Cases in Construction Management

W.J. Slater

• Publisher: Routledge
• Year: 2003
• Print ISBN: 9781138408715
• eBook ISBN: 9781135385361
• Edition: 1
• Topic: Architecture
• Subtopic: Architecture General

Written by the country's leading authority on construction management training, this book gives practical examples of construction management problems and how to deal with them.

Case 1
TYNE CONSTRUCTION LTD

You have been approached by a firm of ‘head hunters’ to take over the position of Managing Director of Tyne Construction Ltd. The salary offered is generous with the usual fringe benefits.

After looking at the company you have decided to accept the position provided the company give you a three year contract. If at the end of the three year term you have proved satisfactory a further five year contract will be given.

The history of the company is that it was started as a small private house building firm in 1933 by a Mr George Anderson. By the early sixties the company employed 1,000 people and was engaged in Civil Engineering as well as building and small works.

The firm was incorporated as a private limited company in 1947. Mr George Anderson died in 1970 and the company was inherited by his wife and four children (two daughters and two sons). She did not re-marry. The share-holding is as follows:

Mrs Anderson	60%
Each child	10% each

The children are not interested in the business and do not want to get involved apart from collecting dividends. Mrs Anderson is a non-executive director to the company and draws a remuneration of £6,000 per annum. She is 75.

Mr George Anderson had appointed a first class manager and the business was quite successful until he died five years ago. A new manager was appointed but has recently been dismissed.

The profit/loss before tax for the last six years is as under:

Turnover for the last six years is as under:

The turnover is calculated by taking value of certificates and invoices plus closing work-in progress minus opening work-in-progress.

Work-in-progress is valued at cost.
The balance sheets for the last five years

The balance sheets for the last five years is shown in Appendix I.

The bank overdraft facility five years ago was £500,000. It was increased to £2 million four years ago, £4 million three years ago, £6 million two years ago with £1 million colateral put up by the family as a personal guarantee. It was increased to £7 million last year. The bank are putting a great deal of pressure on to get it down to £4 million.

This has caused Mrs Anderson a great deal of concern and after a meeting with the family decided to replace the Managing Director as a first step towards recovery.

The present organisation is shown inAppendix 2.

The breakdown of turnover last year was:

Breakdown of profit/loss:

The work the company has on for the current year is:

Any building jobs under £200,000 are classified as small works. Jobs could be as low as £200 in this section.

The geographical area is Northern counties, including Yorkshire and Lancashire. The company does not operate in Scotland.

The company has a small branch office in Leeds and one in Keswick. Each of these offices is headed by one of the contracts managers. Each one has a small staff of four.

The People

Financial Director

Age 45. Married with two children. Is a qualified management accountant. He has been with the company eight years. Did not get along with the last Managing Director. He is keen to stay with the organisation. Salary £14,000 plus Company car and fringe benefits.

Surveying Director

Joined the company five years ago. Was a friend of the last Managing Directgor. Qualified IQS. Age 58. Married—no children. Salary £14,500 plus car etc.

Construction Director

Ex-joiner, site manager, contracts manager. Age 52. Married-one child. Salary £16,000 per annum plus benefits. No qualifications. Has not been on any short courses. He has been with the company six years. Would like to stay with the company. Hardworker.

Plant Manager

He has been with the company three years. Previously worked as assistant plant manager with large national company. Age 48. Married—no children. Salary £13,000 per annum. Reasonable worker.

Small Works Manager

He has worked all his working life with the company. 48 years old. Married with two children. Salary £12,000 per annum. Ex-joiner by trade. Very enthusiastic. Good knowledge of the construction process. Does not think management is as good as it was but will not comment further.

The following points have been noted:

1. Company is not claims conscious.
2. Contract planning is very simple and generally not effective.
3. The bonus scheme collapsed three years ago.
4. The bonus scheme collapsed 4. Wastage on site is high.
5. Site managers think there could be a big improvement in buying, plant (quality very poor) and planning.
6. The company had a good reputation for quality but this has taken a knock with two bad examples of bad workmanship.
7. 7. Cost control is primitive.
8. Tender success rate last year was 1 in 3.
9. Industrial relations is very good.
10. The Company is a member of the Building Employees Confederation and Federation of Civil Engineering Contractors.
11. Most of the men are in a union.
12. The safety record is poor. Two fatal accidents in four years and 10 accidents resulting in absence of more than three days last year.
13. Plant is in poor condition.
14. The company owns 15 cars. The value is included in the plant figure shown in the balance sheet.
15. The loan is due for re-payment in five years time.
16. The debtors are all good.
17. The stock is valued on the FILO system.
18. 30% of the work is sub-contracted in the civils section;
    40% of the work is sub-contracted in the building section;
    15% of the work is sub-contracted in the small works section.
19. The company would consider going public if this was possible. This was first discussed five years ago but no action taken.
20. The company employs its own labourers, joiners, bricklayers, plasterers, machine operators, plumbers and concretors.
21. The buying procedures are poor.
22. The company has a small joiner shop which produces mainly for the small works department.
23. Estimating procedures need revising.

As Managing director you will have a free hand on running the company but the family would like you to produce a report on how you intend to get out of the present difficulties. Your report should cover both short and long term aspects.

The type of work the company has carried out is as follows:

The company has not built private houses since the last war.

Turnover of office staff is high as the company does not have a good reputation for salaries.

The head office accommodation could take a 50 per cent increase.

The company does not own computers.

There is a small canteen in the head office. Meals are subsidised by the company to a maximum of 30 per cent.

There is a staff association but it is poorly attended and is likely to cease functioning altogether.

The Personnel Officer has one Training Officer working for him. The training officer has little knowledge of construction and it is generally thought he got the job because of his friendship with the previous Managing Director. He has been in post for two years.

The only training the company appears to do is with apprentices. The present value of the land and buildings which consists of the head office, joiners shop and yard is £350,000.

The company does not usually find out if it has made a profit or loss on a contract until after the job is finished.

The Quantity Surveying Director does not think feed back methods are cost effective.

The company is finding it increasingly difficult to obtain work.

The company policy is not to use labour only sub-contractors.

Appendix I

Appendix II

Case 2
JONES BROS LTD

Jones Bros Ltd are medium sized builders operating in the North East. They employ, on average, 600 men. The policy of the company is to restrict its tendering policy to jobs under £2.5 million. It has a jobbing section and a small works department. Its turnover is approximately £18 million. It has at present 38 contracts, ranging in size from £150,000 to £2.2 million plus jobbing, plus 14 small contracts under £100,000.

The company does not specialise in any particular type of work but sets its geographical limitations south of the Scottish border and north of Yorkshire.

It employs an indirect staff of 100 including head office and site staff.

John Jones has asked you to advise him on the organisation of the company. He would like to expand to 1,000 men but feels that all is not right in the business. When asked about this he summarized his feelings as:

1. The profit on turnover hasn’...

Table of contents

• Cover Page
• Title Page
• Copyright Page
• CONSTRUCTION MANAGEMENT CASE WORK
• INTRODUCTION
• Case 1: TYNE CONSTRUCTION LTD
• Case 2: JONES BROS LTD
• Case 3: ENVIRONMENTAL SERVICES LTD
• Case 4: GM CONSTRUCTION CO LTD
• Case 5: THE SCOTT CASE
• Case 6: THE NATIONAL PLANT COMPANY
• Case 7: NORTHERN CONSTRUCTION LTD
• Case 8: NORTH EAST DEVELOPMENTS LTD
• Case 9: DISCIPLINE CASES
• Case 10: THE 4DAY WEEK CASE
• Case 11: PROPOSED CONSORTIUM— CASE STUDY
• Case 12: S.SANDS (NORTH EAST) LTD CASE
• Case 13: LAWNSWOOD HOUSING LTD
• Case 14: UK CONSTRUCTION LTD
• Case 15: CASE—DISPUTE
• Case 16: NORTHUMBRIAN CONSTRUCTION LTD
• Appendix A
• Appendix B
• Appendix C
• Appendix D
• Appendix E