2. Construction Companies: Prudent
Company Strategy and Project Selection,
Management and Controls to Meet
Enterprise Performance Targets
Patricia (Tricia) Atallah
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3. Index
1. The Business of Construction
2. Project Selection, Management and Controls to Meet
Performance Targets
Strategic Vision and Management Are
Crucial to Construction Company Success
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5. Prototype/Model as Example
Profile of a Mid-Sized Construction Company providing
services in Brazil:
Construction contractor owned and managed by founders,
senior partners and employees with up to approx. R$ 500
million in annual revenues (private and public sector work)
serving regional heavy, industrial, infrastructure and
building construction markets.
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6. The Business of Construction Overview:
Strategic Vision, Leadership and Management
• Building a successful and sustainable construction
enterprise
• Communicating a coherent company mission, vision,
strategy and direction and inspiring leadership,
management and project team efforts toward common
goals
• Supporting dedicated contract/ risk management,
rigorous enterprise training, policies, procedures,
systems, controls
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7. • Prudent leadership and strategic management of the
construction enterprise and efficient project operations
are crucial to company success
• Achieving competitive advantage by maximizing
successful project delivery and company financial
performance/ sustainability
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The Business of Construction Overview:
Strategic Vision, Leadership and Management
8. The Business of Construction Overview:
Evaluating Market/Industry Trends
1. Overall Strategic Assessment:
• General market, economic, financial and political
trends and demand for construction services as it
pertains to company’s key markets
• Company strategic planning process as an
indispensable ongoing leadership, management and
team-building tool
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9. • Identification and evaluation of enterprise risks,
opportunities and challenges:
Economic and political trends Ease of market entry and presence
Company track record Competitive environment, market positioning
Complexity, location of the work Volatility of materials and equipment prices
Risk management requirements,
corporate governance and
compliance
Availability of qualified executive, management
and project personnel
Supply chain logistics Financial strength and financing capabilities
Price competition Among others
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The Business of Construction Overview:
Evaluating Market/Industry Trends
10. • Company leadership structure/management vision,
overall business strategy and implementation:
Leadership and management profile
Market reputation and positioning and competitive advantages
Key areas of expertise and experience
Competitive advantages
Industry best practices
Enterprise risk/reward profile
Company track record
Ongoing strategic planning process
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The Business of Construction Overview:
Evaluating Market/Industry Trends
11. • Meeting financial performance targets and financing
requirements:
Regular monthly and quarterly financial projections and reporting on
individual project and total project performance
Forecasting and review of quarterly, semi-annual and annual
company financial performance and results
Maintenance of lines of credit and relationships with bankers,
sureties and risk managers
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The Business of Construction Overview:
Evaluating Market/Industry Trends
12. • Leveraging external capabilities and support:
Joint ventures
Strategic alliances
Primary advisors
Advisory boards
Partnerships
Legal counsel expert support on corporate matters as well as contract
preparation, negotiation and resolution of contractual issues and
disputes
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The Business of Construction Overview:
Evaluating Market/Industry Trends
13. • Periodic strategic review of key company risk factors:
Using SWOT analysis as an evaluation tool to facilitate senior
leadership team review/analysis of enterprise strengths,
weaknesses, opportunities and threats; development/utilization of
company strategic business plan as a vital planning and
management tool
• Satisfying local and international anti-corruption
compliance requirements: Brazil Clean Company Act, Foreign
Corrupt Practices Act (US), Bribery Act (UK)
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The Business of Construction Overview:
Evaluating Market/Industry Trends
14. • Internal company infrastructure:
• Gaining competitive edge as a combination of:
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The Business of Construction Overview:
Evaluating Market/Industry Trends
Corporate, organizational and legal structure
Enterprise policies, practices, procedures, systems and controls
Compliance as the backbone for company operations
Qualified/experienced/efficient
leadership/management/project/technical teams
Efficient, cost-effective enterprise/project systems and controls
Strong company culture dedicated to responsiveness to clients
Risk identification, management, mitigation and transfer
15. • Building market visibility and recognition:
Winning ongoing/repeat client work; soliciting new business
Building strong relationships with design, engineering/contracting
communities; real estate developers, property owners, corporations,
public sector
Implementing strategies to gain market visibility via public relations,
media exposure, advertising, industry conferences
Publication of proprietary expert reports, industry journal
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The Business of Construction Overview:
Evaluating Market/Industry Trends
16. 2. Market Positioning/Client Development:
• Review, analysis and update of Company’s core
construction markets and general macro trends; status
and outlook for company’s core markets and general economic,
political, financial, financing, risk management and regulatory
trends and challenges
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The Business of Construction Overview:
Evaluating Market/Industry Trends
17. • Targeted company brand marketing/business
development strategies and campaigns:
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The Business of Construction Overview:
Evaluating Market/Industry Trends
Committed marketing and business development programs to
promote company brand, market presence
Proven areas of expertise/experience
Strong senior leadership and management capabilities
Financial strength and capacity
Corporate integrity
18. • Client Development/Expansion Initiatives:
Maintaining high sensitivity and responsiveness to clients’ capital
project vision, goals, priorities, preferences, needs, concerns
Budgetary constraints and risk profile/perspectives
Providing practical solutions to satisfy client needs and challenges
Engaging senior leadership in high-level business development
initiatives
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The Business of Construction Overview:
Evaluating Market/Industry Trends
19. 3. Building a Dynamic and Efficient Project Management
Operation:
• Ongoing dedicated training and development of qualified management,
construction, technical and support personnel
• Utilization of proven and effective procurement strategies and logistics
supported by vital IT systems and effective company project practices
• Ongoing evaluation of project and team performance such as design
process, project planning, bidding, procurement and logistics, project
management, project controls, financial management, reporting and
controls and risk management policies, procedures and controls
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The Business of Construction Overview:
Evaluating Market/Industry Trends
20. 4. Maximizing/optimizing company financial
performance/results:
• Rigorous periodic review of overall company financial goals,
performance targets, results and forecasts, actual financial
performance and position, capabilities and results, bank financing
support, risk management issues
• Optimization of company leadership and management best
practices, policies, procedures, systems, reporting and controls
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The Business of Construction Overview:
Evaluating Market/Industry Trends
21. 5. Ongoing review and analysis of general market,
economic, financial and political trends and demand for
construction services in major industry sectors, ease of market
entry, competitive environment, location, complexity of the work,
current market factors and potential risk/reward profile
6. Other financial considerations: meeting/exceeding
company financial goals, forecasts and results, financial capacity,
planning, management, risk and regulatory compliance
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The Business of Construction Overview:
Evaluating Market/Industry Trends
23. Project Selection, Management and
Controls to Meet Performance Targets
1. Evaluating project bidding opportunities:
In context with overall business goals
Strategy
Leadership priorities
Construction/technical team capabilities
Financial capacity
Project infrastructure (management, systems, reporting and controls)
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24. 2. Selecting the appropriate project delivery method:
Lump sum contract (fixed price/turnkey)
EPC contract (engineering/procurement/construction)
Project administration contract (cost plus fee)
Unit price contract
Guaranteed maximum price contract (GMP)
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Project Selection, Management and
Controls to Meet Performance Targets
25. 3. Using best practices to make the bid decision:
Based on project location, type, size, scope and logistics
Client
Geographic location
Project management and technical team expertise and resources
Project schedule considerations
Project budget and cash flow requirements
Overall risk profile
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Project Selection, Management and
Controls to Meet Performance Targets
26. 4. Identifying, negotiating and managing contractual
and other project risks in collaboration with the project
owner, design/engineering teams, subcontractors,
consultants/attorneys, materials/equipment suppliers, strategic
partners, etc.
5. Minimizing the risk of loss by protecting of the
health/safety of project personnel and of and materials,
equipment, machinery and other project assets
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Project Selection, Management and
Controls to Meet Performance Targets
27. 6. Developing construction program/project plans:
Project scope/design development
Cost estimating, pricing, bidding and procurement
Project budget and schedule development
Project risk profile and mitigating factors
Project planning/management/risk avoidance
Stakeholders’ communication/collaboration plan
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Project Selection, Management and
Controls to Meet Performance Targets
28. 7. Managing project progress, cost, quality and safety
controls, reporting and dispute avoidance and
management:
Cost, schedule, progress, quality and performance management
against project budget, progress and completion
Development of forecasts /mitigating strategies to achieve optimum
project cost and utilizing optimum dispute avoidance/management
measures/solutions with contracted parties
Maintaining quality standards and safety of on-site personnel
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Project Selection, Management and
Controls to Meet Performance Targets
29. 8. Optimizing project performance (cost, quality,
schedule):
Based on well-defined scope and contractual terms and conditions
Optimal/preferred mode of project delivery
Experienced, competent and resourceful project executive,
management, technical and IT teams
Prudent, effective/efficient project management practices, processes,
procedures, systems and controls
Successful project delivery to the client at optimum cost, schedule
and quality standards, client satisfaction and repeat business
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Project Selection, Management and
Controls to Meet Performance Targets
30. Construction Companies: Prudent
Project Selection, Management and
Controls to Meet Performance Targets
Questions?
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Strategic Vision and Management Are
Crucial to Construction Company Success
31. Thank You!
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Construction Companies: Prudent
Project Selection, Management and
Controls to Meet Performance Targets
Strategic Vision and Management Are
Crucial to Construction Company Success
