After a period of intensive trialling the Birmingham City University / Horizon Campus (Sri Lanka) Enginuity 2022 Competition 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 37% growth being "Ensoconstruct" with 1,374 pts. There is not a lot to choose between the chasing pack, led the "Bechcon" and "Camel Riders Enterprises" in second and third respectively, with the "Modern Construction Company" also well in contention. 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

After the impressive growth figures posted in period 5, not unexpectedly period 6 proved to be a much tougher quarter, with only 4 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.

Previous leaders "Ensoconstruct" fell back 6 places after failing to secure any new work, and it opened the door for the "Camel Riders Enterprises" to move up two places to takeover the lead with 1,323 pts. However, hot on their heels (or hooves) are the "Modern Construction Company" who also moved up two places to second. Further back the best performance in the round came from the "Five Stars Construction Company", who lived up to their name after an impressive 9% growth that saw them climb away from the foot of the table, to be replaced by the "Challengers Company" who will need to work hard to avoid a shareholder revolt as the company's growth deteriorated by 16%.

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

The "Camel Riders Enterprises" continued their trek towards glory in period 7 as they extended their lead at the top of the table with an impressive 14% growth to move them onto 1,507 pts. However, with one round to go they are not home and dry just yet as the leaders from period 5, "Ensoconstruct" came roaring back into contention with a stunning 15% improvement, the best by any team, and a 5-place surge up to second, with the "White Track Construction Company" also well placed just 2 points further back after 12% growth and a 1 place gain.

Overall period 8 proved to be good one for most teams, but no so for the "Modern Construction Company" who came down to earth with a bang after slipping from 2nd down to rock bottom after a 17% deterioration, and demonstrating how quickly things can change. With just one round to go each team will be looking to finish strongly, and every decision will count in the final reckoning.

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

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

A solid 5% growth in period 8 was enough for the "Camel Riders Enterprises" to hold onto the lead and deservedly become the Birmingham City University / Horizon Campus (Sri Lanka) 2022 Champions with a very impressive finishing score of 1,578 pts. Ultimately their success owed much to them demonstrating one of the guiding principles in running a successful business, consistency, having led the competition for 3 of the 4 rounds.

Behind the Champions "White Track Construction Company" finished well ahead of the rest of the field in second. Further back the "Golden Trading and Contracting Group" put in a strong finish to climb places to 3rd, and at the wrong end of the table the "Modern Construction Company produced the best performance in the final round, a 7% improvement that enabled them to climb well away from the foot of the table.

In the final analysis despite the gap between some of the teams, they all finished with stronger, more sustainable companies than when they took over in period 5, a testament to the skill and application shown by the management teams in what was a roller coaster of a journey through one simulated year of management.

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