Exam Revision

Question 1

What is building economics?

Answer 1

How we look at and manage resources

Question 2

Why is it necessary to understand building economics?

Answer 2

To be able to:
Describe: What? How much?
Analyse and explain: How? Why?
Predict: When?
To make better decisions

Question 3

How is industry performance measured?

Answer 3

The accuracy in measuring productivity is crucial to determine proper estimating, cost control, scheduling, and resource management
Investment clock
1. Labour productivity: the ratio of real output produced to the quantity of labours employed
2. Capital productivity measured as output per unit capital
3. Multifactor productivity: the ratio of output to combined inputs of labour and capital
4. Total factor productivity

Question 4

What is productivity and why it important but compromised?

Answer 4

Labour productivity: is the ratio of output to input of labour
Technical productivity: is the ratio of output to input of a physical system
Economic productivity: is the ratio of output to input of a business system

Defined as the measure of the rate at which work is performed
Output compared to the input; higher variance = productivity

Question 5

What are reasons for construction firms to go bankrupt?

Answer 5

• Low productivity due to illegal behaviours: unprotected industrial action (strikes – pre ABCC) (unions support labour activity)
• Insolvency & in-security of payment: driven by unethical builders who delay the payment of subcontractors, using non-payment as a bargaining tool to reduce subsequent claims: SOP regime does not secure payment due to poor quality adjudicators and complexity of legislation

Question 6

What are available remedies to emerging issues?

Answer 6

• Reinstating ABCC via Building and Construction Industry (improving productivity) Act 2016
• The act aims to: prohibit unions from organising unlawful industrial action and picketing/ set out a regime to compensate businesses who suffer loss as a result
• Empower the government to prepare and issue a Building Code (2016) – legislative framework on how we can improve productivity

Question 7

What is Ethics all about?

Answer 7

Subjective
Ethics generally constitutes:
1. A system of moral principles
2. Rules of conduct in respect of human actions
3. Individual moral principles

Question 8

Why is it important to promote ethical practices?

Answer 8

• Maximise profit in the long run
• The need for regulation in areas not covered by legally enforceable duties
• Ethical judgement are inferred in many construction activities such as tendering and dispute resolution
• To bring back faith in the construction industry

Question 9

What is the term “professional” all about?

Answer 9

A person who has had some specific advanced education to become fitted for a line of work and has a diploma to certify to this level of expertise
The professional must be ethical and follows the ethical codes of conducts in his profession
Education plus experience that has been polished

Question 10

What are the roles & duties of clients?

Answer 10

Client – private and/or public sector: the one who is paying the bills. The client is always looking for function, efficiency and overall value.
Duties: selection of competent consultants and contractors, define and specify the outcomes required from the project, make appropriate decisions and give approvals with a selected timescale, provide payment, comply with oh&s standards, manage agency problems efficiently

Question 11

What are the roles & duties of consultants?

Answer 11

Consultant – architects, structural engineers, m & e engineers, quantity surveyors, project managers
Duties: aware of regulations and standards, make sure the client is aware of their duties, eliminate hazards and manage foreseeable risks, provide/share information with clients and contractors, coordinate with other parties to make sure risks are controlled and managed, monitor construction work, perform ethically

Question 12

What are the roles and duties of contractors?

Answer 12

Contractor – appointed by the client and responsible for delivering the project on time and within cost, managing the construction work and coordinating the work of the subcontractors
Duties (corporate): selecting the right jobs to bid, preparing the cost estimate, submitting the bid, procuring the payment and performance bonds, scheduling the work, securing project operating capital
Duties (project level): Controlling progress and expenditures, communicating effectively with owner and designer, sharing information, ensuring working conditions, managing construction risks, transferring risks to subcontractors, coordinating and monitoring the work of subcontractors, conduct all work ethically

Question 13

What are the roles and duties of construction managers?

Answer 13

Construction manager – Hired for overall planning, coordination and control, aiming to produce a functional and financially viable project, appointed by the client to take care of most of the things, assist and advises the client
No CM = scope creep (variations), poor requirements, lack of resources, unrealistic planning
Duties: suitable advise to clients regarding their duties, specifying objectives, budgeting, scheduling and planning, monitor oh&s, resource efficiency through procurement of labour, materials and equipment, proper coordination and control of planning, design, estimating, contracting and construction, developing effective communications and mechanisms for resolving conflicts

Question 14

How is professional liability determined?

Answer 14

You are liable for yourselves, whether you are an employee or a subcontractor
Professionals have a legal duty to do their work to a reasonable standard expected of their profession
If they perform work without duty of care, which results in loss/damage, they can be sued and held liable

Question 15

What is professional negligence and what is the remedy?

Answer 15

Three key elements:

1. There must be a duty of care
2. The professional does not exercise the required standard of care, resulting in an error
3. The error must cause loss/damages

Question 16

What can professional institutes offer to members?

Answer 16

• Offer a career avenue
• deliver broad benefits to society,economy and the people in the industry
• social benefits of providing advice, regulate members, consumer protection
• Education, ethics and examinations

Question 17

What is professional standards legislation – meta regulation

Answer 17

A group of people in a learned occupation who are entrusted with maintaining control or oversight of the legitimate practice of the occupations
Not for profit organisation, maintain the standard of a practice, safeguard public interest,
Example: The royal Australian Institute of Architects – code of conduct

Benefits: high standard of ethics, obligations, protects the reputation

Question 18

What is industrial relations all about and why is it relevant to your profession?

Answer 18

A multidisciplinary field that studies the collective aspects of the employment relationship, concerned with social justice & fair employment
Management of the relationship between management and labour
Relationship between employers and employees
Management of the relationship between management and employees
Another branch of human resources management
Dispute management between builders and unions

Question 19

What are the objectives of IR

Answer 19

Uninterrupted production, reduction in industrial disputes, high morale of the employees, higher efficiency/productivity, job satisfaction, work life balance

Question 20

What is the role of unions in the industry and how is it regulated?

Answer 20

Organisations formed to represent and protect rights of workers, their primary function is to protect the in interest of workers against unfair practices. Traditionally focused on pay rates, work conditions and job security
Their objectives: representation, negotiation, voice in decisions affecting workers, member services

Question 21

What is the relationship between employees, employers & government in the industry?

Answer 21

Main parties in IR: Employee, employer and government
Employers associations, trade unions and courts
Direct relationship between you and employer
Employees have more rights, protected by the government

Question 22

How can employment laws protect your rights?

Answer 22

Fair work commission and fair work ombudsman

Question 23

What is sham contracting and how is it regulated?

Answer 23

A device that attempts to disguise an employment relationship as one of client and independent contractor. Allows employers to avoid costs associated with standard forms of employment such as annual leave, sick leave & redundancy payments

Question 24

What are the causes of industrial disputes?

Answer 24

A state of disagreement over a particular issues between an employer and its employees, resulting in industrial actions
Trade union policies: Union rivalry, non-cooperative approach
Legal & political: Multiplicity of labour law, political interference
Economic: wages, incentives, benefits, working condition
Management practices: unfair labour practices, ineffective supervision, violation of acceptable norms

Question 25

What are the common unethical behaviours in IR?

Answer 25

Unethical conduct: Coercion, discrimination, unlawful strikes, unlawful entry by union officials
Coercion: force someone to do something they don’t want to do through intimidation or threats

Question 26

What are the drivers of IR reform?

Answer 26

Unethical conduct

The need to improve workplace relations framework

Question 27

What is the legal framework to regulate IR and deal with disputes?

Answer 27

BCIIP & ABCC: Seeks to impose penalties on organising unlawful industrial action, grant compensation for losing business as a result of unlawful industrial action, impose penalties on unions for coercing employees and employers, empowers the minister to issue a building code which is a code of practice certain persons must comply with (government projects)

Building code: code for the tendering and performance of building work, amended under the BCIIP to reduce two-year transition period for enterprise agreement content rules, contractors wanting to undertake commonwealth funded building work now have until august 2017 to ensure their enterprise agreements are code-compliant

Question 28

What are the illegal practices in procurement?

Answer 28

Collusive tendering

Contractor’s abuse of competition: bid rigging/ collusive tendering, cover bid, tender fees, industrial association, abuse of market power

Question 29

Why is risk management so critical for professionals?

Answer 29

Risk matters because it could affect objectives
The goal of RM is to minimise potential negative risk while maximising potential positive risks in order to fulfil project goals/ targets

Question 30

What are the most important techniques used in practice?

Answer 30

Risk identification, qualitative risk analysis, quantitative risk analyse, risk response planning, risk monitoring & control
Risk matrix: probability & impact

Question 31

What is risk?

Answer 31

The possibility of loss or injury or an event or action that may adversely affect an organisation’s ability to achieve its objective and execute its strategies

Question 32

What are the different types of risks?

Answer 32

Legal, financial, technical, natural hazards, market conditions, government regulations, management problems, schedule delays, cost overruns, technical/quality problem

Question 33

Why is it important to know about Value Management?

Answer 33

To improve value for minimal cost

Improve, save, increase, build, satisfy, quality, money, time, profits, teamwork, customer

Question 34

Why is it important to maintain a good WLB?

Answer 34

It is important for our health, stress levels, greater satisfaction, greater productivity, improved health and greater focus & concentration

Question 35

How can WLB be achieved in the construction industry?

Answer 35

Develop a non-generic WLB policy that relates directly to the construction industry including: childcare facilities, wellness programs, flexible hours, job rotation, study leave, pair paternal leave

Question 36

Explain the range of legislative measures to limit abuse of fair competition in tendering for commonwealth funded building projects in Australia

Answer 36

The building code (2016) section 11C regarding parties must not engage in collusive tendering practices such as;

• any agreement between tenderers as to who should be the successful tenderer
• any collaboration between tenderers on prices or conditions to be included in contracts without the consent of the client

Question 37

Describe three forms of unlawful conduct by trade unions in construction projects and give one example for each

Answer 37

• Unprotected industrial action
• Right of entry: Kane vs CFMEU
• Coercion
• Adverse Action
• Freedom of speech

Question 38

Is it only tenderers who may abound the fair competition arrangement in construction projects?

Answer 38

No, clients can also abuse the tendering process through price signalling, breech of confidentially, etc

Question 39

Why has it become difficult for trade unions to organise a protected industrial action throughout Australia since Dec 2016?

Answer 39

Since the re-introduction of the ABCC it has become much more political and must go through more tedious process to undertake protected action such as ballot systems, etc.