Meryll Construction is a medium-sized construction company primarily engaged in water works: pipe-laying /rehabilitation, leak repair, water connections. It is in the Top 5 Contractors list of its sole client, Maynilad Water Services, Inc. It is currently experiencing rising project costs that threaten its profitability. Now that Maynilad has been denied rate increases, there is a big possibility that it would reduce its capital expenditure – thus there would be less number of projects for its contractors which include Meryll. To be able to cope with this potential reduction in revenues, the Company must be able to reduce its costs, particularly its labor/ subcontracting costs, which have been increasing steadily. Through the fishbone diagram, it was determined that the main sources for the problem were: the system itself which is highly manual thus prone to errors, repetitions, and tediousness that could be used to mask anomalies; increase in subcontract prices despite the non-increase in client's prices; and lack of performance measurements with regard to operations and engineers' performance that leads to laxity on the part of engineers, and undermines check and balance.
[...] Strengths Opportunities Good reputation for quality work and On-line bidding on the internet may on-time delivery increase contract opportunities Credit line with banks and suppliers Contract opportunities with national Good relations with clients and and local governments suppliers PCAB rating is relatively high and will enable the company to compete in other construction areas Weaknesses Threats Has only 1 client thus highly Maynilad will reduce its vulnerable to changes in client pipe-laying/ rehabilitation situation expenditures thus the number of Erratic collection leads to cash contracts to be awarded will flow crunch at times decrease Increasing costs, particularly Low barriers to entry in the subcontracting, hauling, and permit construction business have costs, that sometimes projects have encouraged the increase of become unprofitable competitors Small working capital of P5 million which is not enough to enable company to finance big contracts Operations Strategy As mentioned previously, the company's overall strategy is anchored on its operations strategy. [...]
[...] Efficacy Long Term Acceptabil Ease of ity Implementation Benefits/ROI Implementation A sample computation for alternatives with efficacy as the criterion is shown below: Efficacy Install Hire auditor Invest in IT cameras Install cameras Hire auditor for Invest in IT squaring the matrix results in: computing for the eigenvector: squaring the matrix again results in: computing for the eigenvector: * the eigenvector is exactly the same as the previous eigenvector, therefore we terminate the iteration And then the final matrix would show these results: Multiplying the Alternative weights with the Criteria criteria ranking: Ranking Effica Long Term Acceptabi Ease Implement cy lity Install cameras Hire auditor for Invest in IT * Investing in IT is the highest ranked alternative Conclusion Based on the above analysis, among the three alternatives, namely: installing hidden cameras, hiring an auditor for each project to conduct spot audits, and invest in information technology to monitor and pinpoint costs that can be reduced, the best approach is the third one, which is to invest in information technology to monitor and pinpoint costs that can be reduced. [...]
[...] It is obvious that the company's overall strategy is mainly the operations strategy, and the rest of the functional areas' strategies are closely tied up with this thrust. Marketing Strategy Currently it just has a single client, Maynilad Water Services, Inc. Thus it strongly values this relationship and has good relations with all the client's departments, especially its engineering department, which decides project awards, and finance, which handles payables. This business model of having only one client puts the company in a vulnerable position, and ties it to the conditions of the client. [...]
[...] As of December 2009, Meryll Construction has completed thirty-nine pipe-laying/ pipe replacement projects, two water service connection projects, and three leak repair projects in various locations in Metro Manila. It also has three on-going projects in Paranaque and Muntinlupa. Financial Performance and Fundamentals Meryll continues to experience strong and sustainable growth, with revenues increasing by 94% from Php119 million in 2008 to Php125 million in 2009. After-tax profits increased by 32% increase year on year for 2009. This translates to increased earnings per share from Php 57 in 2008 to Php 70 in 2009, or a return on equity of an incredible return on investment. [...]
[...] The company's foremen and engineers supervise this work, which hopefully ensures for the company that said work follows the client's specifications. Due to subcontracting, problems with employee loafing has also been reduced. And projects can proceed at a faster pace. With regard to quality workmanship, materials are a key factor, thus the company ensures that it gets materials from reputable suppliers. These materials may come at a higher price, but they prevent rework due to defective materials. Rework is very costly in horizontal construction, due to repeat of pavement works such as cutting, breaking, excavation, and restoration. [...]
APA Style reference
For your bibliographyOnline reading
with our online readerContent validated
by our reading committee
