Balfour Beatty: CSR, Local Content, PPP in Construction Analysis

This report delves into the concepts of business procurement and contractual practices, exploring corporate social responsibility (CSR), local content clauses, and public-private partnerships (PPPs) within the construction industry. It examines the principles and practices of CSR, its benefits, and impact on companies like Balfour Beatty, including accountability, transparency, ethical behavior, and respect for stakeholders. The report then analyzes the advantages and disadvantages of incorporating local content clauses in construction contracts for projects in developing countries. Finally, it assesses the benefits and limitations of PPP arrangements for road projects, considering the perspectives of project sponsors and construction team members. The report provides a comprehensive overview of these critical aspects of business procurement and contractual practices, offering valuable insights into their implications and applications within the construction sector.

Business Procurement
and Contractual
Practice
1

Table of Contents
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
TASK...............................................................................................................................................3
Explain the principles and practice of CSR and its various benefits and impact on selected
company.................................................................................................................................3
Explain the benefits and limitation of having a local content clause in a construction contract
for a project related to the developing country.......................................................................8
Explain advantage & disadvantage of public private partnership arrangements for road project
related to project sponsor and members of construction team...............................................9
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12
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INTRODUCTION
Main objective of this report is to better understand the concept of business procurement and
contractual practices. Procurement is an act of obtaining various type of goods and services for
the purpose of business. While business procurement is the sourcing and purchasing of goods
and services for business which are use from an external source. A process of procurement
involve various points such as effectively identification of needs of customers and suppliers.
Select an effective tool for communicating with suppliers, preparing request for proposal and
request for quotes. A contract procurement is related to the procedure which is necessary for a
business to purchase goods and services and a procurement contract will help in developing
partnership with suppliers and ensuring the quality of products and services. For effectively
answer the first and second question in this report Balfour Beatty plc Company is taking into
consideration. It is a British multinational infrastructure group which is founded by George
Balfour and Andrew Beatty in 1909 and it’s headquarter is in Landon, United State. In 2018
Balfour Beatty was ranked as the biggest construction contractor in the UK. This report includes
various principles and practices of corporate social responsibility and its importance & impact on
construction market. Other than this it include advantages and disadvantages of having local
clauses in a construction contract. This report include various benefits and limitations of PPP
arrangements in context of project sponsor and members of the construction delivery team.
MAIN BODY
TASK
Explain the principles and practice of CSR and its various benefits and impact on selected
company.
Corporate social responsibility refers to a self-regulating model of an organisation which
helps companies to be more social accountable to itself and towards its stakeholders and public
(MARKET, 2018). Stakeholders of a company includes all those parties who have an interest in
business such as customers, suppliers, investors, employees and so on. By practicing corporate
social responsibility which is also known as corporate citizenship, an organisation is able to
impact on all aspects of society which also includes the economic, social and environmental. An
organisation is a part of society and established and use resources of society than organisation is
also responsible for give back something to society. For successfully fulfilling its corporate
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social responsibility company will operate its business activities in a way that it enhance values
for society and environment and does not negatively harm the society and environment. As
important as CSR for the society it is equally important and valuable for a company also.
Corporate social responsibility helps an organisation in creating a strong bond between the
company and employees which boost their morality and assist both employee and employer to
feel more connected with the world around them. Other than this corporate social responsibility
also help an organisation in creating a good brand image in market as customers and clients are
also wants to do business with a company which ethically perform its all business operations and
effectively fulfil its CSR activity (Chen, Dong and Lin, 2020).
In context of Balfour Beatty Company, it successfully fulfil its corporate social
responsibility. They try to reduce waste, energy consumption, emission and effectively use the
non-sustainable resources and consume water in an effective way and all these practices are
spreading to all their operating company across the world. They make effective strategy and
provide training to their employees for reducing the level of accidents on construction site.
Company create various essentials assists for society or for a country such as hospitals, schools,
road, rail and utility system. Company provide benefits to community in which they operate not
only from their work but also positively engaged and deliver additional social benefits. This is
the one reason because of which selected company is a top construction company of United
States.
Principles of corporate social responsibility
 Accountability- It refers to being responsible for the action and having the ability to
provide a valid or sound reason for that action. According to this principle of CSR
company is responsible towards their all action they perform. In context of selected
company, they are fully accountable and take responsibility that they does not conduct
any unfair activity during their work process and also accountable for not harm
environment. They effectively fulfil their all responsibility and take accountability for
their all action.
 Transparency- It refers to a activity of an organisation which ensure that all necessary
information is available that will be used for analysing the authorities performance and to
protect against any kind of misuse of powers. According to the perspective of
government corporate social responsibility is closely related to the transparency. This
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principle of CSR state that an organisation needs to be transparent and provide all
necessary information in such a way that its stakeholders involved can achieve an
effective insight into the issues which are relevant from them. It is a necessary condition
for CSR. Transparency is related to conducting various activities in an open and clear
manner. In context of selected company, it is fully transparent and effectively define its
all activities to its stakeholders.
 Ethical behaviour- It is characterized by honesty, fairness and equity in interpersonal,
profession, academic relationship and in research activities. Ethical behaviour is related
to the dignity, diversity and the rights of an individual and a group of people. The most
important principle of CSR that an organisation needs to fulfil for successfully
completing its corporate social responsibility. The CSR activity is also include how an
organisation will behave or conduct its business activity. In context of selected company,
it ethically perform its all activities and provide good quality of roads, hospitals and
other. Which also help company in achieving their customers or clients trust and enhance
the brand value of company (Matten and Moon, 2020).
 Respect for stakeholder’s interest- Stakeholders refers to various parties which have a
interest in an organisation. It include customers, suppliers, employees, owner,
government, society and so on. All have a stake in business and it’s the responsibility of
an organisation to successful fulfil their demand. Customers of company want that
company provide good quality of products and services, while suppliers have a stake of
get good price for providing raw material. Government as a stakeholder of company
wants that company pay all tax on time and investor have a stake of getting higher return
on their investment. In context of Balfour Beatty, they effectively respect their all
stakeholders which is consider a good CSR activity of company.
 Respect for the rule of law- For performing CSR activity it’s not important that an
organisation will perform any charity it will fulfil its CSR activity just by effectively
following all rules and conduct their business activity under guidance of proper law. In
context of selected company, it perform its all business operations under the control of
law which help company in successfully fulfilling their corporate social responsibility.
 Respect for international norms and behaviour- In context of selected company it
operate its business worldwide so it’s the main responsibility of company to give respect
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all country norms and behaviour which also help company in creating a good image in
the international market. An organisation will not stay silent in response to or benefit
from wrongful acts.
 Respect for human rights- Human rights are the moral principles or norms which set
certain standards related to human behaviour and these acts are regularly protect the
municipal and international law. Give respect to all human rights is also an effective
principle of CSR and an organisation needs to consider it. In context of selected
company, they formulate their policies under control of this law and try their best that
they did not break that law.
Practices of corporate social responsibility
For effectively performing the corporate social responsibility an organisation needs to
perform various CSR activities. In context of selected company, their CSR praises are discussed
below:
 Reducing carbon footprints- Carbon footprints is related to the total amount of
greenhouse gases including the carbon dioxide and methane which are generated because
of organisation activities. Government of UK will always interfere in those business who
have high carbon footprints and force them to reduce the level of carbon footprint so that
the environment does not get polluted. In context of selected company while making
roads they use charcoal which effect environment and their construction business also
affect environment but they make effective strategies which helps them to get their
carbon footprints as per the guidance of government. By reducing their carbon footprints
selected company will successfully meet their corporate social responsibility (Sánchez
and et. al. 2020).
 Improve labour policies- By formulating and implementing effective and good policies
for their labour an organisation will effectively meet their corporate social responsibility.
As labours are also the stakeholders and also contribute in the growth of an organisation
than it’s the responsibility of an organisation to provide better policies which are in
favour of labour. In context of selected company, it regularly improved their labour
policies and make effective strategies related to safety of their labours. Company provide
effective training to their employees which helps in reducing the case of accidents at
construction sites.
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 Charity- It is the biggest CSR practice that every organisation will fulfilled. In context
of selected firm. In context of selected company it is well known for its corporate social
responsibility and it is also participate in various charity functions for the development
of country.
 Corporate policy that benefit the environment- Companies make various policies
which provide benefit to environment. In the context of selected company, the efficiently
utilized the resource which also create saving for business and add higher value to
customers. Selected company regularly drive best practice related to environment
through their business operations.
 Socially and environmentally conscious investment- It includes various CSR practices
that an organisation will fulfil by investing in society and environment. In context of
selected company they create and effectively care for essential assets such as hospital,
roads, rail and so on.
Benefits and impact of CSR activity
Corporate social responsibility has a positive impact on the selected construction business
which are mentioned below:
 Better brand reorganisation- In context of selected company, its CSR activities helps
company in better positioning their brand in the mind of people. As it operates its
business worldwide and because of its CSR activities it’s very easy for company to
effectively establish their business in other country.
 Positive business reputation- When an organization will effectively and ethically
perform its CSR activities than it will create a positive image of company in the market.
This positive image will help selected company in effectively doing their business in any
country of world and because of its positive reputation they don’t need to attract clients
for their business (Moon and Knudsen, 2018).
 Operational costs saving- In context of selected company for fulfilling its corporate
social responsibility company make effective strategies related to utilization of natural
resources. They will effectively utilized all environment resource which help company in
reducing the operational cost and also add value for customers. This benefit help selected
company in achieving competitive advantage in the international construction market.
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 Great ability to attract talent and retain staff- Now a days employees are also wants to
do work with a company that will well aware about its corporate responsibility. Labour
are the stakeholders of company and by fulling company responsibility towards their
employees company is able to retain them for long period. In context of selected
company it successfully fulfil its responsibility towards their employees by effectively
providing them safety at construction sites and timely provide training to them. This will
help company in easily attracting talent towards company while operating their business
in another country and company does not need to do any promotional activity for
attracting new talented candidates.
Explain the benefits and limitation of having a local content clause in a construction contract for
a project related to the developing country
Local content refers to a strategy where a country’s fundamentals are used for achieving a
significant level of socio-economic progressiveness & sustainability (Lima, 2020). The definition
of content clause is based on each country and also depends on the micro and macro-economic
condition of a country. It is also known as a value that an extraction project will brings it to the
local, regional and national economy beyond the revenue resources. A country will promote
local content with the help of recruitment & targets written on the national laws and individual
contracts. In context of selected company, local content clause is state that company needs to use
local suppliers and employees for operating their business in that country. The law related to
local content is applied by the government of a country so that they can develop their country
and protect the interest of their domestic company and suppliers. As per this rule for operating
there Business Company needs to use local employees and resources. In relation to selected
company having this clause in construction contract will have both benefits and limitation for
company which are mention below:
Benefits-
Increase employment- Having this clause in a construction contract helps in enhancing
the level of employment. As per this clause in the contract the construction company needs to
use local labour for operating their business activities which helps in generating employment for
people of developing country. Which increase their standard of living and also enhance their
purchasing power which helps in the development of an economy of a country (Hilson and
Ovadia, 2020). In context of selected company this clause will also help company in reducing
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their operational cost. This is because the rate of labour cost is much higher in UK but if
company use labour of other country while operating their business in other country it will get
cheap labour capital because of developing country (Subai, 2019).
Better utilization of resources- In relation to a developing country having this clause in
the construction contract will help a country in better utilisation of their natural resources. Which
assist a developing country in achieving higher growth and become a developed country. In
context of selected firm, this clause will provide low cost resource and also reduce the cost of
import resource from their own country which helps in achieving higher growth of company.
Better infrastructure- Having this local content clause in the construction contract will
help a developing country in better utilization of country resources and develop roads, hospitals,
schools, bridge and so on which assist company in better economy growth and infrastructure
development (d'Almeida, Apolinário and Ribeiro, 2019).
Limitation-
Competition for domestic companies- As per this clause an international company will
operate their business in the domestic country and also utilized their resources which is good for
economy growth but these company will produce at higher level which provide them cost benefit
which affects the domestic company growth.
Scarcity of resources- When government of country give permission to use their natural
resources for development of country but because of this clause one day country will face the
problem of scarce resources (Ashworth and Perera, 2018).
Explain advantage & disadvantage of public private partnership arrangements for road project
related to project sponsor and members of construction team.
Public private partnership arrangements refers to a long term contract between the
government and a private company (Hodge and Greve, 2018). It is a funding model for the
purpose of public infrastructure project such as road, hospitals, bridge, and airport and so on. The
public partner will represent by the government which can be a local, state and at a national
level. While a private partner will be a private business or public corporation. The PPP
arrangements will includes a long term contract and funding’s, planning, building, operations,
maintenance and divestiture. Various advantages and disadvantages related to PPP arrangements
for a road project in context of project sponsor & construction team are mention below:
Advantage-
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For project sponsor-
 This arrangement will help sponsor in achieving efficiency advantage by using private
sectors skills and form transferring risk to the private sector or the construction company.
 It will increase transparency in the use of funds and also reducing opportunities for
corrupt practices is the best release of information for the sponsor.
 Another benefit of public private partnership to the sponsor is that the construction
company will construct road in a cost and time effective manner.
For construction team-
 Contract with government will create a good reputation of construction team which helps
them in getting more contracts in the future.
 Public private partnership means the resources, funds are easily available by the
government and government will assign the road project cost before the project start
which helps construction team to efficiently utilized resources and with the help of
effective management strategy they can achieve operational cost and higher profit (Marks
and Sparkman, 2019).
 Most important benefit of PPP arrangements is that it provide a long term contract to the
construction team, which helps in the growth and development of Construction
Company.
Disadvantages-
For the sponsor-
 Main drawback of public private partnership is that it involve risk for the private partners
and for this they will demand for compensation for accepting those risk which will
increase the cost of government.
 It is generally found that there are very few construction team who have the capability to
complete a task like building roads which will limit the competitiveness which is require
for cost effectiveness.
For the construction team-
 Profit from this road project is depend on the assumed risk and the level of competition,
complexity and scope of the project.
 The road project is a long term project which includes a high amount of future
inflexibility (Nguyen, Garvin and Gonzalez, 2018).
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CONCLUSION
From the above discussion on this report three important concepts are analysis which are
corporate social responsibility, local content clause and PPP arrangements. All play an essential
role in the growth of a construction company. In this report various benefits and limitation
related to all these important concepts are analysis. Which helps in understanding that CSR
activity performed by an organisation will helps in the growth and development of company.
While local content clause in the contract will help a developing country in become a developed
country and PPP arrangements will beneficial for both the sponsor and construction team.
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REFERENCES
Books & Journal
MARKET, R.Y., 2018. Corporate social responsibility. URL: http://globelink.
ca/wpcontent/uploads/2018/05/Corporate-Social-Responsibility-2018. pdf.
Chen, T., Dong, H. and Lin, C., 2020. Institutional shareholders and corporate social
responsibility. Journal of Financial Economics. 135(2). pp.483-504.
Matten, D. and Moon, J., 2020. Reflections on the 2018 decade award: The meaning and
dynamics of corporate social responsibility. Academy of management Review. 45(1). pp.7-28.
Sánchez‐Torné, I., and et. al. 2020. The importance of corporate social responsibility in
achieving high corporate reputation. Corporate Social Responsibility and Environmental
Management. 27(6). pp.2692-2700.
Moon, J. and Knudsen, J.S., 2018, July. Corporate social responsibility and government.
In Academy of management proceedings (Vol. 2018, No. 1, p. 12777). Briarcliff Manor, NY
10510: Academy of Management.
Lima-de-Oliveira, R., 2020. Corruption and local content development: Assessing the impact of
the Petrobras’ scandal on recent policy changes in Brazil. The Extractive Industries and
Society. 7(2). pp.274-282.
Hilson, A.E. and Ovadia, J.S., 2020. Local Content in Developing and Middle-Income Countries:
Towards a More Holistic Strategy. The Extractive Industries and Society. 7(2). pp.253-262.
Subai, P., 2019. Local content oil and gas law in Africa: Lessons from Nigeria and beyond.
Routledge.
d'Almeida, A.L., Apolinário, B.D.P. and Ribeiro, L.F., 2019, October. Brazilian Local Content
Policy: An Overview and Analisys of Adjustment Clauses Applications. In Offshore Technology
Conference Brasil. OnePetro.
Ashworth, A. and Perera, S., 2018. Contractual procedures in the construction industry.
Routledge.
Hodge, G. and Greve, C., 2018. Contemporary public–private partnership: Towards a global
research agenda. Financial accountability & management. 34(1). pp.3-16.
Marks, M. and Sparkman, J., 2019. The new era of public-private partnership in higher
education. P3• EDU, www. p3edu. com/wp-content/uploads/2019/03/The-New-Era-of-Public-
Private-Partnership-in-Higher-Education. pdf.
Nguyen, D.A., Garvin, M.J. and Gonzalez, E.E., 2018. Risk allocation in US public-private
partnership highway project contracts. Journal of Construction Engineering and
Management. 144(5). p.04018017.
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