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business strategy for carillion plc 2016 2020 Assignment

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business strategy for construction firm is assignment for construction Management Course at University of West of Scotland. This report scored nearly 60 percent. I thought I should share it for wider student community. Students need to add more referencing for better report than this.

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business strategy for carillion plc 2016 2020 Assignment

  1. 1. Contents 1.0Aims of this report ........................................................................................................2 1.1 Research Method..........................................................................................................2 1.1.0 Introduction...............................................................................................................2 1.2 Brief History ................................................................................................................2 2.0 Operational Markets are Diverse .................................................................................2 2.1 International Market.....................................................................................................3 2.3 2012-2014 analysis Carillion and overall performance of Top 100 construction Firms ............................................................................................................................................3 2.4 Conclusion ...................................................................................................................3 3.0 Construction industry performance and analysis of Last Five years ...........................3 3.1 Employment in the industry.........................................................................................4 3.2Economic considerations ..............................................................................................5 3.3Private Sector vs Public Sector Study...........................................................................5 3.4Housing Industry during 2007 to 2015 .........................................................................6 3.5 Infrastructure Sector from 2007 to 2015....................................................................6 3.6 Construction 2025........................................................................................................7 3.7 Industry by 2025 ..........................................................................................................7 3.8 Infrastructure Investment .............................................................................................8 3.9 Rented Houses..............................................................................................................8 3.10 Intelligent Buildings...................................................................................................8 3.11 Low Carbon................................................................................................................8 3.11 Diversity................................................................... Error! Bookmark not defined. 3.11.1 Domestic repair and Maintenance Market..............................................................8 3.12 Green Construction....................................................................................................8 3.13 International Market...................................................................................................8 4.1 Reduction in Cost by lowering Waste and low Carbon Targets ..................................9 4.2 International Markets ...................................................................................................9 4.3 Investment on People...................................................................................................9 4.4 Smart and intelligent Cities Programmes ....................................................................9 4.5 Investment in Research................................................................................................9 4.6 Bibliography...............................................................................................................10
  2. 2. 1.0Aims of this report This report outlines salient features of Carillion plc, defines its business practise, its areas of expertise, its history, area of strength and it cooperate Health. This report briefly discuss current economic health of Carillion plc, its brief history, sectors where it is working and comparison of its business with current construction climate. Strengths of the company and its area of weakness would be discussed. In the end suggestions or ideas would be presented for development and expansion of the company. 1.1 Research Method Carillion published annual reports on its performances, so primary focus would be on its own reports, financial time’s figures on company Yearly progress, construction Management resources provide on Moodle and also various journals if relevant would be used to reinforce author analysis. Internet resources including various websites and e-reports. 1.1.0 Introduction It is one of the UK's leading integrated support services companies, with extensive construction capabilities, employing around 46,000 people and working in UK, Canada, Middle East and North Africa. With 513 million pounds revenue in Canada which accounted 11 percent of its total revenue, 3357million which is 73 percent of group revenue and around 717 million pounds revenue from construction services in Middle East and North Africa which counts 16 percent of total revenue. 1.2 Brief History Carillion website explains its brief history as in late 1990s Tarmac Group, Wimpey Construction, Cubitts and Mitchell Construction combined to become part of Tarmac Group. In 1999 Tarmac Group demerged into specialists companies like Building Materials Company (Tarmac) and company focused on supports services, Facilities Management and Construction Services. After birth of Carillion plc in 1999, since then Carillion has acquired number of well- established market names likes Mowlem (2006), Alfred McAlpine and VANBOOTS (2008) and Eaga (2011). Created Carillion Rail by buying 51 % of GT Rail Management, 2002 bought Citex Management and in 2005 bought planned Maintenance Group. After 2005, it followed policy of buying big Construction names and Services providers like of Mowlem in 2006, Alfred Macpline and Van bots Construction in 2008. In 2011 Eaga which was investment in Energy Efficiency and bought half share in Bouchier Group and in October 2013 they bought John Liang. Company is so resourceful it was able to put bid for its no one rival firm for 201 Billion pounds however it failed to reach any deal. There are number of other companies they bought after. 2.0 Operational Markets are Diverse It works in diverse Markets Such as Aviation, Commercial, Education, Energy, Financial Services, Health and also providing Services Management in UK.
  3. 3. 2.1 International Market Carillion Plc is also involved in providing infrastructure services in Middle East,Canada and North Africa 2.3 2012-2014 analysis Carillion and overall performance of Top 100 In 2014 Carillion was biggest profit making firm in UK which was 111 Million pounds which was 164.8 in 2013 however total drop of 48 percent in profit as compared to 2013. In the same period 2011/2012 turnover was 4,081(£ m) and 4,403 (£ m) respectively. Based on analysis Top 100 construction firms listed on Construction Index website had total revenues of £58.4 Billion only 0.7 percent increase, total perfect rose from £789 to 872 £ around 10.5 percent increase and an average profit also improved marginally low i.e. only 1.36 t0 1.49 percent. The top Profit Margins were noticed by Five companies as Dawnus (9.7 %), Bethel (9.1%) RJ Macleod (7.7 %), 6.8 % and 6.3 % by Thomas Armstrong and Mullaley respectively Out of 100, based on annual reports numbers, one can easily observe significant improvement in their productivity. Fourth four companies have upgraded their position in terms of turnover ranking on the other hand Forty two dropped down the league, some big names still held their places however some significantly lower down the chart. Fifteen percent of total companies dropped their position in terms of turnovers, but shown progress in terms of profitability. Balfour Beatty the biggest rival of Carillion plc in terms of turnover and size of its operations profit plunged by 70 percent in last fiscal year and 2014 its profit dropped by 57 percent even Interserve with highest profit in last fiscal year dropped from £ 180m to £68 m pounds. Moreover, Six Big names of Construction industry could not hold their position in terms of profit rankings. 2.4 Conclusion The analysis of performance of top 100 constructions companies shows complex nature of Construction industry operations and it vulnerability to risk despite having better turnovers, it profit margin can be significantly impacted by its operations and policies each year. They can hold no one position on Table in terms of Turnover and volume of their operations and amount of their projects could involve big cash sum but there could be heavy risk factor in terms of reduction in their profits per year. 3.0 Construction industry performance and analysis of Last Five years This industry has significantly contributed towards economy i.e. £ 103 Billion pounds which is roughly 6.5 percent of total economy in 2014. Within Construction industry housing sector has effected severely during this period. Productivity in construction sector dropped more than the whole economy in 2008. In 2009 sector made progress quicker than the economy as a whole, and 2010 and 2011 saw generally flat progression, followed by another decline in 2012 and fractional recovery
  4. 4. through 2013.The industry’s output rose in 2014 by 9.5% in real terms, the biggest surge in last two decades. Source Construction industry: statistics and policy 3.1 Employment in the industry 2.1 million Jobs are related with construction industry in 2015, which is 6.2 percent of the total jobs. In last decade jobs in industry largely remained stable despite decline in 2009 and 2010. However considering it to all jobs, Construction jobs figure has dropped from 7.0 percent to 6.2 percent in 2005. Performance ofSectors within construction industry
  5. 5. Source Construction industry: statistics and policy 3.2Economic considerations As discussed earlier, Construction industry holds significant place in Supporting UK economy, accounts for 6.1 percent of total economy. Economy seems to be improving since 2009, despite some variations in 2012 and on fast phase since 2013 however when construction industry is analysed it has declined in 2008 and 2009 and followed the economy after 2013 as seen in the comparison line chart. Source Construction industry: statistics and policy 3.3Private Sector vs Public Sector Study During 2007, Private sectors contribution within the industry was roughly five times as compared to Public sector. But Private sector also followed down turn pattern as decline could be noticed between 2008 and 2009.
  6. 6. Public sector performance got better during the same time due to UK incentive which means additional investment in Infrastructure. From 2013 onwards Improvement can be noticed ending up increasing to £ 16.8 billion whereas Public sector output was £ 5.8 Billion during the same time. From 2013 onwards, private sector orders have picked up and in 2015, they were worth £16.8 billion, compared to public sector orders worth £5.8 billion. Source Construction industry: statistics and policy 3.4 Housing Industry during 2007 to 2015 The downturn period of 2007 left large impact on Private Sector capacity of House Building. From 2007, when it was responsible for 76 percent of total orders decline sharply till 2009 and shown growth after 2009. In 2015, private sector orders were worth £5.6 billion, 83% of all house building orders. Source Construction industry: statistics and policy 3.5 Infrastructure Sector from 2007 to 2015
  7. 7. Infrastructure shown sign of steadier growth between fiscal year 2009 and 2010 and since continued to relatively flat after. In 2015, private sector infrastructure orders totalled £2.6 billion, 58% of all infrastructure orders. Source Construction industry: statistics and policy 3.6 Construction 2025 In July 2013 Government with Collaboration with Industry experts ambitious report on future construction under the title Construction 2025 in which it set aims for achieving low carbon targets, . Some silent features of the report would be discussed as relevant to this report. Source construction 2025 3.7 Industry by 2025 Report suggest an increase up to 70 percent by 2025 , with that much potential Industry need to retain, groom and grow talent and required skills in industry to meet demands of industry. At the same
  8. 8. time industry should invest in Smart Technology as Government will make all Government contracts to be run through BIM. So BIM means sustainable structure. Potential of Green technology for next years would be around 22.8 percent which means getting ready for low carbon construction for future. Also effective procurements routes to cut cost and time. High Construction costs as compared to foreign competitors as there is great potential of using innovative methods, better procurement methods and use of new materials can help to reduce cost. 3.8 Infrastructure Investment Government would invest in infrastructure projects to support industry as one of the biggest investment in Cross rail Project 3.9 Rented Houses UK government is investing around 1 billion pound investment for purposely built houses for rent and building around 10,000 new homes, also investing in people to improve their capacity to afford mortgage. 3.10 Intelligent Buildings Government anticipate increase use of technology especially computer and the capacity of Integrated City system would be worth 200 Billion by 2030. 3.11 Low Carbon Government set a target of achieving 80 percent low Carbon emission by 2050. Major investments and incentives for making exiting structures more energy efficient and to have all new structure to be low Carbon. 3.11.1 Domestic repair and Maintenance Market Significant number of Complaints received around 70000 more than any sector, cost UK around 1.5 Billion pounds and construction industry spends around 27 billion pounds per arum 3.12 Green Construction Over last five years Government through TSB has spent around 83 million pounds in innovation sector through low impact Building innovation platform and around 34 million pounds were invested by construction industry itself. 3.13 International Market It is estimated around 4.3 increases in construction industry globally in developing countries. Overall increase would be 70 percent by 2025. Therefore there are opportunities for expansion and exports of UK construction industry. And India would be would be largest country in terms of population, similarly would population would also increase to 9 billion over next 20 years.
  9. 9. Which meant challenges in meeting infrastructure demands, for which UK industry should prepare to meet from UK experience, building new international cities which would be sustainable, smart and modern? Those learnt principles from could be applied abroad. 4.0 Cooperate Strategy for Carillion plc Based on past performance and Construction 2025 Following sectors are vital for Carillion to achieve sustainable growth in future. 4.1 Reduction in Cost by lowering Waste and low Carbon Targets Carillion plc website states target of 40 million pounds profit for long term by not putting any set time, to me it should be time frame for next five years, it set by 24 percent reduction by 2020 however according to Government 2025 strategy it is aiming to cut emission by 50 percent by 2025, Carillion should set this target to be achievable by 2020. 4.2 International Markets Carillion is only limited to few countries in oil Rich Middle East, also it is involved in construction of infrastructure and not in Management services. Expansion of its operations in Middle East, in emerging economies likes of China and India is very important, past record shows Carillion operations expansion s in Canada, North Europe and Middle East was strategically good decision, Carillion has started parenting with Chinese company in building Manchester new Airport City which involves 800 million investment from China, so in future working experience can help Carillion to expand its operations in China based on its reputations. 4.3 Investment on People In coming years, construction industry would face serious challenge of skilled workforce, it’s very important for Carillion to introduce more apprenticeships and should introduce schemes to make construction industry attractive and also introduce measures in recruitment policy to hire more people from ethnic background and increase number of women in industry as they represent significant portion of society. 4.4 Smart and intelligent Cities Programmes Carillion needs to develop its capability to design intelligent Future cities which involve heavy use of new technology and also be able to cut its cost by using innovation in design and be ready to meet challenges of increasing population in Developing world. Where construction industry would growth would increase by 70 percent in next 10 years. 4.5 Investment in Research Carillion profit is low as compared to its turnovers to other companies, it is likely the cost is high due to procurement procedure, use of old methods, lack of innovation and there could be number of other factors, hence it should have its own research institute to keep it updated with new innovations and challenges ahead. It should be responsibility of Research institute to monitor its performance and to increase its profit by cutting waste and all other methods. This institute can forecast industry capacity and performance and can study countries before investing money.
  10. 10. 4.6 Refernces Carillion plc (2016) Our 2020 sustainability strategy - targets [Online]. Available: http://www.carillionplc.com/sustainability/our-2020-sustainability- strategy/targets.aspx#.VvHgRnq70bA [Accessed 22 Mar 2016]. Government (2015) The construction industry: Statistics and policy [Online]. Available: http://researchbriefings.parliament.uk/ResearchBriefing/Summary/SN01432 [Accessed 17 Mar 2016]. HM Government (2013) Construction 2025 industrial strategy: Government and industry in partnership [Online]. Available: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/210099/bis- 13-955-construction-2025-industrial-strategy.pdf [Accessed 13 Mar 2016]. Index, T. C. (2016) Analysis: Top 100 contractors 2014 [Online]. Available: http://www.theconstructionindex.co.uk/news/view/analysis-2014-top-100-contractors [Accessed 17 Mar 2016]. The construction Index (2007) Top 100 construction companies 2014 [Online]. Available: http://www.theconstructionindex.co.uk/market-data/top-100-construction-companies/2014 [Accessed 17 Mar 2016]. Wikipedia (2016) Carillion. Wikipedia. [Online]. Available: https://en.wikipedia.org/wiki/Carillion [Accessed 11 Mar 2016].

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