Pre Seen- Page 1 and 2

Welcome to our pre seen analysis! We will analyse page by page! This should be a discussion! Not a one man show of mine!
Please contribute, argue and learn!
This is the page 2 of the pre seen (page 1 contains CIMA details )

The construction industry in Europe is still under recession.

PFI - Private Finance Initiatives- private finance being used to fund public infrastructure work. Private finance is
defined as finance provided mainly by banks, institutional investors and pension funds.
If a company wants to engage in a construction project it should find the necessary funding in this way! That's what all it is!

PPP- Public Private Partnerships- Agreements between public bodies or central governments and private construction
companies to deliver the agreed projects.

Types of Contracts.
1. Fixed Price
2. Cost Plus
3. Longterm PFI Projects- revenue for the private construction company will include the contracted construction revenue as well as revenues for on-going maintenance and property management for a long-term project, typically 20+ years.

Steps of winning a contract.

1. A company or government body will invite tenders
2. The construction company will tender for the contract by preparing a detailed bid
3. A company or government body will select its “preferred contractor”
4. The bid price and the contract details will be negotiated and agreed
5. Contracts are then signed
6. Selection and appointment by the construction company of suppliers for manpower resources (sub-contractors), as well as for materials
7. Work commences

http://www.building.co.uk/news/breaking-news/construction-recession-could-last-until-2014/5012223.article

Recession is lengthening. Possible unseen. What options are available?

affraid:

Yes! A possible issue!
We need to maintain sound relationships with our customers!
Try to be more competitive in the bidding process.
Diversification is a good option, mostly conglomerate(unrelated) diversification.
While surviving in the industry we need to plan strategically to diversify!
What others think?

I thought we first needed to do a SWOT for the preseen material.
Strengths
• Good reputation in quality, efficiency and safety. These are key in the industry
• Variety of product lines
• Being a global company, making it easy to use reputation to raise finance and economies of scale
• Good health and safety management policy leading to reduced accident prevalence and one of the best globally
• Use of the latest technology on its construction projects to ensure environmental friendliness
• Experience to have survived the economic downturn

Weaknesses
• Outsourcing the deposing of site waste without clear supervision
• low level of R&D investment•
Opportunities
• 2011 bright economic growth
• Sure Cash flow from PFI
• London 2012 Olympic Games construction projects, opportunities for increased sales volumes
• Vertical Integration, ZBCS becoming its own supplier or even taking up the disposal of after construction waste matter.
environmentally sustainable development, including waste management;
• new market segments in BOOT activities (Build-own-operate transfer)
• off-site construction (pre-assembly);
•
Threats
• High quality and standards of delivery by rivals in the industry
• Fixed pricing may be dangerous where costs are beyond expectation
• Government may refuse to finance additional costs arising from adjustments
• High barganing power of buyers
• Government cancellation of contract and negative publicity should BZCS be found in “bid Rigging”
• Saturated European market, currently the biggest sales earner.
• The industry is tainted with serious ethical issues
• Terrorism may reduce demand for construction industry. Governments may desire to channel funds to fighting terror.

Mobali Mososu wrote:
• Being a global company, making it easy to use reputation to raise finance and economies of scale

not sure this really applies to BZCS - more so to their parent company who would fund BZCS ??

daheff wrote:

Mobali Mososu wrote:
• Being a global company, making it easy to use reputation to raise finance and economies of scale

not sure this really applies to BZCS - more so to their parent company who would fund BZCS ??

I agree. Now guyz, what are the major five issues in the preseen????

Moderator1 wrote:Yes! A possible issue!
We need to maintain sound relationships with our customers!
Try to be more competitive in the bidding process.
Diversification is a good option, mostly conglomerate(unrelated) diversification.
While surviving in the industry we need to plan strategically to diversify!
What others think?

I agree, though diversification can require money which a construction company may not be able to afford during the recession.
Appropriate methods for survival during the recession would include, robust risk management strategies, cost control during design, bidding and constuction stages and retaining of talented manpower for core competences. Relationship marketing and management would be very crucial so that we don't lose an existing customers.... What do others think? Come on guys....

Following advantages and disadvantages have been categorised under SAF .I think relevent application from pre seen details and other details of nature of contracts can be evaluated under SAF as follows, when we come cross a new contract opporuninty.

Fixed price contracts

suitability
- this is suitable for better controlling costs and forcasting.
- it provides a target cost for
project managers to maintain costs under clear budgets.
-suitable strategy to win more contracts as the industry is so compettive.

Acceptabilty
- custormers would be very much in favour as they are less likely to be subjected to price hikes.
- project mangers may have initial ressustance to accept and manage cost under pressure at a time of inflation.
- If the customers are insisting to make much alteration to contracts this would make unnessesary administrative pressure to ammend contracts and reporting the changes to commercial directors for approval.

Feasiblity
- the opportunity would be feasible as a straretegic fit to strengthen its relationship with governments
- in time of inflationay period, project is not much feasible as increasing cost may further erodes the margins


Cost plus contracts

suitabilty
-suitable contract type for new experience( if the company has no much prior experience.)
- suitable in inflationary time
-suitable if the contract is of high risk with cost variables
-it secures the expected profit margin in a competitive environment.

Acceptabilty
-project managers are very much in favour in this type of projects as it causes less stress on controling costs and managing supplier contracts.
-If the BZCS bargaing power is higher on a partuicular expertise then customers are likely to agree on cost plus contracts.
- how ever, many customers may not accept this as cost plus contracts provide basis to pass inefficiencies to client by charging more.
-it provides flexiblity to management in negotiations

Feasibility
-it is feasible in managing new and high risky contracts
- Provide flexibility to recruit more new expertise as and when required to enhance the quality of the PROJECT.
-Easy to administer


Long term PFI contracts

suitability
-strengthen the PPP relationship ( BZCS has already the reputation for construction work for europen governments)
-being PFI is one of the main revenue streams in BZCS, Specially in the infrastructure division.
-develop a strategic fit with BZBSS to enhance group profitability.

Acceptability
- European governments would be very much in favour to work with BZCS on quality,safety and ontime delivery
- BEEZED parent company is highly interested in this type of contract as it contributes to BZBSS for on going maintanance.
- incresing pressure from goevernments on margin, would lead to make the BZCS more cost concious and project managers under pressure.

feasiblity
- Already has the experience and expertise in proceeding PFI contracts
- Even low margin PFI Project could become feasible in consideration of long term benifit to the BZBSS for ongoing maintance revenue.( so need to carry out cost benifit analysis)
- The decision would vary on the fixed or cost plus nature of PFI contacts( Currently no clear indication regarding that)

WELL COME COMMENTS ON MY NOTES

from pradeep -wisdom business acadamy Pradeep#

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