BCUCPE 2020/The story of the Competition

Period 5
Period 6
Period 7
Period 8
Period 9


PERIOD 5:  "'TEAM 6' are the early pacesetters!"

After a period of trialling the Birmingham City University / CPE Hong Kong Enginuity 2020 Competition is underway, with a competitive field of 6 teams all battling for supremacy against their peers. And so to the early action, and the early pacesetters after impressive 29% growth are "TEAM 6" with 1,291 pts. Behind them the chasing pack are led by "Upstream" in second, and "INNOBUILD" in 3rd. At the wrong end of the table the "Covin Team" have some work to do in period 6 to prevent being cut adrift from the other teams, but it is early days, and there are sure to be plenty of twists in the weeks 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.

Looking in more detail at the world economies, 2019 saw some dramatic economic and political changes in the UK. Prime Minister Theresa May's Brexit deal was rejected several times by Parliament, and the UK did not exit the European Union as originally planned at the end of March. Theresa May then resigned, and Boris Johnson became the new PM, and promised to secure Brexit by the end of October, but his minority government's new Brexit deal was also thwarted. However, a majority victory in the General Election on December 12 for the Conservative Party opened the door for the UK to finally leave the European Union at the end of January 2020.
UK economic growth remained modest at 1.4% in 2019, with a projected long-term rate of around 2% providing that there is an orderly exit from the European Union. Consumer spending has continued to drive the economy, but the housing market has cooled and job creation is likely to slow during 2020, and business investment has been on a declining trend as a result of ongoing Brexit-related uncertainty and this is expected to continue until this is resolved. For the UK construction market uncertain times lie ahead, and growth will be hard earned.

Further afield, and unlike the UK, the Global economy grew quicker during 2019, at 3%, with 3.4% expected in 2020, However, the steady pace of expansion in the global economy masks an increase in downside risks that could potentially exacerbate development challenges in many parts of the world, according to the World Economic Situation and Prospects 2019.
The global economy is facing a confluence of risks, which could severely disrupt economic activity and inflict significant damage on longer-term development prospects. These risks include an escalation of trade disputes, an abrupt tightening of global financial conditions, and intensifying climate risks.

League table at the end of period 5




PERIOD 6:  "A tough quarter see 'TEAM 6' hold onto top spot"

After the impressive growth figures posted in period 5, not unexpectedly period 6 proved to be a much tougher quarter, with every team posting negative grwoth 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, and some labour scheduling problems completing jobs efficiently.

At the top of the table there was no change in the leading two places with "TEAM 6" holding onto top spot with 1,220 pts despite a 5% decline, and "Upstream" narrowing the gap to just 23 points in 2nd. However, in 3rd are now "CKCT" after climbing 2 places after being the only team to post positive growth with a 2% improvement. At the wrong end of the table the "CAT-TEAM" suffered a 19% fall, leaving shareholders reeling, and their management team wil need to work hard in period 7 to put the company's fortunes back on an even keel.

Business is often a roller coaster ride, learning from both successes and failures, and every management team will be looking closely at the decisions made in period 6 to make effective ones in the next round.

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:  "In a tough quarter, 'INNOBUILD' turn the competition on its head!"

Period 7 proved to be another tough quarter for nearly every team, but there was one shining exception, "INNOBUILD", who grew by an impressive 13% to move to the top of the table with 1,263 pts, and as their rival struggled they opened up a substantial 184 point gap to the chasing pack with just two rounds to go. After leading for the last 2 rounds, previous leaders "TEAM 6" narrowly lost out on a key bid to the Bommel Group, and as a result their forward workload amd margin KPIs fell markedly, and they slipped back to 3rd, but "Upstream" held firm in second despite a 10% decline. At the wrong end of the table the management teams of the "Covin Team" and the "CAT-TEAM" will need to explain their current plight at an emergency shareholder meeting, and they will ned to look very carefully at all aspects of their business to turn their company's fortunes round in period 8.

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 site access isssues affected the erection of new onshore wind turbines for the client, First Wind USA, near Palm Springs, California, with an estimated risk cost of nearly 290k before mitigation.

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




PERIOD 8:  "Another tough quarter as the battle for second place hots up"

Period 8 proved to be another tough quarter for the majority of teams, reflecting the real world that the Competition tries to simulate. At the top of the table "INNOBUILD" maintained their lead from the chasing pack with 1,140 pts despite a 10% decline. Behind them their is a tremendous battle for second place taking place with just one round to go. "Upstream" in 2nd posted an 8% decline, whereas the "Covin Team" in 4th grew by 2%, the only team to do so in the quarter, and the net result was that there are now just 22 points separating the teams from 2nd down to 4th, and one good or bad decision either way could have a big impact in the final round.

Running a successful construction business requires effective internal decisions to be made, such as bidding competitively to win new work, and progressing jobs as profitably as possible. However, external economic, political and environmental WORLD EVENTS can also impact upon the business. Clues to some of the events, but not necessarly all of them, are reported in the ENGINUITY NEWS NETWORK (ENN) each period, and close examination of this valuable new source may influence the current and future strategy of the business.
For example, in period 8 an article in the ENN reported that "With so much labour being used for the Qatar 2022 World Cup building programme, particularly in constructing new stadiums, construction companies operating in Qatar, and neighbouring countries, fear a shortage of workers in the next 6 months, and are looking at sourcing the shortfall from elsewhere." Clearly construction companies undertaking work in Qatar may see their build costs driven up due to having to pay additional labour costs in the near future.

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




PERIOD 9:  "Timing is everything as 'TEAM 6' are crowned Champions"

There is an old saying that timing is everything, and so it proved in a tense final round of the Competition as an incredible 18% improvement from "TEAM 6" enabled them to jump two places up the table and back to the top to become the Birmingham City University / CPE Hong Kong Enginuity 2020 Competition with an 1,173 pts.

In a Competition that had seen many twists and turns, with the teams very closely matched, behind the Champions "Upstream" held onto the Runners Up spot, and previous leaders "INNOBUILD" had to settle for 3rd place after slipping two places in the final round after failing to win any new work, with the subsequent affect on their forward workload and margin KPIs, which ultimately cost them any chance of being champions.

In the final analysis the Competition has been a roller coaster journey through one and a quarter simulated years of management, but hopefully everyone taking part has developed their business management skills and learnt a lot along the way.

League table at the end of period 9
Improvements, or otherwise, during period 9