University of Melbourne

ENGINUITY: Trialling Hints and Tips

Now that you are up and running, to help you in the learning/trialling process below are a series of hints and tips.
Some you may already be aware of, but others will be very useful as you complete each decision screen.
FEEDBACK: Using the Management Consultant's Report; A valuable tool
One of the main tools you have for looking at areas to improve is the "Management Consultant
Report", carried out by your external management consultant. This is available from the "Main Menu/Assessing
performance".
In particular, when you submit a trial and receive your "...p6.dat" database back, use this to review your
performance for period 5. Filter the MCR to show results for period 5, and look at the "N" status (negative)
comments. You cannot change every negative comment, but some you can certainly change.
Most of the comments also have a useful link to the Tutorial for further help.
FINANCE: Utilising the Capital Base
The amount of work you can undertake is governed by the size of your capital base. You can increase
this on the Financial Screen.
In the early periods it is advisable to increase the capital base to enable the company to grow, even if it means
going into overdraft. Overdraft charges will easily be recovered by the profit you can earn by procuring more work,
and managing it effectively.
TUTORIAL REFERENCE(s)
Contents/Making Decisions/Financial management/"Entering Decisions" demo.
Contents/Glossary/"Successful tendering" link
FINANCE: The benefits of targeted investments
Targeted investments can produce benefits to jobs being progressed through reductions in both build
and risk costs, which can make a real difference to job profitability.

Build cost may be reduced on work in progress in specific sectors due to preferential rates on materials, plant
etc e.g., investing in an asphalt company would reduce build costs for any Transport work being undertaken.
Clues to whether or not an investment offers build cost reductions are given in the investment profile, such as
'supplying its unique range of excavators and related products to contractors working in all sectors of the
Construction Industry'.

Risk costs may be reduced on work in progress in specific sectors by investing in appropriate management
consultants that specialise in providing risk management advice for the construction industry. Again, the clues
can be found in the investment profile.

For benefits to be gained the level of investment needs to have reached a minimum level once the Financial
Decisions have been made for the period. The thresholds are displayed in the "Industry Information/The
environment in which the company is operating".
TUTORIAL REFERENCE(s)
Contents/Making Decisions/Financial management/"Entering Decisions" demo)
OVERHEADS: The importance of increasing the Marketing Department size
One of the driving forces behind growing the company is to expand the marketing department.
Providing that the effort of the increased staffing level is directed into the sectors where there is new work,
effective marketing will increase the number of jobs that the company can bid for on the Procurement Screen. This
will incur additional overhead costs, but the profit made from winning and progressing profitable should easily
outweigh the additional costs.
Ultimately, when the marketing department reaches a certain size, the company will not be able to prequalify for
anymore work i.e., there is a limit. However, this will not happen for several periods, especially as only 2 more
'specialist' company marketing staff can be taken on each period, unlike the other overhead departments, where
agency staff can be used

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ENGINUITY: Trialling Hints and Tips
OVERHEADS: Setting staffing levels for the Head Office, QHSE and Measurement Departments
The following hint relates to setting the optimum staffing levels for the Head Office, QHSE and Measurement
Departments.
SETTING THE BENCHMARK LEVEL
The staffing levels during period 4 are the benchmark levels for the Head Office, QHSE and Measurement
departments.
Setting benchmark levels will ensure that there is no adverse affect on :- Build costs (Head Office and QHSE)
- Risk costs (QHSE)
- Measured value (Measurement)
And ensures that there is no understaffing, which us crucial.
For the current period you set the required (benchmark) staffing levels by determining the expected turnover
(value) in the current period, and then comparing this to the level during period 4 E.g., if the current turnover is
expected to be 50% higher, then the staffing level should be 50% higher than the period 4 level.
You need to set the staffing levels for each department separately, as the period 4 benchmarks may differ. Bear in
mind that the expected turnover calculation will be the same for all 3, but not necessarily the staffing levels.
FINDING THE OPTIMUM LEVELS
Although you need to sufficiently staff the Head Office, QHSE and Measurement Departments according to the
period 4 benchmark, you can overman them, up to a point, and gain a benefit.
Although there is additional overhead staffing costs to be paid, up to a point overmanning has a number of
advantages across ALL jobs progressed in the period :- For the Head Office department it reduces build and site costs
- For the QHSE department it reduces build and risk costs
- For the Measurement Department it increases the value accrued progressing each job
But how do you know when you have reached the optimum level ?
To determine this do the following.
1. Submit your trial decisions, with your current staffing levels.
2. When your receive your results, open your period 6 database and navigate to "Main menu/Assessing
performance/Performance summary/Overhead performance".
3. The "Overheads" section shows the "% of the required level allocated". "100%" is the benchmark setting, but
the optimum level is higher. The "net affect" shows the net gain from the staffing levels to date, taking staffing
costs into account. Make a note of the net affects.
4. Alter your overhead staffing (up or down), and when you get your results RECHECK the "net affects".
5. Using different level of staffing you are looking for when the "net affects" are at their highest. When you have
found this, make a note of the "% of the required level allocated" for each Overhead department. These are the
optimum levels e.g., if it is 250%, then the optimum level is 2.5 times the benchmark level.
Once you have found the optimum levels they remain the same throughout the Competition.
TUTORIAL REFERENCE(s)
Contents/Making Decisions/Overhead Management/"Other Dept Decisions" demo

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ENGINUITY: Trialling Hints and Tips
PROCUREMENT: Using the bidding results to refine bids
One of the main advantages of trialling is that you can see the results of your bids, using your period 6 database.
To do this use the "Main Menu/Assessing performance/Procurement analysis/Analysis of all previous bids" option.
You can then make adjustments i.e., if you have bid "too high" you will be able to see the most competitive rival
bid, and can then adjust your bid to win the job. Of course, you can only do this for period 5, and not subsequent
periods.
Based on the above, if you adjust your bids and win more work you will improve your forward workload and
margin indicators considerably.
PROCUREMENT: The affect of deciding which jobs to bid for
The level of workload that the company's capital base can support is shown on the Procurement Screen, under the
"Workload limitation". The value of successful bids is added to the "Initial forward workload" to give the current
forward workload, and once all bids the have been processed, the capital employed KPI measures how close the
current forward workload is to the forward workload that the capital base can support.
The forward workload and margin KPIs measure the current workload/margin after procurement minus the work
progressed on the "Job Progression" screen in the period.
Hence, the decision on which jobs to be bid for can be critical in maximising both the capital employed, and
forward workload/margin KPIs.
TUTORIAL REFERENCE(s)
Contents/Glossary/"Capital Employed" link
PROCUREMENT: Setting a competitive mark up
When bidding for a job you have a number of costs :

Estimated costs that cannot be changed; build, site and design

Additional costs known as On-Costs that you allocate; project manager and risk contingencies

The Estimated costs have been calculated the same by both yourself and all simulated rival companies (SRC). All
SRC then allocate sensible levels of on-cost. The difference between the bids of the SRC is the margin, and the
company profiles and bidding histories give clues as to the level they are likely to set.
The margin, or mark up, you add is the profit you are hoping to make on the job.
If you win the job and manage it well, you can make even more profit than there is in the bid.
PROCUREMENT: Using the Margin Adjuster
Bids are submitted and processed in strict job number order for the period.
If the bids were submitted in the real world, then the mark ups for some jobs would be altered depending on
whether or not previous jobs had been won or lost.
For example.
If the company is bidding for 5 jobs, and the first 2 jobs bid for are not won, then the company would be even
keener to secure the next 3 jobs, and would reduce the subsequent mark-ups to try and achieve this.
In this scenario the margin adjuster might be set as follows :1. Click on the "Activate JOBS LOST adjuster" check box
2. Set the "jobs lost" boxes as follows: "If we lose 2 jobs jobs then for all subsequent jobs that we bid for, the
mark up should be changed by -0.5%"
Note that the change is a negative one to reduce the margins for subsequent jobs once 2 have been lost.

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ENGINUITY: Trialling Hints and Tips
JOB PROGRESSION: Keeping your project managers happy
Although the suitability of a project manager for a particular job is key, paying a project manager a bonus will
improve their performance for the current period only, which in turn will enhance the productivity of the workforce
on site.
The bonus to be paid is entered as a % of the project manager's salary for the period.
Although a bonus improves the performance of the project manager, there is a 'saturation' point at which
additional payments have no effect. As company performance improves/deteriorates so project manager
expectations in relation to bonus payments can rise and fall.
In addition, good project managers may resign if they are not paid a regular bonus, feeling that they are not been
adequately rewarded for their efforts. They will not resign in their first period on a job.
TUTORIAL REFERENCE(s)
Contents/Making Decisions/Job Progression/"Project Mgr Decisions" demo
JOB PROGRESSION: Over manning jobs
The following hint relates to over manning jobs to try and complete them early.
You can over man a job to try and finish it early, and receive a bonus from the client.
However, there are sector-based restrictions on the over manning allowed above the planned labour levels. These
restrictions are defined in the "Industry Information/Environment in which the company is operating".
Failure to observe the restrictions will result in ineffective labour, which does not contribute to progressing the job,
but does incur labour costs.
Consider the following example :Planned Labour: 100 effective men
Sector 3 (30% over manning allowed)
Permitted level of effective labour: 130 men (after allowing for the training of new recruits, and job delays)
Any effective labour allocation above 130 WOULD NOT contribute to the progress of the job, but would incur
labour and site costs, which could SERIOUSLY affect job profit.
If a job falls too far behind schedule, you may not be able to bring it back on schedule due to the over
manning limits.
TUTORIAL REFERENCE(s)
Contents/Making Decisions/Job Progression/Key Points/"Labour used to progress a job" link

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ENGINUITY: Trialling Hints and Tips
JOB PROGRESSION: Completing a job as efficiently as possible
It is unlikely that any job will be progressed exactly in line with the planned progress, even if that is the intention.
There are numerous reasons for this, including :

Job delays
Changes in anticipated productivity levels due to the expertise of the project manager on the site
A job may have been overmanned to try and complete it early, making the planned progress figures
redundant

Bearing this in mind, if a job is likely to complete in the current period, great care has to be taken in setting the
correct level of labour to ensure that the job finishes as near to the end of the period as possible.
If a job finishes too early in the period, the workforce is retained until the end of the period, incurring additional
costs, and excess labour is being used on the site that could have been utilised elsewhere.
In the anticipated final period of a job, you can ignore the planned labour level, concentrate instead on the % of
the job left to complete.
FICTIONAL EXAMPLE
Using information from the following sources :Ref 1: 'Job Progression
Ref 2: 'Job Progression
Ref 3: 'Job Progression
progress' option
Ref 4: 'Job Progression
progress' option
Ref 5: 'Job Progression

Decisions' screen
Decisions' screen, 'Job details' option
Decisions' screen, 'Assessing job progression performance/The status of the jobs in
Decisions' screen, 'Assessing job progression performance/Risk analysis for jobs in
Decisions' screen, 'Industry Information' option.

apply the following logic :- [Ref 3] Job 5 has a planned duration of 3 periods.
- [Ref 3] The job has been overmanned in its first 2 periods, and is now in the 3rd period, its final 'planned'
period, and needs to be completed in the period.
- [Ref 2] The job is 91.4% complete after 2 periods, when the planned completion after 2 periods was only 80%
i.e., 11.4% ahead of schedule. There is only 8.6% of the job left to complete.
- [Ref 2] The total labour required to complete the job was 200 man periods. Based upon this figure, 17.2
effective men are required to complete the job (8.6% of 200). To allow for productivity losses,
and bearing in mind that partial men cannot be allocated, round up to the nearest man, giving a revised figure of
18 effective men required on site.
- Any risks that hit can cause delays that reduce the effective labour on site. However, the delays are not
cumulative, and it is only the worst case possible that takes effect i.e., it is assumed that the other delays occur
within the timeframe of the worst case, and have no additional affect.
- [Ref 4] The worse case risk that has not yet struck has a 'major' delay, which can cause a 15% reduction in the
effective labour on site if it strikes (Ref 5). To compensate for the potential 'slight' delay, the actual labour
allocated to site is adjusted to 21 men.
After allowing for any delays, the effective men on site has to be within the Effective Labour Limit
(EFL). The EFL is a sector-based multiple of the planed labour for the period.
TUTORIAL REFERENCE(s)
Contents/Making Decisions/Job Progression/Key Points/"Over manning to complete jobs early" link

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ENGINUITY: Trialling Hints and Tips
JOB PROGRESSION: Completing a job that has overrun
If a job overruns, great care has to be taken in setting the correct level of labour to ensure that the job finishes as
near to the end of the period as possible.
If a job finishes too early in the period :
The labour on site is retained until the end of the period, incurring additional labour costs

Excess labour is being used on the site that could have been utilised elsewhere
Since the job has overrun, there is no planned labour to consider, and you can concentrate instead on the % of
the job left to complete.
FICTIONAL EXAMPLE
Using information from the following sources :Ref 1: 'Job Progression Decisions' screen
Ref 2: 'Job Progression Decisions' screen, 'Job details' option
Ref 3: 'Job Progression Decisions' screen, 'Assessing job progression performance/The status of the jobs in
progress' option
apply the following logic :- [Ref 3] Job 5, a 3-period job, has overrun into a 4th period
- [Ref 2] The job is 95% complete after 3 periods, leaving 5% left to complete
- [Ref 2] The total labour required to complete the job was 270 man periods. Based upon this figure, 13.5
effective men are required to complete the job (5% of 270)
- [Ref 2] To allow for productivity losses, and bearing in mind that partial men cannot be allocated, round up to
the nearest man, giving a revised figure of 14 effective men required on site
Delays caused by risks occurring are not an issue when jobs overrun, since risks will only strike during
the planned duration of a job.
TUTORIAL REFERENCE(s)
Contents/Entering Decisions/Job Progression/Key Points/"What happens if a job overruns" link
JOB PROGRESSION: Own versus Subcontract labour
You should always try and use your own fully trained staff, where possible, as this is the most cost effective labour
solution for the job.
However, if you have a labour shortfall, then the decision has to be made as to whether to take on new recruits
into your own workforce, or use subcontractors. The pros and cons of each option are discussed in the tutorial.
TUTORIAL REFERENCE(s)
Contents/Making Decisions/Job Progression/Key Points/"The choice of taking on new recruits or subcontractors"
link
JOB PROGRESSION: Utilising idle labour
Before you employ new recruits and subcontractors onto jobs in progress, you should make use of any excess
labour you may have in the idle labour pool.

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ENGINUITY: Trialling Hints and Tips
JOB PROGRESSION: Allocating labour to deal with delays caused by risks
When allocating labour each period, it is very important to consider the potential delays caused to the job if risks
hit. This is particularly important in the period in which the job is due to complete.
The suggested approach to handle risk delays is as follows.
1. For the job first determine the labour you wish to allocate to progress the job in the period, bearing in mind
over manning limits.
2. Use the "Help/Relevant company information/Risk analysis for jobs in progress" menu option to assess which
risks have NOT yet struck for the job.
3. Having analysed the risks that may strike, take the worse possible risk delay. All other delays will be included in
the worse delay, so you only need to consider the worse case.
4. If the risk hits, it will reduce the effective labour on site, set in step 1. How much the labour is reduced is shown
in the "Industry information".
5. ADJUST your labour level by adding a factor to cover the potential delay. For example, if the worse case is a
'major' delay, it could result in a 15% reduction in the effective labour on site. To allow for this, the actual labour
allocated to site should increased accordingly.
TUTORIAL REFERENCE(s)
Contents/Making Decisions/Job Progression/Key Points/"Handling additional labour to handle job delays" link