To Imperial Consulting,
Further to my postings, I have to apologise for the lack of number of blog postings in view of the nature of my work, having to travel extensively in pursuit of jobs. Thus, I have not been able to focus on delivering my assignments periodically. Rather, whenever I am rested back at home (in M'sia), I manage to recollect my thoughts and send a post. Hope you will understand.
Tuesday, June 9, 2009
One Year Later
I recently received a call from Imperial Consulting requesting for my password for entry into this blog and just managed to review what I wrote on business planning one year ago and how things have panned out since then.
Our 2008 revenue achieved was abt RM2.1 bil against a (revised) target of RM2.75 bil. Going forward, our dept has been asked to use new order book rather than revenue achieved for our KPI and current order book stands at abt RM500 mil+ as opposed to an originally planned and target of abt RM2.0 bil. We are clearly short of our targets.
What has happened since one year ago? Of course there was the great global financial crisis with the Lehman Brothers crash and other financial institutions in late 2008 that resulted in an abrupt global slowdown and consequently, a deferment in projects launched everywhere.
In Saudi, the few projects we were quite confident of securing have not materialised in view of our pricing (too high) and probably slowing down of the project by the client. In Qatar, after having completed our highway project there, the client (govt of Qatar) instead of paying us for work already done, went on to sue us (together with their design consultant) for some defects in the highway works (which we attribute to wrong design). Immediate projects horizon in that country appears dim. In India, where we have had a presence over the last 1.5 decades, projects have been difficult to get by. The promising construction alliance with Ansal Property, a premier local real estate developer, has run into some trouble in view of the credit crunch and contraction in that sector. That clearly leaves us with a strategy to double our efforts in pursuing projects at home, in Malaysia.
In Singapore, where the construction industry is still active albeit slower than last year, competition has been stiff. However, adopting a strategy of strategic alliances, we managed to prequalify to tender for a large sized hospital there despite having little local experience. Here a high quality low cost proposition has to continue to be offered if we are to make inroads into this highly competitive but transparent market.
Locally, we have continuously been adopting a strategy of focus, which resulted in our successful securing of a building project last month. Similarly, we targeted and concentrated on a huge infrasatructure tender down south for Iskandar Investment Berhad at Medini who share the same parent company as us, ie. Khazanah Nasional. With the implicit 'advantage' of being related to the project client, we concentrated our efforts in arriving at a most competitive price, which we did, after much coordinated efforts. We managed to turn out lowest tenderer for 3 out of 6 packages. However, a re-tender has been called for the packages as the bids still exceeded the client's budget. We suspect the client may need to 'accommodate' their Middle Eastern customers who own construction companies that also competed with us but did not win. A possible strategy of collaborative alliance may have to be developed to be on the winning side.
Moving forward, our business strategy has to continue to focus on local (M'sia) projects and also possibly neighbouring Singapore where we have the advantage of moving our abundant and cheaper resources to carry out work there. Venturing into new markets doing the same business (ie. civil and building works construction) is being pursued now with our maiden forays into Vietnam and Brunei of late. Execution and reputation of quality and on-time delivery of projects continue to be the key critical success factors and unique selling propositions to potential clients. However, these are out of my control within my organisation and I can only re-emphasise on their importance every now and then. Strategic alliances with potential partners especially project developers in the form of real estate developers will continue to feature in our business plan for India. In the long term, we, as a company, have to move upwards in the value chain and be able to carry out projects of higher complexity to move out of the sometimes perfect competition (many competitors) that we find ourselves in due the very little product / service differentiation. Going green, ie. adopting environmental friendly construction techniques and materials is the way forward in the building sector. To this end, we will need to acquire these skills and technology possibly through strategic alliances with big boys in the industry. Finding a niche parket in water sector is also another possibility. Undertaking Private Finance Initiative (PFI-type) projects is also another alternative, leveraging on our financial strength and strong past track record as project developer of BOT-type projects.
Six months remain for us to acheive our targeted new order book of some RM1.5 bil. more. Just last week we received a conditonal letter of award for the Penang Second Crossing Bridge costing abt RM1.3 bil. If accepted by us, there would only remain some RM200 mil for us to achieve, which hopefully can be attained this year. But then again, they will only move the hurdle higher...
Our 2008 revenue achieved was abt RM2.1 bil against a (revised) target of RM2.75 bil. Going forward, our dept has been asked to use new order book rather than revenue achieved for our KPI and current order book stands at abt RM500 mil+ as opposed to an originally planned and target of abt RM2.0 bil. We are clearly short of our targets.
What has happened since one year ago? Of course there was the great global financial crisis with the Lehman Brothers crash and other financial institutions in late 2008 that resulted in an abrupt global slowdown and consequently, a deferment in projects launched everywhere.
In Saudi, the few projects we were quite confident of securing have not materialised in view of our pricing (too high) and probably slowing down of the project by the client. In Qatar, after having completed our highway project there, the client (govt of Qatar) instead of paying us for work already done, went on to sue us (together with their design consultant) for some defects in the highway works (which we attribute to wrong design). Immediate projects horizon in that country appears dim. In India, where we have had a presence over the last 1.5 decades, projects have been difficult to get by. The promising construction alliance with Ansal Property, a premier local real estate developer, has run into some trouble in view of the credit crunch and contraction in that sector. That clearly leaves us with a strategy to double our efforts in pursuing projects at home, in Malaysia.
In Singapore, where the construction industry is still active albeit slower than last year, competition has been stiff. However, adopting a strategy of strategic alliances, we managed to prequalify to tender for a large sized hospital there despite having little local experience. Here a high quality low cost proposition has to continue to be offered if we are to make inroads into this highly competitive but transparent market.
Locally, we have continuously been adopting a strategy of focus, which resulted in our successful securing of a building project last month. Similarly, we targeted and concentrated on a huge infrasatructure tender down south for Iskandar Investment Berhad at Medini who share the same parent company as us, ie. Khazanah Nasional. With the implicit 'advantage' of being related to the project client, we concentrated our efforts in arriving at a most competitive price, which we did, after much coordinated efforts. We managed to turn out lowest tenderer for 3 out of 6 packages. However, a re-tender has been called for the packages as the bids still exceeded the client's budget. We suspect the client may need to 'accommodate' their Middle Eastern customers who own construction companies that also competed with us but did not win. A possible strategy of collaborative alliance may have to be developed to be on the winning side.
Moving forward, our business strategy has to continue to focus on local (M'sia) projects and also possibly neighbouring Singapore where we have the advantage of moving our abundant and cheaper resources to carry out work there. Venturing into new markets doing the same business (ie. civil and building works construction) is being pursued now with our maiden forays into Vietnam and Brunei of late. Execution and reputation of quality and on-time delivery of projects continue to be the key critical success factors and unique selling propositions to potential clients. However, these are out of my control within my organisation and I can only re-emphasise on their importance every now and then. Strategic alliances with potential partners especially project developers in the form of real estate developers will continue to feature in our business plan for India. In the long term, we, as a company, have to move upwards in the value chain and be able to carry out projects of higher complexity to move out of the sometimes perfect competition (many competitors) that we find ourselves in due the very little product / service differentiation. Going green, ie. adopting environmental friendly construction techniques and materials is the way forward in the building sector. To this end, we will need to acquire these skills and technology possibly through strategic alliances with big boys in the industry. Finding a niche parket in water sector is also another possibility. Undertaking Private Finance Initiative (PFI-type) projects is also another alternative, leveraging on our financial strength and strong past track record as project developer of BOT-type projects.
Six months remain for us to acheive our targeted new order book of some RM1.5 bil. more. Just last week we received a conditonal letter of award for the Penang Second Crossing Bridge costing abt RM1.3 bil. If accepted by us, there would only remain some RM200 mil for us to achieve, which hopefully can be attained this year. But then again, they will only move the hurdle higher...
Saturday, July 5, 2008
Entry for 5 June 08 Learning
Dear Jeremy / Imperial Consulting,
I am sorry for this very late posting. Have been penning notes on my ‘reflections on business strategy learning’ in my diary but have had to fight inertia within to get it typed out nicely and posted in my blog. Have been thinking that I have to get it right first before I get it posted and this has led to me procrastinating the assignment until ‘July’ came around and I told myself to just get started and type out my thoughts as they come, and so here goes…(learning points within brackets)
5 June 08
Immediately after coming back from our 3 day course (2 – 4 June) on M.Sc. Business Leadership, we were faced with the spectre of global economic slowdown because of the oil price increase. Fuel price had just been increased by abt 30% nation-wide in M’sia the night before and I was given the task to review our company’s revenue targets within our Annual Operating Plan for this year in the light of this occurrence.
Our company is in the engineering and construction industry, very cyclical in nature and heavily dependent on economic health of the target country. I am Head of Business Development and am tasked with identifying potential projects for the company to pursue and with the assistance of our engineering and tendering teams, have to device strategies and action plans to procure them.
Fresh from the course, I asked my research staff to do a search for updates on the domestic and global economy (environmental scan). Their search found that the full impact of the global oil price increase had still not been factored in. Got them to do a scan of the latest on our target countries of M’sia, S’pore and India. India showed a slight softening of the real estate market and some property project launches have been deferred pending better demand. S’pore did not have any adverse reporting or does not appear to be severely affected by these new global occurrences as projects have already been committed and most are in full swing. More than S$20 bil is expected to be spent on projects throughout the Republic this year alone. Of this, 30% constitute public sector projects and the rest is by the private sector. This is telling and we may have to target the larger clientele from the private sector (customer targeting) as the country is highly regulated and the risks of non-payment from private sector clients are better mitigated here than elsewhere.
Review of potential revenue targets for this year showed a potential shortfall of RM1.7 billion! “How are we going to bridge the gap with only 6 more mths to go?!’, we sat down to ask ourselves. My view to my colleagues – FOCUS! Of late, we have been dispersing ourselves all over the world in search of projects. There are senior people within my organization tasked with looking for jobs in Qatar, the UAE and Kingdom of Saudi Arabia, without coordination with us from head office - a bit uncoordinated, I’d say. All this is fine but what it ends up at the end of the day, our home-based resources, esp. of Engineering and Tendering, get stretched thin and in the end we are aiming everywhere but get nowhere. Projects nearer to home or those that have higher probability of success end up losing as we can’t afford to devote more critical resources to work on these tenders/proposals to clinch the deals. I view this as a lack of focus on our key target areas, lack of appreciation and acknowledgement of our own resource availability (or lack of it) and capability and lack of strategic planning. (Lack of clarity on Customer Target, lack of acknowledgement of our company’s SWOT)
My argument was, if we want to make sure we get near to our revenue targets for this year, we ought to target the ‘low lying fruits’, in the form of in-house projects planned by our property-related sister company, UEM Land, and by our ultimate parent company, Khazanah Nasional, in the state of Johor down south at the Iskandar Development Region. “Go up to the bosses and tell them to get those companies to ‘give’ us some of their projects if they want to see us achieving our revenue targets this year,” I told my colleagues. Next, S’pore and India appear to be in full swing with their development plans and with our established presence there, we have a competitive advantage over others.
In S’pore, projects are aplenty but there is a great shortage of critical quality resource especially in the construction industry. Top notch Japanese contractors with whom we have had alliances in the past have told us that they have had to turn down jobs offered to them b’cos of the lack of resources. And this is where we can fill the gap… We have the track record, financial strength and more importantly, access to critical resources for the construction industry in terms of manpower, materials and equipment, just across their border, and it makes a lot of sense for clients over there to talk to us. We can offer competitive proposals with the promise (from a large M’sian public listed company) of project delivery and quality. (Low-end attack?, Disruptive Innovation?) Our job – to get to them, let them know we exist, and make them offers they can’t refuse! (Promotions, Positioning Marketing, Value Propositioning etc). If this is a viable target market, then, I said, we should be concentrating our efforts and resources in this country (rather than across the globe with clients of questionable repute..) For my dept., my aim is to follow up with contacts from the local construction industry and discuss possible strategic alliances with the likes of selected Japanese contractors, high-end high rise local S’porean contractors, consultants etc. This would enable us to gain a quick entry into the local market and shorten our learning curve. (We secured a small contract from one of the IR projects early this year and have learnt a great deal since abt doing business in the Republic and it certainly beats doing contracting far away in the Middle East.)
As for India, we have moved from pure infrastructure and highways construction to real estate construction where we have entered into a strategic alliance with Ansal, one of the largest local real estate developers in India, to construct their selected property development in the northern regions of India as a joint venture on direct negotiated basis. “Our order book is almost secured from them”, I said, “but we need to concentrate our resources there also so as to move the pace of negotiations faster.” Another ‘low lying fruit’ for the plucking but not enough resources to push it through…
I am sorry for this very late posting. Have been penning notes on my ‘reflections on business strategy learning’ in my diary but have had to fight inertia within to get it typed out nicely and posted in my blog. Have been thinking that I have to get it right first before I get it posted and this has led to me procrastinating the assignment until ‘July’ came around and I told myself to just get started and type out my thoughts as they come, and so here goes…(learning points within brackets)
5 June 08
Immediately after coming back from our 3 day course (2 – 4 June) on M.Sc. Business Leadership, we were faced with the spectre of global economic slowdown because of the oil price increase. Fuel price had just been increased by abt 30% nation-wide in M’sia the night before and I was given the task to review our company’s revenue targets within our Annual Operating Plan for this year in the light of this occurrence.
Our company is in the engineering and construction industry, very cyclical in nature and heavily dependent on economic health of the target country. I am Head of Business Development and am tasked with identifying potential projects for the company to pursue and with the assistance of our engineering and tendering teams, have to device strategies and action plans to procure them.
Fresh from the course, I asked my research staff to do a search for updates on the domestic and global economy (environmental scan). Their search found that the full impact of the global oil price increase had still not been factored in. Got them to do a scan of the latest on our target countries of M’sia, S’pore and India. India showed a slight softening of the real estate market and some property project launches have been deferred pending better demand. S’pore did not have any adverse reporting or does not appear to be severely affected by these new global occurrences as projects have already been committed and most are in full swing. More than S$20 bil is expected to be spent on projects throughout the Republic this year alone. Of this, 30% constitute public sector projects and the rest is by the private sector. This is telling and we may have to target the larger clientele from the private sector (customer targeting) as the country is highly regulated and the risks of non-payment from private sector clients are better mitigated here than elsewhere.
Review of potential revenue targets for this year showed a potential shortfall of RM1.7 billion! “How are we going to bridge the gap with only 6 more mths to go?!’, we sat down to ask ourselves. My view to my colleagues – FOCUS! Of late, we have been dispersing ourselves all over the world in search of projects. There are senior people within my organization tasked with looking for jobs in Qatar, the UAE and Kingdom of Saudi Arabia, without coordination with us from head office - a bit uncoordinated, I’d say. All this is fine but what it ends up at the end of the day, our home-based resources, esp. of Engineering and Tendering, get stretched thin and in the end we are aiming everywhere but get nowhere. Projects nearer to home or those that have higher probability of success end up losing as we can’t afford to devote more critical resources to work on these tenders/proposals to clinch the deals. I view this as a lack of focus on our key target areas, lack of appreciation and acknowledgement of our own resource availability (or lack of it) and capability and lack of strategic planning. (Lack of clarity on Customer Target, lack of acknowledgement of our company’s SWOT)
My argument was, if we want to make sure we get near to our revenue targets for this year, we ought to target the ‘low lying fruits’, in the form of in-house projects planned by our property-related sister company, UEM Land, and by our ultimate parent company, Khazanah Nasional, in the state of Johor down south at the Iskandar Development Region. “Go up to the bosses and tell them to get those companies to ‘give’ us some of their projects if they want to see us achieving our revenue targets this year,” I told my colleagues. Next, S’pore and India appear to be in full swing with their development plans and with our established presence there, we have a competitive advantage over others.
In S’pore, projects are aplenty but there is a great shortage of critical quality resource especially in the construction industry. Top notch Japanese contractors with whom we have had alliances in the past have told us that they have had to turn down jobs offered to them b’cos of the lack of resources. And this is where we can fill the gap… We have the track record, financial strength and more importantly, access to critical resources for the construction industry in terms of manpower, materials and equipment, just across their border, and it makes a lot of sense for clients over there to talk to us. We can offer competitive proposals with the promise (from a large M’sian public listed company) of project delivery and quality. (Low-end attack?, Disruptive Innovation?) Our job – to get to them, let them know we exist, and make them offers they can’t refuse! (Promotions, Positioning Marketing, Value Propositioning etc). If this is a viable target market, then, I said, we should be concentrating our efforts and resources in this country (rather than across the globe with clients of questionable repute..) For my dept., my aim is to follow up with contacts from the local construction industry and discuss possible strategic alliances with the likes of selected Japanese contractors, high-end high rise local S’porean contractors, consultants etc. This would enable us to gain a quick entry into the local market and shorten our learning curve. (We secured a small contract from one of the IR projects early this year and have learnt a great deal since abt doing business in the Republic and it certainly beats doing contracting far away in the Middle East.)
As for India, we have moved from pure infrastructure and highways construction to real estate construction where we have entered into a strategic alliance with Ansal, one of the largest local real estate developers in India, to construct their selected property development in the northern regions of India as a joint venture on direct negotiated basis. “Our order book is almost secured from them”, I said, “but we need to concentrate our resources there also so as to move the pace of negotiations faster.” Another ‘low lying fruit’ for the plucking but not enough resources to push it through…
Tuesday, June 10, 2008
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