Team - APEX Report Summary

INTERNATIONAL FEDERATION OF CONSULTING ENGINEERS YOUNG PROFESSIONALS MANAGEMENT TRAINING

FIDIC YPMTP11 TEAM APEX SUMMARY CASE DISCUSSION SEPTEMBER -2011

Course Coordinator y Steen Frederiksen Prepared By y Stephen Walker y Sanjeevi Jayachandran

Team - APEX Report Summary

INDEX

1. Introduction 2. Case 1 3. Case 2 4. Case 3 Organization & Human Resource Development Business Development Framework Business Development Instruments

5. Conclusion

1.

INTRODUCTION

Team - APEX Report Summary

1.1

OBJECTIVES

The objective of the YPMTP is to make young professionals and potential managers fully aware of the main business aspects that a firm faces. To do this participants are lead systematically through modules of the FIDIC Business Practice Training Manual. Using this knowledge, they then undertake case studies linked to the modules. The aim of this systematic coverage of business management issues is to develop new approaches, leadership skills and intercultural understanding, complemented by feedback on how the industry at large sees the program s outcomes through participation in, and presentations at, the FIDIC conference.

1.2

PROGRAM THEME

The main theme / concept of the program is to discuss the various scenarios & situations arising from starting a consulting firm, ownership models, acquiring specialized portfolio s, profit centre s, human resource management, bonus & share holding pattern for the staffs, marketing, expansion of the new advanced portfolio s, quality requirements & its impact, cost management, financial issues, expansion into new countries & subsidiaries, organizing business in multidisciplinary & multinational firm, joint venture, sub-consultancy, sustainable development, mission & code of statement, transition from founder to the next level, agreement of cooperation & representation, professional & ethical behaviors and business integrity.

1.3

PROGRAM STRUCUTRE

The program falls in two parts. The first part is an Internet-based learning process where the participants are lead through FIDIC business practice training modules followed by discussion and the exchange of input for three cases that are connected to the modules. The case work consists of a period of discussion of FIDIC Guide to Business Practice training modules (three weeks) with question posed by Mentors that will include an element of describing the local situation in each participant s country. Participants each complete assignments for review and comment by the case Mentor and the Facilitator. Conclusions are brought together by team editors but there is no preparation of case reports by the editors. This first part takes place over six months period prior to the conference in Davos and makes extensive use of the eFIDIC Training Platform (www.eFIDIC.org) where participants post replies and take part in online sessions in the virtual meeting room.

The second part takes place at the FIDIC Annual Conference. It involves working sessions covering each of the cases over three days and the preparation of a final report and presentations to the conference at

Team - APEX Report Summary the Future Leaders Workshop. It is during these working sessions that communication between the teams and coordination for the final overall case reports to be presented at the workshop takes place. 1.4

PROGRAM OVERVIEW
Kick-Off Session Case Case Case Case Case Case Case 1 Start 1 Midway 1 Wrap-up & Case 2 Midway 2 Wrap-up & Case 3 Midway 3 Wrap-up 3 Start 2 Start

The program has been run through the following schedule

Summary Report Preparation Physical Working Sessions Final Report Preparation Final Report Submission

1.5

FACULTY
Steen Frederiksen Ben Novak Bayo Adeola Robin Crouch Course Coordinator

Below are the faculty members who are being with us during the YPMTP 11 program period

Case 1 Mentor Case 2 Mentor Case 3 Mentor

1.6

DOCUMENTS
FIDIC Project Sustainability Management Guidelines FIDIC Business Integrity Management Guidelines FIDIC Sustainable Development Strategy FIDIC Risk Management Short Guide FIDIC Capacity Building brochure FIDIC-Client-Consultant Model Services Agreement FIDIC Representative Agreement

The following documents have been referred and used a guide for case studies

Team - APEX Report Summary 1.7

TEAM NAME

YPMTP 11 Team 1 have been discussed, voted & selected APEX as their identification. APEX has been chosen because of the following APEX has the meaning of Highest Point (Top Level) A P E X Stands for the First Alphabet in English Perfect Excellent Xenon (Bright)

APEX has been proposed by our team member Li Yanjuan & we do appreciate her for this great suggestion

1.8

TEAM MEMBERS
Bevan Sandison Bin Wen Fang Charmaine Manyi Kim Joonghyuk Li Huabing Li Weichao Lin Youhui Li Yanjuan Park Jeong Jun Park Sung Joon Sanjeevi Jayachandran Stephen Walker Yan Wang Yousuf Bashir Khawaja

Below are the names of the team members who are part of Team APEX

Team - APEX Report Summary 2.

Case 1

Organization & Human Resource Development

The following sub topics are being discussed in the Case 1 Organization & Human Resource Development Organizing a consulting firm Administration & Organization of activities Human resource management 2.1 2.1.1

Organizing a consulting firm Case 1 Scenario 1

Charles has been working for 5years in a consult firm. By that time his architecture friend approached him for some structural design assistance Charles accepts & takes on the job and started to work on the evening hours & spare time. Charles & his friend are successful. Within half year time Charles employed two of his old friend (Jack & Joe) full time & rented a small office But keeping his old job Charles employer was not informed formally of his spare time job, but he realized in some point of time what is going on and has decided not to object (b cos Charles is an excellent engineer) Question 1: Is it acceptable for Charles to start working on his own projects in the evening while having full time job? Point of Views & Editors Draft Conclusion:
S. No

Acceptable To a limit until his efficiency does not affect his full time job To do the work in the evening

Not Acceptable Legal & Ethical Issues If his employment contract states so To use the resources of the company (time) Conflict of Interest & Intellectual property rights are involved As per Code of Conduct for Professional Engineers

1 2 3 4 5

It is not acceptable due to the contractual, legal & ethical issues. Since he is a professional engineer he should adhere to the code of conduct. Question 2: Should Charles inform his employer and risk being told not to do the work? Point of Views & Editors Draft Conclusion:
S. No

Yes

need to inform

No

Not required

1 2

Ethically

Contractually No company like his employer to do off time works so not required

Charles should inform his employer on the ethical point of view, however he don t have contractual obligations to do so.

Team - APEX Report Summary Question 3: Is it acceptable to establish a de facto proper consulting firm and at the same time being employed by another company? Point of Views & Editors Draft Conclusion:
S. No

Acceptable In principle Establishing is accepted - if day to day activities are managed by another group of persons

Not Acceptable Doing a favor & setting a company is different As it will take an advantage over the first employer Conflict of interest in terms of projects & resources Un proper & Un fair to work at two places same time

1 2 3 4

It is not acceptable to establish & manage a firm, while having a full time job with other employer taking into consideration the ethical & professional code of conducts. Question 4: Is Charles in reality competing with his employer? Point of Views & Editors Draft Conclusion:
S. No

Yes - Competing By using time, concentration or efforts, resources (supplier, contractors, etc..) of employer If both organization works towards same goal B cos of same nature of business

No - Not Competing At this early stage but will compete at later days

1 2 3

If client base are different May not be competing for the same clients

By all the ways (time, efforts, resources, nature of business, etc ) Charles is competing with the employer expect few may not be cases in the early stage but which are most likely to happen at later stage as the business grows. 2.1.2

Case 1 Scenario 2

Charles gave up having two jobs and decided to focus on developing his own company. He quickly developed the company and within a couple of years they had a staff of some 50 persons. His old friends each developed a division: structural and mechanical. Charles realised after some years that he had to share the ownership and risk - with Joe and Jack. The company became a partnership and the three owners now had shares of 50/25/25 and unlimited personal risk in financial matters. Jack and Joe did not pay to get their share; the value of the company was not considered an important issue and all three were more concerned with risks Question 5: What might the reaction of his former employer be? Is it an acceptable way of establishing your own company, could Charles have done it otherwise.

Team - APEX Report Summary Point of Views & Editors Draft Conclusion:
S. No

Positive It s the way it happens so no harm

Negative Former employer - may opt for a legal action based on employment contract conditions May be upset (b cos lost an excellent engineer & found a new competitor) Charles have taken too long, he should have done it when he has employed two of his friends

1 2 3 4

If Charles parts away in the right way then the employer should feel normal / neutral May be happy as Charles will not be using office spare time for his own business Accepted if Charles has not used company resources, staffs, technical materials, contacts

Charles former employer should be neutral, if he (Charles) has not violated his employment contract conditions. Charles should have left the job earlier (when he employed two of his friends) and might take a higher risk by adhering to the Ethics of the Profession (as discussed in Question No.3) Question 6 (a): What are the types of ownership of consulting firms in your country: partnerships, private shareholding, public shareholding (relate to size)? Point of Views & Editors Draft Conclusion: Typically the following type of ownership exists all over the world Sole Proprietor (Single Owner) in most cases these firms are small in size & deals projects from individuals Private Partnerships (Shareholding) Mid size firms which are capable of doing big project (both from private & public companies) Public Shareholding Large firms and some specialised firms which are capable of doing project of any magnitude Question 6 (b): Is ownership part of the remuneration; is equity distribution or equity based pay-out used instead of salary or bonus? Point of Views & Editors Draft Conclusion: Type Yes No Remuneration is a salary or payment towards a work accomplished Ownership is a title or possession of a group of resources which can create wealth whereas remuneration does not do so Ownership carries unlimited risks, liabilities, etc, whereas remuneration does not carry so. Equity instead Equity instead based pay-out of Salary based pay-out of Bonus Can be part of the salary Can be used in part or full of bonus Not as a full salary

Ownership part Remuneration

of

Ownership can be given by means of selling shares for a certain amount of money

Team - APEX Report Summary Ownerships cannot be part of remuneration unless it has been established by own or purchased by means of settlement with another owner. However equities (shares) can be issued as part of salary & remuneration (not in full), and can be issued in part or in full for bonus. Question 7: What is your opinion of the ownership model chosen by Charlie? Point of Views & Editors Draft Conclusion: Private Shareholding (Partnership) and it is appropriate in order to share the liability & risk as per the percentage of the shares hold by the shareholders. Question 8: What particular considerations would you have if offered ownership on the conditions that Jack and Joe accepted, bearing in mind that a partnership entails unlimited liability for all partners? Point of Views & Editors Draft Conclusion: Determine individual responsibilities Agree on common plan / agenda about selling, transfer, addition of shares, etc Determine the strategic plan of the business Consider the existing liabilities (legal & financial) on the business & the way to overcome Risk management & quality procedure Legal advice needs to be obtained 2.1.3

Case 1 Scenario 3

The company developed and the need for a specialized IT department became apparent The three partners decided to acquire a newly established specialized IT company. Larry, the young founder of the IT company was very positive but did not want cash. He insisted on becoming a partner. A deal was agreed and Larry became a partner with a 6% share based on a valuation of his company. The ownership distribution became 47/23,5/23,5/6%, respectively. Question 9: Please comment upon the deal made by Larry, and the risk he is taking. How could he have safeguarded his financial position? Point of Views & Editors Draft Conclusion: Comment on the deal made by Larry and the risk he is taking Larry will be a minor stakeholder with less holding of shares & he should also carry the liability for the decision made by the others business partners Larry IT firm has became a division in the Charles Company & the development of the division will be based on the Charles company performance Larry has made a long term investment with no financial gains immediately (anticipating future growth) Larry may also be liable for all the previous financial deficits, legal liabilities, etc.. if the acquisition deal has not considered those things Larry safeguard his financial position if he has opted the following Certain amount of money & the percentage of share. With remuneration for his service & some percentage of shares. Larry can choose to enter into a service level agreement with the company (instead of selling)

Team - APEX Report Summary Question 10: In your company: how is risk assessed and handled in your company? How is professional liability and liability insurance handled? What is the additional cost of this as a percentage of fees in your company? Point of Views & Editors Draft Conclusion: Risk Assessment are being done in all companies during the proposal (bidding) stage itself The costs of the insurance are being included in the contract (covered) by the company (the percentage will differ depending upon the project value, risk involved, etc ) The costs of the insurance are being covered as overheads in the contract value Depends upon the contract with the client Depends upon the local government law (where the project is executed) Liability in various countries o In Australia 3 to 5times of the fee o In Pakistan - 2times of the fee (as per new regulation introduced) 2.2 2.2.1

Administration & organization of activities Case 1 Scenario 4

As the company grew and took up more specialties, the three main departments now became profit centres Each profit centre had its own recruitment programme, development and training schemes and bonus arrangements. But to an increasing degree projects required teams and a matrix type of organization and the individual bonus schemes started to complicate fee budgets and risk sharing. The three partners felt that with the growth of the company they had trouble fully controlling the risks they were running and at the same time there was a pressure from the next rank of heads of department to become partners. Question 11: How would you handle the conflict between specialized profit centres and the need for matrix organization type of teams especially in relation to bonus payments? What are the pros and cons seen from a staff point of view of profit centres? Point of Views & Editors Draft Conclusion: Profit Centres should be clearly aligned with the company values & objectives. Bonus should be based on the performance at different levels & the overall performance of the company Bonus for individual to be based on the individual achieving goals as agreed with their inline manager.
S. No

Pro s Staff s feel they are in own destiny / their project Will motivate to work hard and put more efforts

Con s If the team s are formed across different profit centres then everyone tend to work in patches Less willing / cooperation to help other department

1 2

Question 12: How would you design the transition from a partnership to a shareholding in relation to company value, bonus expectations and general investment needs?

Team - APEX Report Summary Points of View & Editors Draft Conclusion Valuation of the company needs to be finalized Proposed valuation of the company needs to be agreed by the present shareholder & the new prospective shareholders. Clear guidelines & rules to be formulated in order to distribute the new shares and further creation & distribution of new shares Bonus distribution between the shareholders & non share holders of the company needs to be finalized Board to established to oversee, regulate & implement the decisions made by the shareholders Strong accounts, finance & audit departments to be established Government & governing institutions of the country need to be followed Clear vision of the company future, its investment diversification, growth level needs to be made clearly 2.2.2

Case 1 Scenario 5

Decision has been made to form a shareholding company and to offer shares to employees based on specific rules A shareholding agreement was established including a formula for evaluating, selling, buying the shares, etc A clause has been included which states that no divined to be paid for next 10years in order to reduce the need for the borrowing money and all earnings shall be retained by the company Question 13: How would you structure the shareholders' agreement if the key aim is to make it attractive for staff to become shareholders and enable the company to attract new, highly qualified staff? What would be the most important issues? Point of Views & Editors Draft Conclusion: The dividend earned per shares during the tenure of 10years (lock in period) will be paid at the end of 10th year with certain interest rate. Guaranteeing a certain payout at the end of the 10 years could be a way to overcome this, but it also exposes the company to risk through non-performance Annual Bonus & Rewards to be paid in terms of bonus (part of shares & part in cash) Part of salary for higher management staff will be paid in shares A set percentage of profit (extra value added EVA) be allocated to staff bonuses, and that a percentage of that pool is used to allocate shares to staff (i.e. they get a mixture of cash and shares as their bonus). Part of bonus is divided to shareholders on periodic basis. Balance part can be used in accumulation to risk reserve fund and capital accumulation fund for future business growth To offer attractive or interest free loans to staff for buying shares Maximum numbers of shares holding per person will be restricted according to the position held in the company Transfer / Sale of shares within the company will be restricted (to certain numbers in a year)to attract the new people to join & get the shares Question 14: Assuming that partners are given shares according to an assessment of their input and without any payment, should shares then in general be sold to staff or given as part of the remuneration package? Is shareholding at all a motivation factor for ordinary staff?

Team - APEX Report Summary Point of Views & Editors Draft Conclusion: Sold or Given Shares can be given as part of some rewards for certain work accomplished & as bonus to the employees. If the shares need to be sold then employees may not purchase it Best way to give shares in lieu of cash bonus, or at least part of it. The partners of course can be given shares according to an assessment of their input without extra payment because they had already paid before. The new shareholder should pay to buy the stocks. Company usually assesses the contribution of the employee who wants to be shareholder. Then the shares can be given as rewards for the outstanding-contribution-employees instead of selling to them. Others can be the shareholder by buying shares in cash which is already extracting the equivalent contribution part. Motivation Factor Shareholding can be motivation factor to the senior & middle level staff. For ordinary staff the shareholding will not be a motivation factor since the percentage of their holdings will be less and their representation in the board will be also less. Further, ordinary staff may not hold the shares due to their mindset in shifting the jobs for higher position & pay scale. Shareholding can create greater levels of commitment to achieving financial targets. However, if staff has to front up with money to buy the shares, then particularly younger staff, would not opt in to the scheme. Benefit in offering shares to all staff is that it creates a direct connection between the individual and the company s performance which may lead to greater effort by them. Shareholding provides staff with motivation for company s success but there should be a difference in either the amount of shares and/or the terms to the shares given to the staff and partners. 2.3 2.3.1

Human resource management Case 1 Scenario 6

Demand for consulting services grew considerably due to the growth of general economic activity. Staff resources have became a rare commodity and the company has developed a number of ways to attract young and qualified staffs (schemes such as salary differentiation, training program, improving work / life balance, social networking, etc were all tired with varying degree of success) To assist new staff and to secure quality of services a number of standard procedures were introduced within marketing, preparation of proposals, agreements, contracts, project management and accounting. Question 15: Are FIDIC guidelines, such as the Business Practice Training Manual and FIDIC model forms of agreements known and used in your company? If not, which other standards are used? Point of views & Editors Draft Conclusions: FIDIC Business Training Manual & FIDIC model forms of agreements are known in the companies. However a majority of the responses indicate that the national level contract terms where used & further the same may depend upon the client what they choose in. Training program has been developed internally which covers non-technical areas such as project management, client relationships, conflict resolution, managing self and others etc. Technical training courses are usually externally. Question 16: Provide details of the staff recruitment methods used in your company. Do you have different types of employment? What is the structure of the salary package (basic pay, bonus, other incentives, leave conditions, flexible hours)?

Team - APEX Report Summary

Point of Views & Editors Draft Conclusion: Most of the companies are still recruiting based on advertising in newspaper, on internet and via HR agency. A handful of companies have the reference scheme where the referee is given certain monetary benefits if the referred candidate has been selected. There is typically two type of employment contract, limited and unlimited or permanent and short term contract. The structure of salary package typically has the standard basic and bonus with varying incentives which varies from country to country and company to company and depending if there s relocation involved. Question 17: List in order of priority the measures you will propose to attract young and highly qualified staff now and in the future. Highlight any possible national differences in discussion with others on your team? Point of Views & Editor s Draft Conclusion: Measures to attract young and highly qualified staff Competitive Pay (remuneration) Job Security Rewards, Recognition, Bonus & Hike based on regular performance review Flexible work options in order for work/life balance Clear defined career path Companies strong business plan & their future expansion growths Mentoring and training program for professional and personal development Young members to be allowed in the decision making process National Differences Middle East (Allow) percentage of variable pay (Allow) Young members (certain no s) to be in the decision making process & to be a board member in the company Rewards, recognition, compensation & promotions to be purely based on the hard work and qualifications Companies should have a strong business plan which should forecast their near future (instead of past performance, if we forecast our near future in terms of revenue this will make attractive of the young people) New Zealand Competitive remuneration Regular performance reviews and salary increases to reward effort and growth Attractive bonus scheme Mentoring programmes, and heavy investment in training and development Clearly defined career paths, and promotion up the management ladder at early age for those stand out performers. Opportunity to transfer to overseas offices (if working in an international company like I work for) so staff can experience their OE. Flexible work packages, ability to have good work/life balance. Share holding opportunity Job security Singapore Competitive remuneration

Team - APEX Report Summary Clear defined career path Mentoring & Training Programmes available Flexible Hours or Option to Work from home for valid personal reasons Australia:work with a well known company pay increases/promotion based on merit (opportunity) to gain experience at the low levels of an organization and move their way up over time China A large experience company in consulting profession can afford a flexible developing space and new staff can try different areas. A mature training program is also important for a young staff to develop himself. A mature training program will guide his life and give him professional training The recognition from the new company . A position would be more attractive than money. A job in government or in state-owned enterprise would be more attractive then money. Question 18: What kind of future development trends do you expect in your company and in your country? Point of Views & Editors Draft Conclusion: We need to acknowledge that most countries or companies have issue with demand in engineers with relevant experience and due to globalization. There could be influx or outflow of engineers depending on where there the market demand is. It would therefore be good to be equipped with an understanding on foreign cultures. Also, due to shortage of supply in engineers, recruitment drives have to target undergraduates to ensure they are able to employ sufficient engineers. We would also expect younger professionals attaining management levels in developing new innovative business solutions. Question 19: In your company: a) how is staff management organized? b) is the work/life-style balance an issue? Point of Views & Editors Draft Conclusion: Most companies have Human Resource Department to handle staff management issue but the individual department heads are also involve in not only managing staff s work allocation and performance but also staff well being. Work/life-style balance is an issue in all company but it may not easy to achieve for some company depending on the country s or company s culture. Since staffs are key to success so work/life for them needs to be balanced with utmost care and attention 2.3.2

Case 1 Scenario 7

Merger with the one of consulting firm has been materialized with which we had earlier often associated. That firm has faced ownership transition problem and would be interested in merger. The single owner of that company had to retire due to some health issues and wished to sell the company for immediate cash. In recent years the financial returns of that company was not impressive due to lack of attention. However in general there was potential for the growth due to their specialty in the energy sector which matched the need of our company. Charles company auditor presented two options for the merger

Team - APEX Report Summary o Raise money by selling more shares to the management & staff in the both the companies o Issue the required number of shares & float them in the stock market Floating the shares in the stock market will have the following advantages o Value of shares will be determined automatically o Selling of shares will be easy (if anyone wills to do so) But on the other hand it had a few disadvantages o Ownership was no longer in the hands of the management, key employees and staff o Complicate & strict cost reporting procedures o Share price fluctuations may happen (which may be unrelated to actual performance of the company) Question 19: How would you handle staff management in a merger situation? What are the key issues that determine whether a merger becomes a success or not in relation to staff? Point of Views & Editors Draft Conclusion: Impart the company values/strategic direction into the newly acquired company as soon as possible, to ensure they feel part of the organization. Offering shares in the as it gives them an interest in the business, and a reason to perform. Uncertainty following the merger about job security can lead to lost productivity, and inclusion in a share scheme may be one way to alleviate those concerns. Staff Management needs to be dealt with caution & utmost care during the merger (due to different management styles) For certain period of time both companies needs to operate individually and gradually (merge and implement) policies related to staff. Ensure retention of the most senior staff, preferably by giving shares, don t make any staff redundant, allow natural attrition and allow the acquired company to operate as a separate entity for a fair period of time and don t enforce a strict quality management system on the acquired company that will alienate staff. Gradually merge the QA systems over time Key Issue to determine success in relation to staff during merger are: o Staff Sustainability o Productivity/ Output of staff members o New Business results o Profit margins Question 20: Assess the influence of a public offering on the stock market in relation to the size of company (number of employees), staff motivation and staff interest in being shareholders. Point of Views & Editors Draft Conclusion: There will not much impact (motivation) and staff interest in being shareholders for large scale companies since the share price fluctuation has nothing to do with the staff s day to day activities. Question 21: Assess the risk of losing the image of being an independent consultant with high integrity when shares are quoted on the stock market and in theory can be bought be contractors, suppliers and others Point of Views & Editors Draft Conclusion: This may become a problem but there is hopefully enough safeguards in corporate legislation around the world. The ways that companies listed on stock exchanges demonstrate their independence include: o Requirement for independent board of directors o Names of major shareholders published o Independent audit of company finance each year

Team - APEX Report Summary o 3. Requirement to identify conflicts of interest

Case 2

Business Development Framework

The following sub topics are being discussed in the Case 2 Business Development Framework Business Development Financial Management Client Relationship & Communication Risk Management 3.1. 1.

Business Development Case 1 Scenario 7

Company has grown rapidly in the recent years partly through the civil/structural engineering consultancy base and by acquisition of high profile specialties. Traditional jobs (civil / structural) are charged lower & other specialty jobs are charged higher due to the research & development requirement and innovative approaches Company management has decided to target the client as below: o Traditional Services Trusted Advisor (with low fees) o Specialized Services If you have a problem, we have a solution (with high fees) Branding the company Consultant Shopping Mall with lot of specialized stores (both for general public & clients) Marketing is done based on individual business units through articles, advertisements in technical papers based on individual project cases Recruit young professional by advertising individual business units providing state of the art technology through specialized staff. The above mentioned strategies have been implemented in all countries, while national affiliation is emphasized and local companies are dealt with as individual operations. This has created some effects in that different companies compete with each other (local & international) In the way of the growth, the financial results are disappointing due to the inability to obtain the high fees for the specialized jobs Further, in the domestic market the company is at the risk of losing the high profile & high tech consultant role due to the technical & financial results. The Board of Directors has a raised the above questions to the management & with the following solutions proposed: o Reorganizing the company into one large unit with a single, efficient QA function. o Changing the approach from selling technology to selling trust. o A general branding effort emphasizing results, quality, reliability, financial standing, etc. o Develop a global brand drawing on all resources from all countries. o Reorganize all marketing into a "Triple Bottom Line" matrix (financial, environmental and social). o Change all marketing to be Internet based Question 22: Branding Local Globally or Individual Market? Point of Views & Editors Draft Conclusion: Locally Global, but there is a need to adapt to the individual market A focus on individual markets and traditional services to be the backbone and to be supplemented by the new technologies Utilize the organization s whole range of capabilities (not only on the local expertise) Venture into the international market by acquisition & mergers and then rebrand the company

Team - APEX Report Summary When branding in an international market use the expertise of the parent company Results will not be uniform and will be varying in international market growth is to be based on the individual market and trying to grow globally Question 23: How would you organize assistance from local consultants? Point of Views & Editors Draft Conclusion: Assistance from local consultants can be obtained by the following o Partnership Deal or Contract o Joint Venture or Merger o Subletting in part or full o Hiring them as local consultants under our supervision o Design by us & Project Management by them Question 24: Discuss the pros and cons of the proposed marketing strategies? Point of Views & Editors Draft Conclusion: Marketing Strategy Pro s Reorganizing the company into Reorganizing is beneficial as all one large unit with a single, resources are aligned to one efficient QA function. common goal (large unit) Marketing can be easier for the new units (since the use of the parent company name) Reorganizing the companies into one entity is the best since it will improve the financial performance but the risk is that client confidence on the local company Changing the approach from selling technology to selling trust. Most jobs are won based on trust therefore it is better to put emphasis on trust Technology advancements and developments can be value addition to the trust Trust is permanent technology is temporary A general branding effort emphasizing results, quality, reliability, financial standing, etc. General Branding is better General Branding is good, but the marketing strategy may be dull Small units from many countries Will be difficult to draw a global and Market is for they who dare innovative solutions so it is better to sell technology Risk of trust relationship need to be certain that the words said are backed up by action.

Con s Reorganizing is not a good idea due to the risks & difficult in client management

General Branding is possible based on the ground realities

Develop a global brand drawing

Team - APEX Report Summary on all resources countries. from all with own identity should join hands for common goals Will provide unifying focus for different divisions of the company across different countries to work together Triple Bottom Line Marketing Strategy is good as it will meets the needs of the client Financial considerations to be put first Change all marketing Internet based. to be Internet marketing only may not viable if all markets do not use internet Internet only is not the solution for business development but it can be used as tool for communication Traditional (brochures, pamphlets, etc..) ones are more real & trust worthy than the electronic media Question 25: Is small beautiful but big better? Point of Views & Editors Draft Conclusion:
S. No

brand on all resources different cultures

with

Local clients may now consider the company to be a multinational which may be negative

Reorganize all marketing into a "Triple Bottom Line" matrix (financial, environmental and social).

Small is Beautiful Good Service Flexible to various services Quick Service Unique Technology Competitive Quality Work

Big is Better Resources Available on call at all times Delivery on time Stable & Flexibility to Survive Structured Organization

1 2 3 4 5 6

A small boat can change its direction rapidly while a large ship is slower, But when a storm is coming, the large ship is more stable and can survive more easily Several small independent units and representation of many in a group is better and more so it depends upon the situation. Question 26: What will be the most important marketing feature in the future?

Team - APEX Report Summary Point of Views & Editors Draft Conclusion: Future Marketing will depend on the client management, which will be based on the following o Trust o Client Relationship o Reliable Partnership o Achievement in traditional & complex projects o Execution of projects related to social & environmental importance o Cost efficient o Quality for money o Smart enough to meet client need o Speedy & Quick service Question 27: How would you plan, budget, control and assess the results of a marketing effort as described in scenario1. How much of your overhead do you or would you spend on this? Point of Views & Editors Draft Conclusion: Marketing Plan & Budget Marketing Plan is a continuous improvement process (Not a predefined one) Marketing Plan should aim at changing people s perceptions Marketing Plan should be part of strategic decision by the company management & it should involve people from the top level Market Plan (Example) We ve listened & We re changing Market Plan Different stage of company o New Company For Establishing o Developing Company For Growth o Developed Company For Existence Marketing Budget is part of overheads Marketing Budget Needs to be benchmarked, inline with other companies and applicable local laws Marketing Efforts & Outputs Marketing Plan Output The message what we thought to convey has been done or not Marketing Plan Output - Analysis will be a difficult process (since the plan implementation & the output will not be in the same period for the construction industry) and can be done by some statistic analysis o Company Financial Performance o New Business Opportunities to Expand o Company s achievement towards its Vision and Mission o Company Growth Expansion into New Segments and Markets Question 28: Describe typical fee structure (overhead components in percentage of salary) for domestic market and for international assignments? Point of Views & Editors Draft Conclusion: Fee Structure is divided in two o Design Fees o Project / Construction Management Fees Further the above will also depend on the following o Cost of the project o Type of the project o Scope of work Required

Team - APEX Report Summary o For o o o o 3.2 3.2.1 Type of Engineering (Detailed, Preliminary, Research & Market Analysis) Internal Use the fee structure will be as follows Salaries (benefits, leave, allowances, etc ) Office over heads (travel, recruitment, insurance, local laws, registration fees, communication, need to be considered in international assignments) Office Establishments, Running Cost & Stationery Profits

Financial Management Case 2 Scenario 2

Marketing initiatives as discussed in Scenario 1 have been implemented and it has been so successful. The turnover increased, more people are employed. At this stage, the financial people raised an alarm on the following aspects: o Overdraft o Liquidity for the new projects o Outstanding invoices Client does not pay for minor problems & Project Managers are more concentrated in the quality & progress of work than getting invoices out and paid. Audit team has proposed to split the company into separate independent divisions for efficient financial management of the whole organization Audit team has also suggested for an independent company to undertake thorough analysis of the budget submitted and the actual results

Question 29: How do you reduce the outstanding payments? Point of Views & Editors Draft Conclusion: Project Managers to be oriented to understand the importance of getting invoices out early and to be assigned for this additional task Payment terms (Period & Stages) to be part of the agreement Invoice to be prepared and submitted in advance (2-3days) with clear statement of progress of work and its due date Submit a pre-planned cash flow showing the invoicing forecast and anticipated date of submission in order to make earlier necessary arrangements by client Separate staff can be deployed to put and follow-up the claims and payments Compensation for Delayed Payments can be a condition in the agreement By Lobbying (through employing ex employees of client, etc..). Only for big projects (or several big projects) though and the lobbyist is not concerned with payment only other issues to resolve too Question 30: How do you improve budgeting procedures? Point of Views & Editor s Draft Conclusion:
S. No

DO s Orientation for Project Managers & all staff on the Financial / Commercial Management Align budget with company strategy Increase accuracy in forecasting, planning & cost accounting procedure Create Knowledge Base & Historical Data s for use as reference

DO NOT s Under Estimate Provide Unnecessary Discounts

1 2 3 4

Team - APEX Report Summary 5 6 7 8 Risk Analysis & necessary financial provisions to be kept to overcome Budget Control Procedure & Analysis Increase Organization Agility Implement Software to track

3.2.2

Case 2 Scenario 3

Tackling the below mentioned problems the main cause for poor liquidity and the substantial delays in payment o Invoices are not clear & require lot of discussion before approval o Lack of clearly defined payment guidelines o Poor Communication

Question 31: What measures do you propose to take to solve these problems? Point of Views & Editors Draft Conclusion: Ensure payment guidelines are included in the agreement (Stages of payments, duration of approval & payment after submission of invoice) Project Managers to be trained and they should be taking care of the invoice submission Invoice amendments can be submitted after agreeing with the client RAM (Responsibility Assignment Matrix) can be implemented to overcome the communication problems Discuss and agree with the client about the format and the necessary breakdowns in the invoice during the early stage of the project Submit the invoice on time with clear details & backups as required 3.4 3.3.1

Client Relationship & Communications Case 2 Scenario 4

A taskforce was established to analyze projects where the financial results deviated substantially from the budget. The key finding are as below o Design Errors o Poor Definition of services in the agreement o Lack of attention to preparation of payment schedule in the agreement Further the design errors and the like so have caused a substantial increase in professional indemnity insurance costs which has later become a major overhead item. Due to increase in the insurance cases, the client confidence level has dropped considerably and the reputation for the solid technology & reliable delivery has become more and more difficult to maintain.

Question 32: How would you reduce design errors and regain the Clients confidence? Point of Views and Editor s Draft Conclusion: Reduce Design Errors Design Errors can be reduced by effective project management procedures o Lack of time need to planned during the planning phase by ensuring enough time is allotted to the key tasks

Team - APEX Report Summary o o Lack of funds Enough funds need to be set aside during the project estimate to overcome Unclear scope of work Scope to be well defined & agreed with the client with accepted deliverables/ outputs which are clearly communicated to team Technical review & verification needs to be the key procedure, with no deliverable sent out of office without formal signoff Hire Competent & Good Quality Team Members Quality Assurance programme, check lists & peer review sessions should be done on regular intervals. Technical Team to be provided with all the latest software & necessary tools Note that sometimes 'design errors' are misunderstandings between designer and owner. Need clear communication

Regain Client Confidence

S. No

DO s Good Service Fulfilling client requirements

DO NOT s Repeat the mistakes Over commit Exceed contract limits & scope

1 2 3 4 5 6

Satisfactory Progress Update Regular contact & update project status with client Implement Procedures as per contract Go for Customer Delight rather than Customer Satisfaction Implement Client feedbacks

3.4

Risk Management
incl. risk management in an international and

Question 32: Define management structure multidisciplinary company?

Point of Views & Editor s Draft Conclusion: Management Structure Matrix Structure is followed mostly (discipline/geography) Depends on the management how to manage the operations Structured or Matrix as follows (Hierarchy varies from company to company) o Directors o Board members (CEO, CFO, etc ) o Regional Heads (Asia pacific, Europe, African, Middle East, EMEA, etc..) o Country Heads (heads of each country) o Divisional Heads VP for Engineering, Design, HR, Commercial, Finance, Accounts, etc.. o Zonal Heads (as applicable in some countries) o Departmental Heads Director for Engineering, HR, Finance, Accounts, etc.. o Project Manager depending upon the specialization & the company operation o Technical Staff o Non-Technical Staff Risk Management Two Types of Risks o Business Risks

Team - APEX Report Summary o Individual Project Risk Ways to manage Risk
S. No

Business Risk Management SWOT Analysis Business Continuity Plan Emergency Management Plan Risk Register with Mitigation Plan Different levels of authority for signoff on the contracts and proposal Management Financial Reserve

Project Risk Management Procurement, Contract, etc ) Project Management Plan Risk Register with risk response plan Budget Reserve Project Quality & Safety Procedures

(HSE,

1 2 3 4 5 6

4.

Case 2

Business Development Instruments

The following sub topics are being discussed in the Case 3 Business Development Instruments Sustainable Management Quality Management Business Integrity Management Client / Consultant Agreement (White Book) 4.1. 4.2. 4.3. 4.4.

Sustainable Management Quality Management Business Integrity Management Client / Consultant Agreement (White Book)

5.

Conclusions
Organization & Human Resource Development

The following things needs to be considered while setting up an professional firm Ethical Issues Contractual & legal issues Conflict of Interest & Intellectual property rights Local Government & International laws Professional associations requirements Possible types of ownerships for the firm Sole Proprietor (Single Owner) Private Partnerships & Shareholding Public Shareholdings (Listed on the stock market)

Team - APEX Report Summary Ownership, Remuneration, Payouts & Bonus Ownership is a title or possession of a group of resources which can create wealth. At the same time ownership caries unlimited risks and liabilities Remuneration is salary or payment towards work accomplished Equity based payout for salary can be used as part only not in full (of salary) Equity based payout for bonus can be used as part or in full (of bonus) Pre-Defined Bonus to be based on the performance at the different levels and overall performance of the company Individual bonus to be based on the individual achieving the goals/targets agreed with their inline manager and to be in line with the company policy Considerations on offering partnerships (to likely partners) Determine individual responsibilities, level of offerings & takings (on the risks, liabilities, etc ) Determine the strategic plan of the business Agree on the common plan on all the operational issues Consider all the existing liabilities (legal & financial) and the way to over come Considerations on acquiring a firm or company Diversify the stake in the newly acquired firm (part of cash & part of shares) Enter into a service level agreement initially to analyze the business opportunities of the firm (instead of direct outright purchase) Acquisition to be on the long terms plans (even if the initial returns are low) Risks & Insurances Risk Assessment, ways to minimize and overcome to be in place at all times Contingency plans and financial reserves to be in place at all times Risk Management to be imparted as part of the training program to all employees All necessary insurance (professional, indemnity, liability, etc ) for the works undertaken to be in place to over the unanticipated risks & damages Costs of the insurance & risk management to be covered in the proposal to the client itself Profit Center s & Individual Divisions (within the company) To be clearly aligned with the company overall values & objectivities (mission & vision) To be integrated with each other to maximize the outputs and reduce the mis-coordination between each other s Transformation from private partnership to shareholding Clear guidelines & rules to be established for creation, distribution, transfers & selling of shares Board to be established to oversee, regulate & implement the decisions made by the shareholders Strong accounting, finance, audit departments to be established Distribution of bonus between shareholders & non shareholders to be finalized Laws of the government & governing institutions of the country to be followed Shareholders Agreement Payment of dividend needs to be considered Offer attractive & interest free loans to staffs in order to purchase shares Part of salary for higher management staff will be in percentage of shares Part of profit will be distributed as bonus and balance to accumulate as capital accumulation fund for future business expansion Number of shares held by per person will be restricted according to the position held in the company

Team - APEX Report Summary Ways to attract young and highly qualified staff Competitive pay Job Security Periodic Rewards, Recognition & Bonus Win-Win situation Balance between work & social life Merger with another firm Need for specialized services Need for expansion & growths Success of Merger with another firm Staff Sustainability Increase in productivity / output of staff members New Business Opportunities Increase in profit margins Public Shareholding (Stock Market) Requirement for independent board of directors Major shareholders names to be published Independent audit of the company fianc Identify conflicts of interest Global Expansion / International Market Act globally local & adapt to individual markets Venture to international market by acquisition & mergers Focus on individual markets & traditional services Results will not be uniform in all markets & will be varying Growth to be based on individual market & try expanding globally Assistance from local firms Partnership deals & contracts Joint Venture & mergers Subletting in part or full Hiring them as local specialist Is Small Beautiful or Big Better A small boat can change its direction rapidly, while a large ship is slower. But when a storm is coming, the large ship is more stable and can survive easily. Several small independent units and representation of many in a group is better Big the better if the beautiful of small are present in it Marketing Strategies Trust is permanent, while technology will be value addition to it Market is for the one who dare s a solution Global branding with unifying focus for different division of the company across different countries Triple Bottom Line Financial, Environmental & Social Future Marketing Trust / Reliable partnership Client Relationship Cost efficient & Quality for money Speedy & Quick Service

Team - APEX Report Summary Achievements in traditional & complex projects Technology advancements in the company wings Marketing Plans Continuous Improvement Process Aim at changing people s perceptions Part of strategic decision We ve listened & We re changing Plan for Establishing, Growth & Existence Marketing Efforts / Outputs Increase company s financial performance New business opportunities Achievement towards company vision & mission Company s growth expansion into new segments & markets Financial Management Orient all staffs all the importance of finance & commercial issues Payment Terms to be part of contract / agreement Pre planning & Pre intimation required Separate staffs to put forward the claims & payments with necessary follow up Compensation for delayed payments Budgeting Improvements Align with company strategy Increase accuracy in planning, forecasting & accounting procedures Knowledge base & historical data base to be used as reference Increase organization agility Budget control procedures & analysis to be in place Risk analysis & necessary reserves to be part of budget Risk Management SWOT Analysis Business Continuity Plan Emergency Management Plan Project Management Plan Management Financial & Budget Reserve Risk register with response / mitigation plans Project Management Plan Various levels of authority for sign-off Client Confidence Go for Customer Delight rather than Customer Satisfaction Regular face to face contacts & update with the client Implement client feedback Don t repeat the mistakes Don t overcommit or exceed the contract limits & scope