Principles Of General And Strategic Management In Construction

Capital base

The following is a reflection on the Enginuity management software that we used in our team (group 7) prepared by the managing director and the shortcomings and successes we encountered. The department we focused on is financial management and company growth. We implemented a new management structure and business strategy with the aims of improving our financial management for the overall growth of the company.

We did not have adequate finances for our company but we still invested in it because we thought this was a good strategy for the growth of the company. We believed that capital is very important in order to grow our company in order to accomplish our goals. This strategy did lead to the company’s success except for period six which was our worst period since it left capital base utilization at 63%. This resulted in zero growth in overall KPI’s. From this it was evident that we needed to keep the capital base utilization above 60%.

The decision was effective since

1.     It leads to the company’s growth thus the success
2.    We were able to accomplish our goals

The decision was ineffective since

1.    We did not consider factors such as managing debt thus we found ourselves in deep debt
2.    We did not consider finance as investments

We then needed to change our approach to financing our company by looking for ways to settle our debt. We decided to rely on investors to provide our capital and then use the profits to pay our debt until the time we pay off our debts

Shareholder relationship

Our goal was to keep our shareholders happy by paying an adequate dividend. However, when looking at the company’s performance in Figure 1 below, it is evident that we continuously failed our shareholders by paying an inadequate dividend (Johnson, Scholes & Whittington, 2014). Our group was paying the third lowest dividends out of the 12 companies.   

                                                                   C= Content, U= Unhappy

Figure 1: Graph of Dividend Paid to shareholders

Our investment strategy was investing in companies which offered build or risk cost reductions. Our investments were successful with combined returns from interest obtained and risk or build cost savings ranging from 25% to 189%. This is shown in Figure 2 below.

The decision was effective since we were able to get a return on our investments and therefore we decided to continue making investments. However, we only decided to invest in companies that had build or cost reductions.

Euros 100000 to 700000

My experience in simulated management of a construction Company

There are many different types of construction company management software on the market like Merit. However, I believe that the Enginuity software is the best. This is due to the involvement of Mr. David Jefferson during and after the competition. This has proven valuable in the competition. The post-competition presentation is very valuable. I have come to the realization that the following aspects are critical to the success of a managing construction company:

I believe that CBU is a very important decision in the management of a construction company. I have learned that the timing of an investment determines the overall success of the company. In the case of group 7, we invested the capital base in our early years. This blind investment cost us a lot since it drove us to debt. We invested in periods where we did not have enough finances (Mintzberg, Ahlstrand & Lampel, 2008). As much as these lead to the growth of our company, it also leads to having a negative cash account. After investing in the capital base we had an average cash account of 265,000 Euros in overdraft between periods 5-11. We were thus left with a high gearing ratio which increased the borrowing interest charges and claims on the firm’s cash flows (Saunders, 2011).

Shareholder relationship

I believe that it would have been more beneficial to our company if we timed our investments to periods when we had surplus finance or reduce the amount of investment in the early years. The smaller investment in the beginning years would have still yielded good profits and also secured our company in that, we would not be burdened with debts in the future.

As discussed earlier, we did not have the surplus finance to invest in other companies. Although we did invest in some companies and received good returns, I feel like we did not utilize this to its fullest potential (Hitt, Black & Porter, 2011).

I have learned that it is essential to invest in other companies in order to receive good returns that ensure shareholders have sufficient dividends and the company stays afloat. Therefore, in future, I will ensure that we have adequate cash management so that we can be able to invest in other companies.

As shown in figure one above, we did not pay our shareholders enough dividend. This left the shareholders unhappy and it had a negative effect on the share price. If this were to continue in future, shareholders may withdraw their investments as they feel they are not getting fair dividends.

I learned that it is important to maintain a positive relationship with shareholders because if they are unhappy, they will withdraw their investments.  This will not do any good for the company. Also, paying fewer dividends proves more profitable to our company. It is more valuable to pay sufficient dividend to the shareholders (Green, 2011). I believe that this shows stability within the company and thus encourage existing shareholders to continue investing. It also encourages new investors.

Importance of client relationship

I have learned that it is important to have a good relationship with our client because this ensures that we are constantly given work to do and more work means more income. Our group has been able to receive work with clients we have a good relationship with even when our bid was higher than those of others.

My experience with working in a team

My team, group seven, consisted of six members and I was the managing director. I was able to learn the purpose and value of teamwork whilst working with my team members. As the managing director, I ensured unity and harmony in our group. I encouraged my teammates to work together and not against each other because all of us wanted to accomplish one goal. Through this unity, I was able to work in harmony with others without arguing or disagreeing disrespectfully.

In addition, I was able to achieve diversity in terms of thoughts and creativity from the other members. Since we are many members, every group member has his/her own thoughts and ideas. At times, I was even awed by the ideas because if I was working alone. I would never have thought of it. I was also able to acquire skills that I did not have from other group members. I encouraged my team members to teach one another in skills and at the end of it, each of us was able to learn to do something new (Anderson, 2010).

Furthermore, I discovered that we would finish and accomplish tasks quickly and efficiently due to the sharing of the workload. I did not assign a task to one person because that would mean the work being done slower and thus we would finish the task in time. I, therefore, ensured sharing of tasks so that if one makes a mistake, another person might notice it and correct it (Dainty, Green & Bagilhole, 2007). Hence, we were able to work more efficiently when I shared the workload.

In addition to this, I also experienced some negative things while working in my group. At times there was a conflict between team members, and this affected our work since we could not communicate effectively. It became strenuous having to beg the team members to corporate in order to accomplish the task. I had to let the team members solve the conflict before continuing with the tasks. This made us waste time, and thus being behind the schedule.

Also, I experienced communication problems with my teammates. Some would tend to talk over me or interrupt me when am assigning tasks. I found this very rude especially since I was the managing director. I made a point of asking my members to raise their hands when they wanted to speak so as not to interrupt anyone. This way, everyone felt respected, and also the opinions they were trying to convey.

In conclusion, as much as I found it efficient and effective to work as a team, it was not smooth all the time. I had to adopt ways to cope with my team members. This way, we were able to accomplish most of the tasks on time. I would like to thank all my team members for their hard work and participation in the competition.

References

Anderson, C. (2010). The Functions and Dysfunctions of Hierarchy. Research in Organisational Behavior, Volume 30, Pages 50-89.

Dainty, A., Green, S. & Bagilhole, B. (2007). People and culture in Construction: a reader. London: Taylor & Francis.

Green, S.G. (2011). Making Sense of Construction Improvement. Oxford: Blackwell.  

Hitt, M., Black, S. & Porter, L.W. (2011). Management (3rd ed.). Pearson Education.

Johnson, G., Scholes, K. & Whittington R. (2014). Exploring Corporate Strategy. (10th ed.). Pearson Education.

Mintzberg, H., Ahlstrand, B. & Lampel, J. (2008). Strategy Bites Back: it is a lot more and less than you ever imagined … Harlow, Financial Times Prentice Hall. (ISBN 0273721844).

Saunders, A. (2011). Financial Institutions management: A risk management approach. New York: Mc-Graw-Hill.