Enguity Game (Engineering Contract)

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Phase 4

a) how you team could have changed its strategy (and management approach) to achieve an improved outcome in the game. Detail as to the reasons for improvement should also be provided; and b) detailed comments on key management tasks required for the successful delivery of projects.

Phase 4 reports:
Golder consulting team (group 34)
Student name: Tianlin Hong Student No. 294796

1. General company strategy and goal
The final goal for our management and bidding strategy is to make the company effective with the resources and maximize the company profit from the job we take (shareholder management, company value and optimize construction cost). Initially, we set the first priority is to get the job done with a functional but a bit tight budget, increase the market value and industry relationship (more good job done will change the relationship with specific group: e.g. satisfactory to excellent), in order to gain a better anticipation of company’s future. Detail of the goal is listed below:

Company value increase: (share price)
Turnover increase:
Prequalification: % share of the total market
Successful Procurement percentage:
Increase relationship with the client
Percentage of overall value of company increment: 2-5%
Percentage of capital base (capital like building, plant and so on) utilization increment: 12-15% Increase the industry confidence via increase in company value

2. Decision making and detail improvement/comments
There are 8 periods from period 5 to period 12 for the game. The decision for group 34 (Golder consultant cooperation) divide into 4 parts: • financial management
• overhead management
• procurement
• job progression

2.1 financial management decisions over 8 period and comments The financial management has two main sections:
• dividend
• capital base
For period 5, 120000 were paid to shareholders represent 2.1% of total equity of 5650000 and capital base increased by 429103 which is the limit amount. The dividend increased from 2% (100000) to 2.1% (120000) in period 5, the decision was made aiming to increase shareholder confidence, hence encourage more people to buy company share, and as a result, an up shifting chart may be seen in our company value with a higher share price. Capital base increased as a part of future investment to minimize idle time/machine/labor, assuming more utilization of capital (machine/building) increase the performance/efficiency dramatically in the future. However, this side-effect is negative figure in the cash account and short-term company value, for instant, the company value and cash account dropped in large scale from 4903363 to 4783363 and 140560 to -508543 respectively in periods 5. Base on the decision of period 5, no capital base investment has been made and dividend encounter a slash from 2.1% to 1.9%, the action is taken for short-term negative cash flow mitigation. The rest of period followed the same pattern until period 12, the dividend rate went up to 3.5% of the total equity for 410000, and the company value has a big shift from 4783363 to 7353952, the company value cheer up for 53.74% incremental, however, the cash account went negative deposit since period 11, consider the capital improvement has done more than a adequate level, hence a reduction of capital base has taken action in period 12 in order to correct the negative cash account. [pic]

2. Overhead management
The overhead are the non-contract based support services required to enable the company to procure and progress work. The overhead system consists of 4 major departments:
• Marketing department
• Head office (administrative)
• Measurement
The decision is mainly work on justifying the number of company staff from each department. Assume the money for employee payment is fixed, a trade off between hiring more marketing department worker or more other department workers....
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