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Boutfskis, V and Fellows, R F (1997) Appraising the performance of long span sportshalls and swimming pools in Greece. Journal of Financial Management of Property and Construction, 2(02), 39–58.
Deakin, M (1997) The development of computer-based information systems for local authority property management 2 : the application. Journal of Financial Management of Property and Construction, 2(02), 59–84.
Goodhew, S, Bird, P and Paterson, I (1997) The financial implications of using natural ventilation to reduce the levels of radon gas within an existing 'period' dwelling. Journal of Financial Management of Property and Construction, 2(02), 85–104.
Reszka, M and Edwards, P J (1997) Joint ventures: a construction project case study. Journal of Financial Management of Property and Construction, 2(02), 5–20.
Woodhead, R (1997) Exploring the hurdle rate in preparation for a Value Management Workshop Planning Session. Journal of Financial Management of Property and Construction, 2(02), 21–38.
- Type: Journal Article
- Keywords: value management; corporate finance; capital investments
- ISBN/ISSN: 1366-4387
- URL: http://www.emeraldinsight.com/journals.htm?issn=1366-4387
- Abstract:
Experienced clients of the construction industry repeatedly have many property teams based within geographical regions or organisational divisions. Individual property managers often propose projects which compete for internal budgetary approval This paper explains how senior managers make capital investment decisions and evaluate the Commercial attractiveness of the proposal on financial grounds. During project appraisal the capital sanctioning decision is often linked to a Comparison between the project's Internal Rate of Return (IRR) and the organisation's hurdle rate. Whilst other appraisal techniques are used, this method of selecting projects is prominent. A worked example is provided in the appendix. This paper explains how the hurdle rate is established in experienced client organisations. Experienced clients are taken as those firm's with a core business outside property related industries and who have experience of major project procurement. The paper commences by placing the work in the context of a larger research project exploring how clients of the construction industry arrive at the decision to build. The paper leans heavily towards the subject area of corporate finance in order to link Capital budgeting to the commissioning of buildings. Its intention is to allow Value Management (VM) academics and facilitators specialising in Front-End VM and Preproject VM to bring the accountant's perceptions into the decision making process.