Different Market Methods for Transferring Financial Risks in Construction

Brockett, Patrick L.; Golden, Linda L.; Betak, J.

doi:10.5772/intechopen.84748

Cited by 11 publications

(9 citation statements)

References 2 publications

(2 reference statements)

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“…To achieve more robust estimation of whether construction projects are economically sustainable, scholars have recommended that risk modeling incorporate additional factors such as natural disasters and special vulnerabilities of the local built environment, rather than continuing to focus narrowly on accidents at construction sites [66,67]. Sustainable risk management also needs plentiful information on potential risks if they are to be effectively managed.…”

Section: Discussionmentioning

confidence: 99%

Identifying Risk Indicators for Natural Hazard-Related Power Outages as a Component of Risk Assessment: An Analysis Using Power Outage Data from Hurricane Irma

Yum

Son

et al. 2020

Sustainability

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Extensive use has been made of lifecycle-cost assessment to enhance the cost-effectiveness and resilience of facilities management. However, if such assessments are to be truly effective, supplemental information will be needed on the major costs to be expected over buildings’ entire lives. Electricity generation and distribution systems, for example, are absolutely indispensable to industry and human society, not least in the operation of buildings and other infrastructure as networks. The widespread disruption that ensues when such power systems are damaged often carries considerable repair costs. Natural disasters likewise can cause extensive societal, economic, and environmental damage. Such damage is often associated with lengthy power outages that, as well as being directly harmful, can hinder emergency response and recovery. Accordingly, the present study investigated the correlations of natural hazard indicators such as wind speed and rainfall, along with environmental data regarding the power failure in Florida caused by Hurricane Irma in 2017 utilizing multiple regression analysis. The environmental data in question, selected on the basis of a thorough literature review, was tree density. Our analysis indicated that the independent variables, maximum wind speed, total rainfall, and tree density, were all significantly correlated with the dependent variable, power failure. Among these, rainfall was the least significant. Despite there being only three independent variables in the model, its adjusted coefficient of determination (0.512) indicated its effectiveness as a predictor of the power outages caused by Hurricane Irma. As such, our results can serve the construction industry’s establishment of advanced safety guidelines and structural designs power transmission systems in regions at risk of hurricanes and typhoons. Additionally, insurance companies’ loss-assessment modeling for power-system facilities would benefit from incorporating the three identified risk indicators. Finally, our findings can serve as a useful reference to policymakers tasked with mitigating power outages’ effects on infrastructure in hurricane-prone areas. It is hoped that this work will be extended, facilitating infrastructure restoration planning and making societies and economies more sustainable.

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Section: Discussionmentioning

confidence: 99%

Identifying Risk Indicators for Natural Hazard-Related Power Outages as a Component of Risk Assessment: An Analysis Using Power Outage Data from Hurricane Irma

Yum

Son

et al. 2020

Sustainability

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“…It is a type of insurance with peculiar characteristics, as despite presenting the formal elements typical of the insurance market (policy, claim, and premium), it analyzed the risk in the context of the project itself and with great emphasis on the principal in an environment of financing of the respective project (Brockett, Golden, & Betak, 2019). In addition, the SB refers to a 'loss avoidance' mechanism designed to pre-qualify individuals based on their credit capabilities and constructive expertise.…”

Section: Context -Surety Bond (Sb) Context -Surety Bond (Sb)mentioning

confidence: 99%

Surety Bond in Infrastructure in Brazil: Transaction Costs and Agency Theory Perspectives

2022

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Context: infrastructure projects assume the use of intensive capital and the participation of several actors, where the institutional environment influences their respective contractual arrangements. A financial instrument for project governance is surety bond (SB), whose purpose is to ensure compliance with the contracted object. However, research involving SB in the context of emerging countries such as Brazil is still incipient. Objective: this study aims to understand the use of SB in Brazil and proposes a conceptual model for analyzing transactions. It contributes to the literature by investigating the relationship between the actors and transactions involved in SB using the transaction costs theory and agency theory perspectives. Methods: this study adopts a qualitative methodology using primary data collected with 10 in-depth semi-structured interviews with market professionals with substantial experience in SB. In addition, it uses secondary data based on debate and a specific lecture on the topic involving the reality and the use of SB. Results: the findings indicate that the agency problem and the high transaction costs in Brazil prevent the development of this risk coverage market, giving rise to targeted public policies. Conclusion: the proposed conceptual model reflects the various specific transactions in the use of SB, the underlying phenomena and the validation of propositions related to market failures, and the institutional environment’s influence.

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“…Although there are agreements in place not to hold the contractor responsible for losses caused by defaulting subcontractors, suppliers or clients, most contractors for unavoidable reasons are unable to abide by the terms of the agreement. Brockett et al (2019) have discussed in detail default by subcontractors.…”

Section: Managing Financial and Economic Risksmentioning

confidence: 99%

Managing financial and economic risks associated with high-rise apartment building construction in Sri Lanka

Perera

Samarakkody

Nandasena³

2020

JFMPC

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Purpose The financial and economic risks associated with high-rise building projects are many. They make project stakeholders to undergo financial difficulties. However, very few past studies have discussed the management of these risks. Thus, the purpose of this paper is to provide a guideline for the effective management of these financial and economic risks associated with high-rise apartment building projects in Sri Lanka. Design/methodology/approach The study adopted the mixed research approach. A literature review and semi-structured interviews were used to identify the financial/economic risk factors of high-rise apartment building projects and their risk response measures. The data obtained were used for a questionnaire survey, and the findings were analysed using the mean score method. They were validated using pattern matching. The risk response measures that were identified were ranked according to their effectiveness. Findings The findings revealed that “financial problems arising from errors in estimating” is the most significant financial and economic risk factor faced by the property developers involved in high-rise apartment building projects, while “poor contract management” is the most significant financial and economic risk factor faced by the contractors of these projects. Originality/value The study recommends a guideline to manage, using effective risk response measures, the financial and economic risk factors that are significant in high-rise apartment building projects.

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Different Market Methods for Transferring Financial Risks in Construction

Cited by 11 publications

References 2 publications

Identifying Risk Indicators for Natural Hazard-Related Power Outages as a Component of Risk Assessment: An Analysis Using Power Outage Data from Hurricane Irma

Identifying Risk Indicators for Natural Hazard-Related Power Outages as a Component of Risk Assessment: An Analysis Using Power Outage Data from Hurricane Irma

Surety Bond in Infrastructure in Brazil: Transaction Costs and Agency Theory Perspectives

Managing financial and economic risks associated with high-rise apartment building construction in Sri Lanka

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