Management systems and ICT

Stringent application of management systems coupled with a prudent use of Information and Communication Technology (ICT) have seen the Group become a true leader in its field, delivering high levels of expertise throughout all of its operational sectors.

Across all aspects of the business, Leighton Holdings establishes guidelines and minimum standards that ensure the Group performs as effectively and ethically as possible.

Information technology

The implementation of Information and Communication Technology (ICT) across the Group has been an important component of the Group's recent development and is integral to the continued success of Group companies. The Group vision for the use and implementation of Information and Communication Technology (ICT) requires each operating company to prepare an ICT strategy that sets goals and objectives to attain a competitive edge and provide support for future growth.

Additionally, an ICT Issues Group has been established to provide a monitoring and support role to the operating companies and ensure the vision is realised. Regular ICT Issues Group meetings are held to ensure the process of adopting and adapting the latest technology systems is an ongoing one that benefits the Group and helps further evolve the business processes.

Innovation and technology

The Leighton Group encourages innovation, research and development and recognises the need to stay ahead of the field when it comes to utilising the latest in technology.

In today’s increasingly competitive world, it pays to be one step ahead of the competition. To ensure that its place as a market leader is maintained, the Leighton Group actively encourages innovation, research and development in the technology and business systems of the future. This enables the Group to maintain and capitalise on its industry presence and reputation and take advantage of cutting edge developments that help improve and further enhance the business process and boost its competitive edge.

Today, the majority of the Group’s projects, both in Australia and Asia, use the latest technological systems on offer. From mining and civil infrastructure projects to process engineering and environmental services, Group companies are at the forefront of the industry. While this technology is being used, newer, faster and more competitive systems are being developed by Leighton engineers that encompass the whole of the business process.

Computer aided tendering system (CATS)

CATS has been developed to provide a consistent and uniform system to prepare and analyse tenders across the broad range of disciplines now undertaken by Leighton Group companies. Continuously developed over many years, CATS takes a tender through every stage of the estimating process.

The system can analyse the use of all the resources in a tender and, when a tender is won, convert the tender makeup to cost codes and download to a site management system. CATS uses a modular design to enable continuous improvements. With automated upgrading of the estimator’s software from a central server, the system requires a minimum of administration. 

Cost controls

A stringent cost management system is used on all projects to ensure that costs and schedules are met, with regular reviews of the system being conducted to confirm that these targets are being achieved and the outcomes are positive. Project costs are monitored utilising a comprehensive cost management system. This is implemented on all jobs, requiring project managers to prepare monthly valuations to monitor the project and forecast completion costs.

Utilisation of Information Technology (IT) and online networks allows collated data to be transmitted seamlessly from sites and branch offices to the operating company head office. Results are reviewed by senior financial and line management staff to ensure acceptable progress is maintained and that tender estimates are adhered to. In-depth quarterly reports on projects are also produced. In addition, regular independent project reviews are conducted to ensure that targets and schedules are being achieved to produce the desired outcome.

Risk management

Managing risk is a critical element of the Leighton Group’s overall business strategy and has been a key contributor to its success.

The Group has in place a comprehensive framework designed to ensure that risks are identified, priced and managed, and that adequate controls are in place and function effectively. This framework incorporates a range of policies, procedures and guidelines which span the Group's diverse contracting and project development activities.

It covers areas such as tendering and contract negotiation, design and project management, occupational health and safety, environmental management, trade practices, interest rate and foreign currency exposures, ethical conduct, gathering and release of material information, crisis management and IT disaster recovery, and business continuity planning.

Appropriate checks and balances are initiated by Leighton Holdings to ensure acceptable risk-reward profiles and cash projections are developed and maintained on all projects across the Group. This process involves setting guidelines and minimum standards, participating in the ongoing reviews of major projects and coordinating audits to ensure the appropriate practices and procedures are in place, are being adhered to and are effective in identifying and managing risk.

Tendering for Work

Our business is all about recognising opportunities and taking risks, and our success is largely measured by how well we manage them. One of the Leighton Group’s great strengths is its ability to manage complex projects and this will always be a dominant focus in risk management.

Every project has degrees of inherent risk. The risk factors include cost escalation, resourcing and procurement, staffing, industrial relations, design, engineering, weather, creditworthiness of the client, country risk, etc.

Risks need to be identified in the selection phase of a project and then managed through the discrete phases of tender preparation and submission, post submission negotiations, project delivery or the actual construction, and the ongoing operation and maintenance of the project or the facilities management, where appropriate. Ultimately these risks cannot be eliminated; they are identified, priced, mitigated and managed, and our insurers are partners in managing risk. They take levels of risk for a price.

Tenders are prepared by experienced estimators and project staff using a sophisticated computer aided tendering system (CATS). The tendering team look at how the project is to be constructed and prices are built up by estimating all of the volumes and costs of the various inputs such as steel, concrete, sub-contractor rates, etc, including seeking quotes where appropriate.

Supervision, labour, finance and insurance costs are estimated and price escalations and contingencies are allowed for. A profit margin is then included which covers offsite overheads and provides an appropriate return for the risk.

Once a project is awarded, the supplier's quotes are converted as quickly as possible to fixed-price supply contracts, thereby laying off the risk to suppliers and sub-contractors. On the M7 Motorway in Sydney for example, Leighton Contractors secured a fixed price contract for the supply of 42,000 tonnes of reinforcing steel.

On some projects, price escalation risk is managed by the client supplying the materials at their own cost. In other cases clients reimburse the contractor based on a pre-agreed escalation index, which limits the Group's exposure to movements in the underlying costs of the various components of the project.

Risk can also be managed by hedging inputs such as bitumen or by limiting liability when clients seek warranties for the performance of projects. Weather risk is managed by planning construction activities and making allowances for expected loss of time due to weather events, based on historical data.

We have a comprehensive approval process which requires every tender to identify its inherent risks and then to detail a strategy to price and manage these risks. Our processes ensure that tenders are carefully selected in the first place and are then subjected to a thorough risk assessment during their preparation.