Pre Seen- Page 3

Here's page 3!

Changes to contract specifications.
Affects costs and man power! Need to ask for more money from the client! Will it affect our reputation?
A possible unseen issue.

BeeZed
BeeZed is a construction and property management company listed on a European stock exchange

Are we BeeZeed? Then who are we? Let's proceed further to see!

BeeZed has 3 wholly owned subsidiaries.

• BeeZed Construction Services (BZCS) – concerned with a wide range of construction projects
• BeeZed Professional Services (BZPS) – concerned with offering consultancy services
• BeeZed Building Support Services (BZBSS) – concerned with property management
and maintenance services.

In respect of PFI projects,
The parent company, BeeZed, will sign the overall contract.
BZCS will be involved only with the construction work
BZBSS will manage the ongoing maintenance and property management work.

How to split the income?
When a PFI contract is signed, the parent company, BeeZed, will agree on how the revenues will be split between BZCS and BZBSS.

Who are we?
BZCS we are BZCS....

We have many construction projects around the world
Some of the construction projects are financed by PFI

We have a good reputation in this industry for quality and safety as well as its ability to deliver projects on time. These are all critical success factors for keeping its existing customers content and for providing a basis for winning future business.

Go and update your SWOTs , 2 strengths are given above!

BZCS has 6 divisions, which are:

1. Office Buildings Division
2. Sports Facilities Division
3. Environmental Projects Division
4. Infrastructure Projects Division
5. Community Projects Division
6. Energy Projects Division

Done with page 3! Now

- BZCS decisions should be goal congruent with BZ. I can see ROI and RI as measures which will drive decisions.
- I can see some Transfer pricing issues and tax issues. Why not ethical issues there!!
- Sourcing issues relating to quality, cost, and timely delivery - what if we consider access to cheap sources at the expense of Cost and quality leading to Reputation risk.
- Issues relating to language and culture e.g construction in Asia
- Financial Reporting issues leading to unethical issues - e.g Failure to account for losses when the company should. CREATIVE ACCOUNTING. IAS 2 (Inventories) should apply for "Speculative construction of office building" whilst IAS 11 for contract accounting. What if we were asked to adjust the Financial Statements?
- Construction industry should also focus on sustainability e.g Tarmac. BZCS has not mentioned it. Should it not focus longterm?
- Operating in EU zone requires knowledge of EU procurement codes. What do we know or should know of what could drive BZCS decisions e.g relating to the procurement?
- BZ the parent company is listed on the EU Stock Exchange. What can be relevant to BZ and BZCS?
- Is BZCS exploiting all areas relating to construction? What new products or markets could it exploit?

YOUR FEEDBACK IS MOST WELCOMED

Yes, what you have mentioned is absolutely correct!
Sustainability is a key issue in the modern context, our strategic solutions also need to be sustainable even though our criteria for evaluating strategic options(SAF) does not include sustainability.
I will start a separate section on IAS 11, Construction Contracts! it is mandatory for this case!
Procurement Department is centralised which I don't think as a good structure for BZCS, they should have geographically dispersed procurement departments! That's a problem! But, I don't think that you would be asked to find a solution for it since you are the management accountant, but you can relate it to your answers!
BZ is listed, so BZCS also can have new share issues, so a source of finance! Separately issuing shares would not be a good option.
There can be potential markets like South Africa.
They can diversify vertically, like cement manufacturing!!!
This case material shows many ethical issues!
Ethical issues can be related to Carbon Emission targets, bribery at biddings etc

Other students also should be active on the forum supporting others!

Moderator1 wrote:Yes, what you have mentioned is absolutely correct!
Sustainability is a key issue in the modern context, our strategic solutions also need to be sustainable even though our criteria for evaluating strategic options(SAF) does not include sustainability.
I will start a separate section on IAS 11, Construction Contracts! it is mandatory for this case!
Procurement Department is centralised which I don't think as a good structure for BZCS, they should have geographically dispersed procurement departments! That's a problem! But, I don't think that you would be asked to find a solution for it since you are the management accountant, but you can relate it to your answers!
BZ is listed, so BZCS also can have new share issues, so a source of finance! Separately issuing shares would not be a good option.
There can be potential markets like South Africa.
They can diversify vertically, like cement manufacturing!!!
This case material shows many ethical issues!
Ethical issues can be related to Carbon Emission targets, bribery at biddings etc

Other students also should be active on the forum supporting others!

but some how i have a sond feeling of present cetntralised procurement. because it generates some cost savings and enable greater contol over the purchases with good supplier management system.In addition, limited authority already has been given to the project managers to purchase locally some items when required although geographically dispersed . So this in turn facilitates the given CSR initiatve of 'increasing the use of locally sourced resourses' as well.
how ever,there can be minor HR issues relating to the employees who worked for procurment department seperately for respective divisions earlier .such as resistance to change, decrease of morale, conflicts due to chage of working cultures and so on...

I can speak with current experience of centralised purchasing & its downsides - much frustration at the time taken to process orders - quite a bureaucratic system which has lead to demotivation & hostility.

Anything has advantages as well as disadvantages. Suppose BZCS is based in UK and has a project in US. UK head office might not know the best suppliers in US. They can establish better relationships if they have a separate procurement division in US.

This is costly. Arguments are there for both sides!!!
Nice discussion. Please keep it up.