Financial and Asset Management: Contractor Selection Analysis Report

This report presents a financial analysis focused on the selection of a construction contractor, specifically within the UK context. It begins by highlighting prominent construction companies like Morgan Sindall, Carillion, and Balfour Beatty, emphasizing their financial standings and past project successes. The analysis then delves into financial ratios, comparing the performance of these companies across various metrics such as current ratio, quick ratio, liquidity ratio, return on capital employed, and return on shareholder funds. The report identifies negotiated tendering as the primary method due to its efficiency and suitability for the project's constraints. It also addresses potential financial risks, including funding, credit, liquidity, market, and operational risks, providing insights into their probabilities and impacts. The report concludes by emphasizing the importance of strict auditing, supervision, and detailed documentation to mitigate financial vices in government projects.

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Financial and Asset Management.
Class
Professor
The Name of the School
The City
State
Date

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Financial and Asset Management
Financial analysis and jurisdiction for selecting a construction contractor
In the UK, several competing construction companies founded in the early years of elite
construction exist. One of the construction companies is Morgan Sindall construction companies.
In an instant, the company is recognizable far and wide. It has completed several iconic
constructions that appeal to the eye of the beholder. With over 50,000 employees all over the
globe, the company has a gross index of 2.3 billion euros. It has a top position that will ensure
that it maintains its market value in the coming years.
The Carillion construction company was recently awarded cutting edge rail contracts
with a worth estimation of over 100 million euros. Looking at the British construction initiative,
this company is the main character in the context. Its tenders dated way back into the 19th century
in 1830; hence it has made a promising present with a promise of a better future.
Top on the list is the Balfour Beatty. In the last financial year, the company has pocketed
a whopping 236 million euros. It is the undisputed champion of the British construction. It was
founded in 1872 by George Balfour. Some of its magnificent fixtures are the cross rail projects
and numerous public and private projects (Smith, and Gerard, 2019, p. 13).
In this context, the Balfour Beatty company is selected to carry out the construction since
what is needed is simply the best of the best. From its financial and construction effectiveness,
the company is more equipped with experience and personnel to handle the task at hand
effectively.
Financial ratios. Carillion construction
company
Balfour Beatty Morgan Sindall

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Rank by profit and latest
turnover
Rank by profit and
latest turnover
Rank by profit and
latest turnover
2018 2019 2018 2019 2018 2019
Current ratio 0.74 0.74 0.934 0.934 1.082 1.082
Quick ratio 0.72 0.72 0.890 0.890 0.713 0.713
Liquidity ratio 3.4 3.4 2.770 2.770 7.64 7.64
Return on capital
employed
157.38% 157.38% 534.58% 534.58
%
21.37 21.37
Return on shareholder
fund
134.66% 134.66% 9.513% 9.513% 17.94 17.94
Main tendering method.
The primary tendering method is the negotiated tendering since the contractor has already
been identified as the Balfour Beatty construction company. Because of the tight deadline and
strict financial requirements, the negotiated tendering method is the best since it will save the
time to take for the project to achieve completion and for efficient use of resources (Agrahari,
and Srivastava, 2019, p. 10). Also, it will minimize the risks associated with the construction of
the project while at the same time reducing interference from politics.
Financial Risks.
One of the financial risks with the highest probability of occurring is the funding risk. The
countries are struggling with other issues, hence some of the sponsors of the project. The
investors may fail to provide enough funds that are required for the project to reach completion.

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Credit risk: the construction company that has been contracted to carry out the project may fail to
keep its promise of timely delivery hence pulling the project back in terms of time (Tang, and
Yang, 2019, p. 449).
Liquidity risk: some transactions may not be made whenever they are required to be made.
Market risk: the market is a dynamic entity; hence at any particular time, the market prices may
fluctuate.
Operational risk: which includes institutional uncertainties.
Minimizing financial vices in government projects.
The only way in which a project can be protected from the menace of corruption is
through strict auditing and supervision of the involved parties (Alshubiri, 2019, p. 20). On the
other hand, documentation of where and when every penny is spent will help.

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References
Agrahari, A. and Srivastava, S.K., 2019. A data visualization tool to benchmark government
tendering process. Benchmarking: An International Journal.
Alshubiri, F., 2019. Analysis of the Financial Model of the ICT Price Basket on Financial
Development Indicators of GCC Countries. The Review of Socionetwork Strategies, pp.1-
24.
Smith, A., and Gerard, W., 2019. Target Cost Contracts and The Development of Collaborative
Behaviours and Value for Money in The UK Construction Industry. Journal of
International Business Research and Marketing, 4(4), pp.7-15.
Tang, Q. and Yang, Y., 2019. Interplay of insurance and financial risks in a stochastic
environment. Scandinavian Actuarial Journal, 2019(5), pp.432-451.