OB 2020/The story of the Competition
|Early Years||Later Years|
|PERIOD 5: "'Clatt Construct UK' are the early pacesetters!"|
After a period of intensive trialling the Oxford Brookes University Enginuity 2020 Competition is underway, with a competitive field of 12 teams all battling for supremacy against their peers. And so to the early action, and the pacesetters after impressive 37% growth are "Clatt Construct UK" with 1,366 pts. However, the early leaders cannot rest on their laurels with "Corona & Crew" only 4 points behind in second place, with "Forefront Construction" and "Part time construction" in 3rd and 4th also close on the heels of the pacesetters. 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.
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.
|PERIOD 6: "A turbulent quarter sees new leaders, and a lot of changes"|
After the impressive growth figures posted in period 5, not unexpectedly period 6 proved to be a much tougher quarter. 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. The result was that growth figures were down almost across the board. However, those that were able to post positive growth figures made substantial gains.
Most notably "Buildability" stunned their rivals as they posted the best performance in the quarter, 10% growth that enabled them to storm through the field with an incredible 10-place gain that enabled them to open up a 33-point lead at the top of the table with 1,405 pts. "Forefront Construction" moved up on place to 2nd as previous leaders "Clatt Construct UK" dropped back one place to 3rd. At the wrong end of the table the shareholders of "Meow Meow" will not be purring after labour scheduling problems on the completion of a key transport contract in South Africa saw their profitability take a major hit, and they will be working hard not to repeat the error in future periods. 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.
|PERIOD 7: "'Clatt Construct UK' lead again, but only just!"|
After their impressive rise up the table in period 6, all eyes were on the "Buildability" to see if they could sustain their momentum, but a 5% decline in period 7 saw them drop back to 4th. In a quarter of mixed results across the board 5% growth from "Clatt Construct UK" was enough to move them back into pole position with 1,398 pts, but their lead is a narrow one as "Part time construction" showed they have full-time commitment as they move to within just 3 points of the leaders after making the best positional gain of any team with a 3-place gain, with "Forefront Construction" still well in contention despite dropping back one place. The best performance in period 7 was posted by "Meow Meow", who were undeterred by their poor performance in the previous round as they recovered in fine style with 12% growthnto move away from the foot of the table.
Many teams who suffered declines will need to look more carefully at their bidding strategy, and they may need to reduce their margins in order to be more competitive when bidding against rival companies, particularly UNKNOWN ones, who are desperate to secure new work in these uncertain times.
IEWP = SUCCESS
A leading industry think tank have come up with a simple formula for running a successful construction business.
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.
|PERIOD 8: "New leaders as UNKNOWN bidders wreak havoc for many|
Period 8 saw major turbulence amongst many of the teams as a number of teams struggled to win new work, with UNKNOWN rival bidders such as The Crayford Road Group undercutting them, and those who put all their eggs in one basket by bidding for just a few jobs suffered the most.
However, there were some success stories, and most notably "Forefront construction", who lived up to their team name as they climbed two places to finally take over top spot with 1,407 pts, and in doing so they have opened up a substantial gap to the chasing pack, led by "Team nr2", who took advanage of the demise of several of their rivals as they also matched their team name by climbing 5 places to 2nd after 6% growth. Previous leaders "Clatt Construct UK" dropped back to third, and were one of many teams to be out bid by The Crayford Road Group, but "Meow Meow" are now purring loudly after once more posting by far the best performance in the quarter, an impressive 11% growth that lifted them up to 4th, but even they will face face uncertainty as the teams enter the second stage of the competition, known as the later years, when they go 'head to head' in direct competition against each other for work. Watch this space to see the outcome!
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.
|PERIOD 9: "'Forefront' hold off their rivals as the Competition intensifies"|
The teams are now in the second stage of the competition, known as the later years, when they go 'head to head' in direct competition against each other. With the increased level of competition for new work in the later years, each company needs a successful procurement strategy, and the effectiveness of the decisions and strategies taken in the early years are put to the test. In particular, the marketing decisions assume added significance, and a company can obtain a competitive advantage by finding niche markets, and building strong client relationships to gain repeat business when price is not the only deciding factor in tender awards.
Despite the increased competition for work, period 9 saw mixed results, with as many success stories as well as disappointments. At the top of the table "Forefront construction" became the first team this year to retain pole position with 1,521 pts after another solid 8% growth, helped largely by an incredible 6 new contract awards, 5 of which were secured with superior client relationships to their rivals after close bidding. Also staying put were "Team nr2" in second after the joint best performance in the quarter, an impresive 10% growth, and they were matched by "GCS (Global Construction Services)", which enabled them to climb two places to third.
In terms of positional gains, "Brookes Construction Ltd", "Design and don't build" and "Chequers Out" all moved up 3 places in the table after 8% growth. However, there were a number of casualties due to the increased competition for work with four teams failing to secure any new work, and they will need to adapt quickly to the intensified bidding, as well making sure their marketing department is well equipped and staffed to identify more jobs in order to give themselves more bidding opportunities. However, no-one should despair at this stage as the only certainty in these uncertain times is that there will be a lot more volatility in the league table in the remaining 3 rounds. Watch this space!
|PERIOD 10: "A tough quarter lit up by 'Corona & Crew'"|
Despite not growing in period 10 "Forefront construction" were able to hold onto top spot for the third consecutive period with 1,528 pts after their nearest rivals, "Team nr2", declined slightly, and their lead has stretched to nearly 80 points, they will take some unseating from their lofty perch in the remaining two rounds.
In a mixed quarter with 50% of the teams suffering setbacks, and 4 teams failing to secure any new work, there were still some success stories. By far the best performance in period 10 came from "Corona & Crew" whose impressive 12% growth saw them climb 4 places to 7th. Higher up the table "Meow Meow" continue to maintain their recent consistent growth figures as a 4% improvement moved them up to 3rd. At the other end of the table there was also some light at the end of tunnel for the beleagured shareholders of "How To Lose Money", whose management team may need to consider a change of name as 5% growth saw them move away from the foot of the table, aided by securing 3 new jobs, including a large 17m building and commercial contract with Val Mart in Canada to build a new hypermarket, a tender that a number of rival bidders were hoping to win.
|PERIOD 11: "The shareholders of 'Meow Meow' are purring with delight!"|
As the teams completed the penultimate round of the Competition there was a dramatic change in the leading positions. "Forefront construction", who had led for the previous three rounds suffered a unexpected 8% decline in growth to drop back to 2nd, and "Team nr2" also dropped back one place to 3rd with a 3% fall. The demise of the leaders left the door wide open, and "Meow Meow", who had been making steady moves up the table after being bottom in the early stages, were catapulted up two places to become the new leaders with 1,436 pts. However, with just one round to go the new leaders only hold a 23-point lead, fragile at this stage, and the ENGINUITY Crystal Ball is predicting that any of the top 5 teams are still in with a chance of becoming the 2020 Champions.
Further down the field in another mixed quarter, the best performances in the period, 10% growth, were posted by both "Chequers Out" and "Part time construction", who both moved ahead of the leaders from period 6, "Buildability". Encouragingly 11 out of the 12 teams were able to secure some new work, demonsrating that the management teams are adjusting their bidding strategy in line with the increased competition for work. "Part time construction" were particularly successful as they won a large 23m transport contract in the UK with the Midlands Aiport Group to build a new rail link to a terminal building, along with two other contracts, all helping to secure their long term order book.
|PERIOD 12: "Timing is everything as 'Forefront Construction' emerge victorious!"|
There is an old saying that timing is everything, and that was demonstrated in dramatic style in the final round as "Forefront Construction" outperformed their nearest rivals with 8% growth to become the Oxford Brookes University Enginuity 2020 Champions with a finishing score of 1,521 pts. In the end the margin of victory of the Champions was decisive, 50 points from their nearest rivals, and their success owed much to them demonstrating one of the guiding principles in running a successful business, consistency, as they had led the table for 4 of the 8 rounds.
Behind the Champions previous leaders "Meow Meow" dropped back one place to finish Runners Up, and "Team nr2" held onto 3rd spot. Further down the table it was a tough final round for many teams, with 3 failing to win any new work, but one of the teams that did post positive growth, "How To Lose Money", defied their team name and were able to climb two places, and away from the foot of the table.
In the final analysis all of the teams 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 2 simulated years of management, with the second one particularly tough with the increased pressure to win new work.