A NEWCOMER seems to be shaking things up at construction firm Koon Holdings as the company prepares to diversify and deepen its businesses. Tan Thiam Hee, who has been CEO since July last year, has been busy integrating the different units of the holding group, with the aim of leveraging their respective strengths for bigger projects.
‘When I came in we weren’t maximising what we had,’ says Mr Tan, who is a certified accountant. ‘So I put a challenge to my managers: ‘This is what we are doing now. How are you going to do more’?’
Competitive advantage
The challenge arose because he realised Koon may no longer be able to compete for open tender contracts based on cost alone. The company’s latest annual financial results are telling. 2008 profit after tax was $1.97 million – down from $6.18 million in 2007. The bright spark is the firm’s $172 million order book, with projects slated for completion from 2009 to beyond 2011.
The company needed to focus on a competitive advantage. With a track record extending back to 1975 and multi-million dollar projects including the reclamation of Jurong Island and the construction of Sentosa Cove, Mr Tan quickly identified Koon’s forte – its ability to handle ‘technically demanding’ projects whilst adding value and providing alternative viewpoints.
He was especially interested in design-and-build contracts, which require seamless construction and technical contributions.
However, Koon’s organisational structure meant these teams did not have a habit of working together.
Mr Tan therefore introduced a matrix organisational structure that allows for dual chains of command and communication across divisions and functions. This set the stage for cooperation when coming up with competitive proposals for demanding projects.
With the restructuring came a sharpening of accountability. Previously, says Mr Tan, job scopes were not well defined. ‘Projects could have two managers in charge’, leading to role confusion. With the revamped structure, ‘every project has just one project manager’.
The former group financial controller at Haw Par Corp, ASL Marine and Hua Kok International (now Abterra) also computerised Koon’s manual accounting process.
Inevitably, some employees were laid off as the company restructured. Those who stayed had to cope with a new way of doing their jobs.
It was ‘tough’ for managers and employees to adjust, says Mr Tan. To mitigate the situation, he did his best to communicate his intentions and be as transparent as possible with staff.
‘Open dialogues and discussions with employees’ are held monthly to keep staff in the loop on company’s objectives. And Mr Tan makes it a point to conduct these meetings on-site rather than in the office.
Diversifying beyond construction
Now that the main restructuring efforts are completed, the group is gearing up for expansion. Mr Tan has set his sights on growing its vessel chartering business through wholly owned subsidiary Gems Marine, and machinery and equipment rental unit Entire Engineering.
If he has his way, Gems Marine, whose core business is transporting sand and rock, may move into greater value-added services, such as ship-repair and on-board welding.
‘Diversification beyond the construction sector is critical’ because construction is cyclical, he says. Besides intensifying marine services, Koon has boosted income by renting out spare office space. And Mr Tan is continuing Koon’s policy of renting out idle equipment.
‘We’ll be adding new businesses in new regions over time, for a more balanced, sustainable income stream,’ he says. Without giving specifics, he talks of ‘non-cyclical, construction-related’ sectors.
With a spate of initiatives under his belt, Mr Tan is quick to play down his role in Koon’s continued success.
‘Once you put the right people in the right place, naturally they will do better,’ he says.
Source : Business Times – 11 August 2009
Lush Dream Home 