In the NEWS –
As reported the 14th Dec 2015 -UK Balfour Beatty
wins the trophy for the construction company winning the most new work in 2015
My thoughts – If construction appears the weakest
commodity for this company as clearly outlined over the past three financial
statements and by the Chairman’s own declarations, while at the same time
winning a major award that claims itself to be the ‘most transparent construction
award’ as it is based on mathematics for the most new builds in 2015, then
has this company simply poured much of its energy and finances into its weakest
area to bail it out. Have they had to
purposely take on as much work as possible to pay back the investors losses of
the previous projects that failed? My
question to the company would be how will you continue to manage risk with
subcontractors under such a workload, considering that five employees of
subcontractors lost their lives in 2013 while working on Balfour Beatty
projects.
As reported 10th Dec 2015- Balfour Beatty
expecting good results from the ‘Built to Last Program’ designed to turn things
around
My thoughts- The implementation of the 'Built to Last Program' including refinancing of the existing financial facilities/loan costing in reality a total of $700 million
pound - $300 million pound lost last year and the $400 million pound
to refinance is quite a lot of money to recover, hence the only way to do this
is to dive into as much work as possible.
The revolving credit facility will allow them to move swiftly from one
job to another without lengthy delays from banks, valuers and the like. I do think these measures that CEO Leo Quinn has
implemented, make good financial sense.
Balfour Beatty could not afford to let the construction side of the business
fail so badly. The only obvious way to
bail it out is to go quite further in, taking on as many profitable contracts as
possible –although there is no room for risky new investment contracts. The question then would be, is Balfour Beatty spending enough on a well executed risk
management system. I fully understand
that decision makers need to save the company financially by pouring the construction side of the company into
as many projects as possible, so that the projects can be turned over as quickly as possible to recoup lost funds, but nothing or no one can buy back a life or the bad publicity the company will
get if the numbers of deaths increase.
Managing the financial clean up and risk management of
the company simultaneously is going to be paramount for a successful future for
Balfour Beatty. It appears at a glance
if the company could clean up the loss or most of the loss from their construction side
over a period of time, they should then run a business plan alongside the clean
up to start cutting back on physical construction, diversifying further and moving into the infrastructure investments & support services in which they appear so strong in. Working out the magic percentages of focus
for each area of expertise I feel will be the way of the future for Balfour
Beatty.
At a glance- Balfour Beatty can not afford over the long term to drop construction as a core of the business entirely or it would lose touch with the 'physicality' of the industry that Balfour Beatty's company model has steamed from. It appears that the company's strengths in infrastructure investments and support services comes from the stability of over 100 years in the construction industry, so the absence of this aspect of business over generations would deteriorate the strengths in the areas of infrastructure investments and support services which have grown successfully from the knowledge of being so long in the physical construction industry. An idea to combat this problem would be to look to the future of technology in the construction area and develop this area into two categories - physical construction and construction technology. The new Balfour Beatty business model could look like the following - 35% Infrastructure Investments, 35% Support Services, Construction - (15% Physical Construction & 15% Construction Technology)
You Tube Video Released 28th October 2014 -
Titled – Zero Harm – Make Safety Personal
My thoughts – Fantastic video, I was really impressed and
inspired by this video. Very cleverly
executed and in the 4 mins and 13 sec it takes to play it, it dissolves all of my
previous concerns on whether or not this company is going to make safety of
human life a prime concern. The answer
is ‘Yes’! Let's hope hey continue to make risk management a focus.
You Tube Video Released 16th April 2013 –
Titled – Sustainability Next Generation Stakeholders
Panel
My thoughts – Clever marketing department in this
company! Obviously the ideas are
filtering down from the CEO and leaders of Balfour Beatty to the marketing department;
however the simple execution is nothing short of clever. Nerd to Normal information and the use of
making a Next Generation Panel whether it was because the company was actually
interested in their views or whether Balfour Beatty just wanted to use the fact that they this panel meeting to use as a form of advertising. Either way it was ingenious. Since the next generation is who excels at
internet marketing, twitter, face book, Linked In etc, I think this will prove a successful marketing ploy, The use of You Tube is clever as it is a cost effective viral way to distribute the company's marketing campaign & message. It is also a great way to
show that Balfour Beatty nearly an 107 year old company can still power through
the generations by focusing on new blood.
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