Step 3 & 4

Products in Balfour Beatty                                           

1.       LaserSweep

 LaserSweep incorporates a variety of  features including an on-site software functionality,  setting out downtime, the ability to add track geometry to structure measurements, plus a  platform marker gauge.

  

Estimated Selling Price  £  5,452                                Estimated Variable Cost  £  3,258

Contribution Margin (CM)           = Sales Revenue (S)  –  Variable Costs (VC)

                                    

(CM)                                                      = (S) £  5,452 – (VC) £  3,258

(CM)                                                      = £  2,194

2.        Ultrasonic Rail Flaw Testing

The 8000SXTM system employs rolling search units, A and B scan visualisations, and highly developed signal processing facilities. This provides very accurate detection and discrimination of rail faults and ensures the highest Probability of Detection with the Lowest False Call Rate.

 Estimated Selling Price   £ 24,326                             Estimated Variable Cost   £ 18,778

Contribution Margin (CM)           = Sales Revenue (S)  –  Variable Costs (VC)

                                    

(CM)                                                      = (S) £ 24,326 – (VC) £ 18,778

(CM)                                                      = £  5,548

 

3.        LaserFlex

LaserFleX™ solutions provide accuracy and configurability with high productivity. Solutions are available for a range of vehicle platforms, from trolley through roadrail vehicle to train mounted at speeds up to 120km/h.

Estimated Selling Price   £ 15,693                              Estimated Variable Cost   £ 11,257

Contribution Margin (CM)           = Sales Revenue (S)  –  Variable Costs (VC)

                                    

(CM)                                                      = (S) £ 15,693 – (VC) £ 11,257

(CM)                                                      = £   4,436

Products

	LaserSweep	Ultrasonic Rail Flaw Testing	LaserFlex
Selling Price	5452	24326	15693
Variable Costs (VC)	3258	18778	11257
Contribution Margin (CM)	2194	5548	4436

*GBP - Pound

Although Balfour Beatty has numerous products and services, the three Balfour Beatty products chosen are used within the same market, being the rail industry. 

In the case of these three products there is a positive affect from the contribution margin and we see the (CM) is contributing to lowering fixed costs and therefore increasing profits. 

I found this really challenging as Balfour Beatty has so many products and services probably due to the fact they have been around over 100 years and are the largest construction contractor in the UK.

I spent several hours trying to find real sales prices for the three products I chose however in the end I had to use sales prices from competitive companies.

Constraints

An example of possible constraints for Balfour Beatty - A recent report released by ReportLinker indicates that the residential construction sector is expected to dominate the global precast/prefabricated and modular construction market between 2015/2020. The precast/prefabricated wall segment is projected to hold the largest market share among all product types during the forecast period with the largest market being dominated by the Asian-Pacific region.  If Asia-Pacific are focusing on producing mass quantities of products  for their own use (as the report indicates), the same products that Balfour Beatty have previously relied on as a cost effective alternative for some of their major residential projects, then one may wonder if the availability could become  limited causing the price to increase.

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