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INDUSTRY WATCH

One can see the huge distance Indian construction companies
will need to cover before they reach a double-digit figure as
top-ranking contractors of the world in the ENR 250. It is also
in this context that perhaps a better way for Indian contractors GUEST ARTICLE
to achieve international significance is through primarily
benchmarking against successful companies particularly those
that make use of the Balanced Score Card (BSC).
The Balanced Score Card is one of the most useful strategic
performance measurement tools at the disposal of complex
organisations such as construction and engineering. There
are several instances from across the world where the BSC has
been used by the construction industry. In summary the use
of BSC, could enable the sustained competitiveness of Indian
construction firms in the marketplace by improving the internal
processes to retain the advantage.

What is the Balanced Score Card (BSC) Framework?
The BSC was developed by Kaplan and Norton (1992), as a set of
measures to give top managers a quick yet comprehensive view
of the business. BSC is a measurement of tangible and intangible
assets. It is ideal to help translate strategy into critical success
factors and establish a clear cause and effect relationship in the
structure. The industry structure undergoes a change. There exists, four criteria that comprise the BSC. The gains from this method
an unusually large base of small sized, localised contractors, may be attributed to the following reasons
above them, a fair number of medium sized contractors who • The BSC ensures organization-wide transparency
have overcome the cyclical risks of the business with a higher • Financials of the company improve, by improving the other
staying power and ability to service a few large sized contracts. ‘perspectives’ (described further)
And finally, the top tier comprising of a select club of contractors, • There is a seamless alignment with the organization’s mission
typically, decades old in the field with high risk bearing capacity, and vision
and better technical and human processes at work. As the data • Goals are converted into tangible actions
reveals, India is left with only a handful of top engineering and • The strategic plan consolidation happens with the use of
construction firms that can step into the international markets. the BSC
A few Indian companies are pitted against global construction
and infrastructure organisations which have greater heft in The BSC reflects the financial measures which showcase the
technology, human resource and access to natural resources. outcomes of actions already taken, complementing the
This is apparent when the Engineering News Record 250 Rankings operational measures related to internal processes, customer
(ENR 250), are periodically published every year. The Indian satisfaction, and the organization’s innovation and improvement
construction contracting industry is unable to add new names activities.
to the list. The list has a dozen or so top contractors of India, It is these very measures that determine the future financial
and not in the top 50 as yet. For e.g., the ENR Top 250 (2019) of performance. It is a holistic enterprise perspective, having
global contractors worldwide had only four Indian companies leading and lagging indicators. The exercise is to be watchful of
Larsen and Toubro, Shapoorji Pallonji, Tata Projects, and Afcons the indicators and control the performance of the enterprise. The
Infrastructure, compared to its nearest competitor China, which BSC uses quantitative analysis as its basis, making it robust and
had forty-seven companies, even bagging the first 2 positions measurable to scrutiny. Among the four perspectives measured,
on the list. USA has 91 of the Top 250. The ranking positions ae Innovation & Learning carries the highest weight of 0.34, and the
computed annually based upon the overseas order revenues rest of the three an equal weightage of 0.22 each. Central to the
realised by these companies. Over the years the growing four perspectives is the company’s Vision, Mission and Strategy.
presence of different Chinese contractors cannot be ignored. Let’s look at how this appears for any company regardless of
India’s relatively lower presence in international construction sector.
exports could be attributed to the following drawbacks
• Majority of the firms carry a short- term outlook (project to Four Perspectives of the BSC
project) towards business (i) Financial Perspective (0.22wt.):
• Non-transparency in cost allocation, control, and decision Brings out the direct relationship between actions and results.
making The financial goals include profitability, sales growth, the market
• Fragmentation and adversarial culture within the industry value of the firm, and liquidity
• Investment in human resource to improve efficiency is Ideally, they also represent the long-term goal of the organization
negligible

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