, in high-context (collectivist) societies, messages are often highly coded and implicit. As a result, the senders job is to interpret what messages mean by correctly filtering through what is being said and the way in which the message is being conveyed. Thus, collectivists see information filtering as less of a communication barrier than individualists. Countries with relatively high-individualism also tend to have greater support for the protestant work ethic and greater individual initiative. Thus, they agreed that personal skills affect communication process. This is shown through the negatively correlated Individualism/Collectivism and the communication barrier "Lack of personal skills" (r=-0.32). Unexpectedly, Power Distance was not significantly correlated with any of the communication variables. However, a positive correlation was found between Masculinity-Feminity and the communication barrier "limited resources" providing some support for Hofstedes (1980) assertion that individuals in countries with a relatively high masculinity index tend to dominate with power, as resources are not likely to be beyond their control. Organisational Culture Frequently the question arises concerning whose cultural customs, mores and practices should take precedence in international operations. The you attitude principle shows that successful communication must necessarily be
cation must necessarily be approached from the viewpoints of receivers, not senders (Sprinks and Wells, 1994, pp. 3029). The results show that organisations with a relatively high external orientation need to have managers with sufficient inter, and intra, personal skills and an organisational communication strategy, but with a less flexible form and style of communication than those organisations with a relatively high internal orientation (Table 3). It is difficult to suggest reasons why the latter should be the case except that, when it comes to communicating to a particular culture, the form and style of the communication have to be permanently adapted to the cultural customs and practices of the partners. For organisations that are relatively more social than task oriented, there appears to be a higher awareness of cultural problems and solutions, with the project variables of
"High levels interpersonal/intra-personal skill management", "Understanding and appreciation of cultural difference involved, "Effective communication", "Awareness of national culture" and barrier of Resistance to change all having significant positive
correlations. Unexpectedly, no significant correlations were found between individuality-conformity and communication of the organisation. This contrasts with the literature on the topic, which suggests that a conformity organisation culture would have policies and procedures to control communication of the company.
Table 3: Correlations between Organization Cultures and Communication Item Uncertainty Avoidance r Communication
+0.41** "Communication to the external of the organization is vital" +0.32* "Lack of trust" Individual+0.33* "Effective communication" ism/Collectivis -0.32* "Information filtering" m -0.32* "Lack of personal skills" Power distance Masculinity/ +0.40* "Limited resources" Femininity ** p<0.01 (2-tailed) * p<0.05 (2-tailed) A safety-conscious response to risks is expected to result in an emphasis on written, as opposed to verbal, communication. Similarly, a risk-taking culture is likely to have a higher tolerance of ambiguity than a safetyconscious culture. These relationships are manifested through a positive correlation of safety consciousness with the barrier language difficulties. A risk-taking culture, on the other hand, perceives lack of personal skills as a communication barrier. Finally, a planning culture is expected to emphasise the need for structure and a non-ambiguous communication process, while an adhockery culture is likely to be somewhat informally structured and less task-driven. This is justified by the findings, which show those from a planning culture to perceive a "well established organisational culture and objectives" and "communication planning, allow "effective communication" in the organisations projects. Also, it seems understandable that different communication activities take place among people of different cultures. Thus, one way for managers to improve intercultural project communication is through knowledge of local customs and practices, which emerged through the positive correlations of "Awareand solutions. Of course, face is very important from the Asian perspective, where the achievement of harmony in communication requires the maintenance of an individuals face. Personal Characteristics Research in social psychology suggests that personality dimensions significantly affect the effectiveness and outcome of communication (Padgett and Wolosin, 1980; Runkel, 1956). Individual personality exerts a significant influence on both the content and style of the interactions with other parties. Extroverts, for example, are expected to prefer an interaction-oriented style of communication, involving the establishment of a personal bond with their counterparts. Introverts, on the other hand, are likely to be territorially and internally oriented. This emerged strongly through the correlations of the project variables "Two way communication both
upward and downward", "Project managers with excellent communication skills", "Understanding of language and cultural practices of local area", and "Effective communication" (Table 4). Extrovert managers would seem to be more competent in both communication and the cultural practices of their working environment. Sensing types show a preference for facts and detail while intuitive types prefer innovation and focus on the big picture. This explains the correlation between Sensing versus intuitive and the project variable "Understand-
ness of national culture", "Understanding and appreciation of cultural difference involved" and "Understanding of language and cultural practices of local area". The surprising result was the positive correlation between Adhockery-planning and the communication barrier face although it is clear from these results that the more planning oriented organisational cultures are, as the socially oriented organisations mentioned above, somewhat more enlightened over cultural communication problems
ing and appreciation of cultural differences involved". The sensing person would have to
explore the cultural differences involved to enhance their communication process in the project.
Table 4: Correlation between Personal Characteristics and Communication Item Introversion vs. Extroversion Sensing vs. Intuition r +0.50(**) +0.50(**) +0.43(**) +0.43(**) -0.42(**) -0.40(*) Thinking vs. Feeling -0.38(*) -0.38(*) -0.37(*) Communication "Two way communication both upward and downward" "Project managers with excellent communication skills" "Understanding of language and cultural practices of local area" "Effective communication" "Understanding and appreciation of cultural difference involved" "Understanding of language and cultural practices of local area" "Communication to the external of the organization is vital" "Project managers with excellent communication skills" "Understanding and appreciation of cultural difference involved"
Judging vs. +0.42(**) "National culture control communication process" Perceiving ** p<0.01 (2-tailed) * p<0.05 (2-tailed)
Thinkers decide things logically and objectively, while feelers use emotional appeals such as loyalty and responsibility. These concepts manifested weakly through the correlations of the general "Communication to the external of the organisation is vital", and project variables of "Understanding of
language and cultural practices of local area", "Project managers with excellent communication skills" and "Understanding and appreciation of cultural difference involved". When the thinker decides that external communication is vital, the next logical step is to understand the cultural aspects involved and improve communication skills. Finally, the relationship between Judging vs. perceiving and the general
relationships between cultural variables and communication variables than the Far Eastern respondents. This turns out to be the case, with approximately 20% more significant correlations in the Anglo than the Far Eastern cluster results. It is noteworthy that the sign of the correlations for the two clusters is quite different, with 54% and 74% being positive for the Anglo and Far Eastern clusters respectively. These results could be due the Face barrier. The number of significant correlations between the cultural and communication variables for the Anglo cluster are approximately double those of the Far Eastern cluster, when the comparisons are made individually between national, organisational culture and personal characteristics. It may be possible to conclude that organisational cultural dimensions would have more effects on communication than other variables. National Dimensions The dimensions of uncertainty avoidance, individualism, power distance and masculinity broadly shape the aspects of the contents and style for each party in the communication process. Based on Hofstedes research, Hodgetts and Luthans (1993) identified different dimensions between Anglo and Far Eastern societies. Anglo societies are generally low power distance and individualistic,
"National culture control communication process" is positive, suggesting that people

who are inclined to judge, since they desire organisation and control, would not conclude national culture to be a control factor hindering the communication process.
Comparison Between Anglo Cluster and Far Eastern Cluster

According to Trompenaars (1994), the Anglo and Far Eastern cultures have opposite cultural values, the Anglo culture being associated with individualism, specific relationships, universalism, emotional relationships and achievement. The Anglo respondents should therefore contain closer
Table 5: Correlations between National Dimensions and Communication Variables Anglo Cluster Far Eastern Cluster r -0.49(*) Communication "Understand the languages and practices of the local culture enhances communication"
Item
r Uncertainty Avoidance -0.45(*) Communication "Understanding of language and cultural practices of local area" "Project managers have good communication skills" "Effective communication" "National culture control communication process" "Face" "Lack of trust +0.50(*) "Lack of motivation"
0.49(*) Individualism/ Collectivism
0.43(*) -0.53(*)
-0.47(*) Power distance 0.50(*) Masculinity/ -0.45(*) "Lack of personal skills" Femininity ** p<0.01 (2-tailed) * p<0.05 (2-tailed)
while Far Eastern societies are high power distance and collectivistic. Each requires a different approach to formulating an effective communication strategy. Table 5 shows the significant correlations between national culture and communication variables for both the Anglo and Far Eastern clusters. Both Anglo and Far Eastern clusters are classified as low uncertainty avoidance societies. People in these societies tend to accept each day as it come, take risks rather easily and show a relatively greater tolerance for opinions and behaviours different from their own. Thus, they feel less threatened by the language and practices of different cultures when they communicate with othersas suggested by the correlations of both clusters on similar communication variables. From the Anglo (individualist) point of view, Far Eastern (collectivist) managers do not have good communication skills and are ineffective communicators. It may be that collectivism also helps to explain this finding. Collectivism stresses the importance of group decisions. When collectivists communicate with individualists, they would seem to be reluctant to make quick decisions and commit their organisation to these decisions. The Anglo cluster suggests that national culture controls the communication process. Face is an important barrier, when communicating with the Far Eastern cluster. This also
explains the fewer number of significant relationships for the Far Eastern cluster. It is possible that praise is used more sparingly because this would involve singling out an individual and it may cause that individual to lose face. Another manifestation of power distance is the willingness to trust other people. High power distance societies typically view others as a threat and, as a result, show less inclination to trust others. This is exhibited through the positive correlation of collectivism on lack of trust. When the Anglo cluster (Low power distance societies) communicated with Far Eastern cluster (High power distance societies), they felt that lack of trust hindered their communication process. Finally, the Anglo cluster (Masculinity societies) suggested that personal skills were among one of the communication barriers, which reflects their value of assertiveness and respect for the super-achiever. On the other hand, the Far Eastern cluster (also a masculinity society) indicates that motivation is not a communication barrier. Organisational Dimensions Culture control is increasingly used to replace rules-based control in an attempt to enhance communication within organisations. Table 6 shows the relationship between organisational dimensions and
Table 6: Correlation between Organization Dimensions and Communication Variables Item Anglo Cluster External vs. -0.58(**) "High levels of inter-personal and intra-personal skill are Internal required" emphasis Task vs. Social +0.62(**) "Understanding of language and cultural practices of local focus area" +0.61(**) "Two way communication both upward and downward" +0.61(**) "Communication strategies to help minimize potential disputes and misunderstanding" +0.56(**) "Effective communication" +0.51(*) "Understanding and appreciation of cultural difference involved" -0.67(**) "Lack of trust" -0.61(**) "Resistance to change" -0.50(*) "Project type and duration has impact on communication strategy and structure" Individuality +0.52(*) "National culture control communication process" vs. Conformity +0.46(*) "Gender issues" +0.45(*) "Lack of trust" -0.60(**) "Two way communication both upward and downward" -0.45(*) "Staff communication is encouraged" -0.44(*) "Effective communication" Risk vs. Safety -0.55(**) "Flexible form and style of communication" -0.46(*) "Project type and duration has impact on communication strategy and structure" Adhockery vs. +0.59(**) "Communication is important" Planning +0.49(*) "Understand the languages and practices of the local culture enhances communication" +0.47(*) "Communication planning" +0.46(*) "Well established organizational culture and objectives" +0.44(*) "Knowledge of different cultures involve in the project is important" Far Eastern Cluster External vs. Internal emphasis Task vs. Social focus r Communication
+0.61(**) +0.60(**) +0.60(**) +0.57(*) +0.41(*)
"High levels interpersonal/intra-personal skill management" "Understanding and appreciation of cultural difference involved" "Religious issues" "Face" "Awareness of national culture"
Individuality vs. Conformity Risk vs. Safety +0.65(**) "Time limitation" Adhockery vs. +0.80(**) "Well established organizational culture and objectives" Planning +0.72(**) "Awareness of national culture" +0.64(**) "Understanding and appreciation of cultural difference involved" +0.58(*) "Face" +0.48(*) "Understanding of language and cultural practices of local area" ** p<0.01 (2-tailed) * p<0.05 (2-tailed)
communication variables both for the Anglo and Far Eastern clusters. An organisation emphasizing an external orientation places special emphasis on satisfying clients and customers. This can be taken to mean that external Anglo organisations require their personnel to have high inter-personal and intra-personal skills to communicate with clients or customers. Both clusters indicate that cultural variables and structured communication networks contribute towards effective communication. Interestingly, the Far Eastern cluster does not find Religious issues and Face to be significant communication barriers. This may be due to their being task-oriented and with their priorities focused on the organisational activities rather than concern for the individual and social needs of its members. Firms that encourage individuality displayed an appreciation of diversity among their members, allowing greater latitude in member lifestyles and behaviours. This would seem to be consistent with the positive relationship from correlations for the first three Individuality vs. Conformity variables (r=0.52, 0.46 and 0.45), although the last three variables (r=-0.60, -0.45 and -0.44) indicate that two-way communication would increase communication effectiveness. An organisations response to risk is an important dimension of organisational culture, particularly in a fluid and rapidly changing environment. Thus in a risk averse culture, they tend to encourage flexible form and style of communication for different projects, as indicated by the Risk vs. Safety variables (-0.55, -0.46 and 0.65). Some organisations create adhockery responses to all changes, while other may opt for elaborate plans that anticipate most future scenarios. These were indicated through the positive correlations of the Adhockery vs. Planning variables for both Anglo and Far Eastern clusters, suggesting that, in an adhockery culture, cultural variables, organisational objectives and communication planning are not the most important issues in the communication process. Personal Dimensions Research in social psychology suggests that personality dimensions significantly affect the effectiveness and outcome of communication. Lachman (1983; 1988) tried to reconcile these different perspectives by showing that early and late socialization induce
changes in different categories of values. Early socialization affects core values, and late socialization affects only periphery values. Thus, peoples periphery values may change because of pressure to comply with organisational requirements and managerial policies, whereas their core values will not. When organisational role requirements are incongruent with core values, people tend to modify these role requirements. The behaviour of individuals in the organisation is influenced by the values and beliefs the individuals bring with them to the their jobs. Since communication takes place between individuals, these differences in values and beliefs are manifested through their communication interactions. These different values and beliefs could assist or hinder the individuals ability to communicate with other. Table 7 shows the relationship between personal dimensions and communication variables. Extroverts would be expected to like socializing and social engagement. Their orientation would be toward the outer world of people and things. Introverts, on other hand, are likely draw more to their own inner world of ideas. The survey supports this through the positive correlations of the Introversion vs. Extroversion variables. This suggests that introverts would withdraw to their inner world. They would not appreciate the benefits from cultural variables, twoway communication or inter/intra-personal skills in enhancing the communication process. Extroverts, on the other hand, would prefer the interaction communication from people of different cultures, which could improve their inter/intra-personal skills. Sensing types are expected to show a marked preference for facts and seek out detail while intuitive types are likely to prefer to focus on the big picture. These preferences would explain the negative correlations of the Sensing vs. Intuition variables for the Anglo cluster, which suggested that managers (Sensing types) would endorsed a communication strategy to help minimise potential disputes and misunderstanding, although this would involve the managers understanding and appreciating cultural differences. Furthermore, the correlations for the Far Eastern managers indicate that limited resources and varying capacity and capability would hinder the communication strategy.
Table 7: Correlation between Personal Dimensions and Communication Variables Item Anglo Cluster r +0.56(**) Introversion vs. Extroversion +0.52(*) +0.51(*) -0.53(*) Sensing vs. Intuition -0.52(*) -0.51(*) -0.47(*) Thinking vs. Feeling +0.49(*) -0.47(*) -0.45(*) -0.60(**) Judging vs. Perceiving Communication "High levels of inter-personal and intra- personal skill are required" "Project managers with excellent communication skills" "Two way communication both upward and downward" "Understanding and appreciation of cultural difference involved" "Communication strategies to help minimize potential disputes and misunderstanding" "Project managers with excellent communication skills" "Understanding of language and cultural practices of local area" "Flexible form and style of communication" "Effective reporting system" "Two way communication both upward and downward" "National culture control communication process" "Lack of personal skills" Far Eastern Cluster r +0.51(*) Communication "Two way communication both upward and downward" "Understanding of language and cultural practices of local area" "Limited resources" "Varying capacity and capability"
+0.51(*) -0.52(*) -0.48(*)
+0.58(**)
** p<0.01 (2-tailed) * p<0.05 (2-tailed) Thinkers are expected to decide things logically and objectively while feelers base their decisions on more subjective ground. These are manifested through the correlations of the thinking vs. feeling variables in the study, suggesting that thinking type managers believe that an effective reporting system and two way communication would enhance the communication process, while feeling type managers believe that flexible forms and styles of communication improve the communication process. Finally, perceiving types are expected to be flexible in life, always seeking more information, with judgers tending to seek closure over open options together with a desire for control. These preferences would explain the positive correlations of the Judging vs. Perceiving variables for the Anglo cluster. The perceiving types recognized that national cultures control the communication process and that personal skills would hinder the communication process.
SUMMARY AND CONCLUSION

This paper provides the results of a small survey of 36 Singapore managers aimed at identifying the main cultural and individual factors affecting project communication. The main findings that are suggested by the survey are: In terms of Hofstedes types of national cultures, respondents from a Low Uncertainty Avoidance culture appear to be associated with a communication process based on trust and one that is therefore less formal and standardized. In contrast, respondents from a High Uncertainty Avoidance culture have a more formal and standard communication process, such as in written communications. The results suggest that the communication process between those from Individualist and Collectivist societies can be difficult, perhaps because a Collectivist cultures approach is to take time to consult with, and receive the consent of, their group members. In addition, the message from those belonging to a Collectivist culture is
often highly coded and implicit. Those belonging to an Individualist culture tend to view personal skills as a communication barrier, due to their nature in support of greater individual initiative. Finally, those belonging to a Masculinity culture may not view limited resources as a communication barrier, probably because individuals tend to be dominant with power so resources would not be beyond their control. For organisational cultures, the more externally oriented organisations of the respondents seem to require higher levels of inter/intra-personal skills. In addition, these organisations are more likely to establish a communication strategy for cross-cultural interactions. The more task focused organisations, on the other hand, tend to place the demands of the job before the individual. Organisations may have to reduce their resistance to change if they wish to strike a balance between their activity and social orientation. Those belonging to a riskaverse culture may have higher level of ambiguity tolerance than those of a Safetyconscious culture, so that language is not viewed as a communication barrier. They may, however, perceive personal skills to be a barrier to communication. Finally, those from a Planning culture emphasise the need for structure and a non-ambiguous communication process, while those from an Adhockery culture may require an informal communication structure. Planning culture members may also have a greater recognition that cultural dimensions are important factors in the communication process. From an individual perspective, the more extroverted respondents seem to be more competent in both the communication and cultural practices of their environment. This may be because they prefer the interactionoriented style of communication and the personal bond with their counterparts. In contrast, those more introverted seem to be more territorial and internally focused. The sensing respondents tend to explore cultural differences to enhance their crosscultural communication process and prefer facts rather than the big picture. Possibly due to the logical nature of thinkers, they are more likely to perceive cultural aspects and personal communication skills as the main tools for communicating with clients or customers. Finally, the judging type respondents may not perceive national culture
to be a communication barrier, due to their desire for control and organisation. The results of the research suggest that the managers attitude and behaviours toward communication may be guided to large extent by their level of competence. The study also provides evidence to suggest that the individuals understanding of the communication process and its barriers, the way they behave with other individuals and expect to be treated, varies according to national cultures. This suggests that organisations should have a balanced dual strategy, as advocated by Abell (1993) and supported by the research of Appelbaum et al. (1998), which is to encourage managers to think globally and act locally. To accomplish this change management process, organisations would need to formally develop key behavioural skills and individual competencies to deal with conflict, culture and change.
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Loosemore M, and Al Muslmani H.S. (1999) Construction project management in the Persian Gulf: intercultural communication.
International Journal of Project Management 17 (2), 95100.
P.A. BOWEN, K.A. HALL, P.J. EDWARDS, R.G. PEARL, AND K.S. CATTELL

Professor P.A. Bowen and Associate Professor K.S. Cattel, University of Cape Town K.A. Hall, The University of New South Wales Associate Professor P.J. Edwards, Royal Melbourne Institute of Technology Professor R.G. Pearl, University of Natal INTRODUCTION
The clients of the construction industry are primarily concerned with quality, time and cost and yet the majority of construction projects are procured on the basis of only two of these parameters, namely time and cost (Bennett and Grice, 1990). This is understandable since the majority of project management control systems highlight time and cost, and overlook the relative importance of quality (Hughes and Williams, 1991). It is argued by Herbsman and Ellis (1991) that the major failings in traditional approaches to project delivery have been in extensive delays in the planned schedules, cost overruns, serious problems in quality, and an increase in the number of claims and litigation associated with construction projects. In order to plan and manage a successful project, the three parameters of time, cost and quality should be considered. Hughes and Williams (1991), in arguing for the consideration of these three factors in attaining the clients objectives, propose that these factors are the three points of a triangle and that neglecting one factor will have a corresponding detrimental effect upon the other two. In support of this, Lansley (1993) argued strongly for the importance of studying the behavioural aspects of management in attempting to address the problems facing the construction industry, i.e., that it is the issue of the human factor involved in construction projects that needs to be addressed. Rwelamila and Hall (1995) further argue that little evidence exists of successful projects where these three factors have been balanced and there is a need to embrace time, cost and quality management as a human activity system. The purpose of this paper is to explore how time, cost and quality management on building projects is perceived by those involved in project teams. Conclusions are drawn and recommendations are made with respect to the perception of time, cost and quality management associated with building projects.
TIME, COST AND QUALITY (TCQ) MANAGEMENT IN THE ATTAINMENT OF CLIENT OBJECTIVES
The concept of managing construction projects is deeply embedded in the traditional building procurement system. Ireland (1983) argues that time, cost and quality are the principal feasible objectives of the client in any construction project. Although it is claimed that time, cost and quality are incorporated in the management of construction projects, research has shown that in fact a time-cost bias exists.
Time
Timely completion of a construction project is frequently seen as a major criterion of project success by clients, contractors and consultants alike. Newcombe et al. (1990) note that there has been universal criticism of the failure of the construction industry to deliver projects in a timely way. NEDO (1983) states that a disciplined management effort is needed to complete a construction project on time, and that this concerted management effort will help to control both costs and quality. This is tantamount to saying that the clients objectives can be achieved through a management effort that recognises the interdependence of time, cost and quality.
Cost
Clients have been increasingly concerned with the overall profitability of projects and the accountability of projects generally. Cost overruns, in association with project delays,
are frequently identified as one of the principal factors leading to the high cost of construction (Charles and Andrew, 1990). Research to date has tended to focus on the technical aspects of managing costs on construction projects in the attainment of client objectives. There is little evidence in the published literature of a concern for the organisational, social and political problems that are inherent in the management of construction costs and the ability of the project team to meet the clients needs in terms of cost.
THE SURVEY The focus of the study

The effective management of project time, cost and quality (TCQ) is intrinsically important to the attainment of client objectives. In order to examine this causal link, the opinions of clients, architects, quantity surveyors, project managers, consulting engineers and general contractors in South Africa were obtained by means a national questionnaire survey. The questions sought to establish their perceptions concerning client objectives and the project time, cost and quality associated with building procurement systems in South Africa.
Quality
To the client, quality may be defined as one of the components that contributes to value for money (Flanagan and Tate, 1997). Vincent and Joel (1995) define total quality management as:
Methodology
A stratified mail questionnaire opinion survey was conducted in South Africa. Survey participants comprised clients, architects, quantity surveyors, consulting structural engineers, project managers, and general contractors. Questionnaires were sent to practices and organisations rather than to individuals, using the membership directories of the South African Property Owners' Association, the South African Institute of Architects, the Association of South African Quantity Surveyors, the Institute of Consulting Engineers, the Institute of Project Managers, and the Master Builders' Associations. In total 180 questionnaires were distributed, comprising 30 from each sub-group. One hundred and forty-three replies were received (79.4%), comprising 10 clients (33%), 24 architects (80%), 30 quantity surveyors (100%), 30 engineers (100%), 25 project managers (83%) and 24 general contractors (80%). The questions for each of the six groups of participants were designed to facilitate an inter-group comparison. In the discussion of the results, percentages given in tables refer to the proportion of respondents offering that perception. The intention of the survey was to reveal areas of concern for the industry within the process of project time, cost and quality management rather than to provide hard evidence of inter-group differences between members of the design team. Clients, as a group, are likely to be less homogeneous than the other groups of participants. The majority of client respondents to the survey described themselves as being experienced in property development, with 80% claiming to have continuous or frequent involvement in property development (50%
the integration of all functions and processes within an organisation in order to achieve continuous improvement of the quality of goods and services. The goal is customer satisfaction.
Furthermore, in order to achieve successful project quality management three separate drivers to quality management must be managed, namely:
Integration of the project team so as to have a single objective and a common culture A customer focus for the team thereby facilitating the provision of products and services that will meet the clients needs A process of continuous improvement in the management of the construction project.
When these three components are successfully integrated, the project will begin to realise significant, measurable and observable improvements in the attainment of the clients objectives. We argue that an efficient way to address these shortfalls is to recognise the human factor within the management of time, cost and quality. An analysis of the perceptions held by clients, contractors and building professionals, concerning client objectives relating to time, cost and quality management will allow this proposition to be explored. This is done through an opinion survey.
claimed a continuous involvement). Most clients (90%) reported being primarily involved in the commercial and industrial sectors of property development, with the majority (67%) being involved in the commercial sector. Average annual turnover varied considerably, but 89% of respondents claimed an annual turnover in excess of ZAR 10m (1 AU$ = ZAR 5.50). The majority of client respondents thus constitute organisations wielding considerable financial influence in the property development market in South Africa, and have a frequent, if not continuous, involvement in property development. In this context, the client group exhibited reasonable homogeneity, but it should be noted that the views of small, one-off clients are almost certainly underrepresented in this survey, as the data collection method would have limited their ability to participate.
attributable to the control over quality which architects perceive themselves to hold as principal agents for the client under conventional traditional procurement systems, as compared to the management of time and cost, for which they would assign responsibility to contractors and quantity surveyors, respectively. A similar response pattern is detectable with engineers and, given their principal role in engineering projects, a similar explanation may hold for their views. Apart from the client group, quantity surveyors hold the next most optimistic view, a clear majority believing that clients have realistic expectations about time, cost and quality from the outset of a project. The quantity surveyors views are closely matched by those of project managers. The views of engineers are probably influenced by the nature of engineering projects, where quality is usually highly specified at the outset, but time and cost are far more uncertain (e.g., the use of schedule of rates and cost-plus forms of contract for engineering projects). Given that engineering projects often comprise far fewer components than building projects, and that many engineering projects are commissioned by public sector agencies with substantial experience, this may explain why engineers are more optimistic about realistic client expectations of quality. Contractors are surprisingly optimistic about the reality of client expectations for project time and quality. An explanation for this view of project time is not readily forthcoming, given that, for most conventional procurement systems, the contract period is not part of the contractors bid but is stipulated in advance by the client. Similarly, the defects liability period stipulated in most conventional procurement systems suggest that clients expectations of quality are considerably less than realistic. Contractors pessimistic view of the reality of client cost expectations is probably explained by their (the contractors) having to seek work in a highly competitive market. Responses for the project time objective exhibit the greatest variability. Given clients practical inability to model time performance reliability, their highly optimistic view of the reality of their own expectations for this factor, at the outset of a project, deserves more thorough research attention.
Survey results
For the purposes of this study, various procurement systems have been grouped together into three generic types, namely: conventional (traditional, negotiated, costplus); design and build (design and build, package deal, turnkey, develop and construct); and management-orientated (management contracting, construction management, design and manage) (Masterman, 1992). The conventional method of building procurement is reported by nearly 70% of respondent clients in South Africa to be the most widely utilised procurement system. The management-orientated (21%) and design and build (9%) systems enjoy considerably less usage. The results are discussed question by question and compare the participating groups' opinions about each issue. Question 1: Please indicate whether clients are realistic with respect to expectations of time, cost and quality at the outset of the project. (Answer choice = all/most/some/ none of the time) The responses show that clients and consultants opinions are far from uniform. Clients are relatively sanguine about their TCQ expectations, with a large majority believing each of these to be realistic. The most pessimistic view of the reality of clients TCQ expectations is held by architects, with only clients quality expectations receiving a majority affirmative response. This is probably
Table 1: Perceived extent to which clients are realistic, all or most of the time, with respect to their expectations of project time, cost and quality at the outset of the project % of respondent groups Project parameter Time Cost Quality All (%) 57 57 74 Clients (%) 90 70 80 Architects (%) 33 44 65 Quantity surveyors (%) 67 83 83 Engineers (%) 47 41 59 Project managers (%) 60 72 84 Contractors (%) 63 46 79
Question 2: Please rank the following factors in terms of their importance to building clients. (Answer choice: 1 = most important; 3 = least important) All respondents to this question ranked project cost as the most important project parameter to building clients. The interesting finding from the responses to this question is that, contrary to the views of other project team participants, clients rate project quality as more important than project time performance. The converse was true for the other respondents. This suggests that clients may well be prepared to sacrifice construction time for improved quality. Question 3: To what extent is an attempt made by the procurement team to match client needs with the characteristics of different procurement systems? (Answer choice:(always/sometimes/never) Clearly, clients have a false illusion about the extent to which consultants and contractors will match procurement systems to clients needs. Table 2 below indicates that while the majority of clients (67%) believe that the procurement team does match their needs to the appropriate procurement system, the perception is not supported by the procurement team themselves. The majority of the building professionals surveyed clearly believed that they did not usually attempt to match their clients needs to an appropriate procurement system. It is possible that they did not see any need to do so, given the overwhelming prevalence of the traditional systems. The danger here is not only that consultants are not properly advising their clients in this regard (and thus clients may not be getting the procurement system which best matches their needs), but also (and more importantly) that clients are erroneously believing that they are actually receiving such advice from the procurement team.
Question 4: What proportion of building projects are completed within the clients agreed budget for the project? (Answer choice = all/most/some/none of the projects) The response data is shown in Table 3. Clients clearly appreciate the greater cost certainty attributable to design and build procurement systems. Architects, however, see less potential in management-oriented systems or antipathy towards procurement systems which appear to diminish architects traditional leadership roles in projects. Quantity surveyors appear optimistic about the capacity of all three procurement systems to maintain project cost budgets. Engineers, on the other hand, are relatively pessimistic about this for design and build and management-oriented procurement systems. Project managers show increasing confidence the capacity of alternative procurement systems to maintain project cost budgets, as their own level of involvement increases. Contractors are highly confident of their own ability to meet client cost limits for projects under design and build and management-oriented procurement, but are less optimistic about these limits being maintained on conventional traditionallyprocured projects. Question 5: To what extent do clients make changes to the original brief (in respect to time, cost and quality) after the start of the project? (Answer choice = always/sometimes/never) Eighty percent of client respondents believed that they never make changes to the original brief after the start of the project. This apparent high regard for their ability to stick to the original brief is clearly not shared by their consultants, who believe that changes do occur at least sometimes
Table 2: Perceptions of the extent to which the procurement team always and sometimes attempt to match client needs with the characteristics of different procurement systems during the election of a procurement system % of respondents groups All (%) Extent of the match 43 Clients (%) 67 Architects (%) 48 Quantity surveyors (%) 43 Engineers (%) 37 Project managers (%) 44 Contractors (%) 25
Table 3: Perceptions of whether all or most building projects are completed within the clients agreed budget (building cost) for the project % of respondent groups Procurement method Conventional Design and build Managementorientated All Clients Architects (%) (%) (%) 78 78 75 77 83 71 75 67 54 Quantity surveyors Engineers (%) (%) 83 83 76 58 77 59 Project managers Contractors (%) (%) 75 69 89 94 95 89
Table 4: Perceived extent to which inadequate briefing of the procurement team by the client is always responsible for client dissatisfaction with the resultant building in terms of time, cost and quality % of respondent groups Project parameter Time Cost Quality All (%) 24 29 26 Clients (%) 30 56 33 Architects (%) 22 35 22 Quantity surveyors (%) 23 23 30 Engineers (%) 13 30 35 Project managers (%) 20 21 12 Contractors (%) 42 29 25
Architects = 58%; QuantitySurveyors = 67%; Engineers = 70%; Project Managers = 60%). Nor are clients views shared by contractors, with 71% believing that changes always or sometimes took place. This finding suggests that there is a serious gap between the perceptions of clients and the other members of the project procurement team about what constitutes a variation to the original brief, and that consultants in particular may not be successfully communicating the full implications of project variations to their clients. Question 6: Does the procurement team utilise a formal brief-elicitation procedure for determining client requirements in respect of the project? (Answer choice = always/sometimes/never) Surprisingly, the responses to this question were considerably worse than expected. Only 44% of clients believe that the procurement team utilises formal brief-
elicitation procedures. Similarly, 57% of architects and 37% of quantity surveyors believe that formal brief-elicitation procedures are utilised for conventionally procured projects. A lack of understanding on the part of the procurement team about what constitutes a formal brief-elicitation process may explain the responses to this question. Architects and quantity surveyors might have been expected to display far more confidence in formal brief-elicitation procedures for conventionally-procured projects. Question 7: In your experience, is inadequate briefing of the procurement team by the client responsible for client dissatisfaction with the building in terms of time, cost and quality? (Answer choice = always/ sometimes/never) The results to this question tend to contradict those obtained in Question 6. If the responses to Question 6 are reliable, then far higher percentages could have been ex-
pected for the always response to this question. The logic for this is that, if formal brief-elicitation procedures are not always used, then inadequate briefing is likely to occur and hence there will be higher levels of client dissatisfaction with the finished building in terms of time, cost and quality. The mismatch of responses to Questions 6 and 7 could be explained by theorising that an adequate project brief may not always be attainable at the outset, and that it often grows with the project development. Question 8: At the outset of the project, do clients know what their needs are with respect to the following factors? (Answer choice = always/sometimes/never) Table 5 shows that all respondent groups (including clients) have little faith in clients ability to know exactly what they want at the outset of a project, particularly with respect to time schedules, quality requirements and methods of procuring the building. This lends support to the proposition theorised above. Only client respondents believe that they knew at the outset what level of functional performance they expect from the
completed building. Other respondents were far more pessimistic about clients knowing this. This points to the possibility of a communication failure occurring between clients and their professional advisors. Question 9: What proportion of clients use their own resources to monitor and control construction time, cost and quality? (Answer choice =all/most/some/none) For the purposes of this question, control refers to the effective management of project time, cost and quality factors. From Table 6 it is clear that consultants and contractors hold a pessimistic view of clients capacity to monitor and control the TCQ performance of projects. The majority of clients (80%), however, believe that they have the resources available in order to adequately monitor and control project cost. It should be incumbent upon consultants to ensure that the accuracy and reliability of their clients cost monitoring and control resources at least matches their own.
Table 5: Perceived extent to which clients always know their requirements at the outset of the project % of respondent groups Client requirement Budget limit Functionality of building Time schedules Quality requirements Procurement method Required return on investment All (%) 58 29 35 23 10 Clients (%) 80 60 40 50 30 Architects (%) 35 26 39 18 0 Quantity surveyors (%) 70 27 40 20 13 Engineers (%) 67 23 17 17 10 Project managers (%) 60 33 52 28 4 Contractors (%) 44 25 29 21 13
58
70
52
60
66
58
48
Table 6: Perceptions of whether all or most clients use their own resources to monitor and control construction time, cost and quality Project parameter % of respondents ArchiClients tects (%) (%) 40 30 80 35 40 9 Quantity Surveyors (%) 37 43 37 Engineers (%) 13 23 10 Project managers (%) 20 33 20
Time Cost Quality
Contractors (%) 21 50 29
Table 7: Perceptions about whether client objectives with respect to time, cost and quality (as laid down in the brief) are always achieved on building projects (C = Conventional; D = Design and Build; M = Management oriented) % of respondent groups Project parameter Time Cost Quality Clients C D 22 40 33 40 11 20 Architects C D M 21 13 31 22 27 27 32 14 27 Quantity surveyors C D M 24 50 35 25 32 8 50 5 8 Engineers C D M 7 17 4 4 29 4 25 13 13 Project Managers C D M 46 52 73 46 52 59 64 38 62 Contractors C D M 18 41 47 10 59 41 43 35 35
M 0 20 0
Table 8: Perceptions about whether clients are satisfied with the time, cost and quality management of their building projects using the listed procurement systems (C = Conventional; D = Design and Build; M = Management oriented) % of respondent groups Project parameter Clients Architects C D M C D M Time 100 100 100 91 73 80 Cost 78 60 60 96 80 80 Quality 67 40 40 96 47 87 Quantity surveyors C D M 41 95 91 62 74 74 77 42 91 Project Managers C D M 81 90 86 81 84 91 96 79 91
Engineers C D M 97 81 92 93 69 88 93 50 70
Contractors C D M 75 93 94 75 80 94 80 67 81
Question 10: To what extent are clients objectives with respect to time, cost and quality (as laid down in the brief) achieved on building projects? (Answer choice: aways/sometimes/never) Project managers and contractors are the only respondent groups to exhibit at least one majority positive response in each of their procurement system/TCQ matrices. The majority of project managers believe that client time, cost and quality objectives are always achieved under managementoriented procurement systems. A smaller majority believe that time and cost objectives (but not quality) are always achieved under design-build systems, while a larger majority believe that only quality objectives are always achieved under conventional procurement systems. It seems likely that the project managers responses are conditioned by the role they see themselves playing in achieving client TCQ objectives. Contractor respondents are most confident about their ability to always meet client cost objectives under design-build procurement systems; which might be expected, given the nature of these systems, but they are pessimistic in every other respect for all procurement systems. Quantity surveyor respondents are evenly split about whether design-build systems can always deliver client time objectives;
and are similarly split about whether conventional systems can always achieve client quality objectives. All other respondent groups are generally pessimistic about the capacity of any procurement system to always achieve any of the clients TCQ objectives. Question 11: In general, how satisfied are clients with the time, cost and quality management of their projects under the listed procurement systems? (Answer choice: satisfied/dissatisfied) According to the client respondents, the conventional systems of building procurement yield the greatest level of client satisfaction with respect to time, cost and quality management on building projects. Clients appear to be indifferent between design and build and management-orientated systems. Within the client group responses relating to the conventional system, it is noteworthy that satisfaction with time management ranks the highest, followed by cost management. Indeed, clients appear dissatisfied with quality management under design and build and management-orientated systems. Other respondent groups generally rate client satisfaction with time, cost and quality management on building projects as being higher (under all three procurement systems) than do the client respondents. Two points are noteworthy. The first point relates to quality management, where architects,
quantity surveyors and engineers point to disturbing levels of client satisfaction in this regard. Clearly room for improvement exists on the part of the procurement team. The second point refers to the response of quantity surveyors regarding cost management under conventional procurement systems. Only 62% of quantity surveyors claim that clients are always satisfied in this regard
cost. Contractors and building professionals did not believe that this is so. Client induced changes are seen by contractors and building professionals to contribute the most to project time over-runs. Quantity surveyors see the potential for effective time management increasing in the construction phase of the project delivery process, whereas project managers believe that the briefing stage offers the highest potential for the effective management of time. The conventional systems of building procurement yield the greatest level of client satisfaction with respect to time, cost and quality management on building projects. High levels of satisfaction were noted for time management. Clients are more likely to be dissatisfied with project quality management under design and build and management-orientated procurement systems. The purpose of the research was to explore the proposition that a recognition of the human factor, i.e., perceptions within the project team of the management of time, cost and quality, would assist attempts to address the perceived shortcomings of TCQ management. The findings of this survey indicate that misperceptions do exist among project team members regarding the time, cost and quality management associated with building projects and potentially have an impact on the ability of the project team to achieve client objectives. While the findings of the research do not warrant any change in practice at this stage, the research itself has aided in gaining a richer understanding of the complexities of human issues inherent in the management of time, cost and quality. More importantly, it points the way forward for further research into the human aspect of how project teams can be more effectively managed in order to achieve client objectives, thereby providing a catalyst for change in practice.
the very function this group of professional consultants is charged with managing.
CONCLUSIONS
This paper has reported on the findings of a South African national questionnaire survey of the opinions project team participants hold about the relationship between time, cost and quality management and the attainment of client objectives. Clients, contractors and consultants opinions with respect to client expectations of time, cost and quality at the outset of the project are not uniform. Clients believe their time, cost and quality expectations to be realistic, whereas contractors and consultants do not believe that this is generally so. Clients rate project quality as more important than project time performance, whereas contractors and consultants believe that clients actually hold a converse view. Contractors and clients place great confidence in the time performance of design and build procurement systems but have slightly less confidence in the conventional and management-oriented procurement systems. Lower levels of confidence were evidenced with respect to the cost performance of projects under all the various procurement systems. Clients believe that variations only sometimes occur after the start of the project. There is a large discrepancy between the perceptions of clients and other members of the project procurement team about what constitutes a variation to the original brief. All members of the project procurement team showed little faith in the clients ability to know exactly what they wanted at the outset of the project. Clients, contractors and building professionals believe that the choice of building procurement system has little influence on the level of subsequent cost variations to the contract. Clients believe that they have the resources to monitor and control project
ACKNOWLEDGEMENTS
The authors wish to acknowledge, with thanks, the financial support of the Foundation for Research Development (F.R.D.) and the Centre for Science Development (C.S.D). In addition, thanks are also extended to Lara Opperman for her work on the data coding and BMDP programming, and to Pauline Makonese for formulating the tables. This paper extends the procurement systems research being undertaken at the University of Cape Town.
REFERENCES
Bennett, J. and Grice, T. (1990) Procurement systems for building. In: Brandon, P. (ed)
Quantity Surveying Techniques: New Directions, Blackwell Scientific Publications,

Oxford. Charles, T.J. and Andrew, M.A. (1990) Predictors of cost-overrun rates. Journal of Construction Engineering and Management, ASCE, 116, 548552. Flanagan, R. and Tate, B. (1997) Cost Control in Building Design. Blackwell Science, Oxford. Herbsman, Z. and Ellis, R.D. (1991) The cost/time/quality integrated bidding systeman innovation in contract administration. In: Bezelega, A. and Brandon, P. (eds)
Management, Quality and Economics in Building. E. & F.N. Spon Ltd., London.
Hughes, T. and Williams, T. (1991) Quality Assurance. BSP Professional Books, Oxford. Ireland, V. (1983) The Role of Managerial
Actions in the Cost Time and Quality Performance of High Rise Commercial Building Projects. Unpublished PhD Thesis, University of Sydney, Sydney. Lansley, P. (1993) Towards improved managerial effectiveness. In: Proceedings of the CIB W-65 International Symposium on
Organisation and Management of Construction, 671679. Trinidad.

Masterman, J.W.E. (1992) An Introduction to Building Procurement Systems. E & FN Spon, London. National Economic Development Office (N.E.D.O.) (1983) Faster Building for Industry. Her Majestys Stationery Office, London. Newcombe, R., Langford, D. and Fellows, R. Construction Management 2. (1990) Mitchell, London. Rwelamila, P.D. and Hall, K.A. (1995) Total Systems Intervention: an integrated approach to time, cost and quality management. Construction Management and Economics, 13, 235241. Vincent, K.O. and Joel, E.R. (1995) Principles of Total Quality. Kogan Page, London.

Xin Janet Ge and Associate Professor Ka-Chi Lam City University of Hong Kong INTRODUCTION
The purpose of building a house prices forecasting model is to estimate the impact of housing demand and housing supply in Hong Kong. The property market plays a very important role in the economy of Hong Kong. The real estate sector contributed approximately 10.2 per cent of GDP in 1996 (Hong Kong Government, 1998). More than 45 per cent of all bank loans, over HK$500 billion as at the end of 1997, were directly tied to properties (Hong Kong Government, 1998). Income from land auctions, rates and stamp duties accounted for approximately 24 per cent of total Government revenue in 1997/1998 (Chan, et al., 2001). Property and construction company stocks contributed 25 per cent to Hong Kongs stock market capitalization as well as to over 60 per cent of capital investment expenditures (Newell and Chau, 1996). Smooth changes in house prices thus help to maintain stable economic growth in Hong Kong. To achieve a stable house price level, housing supply must match the demand for houses. However, house prices have at times been very volatile as a result of mismatched housing demand and supply in Hong Kong. Figure 1 below shows the behaviour of real house prices and plots the quarterly time series data over the last two decades. It is evident from Table 1 that there have been significant booms and busts since the late 1980s. The real price index of private residential property rose 87 per cent from the third quarter 1984 to the second quarter of 1989, 71 per cent from the third quarter 1989 to the third quarter 1992, and 50 per cent from the fourth quarter of 1995 to the third quarter of 1997. The reason for such growth during these periods was that the demand for houses was growing faster than supply and this generated speculative activity in the property market. The periods of low prices were comparatively less volatile than the boom periods. Two dramatic declines have been observed, i.e., from the second quarter of 1981 to the fourth of 1983, with a real fall of prices of 47 per cent and a 42 per cent real fall in the third quarter of 1997. The Asian financial crisis restrained speculative activities dramatically as the suddenly decline in property prices changed assets into liabilities for many households. Consequently, households reduced their non-housing consumption and the lack of confidence in the economy as a whole created a vicious circle, further lowering the value of property. The house prices have dropped a further 18 per cent since then.
Table 1: Housing Price booms and Busts (Source: Rating and Valuation Department, Hong Kong Government) Time Period 4.792.81 3.842.89 3.893.92 1.932.94 4.953.97 2.814.83 2.944.95 3.974.98 2.994.00 % Change (Nominal) 50.0% 144.0% 128.6% 38.0% 65.9% -31.3% -12.4% -41.6% -24.8% % Change (Real) 21.9% 86.6% 71.3% 25.7% 50.0% -47.1% -22.3% -41.5% -18.4%
Booms
Busts
XIN JANET GE AND KA-CHI LAM
Figure 1: Real Residential Housing Prices Index in Hong Kong (Source: Rating and Valuation Department, Hong Kong Government)
Real HP 5 4 3 2 1
1980.1 1981.4 1983.3 1985.2 1987.1 1988.4 1990.3 1992.2 1994.1 1995.4 1997.3 1999.2 2001.1 2002.4 year
It is an important role for the Hong Kong government to forecast the housing market and to provide a matching supply of land to the market. A house price forecasting model is one way this may be done. The objective of this study is to develop a house prices forecasting model for Hong Kong. It starts from the assumption that housing in Hong Kong is traded in an efficient, free market. The first step is to identify, through a literature review, the variables that contribute to changes in the demand for and supply of houses. The second is to use a multiple regression for the empirical estimation. Quarterly time series data from 1980 to 2001 are used for the analysis. Some variables are transformed into logarithms and/or by use of moving averages to remove irregularities and/or seasonal patterns before application of the reduced form of the house prices model. The third step is to test the model by examining the significance of statistical indicators. Three types of variables, namely macroeconomic indicators, housing related variables and demographic variables are used in the analysis. From these variables, eight models are derived for the analysis. These models indicate that household income, the size of the population, land supply, the Hang Seng Index and unit transaction volumes are the major indicators of changes in house prices.
prices will adjust to ensure that the market clears in the long run (Nellis and Longbottom, 1981). Bajic (1983) suggests that the market is not generally in short run equilibrium and that changes in housing prices are frequent and rapid, while DiPasquale and Wheaton (1994) suggest that there is, instead, a continuous adjustment as actual prices converge towards equilibrium prices. The effective housing demand is the amount of housing for which the population is willing and able to pay. Individuals view housing not merely as a consumption good, but also, simultaneously, as an investment (Dusansky and Wilson, 1993). Reichert (1990) suggests that national economic factors such as mortgage rates, and local factors such as population shifts, employment and income trends have a unique impact on housing demand, and thus on housing price. The demand for housing also depends on factors like cost of mortgage finance, real incomes and the general level of consumer confidence (www.tutor2u.net, 2002). Muth (1960) concluded that housing demand is highly responsive to changes in income and prices. The empirical results indicate that the most important factor in the determination of house prices is real income because rising income increases the absolute value of the marginal rate of substitution between goods and owner-occupation. If household behaviour is consistent, then the appropriate income measure should be long run permanent income (Megbolugbe, et al., 1999). Demographic variables such as family size and age composition are major determinants
LITERATURE REVIEW
It is widely accepted that house prices are determined by the demand for, and supply of, houses in the property market. Thus,
of household consumption patterns (Pollark and Wales, 1981). Mankiw and Weil (1989) have found that aggregate demand growth would slow markedly as the baby boom generation grows older and reduces its consumption of housing. However, the conclusion has been criticised by most scholarly commentators (DiPasquale and Wheaton, 1994; Woodward, 1991; Engelhardt and Poterba, 1991). It is commonly accepted that an increase in household formation due to an ageing population, increasing numbers choosing to remain single and rising rates of divorce and separation will lead to increased demand for housing. Wong (1993) attributes the fast growth in demand during the boom in 1991 to a number of demographic as well as economic factors. In this study, the population age group 20 to 59 is used as representing demographic and permanent income factors because these people generally have sufficient savings and income to finance the purchase of houses. Hong Kong began to experience a surge of population in this home purchasing age group after 1986 (Wong, 1993) (Figure 2). Expectations about the future direction of the economy affect current demand. Consumers are more likely to buy houses when they expect an expanding economy to provide them with both job security and rising income in the future. Government policy, inflation, interest rate changes and rate of return on property all have a great impact on consumer confidence and the demand
for housing (Wheeler and Chowdhury 1993). The stock market is another indicator of economic performance. An empirical study by Fu et al. (1993) found a pattern in which the stock market leads the property market in price change. Thus the Hang Seng Index is used as a proxy for macroeconomic impact in this study. Housing price appreciation stimulates investment demand for houses. House price rises may lead to speculation, and speculation has been considered as a possible determinant of house price by number of authors such as Case and Shiller, (1989, 1990) and Levin and Wright (1997). Speculation opportunities arise from the gaps between the timing of purchase and sale contracts, circumstances where the expected growth rate in house prices exceeds the interest rate charged on bridging loans, and the opportunity to trade up without incurring any incremental transactions costs exists (Levin and Wright, 1997). Therefore, the transaction volume of residential properties in terms of the number of sales and purchase agreements in Hong Kong is adopted for this study. Most homeowners use mortgages to finance their home purchase (Chan, 1996). To qualify for a mortgage, borrowers usually invest equity in a down payment (Harris and Ragonetti, 1998). The availability of mortgage credits and first down payment have been critical for housing investment demand.
Figure 2: Population age composition in Hong Kong, 19802000

POPULATION STRUCTURE IN HONG
people
5000000 4500000 4000000 3500000 3000000 2500000 2000000 1500000 1000000 500000
0
019 2060 age groups 1986 1991 1996 > 60
1980
2000
Expectations about the future direction of the economy affect current demand. Consumers are more likely to buy houses when they expect an expanding economy to provide them with both job security and rising income in the future. Government policy, inflation, interest rate changes and rate of return on property all have a great impact on consumer confidence and the demand for housing (Wheeler and Chowdhury 1993). The stock market is another indicator of economic performance. An empirical study by Fu et al. (1993) found a pattern in which the stock market leads the property market in price change. Thus the Hang Seng Index is used as a proxy for macroeconomic impact in this study. Housing price appreciation stimulates investment demand for houses. House price rises may lead to speculation, and speculation has been considered as a possible determinant of house price by number of authors such as Case and Shiller, (1989, 1990) and Levin and Wright (1997). Speculation opportunities arise from the gaps between the timing of purchase and sale contracts, circumstances where the expected growth rate in house prices exceeds the interest rate charged on bridging loans, and the opportunity to trade up without incurring any incremental transactions costs exists (Levin and Wright, 1997). Therefore, the transaction volume of residential properties in terms of the number of sales and purchase agreements in Hong Kong is adopted for this study. Most homeowners use mortgages to finance their home purchase (Chan, 1996). To qualify for a mortgage, borrowers usually invest equity in a down payment (Harris and Ragonetti, 1998). The availability of mortgage credits and first down payment have been critical for housing investment demand. The effective demand for private housing is volatile, while the supply side is determined not only by the production decisions of builders of new dwellings but also by the decisions made by owners of housing concerning conversion of the existing stock, as housing is a durable good (DiPasquale, 1999). Supply side factors including vacancies, housing starts and interest rate all play a role in housing price movements (Ley and Tutchener, 2001). Land supply has been addressed by Peng and Wheaton (1994) and Ho and Ganesan
(1998) in the Hong Kong housing market. They claim that the quantity of land supply determines housing prices. In Hong Kong, land is a highly scarce natural resource. Government land policy may impose a contrived effect on the supply of land. The SinoBritish Joint Declaration stipulated that 50 hectares of land was the maximum that could be sold by the Hong Kong Government in a single year during the transition period (May 27, 1985 June 30, 1997). Land leased by the Hong Kong Housing Authority for the construction of public rental housing was exempted from the land sales limit. In this study, residential units with consent to commence work, i.e., housing starts in terms of gross floor area, are taken as a proxy for land supply as suggested by Ho and Ganesan (1998).
DEVELOPMENT OF A REDUCED FORM HOUSE PRICES FUNCTION

A reduced form equation for the price function is derived based on the supply and demand functions for owner-occupied housing and then inverted under an equilibrium assumption (DiPasquale and Wheaton, 1994). Table 2 shows that reduced form equations have been employed by many researchers in different applications. An example is Reichert (1990) who has used a reduced form equation to derive a regional housing prices model. He found that mortgage rates, population shifts, employment and income trends often have a unique impact on housing prices. Many models of house price changes concentrate on demand factors (Muellbauer and Muphy, 1992) as supply factors are more difficult to measure. Some studies have utilized national aggregate time series data (Nellis and Longbottom, 1981; Buckley and Ermisch, 1983; Mankiw and Weil, 1989). Others have made use of pooled time series cross-sectional data (Case, 1986; Manchester, 1987; Reichert, 1990; Abraham and Hendershott, 1996). To develop a house price reduced form model, the first step is to derive a demand equation. In accordance with literature review, the quantity demand for houses can be denoted as follows: Qd = f(G, H, D, t) G = g(x1, xi, xm, t) (t = 1, 2, 3, n) (1) (i = 1, 2, 3, m) (2)
Table 2: Application of reduced form house prices model Author(s) Muth Follain Year 1960 1979 Title The Demand for Non-Farm Housing The Price Elasticity of Long Run Supply of New Housing Construction An Empirical Analysis of the Determination of Housing Prices in the United Kingdom Explaining Metropolitan Housing Price Differences Canadian Inter-City House Price Differentials Key Findings Aggregate data, concluded that there is a perfectly elastic supply curve. Aggregate annual data, the assumption of a perfectly elastic long run supply curve cannot be rejected. Aggregate data, house prices is relatively more responsive to demand factor. The change in the price of houses lagged one period and nominal mortgage stock were found important in short run. Rent and house price indexes used to measure the variation among 54 metropolitan areas and able to explain 88% of the variation in rental prices and 58% of the variation in house prices. Identify the sources of inter-city house price differentials in Canada. Demand factors are important explanatory variables; a 1% increase in the income of households raises house prices by 1.11%. Nationwide time-series data cross cities. The interaction between taxes and inflation as well as cash-flow constraints has strong effects on the relative price of houses. Aggregated data, explanation for 84% of intercity variation in owner-occupied housing prices. Nationwide data, various regions respond in a similar fashion to certain national factors and suggest monetary and tax policy should take into consideration both national factors and regional trends. Housing demand is examined taking into account expectations, credit constraints, lumpy transactions costs and uncertainty. Cross-section time series data. Examine the empirical relationship between rent and user cost. Changes in user cost significantly affect construction, but not the level of rents. Boston house price pattern. Changes in the cross-sectional pattern of house prices are related to differences in manufacturing employment, demographics, new construction, etc. Cross-section analysis. Log transformed data, Increasing local market regulations of land increase home prices through increasing rents.
Nellis and Longbottom
1981
Ozanne and Thibodeau
1983
Fortura. and Kushner
1986
Manchester
1987
Inflation and Housing Demand: A New Perspective Explaining Intercity Home Price Differences The Impact of Interest Rates, Income, and Employment upon Regional Housing Prices Booms and Busts in UK Housing Market Identifying the Effects of Tax Reform on Multifamily Rental Housing Housing Price Dynamics Within a Metropolitan Area
Manning
1989
Reichert
1990
Muellbauer and Murphy Follain, Leavens and Velz Case and Mayer
1992
1993
1996
Malpezzi
1996
Housing Price Externalities, and Regulation in U.S. Metropolitan Areas
H = h(y1, yi,ym, t) D = d(z1, zi, zm, t) Therefore, Qd = f( xi, yi,, zi,, t) Where
(3) (4)
P = f(Qd , Qs, t) P = f(xi, yi, zi, vi, t) Where
(t = 1,2,3, n) (i =1,2,3, m)
(9) (10)
(5)
P = house prices of new units sold during period t as dependent variable. xi, yi, zi, vi are the independent variables. Assuming the generalized constantelasticity demand function with a multiplicative relationship according to Reichert, (1990) gives:
1 2 3 4 Pt = 0 xit . yit .zit .vit
Qd = aggregated quantity demand for new houses during period t, G = macroeconomic variables, H = housing related variables, D = demographic variables, xi = macroeconomic variables such as GDP, interest rate, Hang Seng Index, etc., yi = housing related variables such as house prices, permanent income, unemployment rate, etc., zi = demographic variables such as population, number of marriages, birth rates, etc. It is assumed that homeowners maximize utility and investors maximize their profits (Reichert, 1990). The method is applied for the supply equation as the second step. The supply of housing is a function of house prices, construction costs including interest rates, material costs and labour costs, and land supply. Qs = f(S, t) S = s(v1, vi, vm, t) Qs = f(vi,t) Where Qs = aggregated quantity of new supply during period t, S = Supply variables, vi = variables such as house prices, construction costs and land supply. Under an assumption of supply-demand equilibrium within the given period, i.e., Qd = Qs, the functions (5) and (8) give a reducedform price function: (t= 1, 2, 3, n) (i = 1,2,3,m) (6) (7) (8)
(11)
The functional form in (11) can be converted into a linear equation suitable for estimation by standard multiple regression techniques by expressing it in logarithmic form. A one period lagged autoregressive error term Pt-1 is applied to the model. Thus, the multiple population regression equation for houses demand becomes:
ln Pt = 0 + 1 ln x it + 2 ln y it + 3 ln z it
+ 4 ln vit + 5 ln Pt 1 + t
(12) Where 0 5 represents the intercept and the regression coefficients (or elasticities) associated with their respective explanatory variables, ln = the natural log of the continuous variables, t = the population disturbance term for quarter t. Where t ~ WN (0, 2).
Data Preprocessing and Estimating Procedures

Secondary data sources were utilised in the study. Unless specify, quarterly time-series economic indicators were abstracted from the Hong Kong Monthly Digest of Statistics complied by the Census and Statistics Department in Hong Kong over the last two decades. The interpretation of each variable employed is as follows:
Table 3: The percentage distribution of households by expenditure Index CPI (A) CPI(B) Hang Seng CPI Approximate percent of households covered 50 30 10 Monthly expenditure range in 1984/85 $2,000$6,499 $6,500$9,999 $10,000$24,999
Source: Hong Kong Monthly Digest of Statistics
General Economic Indicators:

GDPt represents Gross Domestic Product at time t which is a measure of the total value of products of all resident producing units of a territory in a specified period, before deducting allowance for consumption of fixed capital. GDP is most widely used measure of economic performance. The growth in the GDP also underlines the viability of the housing market and lends support to the rising aspiration of home ownership. It is used as an independent variable together with Hang Seng Consumer Price Index (HCPIt) which is used to produce constant (2000 = 100) prices. GDPC (deflated by the HCPI) represents the gross value of investment expenditure in land, building and construction, plant, machinery and equipment by the public and private sectors in constant terms.
There are three Consumer Price Index series derived from the Household Expenditure Survey, defined in terms of the percentage distribution of households by expenditure as shown in Table 3. The remaining 10 percent of households at the top and bottom of the expenditure scale are excluded. The Hang Seng Consumer Price Index (HCPI ) is used in this study because it represents the expenditure group most likely to affect private housing prices.
sign. Real interest rate is the nominal rate (it) minus inflation rate (if ). That is:
rt = it i f
if = CPI t CPI t 4 CPI t 4
(13)
(14)
The real mortgage rate (rm) is derived by dividing nominal mortgage rate (im) by the HCPI, i.e.:
rmt =
imt HCPI t
(15)
Demographic Factors
The demographic variables such as total population (GPLt), people at age group of 2059 (PLt), marriages (MNt) and number of births (BNt) at the period t respectively are considered. Increasing demographic factors will increase the pressure on house prices. Only mid-year and end-year population figures are available. Quarterly figures are calculated as follows:
GPLt = GPLt 1 +
GPLt +1 GPLt 1 2
(16)
Hang Seng Index (HSI ) is compiled by the Hang Seng Bank Ltd based on information on share prices supplied by The Stock Exchange of Hong Kong. HSI covers 33 blue chip stocks listed on the Exchange and is weighted by market capitalization. The last data for each quarter are used for this study.
Median Monthly Domestic Household Income (HHIt ) is the median household income which represents purchasing power in the period t. Real household incomes are constructed by dividing the household incomes by the Hang Seng Consumer Price Index (HCPI ). The interest rate rt is the best lending rate at the period t, expressed as per cent per annum. The Hong Kong dollar is linked to the U.S. dollar hence the local interest rate is beyond the governments control. House prices will increase when mortgage and interest rates decline and the property market will slow down when mortgage rates rise. Therefore it is expected to have a negative
The figures relating to births, deaths and marriages refer to such events as were registered with the Director of Immigration every quarter. Seasonal adjustment is made to eliminate seasonal effect.
Housing Related Factors

Statistics on price and rental cost indices for private domestic premises are provided by the Rating and Valuation Department, Hong Kong. There are four types of private domestic premises that are listed in Table 4. The overall price indices are used for the study. Real housing prices (HP ) are derived by dividing nominal prices by the Hang Seng Consumer price index (HCPI ).
A sudden scarcity of land raises housing prices because of suppressed current housing production and higher investment demand (Peng and Wheaton, 1994). Thus, the availability of land is an important factor to be considered in the model. Consent to commence work on residential flats is used as a proxy of land supply (LS ). The measurement of land supply is defined as the total gross floor area of land supply actually put to the market (Ho and Ganesan, 1998).
Table 4: Property price indices for private domestic premises Private Domestic Premises (square meter) (1989=100) Year Up to 39.9 4069.9 7099.9 100 & above 1992 210 219 229 205 1993 223 244 261 250 1994 263 306 341 351 1995 252 282 306 314 1996 269 310 334 352 1997 376 435 488 514 1998 274 308 336 348 1999 231 265 287 302 Sources: Hong Kong Monthly Digest of Statistics, various issues
Overall 215 237 293 272 298 420 299 257
Number of houses completed (HSt) is the major measure of housing supply. It is relatively inelastic in the short run; this is because there are time lags between a change in price and an increase in the supply of new properties becoming available, or homeowners deciding to put their properties onto the market. The long run impact on prices depends on the supply response determined by the price elasticity of supply (DiPasquale, 1999).
equation because confidence is hard to quantify. The details variables description is in the Table 5.
Date Transformation
To make them more suitable for quantitative analysis, the data are examined and transformed or manipulated as required. All data are examined to establish (a) whether the data for individual variables are normally distributed; and (b) whether the independent variables are linearly related to the dependent variable. Data are transformed though the following methods: 1) Log transformation of variables to make relationships linear, such as house price index and rental index; 2) Moving average to minimize the effect of seasonal and irregular variations, thereby indicating the datas general trend. For example, new house completions where a 4year moving average eliminates, to a great extent, the fluctuations in the original data. The equation is:
The construction cost index is sourced from Levett and Bailey Chartered Quantity Surveyors Ltd in Hong Kong. Their tender price index is a quarterly weighted index that measures the costs of building material, labour costs, plant costs, rents, overhead costs and taxes.
Other Indicators
Political events (PO ) contribute to house price fluctuations such as occurred when housing prices kept falling from 1981 till the end of 1984 because of uncertainty over Hong Kongs political future after the SinoBritish negotiations over Hong Kong in 1997, or the property boom after the Sino-British Joint Declaration in 1985. The Tiananmen Square events caused an immediate but brief fall in property prices. Hence it is evident that Hong Kongs housing market is highly responsive to changes in the political climate (Chou and Shih, 1995). In the analysis, 1 indicates the occurrence of an event and 0 indicates otherwise.

yt =
1 p 1 xt 1 4 i =0
(t= p, n)
(17)
Where there are n values in a time series x1 xn. The centred moving average is applied to match time series (Waxman, 1993). The moving average will be distorted by any unusual events occurring during the time under consideration, thus any unusual curve can be detected if there is policy change or some special event occurred in the period.
Confidence is vital in the housing sector. What people think will happen in the future influences current purchasing decisions. It is not an input variable for the house prices
Table 5: Definition of variables Type yi Name PO HP R U GPL HN PL MN BN Y HSI GDP GDPC HCPI r vi LS Definition Political events. 1 if occurs, 0 otherwise. The Private Housing Price Index (1989=100), inflation adjusted. The Private Rental Index (1989=100), inflation adjusted. Unemployment Rates (percent) Total Population Number Household Number Population Number age at 2059 who are the sources of income group. Number of Marriages Number of Births The Median of Household Income, Hong Kong Dollars per household Hang Seng Index (1964=100), inflation adjusted. Gross Domestic Product at constant 2001=100, Hong Kong Dollars Million Gross Domestic Product construction. Hong Kong Dollars Million Consumer Price Index (10.199909.2000=100) The Mortgage Rates percent per annum from Hang Seng Bank, inflation adjusted. Land supply for private residential development. Residential units/flats with consent to commence work by floor area (square meter) as proxy. Residential Units Completed by Private Number of Units Construction Cost Index (1968=100), inflation adjusted. can separate the nature of variables by making categories and give extraction sums of squared loadings for considering variable selection. 5) There are leading, coincident and lagging characteristics of indicators. To ensure that the economic indicators truly reflect the growth or decline of housing prices, the degree of time lag or lead should be established. Pearson correlations are produced to test if there are significant correlations between the dependent and independent variables, and to find lead/lagged relationships between variables. The correlation value is considered significant if the p value is less than 0.05.
zi
xi
HS C
3) Differencing technique, i.e., by subtracting a lagged version of the series from the original time series data. A new time series is created from the first difference (or the difference of order 1) such as changes in housing completion. zt = yt yt-1 (18)
Similarly, a difference of order 4 can be derived by: zt = yt yt-4 (19)
The inflation rate is determined using this technique. 4) Principle component analysis is adopted for selecting best effective variables. It is applied to avoid the use of variables with strong positive relationships as such relationships may reduce the validity of the model. Many indicators, especially macro economic variables, are strongly correlated. When this is the case, the calculated coefficients may not represent a true causal relationship between dependent and independent variables. This type of analysis
Estimation Procedures
The forecasting procedures are depicted in Figure 3. A reduced-form model is a specific forecasting system used for the stochastic simulation for housing prices based on economic indicators.
Figure 3: Depicts procedures for the housing prices forecast using log-linear model.
Procedures for Data Preprocess Data Transformation Procedures for Forecasting
Qualitative Data
Quantitative Data
Defined Dependent & Independent Variables
Select & Apply Forecasting Model
Data Collection
Data Transformation
Variables Selecting
Stepwise Variable Selection
Organization of Collected Data No Yes
Correlation Analysis Yes Principle Component Analysis
Estimation Parameters No
Data Analysis
Analysis Model Fit
Interpretation Results
Data for Forecasting
Forecasting & Interpretation
Verification
Stage One
Stage Two
Stage Three
Figure 4: Periods of forecasting

T1 Historical data T2 T3
Time
Backcasting
Estimation period
Ex-post forecast period Today
Ex-ante Forecast period
Source: Pindyck and Rubinfeld, 1991
To test the accuracy of the forecasting models, 80 per cent of the historical data are used for estimation and 20 per cent of the data are adopted for ex-post forecasting. Ex-ante forecast will be applied for analysis of policy implication as showed in Figure 4. Stepwise selections are used. The decision to enter or remove variables in the model is based on how much they contribute to multiple R2 and on F and t values. The mean squared error (MSE) and adjusted R ( R ) are employed as criteria in the examination of the model fit. MSE is used because it effectively estimates out-of-sample
2
mean square prediction errorthe smaller the better (Diebold, 1998).
MSE =
e
t =1
2 t
(20)
where N is the sample size and
e = HPt HP
R 2 =1
s2
( HP HP )
t t =1
(21)
2
/( N 1)
where s2 is the variance. R2 is the coefficient of determination which expresses the
proportion of the total variation in the dependent variable that is explained. Adjusted R squared is an estimate of how well the model would fit from the same population. Thus, minimizing the standard error of the regression maximizes adjusted R squared to establish the model with the best fit.
Empirical Results
The ordinary least-squares regression method is employed in this analysis. The advantage of the least-squares method is that it expresses the secular trend in a mathematical formula which permits objective extrapolation into the past, present and future. The disadvantage is that it is based on the assumption that all variables have linear relationships which is not always the case. Table 6 shows three sets and a total of eight models, chosen from many derived models. The dependent variable is the real private residential house price index (1989=100). The models are significant at the 95 per cent confidence level. The independent variables are different in each case for the purposes of comparisons. Case one uses the population of age 2059, land supply, mortgage rate, Hang Seng Index and units of transactions as independent variables. It is found that both the F test and the t test for each variable, except the mortgage rate, are statistically significant and have the expected signs. A one per cent increase in population during the given period is associated with a 2.67 per cent increase in housing prices during the same period. A one per cent decrease in land supply during the given period is associated with 0.104 per cent increase in housing prices during the same period. A one per cent increase in the Hang Seng Index and unit transactions volume during the given period are associated with 0.36 and 0.258 per cent increase in housing prices during the same period respectively, ceteris paribus. The implications are (1) the higher the population and the higher the permanent income, the higher the housing prices; (2) there are speculative activities in the housing market; (3) macroeconomic factors impact on housing prices. The problem in this model is that mortgage rate does not have the expect sign. The Durbin-Watson test rejects the null (=0 ) hypothesis.
Case two uses the same variables as case one but increases the time span (sample sizes) from 63 to 75 quarters, which improves the Durbin-Watson test. To further improve the Durbin-Watson result, the real housing price, lagged one period, is applied. The Durbin-Watson reaches 1.68 which is in the inconclusive range. However, the negative sign of population variable for models 38 has indicated that there may be problems with multicollinearity in the model. In cases four to eight, different variables are tested in the model. It is found that household income is significant, i.e., a one per cent increase in household income at a given period is associated with a 1.97 per cent increase in housing prices for the same period. An interesting finding is that political events have positive impacts on housing prices. However, there are negative signs on the total size of population. The demographic factors indicate great changes in Hong Kong during the past two decades. It is implied that the size of the total population may not be the best proxy in building house prices model. The reasons are as follows: (a) Population Ageing The proportion of the population aged 65 and over has grown progressively (Champion, 2001) in Hong Kong, from 8 per cent to 11 per cent from 1988 to 1999 (Department of Census and Statistics, April 2001). This age group is mostly staying at government public housing or living with their children, rather than adding to the demand for housing. (b) Children of School Age This age group is decreasing in relative terms. The proportion of people aged less than 19 fell 25 per cent from 1980 to 2000 and the birth rate is declining, from 1.2 per cent in 1989 to 0.8 per cent in 1999 in Hong Kong (Department of Census and Statistics, April, 2001). (c) Changes in Marriages Rates Marriage rates have decreased continuously over the past ten years. The median age at first marriage for men increased from 28.6 in 1988 to 29.8 years in 1998, and for women from 25.8 to 26.9 years, indicating a trend towards later marriages (Census and Statistics Department, 1999).
Table 6: Regression Results with Dependent Variable = LOGHP

Variables Expected Sign Constant Case 1 -18.55 (-4.2) LOGPL + 2.674 (3.85) LOGGPL + 822001 Case 2 -10.92 (-3.3) 1.46 (2.78) Case 3 2.04 (2.85) -.482 (-4.3) -4.566 (-5.01) LOGLS -0.104 (-2.2) LOGR 0.875 (4.2) LRHPt-1 + -0.155 (-3.7) 0.871 (3.92) 0.15 (2.96) 0.835 (36.9) LOGHHI + 0.253 (3.44) LOGLSt+2 + 1.98 (12.34) 0.0886 (5.16) LOGHSMA -0.201 (-2.69) POLICY +/0.0081 (5.46) LOGHHIt+2 + 1.954 (10.16) 0.105 (5.16) -0.275 (-3.12) 0.102 (8.21) -0.162 (-2.95) 0.009 (10.53) 1.972 (16.74) LOGHSMA (t+1) -0.153 (-2.17) 1.852 (23.2) 0.10 (8.83) -0.131 (-2.87) 0.0087 (11.96) 0.0068 (4.94) 1.799 (15.03) 0.0877 (4.84) 0.361 (4.40) 0.322 (3.29) 0.375 (6.23) 0.399 (7.50) 0.403 (4.9) -4.55 (-4.17) -4.634 (-6.93) -3.829 (-10.3) -3.339 (-6.08) Case 4 -3.269 (-7.99) 8097 Case 5 -2.911 (-6.02) Case 6 -3.423 (-11.4) 802001 Case 7 -3.504 (-13.2) Case 8 -3.437 (-8.4)
LHSI
0.36 (3.15)
0.292 (2.78) 0.419 (6.77)
0.074 (3.4) 0.121 (8.81)
LSP
0.258 (3.39)
Adjusted R2 D-W Ratio F-Ratio Sample size
0854 0.566 74.99 63
0.81 0.757 65.1 75
0992 1.678 1606 75
0.962 1.413 302.03 71
0.946 0.922 248.08 71
0.980 1.465 569.33 71
0.981 1.451 732.89 84
0.955 1.648 298.26 84
(d) Migration Mainland China is the major source of immigrants. In 1999, 54,625 mainland residents came to settle in the Hong Kong under the one-way permit scheme (Census and Statistics Department, 2001). The population will continue to increase, however, new immigrants may not have much purchasing power.
Though the models have indicated significance in terms of adjusted R2 and t tests, the unexpected sign in some of the models implies that there may be a problem of multicollinearity in the models. Multicollinearity is the correlation among the independent variables. It can distort the standard error of estimate and may, therefore, lead to incorrect conclusions as to which independent variables are statistically significant. It is
suggested that the ordinary least square method may not be suitable for a housing prices model in the Hong Kong situation.
CONCLUSION
This study has attempted to construct house price forecast models for Hong Kong. All selected variables were transformed into logarithms before applying the multiple loglinear functional forms (Anas and Eum, 1984; Harrington, 1989) of regression analysis. In the study it is found that macroeconomic elements such as the Hang Seng Index and household income have impacts on housing prices. Demographic variables, such as population of age 2059, are also significant, while housing related factors such as land supply, and unit transaction numbers and completion of new houses are the main variables that influence house prices. Over the study period, policy factors have also been important for the fit of the models. The implication is that the Hong Kong Government may formulate a stable and suitable long term housing policy. Land policy may affect investment demand for housing and therefore influence house prices. Of the eight models, five (3, 4, 6, 7 and 8) are statistically satisfactory. However, it is indicated that there may be a problem of multicollinearity built into the models which suggests that they can be improved through co-integration, error correction models. An alternative method that could be considered is an artificial neural network model.
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Anthony Mills and Jim Smith, University of Melbourne Associate Professor Peter Love, Edith Cowan University INTRODUCTION
The aim of this research is to identify the barriers to the development of small to medium enterprises (SMEs) in the Australian construction industry, including means for reducing and overcoming them. Preliminary research (Mills et al., 2002) shows that SMEs in non-metropolitan areas often find it difficult to compete effectively with metropolitan-based organisations for projects in regional Victoria. This has resulted in a depletion of regional jobs and skills leading to reduced business activity and investment in regional areas. In addition, research undertaken by Smith et al. (2000) has found that non-metropolitan based building contractors (in particular) face difficulties in being considered, or preselected, for medium to large sized government and private sector projects in regional areas of Victoria. Even when included on selected lists of tenderers for projects in their region, many were unable to compete against their metropolitan-based rivals. This research compares the operational characteristics of construction firms in both metopolitan and regional areas. The information is used to examine the effect of the market on the operation of SMEs in construction in order to identify barriers to their development. The conclusion of this research suggests that a range of initiatives are needed to raise the performance and capabilities of SMEs in regional areas, so that they are as adept as metropolitan counterparts in winning tenders in their own regions; it also identifies some potential policy initiatives. This research was supported by the University of Melbourne and the Building Commission of Victoria. for an economic and social response to support and maintain their existing community fabric. The alternative is long-term decline and de-population. Many observers including Disney (1993) and Steinke (1977) agree that this decline should be arrested and the needs of these communities should be given closer attention. One response to supporting regions is to provide facilities and infrastructure to allow these communities to enjoy the same range of services as those in metropolitan areas. This often means the construction of new facilities or renovation of buildings. The additional employment activity (albeit temporary) these projects inject into an area can provide an economic boost to firms and businesses in the locality. The boost in investment that building provides is a longerterm expression of self-reliance and confidence. Thus, this research suggests that construction in regional areas does have a significant role to play in underpinning the social and economic life of regional communities. The construction industry is a relatively large employer of labour, either directly as employees, suppliers and subcontractors, or indirectly, in the large number of small businesses that make up the sector. Many of these small businesses are found in regional areas, forming a significant part of business activity, and for these reasons governments take an active interest in the health of the construction industry. The Australian government has also recognised new economic research that highlights the importance of innovation to industrial sectors and the overall national economy. It is particularly aware that strategies to be developed should enmesh the (construction) industry into what the OECD calls the Learning Economy: one that is knowledge intensive, innovative, flexible and adaptive and characterised by the fast and effective diffusion of information, characteristics which, in the past, have not been
BACKGROUND
Many non-metropolitan areas are facing economic and social problems due to a decline in population, and withdrawal of many services. Many regional areas are looking
ANTHONY MILLS, JIM SMITH AND PETER LOVE
evident in the building and construction industry (DISR, 1999, p. 36). Regional construction companies have much to gain from linking into expanded networks of IT, tender information, supply chains, education, training and ecommerce. Such an approach could mitigate the effects of the tyranny of distance felt most keenly by regional Australia. Regional building companies along with other regional industry must be given the opportunity to participate in the stated fourpronged national strategy specified in the Action Agenda (DISR, 1999) including;

This research is primarily concerned with developing a framework for identifying the critical factors that militate against regional contractors succeeding in winning tenders in their own regional areas of Victoria.
Economic Markets For Construction

The important aspects of the structure of the Australian building and construction industry are well documented in the five yearly surveys undertaken by the Australian Bureau of Statistics (ABS, 1999). There were some 194,000 firms in the industry in 199697, this figure covers several non-competing sectors of the industry such as, residential building (31,000), non-residential building (2,100), non-building construction (3,100) and special trades (158,000). In addition, 93.8% of firms have four or less employees, 5.7% have from five to thirteen employees, and the remaining 0.5% have more than 13 employees. Research by Runeson (2000) confirms that a very large number of small firms operate in the construction industry. Runeson further demonstrates that other measures can be used to show that the construction industry has a very low concentration ratio (i.e., a few firms dominate the industry) and that profit levels are generally poor (less than 4% of turnover), indicating that the industry is governed by the rules of perfect competition. Perfect competition is defined as a market where the action of individual firms has no effect on the market price for goods or services (Runeson, 2000). Thus, according to the author there is also a strong feeling that the individual builder has no influence over prices and output. Certainly, the participants feel that way due to the absence of any real market power. (Runeson, 2000, p 170). The construction industry is highly competitive, and it seems improbable that any one firm is able to control the behaviour of the market. This leads to the conclusion that the market conditions are outside the control of firms, consequently there is likely to be a narrow range of projects for which any individual firm is going to be effectively competitive.
increase awareness of the benefits of IT
support the development of industry standards and shared databases encourage and focus on added value from the use of IT support restructuring of the industry supply chain to leverage benefits from IT. This research gives a regional focus to these defined national objectives by developing practical and workable strategies for their implementation using an IT strategy that may enable regional SMEs to acquire skills and play their full part in the local, state and national economy. Linking regional areas and contractors into the more economically active metropolitan areas by the use of information technology is obvious, but to date has not been used to overcome disadvantage. Such a development opens up a whole range of policy, training and project opportunities for regional contractors to participate in more easily than they could in the past. The main objectives of this research are to: 1. identify the range of problems encountered by regional and metropolitan firms tendering for state and local government building projects in regional areas 2. determine the significance of these problems to the various stakeholders in regional areas 3. design and develop an e-commerce strategy to improve the capabilities of regional construction contractors so they can compete or work effectively with their metropolitan-based rivals as independent regional contractors.
The Effect of Contract Size and Type

Research by Drew and Skitmore (1997) supports the work by Runeson. They comment that the construction industry is highly fragmented with the dominant firm being
the small contractor. Low entry and exit barriers characterise construction markets, especially for small firms. The conclusion of Drew and Skitmores research was that the most competitive contractors appear to be those with a preferred contract value range, and they suggest that this approach in future may be used by contractors as a basis for assessing bid performance This indicates that the best clustering of contractors may be based on typical project size ranges; the effect of project type may also be significant. This indicates that contractors may have preferences towards certain projects and values, to which they have become accustomed (Drew and Skitmore, 1997, p 470). In research by Briscoe (1988) the character of contracting markets is set by the type and nature of the work, the geographical location and the nature of the client - the exact type of competition experienced by the contracting firm depends on all these factors. Other research suggests that the industry is best described as project-based with vertical integration defining the segmentation of contractors (Langford and Male, 1991). They consider construction in terms of geographically dispersed project-based vertical markets that operate world wide from local to international arenas. The results of the above past research suggest that costruction competitivness is best obtained when firms specialise in small sub-markets; this is generally accepted to mean particular geographical areas, project types and value ranges. Conversly, firms are likely to become less competitive if they attempt to cover too many sub-markets. Firms that are not is a position to specialise, due to the natuure of their market, are likely to become less competitive over time.
According to Smith et al. there is considerable uncertainty about the health of nonmetropolitan construction markets. Regional construction firms operate from nonmetropolitan centres in what has been presumed to be a homogeneous subset of the national construction market. However, the reality is more complex, as many regional construction firms are small and face many difficulties not experienced by metropolitanbased contractors. Smith et al. identified that non-metropolitan based building contractors faced difficulties in being considered, or prequalified, for medium to large sized projects in their own regional areas of Victoria. They reported that even when included on lists of prequalified tenderers for projects in their region, the locally based contractors face serious problems of winning tenders against their metropolitan-based rivals. Problems identified included:
Excessive competition from metropolitan based firms Cost disadvantage due to distance Little vertical integration.

These projects include government and non-government projects such as schools, libraries, hospitals, police stations, industrial plants, civic buildings and the like. The report speculated as to whether any government regional initiatives could be pursued to redress the balance. Alternatively, changes in market dimensions may mean that regional construction markets are no longer viable. This research suggests that the role of construction in the regional or nonmetropolitan areas of Australia does have a significant role to play in underpinning the social and economic life of regional communities. The specific objective of the research is to identify the barriers encountered by firms tendering for building projects in non-metropolitan areas throughout Australia. This is achieved by comparing the operational characteristics of construction firms from both metopolitan and non-metropolitan areas. The aim is to provide a detailed picture of regional tendering markets by identifying the problems or factors that may inhibit competitive bidding in regional areas.
Regional Construction Markets

The study by Smith et al. (2000) looked at the demand and supply factors that influence regional construction markets. The aim was to establish whether an effective market exists, and whether there are barriers to the participation of firms in that market. The report provides insights into the nature of regional tendering markets in the southwest region of Victoria.
RESEARCH QUESTIONS AND METHODOLOGY

As previously mentioned preliminary research undertaken by the authors (Smith et al. 2000) for the State Government of Victoria identified that non-metropolitan based building contractors face difficulties in being considered for medium to large sized projects in non-metropolitan areas of Victoria. Therefore a survey was developed which was designed to explore the following research question:
What operational factors impact on the ability of regional contractors to bid competitively against metropolitan-based contractors?
These operational factors are considered under the headings of finance, labour, staff development, market, travel, and information technology. This research presents a analysis of a survey of the operational characteristics of both regional and metropolitan contractors in Victoria, Australia. The questionnaire comprised 38 factors that were perceived to impact on the ability of construction firms to effectively operate their businesses. Each respondent was asked to indicate the significances of each of the factors on a Likert scale from one (low impact) to five (high impact). The mean scores were calculated and presented in the results below. A database of 550 contractors was compiled from various sources, including the Victorian Building Commission, Department of Infrastructure pre-qualification lists and the Yellow Pages. A balance of numbers between regional and metropolitan contractors was attempted and the final locations of contractors based on postcodes indicated 46.2% were regional and 53.8% were metropolitan contractors. After removing the return to sender firms (52) from the total (550) left 498 delivered surveys. Out of this total, 172 survey returns were made giving a response rate of 34.5%. In construction research this is a good return rate (Chan and Fung, 1996). Within the 172 surveys received, 56.4% were from metropolitan Melbourne firms, compared with 43.6% from regional Victoria.
In terms of the analysis of the survey data it was necessary to identify the comparative difficulties encountered by regional and metropolitan contractors of a similar size. This characteristic was considered to provide the most reliable basis for a valid comparison. Average Company Turnover emerged as the best variable to group companies by size. Figure 1 indicates the profile of the respondent companies in the two groups. Companies with a turnover of between A$1.1 and A$5.0 million were close to the mean and most frequent in both groups and thus chosen as the comparison group. For these reasons this attribute was chosen to compare the two groups and all the 73 contractors in this category were selected for analysis. From this total of 73 contractors, 43 (58.9%) were based in Melbourne and 30 (41.1%) were from regional areas. The authors consider this is a large enough sample to validate a comparison between the groups and all the data analysis is based upon these 73 respondents.
RESULTS AND DISCUSSIONS

Overall results compare the Likert scores between regional and metropolitan contractors for the characteristics measured in the survey as summarised below: size of firms, financial operational difficulties, labour difficulties, staff development/learning, market difficulties, distances travelled to site, and information technology. The significant comparisons are now presented for information and discussion.
Size of Firms
Metro-based contractors of this size employ slightly more directly employed people with an average of 7.58 as against 6.18 in regional contractors. For sub-contracted employees the numbers show a larger variation. This is probably due to the larger metro-based projects that require more sub-contractors and management staff. The relatively large standard deviations (over 20 for the metropolitan firms) reflect the flexible, temporary organisations that are found in the modern construction industry.
Figure 1: Size by average company turnover The Chosen Comparative Groups
50
40
Average Company Turnover

30
Count
Under $0.5 M 20 $0.6-1.0M $1.1-5M 10 $5.1-20M $20.1-100M 0 Metro Melbourne Regional Victoria Over $100
Contractor Location
Table 1: Employee Numbers Contractor Location Direct Employee Numbers Mean 7.58 6.18 Std Dev. 7.11 3.54 Sub-Contracted Employee Numbers Mean Std Dev. 9.40 20.16 5.27 7.09
Metropolitan Regional
Table 2: Mean Likert Values for Operational Characteristics Contractor Location Metropolitan Regional (a) (b) Working Capital 2.21 1.77 Credit for Suppliers 1.46 1.33 High Interest Rates 2.40 1.73 Late Payments 3.16 2.87 PAYE to PAYG(a) 2.51 2.00 GST(b) Admin Burden 3.49 3.13
PAYE = Pay As You Earn; PAYG = Pay As You Go GST = Goods and Services Tax problems in these operational areas as their average scores were lower under each heading. These interesting results undermine some assumptions often made about management in small to medium enterprises (SMEs) in regional-based areas.
Financial Operational Difficulties

Six operational characteristics were compared and the average Likert1 scale mean values are shown in Table 2. In general the lower the Likert score the less respondents perceived the impact. In all cases the regional contractors experienced fewer
Likert scale conversion: 1 = not at all, 2 = no guiding comment, 3 = to some extent, 4 = no guiding comment, 5 = to a large extent.
Table 4: Mean Likert values for Staff Development/Learning Difficulty Experienced Internal Training Self Learning R&D Company Benchmarking of Performance Project Reviews External Training Programs for staff Difficulty Obtaining Training for Site Workers Difficulty Obtaining Training for Managers Importance of Distance Traveled to training Table 3: Mean Likert values for Labour Difficulties Contractor Location Metropolitan Regional Poor Morale 1.90 1.66 Ineffective Supervision 2.00 1.90 Excessive Stress 2.18 1.87 Workforce Conflict 1.79 1.57 Absenteeism 1.71 1.77 Metropolitan 2.20 3.58 1.88 2.22 3.05 2.83 1.83 1.95 1.93 Regional 2.40 3.50 2.30 2.43 3.13 2.50 2.33 2.21 3.47 Total 2.28 3.54 2.06 2.31 3.08 2.69 2.04 2.06 2.58
Labour Difficulties
This section of the survey indicated similar results over the two groups. Again, except for the last characteristic, absenteeism, the regional builders scores were lower than their metropolitan counterparts. The regional builders also perceive that there is less stress (1.87 compared with 2.18) in supervising and organising the labour in their jobs than those in metropolitan firms.
the larger metropolitan (Melbourne) market has created. Table 4 summarises the nine characteristics measured under staff development and training. It appears from these responses that regional builders are not using the regionally based technical and further education (TAFE) institutions to access training programs. Alternatively, these TAFE colleges are not providing the type of training programs and courses that regional builders want for staff in their businesses. The results from this section of the survey indicate a need to follow-up the reasons for these responses. Self Learning opportunities need to be urgently investigated as both groups indicated difficulties in this area (3.50 and 3.58). In terms of the accessibility, respondents were also asked to indicate the average distance they travelled to training facilities. Naturally, regional contractors were involved in longer journeys with nearly 45% travelling an average round-trip distance of more than 100 km. One regional firm was involved in travelling in excess of 500 kms (round trip). The results are summarised in Table 5. Again, the role of regional TAFEs as vocational education must be explored to discover why this sector of the market appears to be travelling to the metropolitan area to gain suitable training programs.
Staff Development/Learning
A significant difference is found between regional and metropolitan contractors in the issue of the importance of distance traveled to training facilities where the Likert scale average was 3.47 compared to 1.93 (Table 4). There is a important difference between these figures. This sentiment is consistent with the average response to internal training (higher) and their use of external training programs (lower) indicating a more independent approach to these issues. Regional contractors also indicated they experienced more difficulties in getting training for site workers and managers when compared to the average response levels of metro-based contractors. Re-
search and Development, Company Benchmarking and Project Reviews were

perceived to be a bigger problem by regional contractors and this possibly points to their companies being more isolated from the body of knowledge and opportunities that
Table 5: Average distance travelled to training facilities Contractor Location Metropolitan Regional Count % Count % 1-15 km 14 37.8% 7 24.1% 16-50 km 19 51.4% 4 13.8% 51-100 km 4 10.8% 5 17.2% 101200 km 4 10.8% 5 24.1% 201 500 km 5 17.2% > 500km 1 3.4% Total 37 100% 29 100%
Table 6: Mean Likert values for market difficulties Difficulty Experienced Difficulty of Obtaining Sufficient Work in Area Excessive Competition for Work in Area Difficulty Establishing Long Term Relationships with Clients Difficulty Obtaining Consistent Work of Most Preferred Type Difficulty Obtaining Work of a Sufficiently Large Value Difficulty Obtaining Sub-Contractors in Structural Trades Difficulty Obtaining Sub-Contractors in Finishing Trades Difficulty Obtaining Sub-Contractors in Services Trades Table 7: Distances travelled Contractor Location Metropolitan Regional Average distance in kms travelled to site 27.21 55.60 Average distance in kms materials are sourced from and to site 28.19 86.25 Metropolitan 2.17 2.60 1.98 2.48 2.49 2.40 2.40 2.24 Regional 2.20 3.13 2.03 2.53 2.53 2.83 2.83 2.60 Total 2.18 2.82 2.00 2.50 2.51 2.58 2.58 2.39
Market Difficulties
Of the eight variables surveyed, one of the biggest problems for both groups was Excessive Competition for Work in Area and the regional contractors felt this more keenly with an average score of 3.13. In fact, across all the variables, the regional contractors indicated that they had more difficulties in gaining work and competing than their metropolitan counterparts. The results shown in Table 6 are a reflection that the size of the regional market is smaller than the metropolitan market and that it experiences greater competition. The fact that these contractors are in the largest size group (A$1.1 A$5.0 million) naturally means there will be more competition from the greater number of builders. Further analysis of other size groups may provide an interesting comparison.
Distances Travelled to Site

Both groups noted that transportation costs of materials were not considered a major problem on most contracts. In fact, inspection and analysis of the Australian Construction Handbook (Rawlinsons, various editions) over the last twenty years shows a steady fall in locality allowances (mainly due to reducing transportation costs of materials). However, as could be expected the (higher) cost of fuel had a bigger impact on regional contractors (30%) than the metropolitan group (12.2%). The mean distance travelled to sites was slightly more than double for the regional contractors at 55.6 km compared to 27.2 for the metropolitan contractors. The sourcing of materials showed a similar trend and these results are shown in Table 7.
Information Technology
The survey attempted to investigate the impact of information technology on builders and to identify and quantify the use of the Internet. The results are interesting and are summarised in Tables 8.
Table 8: Connections to the Internet Contractor Location Metropolitan Regional No Count % Count % 8 18.6% 4 13.3% Yes 35 81.4% 26 86.7% Total 43 100% 30 100%
The surprising figure of 86.7% of Internet connections for the regional contractors exceeded that of the metropolitan group of 81.4%. The regional builders are connected and it would be now useful to discover whether the full potential of the Internet is being realised. The next stage of the research will identify whether e-business and other capabilities can be integrated into the regional builders businessesthat is, can the high level of internet connection be usefully exploited?
supporting restructuring of the industry supply chain to leverage benefits from IT. This research indicates that such policies may succeed with suitable support in some key areas. If the regional tendering situation is not addressed, metropolitan-based building contractors will continue to win the medium to large construction projects in regional areas ahead of the local competition. This has the effect of further reducing the capacity of regional-based builders who cannot grow to add to the competitive environment that creates an innovative and efficient construction industry. The problems in regional Australia are probably common to many countries. These problems, opportunities and initiatives found in construction firms in regional areas around the world need to be shared to find solutions to the common problems, especially when better communications can bring the regions closer to the dominant metropolitan areas.
CONCLUSIONS
All Australian state governments have expressed a desire to maintain the viability of their regional economies. It is in the interests of the regional communities themselves that this essential part of the cultural, social and economic fabric of national life is given renewed vigor (Storper, 1997). It is important that regional construction economy is not ignored in the Government's national quest to improve the economic performance of the construction industry. Regional building and construction companies have much to gain from linking into expanded networks of IT and e-commerce. The impressive Internet connection of regional contractors (86.7%) indicates that a strategy of upgrading and increasing awareness of IT has a sound basis for a number of e-commerce and training developments. Regional building companies must be given the opportunity to participate in the strategy specified in the Federal Governments Action Agenda (DISR, 1999), by:
REFERENCES
ABS (1999) Private Sector Construction Industry, Australian Bureau of Statistics, Commonwealth of Australia. Briscoe, G. (1988) The economics of the construction industry. Mitchell Press. Chan, A. P. C. and Fung, C. Y. (1996) Procurement systems in Australia. Proceeding of CIB W-89, 21-24 October. Beijing, China. Disney, J. (1993) Regional Development and Australia's future, Australian Council of Social Services, Office of Local Government. DISR (1999) Building for growth: The building and construction action agenda, Department of Industry Science and Resources, Commonwealth of Australia. Drew, D. and Skitmore, R. M. (1997) The effect of contract type and size on competiConstruction tiveness in bidding. Management and Economics 15, 469-489.
fostering the use of alliancing between metropolitan and regional based contractors increasing awareness of the benefits of IT

supporting the development of industry standards and shared databases encouraging and focusing on added value from the use of IT
Langford, D. and Male, S. (1991) Strategic
management in construction: conceptual foundations. Heinemann.

Rawlinson (1994) Rawlinson's Australian Construction Handbook 1994, 12 edn. Rawhouse Publishing Pty Ltd. Runeson, G. (2000) Building Economics. Deakin University Press. Smith, J., Love, P. and Jackson, N. (2000)
Regional tendering Markets: Improving the capability of regional tenderers, Deakin University, Prepared for the Department of Infrastructure, Building Policy, Government of Victoria., 36. Steinke, J. C. (1977. Australian Regional
Policy and Regional Population Trends 1947-1971, Department of Decentralisation

and Development, NSW. Storper, M. (1997) The regional world: Territorial development in a global economy. Guildford Press.
BOOK REVIEW
BOOK REVIEW RED MAN GREEN MAN

by Jayne Cox, David Fell and Mark Thurstain-Goodwin Professor Craig Langston*
*Professor Langston is Chair of Construction Management at Deakin University and is one of the authors of Sustainable Practices in the Built Environment available through ButterworthHeinemann.
Red Man Green Man is a beautifully written and presented publication available from the RICS Foundation. It concerns indicators of urban sustainability, and the title and imagery are derivative of pedestrian signals that guide and warn people about their journey decisions. While the authors make it clear that sustainability means different things to different people in different places, there is a general conclusion that the construction and property industries need to engage in the sustainable development debate if they hope to effectively influence the setting of policies and targets rather than have a vision of urban sustainability thrust upon them.
The structure of the publication is to look first at contextual issues, then review existing urban sustainability indicators, and finally discuss issues and implications for practice. The simple structure is logical and contains examples and links for the reader to pursue independently if required. However, if the reader is interested in finding detailed information about existing urban sustainability indicators then s/he would be disappointed. This is not the intention of the publication anyway. While the target audience is stated as being interested general readers, it seems to focus too much on high level strategies and
philosophies, and insofar as it is trying to make a case for a more active role by our industry, it may in fact fail to encourage it by its lack of ready to use solutions. Nevertheless it is an interesting account of how the basic triple bottom line approach informs and frames the development of performance indicators. An important point is that these indicators are more likely to identify trends over time for particular locations than calculate specific benchmarks that can be compared globally. Sustainability is perhaps more about making things better than reaching set goals. While the topic is obviously global, the discussion does suffer slightly from a UKcentric outlook, which could have been more readily concealed. However it is an important and timely contribution to a debate that is ongoing and a problem that is arguably never-ending. It forms a useful platform for further studies into specific indicators, their relevance, how they work, what they measure and how they relate to practice, and hopefully this publication will be the start of a series by the RICS Foundation into this topical and critical field. The price of the publication is 17.99 and details can be found at http://www.ricsfoundation.org or from the RICS.
INSTRUCTIONS/GUIDELINES FOR AUTHORS
INSTRUCTIONS/GUIDELINES FOR AUTHORS TO THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING
Submission
Two issues (June and December) per annual volume of the journal are planned. Authors are requested to submit papers for publication at any time to: Ms Ann Patterson Australian Institute of Quantity Surveyors Telephone: Mail: Email: +61 2 6282 2222 Fax: +61 2 6285 2427 PO Box 301, Deakin West, ACT 2600 AUSTRALIA ann@aiqs.com.au justified, including references. A brief autobiographical note should be supplied including full name, position held and name of employing organisation. The manuscript should be arranged under headings and subheadings.
Papers will be referred to acknowledged experts for comment as to suitability, originality, interest and content. Only those receiving favourable recommendations from the referees will be accepted for publication. If an author is uncertain about whether a paper is suitable for publication, it is acceptable to submit a synopsis first.
(b) Title page

The first page of the manuscript must contain the full title, the affiliation and address of the author(s), a running title of not more than 75 characters and spaces, the name and address of the author who will be responsible for correspondence and correcting the proofs, and up to five keywords for the purposes of indexing.
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As the language of the publication is English, it is strongly recommended that nonEnglish speaking authors seek assistance from a competent English writer to ensure the spelling, grammar and style are correct. The Editor may be able to assist in identifying appropriate people to consult.
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EDITORIAL

Rick Best Goran Runeson December 2002

THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2 i

ii THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2

OUTDOOR WORKERS AND SUN PROTECTION: KNOWLEDGE AND BEHAVIOUR

THE CRISIS MANAGEMENT PRACTICES OF AUSTRALIAN CONSTRUCTION COMPANIES

iv THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2

THE IMPACT OF CULTURE ON INTERNATIONAL MANAGEMENT: A SURVEY OF PROJECT COMMUNICATIONS IN SINGAPORE

PERCEPTIONS OF TIME, COST AND QUALITY MANAGEMENT ON BUILDING PROJECTS

THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2 v

BUILDING A HOUSE PRICES FORECASTING MODEL IN HONG KONG

BARRIERS TO THE DEVELOPMENT OF SMES IN THE AUSTRALIAN CONSTRUCTION INDUSTRY

vi THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2

THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2 1

Total combined bid curve (S1 + S2) S

b1 TCB1 TCB0 P0 P1 b0 B0 B1 Price-time curve S1 S2 Time value curve (LDR x t)

Aggregating fees and technical score

2 THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2

Determining the optimum fee and technical score

THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2 3

Figure 2: Possible optimum fee outcomes (Source: Drew et al. 2002b)

Optimum Fee Outcome 2

Optimum Fee Outcome 1

Optimum Fee Outcome 3

4 THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2

REPRESENTATIVE CASES ILLUSTRATING THE THREE DIFFERENT OUTCOMES

40.00 42.53 50.00

90.00 87.12 91.54

35.00 38.86 45.00

88.89 75.27 78.57

THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2 5

Figure 3: Total score continuums for Cases 36, 37 and 38

6 THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2

The effect of optimum bidding strategy on original bidding performance

THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2 7

8 THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2

Journal of Construction Engineering and Management, 121 (3), pp.273281.

Selection, Appointment and Administration of Architectural and Associated Consultants.

Journal of Construction Engineering and Management, 125 (3), pp.204209.

THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2 9

DR JANE CIOFFI, LESLEY WILKES AND JESS HARTCHER-OBRIEN

OUTDOOR WORKERS AND SUN PROTECTION: KNOWLEDGE AND BEHAVIOUR

10 THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2

OUTDOOR WORKERS AND SUN PROTECTION: KNOWLEDGE AND BEHAVIOUR

Sample: Outdoor workers (n=142) working

Data Collection Procedure: At each site

Data Analysis: Frequencies and percentages

THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2 11

DR JANE CIOFFI, LESLEY WILKES AND JESS HARTCHER-OBRIEN

12 THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2

OUTDOOR WORKERS AND SUN PROTECTION: KNOWLEDGE AND BEHAVIOUR

THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2 13

DR JANE CIOFFI, LESLEY WILKES AND JESS HARTCHER-OBRIEN

Photodermatology, Photoimmunology, Photomedicine, 12, 1315.

vestigative Ophthalmology and Visual Science, 29, 64956.

14 THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2

THE CRISIS MANAGEMENT PRACTICES OF AUSTRALIAN CONSTRUCTION COMPANIES

THE CRISIS MANAGEMENT PRACTICES OF AUSTRALIAN CONSTRUCTION COMPANIES

The signs of crisis proneness

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M. LOOSEMORE AND M. M. M. TEO

16 THE AUSTRALIAN JOURNAL OF CONSTRUCTION ECONOMICS AND BUILDING VOL.2 NO.2

THE CRISIS MANAGEMENT PRACTICES OF AUSTRALIAN CONSTRUCTION COMPANIES