PORT 2020D/The story of the Competition

Early Years
Period 5
Period 6
Period 7
Period 8


PERIOD 5:  "'MKK' make the early running"

After a period of intensive trialling the University of Portsmouth (Distance Learning) Enginuity 2020 Competition is underway, with a competitive field of teams all battling for supremacy against their peers. And so to the early action, and the pacesetters after impressive 32% growth are "MKK" with 1,324 pts. However, the early leaders cannot rest on their laurels with the "RCX Group" and "Four Port" close on their heels. 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 'MKK' hold onto top spot, but only just!"

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 for 5 of the 8 teams. However, those that were able to post positive growth figures made substantial gains.

Most notably "Gosport Construction" outperformed all their rivals to move 3 places up the table with 7% growth, closely followed by "Portsea Building" with a 6% improvement. At the top of the table all three of the leading teams declined slightly, but it enabled "MKK" to hold onto top spot with 1,305 pts, but they are under intense pressure from "Four Port", who moved up one place and to within just 5 points of the leaders, with the "RCX Group" only 4 points further back despite dropping one place. With just 9 points separating the leading three teams one good or bad decision can make a huge difference to a team's fortunes.

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:  "Growth across the board, and all change at the top!"

Period 7 reflected the turbulence and uncertainty of the real world as previous leaders "MKK" fell four places to 5th despite 2% growth as they were outperformed by the chasing pack. In particular "Four Port" continued their systematic rise up the table, from 3rd to 2nd and now to top spot with 1,451 pts after 12% growth, and they have opened up a significant 76 point gap at this stage to "Gosport Construction" in second. In third are "Southsea Power Enterprises", who achieved the rare double of posting the best results in the quarter, an eye catching 17% growth, and making the biggest rise up the table, climbing 4 places.

The next period is the last one of the Early Years, and a crucial one for all the teams as they have one last round to strengthen their business before they enter the unpredicatabilty of the Later Years that lie ahead, and every decision needs to be carefully considered.

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:  "'RCX' make a dramatic move 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 and Sharami International 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 the "RCX Group" turned the Competition on its head after a stunning 14% improvement, by far the best in the quarter, saw them surge 6 places up the table to become the new leaders with 1,503 pts, and they have ended the Early Years with a massive 133 point lead over their rivals, but that can easily be wiped away as the teams now enter the unpredictability of 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!

The chasing pack to the new leaders are led by previous leaders "Four Port", who were one of the teams to succumb to unknown bidders as they lost out on some key bids, with "Gosport Construction" just 7 points further back. 6 of the 8 teams posted deteriorating results, and none more strikingly than the leaders from periods 5 and 6, "MKK", who now prop up the table after a 15% and 3-place fall. The Competition really is reflecting the ups and downs that can occur in the real world being simulated.

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.

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