The three Pyramids of Giza are considered a wonder of the ancient world. They were built to serve as a tomb for the great pharaohs of Egypt. The pyramids maintain historical significance and have continued to be studied for decades. One of the primary mysteries that remain mostly unsolved is the method of construction that was used to erect such humongous structures that have been able to withstand centuries. The lack of technology has made it a difficult practical concept to accept, leading to the rise of various theories on the construction of the Pyramids at Giza.
While there are a lot of absurd and supernatural theories, some suggestions that have been developed by archaeologists, architects, and engineers are based on realistic evidence and calculation. The pyramids were made from stone, laid at an angle on rectangular foundation, with the sides eventually meeting at an apex. After examination, it is evident that the stone was cut into large blocks and moved into position. Historical evidence suggests that a significant labor force consisting of Egyptian citizens and slaves was involved (Sood, 2016). However, the blocks based on their size would have weighed several tons, which creates significant difficulties of raising them to the heights of the pyramid.
Two major theories about the construction techniques used by the Egyptians are based on the premise of utilizing simple machines. Despite being an advanced society for their time, it is unknown how primitive their use of simple machines was since a lot of these devices were not yet discovered. The most common theory suggested by practically every available source on the subject, including historians, archaeologists, and engineering experts, is that ramps were used to slide blocks up the pyramid by groups of workers. The ramps were constructed on the external perimeter of the pyramid, eventually coiling around as construction progressed.
Lime clay or some lubricant was used to reduce friction, making it easier to slide the blocks. Once at the necessary level, levers or rockers could have been used to move the block into the necessary position (Sayre, 2014). A second theory purported by some Egyptian historians based on correlating data suggests that the Egyptians used a pulley and fulcrum system which would have been a basis for a type of primitive crane. Pulleys were an existing technology on ships (Sood, 2016). Meanwhile, cranelike technologies were known to exist to lift water in the Egyptian irrigation system. The blocks would have been loaded unto a platform of some sort and hoisted to the position and level which was necessary, guided by the applied force and using a fulcrum. A series of cranes would have been built around and on the structure during construction (Brier, 2007).
Out of the two, the ramp theory is more plausible. Engineers and historians consider the crane theory impractical for a number of reasons. The technology was simply not sophisticated enough at the time to deliver such heavy weights to towering heights. Wood, which was already scarce in Egypt, could not practically lift multi-ton blocks at leverage without breaking, nor was there room on the sides of the pyramids to place such structures (Brier, 2007). The ramp theory stands to be more plausible due to the design of the pyramids. Its shape allowed to have built linear ramps in a zig-zag fashion which would have provided a slope necessary to move the blocks based on known volume and dimensions. Based on mathematical calculations, it is evident that the use of ramps correlates with the construction rate and time which would have been necessary to construct the pyramids using the available workforce (De Haan, 2014). The ramp technology is simple enough to deduce that Egyptians were able to construct it as a structure. Furthermore, a ramp system is able to reach the top of the pyramid, in theory allowing to deliver massive stone blocks adhering to any laws of physics or mechanics.
Young children are delicate, loving, naive, and unaware of the events happening around them. It is the duty of guardians and parents to monitor and address the needs of these individuals. Evidence reveals that children are abused emotionally, physically, or sexually every day. This happens to be the case because they are vulnerable and incapable of defending themselves. Seltzer, Henderson, and Boss (2016) argue that the overlapping responsibilities of communities, law enforcers, parents, and social workers should be taken seriously to support and protect children. It is surprising that children might be abused in their respective families. Foster care has been embraced in different societies to support the needs of children who are unable to live with their respective siblings or parents. The beneficiaries of foster care may be placed in emergency shelters or homes depending on their situations. Some might be allowed to live with foster parents, friends, or relatives. Before completing the placement process, various ethical issues must be addressed carefully. For instance, the process results in the termination of parental obligations and rights for their children. The aim of this paper is to explain why it would be ethical for parents to relinquish some of these rights in order to maximize the welfare of the targeted children.
Practice Situation
Foster care (commonly referred to as out-of-home support) is taken into consideration when a given child is unable to live with his or her family members (Rochat, Mokomane, & Mitchell, 2016). Different reasons have been presented to support the idea of out-of-home care. Domestic violence or abuse remains a major challenge for many children. Baylis (2013) acknowledges that children placed in different foster care settings are the ones who are abused either physically or sexually. More often than not, households associated with violence tend to report increased cases of child abuse (Miron et al., 2013). Physical violence has been expanded to include a wide range of malpractices. In some cases, children might be restrained or abused verbally. They might be locked in closets or garages for several days.
Neglect has emerged as a major reason for putting children in foster homes. In some cases, children might be living in unhealthy environments or conditions (McSherry, Malet, & Weatherall, 2016). Their emotional needs might also be ignored by their parents or guardians. Emotional abuse is also common in families characterized by drug use or alcoholism. The death of parents and close relatives can result in foster care (Rochat et al., 2016). Some parents might also decide to have some of their children placed in foster care voluntarily. This is usually the case when a given child portrays inappropriate behavior. The decision is also considered when the guardian or parent is unable to meet the child’s needs.
In such cases, social workers and legal professionals should be keen to ensure the rights of the person are taken into consideration. Consultation is necessary to ensure adequate decisions are made throughout the process. The child’s welfare and the rights of parents (or guardians) should be analyzed carefully (Rochat et al., 2016). The ultimate goal is to overcome and address the emerging ethical issues that might have damaging implications on the involved parties.
Presentation of Ethical Dilemma and Literature Review
Ethical Issue
Many scholars, social workers, and ethicists have examined the issue of foster care from different perspectives. Such practices have been influenced by the unique challenges and ethical concerns arising from the issue. To begin with, birth parents will be involved throughout the process. This happens to be the case even when they are not willing to allow their children to be admitted in a foster care setting. Some professionals working with such parents will report numerous challenges and issues that must be resolved expeditiously. The outstanding issue revolves around the relinquishment of parental rights during the adoption process (Seltzer et al., 2016). More often than not, parents will not be willing to have their rights over the targeted children ignored.
This issue amounts to an ethical dilemma because it would be impossible for the identified parents to offer sufficient support or care to the child. This situation has led to diverse opinions from ethicists and social workers. On one side, some ethicists argue that parents should be allowed to retain their rights to their respective children regardless of the existing situations (Baylis, 2013). On the other, a number of moralists have indicated clearly that parents should surrender some of their rights especially when they might not be able to support the welfare of the targeted child (Miron et al., 2013). With such considerations, it has been hard for different players to address the ethical issues revolving around the termination of parental rights in both adoption and foster care cases.
Literature Review
Keddell (2014) indicates that foster care is a wide field focusing on diverse strategies that can be utilized to support the needs of underserved children. The practice seeks to offer adequate interventions to children who might be suffering in the hands of their natural parents. Short-term care is considered when the link between children and their parents is to be maintained. The model is designed in such a way that more parents will have access to the targeted child and reunite after the foster care period expires. Long-term care, on the other hand, seeks to support and empower the child. The selected model should be analyzed and communicated to the involved parties.
Social workers and professionals in adoption or foster care cases are guided by codes of conduct. Such guidelines dictate what should be avoided or done in an attempt to meet the needs of different stakeholders. This notion explains why it would be unacceptable for a child to be adopted or placed in foster support without involving his or her parents. The rights of the targeted child must be taken into consideration throughout the process. Baylis (2013) goes further to indicate that every human services professional and parent involved should focus on the needs of the child.
Evidence suggests that young children grow and develop their faculties effectively when in the hands of their parents. Some fascinating scenarios occur whereby social workers might find it hard to retain a given child in his or her family (Baylis, 2013). In such a case, the use of foster care or adoption is necessary to support the child’s welfare. Unfortunately, this decision has been observed to attract numerous challenges regarding the issue of parental rights over the children.
A study conducted by Rochat et al. (2016) proposed that it was appropriate for families to promote the best environments for their children to realize their full potential. This objective can be achieved when parents offer the right support, resources, and care to their children. Various learning theories can be utilized by parents to induce desirable behaviors and encourage them to pursue their aims in life. When this goal is unattainable, parents should be willing to allow their children to join foster homes. More often than not, alcoholic parents will be encouraged to consider this option in an attempt to support their children. Some parents have been observed to allow their children to join foster care settings without relinquishing their rights over them.
Keddell (2014) believes that the most important thing is to put the needs of children first. In scenarios whereby a child is abused or finds it hard to achieve his or her goals, parents should be willing to be part of the adoption process. The practice is supported by many researchers because it protects the child’s right to a better and successful life. Parents who hold onto to their liberties and rights over their children will only be harming their respective children.
Ethical Principles Involved
The field of ethics has been analyzed widely by many theorists, scholars, and philosophers. These proceedings have led to numerous concepts that can be used to address various ethical challenges affecting humanity. The placement of children in group homes, emergency shelters, or residential facilities is a practice informed by the desire to take good care of human beings who are facing challenges in life (Seltzer et al., 2016). When it comes to placement, the question of parental rights has lingered around for many decades. The problem has worsened because some parents would not be willing to renounce their rights voluntarily. The issue has resulted in a complex dilemma that continues to attract a wide range of ethical principles.
To begin with, the code of ethics dictating the practice of human services professionals such as social workers encourage them to embrace the best strategies to ensure parents relinquish their rights in a voluntary manner. This aim is achieved through the application of appropriate procedures and ethical channels (Rochat et al., 2016). Throughout the process, it is mandatory to involve the child’s parent(s).
The principle of informed consent should be considered by social workers and experts. Parents and children should be informed about the process in a timely manner. Foster parents should be part of the procedures to ensure the child is contented with the situation (Baylis, 2013). Natural parents should be guided to present adequate information about the child’s mental and physical health needs. This understanding will influence the most appropriate treatment approaches.
Ethics theory is a powerful model that can support the process. According to the theory, decisions should be guided by reason and not emotions (Miron et al., 2013). The concept of logical reasoning will ensure critical issues are considered throughout the adoption or foster placement process. That being the case, the model guides professionals to embrace the most appropriate practices that can support the child’s welfare.
Immanuel Kant’s model of categorical imperative is widely utilized in the fields of foster care and adoption. The role of parents, according to the theory, should be to support the welfare of their children. The theory would assert that children in different foster settings should be respected and guided (Keddell, 2014). They ought to receive appropriate treatment as if they were in the hands of their natural parents. Without giving up their rights, parents will not be acting in accordance with this model.
Baylis (2013) believes strongly that Mill’s utilitarianism is a meaningful principle that is applicable in this ethical scenario. This theory focuses on desirable action plans or decisions that will promote happiness and contentment for the greatest number of citizens (Miron et al., 2013). The framework can be used by human services professionals to empower and inform natural parents about the importance of making opposite decisions that seek to maximize the outcomes of the affected children.
Similarly, Pojman’s theory of ethics asserts that human beings should use their knowhow to reward every virtuous action. Wrong deeds must also be punished (Seltzer et al., 2016). The model can be used to explain why parents who are unable to support the development of their children should be willing to surrender their rights. This can be treated as a form of punishment for the inability to empower the children (McSherry et al., 2016). The theory would be applicable in situations whereby children are threatened or abusive by their family members.
The principles indicate clearly that the issue of placement during adoption or foster care will always be characterized by numerous ethical obstacles. That being the case, professionals working with the identified parents should be willing to empower, educate, and guide them. The nature of the existing concerns should be considered to inform the placement process. The ultimate goal should be to guide parents to relinquish their rights in a voluntary many. This means that there should be no form of coercion. It is also appropriate to consider each and every ethical procedure during the process. Keddell (2014) argues that the move will ensure the termination of such parental rights is completed in a peaceful manner.
Personal Perspective: Ethical Options, Personal Position, and Development
My personal perspective is that parents whose children qualify for foster care will encounter numerous problems such as depression and trauma. This might be the situation despite the fact that parents are abusive and unprofessional in the manner in which they treated their children. Nonetheless, such guardians or parents would want to maintain their rights over the children (McSherry et al., 2016). Personally, I would argue that parents who abuse or mistreat their children should be guided to give up their rights. This argument is supported by different concepts such as utilitarianism and Pojman’s ethics theory. This process is desirable since the targeted parents were unable to support the development and success of the children in question.
It is agreeable that children have the right to meaningful and fruitful lives. In order to achieve this goal, the support and care obtained from different professionals or parents is imperative (Rochat et al., 2016). Individuals who are being adopted should, therefore, be allowed to pursue their aims in life. Parents should not hold onto their respective rights in such a situation. The move to hold onto such rights will affect the welfare of the children and eventually make it impossible for them to pursue their goals. This outcome should be guided using appropriate services from social workers. These professionals will seek approval and consent from the respective parents.
Before settling on this perspective, I have considered a number of realities that cannot be wished away by ethicists and experts in childhood development. For instance, foster care has been associated with negative outcomes in the long run such as drug use, poor mental growth, homelessness, and drop in academic performance. Some of the beneficiaries of foster care become discouraged in life. However, the idea of foster care appears to be advantageous over home settings when a given child is abused or neglected (Seltzer et al., 2016). My ethical position, therefore, is that parents who have their children in foster homes should be ready to relinquish their rights voluntarily in order to make it easier for them to realize their aims.
From a personal analysis and self-assessment, I believe strongly that ethical principles should act as guidelines to ensure the most appropriate decisions are made. Before arriving at the above conclusion, it is appropriate to consider the benefits and bottlenecks of foster homes. This understanding can then guide scholars to examine the ethical issues revolving around the termination of parental rights in foster care. While parents would not be ready to renounce such rights, it becomes quite ethical for them to do so in an attempt to minimize the negative impacts of foster care (Keddell, 2014). Consequently, the children will be empowered and ready to pursue their objectives. This personal assessment is informed by the inabilities of different parents to raise their children efficiently and ensure they lead quality lives.
Conclusion
It is worth noting that ethicists would apply various theories differently to deal with this ethical predicament. Despite such differences, the undeniable fact is that children should have their voices respected and heard. The community must offer appropriate support to such children so that they may have desirable lives. In conclusion, parents who are unable to support or empower their young children should be willing to terminate their rights voluntarily to ensure they have a successful and contented life.
References
Baylis, F. (2013). The ethics of creating children with three genetic parents. Reproductive BioMedicine Online, 26, 531-534. Web.
Keddell, E. (2014). Current debates on variability in child welfare decision-making: A selected literature review. Social Sciences, 3, 916-940. Web.
McSherry, D., Malet, M. F., & Weatherall, K. (2016). Comparing long-term placements for young children in care: Does placement type really matter? Children and Youth Services Review, 69, 56-66. Web.
Miron, D., Bisaillon, C., Jordan, B., Bryce, G., Gauthier, Y., St-Andre, M., & Minnis, H. (2013). Whose rights count? Negotiating practice, policy, and legal dilemmas regarding infant-parent contact when infants are in out-of-home care. Infant Mental Health Journal, 34(2), 177-188. Web.
Rochat, T. J., Mokomane, Z., & Mitchell, J. (2016). Public perceptions, beliefs and experiences of fostering and adoption: A national qualitative study in South Africa. Children & Society, 30(2), 120-131. Web.
Seltzer, R. R., Henderson, C. M., & Boss, R. D. (2016). Medical foster care: what happens when children with medical complexity cannot be cared for by their families? Pediatric Research, 79, 191-196. Web.
Every area inhabited by people suffers from the influence of production and technologies i this greater or smaller way. This report is aimed at providing analysis of data presented in different literary sources aimed at shaping the concept of open spaces areas and investigating their value for Australian people.
If the experience of these researchers turns out to be effective, it can be implemented in other urban areas of the world with regard to constant ecological problems, contamination of water, air, and soils, global warming caused by a number of external factors, and other issues.
Figure 1: Major open space components of Sydney (Coleman 2006, p. 4).
Introduction
As different programs on urban consolidation are aimed at investigating the use, potential benefits, and possible implementation of similar practices in other areas, the current report is aimed at analysing the open space areas of Sydney with the help of secondary sources.
Mapping out the greenery in the area will help us to consider its biodiversity, green space and human activities there. It is crucial to be aware of the green spaces of Sydney and its suburbs to see the scope of the problem, connected with urbanisation and industrialization.
However, Sydney can be considered one of the greenest cities as every citizen of this city has an opportunity to spend some time in the green area due to the number and location of parks of different types. It is obvious that the green coverage must be in the city and the thorough research of such places may help to preserve the nature in big industrial cities. The understanding and acceptance of the problem is crucial for making a step to the problem resolving.
Materials and Method
The data for the research was collected through the internet databases that contain a number of issue papers about the open space areas and the effect of the number of parks produced on the overall ecological situation in an inhabited area.
So, the materials for the report include secondary sources whereas the method concerns data collection and data analysis. Investigation concerned the problems existing in the sector of open space areas in Sydney and possible ways of solving those. However, this very issue suggested a dilemma because residential areas cannot be extended at the expense of open space areas eliminating parks and green territories.
In this respect, it is necessary to look at the Fig. 1 to see how effective the location of green spaces is organised in Sydney when people live within easy reach from parks and gardens. Though the data collection was conducted with the help of information retrieved from secondary sources, it is necessary to perform the analysis of data collected.
The information from the map shows that there are a number of green spaces in the area. The largest spots are the Royal Botanic Garden, Moore Park, and Sydney Park. Being the biggest green spaces in the area they play a crucial role in the distribution of land resources in Sydney with regard to the burning issue of dwellings for people and impossibility of their construction without bringing damage to the open space areas.
Thus, the fig. 2 introduces the dwelling projections that are planned for the period of several decades with regard to the number of dwellings in local government areas.
This information means that each hectare of the employment land stock will have 33 dwelling completions which means that South Sydney, Leichhardt, and Marrickville local government areas will be appropriate for the planned number of dwelling per 1 ha. Of the employment land stock whereas the number of dwellings to be built in Botany local government areas exceeds the available resources.
Figure 2: Inner Sydney new dwelling projections and industrial land supply from Department of Planning (1992, 1994) (Searle 2003, p. 7).
The data presented in Fig. 3 suggests a comparative analysis of available and planned resources in the abovementioned local government areas.
Local government area
Planned resources
Available resources
Botany
2010
1956
South Sydney
17100
17160
Leichhardt
5150
5184
Marrickville
3960
4000
Results and discussion
Analysis of sources has shown that the problems are mostly related to the involvement of open space territories into the programmes that deal with dwelling completions plans aimed at providing residents of the city with appropriate number of houses in order to make sure that the problem of housing is solved for the next several decades.
According to the study aimed at analysing the urban consolidation projects, “urban open spaces include: parks, sporting fields, bushland, creeks…, private backyards and gardens, courtyards and balconies, attractive and safe streets…” and other types of open space areas (Byrne and Sipe 2010, p. 2).
In this respect, there is no problem related to the dwelling programmes though this cannot be claimed concerning other types of construction projects as the data available on this issue included the land resources available in four local government areas.
Some problems concern the consolidation of urban open space areas in order to provide more space for people to have some rest from daily routine and ecological factors influential in every country all over the globe. As suggested by Searle (2003) “inner city areas have inadequate local open space even with below-peak population levels” (p. 3).
In this respect, it is necessary to analyse the ways in which the open space areas can be extended and suggest possible solutions for this issue taking into consideration the importance of dwelling programmes aimed at providing residents with appropriate number of residential areas. So, comparison of programs and assessment of needs of population is of primary importance for making adequate decisions on this issue.
As the results of the research show that the area of Sydney has sufficient number of open space areas such as large parks, squares, and gardens, it is necessary to make certain alterations in the design and location of these areas so that it is possible to provide people with adequate number of green territories within urban area whereas this decision should be also coordinated with the projects that deal with housing and planning of the number of residential units.
Cooperation and consolidation on the issue of open space areas and necessity of new dwellings can be beneficial for the authorities and programmes engaged into consideration of this controversial issue.
Conclusion
The research was based on the analysis of data collected from secondary sources and some information received from analysis of facts. In this respect, the research shows that it is necessary to solve the problem of dwelling construction planning with regard to the projects and programmes available for consolidation of open space areas. Every decision made on the issue of land should be coordinated with other programmes and projects involved in this sector of activity.
Reference List
Byrne, Jason, and Sipe, Neil, 2010. Green and open space planning for urban consolidation – a review of the literature and best practice. Issues Paper 11, Uran Frontiers Programme. Web.
Waste management involves collecting, transporting, processing, and disposing of waste. The sustainability aspect helps in enhancing maintenance of aesthetic, healthy, and ecologically sound environs. Effective waste management practices within the construction industry reduce environmental degradation, which affects both fauna and flora (Waste n.d.). There are numerous waste materials in the construction industry, especially solid wastes, which still lack a strong policy for disposal.
Therefore, construction managers ought to device suitable disposal techniques that can make the processes within this industry sustainable. Waste management strategies should be sustainable in order to create a cleaner environment, as well as conserve resources of nutrients, raw materials, energy, and water. Large construction projects produce wastes that construction managers must devise ways of mitigating.
Construction, demolition, and land clearing debris (CDL) that comes from the mentioned project require salvaging, recycling, and complete prevention (Ma 2011). Removing valuable and reusable construction resources prior to demolishing structures constitute salvage. In large construction projects, wood, cardboard and gypsum wallboard are highly likely to be the main eco-friendly materials that remain after work completion.
The reduction strategy identifies potential wastes at the constriction designing stage and devises effective and efficient prevention processes. After identifying how to prevent waste, a contractor goes further to identify salvageable wastes for donation, or reuse in the current or another scheme (Reducing Waste – Waste Management 2013).
These techniques are effective in reducing costs at which contractors will dispose waste materials. Besides, firms that give priority to waste management market themselves to numerous clients who have great interest in participating in programmes that keep the environment green. By recycling and preventing waste materials, contractors are reducing depletion of natural resources, reducing greenhouse gases and creating less pollution due to reduced manufacturing emissions (Ma 2011).
Most of the products in the constriction industries are solid in nature, and with the growth of urban centres, there are limited spaces to use as disposal sites. At the same time, energy is currently more expensive and raw materials are becoming meagre day-in, day-out. Notably, the aforementioned changes result in rise in pollution on water, air and soil, thus bringing into fore the need for modern systems of waste disposal, which are cost effective in the long-term perspective.
Climate change has forced all sectors to employ approaches that tend to minimize harm to the environment. In Australia, there is the National Waste Policy that the Waste Management Association of Australia (WMAA) together with the government has put forth to responsibly manage wastes in the country.
In its responsibilities, the WMAA ensures that all the approaches to waste management within all sectors are sustainable in order to keep waste production at minimum levels and encourage reuse of such resources several times. Australia aims to protect the environment from harm that can emanate from industrial products.
For example, in 2001, the country introduced the Product Stewardship for Oil Program (PSO) that aimed at encouraging environmental sustainability. PSO encouraged sustainability by offering incentives to oil firms to re-refine their used oil and re-use them, instead of disposing (Product Stewardship for Oil Program (PSO) n.d.).
The concept of sustainability remains a key topic in the 21st century, as nations grapple with different strategies to minimize emissions of greenhouse gases, reuse, or recycle wastes. Sustainability intends to facilitate the use of waste management processes and techniques that ensure that the current generation fully meet their objectives without compromising on the objectives of the next generation.
For instance, if a sugarcane company in Australia like Bundaberg Sugar uses bagasse to produce electricity that can run its internal operations, it reduces consumption of energy that is produced from fossil fuels (Bremner 2012). Therefore, in producing their own energy from sugarcane wastes, the company minimizes the amount of wastes that it disposes to the surrounding, as well as conserves energy by using energy produced from environmentally friendly components.
In Australian Capital Territory (ACT), construction and demolition activities produced close to 310,000 tonnes of waste consisting of dirt, asphalt, concrete, and timber (Sustainability: Think Green Every Day n.d.). In 2008/2009, the ACT was able to recycle over 90% of the demolition and construction wastes using numerous Material Recovery Facilities (MRFs). Notably, of the 310,000 tonnes of waste in 2008/2009, only 27,500 tonnes went into landfills, with the rest turned into valuable resources streams for local and regional use.
The ACT Government has worked towards reducing the amount of wastes that go to landfills with the aim of attaining zero net emissions by 2060 (Bremner 2012). The current resource recovery techniques intend to enhance sustainability. Wood and paper wastes, for example, are ideal resources for generating energy since they have high-energy content. Clearly, the waste management approach does not deprive the future generation of using the same form of energy given that it does not cause harm to the environment.
The ACT Government came up with the Sustainable Waste Strategy 2010-2015, aimed at achieving full resource recovery and a carbon neutral waste in all areas (Bremner 2012). In understanding that waste generation has been on the rise, the waste management legislation encourages reuse and reduce as ways of avoiding waste. In addition, recycle and recover form the aspect of alternative use of waste, while safe and appropriate disposal of waste becomes the last resort.
Sustainable waste management approaches are cost effective in cutting on the cost of disposing such waste products. Moreover, the fact that they do not harm the environment reduces involvement of firms in corporate social responsibility of conserving the environment. If the environment is highly degraded, companies in all industries will have to use more funds in restoring the environmental dynamics both at present and in future.
For example, recycling a tonne of plastic materials saves two tonnes of CO2 that could have gone into the atmosphere (Bremner 2012). Environmental sustainability has a direct link with waste management, as the process, if not managed well jeopardizes safe food, clean air, and clean water, which are basic human needs. In the end, improper waste management causes harsh effects for public health. If wastes are not managed properly, they pollute the environment, thus making it unsafe for human life.
Waste management techniques must inculcate the aspect of sustainability in their solutions. Development continues to be the main objective in all parts of Australia, but the development process must be sustainable in the manner in which they manage wastes.
There is need to create awareness among communities about the essence of recycling and recovering waste materials, as well as minimise landfill option in order to achieve a sustainable waste generation. As evident from the essay, generation of renewable energy from waste is a sustainable approach that the entire world should adopt to create a cleaner environment.
Our Globe is a shell embraced by atmospheric gases. This atmosphere works as a gateway that allows most of the gases to make paths in order to reach the surface of the earth. This light, which comes from the sun to the earth, is absorbed by the surface of the earth after passing through the gateway. The earth coverts that light into heat energy and again send them back into the atmosphere.
As a result of the fact that these gases are present in the atmosphere in excessive amount, the heat that is sent back from the surface of the earth is put off by the atmosphere and resulted in heating of the earth. This initiates “Global Warming”.
The emission of heat-trapping gases from earth into the environment has caused the increasing warming around the globe producing or caused to be produced by human race resulting in the melting of glaciers and ice, and rising of sea level. Those emissions are called “Greenhouse Gases” levels of which are constantly increasing day by day especially after the advent of 21st century.
The term “greenhouse effect” has been the most debated term in the recent years. It defines the warming happening around the globe when those gases, which earth transmits back to the atmosphere, are stuck in the atmosphere. They don’t let heat to escape and hence constantly gathering heat producing gases.
The greenhouse effect term surfaced date back to two centuries ago, when in 1824, Joseph Fourier estimated the fact that it is the atmosphere that keeps the world warn otherwise Earth would be freeze to Ice (National Geographic, n.d).
Instead of using the term global warming, Scientist use “climate change” as the expression for defining global warming. Owing to reason of using this term as because of the irregular behavior of earth and climate around the global i.e. the cold in some parts, warm in other while drought in one as rain and flood in others.
Hence, many parts around the Earth are affected by Global Warming. “Global warming makes the sea rise, and when the sea rises, the water covers many low land islands. This is a big problem for many of the plants, animals, and people on islands” (CEDERE, 2007). As per an illustration, “The water covers the plants and causes some of them to die. When they die, the animals lose a source of food, along with their habitat.
Although animals have a better ability to adapt to what happens than plants do, they may die also. When the plants and animals die, people lose two sources of food, plant food and animal food. They may also lose their homes. As a result, they would also have to leave the area or die. This would be called a break in the food chain, or a chain reaction, one thing happening that leads to another and so on” (Oracle ThinkQuest, 2002).
CO2 in Air:
Low down in the amount in atmosphere, it is obtained, from mixture of difference gases in atmosphere, in chemical laboratories. It is extracted as a by-product as the manufacturing of ammonia. It is also used for commercial purpose in daily life as refrigerant for beverages and in fire extinguishers.
Carbon dioxide is produced and released into the atmosphere when carbon-containing fossil fuels. As a result of the extreme world-wide consumption of such fossil fuels, the amount of CO2 in air has risen and now its rate is 1 ppm / annum. It also dissolves in the water of the oceans (Shakhashiri, 2008).
Source: Carbon dioxide (Pidwirny & Reay, 2010)
History of CO2 Emission:
Joseph Black, a Scottish physician and chemist, was the very first identifier of Carbon dioxide in 1750s. Carbon dioxide is a molecule with the molecular formula CO2 i.e. each carbon is bonded with two oxygen atoms (Carbon Cycle, 2007).
There has been continuous increase in the release of CO2 in the atmosphere during the past one and half century as a result of human doings. Consequently, it resulted in the segregation of biomasses and other under ocean living species. Soaring amount of CO2 is produced in excessive concentration by humans because of the burning of fossil fuels, production of cements and forest combustion (Lenntech, 2009).
Svante Arrhenius, first, predicted the concept of global warming as a result of emissions of Carbon dioxide from the burning of fossil fuels and others in a paper named “On the influence of carbonic acid in the air upon the temperature of the ground” in 1896 (NASA, n.d.).
Global warming advocates call for reduced CO2 emissions and this applies to a call for cuts in the use of energy. But the energy and power industries have made human life easier than any other inventions. And global warming supporters suggest strongly the idea of ‘renewable’ energy, i.e. energy by the sources as Wind, Solar and Geothermal, can replace fossil fuels (GreenPeace, n.d.).
As per an illustration, “It is physically impossible for wind and solar energies to supply the energy needs of the developed world and the peoples of the developing world are insisting on their right to develop too” (Courtney, 1999).
Construction industry as CO2 Contributor
There’s always been a view of cars, jets, and trucks as the only producers of carbon emissions and carbon dioxide. But, in fact, we all are responsible of letting this disaster to grow i.e. the heat or the temperature that is generated by most of the house hold things, from lighting of electricity; heating of gas for cooking, does contributes to the climate change. The carbon emission from construction industry and its products i.e. buildings and infrastructure has a considerable portion in their accounts for its emission around the world.
Only lightning and heating building generates 50% of the carbon dioxide emission in Britain. On the other hand, building material industry held a 10% emission on its account (Seager, 2007).
Constructions and building operations are the largest producers of almost half of the carbon dioxide emission in the United Kingdom, contributing to climate change and resulting in adding more and more pollution to the atmosphere.
Almost 90 M tones have been produced because of construction and demolition debris/material as a waste in the UK (UKSwedenSustainability.org, 2006).
On the other hand, more than 100 million tons of carbon dioxide emission has been produced by the Australian continent i.e. 1.43% of global emission comes from just 0.32% of world population of Australia. That approximates around 5 tons in number to each Australian (PDixon, 2008).
Also, the construction industry in India has its largest share in carbon emission that is approximated around 24%. Hence, use of excessive energy and power for the production of cement, steel etc as a major reason for carbon emission. These figures are excluded of 13% carbon emission from local transportation in India (Price & Amiri, n.d.).
Figure: Review of worldwide road construction carbon accounting practices and outstanding challenges (Source: Gifford).
Literature Review: International Standards and Regulations
Sustainable Construction
After it become evident that the largest producers of the carbon emission around the globe comes from Construction Industry, as mentioned in the text discussed above, governments in the developed world become active on this global disaster. In Europe, the British government in alliance with Strategic Forum for Construction (SFfC) led to the conclusion and mission of carbon reduction to a certain level in the UK. Therefore in June 2008, they published paper called “Industry-led Strategy for Sustainable Construction”. They make to form a document that would hold them accountable and responsible in an effort to bring down the carbon emission by 15%.
The paper targeted the aim of promoting construction processes towards drop in carbon emission. That defines the activities under the scope of assessment and emission as target scope of the paper. Hence, the paper identifies following future goals:
15% reduction of carbon emission of the target scope by 2012.
15% reduction of carbon emission of the target scope by 2012 relative to contractors’ output of the waste (Ove Arup & Partners Ltd, 2010).
Air Quality Standard
Clean air is a basic human health and well-being necessity. However, different mixture of gases that the surface of the earth transmitted back in atmosphere and those being produced as a waste from chemical and construction industry has posed a serious threat to the air quality across the globe. Poor air quality causes serious health problems especially in the largely populated and polluted cities in the world. The World Health Organization (WHO) recognizes the following four major air pollutants as Particulate Matter (PM), Ozone (O3), Nitrogen dioxide (NO2) and Sulfur dioxide (S02) (WHO, 2005).
In the United Kingdom, the “Air Quality Standards Regulations 2010” quotes that WHO assertion of quality and clean air as a right of every citizen and human being. It also defined air standard by restricting via a clause; an area or zone is an agglomeration if it has population exceed above two hundred thousand residents.
Clean Air for Europe (CAFÉ)
The European Commission has developed a long-term, Strategic and Integrated policy for the effects of air pollution on human health and the environment in collaboration with the “Clean Air for Europe” or “CAFÉ” (APP, 2011). Hence, CAFÉ recognized the following points as its objectives:
The development and validation of scientific information on air pollution effects.
The assurance of requisite measures at relevant time level.
Information dissemination among general public.
Also, the paper “Reducing Carbon Emissions from Deforestation in the Ulu Masen Ecosystem, Aceh, Indonesia” has been published for the reduction of carbon emissions. The aim of the project is the reduction in the greenhouse gas emissions via the development and carbon finance test procedures. That would contribute to the economic sustainability, social development and the preservation of biodiversity over the next thirty years (Rafli, 2007).
An area of 750, 000 ha land of forest would be used in Ulu Masen town in Indonesia for reforestation, restoration and sustainable community and increased in monitoring over the defined range of land. An estimate of 85% reduction has been projected in the deforestation for that area with around 3.3 million of CO2 emission reduction per year.
Carbon Plan the United Kingdom:
The business processes, Industrial and Chemical Productions in the United Kingdom contributes to 17% of the greenhouse gas emissions which in itself is a huge number. The United Kingdom was the pioneer of being among those nations who developed themselves after the industrial revolution in Europe and almost in all regions of the West.
The emissions from those sources mentioned above are not just being produced from the combustion of oil and gas in the local vehicles and transportation but also from industrial and chemical processes. The chemical reactions in the industry business processes also contribute to this estimation of 17% as a whole. The UK government has assured the stockholders and management of different Industrial and Business processes in the UK the full support and back towards carbon and greenhouse gas emission.
Hence, among many of the steps towards this clean air and healthy environment for humans and well-beings, one is the creation of “The Green Investment Bank”. It has the task of keeping eye on the risk of financials in the market for the above mentioned cause and motivates the business processes for private sector investment as a catalyst (HMGovernment, n.d.).
Impacts of International Standards for the Carbon emission reduction:
With carbon dioxide (CO2) emissions reaching a massive 28 billion metric tons in 2005 and continuing upward, climate change in terms of ensuring environmental sustainability remains an important goal in the current millennium. As per Maitra, “United Nations reports that in 2005 the CO2 emissions in the developed and the developing regions stood at 12 and 13.1 billions of metric tons respectively, an increase of 3.45 per cent and 36.46 per cent respectively from the year 2000” (Maitra, 2010).
The role of technology is viable in the reduction of carbon emission in this competitive global world. Hence, human race never want to go back to the pre-industrial era of 1830s or even before that. Therefore, avoiding the role of latest but environmental friendly technology cannot lead us to sustainable strategy or escape from the carbon emission disaster.
In “Reducing Carbon Dioxide Emissions TECHNOLOGY AND POLICY RECOMMENDATION AND GOALS in the Energy Sector”, five point agenda has been presented towards future green and environmental technology.
Revolutionalization:
Electricity generation via means by:
Increase in generation and efficiency by exploring carbon-based fuel cycles.
Development of renewable ways for electricity generation and its storage
Next-generation nuclear power plant.
Deployment of smart grid
Reinvent transportation by:
Use of electric grid capable of energy storage vehicles.
Renewable fuels concept for power and energy for trains
Development of cellulosic ethanol and hydrogen fuels for environmental sustainable transportations.
Transform the buildings sector by:
Codes and standards for construction industry for the use of sustainable materials and equipments.
Energy efficient operations for building constructions and equipments.
Promote sustainable industry by:
Concept of recycling and re-production for energy storage and preservation.
Empower innovation by:
Increase in collaboration in R&D.
Low carbon technologies incentives for latest technologies through R&D (ASME, 2009).
Advantages of Biofuels, Alternative Energy and Hybrid Vehicles:
In order to have a clean air, and low carbon emitted atmosphere, world is moving towards alternatives that can decisively reduced the green house gases and carbon emission around the earth to make earth better place for living and sharing.
Hence, biofuel is the alternate. Biodiesel and ethanol, biofuels, both are clean and on-site production based fuels i.e. best alternative of renewable resources of energy utilization, storage and preservation. This makes biofuels superior than fossil fuels that are terribly destroying our peaceful and calm and clean atmosphere (BiofuelGuide, 2008).
Hybrid Car Technology:
It operates under the sources of power, combines gasoline engine and electric drive motors. As a result, it generates much less combustion and co2 (Ariskan, 2009).
EN590 STANDARD:
A standard that specifies temperature grades for different climates for diesel fuel. As per a report, “furthermore, the diesel fuel is further characterized by different properties on the bases of “Arctic Classes” i.e. classes from 0 to 4” (Dieselnet, 2010).
EN 14214 STANDARDS:
These standards ensure the use of bio diesels. It allows or suggested the use of Methyl Ester, a Bio diesel, as a fuel because it is cleared as a renewable fuel alternative to mineral diesels derived from vegetable oils.
Concrete Production in Construction Industry:
Around 1.5 to 3 tons per capita has been the figures of the concrete production in the industrialized world. Hence, it has a decisive part in the construction and building operations and industry. Therefore, measures towards the sustainable production of the concrete in the Construction industry would be leading towards better and enhanced building and housing factors (Ecoserve, 2003).
Drilling:
The impacts or problems that the drilling process can cause during construction process are excessive. From troubling the local population to spreading the dusk in the locality are mentioned to be few. Other potential problems caused by drilling are:
The removal or demolition of the trees and other artifacts can be the result of drilling in order to provide access to the drilling area. Hence, the opportunities of building an infrastructure in an area that was not accessible before comes at a handy cost.
Increase in dust, combustion caused from bring trucks, machineries, heavy equipments for construction process can also be the potential threats (TEEIC, n.d.).
Carbon Emission in Construction Activities:
This calculation in this section consists of the quantity of carbon dioxide CO2 emissions related to the different phases of construction activities. This estimate is intended to calculate the contribution of construction industry in emitting the carbon dioxide CO2. The estimation / calculation does not mean as quantity of CO2 emissions during construction activities.
Estimation methodology
The calculations get a holistic analysis of carbon dioxide emissions which is influenced by the different phases of construction activities and this estimation also provides current proofs on emitted carbon dioxide of a building’s life cycle. Following are various phases of constructions are being discussed in detail;
Design
In the beginning emissions of carbon dioxide will take place through the design process, for example, power and mode of transport used by designing staff. Though, the main purpose of this phase is to minimize the chances of CO2 emissions through the innovative impact design like provision of way to natural light and towards building and ventilations.
Manufacture
The carbon dioxide emission can be also be prevented by utilizing local manufacturing industry instead of importing construction material.
Distribution
Human, material and construction vehicle movement also plays an important role in emitting carbon dioxide in to atmosphere.
On-site Operations
Combustion of fuels by the construction machinery and power generation are the main source of CO2 emissions during this phase of construction. The demolitions and refurbishment are not embodied in this phase.
In-Use Emissions
In this phase CO2 emits due to behaviors that change in the building.
Demolition & Refurbishments
As this phase is the main contributor of carbon dioxide emission that is why it was not included in on-site operations phase. Additional activity that makes it to be discussed separately is the removal of construction debris after demolition and also the major renovation and refurbishment of structure (BIS, 2010).
Conclusion
Upon reaching any consent over global pollution, i.e. greenhouse gas and carbon, reduction seems to benefit one country over the other in the short run; countries should focus on the long term environmental reduction benefits that would not only serve their national interest but also be beneficial to the whole humanity and living beings around the world.
Hence, a healthy and green environment can only take place if we all understand our responsibilities and role and move all together towards reducing such disastrous elements from our daily life production use things or others that are actually the cause of prioritizing the human strategies to those instead of providing human the basic necessities of life.
The use of bio fuels i.e. fuels from vegetables and oil must be urged to the citizens around the world in order to avoid any further combustion from the burning and heating of fossil fuels and chemicals. Vehicles must be use for long run distance only, riding of bicycle must be ensure if possible in order to play our role individually to reduce carbon emission by driving cars and vehicles individually.
Industries and business processes must be supported by the governments to make sure that industries especially the Construction industries are playing their role too for the CO2 reduction as we see in the “Carbon Plan” proposed and implemented by the government in the United Kingdom in order to provide the citizens a healthy and green environment.
Hence, now it is not the governments or organizations to blame, it is the real time for every one of us, that includes those organizations, business processes, governments and others, to play our part to make world a real, happier and green for our next generations to come.
When you have measured in units of carbon dioxide, the brunt borne by the environment, due to any kind of human activity, you have made a measurable carbon footprint (UNFCCC, 1992; EC, 2007). These traces of human activity can have a prolonged disastrous effect, a lot more potent than the worst tsunami, merely because of their virtual irreversibility. The planet is vulnerable to the carbon emissions that can damage its climate and probably lead to its total destruction – a thought that is extremely frightening, but highly probable. It is this palpable fear that has led to the close monitoring of carbon emissions today. The Carbon Footprint Protocol seeks to regulate the use of all materials that contribute to the increase in carbon dioxide levels, including that caused by the transportation of construction materials (ECCM, 2007).
The carbon footprint calculator
Every activity undertaken today in the transportation sector can be assessed in order to calculate the carbon footprint that it leaves behind. The calculations are based on the analytical studies and recommendations of both governmental and non-governmental agencies, the prime objectives of which are reduction of carbon emissions. There are private firms who offer information on such calculations based on the “metrics from UK’s Department for Environment, Food and Rural Affairs (DEFRA), the UK’s Department for Transport and the US Environmental Protection Agency (EPA)”. Based on these regulatory recommendations, one such firm, Carbon Footprint Ltd. helps to calculate the impact of carbon emissions, with its easy to use carbon footprint calculator (CFC, 2007; WWF, 2007; TNC, 2007).
Carbon footprints, the construction industry and related transportation
The third edition of The Green Building Bible gives a long and detailed account of how one can ensure a lower rate of carbon footprints, by following the eco-friendly suggestions offered. From building techniques, to alternative sources of energy, to a vast array of ‘green’ building alternatives, the book focuses on the dangers of following the trends that have been in place till now. There are references to the use of locally available materials as opposed to the transportation of materials from distant locations (Hall, 2005).
Some of the highest levels of carbon emissions are caused by the transportation of various materials in the construction industry. In many developing countries today, there are construction materials that are not only hazardous to use but also pose a lot of hazards in their transportation. It is only now, that there is an increased awareness on the kinds of transportation that is used; the focus on reducing carbon emissions is becoming more widespread now.
Impact on Carbon Footprint
One of the chief impacts on carbon footprint caused by the transportation of building materials is the fuel combustion emissions from ships, trains or trucks that are used in the transport of timber. A report of the ECCM on carbon benefits of timber in construction throws light on the statistics involved, when timber is transported. This is not only due to the fact that the use of timber has a direct impact, but also that the mode of transportation only augments the carbon footprint already created. Detailed calculations show the quantum of emissions caused by transporting building materials for various purposes such as residential as well as commercial buildings (Burnett, 2006).
Construction and development at the cost of ecological impairment is certainly not acceptable any more. Using eco-friendly material might be an attractive proposition, but it is not enough to mitigate the impact of the emissions of the various modes of transport that need to operate as part of the construction industry. This is where supporters of diesel instead of petrol have a say. It has been proved that the emissions of vehicles run on diesel emit a lower level of pollutants when compared to their petrol run counterparts. However, it must be noted that petrol vehicles have a very low level of particulate matter (ActonCo2, 2007).
Recommendations
While on the subject of carbon footprints, one needs to mention the concept of carbon credits and carbon sinks. Trees are repositories of carbon, which can offset and absorb the amount of carbon dioxide in the air. Increase in the green cover can result in the lowering of carbon footprint impacts, especially those created by the transportation of building materials.
It would also be wise to assess the impact of building materials and their transportation in terms of carbon footprints before the actual construction is begun. This would take into account the kinds of materials used, the location of the same and hence the related transportation costs. One could go in for materials that are either locally available or that which can be used after recycling is successfully carried out. Architects keen on monitoring carbon footprints have put forth their views on reducing the ill-effects of using materials that are not eco-friendly. (BCN, 2007).
Conclusions
The Bali Climate Change Conference has further stressed upon the need to monitor and lower emissions from various sources in a desperate bid to save the planet from a ticking time bomb – global warming and climate change (Hawthorne, 2007). Reduced usage of transport in the building industry and the usage of ‘green’ construction materials would contribute to this cause to a very large extent (Kane, 2007).
References
ActonCo2, 2007. With help from you, we can reduce CO2. Web.
Burnett, J. 2006, Forestry Commission Scotland Greenhouse Gas Emissions Comparison Carbon benefits of Timber in Construction. Edinburgh Centre for Carbon Management, Ediburgh. Web.
At the turn of 2015-2016, Northern England has experienced repeated flooding and flood threats, many of which the authorities deemed severe (Finnigan 2015). Thousands of York citizens were evacuated from their places of residence: the city was left with no electricity, as were Greater Manchester, Lancashire, Leeds, and other neighboring cities a month before. The floods were the consequence of the Storm Desmond, which, as the scientists conclude, could have been partially caused by manmade climate change (Vidal 2015). As the storm was mainly centered on Cumbria, the local Environment agency conducted a thorough analysis of it and emphasized the importance of reducing the human impact on climate change for the sake of public security (Tran 2015).
The storm and the floods are not known to have resulted in casualties, but the commodity destruction and the subsequent rescue operations have proved to be an economic disaster for the area. Therefore, the issue of manmade climate change is specifically relevant for the construction sector: apart from presenting a threat to public safety, the weather-related consequences of the climate change can (and do) cause harm to the infrastructure. The Cumbrian disaster required approximately £40 million in emergency funding, which is a particularly disturbing figure if one considers that the catastrophe could have been prevented (Finnigan 2015). This paper aims at exploring the evidence of climate change in the UK, the contributing factors, and the potential consequences of it, including the floods. It provides a number of informed suggestions of the actions that the developers can take to reduce the risk of floods and, importantly, lighten the human influence on climate change and thus alleviate its harmful effects.
Climate change in the UK
The direct relation of carbon dioxide emissions and climate change is unarguable. Still less arguable is the fact that the volume of carbon dioxide emissions has greatly increased over time. Historically, the UK has been leading the industrial revolution since the late 18th century, which means it has long been responsible for the greatest volume of CO2 emissions in the world. In the 1850s, the average amount of total CO2 emissions with the exception of forestry and land-use activities was 122 metric tons per year, which was the global record:
(Friedrich & Damassa 2015).
By 2011, other countries have acquired the status of top emitters (e.g., Mongolia, the U.S., Canada, etc.), but the UK emissions volumes were still about four times greater than in the mid-19th century:
(Friedrich & Damassa 2015).
The excess carbon dioxide and other emissions are known to create the greenhouse effect that traps heat on the surface of the planet. The change of climate on the global level is evidenced by increasing annual temperature rates. In the UK, the situation appears especially alarming since, during the last decade, Central England has seen 4 out of 5 hottest years registered within the 3-century period (Review of UK Climate Change Indicators 2004). The 1993-2002 period’s mean annual temperature in Central England was 0.7 °C over the mid-to-late 20th century’s mean, and the yearly indicators continue to display a tendency towards higher temperatures (Review of UK Climate Change Indicators 2004). In 2014, the government issued an updated report stating that the mean yearly temperature in the UK is 1°C higher than a century ago (Climate change explained 2014).
Climate change presents a significant challenge on a global scale and for the UK in particular. Apart from causing potentially threatening shifts in the distribution of some fauna species, it puts the natural renewable resources such as water and timber under jeopardy. In addition to these long-term concerns and in view of the unfortunate events of the year 2015, the rises in temperature are likely to result in more rainfalls and storms affecting the territory of the UK. The skewed rainfall patterns will likely cause droughts in some regions and floods in the other – an instance particularly relevant to the construction sector as the infrastructural damage is quite hard to predict despite the advanced risk assessment practiced deployed by the Environment Agency (Learning Lessons from the 2007 Floods 2008).
There are some other factors that may lead to flooding apart from climate change and related events. The Pitt Review states that one such factor is the capacity of the soil to absorb the fluid, and the corresponding speed of the rivers, which act as water transport systems. Typically, the soil is dry enough to absorb the excess moisture and prevent the floods. Under the storm conditions, however, much of the absorption is lost, which increases the risk. This factor is illustrated by the July 2007 event in the southeast of the country: still saturated from the previous month’s rainfall, the soil was unable to withstand the rain volumes, which resulted in severe floods (Learning Lessons from the 2007 Floods 2008). Another factor is the urban rainfalls which do not generally drain as fast as in the country. In spite of the drainage system advantages, such conditions are not always predictable.
Pitt Review and Lessons Learned
Conducted on the aftermath of the 2007 floods, Pitt Review provides a solid body of evidence on the factors contributing to the floods, to which we have referred above. The review is aimed at the coinage of some recommendations to follow in case the disasters strike again. Among these recommendations, for instance, is the directive to both mitigate and adapt to the extremities of the weather. This recommendation accounts for the fact that the weather conditions are forecasted to worsen in the near future. Another recommendation concerns the necessity to track under-surface water flooding – a factor rarely accounted for when assessing the risk of the floods. The Review puts an emphasis on the importance of forecasting, which is quite understandable, considering the devastation caused by the floods in 2007.
This is why other recommendations concern the improvement of the Met and Environment Agency’s prediction capacity by means of modeling, with a special stress on the measures of the waters’ depths and speed. These organizations are deemed to work more efficiently in collaboration – which is also an advice given by the Review – and join together to tackle the problems of construction in the areas prone to floods, banning the impervious surfaces in the citizens’ yards, disconnecting the sewerage from the surface water drainages, and revising the Building regulations and anti-flood loaning statements. Additionally, the Review explores the issues related to the local authorities’ responsibilities and their compliance with these duties (Learning Lessons from the 2007 Floods 2008).
One of the main lessons learned from the 2007 floods concerns the risk management, which, as the reviewers believe, should be entirely under the authorities’ control. The management includes, primarily, mapping the potential risk zones, shareholder engagement, establishing cooperation between them, coordination of the local Surface Water Management plans and aligning them with the PPS25 policy, technology assessment and enhancement, drainage system management, and ensuring the public sewerage systems comply with the standards (Learning Lessons from the 2007 Floods 2008).
The government showed their commitment to the implementation of these recommendations, enhance the country’s flood defense, and curb the constructions in the vicinities under the flooding risk. The government’s response to the Pitt Review was the Flood and Water Management Act (Flood and Water Management Act 2010). The Act caters for more efficient flood risk management, community group safeguarding, and water supplies protection. It accounts for the necessity to manage flooding risks with the inclusion of groundwater floods, which is an unprecedented improvement.
It also provides a fuller and more comprehensive map of areas under the risk of flooding, which the construction sector can rely on, and outlines the standards for the flood defense systems which are known to have been later implemented in Cumbria (Halliday 2015). Although every region seems to rely on its own standards when constructing the flood defense systems, which can explain the flood gates failure when Storm Desmond struck, the best practices and strategic roles of the defense are outlined in the Act. It also tasks the local authorities with handling the groundwater and surface floods in their vicinity, mirroring the practices put forward by the EA.
On the whole, many of the recommendations put forward by the Review have been accounted for by the Act, especially the mapping and assessment. The issues of the infrastructure, adaptation, and temperature management have been later outlined in the Green Infrastructure programs and the Blue-Green Cities Project directives.
Green Infrastructure and Blue-Green Cities
Green Infrastructure and the Blue-Green Cities can be viewed as cases to follow for the sake of climate change mitigation, adaptation to these changes, and flood risk reduction. Green Infrastructure first appeared in 2010 as a draft of the action plan suggested for Cumbria and several other counties (Green Infrastructure to Combat Climate Change 2010). By 2013, it was formed into a comprehensive position statement mainly accounting for water management, waste management, and carbon storage (Green Infrastructure 2013). Within the water management directive, it sought to implement Pitt Review’s recommendation concerning the impervious surfaces and pipe drainage by replacing them with an organic equivalent surface. The program also took landfills under control, with a view to reducing the landfill-produced CO2 emissions (Green Infrastructure 2013). The criticality of climate change adaptation and local responsibility are also emphasized within the GI statement, as are the benefits to the local businesses and, importantly, the community’s health and well-being.
The Blue-Green Cities is a water management project that aimed at natural water cycle recreation (BlueGreenCities 2016). The idea was to increase the number of green zones in an urban setting so that the rainwater could be absorbed by the soil and growth. The project consolidated a number of UK institutions and collaborated with similarly concerned parties abroad. The results of the project were as numerous as its objectives. Importantly, the researchers managed to determine the main barriers to new flood management strategies implementation (which were mainly the constituents of either scientific or financial uncertainty), assessed the impact of sustainable drainage systems (SuDS) on flood-related hazards, and efficacy-tested a new flood resilience model (Delivering and Evaluating Multiple Flood Risk Benefits in Blue-Green Cities 2016). SuDS was found to have multiple beneficial effects on natural flood management, namely, reducing the risk of floods by trapping suspended sediment, improving the ecosystem by reducing the levels of heavy metals in water and assisting the macroinvertebrate fauna breeding, and reducing the air pollution (Delivering and Evaluating Multiple Flood Risk Benefits in Blue-Green Cities 2016).
Proposed Practices
Based on the lessons learned from 2007 and Storm Desmond, as well as other guidelines issued at varying times, several suggestions can be made in terms of climate change impact mitigation and flood risk reduction and management.
Risk assessment
Unless the supposed flooding area is located in flood zone 1 and is less than 1 ha, risk assessment is the primary obligation for the developers before any subsequent actions can be taken. There are consistent guidelines on how to assess the risk of floods at the development site before starting the construction. The developers are supposed to be ready with their construction planning by the time they make the risk assessment, which means that the documents should be submitted for the city council’s consideration simultaneously. The tools and products to conduct a risk assessment are comprehensively outlined in the governmental requirements; they can include flood maps, input and output data software, GIS, etc. (Flood risk assessment for planning applications 2015).
Climate change mitigation
Waste management
Much of the carbon and methane emissions causing the greenhouse effect comes from unmanaged and unauthorized landfills. Based on the rules and guidelines published by the government, the local departments could assess and safeguard the location and management of landfills (2010 to 2015 government policy: greenhouse gas emissions 2016). This could include electronic stewardship to reduce the number of landfills close to cities, promote recycling, provide the consumers with comparative reviews of greener products, and engage the community in locating and eliminating unauthorized landfills.
Afforestation and reforestation
Because forestry activities are involved in the problem, they must become part of the resolution (Schlamadinger n.d.). At that, the country can turn to the example of China: the efforts to reforest the lands degraded by centuries-long deforestation have been proved successful by NASA satellite images (Murillo 2016). The Grain to Green program implemented by Chinese agriculturists was sufficient in reforesting about 61.000 square miles of woods in the central regions (Shockman 2016). The program consists of reconverting some of the agricultural lands and mountain slopes into woods, and it has proved effective on both the local and national scale.
Carbon sequestration
After the CCS competition cancelation in 2015, the industry was left devastated and ashamed since the event occurred shortly before the UN climate change summit (Carrington 2015). The future of storing carbon in soils and vegetation in the UK is, therefore, quite uncertain. On the local level, however, the developers can contribute to the carbon capture and eventual reduction of the emissions into the atmosphere. For instance, one of the cheapest and natural ways of decarbonization is planting diverse crops where homogeneous cultures used to grow. The levels of encaptured carbon are known to be higher in such areas, as well as in soils taken up by forests (Lal n.d.). Forest restoration, therefore, can serve as a natural decarbonization that is comparatively cheaper than capture plant development.
Reducing car travel
GI areas and local green recreation zones require connections such as waling and cycling paths. it is recommended that local authorities and specifically transport developers focus on the connections. The areas between which people circulate on a daily basis are connected with streets that can be lined with trees.
Water supply management
Local authorities and highway developers can use SuDS to replace the potentially emissive surfaces to enhance the quality of water in containment tanks where it is stored. This will ensure the rainfall water is captured and stored safely for later usage.
Flood management
There are several well-known cases of successful flood management in various countries going through the disaster. Based on these, some practices can be singled out for the most optimal construction and infrastructure development.
Preventative building
The guidelines and standards for flood defense systems are outlined in the Act of 2010 and apply to the UK. However, as said, the regions and even individual counties tend to rely on their own standards in constructing and planning. In the areas specifically prone to flooding, construction without cellars can be considered, as illustrated by a German proposal on the aftermath of the 2002 flood in the Elbe region (Flood Risk Reduction in Germany 2004). Alternately, projects of elevated constructions can be considered to manage the safety and well-being of the citizens. Such constructions subsume the elevation of all openings in the buildings to stop the floodwater from penetrating the houses. If the water penetration is not preventable entirely, the electrical connections and other energy installations can be planned for upper-store build-in.
Water retention
The reduction of water runoff and simultaneously alleviating the risk of floods subsumes water detainment in either natural or man-made storage facilities. Green Infrastructure can be integrated into the practice of water retention to create non-pollutant storage basins, dams, etc. In less extreme cases when it is possible for the water to be stored in natural catchment areas, it is important that the developers account for the enhancement of flood plains to contain and absorb the water. Another way of retaining the water naturally is forestation with mixed tree species, which is known to enhance the retention capacities of the land (Flood Risk Reduction in Germany 2004). Retention can also be used to prevent coastal flooding by curbing some of the tidal surges.
Financial risk reduction
The developers can take care of their properties and the local community’s well-being by combining insurance with other measures and preventive building.
Conclusion
The issue of manmade climate change is especially significant for the construction sector as the consequences of it are multiple and can seriously exacerbate the infrastructure conditions. Historically, the UK has been the leading greenhouse emitter, which is why the responsibility it has to bear is so critical. The UK is also evidenced to experience climate change, which is to a great extent related to the greenhouse emissions the country and the rest of the world are producing. On the local level, the measures that can be taken include practices related to risk assessment, climate change mitigation, and flood management, which present multiple opportunities to prevent another 2007 or Storm Desmond in the near future.
The determination of this research is to evaluate the enactment of construction corporations in the United Arab Emirates for the period of the pre and post worldwide eras of financial disaster, which is from 2006 to 2009. A percentage examination was directed based on an example of several corporations in the construction sector. A nonparametric examination, specifically the Wilcoxon matched-pairs contracted ratio examination, was implemented in order to observe if the intended ranks diverge amongst the pre-crisis and post-crisis eras.
The results reveal a negative actual and potential effect of the global financial crisis and the commercial sequence on the enactment of real estate corporations in the United Arab Emirates. There is a substantial reduction in the liquidness, effectiveness, influence, and commotion fractions after the financial disaster. The restrictions of the research spin around issues such as incomplete example magnitude, non-attainability of statistics for the aforementioned times, little limpidity regarding revealing a number of fiscal specifics and non-accessibility of annual manufacturing arithmetic means.
The local explosion in the United Arab Emirate appeared to be one of the most protruding subjects to lead the captions of the media for the previous more than a few years. This is primarily owing to an excess of essential assets for which the economy of the United Arab Emirates is renowned from one place to another in the whole world. An upsurge in construction value has taken the role of the most noticeable influence acting as a compound to the nation’s renown. The sensible strategies approved by the administration of the country consist of directing construction profits into emerging non-construction trade and industry subdivisions, inviting extraneous assets and funding numerous substructures, expansion and housing plans.
Despite these obviously reasonable compensations, the global financial crisis that has affected the worldwide economy almost seven years was successful in leaving its stain in a quickly developing country like the United Arab Emirates. Al-Masah Capital Limited conducted a research in 2011 that stated that the United Arab Emirates subsidized nearly sixty percent of the assets explosion in the Gulf Cooperation Council (GCC) nations, with Dubai on its own subsidizing up to forty-seven percent of the overall monetary funds among the Gulf Cooperation Council countries (GCC Real Estate par. 5). This impact rationalizes the dispute by Baker that “the central element in the financial crisis is the housing bubble. The real estate and construction sector, which emerged as the most attractive destinations for global investors during 2003-2007 was a sector severely affected by this financial blow” (Baker 73).
The Process of the Research
The economic theory of Minsky
Hyman Minsky has suggested a statement, which is most appropriate to a closed economy. He hypothesized that fiscal brittleness is a distinctive aspect of any capitalist economy (Wolfson, 2002). Great brittleness results in an advanced menace of a financial disaster. In order to simplify his investigation, Minsky outlines three methods that the corporations might select, rendering to their acceptance of menace. They are hedge finance, speculative finance, and Ponzi finance:
For hedge finance, income flows are expected to meet financial obligations in every period, including both the principal and the interest on loans. For speculative finance, a firm must roll over debt because income flows are expected only to cover interest costs. None of the principal is paid off. For Ponzi finance, expected income flows will not even cover interest cost, so the firm must borrow more or sell off assets simply to service its debt. The hope is that either the market value of assets or income will raise enough to pay off interest and principal. (Wolfson 395)
Fiscal brittleness levels transfer along with the commercial sequence. After a collapse, the corporations have lost a lot of funding and select only hedge, the harmless approach. As the economy develops and predictable incomes increase, the corporations usually are certain their ability to take on speculative funding. In this case, they are aware that the incomes will not be able to shield all the interest permanently. On the other hand, the corporations rely on their income to increase, and the credits will ultimately be refunded without many difficulties. More advances result in more asset, and the economy cultivates extra.
The Effects of the Crisis in the UAE
A research conducted in 2011 in the construction sector of the Gulf Cooperation Council countries quantified that charges and rentals have decreased by thirty-fifty percent from their heights, and an assessed three hundred and fifty billion dollars’ worth of production schemes have been postponed or annulled in the United Arab Emirates (Gibson 11).
In the course of the research, we have endorsed a number of causes for an interval in alteration of this reducing tendency. The leading issues observed the funds coming from extraneous depositors, the deterioration on immigrant inhabitants due to a reduction of expenditure, the financing of the technical hitches due to severe liquidness circumstances, the deteriorating customer assurance in the economy of the United Arab Emirates and most important inequities in mandate and source of housing units. The limpidity subject has detained massive consideration particularly after the financial disaster, as depositors are now in pursuit of precise and dependable material in advance of constructing asset choices. As a result, there are only eleven organizations in the construction segment at the moment that are registered in the Dubai Financial Market and three corporations in the Abu Dhabi Securities Exchange (Barthwal 204). The results maintain the information connected to the general deterioration in the presentation of this segment afterward the financial crisis (Barthwal 205).
Figure 1. 2010s Financial Crisis and the UAE Construction Industry (OPEC 57–83)
As the graph provided above shows, the financial crisis has taken its toll on the UAE economy, bringing its rates down significantly. Particularly, the issue regarding the inflation deserves to be brought up; as the graph displayed below shows, the inflation index has reached a rather significant mark, therefore, posing a serious threat to the financial well-being of the UAE organizations.
Figure 2. Inflation in the UAE: Construction Market and the Crude Construction Price (“Crude Construction (petroleum); Dubai Fathe Monthly Price – US Dollars per Barrel” par. 1)
In addition, the recent drop in the foreign and local investments in the construction industry can be viewed as one of the harshest effects of the financial crisis. According to the chart below, the significance of boosting the investment rates in the construction industry in the UAE is huge at present; more to the point, the very existence of a range of corporations may hinge on the possibility for the increase of the above-mentioned factor.
Figure 3. Investments in Construction Industry (UAE) (“United Arab Emirates Foreign Direct Investment Forecast” par. 1)Figure 4. Migrant Force Rates: UAE
Last, but definitely not least, the reduction in the amount of migrant workforce can be viewed as an essential effect of the crisis on the construction industry development in the UAE. According to the graph provided above, the immigrant workforce market, though, being admittedly vast, does not have much diversity in it. The change mentioned above can be deemed as negative for the owners of construction companies, as they will have to pay extra to hire the UAE residents or outsource. However, the change in question may also boost the UAE economy by helping bring the rates of unemployment among the UAE citizens down.
Conclusions and Recommendations
The outcomes of the research disclose that there has been deterioration in the complete the liquidness shares; productivity shares; fiscal power shares and income shares of the organizations in the constructing sector after the global financial crisis. The deterioration in liquidness and productivity site has also been arbitrated as statistically noteworthy.
Recommendations that can be deliberated for the improvement of the presentation in this segment are the following: the segment should create a more reasonable housing system that will advance both transactions and income statistics for the corporations; moreover, the organizations have to benefit from the reduction in price of raw resources, particularly steel charges (Carlberg 75).
Works Cited
Baker, Donald. 2008. “The Housing Bubble and The Financial Crisis.” Real World Economics Review 46.1 (2008): 73-81. Print.
Barthwal, Randall. Microeconomic Analysis. New Delhi: New Age International, 2007. Print.
Carlberg, Conrad. Business Analysis with QuickBooks. Hoboken: Wiley, 2009. Print.
Crude Construction (Petroleum); Dubai Fathe Monthly Price – US Dollars per Barrel 2015. Web.
Finance has been the subject of global market confusion and unremitting controversies with matters of greater public and private concern facing unending challenges due to incompetent policies and regulations governing financial affairs.
The unprecedented hard economic epoch of the recent decades has hit the financial market, thus affecting operations of numerous companies globally through constantly augmenting defaults and losses (Ramsey 43).
Generally, one of the worldwide industries that have constantly suffered from financial crises and the related risks is the global construction industry where million of losses occur not only from the economic circumstances, but also due to unrelenting misfortunes that mar industrial growth.
In a bid to protect contractors from the rising financial risks that have become more eminent in the current decades, financial institutions are becoming proactive in providing risk transfer mechanisms in the form of surety. Despite decades of surety guarantees by corporations in the United States, little remains known to the public about surety. Therefore, this study explores construction surety bond underwriting risk evaluation.
Synopsis of a construction surety contract
The financial business world has grown exponentially for decades and become the most responsive industry that constantly provides substantial aid to other industries on risk related affairs. By operating slightly akin to the insurance firms, corporate sureties have emerged stronger in supporting risk related industries including the construction companies by providing surety bonds.
In simple terms as defined by CNA Surety, “surety bonds are three party instruments by which one party guarantees or promises a second party the successful performance of a third party” (1). These three parties or principles involved in the surety bonding include a surety (any financial institution), a principal (contractor) and an Obligee (owner) (Seifert 47).
Surety bonds involved in construction or bonding construction companies are contract surety bonds. Obviously, construction is a challenging and risky business that possibly can result into huge losses to constructors and owners is not well handled. Construction surety bonds typically prevent owners from financial and resource related risks that likely occur during project construction.
In its broadest understanding, construction surety bonds normally provide assurance to Obligee or project owners that contractors are capable of performing or completing the project on due time, within the stipulated budget and in the desired design requirements (McIntyre and Strischek 30).
On the same note, construction surety bonds are capable of assuring the venture owners that the contractor will complete the project and pay all the specified subcontractors, material suppliers and manual workers as expected (McIntyre and Strischek 30).
Research has identified three common forms of construction surety bonds namely bid bonds, performance bonds and the payment bonds that are common in a large construction spectrum. A bid bond is a construction surety bond that provides financial assurance that the contract is for good will, in desired price and required performance and payment bonds.
Performance bond provides “the owner with protection against financial loss in a circumstance where contractor fails to complete the project and meet terms and conditions of the contract., while payment bond ensure that the constructor makes all payments to suppliers, subcontractors and laborers” (Jenkins and Andrew 2).
Background to the U.S. construction surety industry
Perhaps the United States stands out to be among the most advanced countries that have integrated systems to protect innocent civilians from malicious service providers, including malevolent project managers and contractors.
The U.S. construction surety industry has expanded exponentially in the current decades and its history and background is long, and its fate has been a mixture of success and failure (McIntyre and Strischek 31).
The U.S construction surety industry premiered centuries ago and financial corporations have been offering surety bonds for quite a while, before the government decided to intervene as a service-consumer protection intervention.
According to Surety Information Office (1), the year 1893 saw the U.S government, through Miller Act Section 270a, placing a legal mandate to all contactors on public works contracts to acquire surety bonds that guaranteed their constancy in undertaking projects and masking dully payments to all subcontractors and suppliers on project completion.
The importance of getting into construction agreements and contracts began at this moment.
By the U.S. Government imposing Miller act, one significant issue emerged from this rule. According to Surety Information Office (1), “the Miller Act (40 U.S.C. Section 270a) requires performance and payment bonds for all public work contracts in excess of $100,000 and payment protection, with payment bonds the preferred method, for contracts in excess of $25,000.”
In subsequent moments, approximately fifty American States, including Puerto Rico and District of Columbia began enacting this act. Since this enactment, corporate financial institutions initiated massive campaigns of attracting contractors in such business activities by making the surety industry quite a competitive sector throughout 1990s when the American economy thrived.
Under the strong economy, the contractors remained busy and with minimal failures until the entire world began experiencing economic crunches. Unfortunately, the profitable bonding business became more overwhelming and centered attention for new entrants into surety leading to excess and gratuitous competition within the surety industry that has finally remained shaky 2000 due to high-profile corporate failures.
Principles of Premiums and losses
While trying to understand underwriting of surety bonds in the construction industry, premiums and losses are two financial terminologies associated with underwriting of surety bonds. The U.S surety bonds, similar to the insurances, have premium and loss terminologies, which represent certain fees.
Unlike the insurance premium, surety premium refers to service fee or service charge determined based on anticipated losses (Grovenstein et al. 356). Losses are unforeseen financial risks that may result from contractors failing to complete the project as per expectations, or even other uncertainties related to project construction.
In the case where the surety industry considers risks from the construction company are unpleasant, the financial institution, which is normally the surety, may have to deem a number of alternatives.
According to contract bonding principles, McIntyre and Strischek affirm that some of the alternative that assists in minimizing loss chances in sureties is raising premium charges, raising deductibles, reducing bond coverage, intensify underwriting standards or even quite completely from the bonding deal (30)..
Perceived significance of surety contract bonding
Since the advent of surety contracting and bonding into the U.S federal public works, much has protracted that has led to surveyors considering the imperativeness of surety contract bond underwriting. Surety bonding is a process that involves risk sharing through a business-integrated program that involves several mutual terms and conditions for all the three parties involved (Jenkins and Andrew 1).
In actuality, there is no better or rather practical alternative of defending the private and the public against financial loss. On the other hand, financial institutions depend on public and private sectors to generate revenues for their survival.
Surety bonding on construction favors all the three principals in the contracting deal (Dunn and Sedgwick 15). For the owner, protection from financial loss, safety of the construction and smooth progress of the project is what becomes major benefits in due completion of the project (Ramsey 42). Three contract surety bonds have been supportive in assisting Obligee in undertaking their projects successfully b considering the success of the bonding.
The owner believes that the bid bond, the performance bond and the payment bond are core movers to the success of the project. McIntyre and Strischek assert, “Surety bonds assure project owners that contractors will perform the work and pay specified subcontractors, laborers, and material suppliers in accordance with the contract documents” (30).
The contractors (principals) also rely on the surety contract bond underwriting in a number of ways that may deem significant while undertaking their contracting process. During the underwriting process, the contractor feels assured of owner’s cooperation in terms of payment as cases of exploiting contractors seem outdated since the financial institutions scrutinizes owners financial capacity comprehensively.
Since the surety corporations have the financial stamina to cover any improprieties resulting from Obligee, the contractor feels assured of getting all the stated pay (Dunn and Sedgwick 15). The surety or the guarantors who are large financial institutions normally receive a financial benefit and commercial reputation over the surety industry since premiums have the potential of chaining the corporate improvement of the firms.
Essential information for underwriting a contract bond
Underwriting a contract bond has been a quandary for the three parties, with both of them having worries over the successfulness of bonding and the fate of the project under construction. As noted by Glaser, Piskorski, and Tchistyi “mortgage underwriters face a dilemma: either to implement high underwriting standards and underwrite only high quality mortgages or relax underwriting standards in order to save on expenses” (186).
All parties involved in undertaking the contract bonding must observe several parameters before concluding on ways to undertake the surety bonding. During the process, the corporate sureties are normally at higher risks since they are responsible for monitoring and assessing the capabilities of the two parties in the contract bonding (Sacks and Ignacio 46).
Nonetheless, it is worthwhile that all the three principles consider seeking legal advice and embedding their bonding procedures through legal frameworks that likely reduces chances of uncertainties. The two (principals and surety) with their underwriters and producers have the accountability to oversee all the procedures of the contracting process.
What contractors and their producers must know
Subsequent to a comprehensive coverage of all conditions, terms and procedure of signing the contract bonds, a greater responsibility rests upon the contractor companies and the surety companies as the owner waits in anticipation. As the surety depends on surety company underwriter to undertake a follow up on the contract and plan, the contractor company relies on the producer, who forms part contractor’s external advisory group.
The producer is one of the integral players in the contractor’s advisory team and to avoid performance-related risks that may hamper completion of the contract the producer plays an important part. The contractors company must consider the following qualifications from the producer: the producer must be familiar with the local, provincial and national conditions and trends within the surety market.
In addition, Ramsey (42) asserts that the producer must posses accounting and finance knowledge, respect and a reputation for integrity, knowledge of the contract law and their documents, substantial experience in management practices and strategic planning among other fundamental aspects.
They must understand that the contracting business involving construction company is quite challenging and with numerous uncertainties. For any successful contracting company, understanding of business risks is imperative and this aspect aids in evaluating and assessing the kind of contract bonding that firms associate with during their operations.
As suggested by Ramsey, “taking any and every job available is not a wise strategy” (44). A construction company must understand all the uncertainties including external construction risks as weather, natural hazards, material prices, or supplier’s inconveniences and owner’s-related risks, as well as internal risk like equipment failures, staff problems and capital fluctuations.
This move is normally the best way of evaluating and managing their risks since it enlightens the company on the genuine projects to pursue and the contract bonds to sign.
According to Fayek and Marsh (3764), the contractors must also rely on a sustainable legal expertise team that scrutinizes the owner’s financial potency, as it is normally a challenge for contractors to access data pertaining to owners financial and banking secrets that sureties have.
What surety and their underwriters must consider
In the context of undertaking the construction bonding process, the sureties that involve corporate financial institutions are the core movers and principals of contract bonding. Apart from the main surety in the bonding process, two actors as mentioned earlier are important in the process of surety contract bond underwriting: an underwriter and a producer, who form part of the entire process (Stevens 440).
An underwriter is a professional who works directly for the surety company that has offered to provide bond and undertake the obligation. After a successful collection of the necessary information pertaining to the contract, the bond producer presents the information to the surety company underwriter, who is responsible for making a follow up of the plan for the surety company (Ramsey 44).
The underwriter is the most integral person in the advisory team of the surety company. Ramsey) asserts, “The surety bond producer works with the surety company’s underwriter to ensure that the contractor is bondable and capable of performing the work and paying all parties” (44).
In the context of underwriter’s duties, the following are the primary activities undertaken in underwriting by the surety company underwriter. Firstly, the underwriter has the accountability to determine if the contractor possesses the financial potency to support the contract all through.
Secondly, the surety company underwriter ensures that the contractor has a positive historical record of paying subcontractors and suppliers immediately (Ramsey 44). Finally, the surety company underwriter ensures that the contractor possesses a good rapport with the banks and other financial institutions.
In simplest financial terms, underwriting standards of nowadays surety market emphasize on three important Cs representing capitals, capacity and character in the underwriting process and in understanding the contractor’s business. Since a surety bond acts as a bank credit in several ways, it is important for contractors to have a good reputation since contractors have a challenge of accessing debt capital (Seifert 49).
The underwriter also peruses through the contractor’s fiscal year-end statements including balance sheets, cash flow statements, and income statements among others. The table below summarizes the contractor evaluation criterion.
(Source: Fayek and Marsh 3766).
Project specific risk factors affecting contract bond underwriting
While trying to engage in the surety contract bonding and agreeing to the terms and conditions governing construction under contracts, the three parties especially the contractor in this case must understand the risks associated with contract bond underwriting.
This element explains the reason why the bond producer is an integral actor in the surety contract bond underwriting process in defense of the contractor as this professional recommends an accountability line of consistency regarding the contractor’s competence.
Two important forms of risks have been in constant discussions over the existence years of surety industry and contractor’s business, and these are project-specific related factors and performance-related risk factors.
To begin with, a construction industry is a challenging field of professionalism as it associates with numerous risks (Cummins 28). As guarantors are currently targeting mega contractors with large cumulative programs that are highly perilous, risk in itself is a unique issue and very few constructions complete successfully without encountering jeopardy.
As postulated earlier, the underwriter examines the capital, capacity, and character of the contractor; nonetheless, the forth c has emerged in the recent studies that denote continuity. The continuity in the case of construction may remain hampered by uncertainties. Project specific risk factors are precarious issues that associate with the project itself and contractors are normally unaware of the unforeseen uncertainties.
The project owners will always deem a project successful if the contractor manages to complete it within the stipulated time, designed budget and all other requirements (Grovenstein et al. 159). Project-specific related risk factors may involve natural catastrophes, delays in the supply chain or material deficiency, change in the material prices or even owners lack of cooperation.
This aspect explains the reason behind the existence of payment bond that ensures that the owner’s project continues despite the failure of the contractor in paying sub-contractors, laborers, and suppliers (Vedenov, Epperson, and Barnett 450). Project-related risk factors, especially natural ones have been the most challenging to control in the surety bonding.
Performance-related risk factors affecting contract bond underwriting
Performance related risk factors are uncertainties affiliating with the incapability of contractors to complete the desired project in the requirements highlighted in the contract bonding agreement (Strischek 31). Within the tripartite bond agreement, the caution and worry here is upon the owner of the project under construction and more worse to the surety company.
Some contractor’s performance faith has been questionable within the public and to ensure that contracts have remained successful through surety contract bond underwriting, the performance bond emerged (Seifert 48). While trying to understand the concept of performance related risk factors in the contracting process, management practices and strategic planning as contractor evaluation criterion emerged from this point.
Performance in the context of surety contract bond underwriting refers to the contractor’s aptitude in completing the agreed project. Some of the common performance related factors may include the contractor’s management delinquency, poor or lack of business planning, lack of contract performance frameworks, project complexity as well as obstructing company philosophies and procedures, most of which are avoidable.
How to make an appropriate bond underwriting decision
The appropriateness and successfulness of any bond underwriting between the three parties depends on a number of issues that surety companies must always consider before making a decision into the bonding. “Sureties and bankers have much in common.
McIntyre and Strischek postulate, “Both industries underwrite risk to contractors, and both have enjoyed the good time profits of the cycle’s expansion phase and suffered the losses during its contraction phase” (36). Therefore, analyzing risks involved in contract bonding becomes important.
However, in certain circumstances, financial organizations have found themselves into the traps of fraudster and money swindlers who pretend to be contractors from reputable companies, leading to serious financial losses (Glaser, Piskorski, and Tchistyi 188).
Despite the fact that there are very few decision-support models existing among financial institutions that are sureties and this aspect has resulted into numerous problems concerning contract bond underwriting (Stevens 456). As postulated earlier, corporate sureties should use a number of procedures in determining the probability of having attractive returns from a contract.
Before making a decision to engage in any contract bonding practice with the other two parties, viz. the project owner and the contractor, numerous things appear significant for consideration. Before anything else, the financial institution must scrutinize owner’s financial capacity including his/her willingness to pay all expenses incurred in the project and his/her previous behavior with the bank or surety (Ramsey 44).
In the beginning of the initial phase, the company must consider hiring or employing a competitive underwriter with appropriate knowledge in all forms of surety conditions, who will deal confidently with the contractor’s producer to avoid incurring financial losses.
Bearing in mind that the financial institution will be taking all the liabilities and obligations for the owner, a legal advisory team must prevail to provide information and make all follow ups of the required legal procedures while undertaking the construction bonding (Grovenstein et al. 359).
The financial organization must acquire proper background knowledge and assess the previous character of the contractor on the earlier contracts and agreements. All documents concerning the contractor’s latest fiscal year-end statements must exist in this assessment to provide assurance that the contractor has been loyally paying all sub-contractors, laborers, and suppliers within the slated time.
The financial institution, which is the corporate surety, must ensure that the underwriter assess “the contractor’s latest fiscal year-end statements by examining the accountants’ opinion to review the audit or compilations” (Ramsey 45).
They should also assess balance sheet to evaluate the working capital, income statements to estimate gross profits from previous contracts as well as cash statements to appraise operating cash flow among other important construction bonding documents before deciding on the bond agreements (Seifert 49).
On finalizing, the surety company underwriter must also consider analyzing the possible risk factors associated with the bonding and ensure they depend on a decision support model in their making their final agreement on the contract.
Conclusion
Conclusively, there has been substantial literature existing concerning surety bonding in the construction industry yet understanding important procedures in the construction bonding process has been a challenge. Surety companies are the most parties that are at a greater risk of failing in the surety bonding if proper securitization of the owner and the contractor’s intentions in the bonding deal are unknown.
Sureties with successful transfer of construction risk have always considered the attractiveness of the risk transfers. Companies engaging in surety bonding normally target the jumbo rates in the premiums, which normally come from seriously risky ventures, and if proper caution lacks in making the appropriate decision in the bonding process, the sureties may be putting themselves into great financial uncertainties.
Works Cited
CNA Surety 2005, Surety ship: A practical guide to Surety Bonding. Web.
Cummins, David. “Cat bonds and other risk-linked securities: state of the market and recent developments.” Risk Management and Insurance Review 11.1(2008): 23-47. Print.
Dunn, Jonathan, Irvine Sedgwick. “Letters of Credit, Bonding, Guarantees and Default Insurance: Hedging Bets in a Roller-Coaster Market.” American Bar Association 15.2 (2013): 1-17. Print.
Fayek, Aminah, and Krista Marsh. “A decision-making model for surety underwriters in the construction industry based on fuzzy expert systems.” Journal of Construction Engineering and Management 1.1 (2006): 3763-3772. Print.
Glaser, Barney, Tomasz Piskorski, and Alexei Tchistyi. “Optimal securitization with moral hazard.” Journal of Financial Economics 104.2 (2012):186–202. Print.
Grovenstein, Robert, Francis Sirmans, John Harding, Sansanee Thebpanya, Geoffrey Turnbull. “Commercial mortgage underwriting: How well do lenders manage the risks.” Journal of Housing Economics 14.2 (2005): 355–383. Print.
Jenkins, Robert, and Wallace Andrew 2005, Construction Bonds: What Every Contractor and Owner Should Know. Web.
McIntyre, Marla, and Dev Strischek. “Surety bonding in today’s construction market: changing times for contractors, bankers, and sureties.” The RMA Journal 87.8 (2005): 30-36. Print.
Ramsey, Marc. “Surety Bond Producers and Underwriters.” The RMA Journal 91.8 (2009): 42-45. Print.
Sacks, Arianna, and Correa Ignacio. “Underwriting: The Harvard Student Journal of Real Estate.” The Harvard student journal of real estate 1.1 (2011): 1-116. Print.
Seifert, Bryan. “Sustainable Buildings and the Surety.” Real Estate Issues 33.3 (2008): 47-52. Print.
Stevens, Glenn. “Evaluation of Underwriter Proposals for Negotiated Municipal Bond Offerings.” Public Administration & Management: An Interactive Journal 4.4 (1999): 435-468. Print.
Strischek, Dev. “Underwriting and Monitoring Consideration in Lending to Contractors Today.” The RMA Journal 86.10 (2004):31-32. Print.
Surety Information Office. n.d. 10 Things You Should Know About Surety Bonds. Web.
Vedenov, Dmitry, James Epperson, and Barry Barnett. “Designing Catastrophe Bonds to Securitize Systemic Risks in Agriculture: The Case of Georgia Cotton.” Journal of Agricultural and Resource Economics 31.2 (2006): 318-338. Print.
The global crisis that hit the world adversely affected the economies of developing countries. This is because these countries lacked the ability to withstand the external forces that resulted from the collapse of the major world’s economies from which they depended forcing them to restructure their operating business models.
As the crisis took hold, the Gulf Corporation council countries’ were adversely affected by the depression which hit the region through the trade and financial channels (Khamis, n d).
Among the most hit GCC countries was the United Arab Emirates whose economy has transformed itself from a classical base of fishing and pearling into oil based high income economy with a high concentration of expatriate labor as the main drivers in the key sectors of the economy (IMF, 2003).
The UAE had achieved impressive economic growth over the past years due to its rapid development in the non oil economy making it one of the most diversified economies among the Gulf cooperation Council Counterparts (IMF, 2003).
However, the region’s persistent dependency on oil as the key driver in the economy and its widely segmented labor market where nationals still continue to have a strong preference for public sector employment over the private sector rendered the region highly vulnerable to the negative implication of the global economic downturn.
Real estate and construction sector in UAE
The study covers the actual effects of the crisis to the construction and real estate sector in the region which is among the key sectors in the economy contributing an approximate 16% GDP in UAE (IMF, 2003). The sector which had earlier on achieved remarkable growth rapidly declined with the occurrence of the global financial crisis resulting in depreciating values of property as well as departure of foreign investors from the region.
The emirate of Dubai provides a clear evidence of the decline in the real estate industry following the crisis.
Consequently, the country provides us with the appropriate case study through which we will analyze the trend in the construction and real estate sector in the period between 2002 and 2006 where the industry achieved remarkable growth, the period between 2008 and 2009 when the global financial crisis hit the economy and the forecasted growth up to 2012.
This analysis will be essential in our formulation of an informed conclusion.
Financial crisis facing the region
It is worth noting that the rental market had been soaring in Dubai due to the increased demand for residential houses and office space. Lease prices as well as the real estate prices have doubled since 2005 with prices varying between $ 1700 and $ 3500 per square meter according to location (Noack, 2007).
Due to drastic rent increases, the government of Dubai implemented a rental cap forcing land lords to keep the rent increases to a maximum of 15% per year in 2006 which was further reduced to 7% in 2007 (Noack, 2007).
There appeared to be the stepping stone towards stabilization on the rental and real estate markets which could be attributed to the implementation of the rental cap and the establishment of new housing units in the market (Noack, 2007).
During the boom period, the countries in the GCC particularly Qatar and the UAE experienced remarkable increases in banking system credit to the private sector and this led to real average credit growth which increased bank leverage and doubled the ratio of private sector credit to non oil GDP to 122% by the end of 2008 (Khamis, 2010).
Excess credit coupled with low interest rates and a vibrant economy facilitated higher demand for real estates and equities consequently increasing prices (Khamis, 2010). In the UAE, speculative investments significantly contributed to marked increases in real estate prices.
Further, following the stock market decline in 2006, GCC markets posted 22-60% gains in 2007 but this dramatically reduced in 2008 by 29-73% with the intensification of the global crisis (Khamis, 2010).
With the global recession occurrence, the real GDP growth in the gulf region was expected to sharply decline from 5.8% in 2008 to 1.1 % in 2009 due to correction in oil prices, reduced overall production as well as tight credit conditions (UN, 2009).
Among the GCC economies, the UAE was the most affected by the crises with its real GDP falling from 7.4 % to 0.5% between 2008 and 2009 (UN, 2009). This resulted from severe contraction in domestic demand for real estate prices.
Literature review
UAE attained a per capita income in terms of GDP amounting to $16700 in 1998 which was relatively higher than the GDP of most developing countries (Al Abed and Helyller, 2001). The three emirates of Abu Dhabi, Dubai and Sharjah account for the highest percentage of UAE gross domestic product as well as the population.
The income differences between the emirates are generated by the variations in natural resource endowment prevalent in the region (Al Abed and Helyller, 2001). The key resource in the region is oil and gas and in 1998, crude oil contributed for 22% of the total UAE gross domestic product. The UAE economy is highly dependent on external sector as reflected by the import export disparities prevalent in the region’s economy.
Both exports and imports are relatively high and consequently the external sector plays a major role in performance and evolution of the UAE economy (Al Abed and Helyller, 2001).
The 2003-2008 oil price booms spurred economic activity in the GCC consequently strengthening all the sectors in the economy with overall growth in the economy averaging to 6.6% per year which was considerably higher than the pre oil price boom period.
Role of construction and real estate sector in UAE economy
The construction and real estate sector is one of the key driving forces in the UAE economy. Increasing volumes of local and tourist population in the region as well as the liberalization of the real estate market had significantly contributed to the rapid growth in the sector due to the rapidly increasing demand for property in the region (Noack, 2007).
The United Arab Emirates is by far the biggest property market in the Gulf region which facilitated its domination in the construction sector. Abu Dhabi heavily invested in tourism and residential sector with its numerous projects including beach and island development, town houses, and facilities for residents (Noack, 2007).
Dubai’s real estate sector was mushrooming with projects worth billions of dollars and projects including infrastructure development were under construction. Continuous population growth and immigration in the region has led to increased demand for residential houses especially in Dubai. Other emirates are also increasingly investing on the construction sector but on a relatively smaller scale.
Effects of the Crisis in the Region
The GCC countries have been hit hard by the decline in oil prices and production as well as by liquidity shortages in global financial markets (Khamis, 2010). The impact of the crisis in the GCC manifested itself in plunging stock and real estate markets with the region’s market capitalization falling dramatically by 41% (Khamis, 2010).
As the effects of the global market became more apparent, the average correlation of the GCC markets with the global markets became evident in the period between 2007 and 2008 (Khamis, 2010).
The region was further affected by decline in the international asset prices with losses estimated by market analysts at between 20-30% in 2008 (Khamis, 2010). Consequently, real estate prices dramatically declined which corrected prices in Dubai which had initially risen more sharply.
A couple of scholars had predicted the impact of global economic downturn across the Gulf Corporation Council. The economic down turn as well as the dramatic plunge in oil prices led to a major blow on the development efforts in the region and shattered dreams of thousands of investors seeking maximum returns in a region that was once a land of opportunity (BM, 2010).
The construction and real estate sector was rendered vulnerable to the adverse effects of the crises due to the fact that credit growth in the region substantially contributed to lending in the real estate sector. This lending was funded substantially by bank’s foreign liabilities which rendered the region’s banking system susceptible to credit losses during economic downturn (Khamis, 2010).
The international monetary fund predicted that economic growth across the region would slow down in 3.5 % in 2009 from 6.8% in 2008.
The United Arab Emirates which accounts for approximately 46% of the GCC construction boom is likely to be adversely affected according to research findings by EFG Hermes (BM, 2010). The findings further revealed that the region is experiencing a ‘real estate crash ‘and the effects of this have not yet been fully addressed.
Objectives, Scope and coverage
The Extent of the Crisis in UAE and the gulf region
The property and the construction sectors have been worst hit in the emirate following the global economic downturn. Although various sectors continue to register considerable growth in the recent past, the construction and real estate sectors evidently achieved negative growth in 2010 (Property Wire, 2010).
This failure can be attributed to the sector’s dependence on demand and supply consequently elongated the recovery period. The world debt crisis has also intensified the negative implications on the real estate sector which plummeted with the diminishing international funding Property sales in the region increased by more than half their value since 2008 (Property Wire 2010).
A report compiled by the royal institution of Chartered surveyors revealed that there was a substantial increase in the number of distressed assets coming into the UAE market in the third quarter of 2010 and this was further expected to rise in the last quarter of the year (Property Wire 2010).
Tom Bunker, an investment sale consultant confirmed this increment in distressed selling citing that this property hit the market below their purchase price and in some cases below the price level at which they were initially sold by the developer.
The global economy has started showing signs of revival from its previous down turn (Property digest, 2009).
The United Arab Emirate real estate sector has subsequently registered gradual change and according to the Gowealthy Research Team, whereby the demand for off plan properties in the UAE ended with the departure of speculators changing the trend towards preference of ready to move in property that are at least half way complete.
Dwindling market demand and oversupply of units coupled with distress sales by owners who aim at raising the mortgage requirements have affected the prices of property adversely (Property Digest, 2009). Research by Colliers revealed that home prices in Dubai declined by 40-42% since the fourth quarter of 2008 with sales transactions in Dubai and Abu Dhabi being driven by professional investors rather than speculators. T
his helps us to understand the long term impacts of foreign debt as a means of financing local projects. In this region increased foreign debt coupled with global depression has resulted in devaluation of property in Dubai which has consequently affected the region’s economy.
The UAE has an ideal location for long term property investment. At present, quality accommodation and work space can be acquired at moderate states with scales heavily tipped in favor of serious investors who negotiate for appreciable bargains (Property Digest, 2009). This creates room for optimism in the UAE real estate market orientation towards long term investment.
However, the most important question remains whether the UAE young realty sector is strong and resilient enough to withstand the adverse effects of the forces within the external economies as well as its ability to meet long term investor demands and expectations.
To an attempt to achieve this end, the government of Dubai has recently amended Article No. 13 that aims at protecting the stakeholders in the realty sector. The article provides reviewed provisions for cancellation of contracts and also offers property auction licenses to private firms in order to facilitate the auction process.
Research question and methodology
Our study will focus on a case study of Dubai’s real estate sector and the impact that the global financial crisis has had on the same. This will enable us to evaluate the extent to which the crisis has affected the UAE region since Dubai is one of the major determinants of overall performance of UAE economy.
Effects of the financial crises on the real estate sector in Dubai
The crisis has adversely affected the emirate of Dubai which has heavily invested in construction projects as well as establishment of a financial sector.
Dr, Eckart Woertz, program manager of economics at the Gulf Research Center observed that Dubai, which was the pioneer in economic development in the UAE has been adversely affected by the crisis due to its over reliance on real estate sector as well as its foreign debt financed growth (BM, 2010).
The impact that the economic downturn has had on the Dubai’s construction sector is an obvious indicator of the extent to which the UAE has been affected by the crisis hence our focus on the emirate. Construction projects worth billions of dollars have been rendered worthless with numerous projects being prematurely terminated due to lack of cash inflow (BM, 2010).
A report by Proleads research firm uncovered that an approximate 53% of the projects in Dubai had been suspended while only projects worth $698 were still in operation in a sector estimated to be worth US $1.3 trillion (BM, 2010).
In addition, job cuts have been widespread in the real estate sector with numerous companies announcing a lot of redundancies while considerable number of expatriates continues to leave the country (BM, 2010).
A report by Emirates Business 24/7 claimed that Indian carriers were preparing to accommodate bulk bookings for constructions workers and expatriates leaving the UAE in search of greener pastures.
Further, figure released by Dubai’s ministry of interior naturalization and residency highlighted that 54684 residency visas were cancelled in the beginning of 2009 compared to 29418 in January 2008 with the majority being expatriates and private sector workers who had been frustrated by the poor performance in the construction and real estate industry in Dubai (BM, 2010).
The impact of the global financial crisis further sent shock waves through out other related industries in the region that relied on the construction sector consequently affecting them negatively. For instance, the media companies which depended heavily on the real estate sector for advertising lost significant revenue due to reduction in advertising efforts by the sector (BM, 2010).
The architecture and engineering firms as well as facilities management providers were also adversely affected. According to the Property wire (2010), “The construction and real estate sectors in Dubai have seen a decrease of almost 5% in 2010 and the recovery is some way off according to officials” (p1).
Data Analysis: The Case of Dubai
The property industry in Dubai registered remarkable growth in years prior the global financial crisis (Anonymous, 2007). The trend of the industry in the period between 2002and 2006 is a clear indicator of the robust growth that the sector had enjoyed in previous years. The graph below displays the percentage growth sustained by Dubai’s real estate sector during the period.
Source: Zahrat Dubai real estate.
However, the upward trend rapidly declined with the occurrence of the global financial crisis that affected all the economies in the world. Reports indicated that the residential property prices in Dubai were bound to decline in the subsequent years from the peak levels seen in the third quarter of 2008. The graph below displays the falling real estate prices in specific locations in Dubai during the period of the financial crisis.
Source: Dubai Forums 2009.
Despite the numerous challenges facing the real sector as a result of global financial depression, the region is optimistic that the sector will survive the financial crisis. Substantial market corrections have taken place which has led to the restructuring of the business models in operation.
In order to achieve the best case scenario industry conditions as shown in the graph, the government of Dubai should seek to support the country’s economy by increasing infrastructural spending, reducing oil and foreign income dependence in the economy and bail out guarantees to financial institutions in order to improve performance of the industry and regain investors’ confidence.
Conclusion
The financial crisis that hit the global economy adversely affected numerous countries’ economies without exception of the countries in the GCC. The UAE was the most affected among the GCC member countries with its construction and real estate sector rapidly declining as a result.
The construction and real estate sector which contributes significantly to overall GDP in the UAE has had severe consequences on the overall economic growth of the region.
Evident from the study, the decline in the sector has significantly reduced returns to investment which has led to mass exodus of foreign investors from the region’s free zones and disrupted performance in other related industries. The region should therefore seek to rectify the situation by minimizing their dependence on oil and foreign funding in order to reduce the risks of industry collapse in future.
Reference List
Al Abed, I., & Helyller, P. (2001). United Arab Emirates- A New Perspective. London: Trident Press Ltd.
Anonymous (2007). Statistical Report on Dubai Real Estate Trends. Web.
Business management (2010). How The Bubble Burst. Web.
