ENGINUITY 2015

Tutorial
Copyright Virtual Management Simulations

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Contents
Making Decisions

Financial Management
Overhead Management
Procurement
Job Progression
Resetting Decisions
Exporting Decisions
Exporting Information

Assessing Performance

Key Performance Indicators

Performance Summary
Management Consultant Report
Analysis Tools

Industry information

Glossary

Industry information

Exit

Glossary
Finance

Dividend
Factors affecting share price
Company value

Project manager performance

Measured value (turnover)
% of a job completed

Overdraft limit

Job costs

Capital base

Labour costs

Capital employed
Investments

Retention

Profit definitions
Corporation tax

Forward workload and margin

Departmental overhead staff

Idle staff

Procurement

Project manager information

Cash account

Gearing ratio
Overheads

Job
Progression

Job details
Job risk
Margin adjusting
Choosing consultant designers
Successful tendering
Bidding cost

Job completion bonus

Miscellaneous

Timeframe
The job cycle
Overview of BIM
Client relationships

Timeframe

Getting Started

The
The
During
Company
new
the
management
next
hasstage,
already
team
known
been
take
as
operating
the
control
Later
of
for
Years,
the
4 periods,
Company
the teams
known
at the
compete
asbeginning
the History
against
of period
Year,
each other
before
5, and
for
the
then
new
have
work.
management
the
Thistask
creates
of managing
team
an even
takethe
more
control.
company
uncertain
through
and pressurized
a number of
environment
periods, known
in which
as the
thethe
skills
Early
and
Years.
team dynamics formed in the early years are really put to the test.
Each period represents one quarter, or 3 months.
During the Early Years the competition for jobs comes from a number of simulated companies.
Each one has their own unique profile and bidding history, and a careful assessment of the
opposition is required to formulate an effective procurement strategy.

Period

Start of
Phase 2

Start of
Phase 1

Start of
History

Historical Year

Stage 1: The Early Years

12

13

18

Stage 2: The Later Years

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Financial Management

Making Decisions

Financial management involves : Looking after the shareholders interests

Trying to increase the value of the company by making the best use of the companys assets
In all business areas monitoring performance to improve company profitability

Financial Decisions

Overdraft Limit

Overhead Management

Making Decisions

Overheads are the non-contract based support services required to enable the company to
procure and and progress work. They consist of : 4 key departments; Marketing, Head Office, QHSE and Measurement
Non-departmental overheads, such as idle labour and idle project managers
The Overhead Manager is responsible for : Setting appropriate staffing levels for each department
Directing marketing effort into the 5 market sectors
The non-departmental overheads are the responsibility of
others, and are related to jobs in progress.

Marketing Decisions

Other Dept Decisions

Non-Dept Decisions

Procurement

Making Decisions

Each period the company is offered a number of jobs for which a bid is invited, identified by the
marketing effort in the last period.

Bidding Decisions

Margin Adjusting

Successful Tendering

Job Progression

Making Decisions

Progressing jobs that have been won involves : Allocating appropriate project managers to oversee the jobs.
Allocating labour to progress the jobs in line with the companys strategy for job completion.

Project Mgr Decisions

Labour Decisions

Key Points

Resetting Decisions

Making Decisions

Decisions can be reset to their defaults at the beginning of the period.

Navigate to "Main menu/Making decisions/Reset decisions

The default setting is to reset all

the decisions, but it is possible to
select particular decisions.

Exporting Decisions

Making Decisions

Consider
the
following
scenario.
"Main
menu/Making
decisions/Export
decisions
Group
Both
The
decisions
Export
groups
1 are
Decisions
the
make
could
primary
their
beoption
communicated
decisions
group,
enables
is
useful
containing
for decisions
the
for
back
keeping
period
the
to
entered
team
using
aNavigate
history
leader,
1their
to
into be
a
of
number
own
and
selected,
decisions
copy
when
ofof
by
ways
the
entered,
the
category,
company
:database.
or
for
for
database
exporting
is
The
text
file
created
contains
the
procurement
andGroup
job
decisions
made,itinis
a clear
andmembers.
concise
format. 2.
to a text progression
received
communicating
by
file.them
decisions
each
period
between
e-mailed
team
to Group
A
team
of
6
members
is
split
into
2
groups
of
3
members
each,
and
is located in
2 different

Group
By phone
1 are responsible for sending the company
database
to the
Competition
Controller,
and
Group
2
can
now
e-mail
the
text
file
to
Group
1
for
offices,
geographically
a long
way
apart.

ThisByhas
Each
must
However,
group
put
e-mail
aall
when
number
now
thesubmitting
decisions
hasofauses
copy
for
:decisions
ofthe
theteam
company
forinprocessing
their
database
master
thetocompany
copy
workof
onthe
database
when
company
making
should
database.
their
always
individual
be sent,
entering into the master database.
decisions.
and
the text
file export
the decisions.
ForNOT
keeping
a hardcopy
of of
decisions
entered.
The
responsibilities
of
each
group
are highlighted
the diagram
How option
Each
do Group
has 2
itslet
drawbacks
Group 1:-know
what their by
decisions
are below.
?
Where a team is fragmented into smaller groups, it provides an efficient means for individual
be communicated
back to the team leader for entering into the master company
decisions
By phonetocould
be time-consuming
database.
By e-mail requires a lot of typing of decisions
We
will look
in more
detail
at user-friendly
the second use.
However,
there
is a far
more
method and that is to use the Export Decisions option.

Team
Group 2 make the following changes to the default export options : The Procurement and Job Progression decisions are chosen for export; the other boxes are unchecked
The word _for_group_2 is added to the export name to make it very clear which decisions are contained in the export file

Group 1

Group 2

The Export button is clicked

to create
the
Responsible
for
:-text file.

Decisions E-Mailed
Made
Database
Communicate
Decisions ? Responsible for : Procurement
Finance
The export file itself is a text
file, and has the following characteristics : Overheads
Job Progression
Its name always begins with the competition id, and the rest can be altered
It is placed in the folder from where the company database was chosen

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Exporting Information

Making Decisions

Navigate to "Main menu/Making decisions/Exporting information

Selected information can be exported to CSV format for

importing into spreadsheets for further analysis.

Key Performance Indicators

Assessing Performance

10 key performance indicators are used to measure the success of the company.

The indicators are weighted according to their variability, totalling 1,000 at the end of the History.
As time progresses the weighting of each indicator will change, highlighting improvements or
deteriorations in that area, but the overall total will be the measure by which the ultimate
progress of the company is determined.
The weighting for each indicator at the end of a period is based on a comparison with the position
at the end of the History, and there are two types of comparison :Trend comparison
Smoothes the calculations over the time the company has been operating. Applies to Turnover,
Gross Profit to Turnover ratio, Operating Profit to Turnover ratio, Capital Employed, Contract
Completion and Client Satisfaction.
Snapshot comparison
Compares the current indicator to the position at the end of the History. Applies to Company
Value, Forward Workload, Forward Margin and Share Price.
Calculating Performance Indicators

Performance Summary

Assessing Performance

The Company Performance Summary provide a detailed set of performance statistics relating to
all aspects of the companys activities, and can be used to identify strengths and weaknesses,
and explain the rise and fall of particular key performance indicators.

The right-hand section of the summary

relates to the performance of the
company since the History.

The left-hand section of the summary

relates to information from the History.

Using The Performance Summary

Management Consultants Report

Assessing Performance

Navigate
to "Main
menu/Assessing
performance/Management
consultants
It cannot
There
are be
many
emphasised
methods enough
available
how
forNavigate
valuable
assessing
the
the
Management
performance
of the company,
Report
such
is, if
asreport"
used
key
to
"Main
menu/Industry
information"Consultants
performance indicators, the
effectively.
performance summary and analysis tools. In addition the company
The report can also be filtered by period,
Within each
category
the report
can alsoprocessed
bewho
filtered
by subincategory.
has the use of an external
management
consultant,
looks
detail at all areas of the
and
in most cases
the
previous
companys business, especially
may
be problems, and compiles an appropriate
period where
will be thethere
one being
analysed.
For example, the company is now in period 11, and the Construction
report.

Manager
the performance
The report
can is
beinterested
filtered byindecision
area :- of all project managers during
the previous period. To achieve this the following filters are used :-

We will now look in more detail at what the report looks like.

ALL (All comments)

The nature of the comments made is either :
Category
choice
of
RUN
FIN (Financial)
P if the comment is positive
choice of 10
OVH Period
(Overheads)
information
N if the comment
is negative
The additional
relates to
the highlighted
Category choice of Project
Managers
PRO Sub
(Procurement)

U
if
the
comment
is
unclassified
comment about
Simpson
being
headhunted. Consultants Report
The Bruce
cost per
period of
the Management
RUN (Job Progression)
is
shown
in
the
Industry
information.
What do the results look like ?
It is the negative comments that will need to be
addressed
of urgency. overhead cost in the
It is
recorded as
as aa matter
non-departmental
financial reports.

-------------------------------------------------------------------------------Key Point(s)
The Construction Manager can clearly see that all the project managers performed extremely well during period
The cost of the management consultant cannot be avoided.
10.
The Show additional information option can
be used
display
more
detailed information
However, there
are to
some
areas
of concern.
The quality of the project managers is so high that :about the highlighted comment, if any is
Bruce Simpson
present.resigned from job 166 after being headhunted by another company. A new project manager will
need to be found for the job in period 11.
There is a danger of Paul Nicholson being lured away from job 201 by other offers, and a higher bonus may
need to be paid to him to try and tempt him to stay with the company.

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Analysis Tools

Assessing Performance

Navigate
to
menu/Assessing
performance/Financial
analysis/Operating
performance"
Information
is available
to enable
adetails
detailed
analysis
of the
affect
of tools
previous
decisions
in
a any
The Procurement
analysis
provides
a analysis
detailed
analysis
of
The
:- "Main
Jobperiod
analysis
Further
is
the
analysis
gateway
to provide
detailed
historical
information
information
about
TheDisplaying
Overhead
provides
detailed
information
appropriate
to each
department.
job
provides
oftothe
jobs
that
theeffective
company
to or
thelost,
companys
has
identified
relationship
(prequalified
with
for).
:number
key business
areas,
an
aid
for
making
decisions
for the
future.
Biddingof
information
relevant
to
success
by period;
jobproviding
isDepartment
examined
in:-turn
see
why
itrelating
was
won
taking
into
account
the
various
For detailed
the each
Marketing

The Financial analysis provides detailed information about the financial

the current
of a job.restrictions (company based and job specific) and price.
factors that affect the bidding,
such asstatus
procurement
performance
of
thecompany
since
beganand
operating.
Market trend; the past, current
The
information
Clients
includes
:- by itsector
and
future
value
of
new work
location.This includes :We
will
take
a
brief
look
at
the
range
of
Analysis
Tools
available.
Rival bidding history; Detailed
information
about staffing
the all rival
bids
to date,
to enable
future
strategy
to value
be refined.
marketing
Project
managers
Marketing
performance;
levels,
where
effort
wasbidding
directed,
and the
of new

Operating
performance;
by period
andcan
graphically
forby
allstatus
periods
A list of
Consultants
work identified.
all jobs
identified;
these
be filtered
Share
price analysis;
including
share
Detailed
risk analysis;
for all
jobsprice
won and dividend payments
Investment
Detailedanalysis;
performance
all investments
retentionthe
analysis;
for allofjobs
won
For the Head Office, QHSE and Measurement Departments : Performance; staffing levels allocated in relation to the turnover of the company.

Performance (All Periods)

Presents key information in a graphical format.

On all analysis screens a ?

indicates that more detailed
information is available about
how a figure was arrived at.
The Selected jobs analysis
provides a graphical analysis of
the jobs currently being displayed

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Industry Information

Industry Information

The Environment
Industry
in which
information
the company
is split
is operating
into a number
is split
of areas
into two
that
sets
describe
of options.
the conditions
of
The
Client information
lists the clients with
both the local (UK) and global economy in which the company is operating.
whom the company may be able do work
The Economic outlook is given for the UK and overseas economies for the foreseeable
for, depending upon which sectors and
future.
We will look at each one in turn.
locations their marketing effort is directed.
Financial, overhead, procurement and job
parameters
define
environment
Knowledge of the economic outlook is vital in order for the company toprogression
decide uponAn
its
strategy is
indication
also the
given
of the levelinof
which the company
is operating,
split with
into four
for the future, and in which markets it wishes to focus its efforts.
relationship
that mayand
be are
needed
the
areas
:Navigate to "Main menu/Industry information/The
environment
in which the company is operating"
client in the future in order to be able to bid
for work with them.
Finance
Overheads
Procurement
Job Progression
Most remain fixed, but some can vary from period to
period, such as the prevalent interest rates.

The Country information describes the countries in which

the country may be able to identify work, including countryspecific settings, such as subcontractor cost per period.

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The Job Cycle

Glossary

As period
The
In
Work
Although
has
company
started
been
the
6
7 the
demonstrated,
job
in
iscompany
period
managed
was progressed
8, put
identified
and
over
the
in
the
timeframe
ajob
from
successful
job
acycle
new
completed
timeframe
consists
job
measured
bid
forfor
in
which
periods
ofits
the
up
inplanned
periods,
job.
the
to83client
to
stages
10,
duration,
which
invited
the
:- job
represent
3
prequalification
periods
periods,
3 were
months
finishing
:-by(one
in
quarter)
interested
period
10.
inparties.
the
real
The
world.
jobperiod
had a8planned
duration of 3 periods.
Prequalification
Period
1
of
the
job
was
of the timeframe

Each
Period
Procurement
period
2 ofathe
number
job was
of jobs
period
will9 become available in the market which can be identified,

tendered
Period 3for
Progression
of and
the job
progressed
was period
(if won).
10

The progressing of jobs can begin in any period, and the jobs can last from 2 to 5 job periods.
It is important to grasp the concept of the job cycle, and the following example should illustrate
this key point.
Period 1 of
the job

Period 3 of
the job

Period
5

Identify
(Prequalify)

Bid Submitted
(Procurement)

10

11

12

Progress the job

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Financial Decisions

Glossary

Apart
It
is other
period
from
paying
5,points
and
the
dividend,
Financial
period
the
needs
Financial
to
review
Manager
the
financial
could
choose
structure
to
leave
of
the
the
rest
of
One
The
ofadditional
themain
main
responsibility
responsibilities
of Manager
of
the
the
Financial
Manager
Manager
isdecisions/Assessing
to
is
make
look
the
after
best
theuse
of
the
of
the
Some
Investments
to
note
about each
investments
Finding
an
:-Financial
investment
If
an
opportunity
investment
In addition
that
concern
toto
the
offers
current
ceases
good
investments,
returns
trading
and
,interests
a%
there
benefits
of
the
arecurrent
is
also
not
The
value
of
the
Company
at
any performance/Share
time
is
measured
byaalways
its
Navigate to "Main menu/Making decisions/Financial
financial
price
analysis"
The
dividend
payment
comes
out
of
the
cash
account,
Thefinancial
core business
of the
iscompany
procuring
possible,
and
and
progressing
often
investment
keyassets.
contracts,
decisions
selection
issimply
recovered,
of
and
have
other
if done
tocompanies
as
be
successfully
defined
made
balancing
that
in the
can
the
Industry
be
company
risk
invested
information.
will
reward.
in,report
and a
company,
the
and
structure
decide
upon
of and
the
any
changes
unchanged,
that
need
to
and
be
made.
hope
to earn
some
interest
from
companys
shareholders.
Companys
assets
to company
try
increase
the
Companys
value.
After
paying
dividend
they
consist
of
:-and
and
the
value
ofusing
the
company
is
reduced
byassets,
112,000.

healthy
Any
increases
operating
or
profit,
reductions
and
increase
in
investments
the
companys
affect
the
value.
cash
However,
account,
there
but
since
are
alternative
money
is
ways
being
of
moved
increasing
between
the
value
ofthe
the
these
can
be
viewed
the
Add
new
investment
option.
a credit balance in the cash account.

company,
value of the
such
company
as by investing
is unchanged.
in other concerns,
For example,
which
anmay
investment
The
or actual
may
opportunity
amount
be
recovered
may
arisedepends
that offers
upon
substantial
how badly
build
thecost
Cashnot
in
theconstruction-related.
bank
(-41,769)
savings in the Transport
investment
sector,
concern
ineither
which
isbeperforming,
the
the
very
minimum
active.
However,
%it recovered
the
This
can
in company
credit
orwith
inare
overdraft,
when
is
However,
this
would
be short-sighted,
since
there
are
other
ways
of manipulating
the companys
There
Thereare
aretwo
limitations
ways
of, shown
increasing
in the
theIndustry
companys
investment
information.
value
returns
through
from
may
on the
those
investments
not
:be
performing
very
good.
:the
worst.
considered
a liability.
assets
to improve
the
companys
value,
the transfer
of
the cash
Investment
Increase
in
returns;
a single
that
investment
change
the
thatvalue
can
be
of made
the involving
investments
each period,
thefunds
of between
theinconcern
Thedepending
overdrafton
limit
issize
defined
the Industry information.
Investment
The number
account,
capital
base
and
investments.
benefits;
ofCease
investments
that
reduce
that
can
costs
be
Inon
held
this
jobs
scenario,
atinany
progress
one
the
------------------------------------------------------------------------------------------time
Financial Manager must decide if the net gain from cost
Investments
That
Trading
reductions
Keythe
Point(s)
risk that
the investment
Investment concerns that are performing badly
can outweighs
Capital
Base
(4,300,779) may run into difficulty, and cease
Investment Benefits

We
There
will
is
examine
no
limitation
each
one
onshows
in
theturn
reduction
by
reviewing
trading,
that
can
the
abe
decision
investments
madechange
The
to
that
anmoney
the
could
investment.
company
recovered
currently
oninvest
the
when
profitability
has
an
investment
using
ofthe
theplant,
Display
company.
ceases
details
trading
isfacilities,
paid
go
bust,
and
cease
trading.
Although
changes
do
not
the
value
of
the
company,
byobtain
the
endoption.
of
Capital
Base
The
information
that
forimmediately
a
company
we
would
need
to
at
least
to
This
isimpact
the
investment
in
equipment,
AsIndustry
well
asthese
investing
in other
companies
tomedium
yield a better
return
than
can
becompanys
obtained
from
the200,000
bank,
there
is
potentially
anthe
into
the
cash
account.
The
net
value
of
the
company
will
fall
by
The
level
of future
(turnover)
that
can
be
undertaken
by the
size
the companys
capital
base,
aslevel
shown
on
preferential
rates,
and
we
could
expect
build
savings
ofisevery
atlimited
least
0.4%.
buildings
etc
(infrastructure),
which
the
ofthe
period
the
of
the
will
have
been
felt,
including,
amongst
others
Since
period
1affects
theworkload
company
haschanges
paid
dividend
of
2%
of equity
period
(8%
perof
annum),
and
thisdetermines
has:kept
the
even
more
lucrative
reason
for
investing
incost
other
concerns.

Any
investment
returns
change
the
value
of
the
investments,
amount
and
not
lost.
the
cash
account.
How
do
we
know
if
one
of
our
investments
may
the
Procurement
Screen.
work thatreport.
the company can undertake.
shareholders
content,
as we can see from the Management consultants
------------------------------------------------------------------------------------------------------------------------------------------------------------------------cease
trading
?
in mindBase
that although
a minimum
of 200,000
is required,
anybe
single
investment
in in
a period
exceed
100,000, so
If enough
money
is invested
in
particular
concerns,
costs
may
on work
progress
in specific
sectors.
Bear
Capital
affecting
the
value
of jobs
that
can
bereduced
secured
during
the cannot
bidding
process
Key
Point(s)
An
increase
in least
company
value
can
beany
achieved
through
:- Since
The
capital
base
of
4.3m
can
support
up
to
43m
of
workload.
the
current
forward
workload
is
only
18.3m
(the
value of
it
would
take
at
2
periods
to
gain
build
cost
savings
from
investment.
Investments
(486,189)
In period 5 well continue to pay dividend at this level.

Investment
changes
yielding
returns,
and
increasing
operating
profit
through
cost
reductions
The
affects
of
the
investment
changes
on
the
companys
value
will
be
felt
during
the
period
when
cash
account
interest
The
clues
lie
in
the
information
for
investors,
which
work
still toare
betwo
completed
thereductions
Job Progression
Screen), there The
is still
scope for cash
winning
more work.
However,
once
the ismay
companys
investment
in other
concerns,
which
There
types ofon
cost
:Dividend
calculated,
and
investment
returns
and
build
costmade,
savings
are may
known.
Making
effective
use
of decisions
the
companys
assets
should
be
carefully
monitored
each
period
for
signs
companys
procurement
have
been
there
need
to
be a reassessment
oflevel
the size
of the capital
In
the
case
of PJ
Equipment
Ltd
benefits
are
already
being
received
because
the
minimum
of investment
has
not
be
construction-related.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------All
the
financial
decisions
have
an
affect
on
the
cash
account,
and
it may
go
into
overdraft,
or it that
mayare
already
be
in quarterly.
overdraft

Build
cost
reductions;
these
are
earned
by
investing
in
businesses
that
supply
commodities
used
directly
in the
Dividends
are
taxable
payments
declared
by
a
company's
board
of
directors
and
given
to
its
shareholders,
normally
A
number
of
choices
are
available
:that
the
company
may
be
in
trouble.
The
long-term
of the Financial Manager are to look after the interests of the
base
to
decide reached.
if anobjectives
increase is required.
already
Key
Point(s)
from
thebeen
last an
period.
construction
phase,
such
as
materials
and
plant
e.g.,
investing
in
an
asphalt
company
would
reduce
build
costs
for
any
They
provide
incentive
to
own
stock
in
stable
companies
even
if
they
are
not
experiencing
much
growth.
Using
Theofcompany
currently
valued
atmay
4,745,199.
cashexpectations
toReturns
increase
the
Base
and
support further
growth.
shareholders,
and make
effective
decisions
to manipulate
theis companys
assets
improve
Shareholder
canCapital
change
as the
operating
performance
the company
changes,
and
beand
higher
or lower than
Investment
Transport
work since
being
undertaken.
Consider
the
example
of
Stressed
Out
Plc.
Investors
At
this
point
in
time,
procurement
decisions
have
not
been
made,
and
since
there
is
unused
capital
base,
we
will
leave
it
------------------------------------------------------------------------------------------------------------------------------------------------------------------
Selling
off
a
%
of
the
Capital
Base
to
raise
cash,
which
may
be
required
if
the
cash
account
has
exceeded
the
overdraft
limit,
The
from
investing
PJ
Equipment
Ltd,
aperformance
medium-sized
manufacturer
and
supplier,
are
the
History
level.
This
will affect
the
level of
dividend
that
needs to
paid
to keep equipment
them
happy.
the
value
the
company.
Cash
returns
vary
each
period
depending
upon
the
of construction
anthe
investment,
and
either
increase
or reduce
the
value
This
isbenefits
not
aofpaid
great
concern
if in
the
money
from
the
cash
account
is be
used
productively
in
other
areas,
but there
is an
overdraft

Risk
cost
reductions;
these
are
earned
by
investing
in
management
consultants
that
offer
risk
management
services
to
The
dividend
to
shareholders
is
one
of
the
key
factors
that
affects
company
share
price
:were
sent
a
letter
about
the
companys
deteriorating
unchanged.
Key
Point(s)
-----------------------------------------------------------------------------------orreductions
ifan
the
Capital
Base
isIndustry
not
beinginformation.
fully
in build
costs
across
all
jobutilised.
sectors. This is clear from
the phrase in the companys profile that states .... which
ofthe
investment.
limit,
as
defined
in industry.
the
construction
performance
in
period
7,
and
in
period
8
it
became
Company
was
originally
funded
from
a
share
(equity)
issue
of
5,000,000
The
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------The
larger
the
investment
concern
the
greater
the
benefits,
but
more
has
to be
invested
to obtain
thethe
savings.
Key
Point(s)
Using
cash to
further
in other in
companies
offer
areduce
better return
than
can
be obtained
from
bank, or who may be
are supplied
toinvest
contractors
working
allshareholders
sectorswho
of the
Construction
Industry.
Insufficient
dividend
will
disappoint
the
and
the
share
price
For
each
available
concern,
the
following
information
is
given
:obvious
that
there
was
a
threat
of
administration
in
shares
of
value
1,
with
an
equity
value
of
5,000,000.
able
Key
Point(s)
Whether
or
not
the
minimum
level
required
to
obtain
benefits
has
been
reached
is
based
upon
the
required
afteraccount
Not
only
is
the
company
based
in
the
UK,
butlevel
its further
bank
to
offer
benefits
to
reduce
costs
on
jobs
in
progress,
or
conversely,
selling
off
investments
to
raise
cash.
Sufficient
dividend
willoverdraft
keep
the
shareholders
content,
with
no
inreturn,
the share
price
Whether
or
notthe
theclues
investment
has
been
a success,
in the
terms
of change
thethe
cash
which
would be worth investing
in,
There
are
also
different
rates
depending
upon
the
size
of
overdraft.
In
both
cases
as
to
the
type
of
benefits
lie
in
investment
profile.
9.
period
Any
changes
to
the
capital
base
also
affects
the
cash
account.
financial
decisions
have
been
made,
and
does
not
take
into
account
the
returns
made
from
the
investments
during
is
held
in
a
UK
Institution.
Hence,
company
is
subject
to
We
can
see
that
to
date
build
costs
have
already
been
reduced
by
28,016.
the
Ample
dividend
will make
the
shareholders
verythe
happy,
andrates,
increase
share
would depend
upon
looking
deeper
into
the prevalent
bank
boththe
credit
and
rates
(as
defined
in the
Industry
the
The
profile
describes
concern,
and
gives
clues
as price
tooverdraft
whether
or notuses,
benefits
may
be accrued
At
the
end
of
the
History
share
price
stands
at
1.12,
and
the
equity
value
at
If
the
capital
base
is
being
underutilised,
it
may
be
appropriate
to
reduce
it
to
raise
cash
for
other
such
as
further
the
period.
UK
financial
rates,
such
as
interest
and
tax
rates.
Operating
Profit
Afterthe
examining
the
other
investments,
the
decision
to to
increase
theof
investment
in Woodley
and
Sons
information)
at the
time
the
investments
were
made,
asmade
well
as
the
balance
the cashtoaccount.
When
overdraft
limit
isby
exceeded,
all
efforts
mustisbe
made
reduce
the
overdraft
below
the limit,
which
may
investing
in the
business.
Faced
with this
information,
at
the
beginning
of
5,600,000
(5,000,000
x an
1.12).
investments
or
reducing
overdraft.
Generating
operating
profit
increases
the
cash
account,
and
hence
the
value
of
the
company,
and
is
achieved
through good job
However,
the
benefits
are
not
accrued
automatically,
but
depend
upon
the
level
of
investment
made.
Joinery
Ltd
by
a
further
50,000
(the
maximum
allowed).
The
affect
on share price is The
determined
by
the
%
of
the
companys
equity
that
is
paid
as
a
dividend.
involve
:period
returns
gives
theeach
% return
in previous
periods toinformation.
all investors, and details any
9are
thelimitations
Financial
Manager
must
decide
whether
period
There
theinreturn
changes
tohaving
the
capital
base
period,
defined
in 7
the
Industry
Some
other
points
bear
mind
about
build
reductions
:- given
and
overhead
management.
Although
nocost
direct
control
over
these
functions,
which
responsibility
of other
people,
During
periods
1 to
toon
4 the
from
PJ
Equipment
Ltd
was
superb,
between
and
7.7%iseach
period, and
it is certainly
monies
the
company
may
have
invested.
remove
all
the savings
investment
inlinearly
Stressed
Out
Plc,
or
The
share
price
is
influenced
by
a
number
of
factors
:toThe
Clues
capital
base
depreciates
by
a
%
each
year,
as
shown
in
the
Industry
information.
The
build
cost
vary
between
the
minimum
and
maximum
level
depending
upon
the
level
of
investment.
such
as
the
Overhead
and
Construction
Managers,
the
Financial
Manager
must
monitor
progress
in
these
areas
to
We
will
investigate
this
further.
Theas
will
the
investment
incurrent
Woodley
and
Sons
Joinery
Ltd
to 101,900,
just
above
the minimum
level required
to
tobring
theany
affects
of different
levels
of
dividend
are
available
by
examining
what
happened
in the History,
usingensure
the the
considering
further
investment
if the
cash
account
will
support
it. the company
worth
Not
paying
dividend
inthat
the
period
The
information
for
investors
is
news
about
that
can
highlight
any
issues
that
continue
investing
in
the
hope
the
company
does
The
amount
needed
to capital
achieve
the
isanalysis
not given,option.
and has to be determined from experience.
company
is
being
run
as
profitably
asmaximum
possible.
--------------------------------------------------------------------------------------------------------------------------------------------------------------------obtain
benefits
of the
100,000.
Assessing
financial
performance/Share
price
--------------------------------------------------------------------------------------------------------------------------------------------------------------------Selling
off
part
of
base
investors
need
to
becontrol
aware of
of,the
such
as if theManager
company is having problems, and may cease trading.
notKey
go
bust.
Paying
dividend,
which
is under
the direct
Financial
Point(s)
Point(s)
Key
Reducing
investments
Changes
in the
the
value
of
the
Company
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------Some
other
points
tosome
bear
in
mind
about
risk
cost
reductions
:The
We
now(small,
look
atmedium
of
options
inSons
more
detail.
Ifwill
enough
money
is
invested,
benefits
can
be accrued
even
if the
investment
issupplying
performing
badly.
However,
poorly as
According
to
profile
of
Woodley
and
Joinery
Ltd
they
specialise
high
bespoke
size
orthese
large)
ofaccount
the
investment
concern
determines
the in
amount
that can
bequality
invested
Taking
into
theinvestment
current
cash
account
balance,
bank rates,
potential
returnseach
and period,
benefits from

We
will
now
look
at
what
happens
if
the
The
future
profitability
of
the
Company
The
Key
Point(s)
reduction
in
risk
cost
does
not
vary
as
the
increases.
performing
investments
can cease
This
will
be discussed
further
due
course.
joinery
tothe
contractors
working
in thetrading.
building
and
commercial
sector
of in
the
Construction
Industry., and are
defined
in
Industry
information.
the
concerns,
a
decision
would
now
be
made
about
whether
or
not
its
worth
investing
any
cash in any
the
investment
concern
does
goCompany
The
debt
burden
ofinvestment
the
As
share
changes,
sobust.
does
equity
value
of the
and
paying
same
ofour
dividend
consecutive
The
benefits
are
cumulative
e.g.,
a job
canbuild
receive
cost
reductions
from
morethe
than
onelevel
investment
eachin
period.
clearly
an price
excellent
forthe
reducing
costs
oncompany,
building and
commercial
jobs,
one
of
target
sectors.
of affect
the available
opportunities.
periods will have a different
on share
price as the % of equity changes.
Quit

Keep clicking anywhere on the screen to advance

Overdraft Limit

Glossary

The amount of
money
that
can
be borrowed
the bank and
is notthe
The
warning
message
has
nowfrom
disappeared,
Consider
the
following
example.
unlimited. Thecash
current
account
overdraft
balance
limit,
is below
imposed
the by
overdraft
the bank
limit.
depending
upon the economic
climate,
is
shown
in
the
Industry
information.
Its period 9, and after decisions were processed last
----------------------------------------------------------------------------period the companys overdraft has reached 787,649. This
What happens
Key
if the
Point(s)
overdraftthe
limitlimit
is exceeded
? and as a result a
has
exceeded
of 700,000,
warning
If all possible
measures
have been taken, and the cash
message
is displayed.
-------------------------------------------------------------------------------account balance still exceeds the overdraft limit, then
Key Point(s) no
action
needs toDecisions
be taken, Screen
and theisuser
is not
As further
soon as
the Financial
closed
a
The base overdraft
prevented
limit
from
imposed
moving
by the
to another
bank
is screen.
normally
the same
for
critical
warning
message
appears.
The message
informs
all companies. the
However,
it may
be reduced
even further
for a specific
Financial
Manager
that all possible
measures
need to
be
company if the
The
companys
cashtoaccount
current
share
exceed
price falls
the
overdraft
too farthe
relative
limit
to the
taken
reduce can
the
overdraft
to below
limit.when
price at the start
of the History.
This will be
in the
Management
decisions
are processed,
butreported
during the
following
period
consultants report.
all
possible
measures
need
to
be
taken
to
reduce
The Financial Manager decides the best action to the
take is
balance
tosome
belowofthe
limit.
to reduce
theoverdraft
companys
investments.

Keep clicking anywhere on the screen to advance

Quit

Factors That Affect Share Price

Glossary

Gearing
Ratio
Company
Value
Dividend payments
The
companys
share
price
is one
of the
key
performance
indicators
in measuring the success
Consider
Future
Profitability
the
following
example,
where
a company
is in
period
5.
The
final
factor
affecting
the
share
price
is
changes
in
the
gearing
ratio.
Changes
in
the
value
of
the
company
from
period
to
period
also
affect
the
share
price.
Dividends
aremargin)
taxable
payments
declared
by
a
Another
factor
the share
priceaisrising
the changes
the future
profitability
(forward
of
theconfidence
company,
which
or
failure
ofthat
theaffects
company,
with
shareinprice
signifying
increasing
industry
inis
company's
board
of
directors
and
given
to
its
Since
based
period
upon
the
1
the
companys
share
price
work
has
in
fluctuated,
progress.
with
periods
of
improvement
(2
and
4),
and
the
fortunes
of
the
Company.
The
ratio
is the
ratio
ofperiod,
the companys
liabilities
(cash account
to its assets
(capital base
and investments,
and
If thegearing
company
value
falls
in a
it will have
a depressing
effect overdraft)
on share price
as shareholder
and industry
confidence
shareholders, normally quarterly. They provide
periods of deterioration (1 and 3).
indicates
theofdebt
of increases
the
Ifconfidence
there
areestablished,
no
the
gearing
is 0. jobs,
falls.
ifburden
the
thenwas
willliabilities,
improve,
and
the share
price
will increase.
At theConversely,
end
period
1, value
whilst
the company.
company
being
there
were
noratio
ongoing
nostable
forward
margin.
an
incentive
to and
ownhence
stock in
companies
The
share
price
is influenced
by has
:-work
However,
during
periods
2 to 4 atwhen
some
was
secured,
forward margin fluctuated,
increasing
in periods 2 much
and 4,growth.
but
even
if they
are
not
experiencing
We
will
now
look
in
more
whymixed,
this
been
the
case.
IfAsthe
gearing
ratio
increases
the
company
willwith
be
viewed
as
beingon
vulnerable
to both
interest
rate
rises,
and its affect
abilityduring
to service
can
be
seen
the
trenddetail
has
been
adverse
affects
share price
in
periods
1-3,
then
a
positive
falling in period 3, and generally having a mixed affect on the share price, as reflected
in payments
commentsare
in the
Management
Dividend
based
upon
thegearing
current
its
debts
from itswould
futurehave
profit
flows.toConsequently,
thisprice.
will have
a depressing
effect
on share
price. Conversely,
if the
period
4 which
helped
boost the share
Comments
in the Management
consultant's
report
provide
further
Navigate to "Main menu/Assessing performance/Financial analysis/Share price analysis"
consultant's
report.

share
price.
The
level
of
dividend
paid
to
the
shareholders
ratio
decreases
theofcompany
will be
viewed
as being more financially sound, and the share price will increase.
evidence
of the then
affects
the company
value
changes.

value
AsThe
can be
seen, of
thethe
cashcompany
account was only overdrawn in period 4, when the increasing
gearing
ratio
had a negative
affect
on the
The equity
of the
company
at any time
is the
share
price,
albeit
a
very
slight
one
as
there
is
no
comment
in
the
Management
consultant's
report.
The future profitability of the company
overall share value i.e., the number of shares in
The debt burden (gearing ratio) of the company

circulation multiplied by the current price per

share.

There is a level of dividend, measured as a % of

the equity, at which the share price does not
change. Paying more than the equilibrium level
will cause the share price to rise, but paying less
will be not be well received by the shareholders,
and the price will fall.
Dividend payments of 2% of equity have been
made each period, and the affect has been
In Summary
Shareholders
content
with
level
of
Each of the 4 factors have different levels of impact upon the company share price.
It may be, forare
example,
that
thethe
share
price
dividend
paid,
implying
no
change
to
the
share
rises even though 3 of the factors have negative affects, but the positive affect of the 4th factor has the greatest impact.
price.
Careful examination is needed of the company data to determine which factors have had which affects, and to what level :If dividend has had little affect on the share
price, what about other factors ?
During period 1 the share price fall was down to a drop in company value.
Even though company value fell further during period 2, this was more than offset by a rapidly improving forward profitability,
and the share price rose.
Falling company value and profitability contributed to the drop in share price in period 3.
During period 4 gearing increased slightly, but both company value and forward profitability improved, and the share price rose.
Quit

Keep clicking anywhere on the screen to advance

Dividend

The dividend paid to shareholders each period is one of the key factors that affects the share price of the
company.
The dividend paid is a sum of money.
The equity of the company at any time is the overall share value.
EQUITY = NUMBER OF SHARES x CURRENT SHARE PRICE
The dividend paid is expressed as a % of the equity of the company, or the earnings per share. This can be : Insufficient to satisfy the shareholders, which will reduce the share price
Sufficient to satisfy the shareholders, which will have a no effect on the share price
More than sufficient to satisfy the shareholders, which increase the share price If the cash account is in credit,
interest is earned at the annual rate shown.

Glossary

Company Value

Glossary

The value of the company at any time is measured by its assets and liabilities, which consist of :Cash in the Bank

Capital Base

Investments

The cash balance can be : In credit (an asset)

In overdraft (a liability)

The companys investment in

plant, equipment, buildings
etc, which determine the level
of work that the company can
undertake.

The companys cash

investment in other concerns,
which may not necessarily be
construction-related.

There is an overdraft limit.

The value is increased by : Generating an operating profit through the companys activities (into the cash account)
Good investments
The value is reduced by : Dividend payments to shareholders (from cash account)
Making an operating loss through the companys activities (from cash account)
Depreciation of the capital base
Poor investments

Cash Account

Glossary

The company has one UK bank account, known as the cash account, which can be : In credit, when it is considered an asset
In overdraft, when it is considered a liability
Interest is earned/paid on the cash account balance at the beginning of the period. The
prevalent interest rates each period are defined in the Industry information.
Credit Interest
If the cash account is in credit, interest is
earned at the annual rate shown.
Overdraft Limit
The cash account can be overdrawn
up to the overdraft limit. If this is
exceeded steps need to be taken to
try and reduce the overdraft.

Overdraft Interest
If the cash account is overdrawn,
interest is paid at the annual rates
shown, depending upon the size
of the overdraft..

INCREASED BY

The company generating an operating profit

Selling off a % of the capital base
Selling investments

REDUCED BY

The company making an operating loss

Dividend payments to shareholders
Increasing the capital base or investments

Gearing Ratio

Glossary

The gearing ratio is the ratio of the companys

liabilities to its assets investments, and indicates
the debt burden of the company.
0 indicates no liabilities
1 indicates serious debt problems

Liabilities
Investments
Capital
Base

For period 8 the gearing ratio of 0.051 is the absolute value of :Cash Account Balance / (Capital Base + Investment Value)
-310,719 / (4,433,668 + 1,698,938)

Changes in the
gearing ratio have an
impact on the
company share price

INCREASES

The company will be viewed as being vulnerable to

both interest rate rises, and its ability to service its
debts from its future profit flows. Consequently,
this will have a depressing affect on share price.

Conversely, if the gearing ratio decreases then the

REDUCES company will be viewed as being more financially
sound, and the share price will increase.

Capital Base

Glossary

The capital base is the companys investment in plant, equipment, buildings etc, and determines
the level of work that the company can undertake.
One of the key company performance indicators is capital employed, which measures how well
the capital base is being utilised over a period of time.
Changes to the capital base are the responsibility of the Financial Manager, and the Industry
information shows factors that affect the capital base.
Changing
It can be increased, reducing cash reserves, in order to support further growth. There are limitations on the
increase possible each period. The Company based Restrictions on the Procurement screen gives an indication
of when an increase may be necessary.
It can be reduced, increasing cash reserves, which may be desirable if money is needed for other things, or it is not
being fully utilised. There are limitations on the % of the capital base that can be sold off each period.

Depreciation
Each period the capital base
depreciates by a %, reducing the
overall value of the company. This
occurs at the end of the period.
Writing Down
Any increases in the capital base can be used to reduce the
companys tax burden, known as capital writing down.
Capital Employed

Calculating Capital Employed

Glossary

The
capital
employed
measures
how much
of the companys
capital
base (plant,
At companys
the start of period
4 the companys
initial
forward workload
was 14,554,270.
This was based
on the turnover
still
to be completed
on the 2 jobs
the start
of themenu/Assessing
period.
equipment,
buildings
etc)inisprogress
being atutilised.
Navigate
to "Main
performance/Financial analysis/Operating performance"
3 jobs were bid for, and 2 were secured, which took the cumulative forward workload post-bidding to 27,122,370.
Not
utilising the capital base is a waste of resources that could be directed elsewhere, and can
hinder
growth.
The capital
employed measures how much of the companys potential workload (43,278,280), based on the
actuallycapital
being employed
utilised i.e.,
Forcapital
Periodbase,
4 the was
companys
was 68 %, indicating that the
Consider
the
following
example
where
a company is in period 5, and the financial performance is
capital case was being reasonably well utilised.
(27,122,370
/ 43,278,280)
* 1004.
= 63 %
being
reviewed
for period
But how was the capital employed % determined ?
Navigate to "Main
menu/Assessing
performance/Procurement
analysis/Analysis of all previous bids"
The answer can be found by looking at the Procurement
Analysis
for period
4.

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Investments

Glossary

The core business of the company is procuring and progressing contracts, and if done successfully the company will
report a healthy operating profit, and increase the companys value.
However, there are alternative ways of increasing the value of the company, such as by investing in other concerns,
which may or may not be construction-related. Such investments can : Offer a better return than can be obtained from the bank
Provide benefits for work in progress, in the form of reductions in build and risk costs
Each period a number of new investment opportunities may arise, adding to the list of available investments, and
for each one some key information is given to help in making investment decisions : The investment profile describes the concern.
The Past Performance gives the % return given in previous periods to all investors, and details any money the
company invested, and any build cost savings gained.
The Industry information shows factors that affect investments.

Increasing Investments
The increase in a single
investment each period
cannot exceed a given
amount, depending upon
the size of the investment
concern.

Benefits
Depending upon the size of the concern,
there is a minimum level of investment
required to gain the benefits.

Number of Investments
There is a limit on the number
of investments that can be held
at any one time.

Cease trading
Poorly performing investments can cease trading, in which
case a % of any investment is recovered..

Profit Definitions

Glossary

Company Gross Profit

In any period, the gross profit of the company is a measure of how profitable the jobs in
progress have been.
Monies IN
Gross Profit =

Measured value across jobs progressed

Retentions repaid from completed jobs
Early completion bonuses

Monies OUT

Retentions held from jobs progressed

Costs across all jobs progressed

Company Operating Profit

In any period, the operating profit of the company is a measure of the overall profitability of
the company.

Operating
Profit =

Monies IN

Monies OUT

Gross profit
Credit interest (cash account)

Company overhead costs

Overdraft interest (cash account)
Corporation Tax

Corporation Tax

Glossary

Corporation Tax is a tax on a company's taxable profit, which is defined as :Operating Profit Before Interest & Tax

Taxable Profit =

Gross Profit

Overheads

Capital Allowances

If the company makes a operating loss before interest and tax no corporation tax is paid, and any
capital allowances are carried forward to future periods.
Capital Allowances are acquired by investing in the companys capital base, and are calculated on
a written down basis; the rate of writing down allowances is shown in the Industry information.

Capital writing down rate

per annum.

The corporation tax rate is shown

in the Industry information.
Calculating Corporation Tax

Calculating Corporation Tax

Glossary

Consider theA following

example where
a company
is in period
5, and the Corporation
Financial Tax
Details
are
Navigate
to on
"Main
performance"
Corporation tax rate of 30% was
levied
themenu/Assessing
taxable profitperformance/Financial
of 239,968 to give analysis/Operating
of 65,655.
being reviewed for period 4.
ForAllowances
Period 4 we of
can
see that the companys Operating Profit before tax &
The tax burden was offset by the Capital
24,453.
interest was :Capital Allowances are acquired by investing in the companys infrastructure (capital base), and are calculated
Gross
Profit: 374,968
on a written down basis; the rate of writing down allowances is given in the Industry
information.
Less
Overheads: 135,000
------We can use the drill-down to see exactly how the 24,453 was calculated.
Operating Profit Before Interest & Tax: 239,968
The Operating Profit Before Interest & Tax was then subject to Corporation
Tax of 64,665. How was this calculated ?
We can use the drill-down to investigate further.
The Capital Allowances to be written off is adjusted each period as follows : Increased/reduced by changes in the companys capital base
Reduced by using up capital allowances that are written off by 25% per annum (6.25% per period)
Capital allowances are not used if an operating loss is made.
In period 4 an operating profit before interest & tax of 239,968 was made, and as a result capital allowances were used.
These amounted to 6.25% of 391,251, the amount still to be written off, giving the figure of 24,453.

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Marketing Decisions

Glossary

The
Marketing
Department
are
first
step
on
the
ladder
winning
and
progressing
contracts.
Having
set the
the staffing
level,
and
directed
the
marketing
effort
into
jobto
sectors,
and
indicated
job
size
Consider
following
situation.
The
additional
marketing
staff
will
have
little
affect
ifinformation
they
do
not
direct
their
efforts
into
theand
market
sectors
Job
Size
Preferences
Preferences
There
arecan
athe
number
of
The
tools
Assessing
Based
available
ondifferent
overhead
the
to
performance/Marketing
the
composition
about
the
likely
of
market
Performance
split
in period
option
5, andin
There
are
currently
2 analyse
marketing
staff,
and
the
split
of country
the
marketing
effort
How
much
new
work
be
identified
?
Client Relationships
and
Prequalification
preferences,
the
company
will
be
able
to
identify
(prequalify
for)
a
number
of
jobs
that
come
onto
the
market
in
the
period.
thereWhere
isforecast
new
work.
When
the
the
market
job
they
size
inidentify
are
greater
preference
both
set
shows
detail
the
:also
:the
country
%
ofpreference
the
the jobs
long-term,
takes
market
that
thethe
overhead
company
the
manager
job
has
size
prequalified
preference.
decides
tofor
:- in
5looking
market
sectors
is presently
asover
shown,
with
effort
being
directed
The
companys
indicated
that
there
isways
389m
oftooverall
new
work
available
during
period
5.
Marketing
isthe
a which
complex
subject
totwo
the
availability
of
work,
some
marketing
strategies
Each
period
marketing
staff
new
construction
inpriority
the
global
market,
known
as
Client
relationships
play
a setting
role
inarea,
prequalifying
for between
work
in
:Its
the
beginning
of
period
5, and
and
the
Overhead
Manager
needs
decide
the staffing
level
into
previous
all sectors,
periods.
and in particular
the to
Building
and upon
Commercial
sector.
that
may
be
adopted
include
:prequalification,
which
the
company
may
then
decide
to
try
and
win
through
the
procurement

Leave
the
effort
by
sector
unchanged
forto
now,
but
reassess
thewhich
for
the Marketing
Department,
and
into
Although
which
decisions
sectors
have
the
to
staffs
be
made
about
are
be
sectors
directed.
direct
the
In addition,
the value
of
workFor
for
can
be
influenced
by
other
factors
:-efforts
us
prequalified
determine
where
the
new
work
isUK
use
the
overhead
performance/Market
trend
option,
Target
large
By
example,
number
jobs
of
ifis
Prefer
jobs
chosen
then
jobs
large
and
jobs
Target
are
the
large
jobs
are
then
the
identification
of
LetTo
suppose,
for
example,
that
increasing
theAssessing
number
of
marketing
staff
tochosen,
4into
haswhich
increased
theto
market
share
If the relationship
isIfan
improving
one,
and
at
least
at
a
certain
level,
the
company
may
prequalify
for
a
job
that
would
have
situation
each
period
process.
marketing
effort
in
period
5,
the
%
change
in
each
sector
is
limited,
as

shows
the
companys
forecast
of
the
global
market
trend
for
the
next
year.
The
accuracy
of
the
forecast
primary
choice,
jobs
By
is
client
followed
prioritised
as
medium
follows
Based
then
:-upon
small
the
last
jobsyear,
as the
andidentify
assuming
the
directed
to 30%.
In practice
this
meansbythat
potentially
the
company
can
117m
ofmarketing
new work effort
(30% was
of 389m).
unattainable,
as
shown
insectors
the
Management
consultants
report.
country
Continue
toand
show
no
preference
towork,
country
or
job size.
been
defined
in
the
information,
so
wholesale
changes
cannot
be made
variety
widen
client
base
of
jobs
identified.
Although
IfTargeting
the companyaare
expertsof
in a
particular
sector(s)
depends
upon
the
sizeto
of
the
department.
secondary
choice.
By
location
(UK
or marketing
overseas)
intothe
sectors
in Industry
which
there
was
some
new
the
company
was
able
to
in
one
period.
The
relationship
with
contract
clients
may increase
the
choice
of
jobs that
can
procured,
enabling
the
company
to marketing
find
jobs
1.Large
UK
jobs
prequalify
for
only
between
12 allow
andhave
13%
of the
overall
market
with
Taking
Building
& one,
Commerical
sector
anbe
example,
thewill
company
allocated
43%
of the
Ifthis
the relationship
is a the
deteriorating
then there
is a as
chance
the
client
not
prequalification,
regardless
of 2the

The
overall
value
of
the
market
is
expected
to
fluctuate
between
411m
and
465m,
picking
up
in
particular
All
jobs
belong
to
one
of
5
market
sectors
:If
Target
----------------------------------------------------------------------------------------2.
medium
Medium
jobs
UK
jobs
is
chosen
marketing
then
staff.
medium
jobs
are
where
may
besector.
lessjob
rival
competition
for
work,
it work
mayin also
reduce
chance of
to this
This
should
enable them
to the
identify
50m of
the sector
(43%the
of 117m).
effort
beingthere
put effort
into
the
particular
sector.
Thesmall
change
limitation
makes it imperative that as well as the short-term, the
We
will
now
look
at
each
one
in
turn.
during
period
9.
the
primary
Key
3.
choice,
Small
Point(s)
UK
with
jobs
large
and
jobs
given
equal
building long term relationships with long-term
particular
clients, which
may bemarketing
vital in strategy.
securing work if
Industrial
considered
reviewing
weighting4.Large
Analysing
as the secondary
overseas
the market
jobs
choice.
The
in detail
companys
is is
essential
strategy
because
iswhen
for not
steady
onlygrowth,
is the and to achieve
this more work
----------------------------------------------------------------------------------------------------------------------------------------------------economic
conditions
deteriorate.
Building
and
Commercial
In
terms
of
where
the
work
is,
there
appears
to
be
new
contracts
in
all
sectors
for
the
foreseeable
future,
5.Medium
marketing
overseas
effort
to
be
jobs
directed
by
sector,
but
within
each
sector
will
need
to
be
identified,
so
we
will
need
to
increase
the
staffing
level
bywith
the
Key Point(s)
Transport The

each
sector
maintaining
share
of
the
overall
global
market.
Ifabove
Target
6.Small
choices
small
overseas
canits
be
ison
chosen
made
jobs
bythen
country
small
allowed,
and
jobs
job
are
2 size
(the
the
preference.
limit is shown
in the
information).
analysis
is jobs
based
themaximum
assumption
that
there
is enough
new work
in Industry
the sectors
where the
Energy
Targeting marketing
a particular
sector
where
there
is
a
lot
of
work
to
look
to
build
long
term

primary
choice,
followed
by
medium
then
large
jobs
as
the
effort has been directed.
with
specific
clients, and------------------------------------------------------------------------------------------------------perhaps target particular sized jobs. The risk here in
secondary
choice.
relationships
Water and Sewage
Key
Point(s)
putting all your eggs in one basket is that
there may be more competition for the work.

For now the company has no particular

No matter
jobhow
sizelarge
preference.
the marketing size is, and how well the marketing effort
is directed, the company will never be able to identify 100% of the market.
The
company
may look
to find
niche
markets,can
in which
therefor
is less
competition
for work, by a
The
value
and number
of jobs
that
the company
prequalify
in any
period is governed
--------------------------------------------------------------------------------which of
could
improve
future procurement success.
number
factors
Key :Point(s)
Depending
upon Department
where the marketing
has been
by staff)
The size of the
Marketing
(number
ofdirected
company
sector,
and market
the composition
of the
work
available,
may be
The size of the
global
(value
and
number
ofit jobs
available)
that no jobs
can be identified
from the
primary
choice, and bearing on the future success of the
Whatever
marketing
decisions
are
made
have
an
important

Where the marketing

effortjobs
is directed
(5 instead.
potential sectors of work)
secondary
choice
are indentified
company,
since
failing
to
identify
any
new
can ultimately
Experts
in asector
Sector lead to the demise of the
Whether or not the company are experts inwork
a particular
business.
If the companys average marketing effort in a sector
The
relationship with contract clients
exceeds a particular %, then the company are deemed
to be experts in the sector, and will prequalify for more
work in the sector than anticipated.
Number
Where
Size of
Value of
of
marketing
The Marketing effortOther
(by sector) indicates period
by
global
new work
marketing
effortperiod
is
factorsin which the company is
in green the sectors
market
identified
staff
directed
considered an expert.

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Other Overhead Department Decisions

Glossary

We
The
Consider
The
staff
staffing
know
in
the
these
following
that
the
forbenchmark
3
the
situation.
staff
QHSE
can
perform
and
handle
Measurement
tasks
8.8m
related
ofperson,
turnover.
Departments
to
the
are
determined
jobs
in
in the
same
:Navigate
tocompanys
"Main
summary"
Overstaffing
We
have
Bearing
seen
inlevels
that
mind
setting
the
adequate
staffing
of
2.9m
levels
per
Head
in
the
Office
current
period
if for
the
the
turnover
Headmenu/Assessing
Office,
is expected
QHSE
toperformance/Performance
and
beprogress
10.9m,
Measurement
the
number
of
Understaffing
On
the
Job
Progression
screen,
and
assuming
appropriate
labour
Finding
It
isnow
essential
the
Optimum
to
set
atdepartments
least
Staffing
adequate
Levels
(benchmark),
and
ideally
optimum,
staffing
Overstaffing
Departments
staff
required
ofHead
the
involves
Head
isHead
(10.9
:-Office,
/if2.9)
QHSE
=
3.8,
and
rounded
Measurement
up to
to
4 staff,
departments,
since
fractions
above
the
ofwill
staff
adequate/benchmark
isexpected
not allowed.
level,
can
have
positive
Understaffing
of
the
Office,
QHSE
and
Measurement
allocations
departments,
have
been
below
made,
the
the
adequate/benchmark
turnover
level,
forOffice
thewill
period
have
is
based
upon
benchmark
staffing
levels
and
turnover
The
for
setting
the
staffing
level
applies
all
3 further,
departments,
we
concentrate
on
the
Head
Using
levels
the
for
the
previous
example
Office,
QHSE
the
and
staffing
Measurement
levels
raised
Departments
to
toanticipated
ensure
138%,
that
165%
oflevels.
the
required
the
net
manner,
To
Its
see
Head
the
ifprincipal
beginning
Office
this
staffing
staff
ofdeal
level
period
with
is
5,
sufficient
buying,
and
theare
accounting
we
Overhead
need
to
and
Manager
determine
IT so
issues
needs
theand
anticipated
to165%
decide
upon
turnover
thelevel,
staffing
this
period.
affects
across
all jobs
being
progressed,
namely
:- namely
negative
affects
across
all companys
jobs
being
progressed,
calculated
:-yet
as follows
Department.
affects
the
staff
increase,
can
cope
indicating
with
the
that
the
optimum
level
oflevels
turnover
may
innot
the
period,
have
since
been :-failure
reached.
levels
Having
for
performed
the
Head
the
Office,
necessary
QHSE
and
calculations
Measurement
an
extra
Departments.
0.5
staff
are
required
intobenchmark
each
department,
1.
For
Since
each
there
department
are
currently
establishing
3
Head
the
Office
level
staff
of
turnover
employed
that
at
each
the
moment,
person
can
anProgression
extra
support,
1issues
person
knownneeds
as the
be recruited
level,
to cover
todo
To
do
so
this
can
we
seriously
need
damage
to refer
the
to
operating
the
decisions
profits
the
made
business.
on
the staff.
Job
Screen.
QHSE
staff
deal
with
quality,
health
& ofsafety
and
environmental
This
period
we
currently
have
3
staff,
all
company
staff
and
no
agency
The
rounded
up
to
1
person
to
prevent
any
shortfall.
which
the
Office,
slight
comes
reduction
shortfall,
from
thein
and
staffing/turnover
jobjob
tocosts
facilitate
(build
this
costs)
there
during
are
two
period
choices
4.onstaffing
:-site * value
Head
Head
Office,
an
increase
in
costs
(build
(Total
labour
man
secret
toafinding
the
optimum
level
islevels
tocosts)
keep
increasing
the
levelsper
until
theperiod)
net affects have reached their peak,
when
Measurement
staff
(quantity
surveyors)
ensure
that
money
is
recovered
from
the client
a
reduction
in
job
costs
(build
and
risk
costs)
QHSE,
How
do
we
know
if
3
staff
will
be
able
to
manage
the
companys
turnover
this
period
? company
When
the
decisions
have
been
processed
for
the
period,
and
the
results
received,
the
Performance
Summary/Overhead
QHSE,
an increase
in will
job have
costsbeen
(build
and
risk in
costs)
the
optimum
level
Employ
more
companys
staff,established.
bearing
mind that there is a limit on the number of new
staff that can be
performance
anaeach
increase
in measured
value
2.Measurement,
Complete
the
labour
allocations
for
current
period
on the
Job
Screen,
and
the expected
Measurement,
can
be
used
to
howthe
effective
the
staffing
levels
been.
reduction
measured
value
(turnover)
This
equates
to have
:-Progression
employed
period,
as
defined
in
the(turnover)
Industry
information
(3 each
for
Head
Office).
Newcalculate
company
also
a to
To answer
this
question
weinreview
must
first
assess
the
level
of
turnover
that
person
can support,
and tostaff
do this
weincur
need
turnover
in
the
current
period.
Job
2:
(
90
x
52,561)
=
4.7m
Once
established
the
optimum
staffing
levels
do
not
change.
& training
cost in their
first period.
referrecruitment
to the Assessing
overhead
performance/Head
office, QHSE and Measurement performance option.
Although
overstaffing
increases
overhead
costs,
itto
can
increase
job(allocated.
profits,
resulting
in
increased
operating
for the
company.
The
adequate
setting
is 100%
of
theIt required
(benchmark)
level
This
is
sufficient
toeach
ensure
thatprofits
performance
is not
Understaffing
is aOverhead
false
economy.
might
reduce
overhead
Job
43:
costs,
17
butxwill
74,493)
alsoof
reduce
=
1.3m
job
resulting
in reduced
The
task
of the
Manager
is
ensure
that
the
level
staff
inprofits,
department
each

Employ
agency
staff
for
the
current
period
only.
Agency
staff
attract
a
higher
salary
than
company
staff.
However,
3. Useisoverstaffing
the
information
onlycompany.
from
has step
positive
1, companys
and
affects
the expected
up to ajobs
point,
turnover
known
level
the
step
optimum
2 to determine
level
ofdeterioration
the
staffing.
adequate/benchmark
impaired.
operating
profits
for manage
the
Job
55:
( as
46in
x
56,336)
= 2.6m
------------------------------------------------------------------------------------------------------------------------------------------------------------------------period
able
to
the
in
progress
without
any
in the
--------------------------------------------------------------------------------------------------------------------------------------------------------------------staffing
levels
for
each
department
in
the
current
period.
Job
62:
(
45
x
50,903)
=
2.3m
Key
Point(s)
Since
the
company
is
looking
to
increase
turnover
in
the
next
year,
its
more
cost-effective
in
the
long
run to increase
Key Point(s)of the jobs.
performance
The
example
shown
indicates
that
staffing
in
all
3
departments
was
more
than
sufficient
i.e.,
well
above
the
100%
benchmark
The
net
affect
shows
the
gain/loss
in
job
profits
from
the
staffing
levels
allocated.
If
the
benchmark
levels
are
set,
100%
of the
The
example
shown
indicates
that
staffing
in
all
3
departments
was
insufficient
Total:
i.e.,
10.9m
below
the
100%
benchmark
level.
TheThe
opportunity
to
optimum
levels
during
the
phase,
when
decisions
for
period
can
made
andinthe
the
companys
own
staffthe
rather
thanperiod
use
agency
staff,
sotrialling
well
employ
additional
1 company
staff,5 which
isorwithin
turnover
ofdetermine
the
company
in the
isisthe
amount
of
money
the an
company
receives
from
progressing
all
jobs
level.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------The
company
may
have
incurred
higher
overhead
costs,
but
the
increase
in
job
profit
(reduced
costs
and
increased
value)
is
required
level,
thefor
affects
are 0.to the amount of effective labour on each site.
processed
repeatedly.
limitations
new
staff.
progress,
and
isnet
directly
related
reflected
in the overall
netsaved
affect.on overhead costs, but the reduction in job profit (increased costs and reduced value) is
Keycompany
Point(s)
The
may have
We
will
now
look
at
an
example
of
how
toexceeded,
set adequate
staffing
levels
department.
The
benchmarks
in
step
will
not
vary, but
the
companys
expected
turnover
vary
each
period.
The
example
below
shows
that
adequate
levels
were
and there
waswill
a net
gain
infor
eacheach
department.
reflected
in the
overall
net1affect
(loss).
We will not investigate how to determine the optimum staffing levels.
We will not look in more detail at what happens if the staffing levels set are lower (understaffing) or much higher
(overstaffing) than the adequate/benchmark levels.

The value per man period is shown on the Display job details (Procurement details),
and is defined as :Period 4, the last period of the History, set the benchmark
(bid submitted during tendering / total man periods)
staffing/turnover level i.e., the number of staff required to
support the level of turnover without impairing performance.
We can on
see that
3 staff
can cope with
of turnover, or
Keep clicking anywhere
the
screen
to8.8m
advance
2.9m per person. This is the benchmark for all future
staffing levels for the Head Office Department.

Quit

Non-Departmental Overhead Decisions

Glossary

As
asManager
the departmental
overheads,
there are also
non-departmental overheads :Idle well
Project
Pool (Job Progression
Screen)
Management consultant's report
Idle
Labour
Pool
(Job
Progression
Screen)
Project managers employed by the company who are not currently allocated
to a job
The
Idle
project
managers
(JobManager
Progression
Screen)Each period an external management consultant carries out
companys
own
site-based
labourers
who are
not currently
in progress
are
held
in
the
Idle
Project
Pool.
Bidding Cost (Procurement Screen)
a detailed review of the companys activities, looking in
to job inpool
progress areProgression
held in the Idle Screen)
Labour Pool.
allocated
IdleEach
labour
job that the (Job
company bids for incurs
a
particular for any problem areas.
cost,there
depending
upon the
They
canbidding
be placed
if :Idle
labourerscost
incur(Procurement
a cost whilst they are
in the idle pool, so it
Bidding
Screen)
approximate
value
of
the
job, defined in the
The review is in the form of a report, and this has to be paid
Amakes
job hassense
just finished,
the project
is placed
in the
to either and
allocate
them tomanager
appropriate
contracts
orpool
pay until the
Industry
information.
for, the cost being defined in the Industry information.
company
External
performance
to do withreview
him.
them
off, decides
which
iswhat
the responsibility
of the Construction Manager.
The project manager has been recruited from the market for use on a future
----------------------------------------------------------------------------------------contract,
and the
doesat
noteach
want to
risk losing them to a rival.
We
will take
a company
brief look
one.
Key Point
Sometimes
a decision
is paid
madetheir
to deliberately
keep excess
Approximate
Value
Project
managers
must be
salary and benefits
package whilst they are in
labour
in the
idle value
pool.
This
happen
companytoistry and allocate them to
is themay
anticipated
theThe
idleapproximate
pool,
which
is
a wasted
cost,
and it ifisthe
important
expecting
tojob
win
a labour-intensive
job,million.
and its of
cheaper
to pay them
cost of thecontracts,
rounded
to the
nearest
appropriate
which
is the
responsibility
the Personnel
Manager.
for being idle in the short-term, rather than incur potentially higher
costs for laying off and then retraining new staff in the future.
Navigate to "Main menu/Assessing performance/Management consultants report"

The cost per annum of keeping

Keep clicking anywhere one

onidlethe
screen
labourer
is shown into
the advance
Industry information.
Quit

Overhead Staff

Glossary

Overheads are the non-contract based support services required to enable the company to
procure and progress work, and consist of : 4 key departments; Marketing, Head Office, QHSE and Measurement
Non-departmental overheads, such as idle labour and idle project managers
The staff in each of the key departments can be either : The companys own staff
Agency staff (except the Marketing Department)
and are subject to costs and limitations shown in the Industry information.
Staffing Limitations
There is a cap on the number of
new company staff that can be
employed in a period.

Costs (per person)

Both company and agency staff incur an
annual salary, which is higher for agency staff.
For new company staff only, there is a
recruitment/training and payoff expressed as a
% of the annual salary.

Idle Staff

Glossary

Idle Project Manager Pool

Contains the companys project managers who are currently not
allocated to a job.

Idle Labour Pool

Contains the companys own fully-trained operatives who
are not currently allocated to a job.

Project managers can reside in the pool for a number of reasons :-

Labour can reside in the pool for a number of reasons :-

They may have been deliberately recruited by the personnel

manager prior to being used on site, perhaps to prevent other
companies from employing them (Later Years).
Project Managers are automatically transferred to the pool
upon completion of a job.

They may have been deliberately transferred there by

the construction manager, and not reallocated to site.
Own labour is automatically transferred to the pool
upon completion of a job.
It is always more cost-effective to keep the idle labour
pool as low as possible, using the companys own fullytrained staff on contracts that are in progress.

Procurement Decisions

Glossary

The
A
It
decision
isDisplay
company
assumed
is
made
are
that
able
the
to
bid
estimators
to
bid
for
job
for
jobs
77,
have
athat
Design
produced
were&
Build
an
job.by
How
the
assessment
is
Marketing
the
bid
formed
of
Department
the
costs
?design
in
be
the
The
Bids
What
The
bid
are
level
has
processed
of
Job
now
mark-ups
Details
been
in
strict
set
are
for
job
rival
job
number
bidders
77.
order.
likely
to
Anidentified
appropriate
Theaccurate
oncost
Having
consultant
is
Recruitment
an
selected
additional
for the
an
Costs
Select
allowance
job
appropriate
can
Yes
be added
found
to
indicate
by
to to
areviewing
consultant,
bid
that
to a bid
the
Salary
and
Benefits
Package
A consultant
needs
to
be
allocated
to produce
theapply ?
Build
Design
&
option
Job
77
can
is be
ain
large
used
job,
to project
and themanager
bidding
history
of
each
rival planned
profiles
cover
of
each
thecan
use
contract
consultant,
The
thefound
Industry
Set
costs
the
and
bid
matching
information
isand
option
to period
be
above
submitted.
the
to establish
shows
consultants
the
the
the
cost
build
bid
expertise
of
price.
Details
about
specific
details
(salary,
benefits
package
etc)
be
onover
the
Job
ProgressionScreen,
previous
incurred
period.
completing
each
along
with
labour
levels
for
each
of design,
the
planned
Element
Description
Rival
bidders
design
who
has
appropriate
expertise
for the
job.
As
discussed
earlier
all
bids job,
entered
are
processed
in
strict
job
number
order.
Only
Build
If
We
it
were
will
know
the
real
next
world
period
the
whether
bids
would
or
not
be
we
spread
have
out
won
throughout
the
job.
the
and
site
costs.
recruiting
a
project
manager,
which
applies
to all
display
company
detailed
is
filtered
to
show
bids
for
large
jobs
only.
to
the
job
sector,
along
with
looking
for
evidence
of
BIM
where
information
also
be found
about
those
signed
to theMarkup
Project
Manager
Recruitment
Agency.
When determining
the
mark-up,
the level
that
may
be setupby
duration
of thecan
job.
The allowance
can
now be entered
for
information
period,
withabout
the
company
the
being
able
to
adjust
dynamically
experience
if required.
projecttomanagers.
rival
bidders
needs
tojob
be is
considered
very
carefully.
The
the
markup
project
applied
manager,
set
a bid
asisfollows
one of:-thexcompanys most
InDesign
addition,
since
the
using
BIM,
or
Building
Cost
of
producing
the
design.
There
areCost
two
types
of
jobs
that
themargins
company
can
bid
for.
Bids
are
awarded
through
competitive
tendering,
and
at
the
time
a
bid
is
submitted
the
client
job.
depending
The
lowest
company
upon
markup
incur
the
previously
a
success
cost
for
or
each
set
failure
was
bid
of
by
submitted,
previous
the
Punj
depending
submissions.
Singh
upon
The
the
oncost
covers
:Bearing
in
mind
that
job
77
is
a
building
and
commercial
contract
in
India,
the
search
is
narrowed
down
using
thetoto
search
filters
critical
decisions,
and
is
the
margin,
or
profit,
be
made
by the
Information
Modelling,
the
client
has
imposed
a
At
the
procurement
stage
some
of
the
estimated
costs
are
automatically
included
in
the
bid,
success
in
being
awarded
the
contract
depends
upon
a
number
of
factors
:Group
approximate
at
3.1%.
value
This
of
is
the
not
job,
really
defined
surprising
in
the
as
Industry
they
are
information.
The
choice
of
consultant
Based
on
can
the
have
annual
a
significant
salary
of
40,000
impact
already
on
the
to
find
the
salary
and
benefits
package
that
may
have
to
be
paid
for
the
most
suitable
project
managers
for
the
job.
Assuming
a
similar
cost
base,
including
a
sensible
level
of
Salary:
40,000
job
over
and
above
the
costs.
bidding
restriction
that requires
theare
consultant
to allocated Project
Design
Consultant
Design
consultant
to create
the Costs
design.
Manager
to
x cost isand
Build
and
cannot
Only
jobs
be
altered.
the
:Fortunately
These
areIndia,
part
this
of
isexperience.
the
simulated
overhead
byThese
margin
costs
foradjusting,
the
period.
which
to be
(+) Project
determined,
manager
costs
the recruitment
expected
based
in
and
their
local
knowledge
gives
them
a needs
build
costs.
Consultants
with
appropriate
expertise
BIM
oncost,
setting
too
high
a mark-up
could
make
the
bid
Benefits
package:
have some
BIM
Although
project
managers6,400
are not normally recruited until a
basis
The
contractor
is
responsible
forwill
the
considered
competitive
once
edge.
allnot
theonly
bids
have
been
finalised.
experience
(+) Contingency
bedesigns
15%
for
Risk
that
the
annual
reduce
salary,
thetoexpected
or costs
6,000.
build
cost.set.
On
investigation
Ashish
Sanwal
fits
thedirectly
bill,
and
used as
the
for
setting
allowance.
uncompetitive,
and
give
the
company
a chance
ofbe build.
Markup
Recruitment
isproduce
entered
costs:
asthe
a of
%,
and
6,000
the
already
Build
Cost
Costs
involved
in
the
(labour,
plant,
jobbuild
has
been
secured,
and
isisinadded
progress,
an allowance
is

---------------------------------------------------------------------------------------------
Design
cost
winning
the
job.
Total:
52,400
The
Allocate
from
available
list
option
can
be
used
Procurement restrictions
made the
in the
bid for the
costs
recruiting
and paying
a
materials
etc).
Unlike
estimated
costs
thatofcannot
be changed,
oncosts
Margin
We
Key
will
point
adjusting
set
aentailed
mark-up
isjob
discussed
of77
3%
to
hopefully
abeseparate
be
the
demonstration.
most
For
job
77, site
ahave
Building
and and
Commercial
contract,
Luna
Consulting
Bearing
in
mind
that
has
ain
planned
duration
of
periods
the
allowance
for
salary
package
is
setof
as
follows.
estimated
cannot
changed
are
the4would
design,
build
and
costs.

If
Build
the
job
cost
any
design
work,
this
already
commissioned
by
the
client,
To
determine
thebeen
markup
to benefits
be
applied,
a number
factors
need
toThe
choose
from
acosts
list
ofthat
all
available
consultants.
suitable
project
manager
to
oversee
the
job
for
its
planned
can been
be altered
depending
upon
the companys
strategy
The
company
can
bidand
for all
jobs
available,
but
this
canservices
lead to
competitive
on
price,
assuming
thatupon
the
Punj
Singh
Ltdtohave
chosen
due to their
expertise
over many
yearsfor
in the
The
nature
of
the
rival
bidders
depends
the
Site
Cost
Support
staff
and
required
to
administer

be
taken
into
account.
who cost
Site
would
have engaged their own consultant designer.
duration.

Company
based
bidding
a particular
job. and since
Group
substantial
willCost
bidding
for
the
costs,
job. and
it is normally more cost effective
Building
to bid
and for
Commercial
sector,
the job is using BIM,
Salary
Design
(D&B
jobs
only)
timeframe
:-bid
a site
whilst
the
build
istheir
inand
progress.

Can
the
companys
capital
base
support
the
additional
workload
?costs
inThe
a more
scientific,
strategic
based
on theisnumber
significant
experience.
Annual
salary
is
40,000
design
cost
to and
be paid
to
themanner
consultant
designer
expressed
as a %
ofBIM
the
build
cost.
Covering
other
company
Project
managers
vary
in experience and salary, and the
Design
The
remaining
&
Build
elements
jobs
:value
ofearly
jobs
that
becompetition
secured.
----------------------------------------------------------------------------Salary
period
iscan
10,000
(40,000
/ 4)

Have
the
company
reached
thefrom
limit
on the number
ofmade
jobs
in
progress
that
company
On-cost
In
theper
years,
the
comes
fictional
Thechoice
profit
across
all
should
atthe
leastfor
cover
of an appropriatejobs
project
manager
a jobthe
can can
have
The
contractor
has
responsibility
for
both
the
design
and
the
build.
This
involves
more
effort
Key
point(s)
-----------------------------------------------------------------------------------------Salary
for cost
the planned
duration
of their
40,000
(4 progression
x 10,000)
Design
is paid
back
in time
relation
toown
the
of the jobcompany
e.g.,
if 30%
of the
job not
is
completed
inthe
aofperiod,
thenjobs,
30%such
of as
rival
companies,
Each
one
has
unique
profile
support
at
any
one
?
related
costs
covered
in
individual

serious
implications
for
the
progress
the
job.
Project
manager
An bidders
allowance
for the costs
of recruiting and
and
Thebidding
level40,000
of
markup
set
by
rival
does
not
Key
Point(s)

Allowance:
the
design
cost
has
to
be
paid.
during
Design
the
consultant
procurement
stage
because
a
consultant
designer
needs
to
be
allocated,
but
the

history, and a careful assessment of them is

:-to oversee the job for
paying
a project
manager
depend
upon
the
job
sector,
only
the
job
size
i.e.,
for
a
The
list
of
available
consultants
changes
each
period
due
to some

required
to
determine
the
appropriate
level
of
margin.
profit
On-cost
from the design element can make the jobsThe
more
attractive
to secure.
project
manager allowance
consists of 3 elements :
Job
specific
its
planned
duration.
large
contract
the
markup
strategy
is
the
same
across
all
consultants
being
unavailable,
as
shown
in
the
status
column
e.g.,
Benefits
Package
Build
Cost
Company overheads

Risk
Contingency
Risk
Contingency
Mark-up

If
BIM
is
being
used
for
a
design
&
build
job,
has
a
consultant
with
BIM
experience
been
sectors.
too
much
workload.
Annual
benefits
package
of labour,
6,400
The
build
cost
covers
the
plant,
materials
specialist
subcontract
trades
needed
completelosses
the job.
The
In
the
later
years
thean
competition
comes
from
theand
other

potential
Risk
contingency
Contingency
to
cover
the
estimators
made
assessment
offailures
the
potential
risks
that
could
occur
onrisks
the job
causingtomonetary
to the company,
Paying
dividend
tothat
shareholders
For
the
potential
risk
Equipment/plant
: Salary

allocated
to
produce
the
design
?
Benefits
package
per
period
of
1,600
human
teams
in
the
competition,
with
less
certainty
The
and
joblikelihood
delays, and
a risk
register
was
formed
for the
thea job.
of
the
risk
occurring
is
high;
there
is
70-80%
chance

of
happening
Benefits
package
could
occur
on
job
causing
monetary
losses
There
can
be
are
adjusted
a number
atstrategies,
the
ofduration
procurement
elements
that
stage
make
depending
up the bid
upon
for
each
the strategy
type
of job,
to the
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as adopted
shown
ininthe
about
Some
companies
just
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market,
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package
for may
planned
ofhence
6,400
(4
x 1,600)

Site
Cost
the
relationship
the
client
strong
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client
toprogressed
accept
bid
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possible
and
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If
the
profit
all
jobs
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not
these
IfIsthe
risk
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there
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bewith
anto
impact
cost
of
160,000

Recruitment
costs
the
company.
bidding
following
for
each
table.
particular
job.
not
have
a
bidding
history.
In
this
situation
their
profile
is
Allowance:
6,141
Site
costs
pay
for
the
support
staff
and
services
required
to
administer
a
site.
markup
becomes
far
harder.
Each potential risk in the risk register has 2 key elements that need
to be considered
at thethen
bidding
stage :- could suffer serious
additional
company costs,
the company
the
only
guide
to
their
likely
markup
settings.
Mark-up
(%)
The
profit
(margin)
to
be
made
on
the
job.
flow
We could cover ourselves for the full impact cost, but this could cash
make
our
bid
uncompetitive
high). Based
We
willproblems.
consider
each one(too
in turn.
upon the
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------Price
Since
a design
& hitting,
build
job cover
includes
allclassified
the75%
bid
willThe
look
at
an example
ofhappening
how
tois
The
likelihood
the
risk occurring
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as
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Low.
% chance
of
level
probability
of theofrisk
well
for
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the risk
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oror120,000.
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oureach
bid far
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competitive,
Key
Point(s)
Key
Point(s)
defined
thefor
Industry
and
also
provides
some information.
cover
if the risk occurs.
form
a in
bid
such
a job.
Design
and are
build
paidhits.
in bidders,
a period and
relate
to the % of the job completed in the period, whereas the site costs to
Rival
bidders
only
potential
ondirectly
the tender
The
impact
cost
ifcosts
the
risk

Is
the
company
able
to
compete
onare
price
be
are
related
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actual
labour
list
forpaid
the
job.
They
or
not
submit
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bid.site.
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a similar
logicmay
thethe
other
risk
contingencies
set. against rival bidders ?
A contingency needs to be added for each risk to cover the company for the impact cost if the risk occurs.
E.g., if there is a lot of ineffective labour on site, site costs still have to be paid even though the ineffective labour does not
----------------------------------------------------------------------------------------------------------------------------------------------------------------------contribute
progressing the job.
--------------------------------------------------------------------------------------------------------------------------------------------------------------------------Key
Point
Once
the tobids
have been submitted, whether or not the company is successful wont be known
Key
Point(s)
Assuming
we
win
the
job, if the risk does not occur then the extra risk becomes profit, or margin, made on the job. Conversely, if
until the next period.
Although
the itrisk
only covers
the cost
striking,
a risk
strikes there
maybuilding
also beinto
delays
to the
job,
which
the risk hits
willcontingency
eat into job profits,
although
this of
willthe
berisk
offset
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contingency
were
the bid,
and
any
have
to
be
considered
in
the
labour
allocation
when
a
job
is
progressed.
mitigating actions taken to reduce the risk costs.
Quit

Keep clicking anywhere on the screen to advance

Margin Adjusting

Glossary

Margin
Adjusting
a mechanism
forwinning
varying
markups
during
the jobs
bidding
process,
Lets
thatthen
weis
would
bebe
satisfied
with
and that
either
80 or 81
would bedepending
a bonus.
If wesuppose
lost job 76,
it would
very important
to try job
and76,
secure
jobswinning
80 and 81.
upon how many jobs have been won and/or lost.
IfWe
thiscan
was
the real
world,
andinto
we the
hadbidding
won jobprocess
76, we by
might
try andthat
extract
higher
margin
transmit
this
thinking
indicating
if wea lose
1 job
thenfrom jobs 80 and 81.
for all subsequent jobs (in this case jobs 80 and 81) the markup should be decreased by
We
cangiving
transmit
strategy
the bidding
process
by indicating
that if we win 1 job then for all subsequent jobs, in this
0.8%,
us aour
much
betterinto
chance
of winning
the remaining
jobs.
case jobs 80 and 81, the mark up should be increased by 0.5%.

Consider the following situation where bids have been submitted for jobs 76, 80 and 81.
If we lose job 76, then the markup for subsequent jobs will be adjusted as follows :The bids are processed in strict job number order.
for job 80 from 4.2% down to 3.4%
If the bids were submitted in the real world, then the mark ups for jobs 80 and 81 may be adjusted
for job 81 from 4.7% down to 3.9%
depending on Ifwhether
76the
was
won. for subsequent jobs will be adjusted as follows :we win or
jobnot
76job
then
markups
In this situation
the
margin for
to be earned will
be reduced, but the chances of winning the last job are improved.
Margin Adjusting
provides
a means
for
job 80 from
4.2% upsimulating
to 4.7% this bidding strategy, and enables the mark up of
jobs to be varied
upon4.7%
the result
previous submissions.
depending
for job 81 from
up to of
5.2%
Notice that the change can increase (positive change) or
-------------------------------------------------------------------------------------------------------------------------------------------------reduce (negative change) subsequent markups, and there
Key Point(s)
In both cases the margin to be earned will be increased,
but the
chances
of winning
the jobs either
is reduced.
may
strategic
reasons
for choosing
setting.
If we win job 76, and then lose job 80 (or vice versa), both
thebe
jobs
won and
jobs won
flags are activated.
In
this case the cumulative affect reduces the margin of job 81 by 0.3% to 4.4% (0.5 0.8).
---------------------------------------------------------------------------------------------------------------------------------------------Key Point(s)
In a different scenario, if we lost job 76, but won job 80, the markup for job 81 would be altered up to 5.2%.

Keep clicking anywhere on the screen to advance

Quit

Successful Tendering

Glossary

Based
upon the
strategy for growth, a number of bids may be submitted in a period. Each one is
Competing
oncompanys
Price
processed in strict job number order.

If the client does not immediately reject the companys bid because of the procurement
restrictions,
then through
the decision
as totendering,
whether and
or not
they
are
awarded
the job
comes
toin
Each bid is awarded
competitive
at the
time
a bid
is submitted
to the
client down
success
High
competing
onthe
price
against
rivalupon
bidders
:- bidding
being
awarded
contract
depends
a number
of factors.
If the companys bid is above the rival bid, the client will reject the
companys bid due to high bidding.

High Bidding
Procurement
Restrictions
In the early
years, the competition comes from fictional rival companies, Each one has
Company
based
procurement
include
:their own unique profilerestrictions
and bidding
history,
and a careful assessment of them is required to

the appropriate level of margin.

The ongoing jobs limit is shown
determine
Number of jobs in progress
in the Industry
information.
Procurement
Restriction:
Workload
Client Relationship
If the company
has too many
job Limitations
commitments,
clients will reject a companys
bid because
they feel that the
Consider
the
following
example
in
the
Early
Years.
Procurement
Client
In companys
the later
Years
the
competition
from
the
human
teams
in the
later
The
initial
at the beginning
In comes
the
of
Later
the period,
Years,
based
whenother
the teams
compete Head
to
Head
against
each
company
will
not
be workload
able
to manage
further
contracts
efficiently.
Restrictions:
BIM
Experience
Procurement
Restrictions:
Number
of
Jobs
in
Progress
Relationship
Procurement
Restrictions:
Client
Relationship
other,
client
relationship
becomes
a
factor
where
bids
are
within
a
%
of
the
upon
the
value
of
work
still
to
be
completed
from
the
jobs
in
progress
on
years,
about
possible
bidding
For
design
& buildless
jobs,certainty
if BIM (Building
Information
Modelling)
is strategies, and hence setting the mark-up
Rival
Bidwith
The
most
competitive
(lowest)
rival
bid
is
as
shown
The
client
will
also
a bid
if the
companys
number
of jobs
in look
As time
passes
may
to preferred
and
if the
being
the
Job
Progression
Screen,
iswill
18.3m.
most clients
competitive
bid. This
% rangebidders,
depends
upon
theclient
job size.
Workload
limitations
used
for
thereject
job,
the
client
insist
that
becomes
far
harder.
The
initial
forward
workload
is 18.3m,
and
if thea3consultant
bids weredesigner
to be won the affect would be :progress
exceeds
the
limit
defined
in
the
Industry
information,
relationship
is
not
strong
enough
the
client
may
refuse
to
accept
the
bid. resources
accept
a bid from the company
if they
isClients
chosen will
with not
some
BIM experience.
Safe
area feel that the company does not have the
feeling
that the
company
is spreading
its
too
thinly,
The company
has
for
3 jobs,
butjob.
willresources
the capital
base
support winning
base)
tobid
complete
the
companys
bid falls below the rival bid, but above the low bidding
(capital
Job
76: the
11.1m
(cumulative
workloadIf the
29.4m)
which
will
affect
quality
of
any
work
progressed.
theCreative
example
shown
from
period
7 onwards
the relationship
with
the
additional
jobs,
and
adding
to
theInexisting
workload
?
Job
Secured
In
the
example
shown
for
job
77
Waverley
Designs
have
threshold,
job
will definitely
be won.

Job 77: 20.9m (cumulative

workload
50.3m) then the
Auckland
City
Developments
will
need
to
be
at
least
fairly
good
for the
Job
specific
restrictions
include
:been
chosen
because
of (cumulative
their
suitability
for
thethe
job,capital
and
because
improve
To
the
companys
chances
of
avoiding
base
workload
limitations,
the
threshold
can
be
raised for the
Job
80:
4.8m
workload
55.1m)
Inthey
thishave
example
the
limit
is 10 show
jobs inthat
progress.
Withcapital
4 jobs
already
client
to accept
the bid.
The
Workload
limitations
companys
base
of 4.3m can
some
BIM
experience.
current
period
bybeginning
using more
of
companys
cash reserves
to increase the capital base.
in
progress
at the
of up
thethe
theenable
company
the
workload
limitations
will not
3can
jobsonly
to be won, since the cumulative forward workload cannot
However,
support
workload
of
toperiod,
43m
without
anyall
problems.
Client future
relationship
win
uptime
tothe
6 jobs
before
the number
of jobs
limit takes affect.
exceed
upper
threshold
of 43m.
As
passes
may
to preferred
bidders,
and if the client relationship is not strong enough the
This
is a decision
toclients
be made
onlook
the Financial
Decisions
Screen.
The
future
definedthe
as bid.
the companys
initial forward
workload
client
mayworkload
refuse
to isaccept
The
following
successful
bidding
combinations
are possible
:---------------------------------------------------------------------------------------(before any jobs are progressed in the period), plusLow
the bidding
value any jobs won
The
Industry
information
workloadworkload
that can be
supported
based
upon
size
of job
the77,
companys
capital
Job
76
could
be securedindicates
since thethe
cumulative
would
not exceed
43m,
butthe
then
but possibly
jobbase.
80
Key
Point(s)
in
the
period.
BIM
experience
If the companys
bid is too
far below
thenot
most
competitive
rival bid,
the
For
If limit
jobDesign
76
wasnot
not
secured,
job
77any
could
secured,
buttonot Modelling)
job 80
The
does
take
account
of
jobsbe
that
are
likely
&
Build
jobs
if
BIM
(Building
Information
is
being
used
for
the
job,
the
client
will
insist
client
will
reject
the
companys
bid
on
the
grounds
of
low
bidding,
In
the
example
the
workload
cannot
exceed
times
the capital
base,
so an additional 258,047 of capital base will support
Bidding
We
If neither
jobs
76Low
orfurther
77
were
secured,
then10job
could
be
secured
complete
in
the
current
period.
will
investigate
what
would
happen
if80
we
wereeasily
to win
the
that
the
consultant
chosen
to
produce
the
design
has
some
BIM experience.
believing
that
the
quality
of the work will be undermined because the
2.6m of further workload.
additional work.
company cannot possibly complete the project without cutting costs.
Successful bidding of course, depends on other factors other than just workload limitations, which will be discussed shortly.
Price
---------------------------------------------------------------------------------------------------------------------------------------------------------------------The
companys bid being able to compete on price against rival bidders.
Key Point(s)
In the
values
have
We
willexample
look at the
each
factor
in been
turn.rounded to 1 decimal place. During processing there is no rounding, and all
calculations work to exact numbers.

Keep clicking anywhere on the screen to advance

Quit

Consultant Details
Expertise
The consultants profile highlights the sectors of
expertise of the consultant.

BIM experience
The consultants BIM (Building Information Modelling) is
graded from none through to significant.

Expertise is graded behind the scenes between 1 and

5.

Choice of consultant
The choice of consultant for a Design & Build job can have a significant
impact on the build costs when a job is progressed.
Consultants with appropriate expertise and BIM experience produce
designs that reduce the expected build cost.

Glossary

Choosing A Consultant Designer

Glossary

One of the key decisions when bidding for a design & build job is the choice of the consultant to
Navigate to "Main menu/Assessing performance/Consultant history"
produce the design.
But why is the decision so important ?
The choice of consultant can have a significant impact on the build costs. Consultants with
appropriate expertise and BIM experience produce designs that reduce the expected build cost
when a job is progressed, which improves the profit margin on the job.
Luna Consulting Ltd have been chosen to produce the design.
If
job
77
is
secured,
and
then
progressed,
we can
use the
Consultant
history
determineofif design
There are a number of consultants available, and
there
is no
restriction
onoption
the to
number
our choice of consultant
Luna Consultants
was
justified.
Their
indicates
thatfinding
they have
vastmost
experience
in the
& build jobs a particular
canLtdwork
oncompany
at any profile
one time,
but
the
suitable
Building
and
Commercial
sector,
and
significant
BIM
experience,
in
consultant is not always easy.
Clearly we made the right choice as Luna
Consultants
Ltd
expertise
in
the
Building
&
Commercial
the following
example.
lineConsider
with the clients
wishes,
and they appear to be an ideal choice.
sector, and BIM experience, has helped to reduce build costs by 2.36%, a significant saving.
The company is submitting a bid for job 77, a large design & build
---------------------------------------------------------------------------------------------------------------------------------------Building & Commercial contract in India.
Key Point(s)
Unlike project managers, for design consultant
based in one
countrybydoes
not inhibit
their
One ofbeing
the restrictions
imposed
the client,
Kumal
Developments,
performance on jobs in other countries. is that because the job is using BIM (Building Information Modelling),
the consultant designer chosen must have some BIM experience.

Keep clicking anywhere on the screen to advance

Quit

Cost of Bidding

Glossary

Each job that the company bids for incurs a

bidding cost, depending upon the
approximate value of the job, defined in the
Industry information.

Navigate to "Main menu/Assessing performance/Financial analysis/Operating performance"

The bidding cost incurred each

period across all jobs is recorded
as a non-departmental overhead.

Job Risk
Navigate
toInvestments
"Main
menu/Assessing
performance/Job
analysis/Risk
analysis
for all
won"
Navigate
to
"Main
menu/Making
decisions/Procurement
decisions/Display
jobjobs
details
Target
Navigate
to "Main
decisions/Procurement
decisions/Set
the
bid
Likelihood
and menu/Making
Impact
cost

Target investments
Financial
Decisions
into riska
For each on
riskthe
in the
risk register
the bidScreen
itself contains
management
consultants
to
the
Construction
Industry
can
reduce
any risk
contingency for the likelihood of the risk occurring,
and the
If the decision is made to bid for the job, what mitigating actions
costs incurred.
potential impact cost.
can
taken to deal
with each
risk
? and when a job
Nobe
construction
project
is risk
free,
is identified
the estimators
make an
Likelihood
of occurring
Mitigating actions to reduce risk costs
assessment of the potential risks that could arise on The
a job,
which
are
stored
in
a
risk
register.
profile
Phoenix
Horizons
shows
appear
to register
be
The
of the
risk
occurring,
or level
of
risk,
is an ideal
The
company
are
for athat
job they
that
has
a risk
As we
have
seen,
settingupon
sensible
levels
of risk contingency
inofalikelihood
bid
can keep
abidding
bid
The
action
taken
depends
each risk
element.
BIM
model
affects
company
invest as
in of
for
reducing
risk
Transport contracts,
Scenario
3:
either
Sensible
High,
Medium
risk
oronLow.
consisting
potential
risks.
competitive in relation to rival bids, and cover the company
for classified
ato
proportion
of2the
risk cost
ifcosts
acontingency
We will take a closer
the features
of eachInformation
risk.providing
If the look
job isatusing
BIM (Building
Modelling),
there
may
be
an
opportunity
thewill
impact
cost
that
we
are
undertaking
jobs
in
the
Transport
sector.
If
a
sensible
level
of
contingency
is
added
the
bid
still be
Scenario1:2: No
Full
risk
contingency to reduce
Scenario
risk
contingency
risk occurs.
if the risk occurs.
The
%of
chance
and
ofofeach
therisks
company
level
have
partly
isthere
defined
in the
themselves
Ifno
the
full
cost
the
risk
isishappening
added
then
less
chance
One
the
identified
Equipment/plant
failures,
whichofofisthe
Ifcompetitive,
risk
contingency
is
added
then
there
iscovered
a is
good
chance
Although
there
are
awinning
number
ofa job
risk
management
many
Industry
in
the
risk
occurs.
thecase
company
winning
thesince
job
since
bid would
probably
classified
as
having
High
likelihood
of companies,
occurring,
this be
company
the
their their
bid
could
be farand
more
Job
delay
In addition, if a job is secured and being progressed, the
impact
costs
ofinformation.
any
risks
incurred
can
For
example,
if
there
is
the
threat
of
structural
failures,
these
may
be
identified
in
the
BIM
model,
and
the
management
consultants
do
not
specialise
in
this
area,
and
would
less
competitive
than
their
rivals
who
may
have
included
some,
implies
a
70-80%
chance
the
risk
will
occur
at
some
point
during
competitive
than
their
rivals
who
would
probably
have
included
If the risk occurs there may be a delay to the job, classifiednot
as
be reduced by taking a number of mitigating actions.
threat mitigated.
reduce risk
costs
on
job
undertaken.
clues
always
lie in
thebased
IfMajor,
the
Since
risks
there
occur
issathey
only
occur
once
of theduring
risk occurring,
the
planned
but
not
the
full
risk
contingency.
the
progressing
of70-80%
the
jobchance
(ref:
Industry
information).
some
risk
contingency.
Reasonable,
Slight
orThe
None.
investment
profile.
duration
upon
probability
of
the
contract.
it
is
reasonable
to
cover
75%
of
the
risk cost, or
Job delays
We will examine possible mitigating
actions further.
-------------------------------------------------------------------------------------------------------------------------------------------------HANDLING
JOB
DELAYS
120,000.
However,
the
contract
issecured,
secured
and
theof
risk
occurs
If
the
risk
strikes
there
will is
be
an
impact
cost
160,000.
However,
ifif
contract
and
the
risk
The
delay
is
athe
% reduction
in
the
effectiveness
of
theoccurs,
labour the
The possibility of job delays are dealt
with
once
the
job
Key Point(s)
CAUSED
BY
RISKS
OCCURRING
The
Industry
information
shows
the
reductions
possible.
-------------------------------------------------------------------------------additional
cost
will
have
covered,
not affect
additional
could
seriously
affect theand
job will
profits,
and
on
site
in thecost
period
when
thebeen
risk strikes.
is in progress by adjusting the labour
allocated
to site.
The cost reductions are graded depending
upon
particular
risk,
and
theflow
reductions
tofind
date
across
all25%
jobs in
The nature
ofthe
the
potential
risks
may
be
one
of
the
deciding
factors
Key
If
the
Point(s)
risk
occurs,
the
company
has
to
the
other
of
the
job
margin.
If
the
risk
does
not
occur
the
margin
would
There
are
3
possible
scenarios
for
determining
the
risk
adversely
affect
the
cash
of
the
company.
Impact
cost
As well as targeted
there
are other
actions that can
reduce risk
costsanalysis/Risk
incurred :- analysis for all jobs won.
caninvestments
be found
in
the
Main
menu/Assessing
performance/Job
determining
whether
or not
company
bids
for
ainto
along
with
--------------------------------------------------------------------------------------------------IfThe
athe
job
risk
is completed
cost,
or
40,000,
early
there
which
is cost
aeats
possibility
the
of
avoiding
If
be
significantly
improved.
contingency,
and
we
will
investigate
each
one
in
turn.
%
reduction
inthe
labour
for
level
ofjob,
delay
severity
is the
This is discussed in a separate
topic
(please
click
on
the
The
impact
cost
is each
the
incurred
ifmargin.
the
riskfactors
occurs.
BIM
reduction
in
impact
cost
such
as
the
job
sector,
location,
size,
client
etc.
Key
Point(s)
risks
risk
that
does
may
not
occur
occur
towards
then
the
the
120,000
end
of
the
is
job.
additional
margin.
defined
the Industry
information.
button
for more
Employing a good project
manager,
whodetails).
will be able to identify
andinaddress
the potential
effects of the risk.
No action needs
be takenare
asalready
the costinvesting
reductions
areappropriate
made
If the to
company
in an
risk consultant e.g.,
automatically
if the
risk the
occurs,
and
beingbid
used
thethe
job.risk contingency may
that
serves
sector
ofBIM
a jobisbeing
for,on
then
Having a well-staffed QHSE Department.
be reduced below the sensible level. This would make the chances of
securing the job even better, in the knowledge that should any of the
Conversely, risk costs may be increased if the project manager is inadequate, and QHSE Department is understaffed.
job risks strike, they will be reduced by the investment made.
In addition, where BIM (Building Information Modelling) has been used on a job, some risk costs may be reducing by
using the BIM model, but this will not apply to all risks.
The Risk Analysis for all jobs won and progressed displays a detailed risk analysis for all jobs progressed, covering both
costs incurred and delays to jobs.

Keep clicking anywhere on the screen to advance

Project Manager Decisions

Glossary

Project
At
the
managers
period
are
8concerned
thethat
company
with
employs
the
overall
the
planning
following
project
co-ordination
managers
of
:aZhou
project
from
Since
Project
neither
manager
Alastair
Alastair
Yi
Harris
resignations
Zhous
Harriss
profile
The
Yiand
profile
Zhou
key
and
is
toand
suitable
finding
past
history
the
for
history
right
job
with
131,
person
with
the
we
the
company
could
is131,
company
to
is:to
indicate
review
Since
neither
idle
manager
was
suitable
for
job
we
can
use
But
how start
do
we of
know
the
affects
different
levels
of
bonus
have
on
performance
?past
If possible
The
performance
the
idle
project
level
managers,
oforproject
project
managers
Alastair
Harris
can
be
and
improved
Yi
by
should
paying
be
them
a
Project
managers
indicate
expertise
can
aand
resign
high
in
the
level
the
from
profile
Water
of
the
expertise
(or
&
company
curriculum
Sewage
infind
the
for
sector.
Building
asuitable
number
which
&one
of
Commercial
covers
reasons
both
:-on
the
Recruit
from
the
agency
option
to
avitae),
from the
inception
to
completion
aimed
at
meeting
the
clients
requirements
and
ensuring
completion
bonus.
This
is
a
%
of
their
salary
for
the
period
(quarterly
salary).
placed
on
a
suitable
job,
there
is
one
job
at
the
beginning
of
this
period
that

Appropriate
project
now
been allocated to all the companys jobs in progress,
Alastair Harris
andmanagers
Yi Zhou inhave
the
idlethem
pool
1.does
Pay
off
from
the
company
(Payoff
the pool
option).
project
manager
recruitment
work
and
agency.
personal
details,
both
of
which may
The
clues
lie
in
the
Project
Manager
History,
which
shows
the
level
ofmanager,
bonus
paid
for
each
period
a contract.
project
manager
hasbe
time,
within
cost
and
to
the
required
quality
standards.
not
have
asector.
project
job
131,
afrom
Transport

and
next period
theKevin
Project
manager
history
can
be
used
to
review
the
performance
of
project
managers
whose
average
bonus
over
the
time
they
are
Dimitrios
Vrikos,
Stanley
andIfGood
Lee
Plucket
on
jobs
in
progress
an
insufficient
benefits
package
is
offered,
and
the
project
manager
Clearly,
as important.
with expectations
Alastair Harris,can
Yi ischange
not suitable
for
workiseach
in the
worked for the company (on site), and the affects.Be aware that project
manager
as
the
operating
working
on
a
particular
job
is
below
a
certain
level
may
resign
because
they
required
on
a
job,
an
unnamed
agency
project
manager
will
be
allocated
to
project manager.
2.But
Keep
them in
Clearly
the
Transport
idle
Alastair
pool
sector.
ifproject
ischanges,
we
notare
suitable
bidding
for
for
work
jobs
in
inthe
the
Transport
current
period
sector.
that
performance
are
either
of
of
our
the
two
company
idle
managers
and
may
suitable
be
higher
for
or
alower
Transport
than
the
job
?
A project manager with well-matched
experience
for
a
particular
type
of
job
will
handle
do
not
feel
they
are
being
adequately
rewarded,
and
the
average
level
can
the
site
for
the
period.
However,
the
suitability
of
the
agency
project
manager
they
may
be
suitable
for
next
We
period,
are
looking
in
this
for
case
a
project
Building
manager
and
Commercial
with
expertise
or
We will try and boost the performance of Dimitrios
Vrikjos
considerably
by
paying
an
8%
bonus,
double
the
previous
amount
History
This
will
affect
the affect
bonus
levels have onexperience
performance. will
varythe
forlevel.
manager.
for
job
will
only
be
average,
worse.
available
resources
morerecruitment
efficiently,
whilst
aeach
project
manager
with
inappropriate
Water
&
Sewage
contracts.
in using
the or
transport
sector,
and the
Search
Phrase
can
Thethat
Project
agency
isproject
dynamic,
and
project
managers
can come
and
paid
producedmanager
a small improvement
in performance.
We
can
determine
suitability
by
the
Display
details
option.
In such this
a case
the
project
manager
may
bear
a grudge,
and people
may notit be
impair
contract
efficiency.
Although
still
incurs
a
salary
be
used
cost
to
each
narrow
period,
down
for
the
the
list.
right
may
go from the agency. This makes is essential
that
it
is
reviewed
each
period
toIndustry
ensureinformation.
that thebe a
available
again
for
some
time
in
the
future.
The
cost
of
agency
project
managers
is
shown
in
the
worth
paying because
paying thembonuses
off may to
beboost
riskyperformance,
as there is noand
We
will possible
also reviewproject
the performance
of the other
project
managers,
pay
appropriate
best
managers
are price
being
used
by and
the
company.
Project
managers
never
resign
in
their
first
period
on
a
job.
guarantee they will be available
On closer
again examination
in the following
Harrison
period.Jones appears a
keep them happy.
-------------------------------------------------------------------------------------------------------Harrison
Jones
commands
an
annual
salary
of
46,000,
and
has
good
candidate,
having
extensive
project
Project Managers employed by the Each
company
are
either
:
job
now
has
a
project
manager
allocated.
The
top
performing
project
managers
can
be
poached
by
rival
companies
Key
Points(s)
been
offered
an
annual
benefits
package
of
8,188
from
another
3. Check if they are more suitable
management
for the other
experience
jobs ininprogress
the transport
that
already
sector. have
The
-------------------------------------------------------------------------------------------------------------------------------------------------------------------------regardless
of
the
level
of
bonus
they
are
paid,
although
paying
a
good
bonus
Agency
project
managers
are
only
assigned
where
the
benefits
package

company,
or
17.8%
of
the
annual
salary.
In
the
idle
pool
awaiting
a
placement
on
site;
once
a
job
finishes
the
project
manager
on
site
a
project
manager,
and
replace
only
the
downside
one
on
is
site.
that
Harrison
has
only
ever
worked
Key Point(s)
In the
the
project
managers
allocated
fromand
the
agency,
indicated
byon
the
willcase
helpisof
tonot
lesson
the chance
of
this
Once
poached,
acostproject
offered
sufficient
forinthe
allocated
project
the
United
States,
jobmore
we
need
him
in the
idleit, pool.
Idle
project
still
have
to
bea happening.
paid,
somanager.
itsthe
far
Ifis
tooplaced
much bonus
is paid
it may be
money
down managers
the drain, because
there
comes
point
when
the
performance
does
not is in
new
status,
allocating
in
itself
will
not
be
enough
to
secure
their
services,
manager
will
not
be
available
again.
To be able
to
services
of
the
17.8%
be
this
case
on
our
bidding
India.
strategy
However,
we will
there
keep
arethem
no suitable
in the idle
project
pool in the
improve
no matter
how the
much
bonus
is Harrison
paid;In
the
trick
isbased
tomust
find
the
level.
effective
tosecure
have
them
working
on
site
than
doing
nothing.
since
as
well
as
their
salary
all
project
managers
expect
a
benefits
package
If
no
attempt
has
been
made
to
allocate
a
project
manager,
NONE
will be
at affects
least matched
from
the list ofare
available
benefits.
current
period.
The
of bonus
payments
the same
for all
project managers. managers based in India.
commensurate
with
their
status
in
the
industry.
Project
managers
resign
from
a
job
at
the
end
of
the
period,
providing
that
allocated to site, not even an agency project manager. This could have
a the
Status column
to a
specific
job in progress.
TheAllocated
shows
the availability
of project
managers
in
the
agency.
job
is still
in progress.
serious
adverse
effect on As
thewell
progress
of the job.
The benefits to be offered are chosen using the
Yes
option.
as relevant
experience, job and project
We can offer appropriate benefits
packages
using
Package
option.
manager location is the
oneBenefits
of the other
factors
that
Project managers may be unavailable for a number of reasons :A benefits package worth 18% has been offered to Harrison,
affects
project
manager
performance.
There
is an
need
to
be
made
about
:Decisions
They
may
be
off
work
for
personal
reasons,
such
as
illness.
which should be sufficient.
adverse impact on performance if the project
If they have previously resigned from the company, or have been paid off, they
manager is not based where the job is, although
As well
asarecruiting
project
managers
from for
agency,
thereagain
are afor a while.

may
bear
grudge
and
be managers
unwilling
to work
the
company
Which
idle
project
to the
payoff.
-------------------------------------------------------------------------------------number of options available for moving project managers between the this is only a minor consideration in relation to
Allocating
Key Point(s) suitable project managers to jobs in progress,
thatmanager.
dont currently
theespecially
expertise of those
the project
idle pool and jobs
in progress.
The choice
related
to the profileone.
of theThe project manager can come from the idle pool,
have
one, of
orbenefits
have is
a not
poorly
performing
project manager,
their
personal
circumstances
Select
option
is used to choose
Harrison.
job are
or and
from
the
(a list for
oforavailable
onesThe
who
have
registered
with the
Inanother
addition, there
a
number
of market
charges incurred
:preferences; all that is required is to match the benefits
---------------------------------------------------------------------recruitment
agency).
available
elsewhere.
Key Point(s)
Recruiting a project manager from the agency
The benefits package is paid each period on a pro rata basis
The list of project managers signed up to the Project
Paying off a project manager from either the idle pool or a job in
for the duration of the time the project manager is allocated to
Manager Agency is dynamic, and can change from
progress
a
job.
period to period.
Relocating a project manager from one job to another

Keep clicking anywhere on the screen to advance

The costs are shown in the Industry information.

Quit

Project Manager Information

Benefits package
Paid each period, and based upon the
package offered when the project manager
was recruited as a % of the annual salary.

Glossary

Recruitment,
staff payoff and relocation charges
Bonus
ResignationAgency
Project
managers
can
be :-company
Agency
Acan
bonus
staff
may
mayfrom
be
beused
paid
to
if the
theservices
project
of
a particular
onreasons
a job, :Project managers
resign
the
for amanager
number
of
project
expressed
manageras
cannot
a % ofbethe
secured
salary e.g.,
paid in
if the
thebenefits
period. This is a
Recruited into the company
Good project
package
offered
is not
sufficient.
one-off
payment
that
does
not over
change
salary
level.
managers
whose
average
bonus
thethe
timecurrent
they are
working
Paid off from the company
on a job is below a certain level may resign because they do not feel they are
Moved from job to job within the company
Agency
The
project
payment
managers
of such
a bonus
incur
will
a they
improve
cost above
normal
salary
in the
being adequately
rewarded.
In
a case
mayperformance
bear
a grudge,
and
period
andagain
their
in which
performance
the bonus
paid.
or Project
worse. managers
may not be levels,
available
for
some
time isinisaverage,
the
future.
Each action attracts a cost expressed as a % of annual
never resign in their first period on a job.
salary; details are given in the Industry information.
Project manager expectations can change as the operating
The top performing
performance
of the company
changes, by
and
may
be higher or
project managers
can be poached
rival
companies
the History
level.
will affect
the aaffect
regardless of thelower
level than
of bonus
they are
paid,This
although
paying
goodbonus
bonus
levels
have onofperformance.
will help to lesson
the chance
this happening. Once poached, a project
manager will not be available again.

Weighting (never seen)

The project managers performance on site each period is
weighted between 1 and 10, and this depends upon a
number of factors.
The main
factor affecting the weighting is the project
Salary
managers
expertise
the job
sector,
and
the period.
clues lie in
A quarter
of the in
annual
salary
paid
each
their profile. This is adjusted further by a number of other
factors :

Time with the company (improves)

Bonus payments (improves)
Taking over a job from another project manager (impair)
Job location (impair)

Keep clicking anywhere on the screen to advance

The project manager weighting has a key bearing on

how well the labour allocated to site performs. This is
reflected in how effective the labour is.

Quit

Project Manager Performance

Glossary

Bonus
We
Project
To
summarise,
will
managers
take
a look
the
are
at
main
the
factor
factors
that
with
that
affects
the
have
overall
contributed
a project
planning
managers
to Bruces
and co-ordination
performance
overall performance
of
is athe
project
past
level.
from
Profile
Other
reasons
for
paying
a concerned
bonus
The Project
Manager
History provides a detailed analysis of the performance of all project managers, and highlights :experience
The
performance
of thejob
project
manager
can
be
improved
for
the are
current
period
byBuilding
paying
a&
is alevel
% ofmay
the
Good
Bruces
project
basic
performance
whose
is
very
average
good
bonus
because
over
ofthe
anthe
time
outstanding
they
track
working
record
on only
ainparticular
the
isbonus,
Commercial
below awhich
certain
inception
tomanagers
in
completion
the
sector.
aimed
at
meeting
clients
requirements
andjobensuring
completion
on
the
The
basicdoperformance;
based
on the
project managers
profile
salary
for
period.
sector.
resign
because
they
not
feel
they
are
being
adequately
rewarded.
In
such
a
case
the
project
manager
may
bear
a
grudge,
time, within
cost and to the required quality standards.
overall performance,
taking
into
a number
of performance
and may notThe
be available
again for some
time
in account
the future.
Project managers
neverfactors
resign in their first period on a job.
There
are
additional
factors
that
can
improve
performance
:- company
Project
manager
expectations
can
change
as
the
operating
performance
of
the
changes,
andalso
may
be higher
or
But
how
do
we
know
the
affect
a
project
manager
has
had
on
the
performance
of
the
companys
The profile
also
includes
some
personal
details. Although they can affect basic performance,
they are
pointers
Taking
over
from
another
project
manager

lower
than
the History
level.
This
will affect
the
affect
bonus
levels
have depression
onregardless
performance.
spent
with
the
Company
Job
location
Taking
jobs
?the
The
asTime
totop
performing
future
outlook
project
for
managers
the
project
can
manager
be
poached
e.g., performance.
tendency
by rival
companies
towards
could
of the
indicate
level of
that
bonus
the project
they
are differently,
paid,
over
from
another
project
manager
can
impair
The
previous
project
manager
will
have
worked
Time
with
the
Company

If
the
project
managers
home
base
is
not
in
the
same
country
as
the
job
location
it
can
have
Bonus
payments
manager
may
beabeen
off
ill paid
in
the
and
available.
although
paying
good
bonus
will help
tonot
lesson
the
chance
of this
happening.by
Once
poached, aamount
projectduring
manager
will 5.
not be
A
4% bonus
has
tofuture,
Bruce
each
period.
This
improved
performance
a reasonable
period
andathere
will be
a period
ofThe
adjustment.
Better
project
managers
are
not
affected
so better
much.
longer a project
manager
works
the
company,
the
the performance,
as they gain
negative
impact
on their
performance,
which
increases
asfor
the
project
manager
suitability
for
available
However,again.
from period 6 onwards
project
manager
expectations
rose
as
the
companys
operating performance improved, and
experience
and
knowledge
and
how
the
company
operates.
the job
declines.
Aand
good
project
manager,
one
with
the he
relevant
experience
for
aperformance.
particular
job, will
output from
others
that
can
deteriorate
:the
4%
bonus
only
resulted
a small
improvement
Bruces
Since
Bruce
has
managed
allin
the
jobs
hasperformance
been
oninsince
they
began, there
hasproduce
been nomore
deterioration
in the
performance
resources
available,
while
a
poor
project
manager
will
impair
contract
efficiency.
dueBruce
to taking
over from
manager.
Weand
can
has
worked
theUK,
company
for 6 periods, and during that
is based
in theanother
UK,
allsee
thethat
jobsBruce
he has
worked
oncontinuously
have been inforthe
and there
Bruce
Simpson
managed
jobs
62,
102
and
166
from
period
5
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------Job
location
time
there
has been an noticeable improvement in performance due to experience gained.
has
been
no problem with
the
location.
Key
Point(s)
onwards,
all
Building
&
Commercial
contracts,
and has had a very
If project
Taking
over from another
project
manager
remains
constant,
paying
the same
level of bonus will not necessarily result in the same
good manager
basic, andexpectation
excellent overall
performance
level each
period.
improvement in performance level each time as there is a human element built into the calculations which can marginally
distort the results.
Although
these can be graded from None to Dramatic for affect, none of them has

anything like the impact as the past experience.

Navigate to "Main menu/Assessing performance/Project manager history"

The experience/performance of the project manager can be gauged from : Their profile
Their career history with the company

Keep clicking anywhere on the screen to advance

Quit

Labour Decisions

Glossary

Using
the
option
Navigate
"Main
menu/Making
decisions/Job
progression
decisions/Display
details
The
Construction
looks
to to
theset
requirements
the labour
levels
of each
fortojob,
the
itother
is
likely
jobs
that
by :one
two situations
have
toGeneral
be joblabour
The Construction
Manager
must
first of
ensure
that eachmay
job
has
sufficient
Labour
shortageManager nowDue
resolved
:- the jobs
to enable
them
to progress
in lineschedule.
with company strategy.
As
Setting
labour levels
that
aimdeciding
to complete
either
on
time,
orcompleting
ahead
the
company
grows
a problem
the Construction
Manager
could
face
is
one ofofan
overall
labour
shortage.
When
upon
the
strategy
to
be
used
for
jobs
there
are
a
number
ofset
sensible
Key
Point(s)
Job
Like
Having
112
job 112,
has
set the
aJob
planned
labour
122 has
levels
duration
a planned
for
of
each
3
periods,
duration
job,
the
and
of
Construction
3
period
periods,
8
is
and
Manager
the
period
second
needs
8
is
period
the
to
second
be
of
sure
the
that
period
job. made
the
of
labour
the
job.
levels
for each
jobin

The
labour
allocations
have
now
been
for
all
the
companys
jobs
An
overall
labour
shortfall
options
:A
Consider
the
following
situation.
Job
131
has
been
allocated
82
new
recruits,
but
the
Trying
to
use
the
companys
own
labour,
which
the
Construction
Manager
feels
is
more
cost
effective
in
number
choices
are available
to make-up
theThere
shortfall
:-two types
are
withinofthe
permitted
overmanning
limit. This
can
beare
checked
using
the
Effective
labour
limits
jobs incan
progress
of labour
that
can
be used
:progress.
Itown
will
not
be until
period
that
amay
fullfor
analysis
be undertaken
new recruits
into the
companys
workforce
ornext
subcontractors
have to be
taken
on.
Manager
has
a
problem.
On
leaving
the
Job
the
long
than
using
subcontractors.
Construction
Under
labour
on
some
This
may
put
the
jobs
behind
schedule,
but
attempt
can
be
made
to
bring
them
back
on
There
are
strict
sector-based
over
The
22ahead
men
are
taken
from
the
idle
labour
pool,
which
The
option.
job allocate
isrun
currently
also
currently
ahead
of
schedule,
ofjobs.
schedule,
and
we
and
will
we
see
will
if
see
it
is
if
possible
it
is
possible
to
complete
to
complete
it
in
period
it
in
period
8.
If
we
8
and
can,
earn
the
a
job
bonus
will
complete
from
the
It
is
the
start
of
period
8,
and
the
company
has
4
jobs
in
progress
.
of just
how
well
the jobs
were progressed
this period.

Try
and
complete
all
jobs
earlier
than
the
planned
duration
(e.g.,
complete
a
3-period
job
in
2
periods)

Progression
screen
there
is
a
warning
message
indicating
An
overall
labour
schedule
in later
periods.
Thisitscan
adversely
affect
relationships.
manning
limits
above
the
planned
labour
contains
the
companys
own
operatives
currently
notthe
early,
client
for
before
completing
its
planned
a before
duration,
planned
and
thisduration.
will
earn
aclient
bonus
from
client
defined
in the defined
theidle
Industry
surplus
The
companys
own
labour;
available
either ininthe
labour information.
pool or on site
Try
and
complete
all
jobs
on
time
there
is aeffective
limit
on labour
the
of is
new
that
jobs
could
berecruits
overmanned
towho
aim
at early
completion,
labour
may
have
to be
released.
that
Take
on the
New
recruits
into
the
companys
own
each
incur
a used
training
cost
in their
first
period
with
the company.
assigned
to
anumber
job.
defined
in the
Industry
information.
Clearly
on
site
within
the
effective
limits.
workforce,
Subcontract
labour
being
onor
site
Any
profits
(or
losses)
generated
from
the
jobs
will
be
added
to the
We
can
use
the
Display
job
details
option
to
investigate
further.

A
mixture
of
the
above
taken on in a period,
as defined
in the Industry
can
Usebe
subcontractors,
who incur
an additional
premium each period they are with the company. Subcontractor premiums vary
companys
We can use the
Display
job
details
option
to investigate
further.cash account at the end of period. Hopefully, overall there will
information.
The
can
vary
each
period.
between
countries,
which
where
they
arefor
used.
There
are
stillcan
85 influence
idle
labourers
available
use,
andthe
Unfortunately,
thelimit
Construction
Manager
has
not
finishing
setting
required
labour levels
as there isvalue.
one more very
be
a
profit
that
will
help to increase
therequirements
companys
Of
the
4
risks
identified,
3
have
so
far
struck,
but
there
is
still
the
The
idle labour
pool
cost
one
person
per
annum
isManager
Infor
all
cases
the
Construction
needs
to assess
the labour
each period for each
Using
Using
the
the
General
General
option
option
they
should
be
redeployed
to
site
if
possible
as
the
important
factor
to
consider,
job
delays.
The
choice
between
new
recruits
and
subcontractors
is
discussed
in
the
Key
points
section.
threat
of
unsuitable
materials.
shown
in the Industry
information.
job
based
upon
the strategy
being
The Construction
Manager
makes
the
necessary
Industry
information
shows
that each
idle used.
labourer
adjustments
to
the
labour
allocation
for
job
131,
and
uses
costs
an additional
1,500
eachcaused
period (6,00
per annum).
If risksthan
in the
riskrisk
register
strike,
thesame
delays
will reduce
the effective labour on site, and this possibility needs to be
If
more
one
strikes
the
ONLY
the
Insubcontract
the example
shown
cost
per
period
ofperiod,
keeping
Planned
labour
levels
each
period
were
determined
by the estimators in order for the job to complete
labour
to the
make
upin
the
shortfall.
factored
into
the
labour
calculations,
otherwise
jobs
may
not
complete
as planned.
worst
case
delay
occurs,
as
the
other
delays
are
assumed
to
one person in the idle pool
is 1,500
/ 4).be used as guidelines in setting the labour levels for whichever strategy is adopted.
on time,
and(6,000
they can
occur within the worst case.
We will take a look at how the Construction Manager may adjust the final labour levels to compensate for any potential delays.
To complete
a job early
it is possible
to overmanjob
above
the planned
levels. Overmanning
limits
shown
Navigate to "Main menu/Making
decisions/Job
progression
decisions/Assessing
progression
performance/Effective
labour limit for
jobsare
in progress
The risk unsuitable materials
would
cause
a
slight
delay,
which
in the Industry information, and are sector-based.
according
to the Industry
information
could
labour
on
The
Performance
(by period)
tab shows
the reduce
job wasthe
53.8%
complete
at the end of the last period, with 46.2% left to complete.
site 131
by between
2 and
3%. & Sewage
Job
isJob
a 3-period
contract
in its
first
period.
The
Construction
Manager
to over
man
thelevel.
job
to try
and
Although
122
is98aTransport
effective
Water
men
on site
contract,
will
complete
for
whichjob
the
112
effective
in the period,
labour
limit
we cannot
isdecides
25%allocate
above
the
thisplanned
number
of
men
due
to
The
General
option
shows
that
the
total
labour
required
to
complete
the
job
is
166
man
periods.
Since
there
is
46.2%
of
the
There
The
Surplus
Job
is
no
labour
details
hard
shows
and
fast
:rule
for
deciding
upon
the
order
for
determining
the
labour
requirements,
and
the
Construction
eventually
complete
it
a
period
early,
and
ahead
of
schedule.
This
would
ensure
a
bonus
from
the
client,
as
defined
in
the
strict
overmanning
limits,
dependent
upon
the job on
sector,
which
are shownit in
Industry
We
have
already
determined
that
only
77be
men
are
needed
job
101
to
complete
asthe
efficiently
asinformation.
possible in period 8.
The
status
of
the
jobs
in
progress
can
used
to
determine
the
current
status
of
each
job.
At
the
end
of
the
last
period,
and
available
at
the
beginning
of
period
8,
there
are
:Construction
Manager
may
decide
to
adjust
the
labour
level

job
left
to
complete,
in
manpower
terms
this
is
46.2%
of
the
total
labour
of
166,
or
76.7
men.
This
is
rounded
up
to
77
men
to
Manager
After
The
making
planned
decides
the
%
labour
complete
to
concentrate
allocation
after
each
first
decisions
on
period
job
101,
for
(General
each
as
this
job,
tab)
must
there
be
may
completed
be
a
surplus
in
the
of
current
labour
period,
left
in
and
the
is
idle
a
priority.
pool.
If
this
is
the
Industry information.
Since
theallocated
plannedto
labour
is 88
in theit jobs
second
the effective
labour
(1.25
x 88).period.
77
men
were
job 101
to men
complete
inreduction
period
8.inItperiod,
is essential
it completes
as itlimit
is inisits110
final
planned
77
to
80
in
case
the
risk
strikes,
based
on
a
3%
Job
allow
for
productivity
variations.
case,
The
actual
there
are
%
of
a
number
work
completed
of
options
to
:date
(Performance
(by
period)
tab)
from
101
is the
in112
its
2nd
and
planned
period,
be completed
this
period.
It the
is 96
ahead
of schedule.
is an
Energy
contract,
for
which
themust
effective
labour
is 18%
above
planned
level.
At
moment
there
are
96final
men
site,
ofand
which
:Period
8 Job
is
second
period
ofonthe
job,
itsand
final
planned
period.limit
There
are
currently
operatives
on site (45 of the
the
107
men
in its
the
idle
labour
pool
labour
effectiveness.
the
As
we
have
seen,
there
are
strict
overmanning
limits,
dependent
upon
the
job
sector,
which
are
also
shown
in the Industry
Job
112
is
in
2nd
period,
and
has
a
planned
duration
of
3
periods.
It
is
ahead
of
schedule.
Hence,
the
110
men
needed
is
just
within
the
permitted
overmanning
limits.
companys
The
job
is
currently
own
operatives,
36%
37.7%
complete,
complete,
and
51
and
subcontractors),
and
well
well
ahead
ahead
of
but
of
the
the
the
30%
30%
planned
planned
planned
requirement
completion
completion
is
after
slightly
after
the
the
higher
first
first
period.
at
period.
100.
Using
theallocation
Assessing
job
progression
performance/Risk
analysis
for jobs
won
and
progressed
option,
it is
to
Leave
216
men
on
jobs;
99
are
the
companys
own
operatives,
117
are
subcontractors
The
planned
was
100
men,
which
although
guaranteeing
to
complete
the
job,
would
have
completed
jobpossible
far
them
in
the
pool
for
use
next
period,
if
they
are
likely
to
be
required.
45
information.
For
Transport
contracts
the
effective
labour
can
be
45%
above
the
planned
level.
Since
the
planned
istoo
57
Jobare
122
is companys
in its
period,
and has
a planned
duration
of 3 periods.
It the
is ahead
of schedule.
Since
the2nd
planned
labour
is 76
men
in
the
jobs second
period,
effective
labour
limit
is 89.7 (1.18the
x labour
76),
which
the
ownfor
operatives
review
the
risk
register
job
101,
to
see
the
impact
any
risks
may
have
on
the
labour
for
the
job.
Normally,
There
is Currently
64%
62.3%
allocating
of
the
the
the
job
job
planned
left
tolabour
to
complete,
level
complete,
each
or
period
or
64%
62.3%
is
of
sufficient
the
of
total
the
total
labour
tocompany
complete
labour
required
required
a completion
job
for
on
the
fortime,
job
the
(152
job
providing
(176
man
a
periods),
good
periods),
project
equating
equating
manager
97.3
to has
analysis
would
be
carried
out
for
the
other
jobs
in
progress
early
in131
the
period,
which
would
have
the
following
detrimental
affects
:the
No
to
layoff
to
layoff
asishad
much
of
the
surplus
as
possible
prior
to
any
labour
allocations.
The
bonus
for
early
job
is
defined
in
the
Industry
information,
Similar
men
in
jobs
first
period,
the
effective
labour
limit
islabour,
82.65
(57
x1.45),
which
is
rounded
down
to man
82
since
fractions
oftopeople
IfUse
we
take
theof
combined
idle
and
site-based
the
has
a
current
Job
was
won
last
period,
and
in
its
first
period.
is
rounded
there
down
are
toleft
66
89,
subcontractors
since
fractions
on
are
site.
not
To
permitted.
source
the
110
men
needed
we
will
:51
are
subcontractors
Sector-based
overmanning
been
men
allocated
men
xrisk
152).
(.623
toRounding
xoversee
176).
Rounding
the
uptojob,
gives
up
a gives
labour
all
thearequirement
labour
is
requirement
fully
98
effective
of
effective
men
needed
men
needed
to
onthe
complete
site
to complete
the
athe
period
job a
to109.6
see
how
may
affectmen
them.
workforce
Instead
of
transferring
theand
idle
labour
pool from
site,
pay
them
straight
off value.
from on
sitesite
using
Paid
offjob
column
and
isofaeffective.
%
of
the110
tender
(bid)
are
not(.64
permitted.
of
323.
limits
are
shown
in
the
early.
period
early.
-----------------------------------------------------------------------------------------Labour
isofTransfer
still
retained
until
end
of
the
period,
incurring
additional
labour
costs
(ineffective
instead
transferring
tothe
the
idle
labour
pool.
---------------------------------------------------------------------------------------------------------------85
men
from
the
idle
labour
pool
tothe
site,
using
the From
column
98
is
9the
too
many.
since
this
is
the
final
planned
period
of
job
weoperatives
should
take
a closer
lookperformance/The
atlabour)
how the
Navigate
tomen
"Main
menu/Making
decisions/Job
progression
decisions/Assessing
job
progression
status
ofprogressed
jobs in progress
ItHowever,
is
more Hence,
cost
effective
tothem
keep
companys
own
fully
trained
on ILP
site,
as
subcontractors
incurjob
anhas
additional
Industry
information.
As
Key
Point(s)
Labour
could
be
utilised
other
jobs,
where
it
may
be
more
productively
used
--------------------------------------------------------------------------------------------------the
job
is
in
its
first
period,
there
is
no
labour
on
site,
and
it
is
decided
that
the
82
operatives
required
should
be
new
Key
Point(s)

Lay
off
41
subcontractors
from
site
using
the
Lay
off
column
to
date,
since
other
factors
may
have
contributed
to
the
job
being
behind
or
ahead
of
schedule,
and
we
need
torecruits
premium each period (variable by country), as shown in the Industry information.
------------------------------------------------------------------------------------------------------------------------------------------------------------------------If----------------------------------------------------------------------------------------------------------------------------------------------------------------------the
risk
does
not
hit,
and
additional
labour
has
been
allocated
just
Key
Point(s)
into
the
companys
workforce
in
order
to
build
up
the
workforce
for
the
future,
rather
than
subcontractors.
This
is
achieved
The default
labour
allocations
for each
jobjob
in progress
are recruits
the
levels
from
the the
endin
of
Since
job 112
is already
ahead
of
schedule,
it is decided
just
allocate
planned
level of 76 to keep the job by
allocate
sufficient
labour
to complete
the
as efficiently
asto
possible.
The
new
limit
is shown
Key
Point(s)
in
case
it
does,
then
there
may
be
some
ineffective
labour
on
site.
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------Point
Completing
a job
early
means
completing
before
the planned
entering
intolabour
the
New
column.
the
last82
period.
the
levels
are
unlikely
to
be the
required
ones
for
ahead
ofHowever,
schedule.
Currently
there
are
theIndustry
companys
own
operatives
on column.
site, and
the additional
22 duration
can be e.g.,
To
reduce
the
from 96
todefault
77
we
will
lay
off54
19ofsubcontractors
using
the
Lay
off
the
information.
Itcovered
can
Due
to
a
number
of
factors
the
job
may
be
behind/ahead
of
schedule,
and
require
more/less
labour
than
planned.
Additional
labour
may
be
allocated
in
case
of
job
delays.
Handling
job
delays
is
in
the
Key
points
section.
However,
the
consequences
of
not
allocating
additional
labour
Key
Point(s)
Unnecessary
Idle
labour
costs
money,
as
shown
in
Industry
information,
and
is
an
overhead
that
can
adversely
affect
completing
a
5-period
job
in
4
periods,
or
a
4-period
job
in
3
periods
etc.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------the current
period.
sourced
from the 107 idle labourers still available.
vary each
period depending upon
could
be
severe
if
the
job
then
overruns.
This
is
especially
true
in
The
adopted
above
work
well
unless
other factors
affect the effectiveness of the labour allocated, such as delays
company
operating
profit
forwill
the
period.
Key
Point(s)
Westrategy
can use
the Display
job
details
option
to investigate
further.
economic
conditions.
the
final
planned
period
of
a
job.
caused
by
risks
striking,
or
poor
choice
of
project
manager.
A labour shortage
can
sourced
from are
either
increasing
own workforce
(new recruits), or using subcontractors.
The extra
22be
own
operatives
transferred
to the
sitecompanys
using the From
ILP column.
The
of jobs delays
is covered in the
Keyare
Points
section.
Quit
Eachpossible
one hasaffect
it advantages
and disadvantages,
which
discussed
in the Key points section.

Keep clicking anywhere on the screen to advance

Key Points For Progressing Jobs

Progressing jobs to completion is often a complex task, and the
decisions that have to be made are often the result of the
strategies adopted in other areas.
For example, if the company has an aggressive tendering policy,
and secures a large number of profitable new contracts in a
particular period, this can cause problems when it comes to
adequately resourcing the new and existing jobs.
More work normally means more labour, and the company may
have a significant shortfall of its own fully-trained labour. This
would then require decisions on how to overcome the shortfall, by
taking on new recruits into the companys own direct workforce,
or using subcontractors. An alternative policy may even be to
deliberately delay jobs in the short-term, but this can affect the
relationship with the clients.

Glossary

The labour used to

progress a job
Overmanning to try and
complete jobs early
What happens if a
job over runs
Handling job delays
Using new recruits or
subcontractors
Labour relations

Some of the key issues are dealt with in the demos.

Labour Used To Progress A Job

Glossary

The labour used to progress a job is classified in a number ofThe

ways
:Job details shows the labour breakdown
Planned labour
Effective labour limit
Total labour allocated
Effective labour
Ineffective labour

each period between the different

classifications, and the costs incurred.
Total labour on site
The total labour allocated contributes to the site
costs.
Ineffective labour due
to overmanning

After allowing for delays the labour ABOVE the effective labour limit is
Planned Labour
Effective
labour
classed as ineffective
labour due
to overmanning, and does not
The
planned
labour
level
for
each
period
was estimated
during
The following example should demonstrate the
classifications.
Effective
labour
contributes
to the
build costs.
contribute to progressing the job.
the tendering stage in order to complete a contract on time.
Effective Labour Limit
Effective labour
a rough
guide,inif the
the effective
is 30%
The cost of ineffectiveAs
labour
is shown
Industry labour
information,
After allowing for delaysofthe
labour
BELOW
the
effective
labour
the total labour required to complete alimit
job,
is classed as the effective
site,
and
contributes
30%labour
of the on
jobs
total
build
costs willto
be
progressing the job.
incurred.
Planned Labour Level
Only effective labour generates
Ineffectivevalue,
labouror money from the client.
Ineffective labour costs are shown in the
As
a
rough
guide,
if
the
effective labour
oncosts.
site is 30% of the total
labour
Labour allocated to site additional
labour
required Manager
to complete
a job, 30%
the jobs
value
(originaltobid)
The
Construction
determines
theoftotal
labour
to allocate
site
Effective labour
limit
should
be
earned
from
the
client.
in the period depending upon the requirements of the job.
The planned labour can be exceeded each period up to a point known as the
effective labour
limit.there are numerous other factors that can affect the
However,
The
total labour
level is adjusted by affect of any delays to leave the
measured
value
recovered,
potential effective
labour onincluding
site. :The overmanning limits are sector based, and shown in the Industry information.

quality
of the
project
manager
the site
The The
labour
lost by
delays
is classed
ason
ineffective
labour. The cost of
Morale of the companys own labour
---------------------------------------------------------------------------------------------------------------this is assumed to be incorporated into the risk cost.
Key Point(s) Measurement effort across the company
------------------------------------------------------------------------------------------------ It would be necessary to over man a job to complete it early e.g., to complete a 5Key Point(s)
period job in 4 periods, 4-period job in 3 periods etc.
The total labour level allocated may be higher than the effective labour
2-period jobs can never be completed in 1 period.
limit to allow for any delays to the job caused by risks striking.

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Over manning To Complete Jobs Early

Glossary

But
It
Trying
is what
unlikely
to happens
complete
that for
any
ifathe
the
job
job
Construction
early
will
be
has
progressed
a number
Manager
exactly
of
attempts
benefits
in early
line
toincurred
with
complete
the
company,
the
planned
theManager
job
including
progress,
early,
:-refer
even
if
Of
the
2 risks
identified
job,
one has
so
far
struck,
To but
complete
there
a job
the
Construction
to
to the
The
job
additional
costs
ofneeds
153,562
due
to
The
Construction
Manager
needs
to
allocate
less
than
the
planned
level
is
still is
thethe
threat
of
goingbut
bustisoutstanding.
How to
overmanning
limits
in
the the
Industry
information.
ineffective
labour
costs
too early of
in
overmanning
that
intention.
insubcontractors
some periods,
stillsector-based
not able
complete
thegiven
job when
early
? job completed
in period,
the jobsalong
final with
period
to
enable
the
job
to
complete
at
the
would this affect the labour on the job if the risk struck ?labour (35 men)the
unnecessary site costs, and both
The client may pay a bonus for early completion
For
Water
&
job
that hasthe
a planned
duration
(see
below).
endexample,
of its finalconsider
period.
Ifa the
full
35Sewage
men
are
allocated,
job will complete
contributed
to
the
large
loss
in its final period.
This
may
occur
for
a
number
of
reasons
:of
3
periods,
and
that
can
be
overmanned
by
up
to
25%
each
period.
well before
end of the period, and additional labour costs will be If
There
are
numerous
for
including
:- the
The
job delay
is identified
asreasons
being
reasonable,
and
information
The
companys
own
labour
thatthis,
was
being
used
on
the completed
can be guidelines,
used on and
other
the
Construction
Manager
follows thejob
overmanning
the
incurred
until thethe
period
end.

in
Industry
information
reveals that
this
could
affect
the
Delays
to
the
job,
caused
by
risks
striking,
reduce
effectiveness
of
the
labour
on
site.
the
Job
sites,
delays
preventing the need to take on new
recruits,
or
having
to
use
subcontractors.
labour allocated to site is fully effective, the completion schedule should
effectiveness of the labour on site by between 8 and 9%.

An
Changes
overall
in
own
anticipated
labour
shortage,
productivity
and
levels
a
reluctance
to
to
expertise
useofsubcontractors,
project
manager
mean
the
on
job
the is
be
asdue
follows.
Since
there
is the
only
5%
the jobof
leftthe
to
complete,
the
labour
level
required
The companys capital assets (plant, buildings
etc)
being
used
on
the
job may
can
be
diverted
is
not overmanned
enough.
of from
the total labour (176), or 8.8 operative, which is rounded up to 9 men,
Thesite
Construction
Manager decides
to adjust the labour5%
level
elsewhere.
<----------Labour
-------
welland
shortcomplete
of
the planned
level
of making
35. Allocation
job
may
have
been
overmanned
to try
it early,
the
planned
progress
9
toA
10
operatives
in case
the risk
strikes.

A
poor
choice
of
project
manager
reduces
the
productivity
of
the
labour
on
site.
Period Planned Overmanning Actual Cumulative
figures
Cash flows
are
improved.
redundant
53 Manager is25
% determined
66not to be caught
66
The1Construction
also
out by
----------------------------------------------------------------------------------------2
88
25
%
110
176
In
this
scenario,
the
job
would
enter
its
final
planned
period
out
of
step
with
the
completion
potential delays in the job if any further risks strikes, and decides to carry
Key Point(s)
Bearing
this
in mind, by
if athe
jobestimators.
is likely to complete
inrisk
theanalysis
current
period,
care
has
to level.
be
3
35
outall
a detailed
before
deciding
upon the
final
labour
schedule
determined
In
probability
it would
still
begreat
ahead
of
schedule,
If the risk does not hit, and additional labour has been allocated
taken
in setting
thethere
correct
labour
to ensure
that
the job must
finishes
near
to the
end of
--toof
"Main
menu/Industry
information"
just
in case
ititdoes,
may Navigate
belevel
some
ineffective
on
because
has then
been
overmanned,
but
thelabour
Construction
Manager
be as
very
careful
about
176
the
period
as
possible.
site.
However,
consequences
of not allocating
additional
labour
setting
the the
labour
level, since
the planned
level
cannot be relied upon.
could be severe if the job then overruns. This is especially true in
The job should complete a period early, securing a bonus from the client.
the final planned period of a job.
Usingsets
the previous
3-periodlabour
Water &level
Sewage
as an
Wea will
If
job now
finishes
examine
too early
howin
the
the
Construction
period :--------------------------------------------------------------------------------------------------Manager
the correct
tocontract
complete
example, the job was indeed overmanned in its first two
Key
Point(s)
the
job
as efficiently
as possible.
the
planned
of
men
had decisions/Job
been
would
have and
completed
early
the period,
as
in
IfThe
workforce
is35
retained
untilallocated,
the progression
endthe
ofjob
the
period,
incurring
unnecessary
additional
periods,
wellvery
ahead
of in
schedule,
and on
course
to the
Navigatelevel
to "Main
menu/Making
decisions/Assessing
jobwas
progression
performance/Risk
analysis
for shown
jobscosts
in progress
Overmanning
above
the
effective
labour
limits
results
in
ineffective
labour
consultant's
report.
complete
period early.
Management
Excess labour
is being
used on the sitethat
that
could
havea been
elsewhere
does
not contribute
to theutilised
progress of
the job, but incurs labour costs.
Early completion of a job means completing at least one
This would have resulted in :However,
jobthe
delays
the
second
period resulted
in the
period
before
endinof
thejobs
planned
duration
e.g., if and
the
In An
the
anticipated
final
of auntil
job,
can
ignore
the
planned
labour
level,
increase
in costs as
labourperiod
was retained
the you
end of
period,
incurring
additional
labour
and
site
administration
effective
labourisbeing
reduced
frombe
110completed
to 100.8 men,
andcosts
the
planned
duration
4 periods,
it must
in 3 periods
concentrate
oncould
thehave
% of
the
job
left
to
complete.
Inefficient useinstead
of labour that
been
used
elsewhere
job
was
95%
complete
at
the
end
of
the
period,
and
just
failed
or less to obtain the client bonus.
to complete.
The bonus paid by the client varies depending upon the job
-----------------------------------------------------------------------------------size.
Key Point(s)
The Construction Manager should have allocated more labour
during the second period to compensate for an potential delay,
and the job would have completed.

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What Happens If A Job Overruns

Glossary

Ideally all jobs progressed will be completed either early or on time.

However, this is not always the case, and if a job overruns beyond its planned duration there are
a number of affects : A penalty will be incurred
Using the General
from tab
the client for late completion, expressed as a % of the tender
value for each period the job overruns. This can have a severe affect on the companys cash
account, and company value.
Additional resources will be needed to complete the job (labour, project manager), diverting
them from elsewhere.
It reflects badly on the industrys perception of the company, reflected in the contract
completion and client satisfaction key performance indicators used to measure the progress
of the company.
The Job Details shows :-

theimperative
client will be that
affected
by Construction
the late completion
of the job. allocates enough labour to
If aThe
jobrelationship
overruns,with
it is
the
Manager
The planned % complete after each period (General tab)
complete
the job in its first overrunning period.

% ofexample,
work completed
to datedeterioration
(Performancein(by
period) tab)
InThe
this actual
particular
the dramatic
relationship
with the client, Johannesburg Vision ,
as
a
result
of
the
job
completing
late
has
been
the
overriding
factor
in
the
currentfor
poor
client relationship.
Once the period has been completed, the Job Details shows the penalty incurred
late completion.
The job is currently 97.5% complete, and has overrun.
This
may now
affect tryinga to
further
work with
theper
client
in the
The
penalty
for completing
jobprocure
late is aany
% of
the tender
value
period,
asfuture.
defined in the Industry information.
There is the
2.5%
of the job
left to complete, or 2.5% of the total labour required for the job (360 man periods), equating to 9
Consider
following
example.
men (.025 x 360). To ensure that the job completes 9 effective men should be allocated to the job.
Job 2, planned to be a 4-period job, has overrun into its fifth period.
If a job overruns you can allocate as much labour as is required to complete the job, and the normal overmanning
rules are
do currently
not apply,
is no planned
labour
as abut
guide.
There
30since
of thethere
companys
own labour
on site,
with no planned labour
as a guide, what level of labour is required to complete the job this period ?
-----------------------------------------------------------------------------------------------------------------------------------------------------------------Key Point(s)
Delays caused by risks occurring are not an issue when jobs overrun, since risks will only strike during the planned
duration of a job.
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Handling Job Delays

Glossary

Riskseffectiveness
The
only strike during
of labour
a jobs
allocated
planned
to duration,
a job by the
andConstruction
not if it runsManager
late. Hence
can the
be adversely
Construction
affected by
Manager
does
a number
not need
of to
factors,
adjustsuch
labour
as levels
:to compensate for possible job delays if a job
overruns.
The expertise of the project manager on the site

Another
Overmanning
consideration
of the is
site
whether or not to allow for job delays during the early periods of a job.
It may well be that the job is overmanned in the early periods with the intention of completing it
When setting the labour levels during period 8, the Construction Manager
Thereand
late,
is also
hence
another
any delays
key factor
can be
that
compensated
the
Construction
in Manager
future
periods.
needs
account,
and
should
have for
referred
to the Risk
analysistofortake
jobs into
won and
progressed,
that is delays to the job caused by risk available
events from
becoming
a reality.
the Assessing
job progression performance menu.
However, it is essential to consider potential delays in the period in which the job is expected to
What
doesfinish.
this
?
We will look
complete,
in into
order
how
to ensure
the Construction
that the job
Manager
does
canreveal
mitigate
against the consequences of job
delays caused by risk.

The Industry information reveals that a reasonable job delay

could reduce the effective labour on site by between 8 and 9%.
Forthe
jobstart
122 of
theperiod
Construction
Manager
is risks
able to
see
:- register
At
8 neither
Consider
of the two
following
in
example.
the risk
had122,
struck
onmen
the were
job, leaving
2 potential
that
For job
110
originally
allocated risks
to site.
Assuming
could
strikeidentified
during period
8
:the
worst
possible
case,
a
9%
reduction
in
the
effectiveness
of the
The risks
during the procurement stage (risk register)
Job
122
should
have
completed
in
period
8,
when
110
men
were
allocated
to
site.
labour,
121
should have been allocated, and the job delay
affects of the
striking,
terms
of likelihood,
impact
costs
and men
job delays
The
Subcontractors
gorisks
bust,
which in
would
cause
a reasonable
job
delay
would
not
have
prevented
Any contingencies
built
intoresolving
the bid towhich
coverwould
the likelihood
andaimpact
cost job delay the job from completing during period 8.
Specification
issues
need
also cause
reasonable
However, the effective level of labour was reduced by 9,2 men due to delays. This resulted in
the job
being
complete
at the
end
of
period
and
notkey
quite
completing.
---------------------------------------------------------------------------------------And,
most importantly,
whether
orperiod
not95.5%
thethe
risks
have
knowledge
is the
toonly
deciding
to adjust labour
If a number
of risks strike
in a
delay
tostruck.
the
jobThis
is the
worst 8,
case
possible
i.e., it how
is assumed
Key
Point(s)
levels
delays
caused
by the risks
occurring.
that to
theguard
otheragainst
delays job
occur
within
the timeframe
of the
worst case, and have no additional affect.
The Construction Manager did not take
into
affect
ofadditional
possible delays
setting and
If the
riskaccount
does notthe
strike,
the
labour when
is ineffective,
the labour
level,
so how
thelevel
labour
level
have
adjusted
to
mitigate
the the before
would
generate
labour
costs
if against
the
completes
How does the Construction
Manager
change
thecould
labour
to ensure
that been
aadditional
reasonable
delay
does
not job
prevent
delays ?
the end of the period, as the labour is retained on site until the end
job from completing during period 8 ?
of the period. However, this is less costly than the job not
completing, especially if it overruns and penalty clauses are
imposed by the client.
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New Recruits v Subcontract Labour

Glossary

In
Comparing
progressing
thejobs
training
it is cost
always
of new
morerecruits
cost-effective
versus
subcontractor
use the companys
premium
own
in a
fully
period,
trained
it would
Key to
Point(s)
Where
there is anit
overall
labour
shortfall in the period,
operatives,
appear thatrather
subcontractors
than usingare
subcontractors.
the cheaper option.
However,
must
be remembered
thatthe
the
decision
as
to
whether
to
employ
new
recruits
or
use
new recruit training cost is a one-off cost, whereas subcontractor premiums have to be paid
subcontractors is further complicated by the limit on the number
Subcontractors
every period. :The new recruits limit is shown in
of new recruits that can be taken on in a period, as defined in
the
Industry
information.
the Industry information. The limit can vary each period.
Cost
more
than ownIt can
labour
The
decision
as
to
whether
to
employ
new
recruits
or use subcontractors may come down to
vary each period depending upon

Reliance
on
subcontractors
can
affect
the
morale
of
the companys
the
economic
jobs conditions.
where they may be needed, and there are other
factors thatown
maylabour
affect the companys

strategy :-

However, if there is an overall labour shortfall that the Construction Manager needs to address,
The limit on the number of new recruits that can be employed.
two
options are available : The anticipated duration of a contract, which can affect how many periods subcontractors

Take-on new recruits, adding to the companys own labour

need to be employed for.
Use subcontractors
The affect of using subcontractors on the morale of the companys own labour, which is
New
recruits
covered
another
But
whichinoption
is demo.
now the most cost effective ?
Each new recruit that is taken on into the companys own workforce has to be trained in their first

Subcontractors
Eventually period
own labour
may need
paidcost
offallocated
when work
dries
incurring
with the company.
This to
is abe
one-off
to the job
they up,
are placed
on. additional
Subcontractors do not need to be trained, and are fully effective from day one.
To labour
answerpayoff
this question
charges.we
The
need
laying
to compare
off of own
the
labour
costsmay
involved
then in
impact
taking
onon
labour
one new
relations,
recruit
Themorale
training isand
assumed
to take place where
the company across
is based, the
and does
not vary between
against
affecting
one
the
subcontractor.
productivity
the workforce
company.
However,
they
do incur
an additional
subcontractof
premium
each period,
countries. Hence, no matter which job a new recruit is allocated to the training cost is the same.
shown in the Industry information, which varies between countries.

The training cost for each new recruit is shown in the Industry information.
Key Point(s)
ItSubcontractor
is certainlyvariations
worth taking
timecan
tohave
determine
the most
between the
countries
a crucial bearing
upon cost-effective approach, as this can
have
significant
bearing
on the profitability of the company.
whichajobs
they are used
on.

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Labour Relations

Glossary

EXAMPLE
EXAMPLE
2: force
1:
poor
good
labour
labour
relations
in use
action
in performance/Management
action
In any
The
most
period
cost-effective
a companys
way
total
of
managing
labour
the
consists
labour
force
of relations
:-is to
the companys own
fullyreport"
Navigate
to "Main
menu/Assessing
consultants
107
men
were
available
in
107
men
were
available
trained labour, rather than subcontractors.
the idle labour pool. All 107
in the idle labour pool.

were
laidwere
offare
when
they
could
For example, if 50 men are transferred to the idle labour pool from job A, then
they
None
laid off,
and
have
been used
utilised
jobs.
Labour on
all were
on on
site,
immediately used onLabour
job B.
in No training is required, no men are laid off, and the company does
Jobs in
leaving no idle labour.
not incur any additional
the Idlecosts
Pool such as subcontractor premiums.
Total Labour
Progress
in Company

In this scenario the company

would be perceived to have a good labour relations policy and the
(Own)
(Own + Sub)
morale of the companys own labour would be high, ensuring greater productivity.
The laid
affect
the site,
companys
15 men were
offof
from
and construction management decisions on labour
relations
is
reflected
in
comments in the Management consultant's report.
replaced
by
subcontractors.
The
least cost-effective
way
of with
managing
the
force
to be constantly
hiring
and
laying
Additional
labour
was
the labour
companys
No
subcontractors
To source
the jobs in progress
the labour
required
theisConstruction
Manager
will
often
be
own,
and
not
subcontractors
were
used.
off
the
companys
own
labour,
and
also
relying
on
subcontractors.
faced with either an overall labour shortfall, or a surplus. In this situation a number of

decisions
haveif to
be made
on howofbest
to manipulate
labour
force.
For example,
a high
proportion
the companys
ownthe
labour
is laid
off in a period, then the
morale of the remaining own labour (not subcontractors) would be weakened, leading to
The
options
available In
include
:- the Company would have a poor labour relations policy..
reduced
productivity.
this case

For the Companys Own Labour

Laying
men off
from
the Idle Labour
Pool that
(ILP) illustrate good and bad labour relations.
We
will now
look
at detailed
examples
Transferring men from the ILP to jobs, or from jobs to the ILP
companys
own were used.
subcontractors
The
Construction
Manager
wasonto
able tojobs,
manipulate
the labour
so from jobsNone of the138
Taking
on new
recruits
or laying
off force
labour
that :The Construction Manager did not manipulate the labour force effectively, and :-

labour was laid off from site.

For Subcontract Labour

All idle labour was redeployed to site
Taking
or releasing
subcontractors
Used
138on
subcontracts
when
men were
available
the idle pool, but were paid off
Additional
labour was the
companys
own,
and notinsubcontractors

Laid off 15 men from site, some of whom could have been used instead of subcontractors
None of the companys own labour was laid off
No subcontractors were used
This is an example of poor labour relations, and the productivity of the companys own
labour would be adversely affected.
This is an example of very good labour relations, and the productivity of
the companys own labour would be improved.

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Measured Value (Turnover)

Glossary

The
measured
value,
also
referred
toanas
turnover,
the
is
the
amount
of effective
moneyperformance"
the
Using
the
value
per
man
as ato value
base,
and
taking
into
account
the
labour
For each
jobexpected
awarded
to the
company,
there isperiod
expected
per
manperiod
period
defined
as
:- analysis/Operating
Navigate
"Main in
menu/Assessing
performance/Financial
company
receives
from
all a
the
jobs
in period.
progress, and is directly related to the
on
site, three
values
areprogressing
calculated for
job
each
Expected
value
per
man
period
=
Bid
value
/
Total
labour
(man
periods)
amount of effective labour on each job.
The Assessing performance/Financial
analysis/Operating performance
shows
the
measured
value,
or
turnover,
across
all jobs progressed in a period.
EXPECTED VALUE
In the example shown :The expected
measured
value
canamount
be thought
of as
a measure
of to
the
of work
that the
The
value
is the
of money
that
is expected
beamount
earned from
the client
by
The
Performance
(all
periods)
tab
can
be
used
to
display
the
measured
value
Expected
value
per
man
period
=
Bid
value
/
Total
labour
(periods)
company
is undertaking
at any particular time.
progressing
a job in the period.
=

for all periods.

5,307,161 / 166

We will nowValue
look more
closely labour
at
the
measured
value isvalue
determined
for period
each individual job.
Expected
= Effective
on site
x Expected
per man
= how
31,971
------------------------------------------------------------------------------------------------------------------------------------------------------------------------Key Point(s)
ACTUAL
VALUE
Using
the Performance
Build and site cost ratios per man periods can be calculated in similar ways, using the total labour
(periods)
as the (all periods) tab
The
actual value
the expected
value
to take into account a number of factors that
denominator,
with the is
appropriate
estimated
cost asadjusted
the numerator.

affect the productivity on the job :-

The performance of the project manager allocated to the job

The labour relations policy of the company
MEASURED VALUE (TURNOVER)
The measured value is the actual value adjusted by the measurement effort of the company for
the period.
Using the General tab

The measurement effort depends upon how well the companys measurement staff (quantity
surveyors) are able to cope with the turnover in the period across all jobs. A well staffed
measurement department will be able to extract more value from the jobs progressed.

clicking
anywhere
the screen
to advance
The last Keep
period of
the history
provides the on
benchmark
for determining
the appropriate level of
staff required each period.
Quit

Job Costs

Glossary
Design cost
Applicable to design & build jobs only, the design
consultant charges a fee paid in relation to the
amount of the job progressed in the period.

Build cost
Build costs cover all the direct costs (labour, plant,
material etc) needed to complete a job.
The build costs incurred each period depend upon the
effective level of labour allocated to the site.
Risk cost
The costs of any risk incurred after mitigating actions
have been taken, such as the use of a BIM model and
targeted investments into risk consultants.

Site cost
Site costs pay for the support staff and services required
to administer a site whilst the build is taking place.
The level of site cost paid each period is based upon the
total labour (own and subcontract) allocated to the site.

Completion penalty
If the duration of a job exceeds its planned
duration, the company is charged a penalty
for each late period.
The penalty is a percentage of the tender value
(bid entered) for the job; details are given in the
Industry information.

Additional labour costs

The bulk of the labour costs are built into the
build costs, but there are additional labour
costs, such as the cost of taking on and laying
off of both own and subcontract labour.

Project manager costs

Various costs covering the project manager
allocated to the site.

Labour Costs

Glossary

The labour costs are allocated to either job or overhead costs. The applicable rates are
shown in the Industry information.
Subcontract premium (job cost)
Each subcontractor used incurs an additional
cost per period, which varies by country.
Training cost (job cost)
The cost of training a new recruit in their
first period with the company.

Annual cost of idle labour (overhead cost)

This is the cost of keeping someone idle for a
year, and takes into account the redeployment
of the person in other areas.

Labour payoff rate (job/overhead cost)

This is the cost per person of laying off the
companys own labour from either : The idle labour pool (overhead cost)
A job in progress (job cost)

Ineffective labour cost (job cost)

The cost of ineffective labour per annum.

Bonus For Early Completion

Glossary

The client pays a bonus for early completion of a job.

Early completion of a job means completing at least one period before the end of the planned
duration e.g., if the planned duration is 4 periods, it must be completed in 3 periods or less to
obtain the client bonus.
The bonus varies depending upon the size of the job, and is expressed as a percentage of the
tender value (bid entered) for the job; details are given in the Industry information.
The bonus is shown in the Job
Details for the last period of the job.

The early completion bonus varies

according to the size of the job.

Retention

Glossary

Navigate
to(turnover)
"Main menu/Assessing
performance/Job
analysis/Retention
analysis
for is
all jobs
won"
Retention
a came
% offrom
theameasured
value
achieved
on a job
inanalysis/Operating
a period
that
retained
The retention is
held
number of jobs
progressed
during
period
10.
Navigate
to "Main
menu/Assessing
performance/Financial
performance"
by the client until the job is completed.

The Industry information showed retention to be 1% of Retention

measuredaffects
value i.e.,
the cashflow of the company.
1%
13,510,240 orheld
135,102.
Anyof retentions
are repaid in two equal instalments :In the example shown, the Financial Analysis shows that in period 10
In the period when the job is completedthe companys retention figures were :-

2 periods after the job completes

125,700 repaid from completed jobs

135,102 held from work completed from jobs progress during the
period
The net retention of 9,402 did not help the cashflow of the company.

Details of the % retained are shown

in the Industry information.

Retention Analysis for jobs won and progressed provides

Keep The
clicking
anywhere on the screen to advance
comprehensive information about all retentions held and repaid, along
with the outstanding net retention to be repaid.
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Percentage Of A Job Completed

Glossary

The % of a job completed on the Job Details does not always equate to the measured value
recovered on a job in relation to the original bid value.
A job was won with a bid of
We will take a closer look at this anomaly.

11,880,490

The job has just completed its 1st period, and the total value to date is 3,294,292.
This equates to 27.7% of the bid i.e.,
(3,294,292 / 11,880,490) * 100
However, the % complete shown is lower at 27.6%, so why is there a difference ?
The % complete is derived from the actual amount of the job completed to date.
However, the companys measurement effort has secured an extra 0.1% of value
over the 1st period, which is incorporated in the total value.

Navigate to "Main menu/Assessing performance/Management consultants report"

Keep clicking anywhere on the screen to advance

Quit

Forward Workload And Margin

Glossary

The
forward workload (or potential turnover)
on
amenu/Assessing
job
ismenu/Assessing
the performance/Financial
remaining
value
to performance
be recovered
Navigate
to
"Main
performance/Overall
(KPIs) from
Navigate to
The forward workload and margin values were formed
from"Main
5 jobs
When
in progress.
determining
the amount analysis/Operating
of work that theperformance"
company
the present time until the job has been completed. cannot undertake based upon the size of the capital base,
The the
forward
workload
andatmargin
values
the end period
of period
8
forward
workload
the end
of theatprevious
is the
shown
inpoint
the
Financial
Analysis.
starting
for any calculations.
The forward margin is the anticipated remainingare
profit
on
a job.
55.6% of the job was left to complete at the end of period 8, giving a remaining forward
In the example
shown,
at the
of period
:workload
of 4,997,318 (55.6%
the bid
of 8,987,983)
of
any bids
wonend
during
period8 been
9the
arecompanys
added
to the
Both
are calculated
at theofend
of value
a period,
after all The
thevalue
companys
decisions
have
processed.
The forward margin figure comes from the forward workload less initial
the remaining
forward workload,
cost.
and the cumulative figure is used to
Forward
Workload
was
21,050,580
determine how much work the company can undertake.

Forward
----------------------------------------------------------------------------------------------------------------------------Forward workload and margin are important because :- Margin was 826,386
Key Point(s)
Forward true
workload
margin
form
two
the
key performance
indicators
of the
The
They
are two
the key
indicators
upon
which
companys
progress
is measured,
?
can
be used
to
drill-down
to job-level
detail.
remaining
costof
is based
uponperformance
the anticipated
cost and
ofThe
the
job,
taking
intoaof
account
company,
and
the potential future prosperity of the business.
indicating
thecost
potential
prosperity
ofindicate
the business.
build
cost, design
, site costfuture
and project
manager
costs.
Taking job 131 as an example :-

Both indicators fell during period 8, which can be further verified by referring to the

The forward workload providesFinancial

the starting
point
during the
bidding process for determining
Analysis
(Performance
All Periods).
whether or not the client will allow the company to bid for a job based upon capital base
The forward workload and margin values at the end of period
8 limitations.
were slightly lower than at the end of period 7, and this fall
was reflected in the increased in the KPI weightings.

We will take a closer look at how both are calculated, and used.

Keep clicking anywhere on the screen to advance

The for ward workload at the end of period
8 is shown in the Financial Analysis.

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Job Details
Job number
A unique number that identifies a job,
ranging from 1 (earliest jobs) onwards.

Period of prequalification
The period in which the company
identified the job through marketing effort.

Size
The size is based upon the approximate value : Small (approx value range 1m - 6m)
Medium (approx value range 7m - 13m)
Large (approx value range 14m - 25m)
Approximate value
The anticipated cost of the job rounded to
the nearest million.

Glossary

Country/Location
Where the job is located.

Type
There are two types of job : BO (Build Only); traditional type of job where the client is responsible for
the design, if appropriate, and the contractor is only responsible for the build.
DB (Design and Build); the contractor has responsibility for both the design
and the build.

Duration
The planned duration of the job (2 to 5
periods.
Client
The public or private-sector organisation for
whom the job is being carried out.

Total labour manning

The total number of man periods
required to complete the job.

BIM
Indication of whether or not BIM
(Building Information Modelling) is
being used for the job.

Description
A brief description of what the job entails.
Sector
Each job falls into one of 5 market sectors : Industrial
Building and Commercial
Transport
Energy
Water and Sewage

Risk register
Possible problems that may occur during the
progression of the job.

BIM
OVERVIEW OF BIM
BIM is an acronym for Building Information Modelling.
It describes the process of designing a building collaboratively using one coherent
system of computer models rather than as separate sets of drawings, which is
the traditional method.
It is a digital representation of physical and functional characteristics of a facility,
and a shared knowledge resource for information about a facility forming a
reliable basis for decisions during its life-cycle; defined as existing from earliest
conception to demolition.
At the technical core of BIM is the software that enables 3D modelling and
information management. Extensive use of the software eventually leads to a
more complete understanding of the technical core.
BENEFITS
BIM offers enormous gains in saving in cost and time, much greater accuracy in
estimation, and the avoidance of error, alterations and rework due to information
loss.
To achieve all the benefits BIM offers, everyone in the architecture, engineering
and construction industries will have to learn to work in fundamentally new ways.

Glossary

Forming Client Relationships

Glossary

Navigate
tocompanys
"Main menu/Assessing
performance/Client
The
company
canainfluence
relationship
with a clientConsider
in athe
number
the following
of ways
:-example.
Each
period
numbertheir
of jobs
are available
in
market.
The
marketing
effort history"
will

determine
identifyhave
(prequalify
Positively
by :-how many of the jobs the company
The company
prequalifiedfor).
for a job with Johannesburg Vision.
The Client History provides a detailed
Identifying and winning jobs
analysis
of the companys
current
the company
prequalifies,
tenders
forwork
and secures
with the out.
Each
job competitive
has a client,
either
public
orAsprivate
sector,
for whom
the
is to work
be carried
Submitting
bids, in
even
if jobs the
are not
secured
Procurement
relationship
with
each
client.
client
a
relationship
is
built
up
between
the
two
parties.
Managing
jobs well,
and
completing
them
at least on schedule
As time passes,
and
depending
upon
economic
conditions, clients may look to preferred bidders,
The current state of the relationship can be analysed using the
Negatively
:- relationship is not strong enough
and if theby
client
Display Client Details option.
Submitting uncompetitive (poor) bids
the client may refuse to accept the bid.
Managing the jobs poorly, and completing late
Not keeping jobs on schedule
In this example, the company currently have a fairly good relationship with Johannesburg Vision, based upon a number of factors.
But why is the client relationship so important ?
Performance Indicators
The companys relationships with ALL clients forms one of the key performance indicators
upon which the progress of the company is measured.

Prequalification
The level of a companys relationship with a client can determine whether or not the
company prequalifies for new work with the client :-

If the client relationship has deteriorated, poor or worse, then the company may not be
able to prequalify for work with a client.
If the client relationship has improved to a certain level, prequalification may be possible
even if the companys marketing effort may not have previously identified a job i.e.,
preferred bidder status with the client.

Keep clicking anywhere on the screen to advance

Quit

Performance Indicator Definitions

Glossary

Turnover
Measured value accrued across all jobs progressed; an indication of how much work the company has done.

Gross Profit to Turnover

The ratio of gross profit to turnover across all jobs progressed; a measure of how profitable the companys jobs have been.

Operating Profit to Turnover

The ratio of operating profit to turnover; a measure of how profitable the company is after considering all operating factors.

Company Value
A measure of the asset value of the company.

Capital Employed
Measures how much of the companys capital base is being utilised.

Contract Completion
A measure of the number of jobs completed early, on time or late.

Forward Workload
The remaining turnover (value) of jobs still in progress.

Forward Margin
The remaining profit of jobs still in progress.

Share Price
A measure of the strength of the companys share price.

Client Satisfaction
An indication of how happy the companys clients are; based on procurement and job progression.

Calculating Performance Indicators

Glossary

Navigate
to
"Main
menu/Assessing
performance/Financial
analysis/Operating
performance"
Navigate
to
"Main
menu/Assessing
performance/Financial
analysis/Operating
performance"
Navigate
to
"Main
menu/Assessing
performance/Financial
analysis/Operating
Navigate
"Main
menu/Assessing
performance/Financial
analysis/Operating
performance"
Navigate to "Main
menu/Assessing
performance/Financial
analysis/Operating
performance" performance"
Navigate
toto
"Main
menu/Assessing
performance/Financial
analysis/Operating
performance"
Client Satisfaction
Contract
Completion
The
Company
now
in jobs
period
9, but how
were the
the
performance
To gain
a feel
the relationship
with
each client,
a textual
description
is since
given.
The
description
is based upon a
Using
the All
jobsfor
identified
option the
number
andissize
of
completed
History
is established.
Gross
Profit
to
Turnover
Turnover
Forward
Workload
indicator
weightings
calculated
at
the
end
of
period
8
?
numericalForward
value
(hidden)
determined
by
a
number
of
factors,
including
prequalification,
procurement
and job progression.
Margin
Operating
Profit
to
Turnover
Company
Value
Capital
Employed
Using
the
Financial
analysis
:Using
the
Financial
analysis,
the
turnover
:Using
the
Financial
analysis,
the
forward
workload
:Share
Price
Using
the
Financial
analysis,
the forward
margin:Each completed
job
is given
a score
depending
upon
the
status (early, on time or late) and job size. Scores are
Using
the Financial
analysis
:-completion
Using
the
Financial
analysis,
the
company
value :-of
After
bids
have
been
processed,
the
forward
workload
therelationship
company
expressed
as
a % the
of the
upper and
limit of
of
The sum
of
the
numerical
end
values
across
all
clients
is
calculated
for
the
changes
since
The
Historical
gross
profit/
turnover
ratio
(periods
was
0.0427
(655,483
/History,
15,333,891)
During
the
History
(periods
1-4)
was
15,333,891
the
the
the
History
was
18,312,170
At

Using
the
Financial
analysis,
the
share
price
:negative
where
jobs
At
complete
end
of
the
late,
History
but
was
positive
682,848
for
jobs
that
complete
early
and1-4)
on
time.
The
total
calculated
added tothen
the initial
The
Historical
operating
profit/
turnover
ratio
(periods
1-4)
was
0.0141
(216,826
/ is
15,333,891)
at the
end
of
the
History
was
4,745,199
workload
that
can
be
undertaken,
based
upon
the
companys
capital
base,
is
the
capital
employed.

added
to
the
performance
indicator
weighting
at
the
end
of
the
History.

The
gross
profit/turnover
ratio
to
date
(periods
1-8)
has
been
0.0521
(3,323,426
/
63,753,057)
To
date
(periods
1-8)
has
been
63,753,057

At
the
end
of
period
8
was
29,869,840
Atthe
the
end
of
1.12
indicator weighting
At
at end
the
end
ofend
period
of the
the
8History
History
was
1,096,951
to give
theratio
current
indicator
value.
The
profit/turnover
to date
(periods
1-8) has been 0.0112 (713,082 / 63,753,057)
at the
ofgross
period
8 was
4,916,348

At
the
end of period
8during
was 0.94
In this example
thethe
numerical
value
periods
5-8
came
toemployed
79.
This
was
added
totimes
the initial
rating
ofthe
70 end
to give
an
Using
Financial
analysis,
the
average
capital
:- the
The
ratio
at
the
of
period
8which
was
1.22
(0.0521
/to
0.0427)
the
at
of
the
History.
To
compare
fairly
the
turnover
to
with
thevalue
Historical
benchmark,
which
based
year,
we
The
value
at
the
end
of
period
8
times
the
ofof
the
History.
In this
example
The
the
value
6
completed
at
the
end
jobs
of
period
created
8 end
a
was
score
1.61
of1.631
times
70,
the
value
when
at
added
theatat
end
the
ofend
the
starting
History.
point
ofis100,
an one
indicator
value
The
ratio
at
the
end
of8was
period
8date
was
0.7943
(0.0112
/the
0.0141)
times
the value
value
atgives
theupon
end
of
the
The
value
at
the
end
of
period
was
1.036
times
the
value
end
the
History.
indicator of 149
at
the
end
of
period
8.
For the History
(periods
1-4)
was
40.5%
(162
/
4)
need
to work
the average
per year,
is 31,876,529
/ 2).
The
value
at
the
end ofout
period
8 was 0.84
timeswhich
the value
at the end (63,753,057
of the History.
of 170 at the end
of period
8.
History.
To
date
(periods
1-8)
has
been
62.75%
(502
/
8)
This
improvement
is
reflected
in
an
increase
in
the
gross
profit
to
turnover
performance
indicator
an
ininforward
the
workload
performance
indicator
from
70,
the
The The
improvement
waswas
reflected
in aninin
increase
in the
workload
performance
indicator
from
70,170,
the
initial
Theimprovement
improvement
wasreflected
reflected
anincrease
increase
theforward
company
value
performance
indicator
from
the initial
initial
The
weightings
used
in
calculating
the
client
from
130,
the
initial
weighting,
to
159
(130
x
1.22).
The
yearly
average
by
the
end
of
period
8
was
2.079
times
(31,876,529
/
15,333,891)
the
value
at the
weighting,
to
114
(70
x
1.631).
The
improvement
was
reflected
in an increase
price
performance
indicator
from
70,
the
initial
weighting,
to 161
(100
x 1.61).
This
deterioration
is reflected
in a fallin
inthe
theshare
operating
profit
to
turnover
performance
indicator
from
weighting,
to
176
(170
x
1.036).
satisfaction
are hidden,
but/ 40.5).
the relative affects
The value at
the end
of period 8 was 1.549 timesNavigate
the value
at the end values
of the History
(62.75
end
to "Main menu/Assessing performance/Job analysis/All jobs identified"
weighting,
to of
59the
(70History.
x 0.84).
130,
the
initial
weighting, to 103 (130 x 0.7943).
of different factors that affect the client relationship are
This improvement
is reflectedisinreflected
an increase
the capital
employed
performance
indicator
from
120,
This improvement
in aninincrease
inshown.
the
turnover
performance
indicator
from
40,the
theinitial
initial
weighting, weighting,
to 186 (120tox83
1.549).
(40 x 2.079).

Keep clicking anywhere on the screen to advance

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Using The Performance Summary

Glossary

The will
We
Company
now look
atPerformance
how
at the
howperformance
theSummary
performance
summary
provide
summary
acan
detailed
help
can to
help
to
set
explain
of
to
performance
identify
whether
strengths
or
statistics
not and
the relating
companys
to
Navigate
"Main
menu/Assessing
performance/Performance
summary"
all aspects
strategy
weaknesses
has
ofin
been
the
company
companys
successful.
performance.
activities, and can be used to identify strengths and weaknesses,
and explain the rise and fall of particular key performance indicators.
We will look first at how performance
statistics
can
to explain
keythe
performance
Since
the History,
newhelp
management
team changes
have tried tointarget
companys
investments into other concerns that provide :indicators.
A better return than the bank
Reduce job costs through lower build and risk costs
the strategy
off ?
Consider the performance indicators of Has
the company
afterpaid
8 periods.
The Performance
provide
evidence that it has, with a far higher
Since the end of the History the Gross Profit
to Turnover summary
indicator has
increased.
return than the bank credit rate, and overall jobs costs being reduced by 0.58%.
This would appear to indicate that jobs have been managed better since the History.
To verify our reasoning, we can refer to the performance summary.
The Procurement analysis shows that since the History out of 26 jobs bid for, 20 were lost.
65% of the jobs were lost due to capital base workload limitations.
Evidence from the Performance summary shows that :This
couldthe
possibly
beenwas
avoided
thecost)
Financial Manager had increased the companys
During the
History
averagehave
job profit
4.5% if(of
base
during
5 to
8 in5.8%
order(of
to cost)
enable the company to take on more work.
Since thecapital
History
the more
average
job periods
profit has
been
This is clear
evidence
that job profitability
improved
since
the more
History.
Using
the performance
summaryhas
in this
way will
enable
effective decisions relating to the
capital base to be made in future periods.
The Assessing performance/Job analysis/All jobs identified can be used to analyse even further where the improvement
was made, in terms of individual jobs progressed.
-----------------------------------------------------------------------------------------------------------------------------------------------------------------------Key Point(s)
The performance summary cover the early years and the history separately, but many of the performance indicators cover
the full lifecycle of the company. These are specifically the trend-based ones such as turnover, gross profit to turnover etc.
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