PORT 2018/The story of the Competition
|Early Years||Later Years|
|PERIOD 5: "'Green MT' the early leaders by a point!"|
After some intensive and effective trialling the University of Portsmouth Enginuity 2018 competition is underway, with a field of 10 student teams all battling for supremacy against their peers. And so to the early action, and if period 5 is anything to go by the competition is going to be keenly fought, and of a very high quality, with very little to choose between the teams. Leading the way are "Green MT", who laid down the gauntlet to their rivals as they got off to a flying start with an impressive 1,450 pts, but they cannot relax as "Equality" are only one point behind in 2nd, with "Chimera" not far behind in 3rd. However, it is early days, and the next few rounds will determine whether the scores of the leading teams at this stage are based on short term gains, or effective long term strategies, the later being the key to success in growing a profitable business.
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, in the UK following the uncertainty caused by the Brexit vote, sluggish productivity and business investment, and the Conservative Party losing their parliamentary majority in the June 2017 election, growth stuttered in the UK economy during 2017 to the slowest in the G7 economies. Despite this the Bank of England's Monetary Policy Committee (MPC) raised interest rates slightly during 2017 to counteract higher than expected inflation figures, but many economists do not expect UK interest rates to rise significantly until 2019. Chancellor Phillip Hammond announced in the November Budget that the Office for Budget Responsibility (OBR) do not expect the economy to grow significantly until 2021. For the Construction Industry this could lead to a continued period of uncertainty in the short term, although from mid 2018 onwards it is hoped there will be a steady rise in the volume of new work, although margins are expected to remain tight, and there is expected to be an increase in competition for work as more companies rejoin the construction sector, and there will be more demand for project managers and skilled labour, with the latter already being in short supply.
Further afield, and unlike the UK, the Global economy grew quicker during 2017, at 3.5%, with 3.6% expected in 2018, and the International Monetary Fund has raised its outlook for global growth, citing a postelection surge in confidence in the United States, better prospects in large emerging and developing economies such as Brazil, China and Mexico, and an overall uptick in global trade. The recovery in the Construction Industry is expected to be strongest in emerging economies such as India, and in the energy, and renewables, sector in particular, and the Qatar 2022 FIFA World Cup is expected to continue to generate new opportunities in the Middle East.
|PERIOD 6: "'HOMA Management' home in on top spot"|
After the impressive growth figures posted in period 5, not unexpectedly period 6 proved to be a tougher quarter, although nearly every team were still able to post positive growth figures. The only exception were "Equality", who experienced bidding problems that saw them slump from 2nd to 10th, issues they will need to address quickly to get themselves back on track. At the top of the table 11% growth from "HOMA Management", matched by 2 other teams, saw them move from 4th to top spot with 1,590 pts, but just one point clear of previous leaders "Green MT", and it is the first time in Enginuity History that there has been just one point between the top two in consecutive rounds, reinforcing how incredibly well matched the teams are. In fact, only 59 points separates the leaders and the "Part-Timers" back in 7th. Seasoned Enginuity observers are predicting further significant changes in the table in the next period as the rollercoaster gathers momentum!
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: "The 'Part-Timers' in full time mode"|
Period 7 proved to be a much tougher quarter for many of the teams, and just like the real world that the Enginuity Competition tries to simulate, the teams are beginning to realise that it is hard to maintain consistent growth figures. A number of factors hindered the performance of many, notably aggressive bidding from a number of simulated rival bidders, the Chota Nagpur Group in particular, and the growing pains of additional labour costs incurred from having to source jobs won in the previous quarter by either expanding the company's own workforce, or using subcontractors.
And so to the period 7 action, and the team keeping the headline writers busy were the "Part-Timers", whose 9% growth was the joint best in the quarter, and enough to propell them 5 places up the table and into second place, and they now have the leaders firmly in their sights, who are once more "Green MT", who regained pole position with 8% growth and 1,720 pts. Previous leaders "HOMA Management" dropped back to 3rd, and just 3 points ahead of the emerging force that is the "Y-Nots", up 1 place to 4th. There is still very little to choose between the teams, and in a quarter when nearly every team grew, albeit marginally, it was "Equality" who also posted the joint best results in the quarter, and it was enough to lift them off the bottom of the table, and back into contention with the teams above them.
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 stakeholders not working together affected the construction of a new station for the Mass Transit Railway for the client, Hong Kong Developments, in Hong Kong with an estimated risk cost of nearly 240k before mitigation.
|PERIOD 8: "'Thenza' impress, and 'Green MT' sustain their position at the top"|
|Period 8, the halfway point in the Early Years, proved to be a remarkable round at the foot of the table as
"Thenza" posted the best results in the quarter, 10% growth, that enabled them
move to within just 1 point of the "Y-Nots", whose 2% decline saw them
fall 5 places, and they in turn are just one point behind "Equality", who
gained one place, so only 3 points now separate the bottom three teams, and they in turn are not too far
behind the teams above them.
At the top of the table "Green MT" sustained pole position with
1,812 pts, and there is no change in the top three, although
"HOMA Management" moved within just 9 points of the
"Part-Timers", and there is not a lot between the whole field, and
further changes are expected in the next round as the teams move into the critical second half of the early years
as they try to build as strong a business as possible before the rigours of the later years that lie ahead.
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: "The 'Empire' strikes back!"|
|As the teams entered the second half of the Early Years there was mixed performances throughout.
On a positive note the stars of period 9 were undoubtedly "Empire 6",
whose 13% growth propelled them up 4 places to 3rd, and their highest position to date, and just 3 points behind
"Chimera", who also made ground on their rivals as they climbed two places
to second. At the top of the table there was no change as "Green MT"
maintained their consistent growth figures, although their current score of 1,907 pts
has resulted in a narrowing of the gap to the chasing teams.
And if ever evidence was needed of how quickly fortunes can turn, look no further than those
"Part-Timers", who plumetted from 2nd down to 9th after a 9% decline,
having failed to secure two major contracts they were targeting, and they will be keen to rectify this in
the following quarter.
As well as the increasing availability of direct labour, a key factor in managing jobs as productively as possible is the choice of project manager. Employing the most suitable project manager can significantly increase the profitability of a job, by improving the productivity of the workforce, and mitigating against the affect of risk. The main factor that influences the suitability of project manager is the past experience in the job sector, which can be gleaned from their unique profle. However, there are additional factors that can improve performance, such as time spent with the Company and bonus payments, and other factors that can deteriorate performance, such as job location and taking over from another project manager. new project managers are employed directly from the Project Manager Recruitment Agency (PMRA), which is dynamic, and project managers can come and go from the agency. This makes it essential that the PMRA is reviewed each period to ensure that the best possible project managers are being used by the company.
|PERIOD 10: "'Global Construction' match the leaders"|
Period 10 saw encouraging growth figures for many teams, despite UNKNOWN bidders putting in aggressive bids
for a number of jobs, and there was particular good news for "Global Construction",
as a slight decline in the previous period was put firmly behind the company as they posted the joint best results in the quarter,
10% growth that saw them climb two places. Their performance was matched only by the current runaway leaders
"Green MT", who appear to be in a league of their own as they
stretched their lead over their nearest challengers with 2,106 pts,
although their rivals will know that the impending Later Years can see the situation change quickly, and they
will be keen to stay in touch in the remaining two rounds of the Early Years.
The emergence of "Empire 6" as a force to be reckoned with continued as
6% growth saw them move up one place to 2nd, their highest position to date, swopping places with
And there was optimism at the other end of the table as 3% growth from
"Thenza" saw them close the gap on the teams above them.
A recent report in a leading international construction journal posed the question "What makes a successful construction business ?". The author's answer, backed up by some leading industry experts, was that the essential ingredients are an effective marketing strategy, competitive tendering and successful completion of contracts, but there are many other factors that can make the crucial difference between being a 'successful', and an 'outstandingly successful' business. These included targeted investments, employing the most suitable staff and effective overhead management. Also, increasingly important is the role that an effective risk management policy can play. Take the onshore wind farm development in Horth Walsham, UK, for the client, Breeze Energy. Subsurface geotechnical problems had been identified as a low possibility, but during period 10 this caused problems for the contractor, at a reported cost of around 126k. However, it could have been far worse if the chosen contractor had not employed one of the most highly respected project managers in the Energy field, along with an investment stake in a risk management company, all of which helped to mitigate the affect of the geotechnical problems, and reduce the final bill.
|PERIOD 11: "The battle for second place hots up"|
|Period 11, the penultimate round, proved to be one of growth for all the teams except "Empire 6", who fell back to 5th after starring in the previous round. As "Green MT" continued their relentless drive towards global domination with another solid quarter of growth that saw them well clear of their rivals with 2,244 pts, it is the battle for second place that is occupying the tabloids with just 24 points separating 3 teams, led by "Chimera", up one place to 2nd. The leaders from way back in period 6, "HOMA Management", also climbed one place to 3rd, but they are only 4 points clear of the "Y-Nots", whose impressive 13% growth was the best published in the round. It will be a key round ahead as the teams burn the midnight oil in trying to find the decisions that will provide a strong finish to the Early Years, and hopefully leave them well placed to face the rigours and unpredictability of the Later Years that lie ahead, when even the position of the leaders cannot be guaranteed.|
|PERIOD 12: "Incredibly at this stage 5 teams surpass the 2,000 points barrier!"|
You have to go back to 2015 to find when so many teams have surpassed the Enginuity Holy Grail of 2,000 points before the Later Years, but such is the quality of the teams in 2018 that it has happened again. Leading the way still are "Green MT" with 2,324 pts, but what a battle rages behind them, with "HOMA Management" and the "Y-Nots" separated by just 1 point in 2nd and 3rd respectively, and although "Chimera" may have slipped two places they are still in contention in the chasing pack. The plaudits for the best performance in the round, impressive 11% growth, went to "Equality", and it was enough to lift them 2 places, but even the management team of "Thenza", at the wrong end of the table, are running a viable profitable business. And a word of caution for the leading teams. Past experience has shown that leading the competition going into the later years is no guarantee of success, as the changing dynamics and increased competition of the later years tests the resolve of even the most experienced of management teams, with an effective strategy and collaborative team working assuming added significance. Watch this space as events of the later years unfold!
|PERIOD 13: "The intense battle for second place heats up"|
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.
The increased competition for work had an immediate affect in period 13 with growth rates down overall, and it was "Global Construction" who took advantage with 6% growth that moved them to within just one point of the "Y-Nots" in 3rd, who are in turn just 6 points behind "HOMA Management" and incredibly just 6 points separate the 3 teams chasing the leaders, who are still "Green MT" on 2,377 pts. The best performance in the quarter came from "Empire 6" with 7% growth, and they have now moved into contention with the leading teams. During period 13, and despite the intense competition for work, encouragingly every team was able to secure some new work. The "Part Timers" in particular showed the value of being in a niche market after their marketing strategy in the early years enabled them to win an 18m water and sewage contract in the UK with the London Water Services after being one of only 2 bidders, the other being High Peak Water. With so little to choose beween so many teams, every management team will realise that one good or bad decision, especially during the bidding process, can make a big difference to their standing in the league table, and it should be a fascinating remaining 3 rounds of the competition.
|PERIOD 14: "'Chimera' back on track in a high quality field"|
In what is becoming one of the highest quality competitions in recent memory, period 14 saw growth across the board, almost unprecedented at this stage, and it was "Chimera" who benefited the most as 7% growth saw them make a major move from 6th to 3rd, and right back into contention. "HOMA Management" also posted a 7% improvement to remain second, and the "Y-Nots" dropped one place to 4th, but only a point adrift of 3rd. It looks like it will be the battle for second that occupies the tabloids in the remaining two rounds as "Green MT" on 2,518 pts continued their domination of top spot. At the other end of the table it was a good week for the "Part-Timers", who also matched the best performances in the period to swop places with "United Constructions" as the two continued their rivalry in their own mini competition. And despite the intense competition for work again every team were able to secure at least one new contract, keeping their forward workload healthy, so key at this stage to running a sustainable business.
|PERIOD 15: "The battle for second goes down to the wire"|
With just one round to go, unless there is a dramatic turn of events it is looking like the green machine, "Green MT" are homing in on the title as another solid quarter saw them reach 2,574 pts, and well clear of the chasing pack. However, the battle behind them for second place shows no signs of letting up as "Chimera" continued their late surge to climb one more place to 2nd, and change places with "HOMA Management", with "Global Construction" also moving up one place to 4th, and only 73 points now separates the three teams chasing the runners up spot, and one good or bad decision could be decisive in the final period. Further down the table it was an excellent quarter both for "United Constructions", whose 11% growth was easily the best published, and "Thenza", whose resilience has finally paid off as they finally made it off the bottom with an impressive 7% improvement, to leave the "Part-Timers" with a full time job to avoid propping up the table after the final round. Having said that, all the management teams are still running sustainable and profitable businesses, whatever their league position.