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...
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