Construction Company Recruitment and Incentive Scheme

The provided content discusses the management of a construction company, CK Infrastructure Holdings, and its subsidiary Kone. The company requires skilled employees in administration to manage various aspects of the business. A team is formed under one umbrella, with semi-skilled laborers supporting the company. Skilled labor is responsible for taking instructions from management and implementing tasks. The company also focuses on corporate governance, training, and retraining of labor to ensure a safe working environment. The government provides incentives and support for businesses in Hong Kong.

A Hong Kong Continuous Professional Education Centre
Project on the Construction Company
Part -1
Company -1
Legal Status: CK Infrastructure Holdings; public limited company
Types of work carried out: Infrastructure providing company engage in providing infrastructure in
terms of electricity distribution, gas distribution, investment in the water, power plants, energy from
waste plant and oil transmission.
Finance and equity: Company has balanced their financial position and has its finance from banks
other financial institutions. Company has its equity prospects as well. The company equity shares are
been increasing every year due to higher retained earnings.
Legal requirements for company dissolution: The legal requirement of the company to get dissolve is
not active as of now as there is no mitigation factors to attract the same. The company is working
progressing each year and the company is able to mitigate their current liabilities and able to fulfill
the return required from the shareholders and there is no stage that shows that the company is
going to fraudulent to the debt taken from the financial institutions. The company has been able to
mitigate the financial risks like currency risk, interest rate risk, credit risk and liquidity risk. So, as the
company has able to work with the risks so the competitive working scenario has been changed. The
official requirement of the dissolution is as follows:
- the company has not operated and there is no business since last 3 months when the
company has been register;
- Creditors has filed case about the litigation of the company;
- Losses for more than 5 years and there is going concern effect
- Shareholders files the case of deregistration and company court has approved the same;
- Before deregistration it is been complied that whether there is any obligation which has not
been filled by the company, or the company needs to auction their assets;
- Once the assets are been auction and all the liabilities are been paid off then the company
repay the funds to the shareholders on the amount brought by them
- Once the shares are been repaid to the extend of the amount remaining the court of
company obtains a notice of no objection from all the stakeholders and then dissolve the
company.
Since the company is working on the fine tune so the company need not to follow the process of
dissolution as of now.

Company -2
Gammon Construction
Legal Status: Private Limited company
Types of work: Construction and engineering contract company, which involved in various projects in
china and Southeast Asia.
Finance and Equity:
Company has been financed by equity and loan as well. The debt equity ratio has been balanced.
Company-3
Kone Corporation company
Legal Status: Public Limited Company
Types of work: Engaged in providing services in terms of constructions of various types of building
and civil engineering projects for government (which are especially public housing estates and
highways) and also to the private sectors. The company has worked various other joint ventures so
to provide the engineering services to various other sectors.
Finance and Equity:
Company has taken minimal amount of loans from the financial institutions as company has higher
reserve and equity value and its growing.
The total amount hold by the company in terms of Loan is 194.7 million and the total amount of
equity is 2,907 million, out of which company has been able to generate retained earnings for 2,528
million. This huge potential of the company has helped company to move ahead in terms of finance
and planning for the growth of the company.
Legal requirements for company dissolution:
The company debt equity ratio is 0.67, which means the company is been able to repay their long
terms debts with the retained profit of the company. Further, the current ratio of the company is
also potential enough to repay their current assets and raise long term planning. So, as there is no
sign where the company is obliged enough to sell their assets and there is no indicator which shows
that the company's financial working is going down and the company has to overcome from the over
dues. So, the legal requirement for company dissolution is to shows:
- the company has not operated and there is no business since last 3 months when the
company has been register;
- Creditors has filed case about the litigation of the company;
- Losses for more than 5 years and there is going concern effect

- Shareholders files the case of deregistration and company court has approved the same;
- Before deregistration it is been complied that whether there is any obligation which has not
been filled by the company, or the company needs to auction their assets;
- Once the assets are been auction and all the liabilities are been paid off then the company
repay the funds to the shareholders on the amount brought by them
- Once the shares are been repaid to the extend of the amount remaining the court of
company obtains a notice of no objection from all the stakeholders and then dissolve the
company.
Since the company is working on the fine tune so the company need not to follow the process of
dissolution as of now.
Part-2
For the inward investment the company have various sources of finance available, but the source
depends on how the target company gets the funds into their bags. Some of the options that they
can be given are:
1. Funds repayment by banks funds i.e. in cash;
2. Offer the investment as an Letter of Credit, where the target company will gets the funds
after few day of purchase;
3. Offer property on the shares bought;
4. Give shares in the existing company so that the company which is been target will become
part of the owned company;
Source of finance:
1. Term Loan from the bank
2. Purchase and lease back
3. SBA Loan;
4. Leveraged buyout;
5. Line of credit
Cost of Borrowings:
1. Usually the Term loan from the bank offers the market rate + Libor, the Libor rate is
applicable in case of loan in terms of USD but if the loan is in local currency then the funds
can be available at the local market rate which may be range from 10 to 15% rate.
2. Purchase and lease back, is the way where the company purchase one company and give the
control to the same company management so that they can run the business. For the said
financing the company charge lease interest from the company which can be financed at
the rate lower than the bank loans
3. SBA loan: Usually the rates for SBA loans lies from 7.5% to 10.25%

4. Leveraged buyout: This is the process where the private equity team buyout the obligation
of the company and on the progress of the things the company takes the returns into the
accounts.
5. Line of Credit: This facility is usually facilitates on the basis of rates that is available in the
market. So, the credit facility is given at a rate of minimum margin or at the flat rate. Usually,
it is available at a rate of 2% p.a. But the funds are usually small and one have to open
couple of Line of credit so to facilitate the investment.
Strategy for managing finance:
All the companies mentioned above have a good market so there is no solvency for the company.
For the purpose of investment the company should do the due diligence of the company and if the
company is likely to take over the company then the company should identify the risk of investment,
if the existing working capital of the company is funded enough then the company can invest via
their own retained earning funds. If the risk is involved in terms of investment of financing then the
company should involve the funds of the financial institutions so that the company's working capital
should not be effected.
The facilities mentioned above should be reviewed for the investment. Usually the target company is
interested to take the money against the capital hold, but if there is no retained earning the
company should repay via the term loan, where the bank will repay the funds of capital to the target
company and then the source company will repay the installment as per the repayment schedules.
The company needs to plan the funds as the requirement of working capital and also as a part of the
special reserve. If the special reserve of the company is not so specific then the company can plan to
invest those funds into the new company and the company should get change to get returns into the
same. Also, the company have various other parameters under which the company needs to analyze
the system where and how to invest. The finance of the company is strong when the leading
company have good net worth, sufficient working capital, current ratio is higher than the standard.
So, all these situation are feasible then the company can invest their funds in to other companies
and after that also the company can find their finance in a viable situation. So, it is always better to
invest their funds if the current situation of the company is viable.
Specific Project:
Contract price - £118,000 Time allowed for work - 9 months Interim certificates - monthly (In these
calculations 30 days are allowed as delays are experienced) Period for honoring Interim certificates
- 14 days Retentions to be at rate of -10% Estimated profit - £23,600 (20% of total contract) Limit of
retention fund - £5,900 (5% of total contract)
It is necessary to distinguish between cost of labour (two-thirds) and cost of materials (one-third).
The builder is able to secure 1 month’s credit from merchant who supplies the materials.
Solution:
In the vary case the retention rate given is 10%, which states that the total price will be £11,800, and
the time allowed for work is 9 months which means that the company have less than a year. and the
profit is realizable in one year itself.
In the given scenario it seems that the loan from bank will be more expensive so it is better to take
pay from the own resources. The total amount required will be:

1. Contract price: £118,000, in which the cost of labor = £78,666 and Cost of material £39,333
2. Retention money: £5900 (10% will be 11,800 so limit is to be taken)
So, the total amount required = 123,900
Even though the material and labor can be arranged on credit but the funds needs to be paid.
Part-3
Corporate Governance:
Kone's Corporate Governance:
Company complies with the Finnish Corporate Governance Code 2015 and various of the codes
suggested. The company has its major shareholder who holds 62% of the total voting rights so the
main shareholder is serving as either chairman or member of the board of directors. Further the
administrative bodies and officers has also a huge power to make a great decision. The officers
decides the matters in the board of meetings and then take the things into the shareholders meeting
where the vote are been done for each matter.
On the financial statement the shareholder on the annual general meeting approve the consolidated
financial statements. On the other internal control system the board has ratified the principles of
internal control, risk management and internal auditing which needs to be followed within the
group. This will be followed in each company, each division and each section, so that the things
should be reported in terms of MIS. The company is been lead by the CEO and further there are
divisional managers who are reporting to the company. The company has also initiated various
committees where the company deals with the separate matters and specific to it. In addition to this
the company has its own nomination committee which is responsible to nominee the rotary
directors and to add the new directors for the company. The directors in terms of executive and non-

executive can be appointed via Nomination committee. These directors are been appointed by the
process so framed by the company. Nomination committee is also responsible to appoint other key
management employees of the companies, which will be under the working parameters of the
boards and the division under which the employee has been appointed.
There are Audit committee which are responsible to conduct the internal, statutory and compliance
audit. All the auditors will be entertained by the audit committee to the extend the queries,
recommendations and suggestion of the company are been on the operational ground, but if the
things are on the strategic ground then the audit committee have to refer their points to the board
of directors. The BOD will take the notes of the point and present the things in the shareholders
meetings and on the resolution passed, the BOD will approach the auditors to take final note on the
same. The Audit committee will be responsible to conduct all the workings and refer the MIS to the
company.
Adding to this, there is a Risk management committee, who will be responsible to access to the risk
of the company, which will can be identified, monitored and find the new control techniques for the
company. Further to this, the committee will be accessing these risk whether it will impact the
companies potential market or it will just be a part of the normal risk. If the things are significant
then the message will be forwarded to the BOD who will further determine the risk and return and
take the necessary action against the same.
Also, the Kone Limited have their own matrix, where the BOD will be the head of all the division,
Further to the BOD there are executing committee members who will be accessing the workings of
various operational staffs and divisional managers. So, these managers will inform their working to
the Executing committee. The strategic part is still to be decided by the BOD after the confirmation
from the shareholder resolution but most of the time the operational decision can be taken by the
divisional managers themselves.
Board of Directors
Executing Committee
Operations team
Corporate Legal Internal Audit Human Resource Administration

Kone limited, have different organizational plans for the personal training and development of the
employees, who will be learning the new ideas and process of the working at the factory. As been a
construction company, the employee should learn about the companies working at different sites
and the projects, so these learning experience and training will help them to familier with their jobs
and build good knowledge for the workings so done by the employees. So, the trainings are been
done frequently by the company so that the company staffs will flow the working area.
The company operates as per the company laws so the leadership style is as per the organization
structure. As per the organizational structure the leadership styles are been designed.
CK Infrastructure Holdings
The corporate governance is been followed as per the provisions of the Corporate Governance Code
and rules so associates. Company board has been composed and working as per the requirement of
the board and the compliances. The composition of the board consists:
1) Chairman of the company who is responsible to deal and decide the major decision of the
company including the operating and the expansion issues.
2) Non Executive Directors: Who are responsible for the decision making in the board and give
decision for the company;
3) Executing Directors: There are 8 executing directors who are working within the company as
an part of the operation and dealing with the changes of the company.
4) Independent Non-executive directors: There are 7 independent non executing directors who
are not part of the daily operations but still advice the company on the changes.
There are couple of committee which elects the Key management persons of the company along
with the operations staffs who will be engaged in taking decision for the company. There is a
nomination committee which will be held by couple of directors and will be responsible for rotation
of the directors and appointment of the new directors and also other key management personals.
There is Audit committee which will be responsible to comment on the management accounts and
adhere the internal and statutory audit for the company. All the comments and recommendation
form the auditors needs to be replied by the audit committee and the major chunks are been
reported to the board of the company.
Other division is the Risk Management and Internal Control:
The board oversees the overall group risk and internal control of the company. If the risk and control
are not tight enough then the committee makes a new policy to detect, control and execute that
risk.
A good corporate governance also elect an company secretary who will be responsible to deal with
the company affairs in terms of the legal laws and the compliances in relate to the company. Further
the company should files multiple of returns with the governance and revenue authorities, so these
returns are been filed on deadline or not.
Matrix organization:
Board of Directors
Executing Committe

As per the above matrix of the company the Legal team, Audit team, HR and administration
use to report to the operation manager who will be reporting to the executing committee and so
then the final authority is the board of directors who takes the decisions on the activities taken by
the company.
Company use to have multiple training and development program in terms of division wise
or in terms of the employee section who are in need of such training. Company provide such training
so to create the awareness within the staffs and learn new affairs for the company. Such affairs are
to be utilized within the company for their growth and success. Usually, these training are needs to
be done via human resource of the company. They select the idea and training so required and the
population who needs to be involved in such trainings. The development of employees will leads to
the development of the company in long terms, so company is usually involved in providing such
training to the employees.
Leadership Styles:
Company usually works as per the board of directors plan and which has to be supported by
the shareholders resolution. Even if the board of directors plans and decide something for the
business, that needs to be passed from the shareholders in an annual general meeting or any of the
meetings so held for the purpose. So, in terms of the company the leadership style is been designed
as per the compliance of the companies act and this has to be obeyed by the company personal.
Part-4
Strategy for frequent ideas:
1) Skilled or semi-skilled labor:
Management usually decides whether the company or the division required the
manpower as a skilled or semi-skilled. As each division has their own criteria for the
employment. If the management ask for the employee in administration then it should
be skilled employees and thus management plans to hire that manpower after
conducting interviews and selecting the best out of the available. Further the company

make a team of such manpower under one team and work for that division respectively.
The administration is been supported by the semi skilled labors who will work as a
supporting team to the company. In case of the construction company most of the
employees are semi skilled who are responsible to know their work and work under the
supervision of the skilled manpower. The skilled labor will be responsible to take the
actions and directions for the plan so been decided by the board of directors and on the
received on the plan they execute the road map on the ground with the help of the
semi-skilled labor. On time to time company use to reward to these staffs and plans the
events for the company. These staffs also gets the promotions on frequent times so that
they gets motivates and utilize experience.
2) Material ordering, delivery strategies, storage and movement:
The company use to have the procurement team who will be connected with the
production team so that in a phase of the time when the company required the
materials for the company, the production team inform the requirement to the
procurement team and the procurement team orders the stock from the market. The
company handles the procurement plans as company should not order the material
higher or more than the requirement due to balancing of the working capital. Further
once the material is been ordered the company have to handle the logistics who will be
involved in the delivery of such material on the prescribed time. As the company is in the
construction, so CK infrastructure usually have a system where the company needs to
plan their source of material and the delivery should be given on time so that the
company should execute their plan on deadline. Further the storage of the goods should
be taken care of so that the goods should not be misplaced.
3. Plant hire or buy, selection process, setting hire rate:
In the business of construction company sometimes the company needs to engage casual
manpower and sometimes they needs to hire a site so that the company can build the new
construction plan out there. Further there are some of the sites and plants which needs to
be buy so to fix the buildings and new construction platform. CK and Kone both are engaged
in taking the new plant either on rent or buy for their new projects, if the projects are been
ready to build within the time they needs to invest in the selection process, which involves
the selection of the manpower, construction sites and the material requirement. If any of
those items are not been worked out then the company should invent their own process of
selection through other companies who will hire the things for the company.
All this process should be connected to the companies new project as this project will take
the company into success factor.
The hiring rate of the casual employees are usually high for the construction companies as
these companies are used work on temporary employees rather than hiring the permanent
employees. These category will improve the costing of the company and help the company
to reduce the employment. The hire rate of the employees are therefor very high in these
companies.
4. Incentive scheme to increase labour productivity:
Usually there are temporary employees in the companies but still the companies build their
confidence and motivate them by providing them the usual bonus and good incentive
schemes on time to time. These scheme will help the company to boost their employees and
work as a team with the sustainable growth and to work with the compassion within. The
growth of the company is sustainable so, the incentive scheme should be there to motivate
them and ask the employees to work accordingly.

CK construction is engage in providing the annual bonus and giving the shares right to the
employees so that the employees work in the company as the partners instead of thinking as
an employees for the company. Further to this, a scheme which attracts the employees is
the giving good arrangement for new events and parties within the company so that they
will enjoy their attendance in the company. The incentive scheme for Kone also attract the
employees by providing the movement and accommodation plans for the companies. If the
employees gets goods movement from time to time then they will enjoy their job on
rotation and push the working on the required time.
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