PROJECT PLANNING SERVICE PUBLIC COMPANY LIMITED
Risk factors We put much focus on risk management and set up risk management committee to create strategies to manage risks since 2012. Our company faces risks as follows:1. Risks of Business Competition 1) Risk of business competition Typically, engineering services has low barrier to entry because of low investment cost. Even though there is a requirement for engineer to possess certain license, it is not too hard to obtain. A boom of engineering services company in the past few years can be a good evidence. Any individual with license for professional practice can gain some foothold in this business. Increase in construction projects of big retailers or government could create opportunities for new entry who might employ aggressive pricing strategy to penetrate the market. However, there are not many qualified players who can provide one stop engineering services especially ones with good track records. In addition, having highly skilled engineers who have close and long relationship with the clients also give company certain advantages over competitors. Lastly, PPS’ commitment in quality over price is a strong defense for any price competition should it arise. That being said, we did not overlook any of the above risks. In response to that, we have created risk management scheme since 2012. We increase our scope of services from upstream to downstream of engineering consulting. We invest in engineering and architectural design together with the introduction of IT in the field to increase company’s efficiency. This might be a first stepping stone towards new business in the future. 2) Risk of focusing on limited market segment and a few big clients Since our customers are limited to those medium to large project owners that emphasize on construction quality, most of our customers are normally repeat customers such as CPN Group and Ekachai Distribution (Tesco Lotus), both of which are real estate developesr in retail business. CPN Group contributes 25% of income to the company, while Tesco Lotus accounts for 15%. Therefore, if there is any change in their decision on receiving services as well as scope adjustment, it will have an impact on our sales revenue. We plan to mitigate this risk by re-balancing the work between government and private i.e. focusing more on government work which is currently at only 15%. In addition, we will diversify into other types of construction; for example, factory and infrastructure. 3) Risk of income inconsistency Our main income is derived from consulting and construction management for project owner or contractors on project by project basis, therefore company might face the risk of discontinuity of income when existing projects are completed but there is no new project assigned for the engineers who have just completed. Inevitably, the company still has to bare the cost especially those associating with personnel costs as a major cost of the compan.y Recognizing the risk, we set risk management plan as follows: 1. Increase our scope of services from upstream to downstream of project management; that is, from consulting and project design service to facility management. 2. Re-balance the work between government and private i.e. focusing more on government work, and diversify into other types of construction.
Annual Report 2012
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