Editorial

Article Type: Editorial From: Journal of Financial Management of Property and Construction, Volume 19, Issue 1

Welcome, to Volume 19, Issue 1 of the Journal of Financial Management of Property and Construction (JFMPC) – the first issue of 2014. We are pleased to present this as a special issue (SI) entitled Exploring Issues of Project Cost Overrun.

The catalyst for the SI was a protracted debate on this theme that took place on the “Co-operative network of building researchers” (CNBR, 2013) message forum, in late 2012. That debate suggested a “dichotomous” interpretation of the reasons for overruns occurring: from errors in cost estimating or the impact of unforeseen events on one side; to “strategic misrepresentation” or “outright lying” on the other (Flyvbjerg et al., 2002). Given the subsequent CNBR interest in this theme, evidenced by many contributions to said debate, it seemed an appropriate juncture for JFMPC to produce an SI on the subject.

Following our SI call for papers, 12 manuscripts were submitted. Five of these comprise this issue and two remain in review (at time of writing this editorial) and which if accepted, will appear in a future “regular” issue. The remaining submissions did not progress through review and were not therefore, accepted for publication. We thank all who submitted their work to the journal for review; congratulate those who made it into the special issue; and ask those who were unsuccessful this time round, to recognise that in striving to uphold the highest academic standards, not all manuscript submissions to JFMPC are accepted for publication.

The overall flavour of submissions broadly mirrored the “dichotomous” themes alluded to earlier and in choosing successfully reviewed papers for inclusion in the SI, it is encouraging that we have been able to highlight five totally different aspects of the subject. These aspects are: cost analysis in relation to sustainable housing; a focus on offshore wind farms; issues of cognition, learning and estimating; a specific focus on Malaysian construction project overruns; and the influence of project teams on cost growth.

The first paper is by Tokede, Wamuziri, Sloan and Brown who promote consideration of the approaches available for costing sustainable buildings and equally therefore, strive to minimise their cost overruns. This is achieved by studying “continuity” in whole-life cost models for zero carbon houses. Their mathematically based risk procedure specifically analysed the Lighthouse Zero-carbon House Project – using finite element methods and Monte Carlo analysis, to compare their results with existing whole-life cost techniques. Tokede et al. proffer that this experimental departure from “Stereo-typical discounting mechanisms in standard whole-life costing procedures” shows that the adoption of continuity in whole-life cost models, facilitates a clearer picture; a profile of the economic realities; and a view of the decision-choices confronting stakeholders in this aspect of sustainable building.

Koch provides a treatise on cost issues relating to offshore wind farms, providing a social constructivist conceptualisation of their realisation in a Danish and Swedish context. Variance found in project (cost et al.) performance among the seven case study projects observed, mirrors that of construction more widely and in looking at strategic misrepresentation, a contradictory pattern was identified. Koch concludes that although renewable energy power plants represent an important societal investment, their costs and issues relating to their cost efficiencies, are poorly understood. The subject focus of this paper makes an interesting departure from “mainstream” construction products and accordingly, we would welcome further papers on more diverse subjects such as this, in the future.

Paper three is by Ahiaga-Dagbui and Smith who offer a “holistic view” of cost growth causes by studying the dynamics between cognitive dispositions, learning and estimation. Their research employed both qualitative method and analysis using artificial neural networks, to distinguish between the often conflated causes of underestimation and cost overruns on large publicly funded projects. In these times of increasing emphasis on research impact, it is interesting to note that the authors mention development of their study into a cost prediction desktop package. Should this come about, JFMPC would welcome a note from the authors in the future, to update readers on this initiative and describe how their work was received at the “workface”.

A geographic focus on cost issues is featured in the fourth paper by Shehu, Endut and Akintoye. Specifically, the authors study factors leading to time overrun among Malaysian construction projects by contrasting the views on this of public and private sectors, contractors, clients, and consultants; with extant knowledge in a broader geographical context. Malaysian clients will no doubt be pleased to learn; that the study suggests reasons for project delays and associated increased costs rest predominantly at the feet of contractors with perhaps unsurprisingly – given the well-recognised problems of operating a contractor company – issues of cash flow being a major underlying root cause. How the issues of cash flow and liquidity generally can be overcome within construction, would merit a special issue all of its own. Perhaps JFMPC will approach this as a themed issue in the future.

The final paper in this issue – also with a geographical focus – looks at the relationship of project teams on cost growth, among both traditional and more collaborative procurement approaches. In so doing, Dada studied data from 274 construction projects within Nigeria to find that cordial relationships between client and contractors were most important in containing cost growth; while finding perhaps somewhat controversially, that no association between procurement method and cost growth was apparent.

So there it is. We do hope you enjoy this special issue of JFMPC and would once again thank all who expressed a desire to contribute to it, but especially, to those authors who ultimately compiled it. Should any readers wish to offer a comment, short note or brief discussion on any of these papers, we would be pleased to present such to authors for comment if appropriate, and consider their publication in a future issue.

References

CNBR (2013), “The co-operative network for building researchers”, available at: http://groups.yahoo.com/neo/groups/cnbr-l/info (accessed September 2013)Flyvbjerg, B., Holm, M.S. and Søren Buh, S. (2002), “Underestimating costs in public works projects error or lie?”, , Vol. 68 No. 3, pp. 279–295

Journal of the American Planning Association

Akintola Akintoye, Peadar Davis, Gary Holt