Critical Factors Affecting Construction Price Index: An Integrated Fuzzy Logic and Analytical Hierarchy Process
31 Aug 2020-Journal of Asian Finance, Economics and Business (Korea Distribution Science Association)-Vol. 7, Iss: 8, pp 197-204
TL;DR: In this article, the authors presented a fuzzy decision-making approach for calculating critical factors that affect the construction price index in Vietnam, which was implemented based on in-depth interviews of experts in the construction industry in Vietnam.
Abstract: Nowadays, many construction engineering and technology enterprises are evolving to find that prosperity is driven and inspired by an open economy with dynamic markets and fierce multifaceted competition. Besides brand and product uniqueness, the ability to quickly provide customers with quotes are matters of concern. Such a requirement for prompt cost estimation of construction investment projects with the use of a construction price index poses a significant challenge to contractors. This is because the nature of the construction industry is shaped by changes in domestic and foreign economic factors, socio-financial issues, and is under the influence of various micro and macro factors. This paper presents a fuzzy decision-making approach for calculating critical factors that affect the construction price index. A qualitative approach was implemented based on in-depth interviews of experts in the construction industry in Vietnam. A synthetic comparison matrix was calculated using Buckley approach. The CoA approach was applied to defuzzified the fuzzy weights of factors that affect the construction price index. The research results show that the top five critical factors affecting the construction price index in Vietnam are (1) consumer price index, (2) gross domestic product, (3) basic interest rate, (4) foreign exchange rate, and (5) total export and import.
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TL;DR: The results reveal that the presented hybrid model has advantages in granting flexibility to the preferences of decision makers and can be useful to make purchasing decisions for many kinds of real estate property under uncertain business environments.
Abstract: Real estate markets play an essential role in the economic development of both developed and developing countries. Investment decisions in private real estate demand the consideration of several qualitative and quantitative criteria. Especially in Vietnam, demand for housing, apartments are rising which has resulted because of the migration from rural to urban areas. This study aims to determine the influencing factors of the real estate purchasing behavior and then recommend a grey Multi-Criteria Decision Making (MCDM) support model to evaluate real estate alternatives based on a numerical example in Vietnam. A set of essential criteria are identified based on experts’ opinion, and the proposed determinants are initial investment, maintenance cost, prestige location, distance to interesting places, parking lot, public transportation, property condition, total area size, number of rooms, and neighbors. The subjective weights were obtained by using the Decision-Making Trial and Evaluation Laboratory (DEMATEL) model, and the Grey Relational Analysis (GRA) technique is employed to prioritize and rank real estate alternatives. The results reveal that this approach can be useful to make purchasing decisions for many kinds of real estate property under uncertain business environments. These findings indicate that the presented hybrid model has advantages in granting flexibility to the preferences of decision makers.
11 citations
Cites methods from "Critical Factors Affecting Construc..."
...(Aldalou & Percin, 2020; Brauers & Zavadskas, 2006; Fasanghari & Montazer, 2010; Giannakis et al. 2020; Ishtiaq & Siddiqui, 2019; Nguyen et al. 2020; Singhal, Tripathy et al. 2018; Škrinjarić, 2020; Yalcin et al. 2012; Ying-Yu & De-Jian, 2011, )....
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...Besides, Nguyen et al. (2020) studies are based on the viewpoints of people with real housing needs in order to investigate the determining factors affecting apartment prices in Ho Chi Minh City with the Hedonic method to establish a scientific foundation for more accurate pricing in the real…...
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TL;DR: In this paper, the authors present critical risk factors of office building projects in the construction phase in Ho Chi Minh City, Vietnam, based on a questionnaire survey based on the likelihood and consequence level of risk factors.
Abstract: Risks and uncertainty are unavoidable problems in management of projects. Therefore, project managers should not only prevent risks, but also have to respond and manage them. Risk management has become a critical interest subject in the construction industry for both practitioners and researchers. This paper presents critical risk factors of office building projects in the construction phase in Ho Chi Minh City, Vietnam. Data was collected through a questionnaire survey based on the likelihood and consequence level of risk factors. These factors fell into five groups: (i) financial risk factors; (ii) management risk factors; (iii) schedule risk factors; (iv) construction risk factors; and (v) environment risk factors. The research results showed that critical factors affecting office building projects are natural (i.e., prolonged rain, storms, climate effects) and human-made issues (i.e., soil instability, safety behaviors, owner’s design change) and the schedule-related risk factors contributed to the most significant risks for office buildings projects in the construction phase in Ho Chi Minh City. They give construction management and project management practitioners a new perspective on risks and risk management of office buildings projects in Ho Chi Minh City and are proactive in the awareness, response, and management of risk factors comprehensively.
8 citations
23 Aug 2019
TL;DR: In this paper, the authors employed time series annual data for the period from 1978 to 2017 to evaluate the contribution of foreign direct investment (FDI) and tourism industry (TR) to Sri Lanka's Gross Domestic Product (GDP).
Abstract: This study employs time series annual data for the period from 1978 to 2017 to evaluate the contribution of foreign direct investment (FDI) and tourism industry (TR) to Sri Lanka’s Gross Domestic Product (GDP). Sri Lanka’s liberalization and deregulation policies put into effect in 1977 have attracted a huge volume of foreign direct investments into the country. However, the protracted civil war affected the country’s economic base and resulted in poor performance. Recently a more conducive environment has been established after the three decade long ethnic war came to an end. In this context, the Sri Lankan government has taken positive measures to attract foreign direct investment and boost tourism in the country. This study intends to evaluate the contribution of foreign direct investment (FDI) and tourism industry (TR) to the Gross Domestic Product of Sri Lanka, as these two factors are considered to be very effective at increasing the GDP of a country. Unit root test was done on the variables and the method chosen was the Augmented Dicky – Fuller (ADF) test. Co-integration analysis was used for the long run relationship and the Granger causality test was performed to investigate the causal relationship. The empirical study shows that there is a positive and statistically significant relationship between the variable’s TR and FDI to the GDP in the long run. Results of Granger causality test implied that the two-way causality promoted the economic growth of Sri Lanka. E-Views 9 econometrics software was used for the time series data analysis.
7 citations
TL;DR: The research results showed that the construction price index prediction model based on the K-Nearest Neighbors (KNN) regression method has fewer errors than the traditional method.
Abstract: Machine Learning is a subset and technology developed in the field of Artificial Intelligence (AI). One of the most widely used machine learning algorithms is the K-Nearest Neighbors (KNN) approach because it is a supervised learning algorithm. This paper applied the K-Nearest Neighbors (KNN) algorithm to predict the construction price index based on Vietnam's socio-economic variables. The data to build the prediction model was from the period 2016 to 2019 based on seven socio-economic variables that impact the construction price index (i.e., industrial production, construction investment capital, Vietnam’s stock price index, consumer price index, foreign exchange rate, total exports, and imports). The research results showed that the construction price index prediction model based on the K-Nearest Neighbors (KNN) regression method has fewer errors than the traditional method.
5 citations
Cites methods from "Critical Factors Affecting Construc..."
...To categorize the clauses of general conditions in contracts, Salama Dareen and El-Gohary Nora [19] created a machine-learning-based text- classification algorithm....
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01 Apr 2021
TL;DR: In this article, the authors examined the main trends in the construction industry as one of the most important economic sectors and examined the resulting indicators of the industry in conjunction with macroeconomic indicators.
Abstract: This article examines the main trends in the construction industry as one of the most important economic sectors. Construction makes a significant contribution to the economic potential of the country it forms tangible assets and is an integral part of the wealth of the nation. We examined the resulting indicators of the industry in conjunction with macroeconomic indicators. The studies were carried out using statistics from the World Bank, the countries of the European Union and the Russian Federation in the period from 2000 to 2020. The study set out to compare the indicators affecting construction activities, investment, incomes and other sectors. In parallel we looked at the factors affecting the volume of completed construction works by means of correlation analysis to identify symbiotic relationships between the selected data. The main goal of the study is to identify the factors affecting the performance of the industry and confirm by use of quantitative analysis.
5 citations
References
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TL;DR: Dulberger and Gordon as discussed by the authors pointed out that the BLS already makes substantial corrections for quality change; that quality improvements and new products accrue only to the rich; and that procedures to make more extensive quality adjustments, valuations of new products, and adjustments for commodity and outlet substitution are impractical.
Abstract: After presenting major findings and recommendations, the CPI Commission reiterates the estimate of a 1.1 percentage point per annum upward bias. It rejects the contention that the BLS already makes substantial corrections for quality change; that quality improvements and new products accrue only to the rich; and that procedures to make more extensive quality adjustments, valuations of new products, and adjustments for commodity and outlet substitution are impractical. The bias in the CPI can be sharply reduced, as the authors detail in this paper. Coauthors are Ellen R. Dulberger, Robert J. Gordon, Zvi Griliches, and Dale W. Jorgenson.
438 citations
TL;DR: In addition to materials, labor, equipment, and method, construction cost depends on many other factors such as the project locality, type, construction duration, scheduling, and the extent...
Abstract: In addition to materials, labor, equipment, and method, construction cost depends on many other factors such as the project locality, type, construction duration, scheduling, and the extent...
130 citations
"Critical Factors Affecting Construc..." refers background in this paper
...In countries that neighbor Vietnam, as well as many other parts of the world, construction price indices are assessed by the balance of market supply and demand (Rafiei & Adeli, 2018)....
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TL;DR: Findings from this study indicate that the pollution heaven hypothesis and the EKC curve are generally valid in the region and FDI has a strong impact on the environment.
Abstract: This study is conducted to examine the concerns of the foreign direct investment (FDI) causing environment degradation and also to test the validity of the traditional Environmental Kuznets Curve (EKC) in the context of emerging markets in the Asian region. Data of these countries from 1980–2016 are utilised. This study employs panel cointegration Fully Modified Ordinary Least Squares (FMOLS), which treats the endogeneity problem, and its estimators are adjusted for serial correlation. Moreover, this study also uses panel Dynamic Ordinary Least Squares (DOLS), which includes contemporaneous value, leads and, lags of the first difference of the regressors to correct endogeneity problems and serial correlations. Findings from this study indicate that the pollution heaven hypothesis and the EKC curve are generally valid in the region. In addition, FDI has a strong impact on the environment.
77 citations
TL;DR: In this paper, the authors derived leading indicators for construction prices in the United Kingdom based on two experimental methods: turning points of the basic indicators in relation to construction price turning points; and predictive power of lags of basic indicators, and concluded that unemployment level, construction output, industrial production and ratio of price to cost indices in manufacturing are consistent leading indicators of construction prices.
Abstract: An understanding of future trends in construction prices is likely to influence the construction investment strategy of a variety of interested parties, ranging from private and public clients to construction contractors, property speculators, financial institutions, and construction professionals. This paper derives leading indicators for construction prices in the United Kingdom. These indicators are based on two experimental methods: turning points of the basic indicators in relation to construction price turning points; and predictive power of lags of the basic indicators. It is concluded, based on the analyses, that unemployment level, construction output, industrial production, and ratio of price to cost indices in manufacturing are consistent leading indicators of construction prices. Building cost index and gross national product constitute coincident indicators. ‘Popular’ macro-economic time series such as nominal interest rate, inflation rate, real interest rate, all share index and money supply...
72 citations
"Critical Factors Affecting Construc..." refers background in this paper
...In the United Kingdom, Akintoye, Bowen, and Hardcastle (1998) found leading factors that affect construction price indices include interest rates, investment intention, new empowerment of architects, drawing production, requirements, orders, expected work volume, and construction costs....
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TL;DR: In this paper, the authors investigated the political, economic, and legal risks faced by foreign firms when undertaking construction projects in Vietnam and recommended ways to respond to these risks. But they did not investigate the types of PEL risks faced and the risk response techniques adopted.
Abstract: The aim of this research is to investigate the political, economic, and legal (PEL) risks faced by foreign firms when undertaking construction projects in Vietnam. The specific objectives are to investigate the types of PEL risks faced and the risk response techniques adopted. The data collection instrument was a questionnaire with open ended questions. The data collection method was in-depth face to face interviews with 18 experts from France, Hong Kong, Malaysia, Singapore, and the United States who have managed construction projects in Vietnam. The major risks faced include corruption, termination of public projects, bureaucratic administrative system to obtain permits and approvals, changing and inconsistent regulations, inadequate legal framework, fluctuation of exchange, and interest and inflation rates. Ways to respond to these risks are recommended by the experts. Foreign firms undertaking construction projects in Vietnam may make use of these findings to identify their PEL risks and determine the...
71 citations
"Critical Factors Affecting Construc..." refers background in this paper
...Therefore, construction price indices represent the fluctuation (increase or decrease) of work construction costs over time (Ling & Hoang, 2010)....
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