(c) Using information from the case, assess THREE risks to the Giant Dam Project. (9 marks)
(c) Assess Mr Hogg’s belief that employing child labour is ‘always ethically wrong’ from deontological andteleological (consequentialist) ethical perspectives. (9 marks)
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1 Rowlands & Medeleev (R&M), a major listed European civil engineering company, was successful in its bid to becomeprincipal (lead) contractor to build the Giant Dam Project in an East Asian country. The board of R&M prided itself inobserving the highest standards of corporate governance. R&M’s client, the government of the East Asian country, hadtaken into account several factors in appointing the principal contractor including each bidder’s track record in largecivil engineering projects, the value of the bid and a statement, required from each bidder, on how it would deal withthe ‘sensitive issues’ and publicity that might arise as a result of the project.The Giant Dam Project was seen as vital to the East Asian country’s economic development as it would provide alarge amount of hydroelectric power. This was seen as a ‘clean energy’ driver of future economic growth. Thegovernment was keen to point out that because hydroelectric power did not involve the burning of fossil fuels, thepower would be environmentally clean and would contribute to the East Asian country’s ability to meet itsinternationally agreed carbon emission targets. This, in turn, would contribute to the reduction of greenhouse gasesin the environment. Critics, such as the environmental pressure group ‘Stop-the-dam’, however, argued that theproject was far too large and the cost to the local environment would be unacceptable. Stop-the-dam was highlyorganised and, according to press reports in Europe, was capable of disrupting progress on the dam by measures suchas creating ‘human barriers’ to the site and hiding people in tunnels who would have to be physically removed beforeproceeding. A spokesman for Stop-the-dam said it would definitely be attempting to resist the Giant Dam Project whenconstruction started.The project was intended to dam one of the region’s largest rivers, thus creating a massive lake behind it. The lakewould, the critics claimed, not only displace an estimated 100,000 people from their homes, but would also floodproductive farmland and destroy several rare plant and animal habitats. A number of important archaeological siteswould also be lost. The largest community to be relocated was the indigenous First Nation people who had lived onand farmed the land for an estimated thousand years. A spokesman for the First Nation community said that the ‘trueprice’ of hydroelectric power was ‘misery and cruelty’. A press report said that whilst the First Nation would be unlikelyto disrupt the building of the dam, it was highly likely that they would protest and also attempt to mobilise opinion inother parts of the world against the Giant Dam Project.The board of R&M was fully aware of the controversy when it submitted its tender to build the dam. The financedirector, Sally Grignard, had insisted on putting an amount into the tender for the management of ‘local risks’. Sallywas also responsible for the financing of the project for R&M. Although the client was expected to release money inseveral ‘interim payments’ as the various parts of the project were completed to strict time deadlines, she anticipateda number of working capital challenges for R&M, especially near the beginning where a number of early stage costswould need to be incurred. There would, she explained, also be financing issues in managing the cash flows to R&M’smany subcontractors. Although the major banks financed the client through a lending syndicate, R&M’s usual banksaid it was wary of lending directly to R&M for the Giant Dam Project because of the potential negative publicity thatmight result. Another bank said it would provide R&M with its early stage working capital needs on the understandingthat its involvement in financing R&M to undertake the Giant Dam Project was not disclosed. A press statement fromStop-the-dam said that it would do all it could to discover R&M’s financial lenders and publicly expose them. Sallytold the R&M board that some debt financing would be essential until the first interim payments from the clientbecame available.When it was announced that R&M had won the contract to build the Giant Dam Project, some of its institutionalshareholders contacted Richard Markovnikoff, the chairman. They wanted reassurance that the company had fullytaken the environmental issues and other risks into account. One fund manager asked if Mr Markovnikoff couldexplain the sustainability implications of the project to assess whether R&M shares were still suitable for hisenvironmentally sensitive clients. Mr Markovnikoff said, through the company’s investor relations department, that heintended to give a statement at the next annual general meeting (AGM) that he hoped would address theseenvironmental concerns. He would also, he said, make a statement on the importance of confidentiality in thefinancing of the early stage working capital needs.(a) Any large project such as the Giant Dam Project has a number of stakeholders.Required:(i) Define the terms ‘stakeholder’ and ‘stakeholder claim’, and identify from the case FOUR of R&M’sexternal stakeholders as it carries out the Giant Dam Project; (6 marks)
(b) Describe a framework to assess the risks to the progress of the Giant Dam Project. Your answer shouldinclude a diagram to represent the framework. (6 marks)
(ii) An evaluation of the environmental and sustainability implications of the Giant Dam Project; (8 marks)
(e) Internal controls are very important in a complex civil engineering project such as the Giant Dam Project.Required:Describe the difficulties of maintaining sound internal controls in the Giant Dam Project created by workingthrough sub-contractors. (4 marks)
(c) (i) Using ONLY the above information, assess the competitive position of Diverse Holdings Plc.(7 marks)
(c) Excluding the number of complaints by patients, identify and briefly explain THREE quantitativenon-financial performance measures that could be used to assess the ‘quality of service’ provided by theDental Health Partnership. (3 marks)
