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Tuesday, May 12, 2009

Strategies to boost PKNS' performance

The Selangor State Development Corp (PKNS) has put in place key performance indicators (KPI) at all departments in a bid to increase revenue and net profit.

General manager Othman Omar said he has identified several strategies to drive growth at PKNS, Selangor's property arm.

Top of the list is to focus on open bidding for its projects.

Previously, it gave contracts based on negotiated tenders. This was not competitive as profit margins were below 20 per cent, mainly due to claims on additional costs, Othman said.

"Since February we have been practising open and selective tendering and awarding contracts to the lowest bidder, not compromising on quality," Othman said at a news conference in Petaling Jaya yesterday to highlight the KPIs and his first 100 days in office.

Othman said PKNS' austerity drive and recent cost-cutting programmes have reduced its operational spending by RM87 million in the last three months.

"We achieved that by not spending on infrastructure and scaling back on projects. We are targeting RM100 million by end-December," he said.

This year, PKNS aims to make RM1.06 billion in revenue, a record for the group. Last year, its revenue was RM825 million.

"Through our plans, we will make sure we get the margins we are supposed to get. The target is 30 per cent but at the end, it could be 40 per cent," Othman said.

PKNS has set up a division for business development to identify more than RM2 billion worth of projects over the next two years. The projects, comprising a mix of retail developments and townships, will be done jointly with land owners, private developers and state agencies.

"We are talking to a few parties and working out the conceptual designs for the best costs," Othman said.

PKNS' finance department has also been asked to raise RM1 billion by December 2010.

The cash will be used to buy land and assets to build up PKNS' portfolio.

By Business Times (by Sharen Kaur)

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