“ SKANSKA ” ME 2605 Cost Management and Control ME 2027 Performance and cost analysis Group: TF1 Code: BXXX Alberto Romance Ileana Trigo Ravil Vildanov Sainath Gopinath Yifan Long

Slide n°2 One of the world largest construction companies (created in 1887) Markets in Europe, North America and Latin America #of employees: persons Revenue for 2006: 13.6 bln EUR PORTFOLIO: SKANSKA at a glance DIVISIONSHARE of groupRevenue Construction92% Residential Development5%734 Commercial Development3%370 Infrastructure Development~0%16 €MLN

Slide n°3 Core Business  Construction  Residential Development  Commercial Development  Infrastructure Development

Slide n°4 Comments  All activities in construction are done according to norms and codes.  These norms and codes describe the relation among activities, labour, equipment, materials consumption.  We are presenting simplified version of cost calculation in construction just to give you idea how it works.  Internally, construction companies use the activity based costing and externally when they sell building they use unit based pricing, e.g.

Slide n°5 ABC Description Cost centre for each activity Major Activities Cost Centre Cost Driver Trace the cost of activities to the project

Slide n°6 Activity based work break down structure *All figures are not real Cost drivers Cost centre

Slide n°7 Activity based work break down structure *All figures are not real Cost objects

Slide n°8 COST of construction *All figures are not real Final Table

Slide n°9 Financial Analysis ROA tends to decrease in ROA is a product of Sales to Asset ratio and Net profit margin Net profit margin is very low that decreases the ROA Both sales and costs are increasing. The company should cut costs to increase Net profit margin. Not only that, the company has also reduced their total assets when compared to This can improve cash flows.

Slide n°10 Risks at Skanska  Risks related to Material prices  Financial Risks - Foreign exchange rates - Interest rate risks - Refinancing risks and liquidity Risks management done by Operational Risks assessment