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BIRMINGHAM CITY UNIVERSITY 2022 (B)/THE STORY OF THE COMPETITION

PERIOD 5 PERIOD 6 PERIOD 7 PERIOD 8


PERIOD 5:  "'Alpha Construction' are the early pacesetters!"

After a period of intensive trialling the Birmingham City University Enginuity 2022 Competition B is underway, with a competitive field of teams all battling for supremacy against their peers. And so to the action, and all the teams made excellent starts, with the early pacesetters after 44% growth being "Alpha Construction Limited" with 1,440 pts, but they cannot rest on their laurels with "ULTRA TECH" just 20 points further back, and "GCI Services" not far behind in 3rd. However, it is early days, and there are sure to be plenty of twists ahead as the journey through the Early Years unfolds.

The early signs are that the competition will be very competitive, with all the teams improving their overall position in period 5. However, this was not unexpected. After being formed at the beginning of period 1, overhead costs were incurred whilst the companies were being established, without any profits being generated. The companies were now in a position to generate profits against a more stable overhead base, and this was reflected in improved operating profits. Of course, growth will be impossible without an effective strategy, and all the management teams have had time to think about this carefully, and come up with a set of objectives to deliver business success for their stakeholders.

After COVID-19 pandemic sent shockwaves through the UK economy in 2020 there was renewed optimism during most of 2021 thanks to the UK-EU trade deal post Brexit, and the successful role out of a COVID-19 vaccine, resulting in GDP growth of around 6.5%. However, towards the end of 2021 dark clouds began to gather with the new Omicron variant causing concern, inflation at 5.1% in November hitting a fresh decade high, and continued global shortages of goods and fuel raising concerns of an inflationary cycle that forced the Bank Of England to increase interest rates by 0.25% in December for the first time in three years. This led to the OECD (Organisation for Economic Co-operation and Development) to lower its UK’s 2022 GDP growth forecast to 4.7%.

Further afield the COVID-19 pandemic delivered a global economic shock of enormous magnitude during 2020 leading to steep recessions in many countries. However, during 2021 the global economy recovered rapidly from the pandemic shock compared to past recessions with global growth of just over 5%, although this is expected to reduce slightly in 2022. Beyond 2022, slower trend growth is expected with many challenges to be faced including the potential of higher financing costs, heightened financial market volatility, inflation risks driven by rebounding growth and supply-chain bottlenecks, ongoing labour shortages and intensifying climate risks.

League table at the end of period 5




PERIOD 6:  "'Alpha Construction' go from strength to strength"

After the impressive growth figures posted in period 5, not unexpectedly period 6 proved to be a much tougher quarter, with only 40% of the teams posting positive growth figures. This was largely driven by the companies being unable to win as much work as they had previously, with the corresponding reduction in forward workload and margin KPIs.

However, amongst the successes one stood out like a beacon as "Alpha Construction" posted 8% growth that enabled them to extend their lead at the top to over 150 points from the chasing pack, and their current KPI score of 1,549 pts is one of the highest ever recorded after just 2 rounds of Competition. The chasing pack are now led by "GCI Services", who changed places with "ULTRA TECH", and the teams from 2nd to 7th are only separated by less than 30 places.

With KPI points hard earned it will become increasingly important that the management teams look very carefully at every aspect of their business for potential improvements, and those that are most successful in doing so should prosper the most. Two areas that the teams need particular attention are Marketing strategy and Procurement (rival bidders), which are discussed in more detail below.

Marketing is possibly the area of the business that requires the most thought, as there are numerous strategies that could be adopted. The market trend can only be gauged for one year ahead, and not always accurately, and as marketing departments are expanded, the choices of where to direct the marketing effort are wide ranging, by sector, country and job size. The task is not an easy one, but has a major impact upon procurement options, and the future work undertaken, and ultimately on the long term prosperity of the company.

Another important consideration is that rival bidders do not necessarily stick with the same bidding strategy, and as time goes by they can change their strategy according to market conditions. This makes it imperative that teams keep a close eye on the margins rival bidders are applying, and how they may be changing. Evaluating these strategies could make the key difference between success in securing work, or not. To complicate matters even further there may be UNKNOWN rival bidders, and the only clues to these may be in the ENGINUITY NEWS NETWORK (ENN) for the period.

League table at the end of period 6
Improvements, or otherwise, during period 6




PERIOD 7:  "'Access Engineering' storm through the field"

Period 7, the mid point of the Competition, proved to be one of mixed results, but for those that prospered there were some startling results. As previous high flyers "GCI Services" and "ULTRA TECH" surprisingly plummeted 5 and 6 places respectively, "Access Engineering ( Pvt) Ltd" moved in the opposite direction with a stunning 5-place gain, and up to second place, and "Horizon Corp" posted the joint best results in the round, impressive 12% growth that lifted them from 8th to 4th, and just behind "Imperium Construction LTD" in 3rd. At the other end of the table the 11% improvement from "Sky View Construction" staved off a potential emergency shareholder meeting, and lifted them up 2 places.

At the top of table there is no stopping the meteoric rise of "Alpha Construction", who equalled the best performance in the round with 12% growth that saw them reach 1,732 pts, and extend their lead even further. There are even rumours circulating that Government Sources are trying to reach out to them for advice on dealing with the current cost of living crisis!

IEWP = SUCCESS

A leading industry think tank have come up with a simple formula for running a successful construction business.

  1. IDENTIFY new work
  2. EXPAND the infrastructure (capital base) of the company to take on more work
  3. WIN new work through competitive bidding
  4. PROFITABLY PROGRESS of the jobs won
It sounds so simple in theory, but in practice it is much far harder to achieve. Most teams prove to be more than competent in the first two areas, identify new work and expanding the infrastructure, but the bidding and successful job progression proves more challenging. Winning new work is not easy with so many known and unknown rival bidders working in different sectors and locations, and progressing jobs through to successful completion is hindered many things, such as finding suitable project managers, labour scheduling and overcoming the many obstacles that can occur, such as delays caused by risks strking. Steady growth also requires replacing work progressed with at least the same amount of work again, and this is often the hardest factor of all to get right. The teams can take some comfort from knowing that many management teams in the real world also struggle for consistent growth, and at least in the virtual world it is not critical, although it may feel like it at times!

Another essential part of running a successful business is being able to form an effective Risk Management Strategy to keep the business as profitable as possible. This can take a number of forms, firstly by building sensible risk contingencies into the original bids based upon the likelihood and cost of the risks occurring. Secondly, and just as importantly is mitigating the affects of any risks that strike through targeted investment into risk management companies, using a BIM model if available, and employing the most suitable project managers to jobs in progress. However, even when these mitigating actions are taken, risk can still be costly to job and company profits, and during period 7 problems with structural defects affected the construction of a new health spa for the client, Orlando Adventure World, in the United States, with an estimated risk cost of around 280k before mitigation.

League table at the end of period 7
Improvements, or otherwise, during period 7




PERIOD 8:  "A tough round, but not for 'Precision Construction Services'!"

Period 8, the penultimate round of the Competition proved to be a tough one for the majority of teams, with 70% posting deteriorating results. However, it was not all doom and gloom, and "Precision Construction Services" turned the form book on its head with an astounding 17% improvement, easily the best in the period, that saw them climb 3 places up to second, and their highest position to date. They are now well ahead of the teams directly below them, "Imperium Construction LTD" who stayed in 3rd, and "Sky View Construction", who made an impressive 4 place gain up to 4th with modest growth as those around them struggled.

At the very top of the table there is surely no catching "Alpha Construction", whose consistency continues to impress as further 10% growth saw them stretch their lead even further to just shy of 300 points as they reached 1,905 pts. With just one round to go each team will be looking to finish strongly, and every decision will count in the final reckoning.

League table at the end of period 8
Improvements, or otherwise, during period 8






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