Business Planning

Question 1

What is Lendlease’s strategy?

Answer 1

• Global business with three core business units across each region
• Listed on Australian Stock Exchange
• Share price has dropped
• Simplify organisation structure and right size its cost base
• Exit international construction, accelerate release of capital from offshore developments, recycle 4.5 billion by completing transactions underway

Question 2

What are Lendlease’s objectives?

Answer 2

‘Create places for people to work, live, connect and enjoy’

Financial:
- Simplify organisation structure and right size its cost base
- Improve share price

Question 3

How is my team’s performance measured?

Answer 3

• Planning approvals
• Plot completions

Question 4

How does Lendlease market itself over the short, medium and long term?

Answer 4

Social, economic, environmental

Short - medium: Creating homes, jobs and improving the environment
Long: Tackling UK housing crisis, creating growth in areas, leaving the environment better than how we found it

Question 5

What is included in a business plan?

Answer 5

• Opportunities and risks
• Resources required to service clients

Question 6

What is a SWOT analysis?

Answer 6

Strengths, weaknesses, opportunities, threats

• Anticipate different SWOTs which helps with strategic thinking
• Helps decision making
• Helps set realistic objectives
• Allocate resources

Question 7

How can firm’s plan for future business activities and ensure they hit the required profit margin?

Answer 7

Fee forecasts

Question 8

How can firm’s allocate resources and expenditure?

Answer 8

• Budgets
• Cash flows
• Financial / audit controls

Question 9

How would you set up as a sole practitioner?

Answer 9

RICS requirements and Statutory requirements for starting a a firm
I would then put business plan together

Question 10

What is a sole practitioner?

Answer 10

Individual who works independently without any partners

Question 11

What is a partnership?

Answer 11

Partners share responsibility of the firm

Question 12

What is an LLP?

Answer 12

Limited Liability Partnership - Partners have personal liability

Question 13

What is a limited company?

Answer 13

Owned by shareholders, liability limited by shares, formally register on Companies House, shareholders don’t have personal liability

Question 14

What is a PLC?

Answer 14

Public Limited Company - Shareholders own company, directors manage it, listed on stock exchange

Question 15

How could a firm monitor its performance and what key management tools would be needed?

Answer 15

Financial - Revenue, profit margin, return on investment
Operational - Production output (number of flats delivered per annum)
Employee - Turnover rates
Customer - Customer retention rates, complaints
Quality - Defect rates, compliance with industry standards (construction - how many incidents)

Question 16

What is the RICS motto?

Answer 16

There is measure in all things

Business plans can MEASURE performance

Question 17

What is a strategic business plan?

Answer 17

Strategy devised to achieve overall goals set by a business - for the future rather than the present

Question 18

What are the steps in a strategic business plan?

Answer 18

1. Identify and approve framework, vision, long-term goals and objectives
2. Position company in terms of marketing capabilities, technological advantages and available resources
3. Sets foundation for tactical plan to achieve goals

Question 19

What is another type of business plan?

Answer 19

Departmental Business Plan

• Review of periodic metrics
• Do metrics meet goals?
• Do annual goals need adjusting?
• What are the departmental needs to meet the goals?
• Individual staff metrics

Question 20

What is an operational business plan?

Answer 20

Work planning stage
- Requirements for professional service
- Criteria (legislation / rules of Conduct)
- Resources (what do you need to undertake work)
- Acceptance by client
- Documented information (any deliverables to produce or retain)

Delivery phase
- Customer communication
- Determine requirements
- Change of requirements
- Review requirements

Question 21

What is a corporate business plan?

Answer 21

• Vision statement
• Mission (how you will achieve business plan)
• Resources (and scope of works)
• Objectives (corporate objectives, need to be measurable)
• Strategies (how to reach objectives)

Question 22

What is an organisational structure?

Answer 22

Functional structure (hierarchical):
- Managing Director
- Then Building Surveyors, QS, Architects
- Then Placement student, CAD technician

Divisional structure (each discipline is split by division):
- Managing Director
- Then Surveying division (with admin and finance, marketing)
- Alongside QS division (with admin and finance, marketing)

Matrix structure (each team reports into head of team and head of function):
- Managing Director
- Delivery Manager
- All delivery team report into Delivery Manager and Project Lead

Flatarchy (not flat, not hierarchical):

Question 23

What is working capital?

Answer 23

A company’s ability to pay it’s working liabilities with its current working assets

Question 24

What is a stock?

Answer 24

Also known as equity

Ownership of a fraction of an entity

Units of stock are called shares

Question 25

What is a debtor?

Answer 25

Company / individual who owed money

If debt is from a financial institution, the debtor is called a borrower

If the debt is in the form of bonds, the debtor is called an issuer

Someone who files for bankruptcy is called a debtor

Question 26

What are the two types of debt?

Answer 26

Loans
- Trade debtor - Someone who hasn’t paid you for your goods or services yet

Creditor
- Party that is owed money by another party

Question 27

What are current ratios?

Answer 27

A type of financial benchmarking

Current ratio = Current Assets / Current Liabilities

If ratio is below 2:1 it is a cause for concern for a business to repay it’s debts

Nowadays businesses trade on a 1:1 ratio basis

Question 28

What are quick ratios?

Answer 28

Measures liquidity quicker than the current ratio, because turning stock into cash takes times

Quick ratio = Current Assets less Stock / Current Liabilities

Question 29

What is gross profit margin?

Answer 29

Gross profit as a percentage of turnover

Gross profit % = gross profit / turnover x 100

Question 30

What is breaking even point?

Answer 30

Break even = Fixed expenses / gross margin

Question 31

What is net profit margin?

Answer 31

Net profit % = Net profit / turnover x 100

If net profit is declining, look at which costs increased the most

Question 32

What is return on capital employed? ROCE

Answer 32

Return on capital employed = Net profit / net assets x 100

Question 33

What do you mean by short, medium and long term goals?

Answer 33

1 years
5 years
10 years

Question 34

How often are your team meetings and what project milestones do you speak about?

Answer 34

Fortnightly

• Planning applications submitted / validated / consented
• Design updates like starting / ending a design stage
• Construction updates like topping out / PC

Question 35

How often are your development team meetings and what business updates are given?

Answer 35

Monthly

• New business strategy (e.g. reduce head count, cash back into business, selling construction business)
• Role as Development Manager rather than Developer
• Options for projects with new strategy

Question 36

What business operations have you undertaken outside your role that align with LL business strategy?

Answer 36

The Ministry for Housing, Communities and Local Government does consultations on planning issues and I have provided responses on behalf of Lendlease in relation to:

• Planning fees
• Brownfield development