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9ECONOMIC SCIENCES
SCIENTIFIC AND ANALYTICAL BASIS OF DEVELOPMENT OPERATING MANAGEMENT AS A LEADING CONTRACTOR, DISTRIBUTOR OF RESOURCES AND REGULATOR OF THE ENVIRONMENTALITY OF CONSTRUCTION STAKEHOLDERS
Grigorenko V. Gizhko A. Revunov O. Malashkin M. Petrichenko A.
Applicants for the Department of Economic and Management Kyiv National University of Construction and Architecture, Ukraine
Abstract
The article highlights the author's view on the management of real assets of the enterprise, which are part of its investment portfolio in the general situation of uncertainty that has developed in the domestic business environment. The main requirements for the formation of a strategy for effective management of real assets are determined and the theoretical principles of positioning development companies as special enterprises participating in the construction and investment process and specific operating systems are considered. A description of the multi-project business environment of the developer from the standpoint of a holistic methodological platform for the administration of operational activities based on involvement of interdisciplinary and special methods of system and investment analysis as a methodological basis for the formation of the investment portfolio of development projects. Innovative components of the methodology of management of the developer's operating system are combined with the modernized system of business indicators of its multi-project activity.
Keywords: investment portfolio of the enterprise, real investments, real assets, investment activity, construction enterprise, developer in construction, integrated business structures (IBS).
Economic reforms have changed the status of construction companies, which have become independent subjects of market relations. Financial instability, the crisis of non-payment have increased the traditionally low contractual discipline - the norm of contractual relations in our time have become constant, months of delays in financing construction, disruption of contractual obligations by contractors and so on. All this has led to the urgent need to find adequate management tools to reduce the instability in the interaction of independent participants in the construction and the associated weakening of the effective operation of construction companies.
The current state of economic development requires companies to pay more attention to asset management. This is primarily due to the opportunities that open up as a result of attracting external resource and intellectual potential. The tasks of asset management of a modern enterprise are to find rational relationships between the level of resource provision, opportunities to increase and effectively use the potential of enterprise development, time categories, risk and end results. This should ensure financial stability and high investment attractiveness of the enterprise. European companies refuse both intermediate optimization of their resources at the level of low-income cash balances and a fanatical and aggressive process of restructuring and migration of capital, including diversification, consolidation and vertical integration, when size becomes more important than profitability. They are refocusing on share buybacks when capital flows from mature companies with limited investment opportunities to young companies with huge growth potential and huge financial needs. Such changes are made possible by the
transformation of tax legislation that encourages such actions and other factors, including shifting the focus to indicators such as market value of the enterprise, weighted average cost of capital, economic value added EVA, which are used as the main tools for assessing business performance. Underestimation of control over the return on capital at the stage of operation of investment projects leads to negative consequences of investment activities in general. Accounting for the true value of assets and their sources provides a fair basis for assessing the real state of the enterprise and prospects for its development.
The reason for the collapse of once promising and promising companies, which were able to expand their activities by increasing sales of basic products or diversification, is often the inability to maintain the quality of their activities in a growing number of business processes. As a result, the company "burns" due to its own speed. The most sensible alternative to the development of companies in growth is to focus on the manageability of business processes and bring the management and accounting system in line with the level of development. principles:
1. Taking into account the immediate prospects for the development of operating activities and forms of its diversification.
2. Ensuring compliance of the volume and structure of assets formed to the volume and the structure of production and marketing.
3. Ensuring the optimal composition of assets from the standpoint of economic efficiency.
4. Providing conditions for accelerating the turnover of assets in the process of their use.
5. Selection of the most progressive types of assets from the standpoint of ensuring the growth of market value of enterprises.
Currently, there are virtually no generally accepted scientific developments to address the problems of economic potential management on a single dialectical basis of experience, current status and future challenges of the construction industry.
Analysis of literature sources [1-12] was conducted in the following areas:
- rational ways of transformation of assets of contractors in the process of their economic activity, subject to the requirements of the construction development project;
- modern approaches and tools for accounting for the assets of a functioning construction contractor and their compliance with the requirements of the international financial reporting system;
- expediency of needs and conditions of adjustment of assets of the contracting construction enterprise on the part of institutional participants of the construction investment project - the customer, the co-investor, the developer;
- identification among economic methods of decision-making and related economic and mathematical tools that are able to identify the relationship between the volume and structure of contracted works and services and their impact on the dynamics (growth) of the relevant elements of assets (property) of the contractor as executors of the project.
As a result of research, it was found that the formation of enterprise assets is associated with three main stages of its development at different stages of the life cycle:
1. Creating a new enterprise. This is the most responsible stage of asset formation, especially when creating large enterprises. The assets formed at this stage determine the need for start-up capital, the conditions for making a profit, the speed of turnover of these assets, the level of their liquidity and so on.
2. Expansion, reconstruction and modernization of the existing enterprise. This stage of formation of assets of the enterprise can be considered as a constant process of its development in terms of the main stages of its life cycle. Expansion and restoration of the assets of the existing enterprise is carried out in accordance with the strategic objectives of its development, taking into account the possibilities of forming investment resources.
3. Formation of new structural units of the existing enterprise, for example, subsidiaries, branches, etc. This process can be carried out by forming new structural property complexes through new construction or acquisition of a ready-made set of assets in the form of an integral property complex. Options for such an acquisition are the privatization of an existing state-owned enterprise, the purchase of a bankrupt enterprise, and so on.
The second and third stages of asset formation are a form of investment activity of an existing construction contractor. Given the above factors, it should be noted the particular effectiveness of the formation of the investment portfolio of the enterprise by investing in real estate. As an effective tool in the investment
portfolio, real estate can be considered in several aspects:
- spatial aspect of real estate as an investment asset: real estate is localized, ie does not change location, heterogeneous (no two identical objects), its value significantly reflects the environment and trends, its real estate can be divided into shares or combined in larger real estate;
- legal aspect of real estate as an investment asset: real estate cannot be consumed, spent or disappear, so it always has an owner, requires a special procedure to confirm the rights to it - determines the legal aspect of real estate as an investment asset;
- economic aspect of real estate as an economic asset: real estate has a high capital intensity, which determines a high barrier to market entry, low elasticity of demand and even less - supply.
Thus, provided effective forecasting of the development of the real estate environment, if there are sufficient resources for its acquisition (which limits competition in the market by small investors), localized, legally proven property, which can not be physically spent, is a reliable, efficient , a rational object for investment. Given this, investing in real estate is one of the defining tools for the formation of the investment portfolio of the enterprise in conditions of instability, where its features become even more relevant due to the need primarily to preserve for a long period, the accumulation of enterprise resources.
The classification of investment real estate involves the selection of: land, as a real estate object, intended to benefit from an increase in its value in the long run; buildings as real estate owned by organizations (or available under a financial lease agreement) and leased under an operating lease agreement (agreements); premises as real estate, not currently occupied, but intended for lease under an operating lease(s).
Legislative protection of the rights of investors investing in real estate in Ukraine is based on the regulation of the investment market by about 150 regulations, the main of which are: Laws of Ukraine "On Investment Activities" of 18.03.1991 as amended, "On mutual investment institutions and corporate investment funds) "from 15.03.2001 with amendments and additions," On financial and credit mechanisms and property management in housing construction and real estate transactions "from 19.06. 2003 with amendments and additions.
These regulations primarily create opportunities for the developer to optimize tax liabilities and attract resources to projects, but do not sufficiently protect the rights of the investor, in particular, in most cases, between the investor and the developer is a collective investment institution to which the investor transferred resources. protects the rights of the investor, but on the contrary prevents the realization of his rights. Therefore, the problem of creating a legal framework that would allow the development of real estate investment is a basic problem that characterizes the causes of instability in real estate investment.
Strengthening the role, place and prospects of the company is closely related to the development and im-
plementation of methods to reduce economic risks, provide more flexible management, spread non-monetary forms of payment, strengthen confidence and influence on investment efficiency [4, 8].
At present, the following methodologies and models are used to assess the financial and credit risk of real investments: CreditRisk + (CSFP, 1997); Credit-Metrics (J. P. Morgan, RMG Corporation, 1997) Portfolio Manager and Credit Monitor (KMV Associates, 1993); CreditPortfolioView (McKinsey, 1998); Jarrow-Turn-bull Model (Kamakura, 1993-1995) [1; 2]. These models allow to estimate with a certain degree of accuracy the amount of risk losses and calculate the risk (Value-at-Risk, VaR). However, it should be borne in mind that the current state of theory and practice in the field of risk has emerged as a consequence of the evolution of approaches.
Peculiarities of modern institutional conditions of Ukraine are the combination of participants in the construction process in self-organizing structures, increased competition, insufficiently developed regulatory framework for construction companies, lack of former state support, the emergence of specific market risks and others. The enterprise is the basis of the economy of any state. Both the economic and social development of the country depends on the results of its activities. The activity of any enterprise is possible only under the conditions of use in the process of its functioning of various types of economic resources, in particular its assets.
At the present stage of development, complex economic systems, which include integrated business structures (IBS) are forced to operate in conditions of high uncertainty, which significantly complicates their management. In the process of making managerial decisions there is a problem of predicting the behavior of the system and the environment. The results of forecasts must be constantly adjusted in the course of events, which allows you to adapt to changes in the environment and flexibly respond to adverse effects. Simulation allows you to make many predictions in different scenarios, depending on the dynamic formation of various situations of almost unlimited complexity. Necessary conditions for creating minimalist models, adequate to real systems and the task of forecasting and analysis, are the successful choice of modeling methodology, software and plans for simulation experiments, which is still a significant problem and is the subject of discussion [3, 5-8].
The most developed methodologies of simulation modeling today are discrete-event (DE), system-dynamic (SD) and multi-agent (MA) [4; 9]. System dynamics operates with processes that are continuous in time, while discrete-ideology and multi-agent approach study discrete processes. System dynamics replaces individual objects with their aggregates and provides the highest level of abstraction. Discrete-event modeling works at the lower and middle levels of abstraction. Agent models can be used at any level and on any scale. Discrete-event modeling is most often used to solve operational and tactical problems that involve the dis-aggregation of the studied system into individual objects; in some cases, to address strategic challenges that
require a significant level of disaggregation. The basis of the discrete-event approach is the concept of orders (transactions, entities), resources and flowcharts, which determine the flow of orders and use of resources. The most common software platforms to support the approach - GPSS / PC, GPSS / H, GPSS World, Object GPSS, Arena, SimProcess, Enterprise, Dynamics, Au-toMod [11].
System-dynamic methodology is designed to solve, as a rule, strategic tasks; identification of general trends in processes. It provides a high level of aggregation of objects. The SD approach is used when the dynamics of the modeling object is determined in the form of evolutionary changes, without reproducing individual elementary events. Models of real objects are presented in the form of interaction of flows of various nature. The flow approach is implemented on the basis of the method of system dynamics proposed by J. Forrester [10]. The fundamental concepts of the method are the concept of fund (storage, tank) and flows. The object of modeling within the accepted concept is presented as a dynamic system consisting of funds interconnected by flows. The content of funds is measured by their level, and the intensity of flows is determined by the rate or speed of movement of the contents of funds. At the same time, the model simultaneously uses flows of different nature: material, labor, financial. These concepts are very universal and easy to interpret in terms of a particular economic system. System dynamics models are dynamic models with feedback. There are also time delays that reproduce the duration of the processes. The formation of the model by the method of system dynamics is carried out with the help of diagrams of causal relationships. Software platforms for the implementation of system-dynamic methodology - DYNAMO, Stella, Vensim, PowerSim, Ithink, Rethink, ModelMaker and others.
Agent-based modeling is based on the definition of the object under study in the form of separate specified active subsystems (agents). This methodology implements the view of the system as a set of active objects with the task of their individual behavior and interaction. Accordingly, agent models are used to study decentralized systems, the dynamics of which are determined not by global rules and laws, but on the contrary, these global rules and laws are the result of individual activity of group members. All agent models combine the decentralized nature of their organization and operation. Agent modeling is also called "bottom-up" modeling, because, above all, behavior is determined at the individual level, and global behavior occurs as a result of many (tens, hundreds, thousands, millions) of agents, each of which follows its own rules. lives in a common environment, interacts with this environment and with other agents. The fact that the models of stable equilibrium regimes in the field of economics are not quite adequate in recent years contributes to the active promotion of this approach. More adequate are the models that allow to perform the analysis of the formation of rules and trends of global behavior as integral characteristics of the behavior of many active players. At the same time agents models are more time consuming to build and calibrate. Therefore, when
choosing a specific approach, keep in mind that additional complications are not justified if the system can be described by simpler means. The most common software platforms for the implementation of multi-agent methodology - SWARM, RePast, AScape, AnyLogic [7-8].
Basic indicators and dependences of the system-dynamic model of financial and cash flows of IBS have the following values [4; 11]:
- Creating Value Function - a function that formalizes the conditional process of creating a product and providing services. For the purposes of modeling the activities of IBS within this function, the results of operational activities for the provision of basic and related services are summarized. The function depends on rate variables, such as Fixed Operational Costs, Variable Operational Costs, and level variables: Working Capital Weight and Long Term Assets.
- Cash Flow - cash balances (and equivalent). This is a key indicator of the model, which increases due to cash flow from operating activities (Sales Flow), capital increase (Capital Flow), and decreases when financing operating costs (Operational Flow), investment costs (Investment Flow) and interest payments. );
- Capital - IBS capital, which increases due to profit (Operational Profit or Losses), budget financing (Budget financing Plan), loans (Credit) and decreases due to losses (Operational Profit or Losses), interest on loans ), short-term liabilities (Liability Rate) and other capital losses (Other Capital Losses);
- Long Term Assets - the balance of the active part of long-term assets that affect the level of return on resource use. The indicator increases by the level of financed investments (Using investment funds) and decreases by the level of depreciation of assets (Depreciation);
- Amount of investment - balances of planned but not funded investments, which increase by the expected level of investment (Investment plan) and decrease by the level of planned investment costs (Investment Costs).
As can be seen from formula (1) within this model, the financial flow of IBS is considered in the interaction of the following dynamic subsystems: operational activities for the provision of basic services; operational activities for the provision of related services; investment activity; financial activities and capital management; activities for managing financial flows in foreign currencies; budget management and budget investment management activities.
The use of system-dynamic BSC-model for IBS allows to determine plans of financial flows and to carry out its operative specification. Modeling of processes of continuous management of IBS activity is an interpretation with a significant level of abstraction of financial and economic activities, in particular, the relevant relationships, which involves monitoring and identification of threats and their impact on key business processes, aimed at improving IBS sustainability and efficiency them limited resources.
Decomposition of the system of modeling of processes of continuous management of financial and economic activity of IBS (S) is defined as
S = <B, T, Z, Q, I, Y> (1),
where B - is the set of business processes of financial and economic activity of IBS;
T- is the set of time points;
Z - many threats to the continuity of business processes;
Q- is the set of qualitative and quantitative indicators of the efficiency of the continuous management system;
I - a set of management information, taking into account its quality and modeling tools;
Y- is the set of acceptable control measures.
The specific principles of modeling the processes of continuous management of financial and economic IBS include: continuity of business processes; riskiness; systemic and organizational unity.
The method of formalizing the criteria for modeling the processes of strategic management of IBS, based on the results of SWOT-analysis of the functioning of Ukraine's economy, and in contrast to existing approaches, combines process management models in IDEF0 notation and the principles of building a balanced system of IFRS (International Financial Reporting Standards), which allows to optimize the costs of implementation of strategic measures and investment projects for the development of IBS.
Current trends in the development of construction companies in Ukraine, in particular the low level and tendency to reduce profitability, increasing the share of unprofitable enterprises, suboptimal cost structure, working capital deficit, loss of financial stability and solvency indicate the formation of signs of crisis in the country's construction industry. To overcome these problems, world practice offers new methods and technologies to ensure the effective functioning of economic entities, which are comprehensively implemented in the system of financial controlling of the enterprise.
Management of financial risks of the enterprise on the basis of parametric programming involves choosing the optimal management strategy by solving the problem of minimizing the risk of the enterprise (r) simplex method, which allows to achieve the highest level of efficiency and long-term effect of financial resources by mobilizing real and potential financial opportunities profit and increase the market value of the enterprise.
This allows you to make an informed choice among three possible alternative financial strategies for enterprise development (formula (2)-(4)):
1) flexible management taking into account the level of sensitivity of key strategic performance indicators to the influence of factors of their formation (this strategy involves managing the risk of the enterprise by adjusting the degree of impact of different targets of a balanced scorecard):
n
r = X (Cj + djt)(Xj - M0 (X)) ^ min
j=i (2)
n
X ajxj = h',(i =1 * m) j=i
x, > 0, (j = 1 * n)
2) management within the existing resource base (this strategy involves the regulation of quantitative characteristics of the level of financial risk based on variations in the resource base of the enterprise, strict control of compliance with the needs of the enterprise in different resources to attract them):
r = Z cj (xj - Mo(X )) ^ min
j=i
(3)
X (aj + Pijt) xj=bi,(i=1 ^
j=1
Xj > 0,(j = 1 + n)
3) regulatory management (this strategy involves the control of acceptable limits of variation of resource consumption rates to achieve the planned performance of the enterprise):
n
r = X Cj (Xj - M0 (X)) ^ min
j=i (4)
n
X ajXj = bi + git,(i = 1 + m)'
j=1
Xj > 0, (j = 1 + n)
where r is the riskiness of the enterprise, which is estimated by the total deviation of the efficiency of various activities (operational, financial, investment) from its planned (modal) value; xj - variable management, ie a certain target of the development strategy of the enterprise (profit, market value of the enterprise, economic added value, etc.); aij, pij - constants that reflect the rates of expenditure of the available resources of the enterprise to achieve a certain target value of the choice of enterprise development strategy; cj, dj - constants that reflect the degree of influence of each management variable on the quantitative characteristics of the efficiency of the enterprise (profitability, return on investment, etc.); bi, gi - constants that determine the available amount of resources for the implementation of the enterprise; t - parameter that characterizes the share of use of available resources, which depends on the chosen management strategy, to achieve a certain target value of the choice of enterprise development strategy; M0 (X) - modal value of the quantitative characteristic of control variables; j - type of enterprise activity; i - type of resource; n is the number of considered activities; m - the number of resources.
The analysis of the given methodological approaches proves that the choice of simulation tools depends on the specifics of the object of research, as well as on the tasks facing the researcher in specific situations. Analysis of activity and development of strategy of behavior of the company in the conditions of turbulence of the market, unstable economic situation; development of anti-crisis program in modern economic conditions; creation of modules of operational, tactical and strategic planning in corporate information systems
and decision support systems urgent tasks for Ukrainian enterprises. This explains their interest in finding effective tools for strategic and tactical decisions.
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