Emerald | Journal of Financial Management of Property and Construction | Table of Contents

Editorial Vol 18.2

Mon, 20 May 2013 00:00:00 +0100

Abstract

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Financial Structure of PPPs Deals Post-GFC: An International Perspective

Fri, 02 Aug 2013 00:00:00 +0100

Abstract

Purpose - The purpose of this study is to explore the implications of the Global Financial Crisis on PPP markets around the world. Specifically, it aims to highlight the extent of over reliance on debt finance as well as the conditions needed to attract enhanced levels of institutional investment into key infrastructural provision.Design/methodology/approach - A mixed methods approach is applied within the confines of this study. Quantitative insight is derived from the Infrastructure Journal (IJ) Online Database. The quantitative insight is complemented by a combination of interview evidence and forum based discussion premised on a diverse range of key stakeholder groupings from across both the public and private sectors. Contributors were drawn from five key PPP markets at different stages in the maturity cycle namely Australia, Canada, India, the UK and the US. Findings - The findings from the study highlight a number of inherent deficiencies in the PPP model including the over reliance on private sector debt. Additionally, the research profiles the extent and form of national government interventions in PPP markets around the world highlighting the need for a more innovative, sustainable and balanced funding frameworks for essential infrastructure conducive to the next economic/financial cycle.Practical implications - The findings from the research demonstrate a clear need to develop appreciation and awareness of the investment potential on infrastructure as an asset class within the institutional investment community. Originality/value - This study is distinct in that it examines the cross-jurisdictional implications of the global financial crisis on PPP markets

Performance and Role of European Listed Infrastructure in a Mixed-Asset Portfolio

Fri, 02 Aug 2013 00:00:00 +0100

Abstract

Purpose - This paper seeks to examine the performance of European listed infrastructure before, during and after the global financial crisis and the significance of European infrastructure in a mixed asset portfolio. The paper examines the level of correlation of European infrastructure with other major assets classes and substantiates the potential diversification benefits of including European infrastructure within a mixed asset portfolio. Design/methodology/approach - The study uses monthly investment return indices obtained from Thomson Reuters DataStream over a ten year period. (2001-2010). The paper analysed the European listed infrastructure investment return characteristics including average annual return, annual risk, Sharpe indices, mean variance portfolio and maximum return portfolio and computes the efficient portfolio frontiers using the risk solver optimization tool. Findings - This study shows that despite the global financial turmoil, a robust performance was seen by certain infrastructure sub-sectors particularly European generation utilities, which posted positive annualised returns and European ‘ports’ was the overall best performing sub-asset class during the post-GFC period. Using the monthly return indices over the ten year period, European infrastructure investment was found to play a significant role in the optimality of multi asset portfolios. Practical implications - The diversification benefits within the European infrastructure investment space were more return enhancing than risk reducing, which appreciably exhibits one of several strategies largely appealing to investors’. A remarkable implication from this paper reveals that European listed infrastructure has evolved into a separate asset class in its own right, giving investors a unique platform to launch into an exciting alternative investment. Originality/value - The originality of the paper stems from the analysis of the performance and significance of European listed infrastructure in a multi-asset portfolio over unique periods which tested the resilience of European listed infrastructure performance over different financial climates including the global financial crisis period. This paper presents European listed infrastructure as an indication of rewarding investment outlets for investors in quest of exposure to the infrastructure industry and for those seeking to enhance investment portfolio performance.

Analysing the perceptions of UK building contractors on the contributors to the cost of construction plant theft

Fri, 02 Aug 2013 00:00:00 +0100

Abstract

Purpose - The purpose of this paper is to consider the significance of the sources of cost of construction plant theft identified in previous studies and derive rates which can enhance proper estimation of the cost of plant theft to the construction industry. The direct and indirect costs of plant theft include replacement cost (new-for-old/depreciated), emergency cost, hire replacement cost, productivity loss, increased labour cost, loss of goodwill, administration cost, increased insurance premium and social cost.Design/methodology/approach - The cost-contribution of these various sources was studied, using a structured questionnaire which was administered to building contractors in the UK construction industry; to measure their opinions of the frequency and severity of the contribution of the sources to the cost of construction plant theft. The questionnaires were administered to 220 companies and 51 of them were fully completed and used in this analysis to derive the probabilities of sources contributing to the cost of plant theft.Findings - The results of the analysis show that the rates of contribution to the cost of plant theft varies significantly between the sources, with ‘loss of output’ and ‘increased insurance premium’ ranking as the top-2 costs of plant theft in the UK construction industry. The rates derived in this study can be used to reasonably estimate the cost of plant theft especially when there is need to justify the adoption of measures that can mitigate plant theft.Originality/value - This study generated rates of contribution by factors which contribute to the overall cost of theft of construction plant in the UK. These rates can provide a more reliable estimate of the cost of plant theft than current estimations which vary significantly.

RURAL INFRASTRUCTURE DEVELOPMENT IN THE VOLTA REGION OF GHANA: BARRIERS AND INTERVENTIONS

Fri, 02 Aug 2013 00:00:00 +0100

Abstract

Purpose - Although a high proportion of the Ghanaian population live and work in under-developed areas, research on rural infrastructure development is scarce. This study seeks to explore the challenges confronting rural infrastructure development and the requisite incentives needed to boost it.Design/methodology/approach - An inductive methodological approach was adopted using a structured questionnaire to survey the perceptions of rural contractors.Findings - Incentive systems identified include the provision of mobilization funds for projects; a plant pool for rural contractors; special allowance for rates of project items; and provision of letters of credit to secure loans for projects. Key challenges confronting rural construction were identified as a lack of financial institutions willing to support projects with funds; lack of potable water; lack of good health care systems; and lack of a goods market to supply materials. Research limitations/implications - Identification of challenges and incentive systems for rural infrastructure development provides an opportunity to reinvigorate rural infrastructural development in sub-Saharan Africa.Practical implications - The study will be of value to all project partners throughout the supply chain who contemplate rural infrastructure development.Originality/value - The paper presents a novel epitome of rural infrastructure delivery in the developing country of Ghana.

IMPACT OF BUSINESS DIVERSIFICATION ON SOUTH AFRICAN CONSTRUCTION COMPANIES' CORPORATE PERFORMANCE

Fri, 02 Aug 2013 00:00:00 +0100

Abstract

Purpose - This paper investigates and examines whether there is any significant relationship between the extent of business diversification and the performance of construction firms in South Africa. The rationale for the examination stems from the view that the relationship between diversification and the performance of construction firms raises important issues in strategic management and cross border business. In contractors’ growth however, there is a dearth of empirical research and theoretical arguments regarding the effects of business diversification on construction company performance in South AfricaDesign/methodology/approach - The study employed the use of a case study and archival approaches using semi-structured interviews to elicit primary qualitative and quantitative data over a period of five years for large construction companies listed in Grade 7-9 on the Construction Industry Development Board (cidb) contractor register. The scope of services and geographic diversification are computed from the sourced data. Dependent variables are the measure of performance using Return on Total Asset (ROTA), Return on Capital Employed (ROCE) and Profit Margin (PM); independent variables used are service/Product Diversification (PD) and Geographic Diversification (GD); while control variables used are size, age, technical capability and capital structure of the construction firms.Findings - It emerged that established construction companies on the CIDB Contractor Registers perform and diversify more in their service/product better than the newly upgraded contractors and this was evident in their performance with respect to the profit margin. The results also indicated that there are no statistically significant differences in the performance of diversified and undiversified firms although, diversification was found to have a positive impact on the corporate performance of construction companiesResearch limitations/implications - The research was limited to large firms (Grade 7-9) listed on the CIDB contractor register. Efforts should be made to expand the research by incorporating a larger sample size and by increasing the length of years examined in a future study. The information used for GD and PD was limited to the information supplied by the firmsPractical implications - The findings of this study suggest that geographic and product diversification has an impact on the profit margin of construction companies. These findings aligned to the view of strategic management, finance and international business that diversification is related to corporate performance. The findings of this study suggests that it is may be important for construction companies in South Africa to expand to different regions and diversify along the lines of their core business of construction, in order to improve their corporate performance. Originality/value - The outcome of the research is of immeasurable value to decision makers and managers of construction companies, as it will help in making viable corporate strategic diversification decisions. The study also engenders a better understanding of the effect of both product and geographic diversification on the performance of contractors