MERIT is a computer-based simulation that currently operates as a modular package in the Windows environment and supported internet-based communications. MERIT generates realistic scenarios of a construction company’s business markets and conditions, to which groups of young engineers interact as teams to competitively manage a virtual company.

 

Background

The Merit simulation has been designed to encourage the separation of team member responsibilities into different managerial functions to foster responsibility and teamworking, and the success or failure of the company may well depend upon the effective interaction between the different factions.

For example, a typical scenario for the structure of a team might be :-

The MERIT acronym stands for Management Enterprise Risk Innovation and Teamwork. The main objective of MERIT is to enable young engineers to effectively acquire these additional skills required to progress their careers.

The simulation is designed to demonstrate the interdependence of the various managerial decisions and the interlocking nature of the variables that determine the success or failure of a construction company. MERIT has great potential to impact on the duration of the learning curve of young engineers.

MERIT as a simulator shows how managerial and technical decisions made today unfold into tomorrow’s operational and financial results. It develops in participants a greater dexterity in exercising the decisions involved in their functional roles. It develops skills in other functional aspects of the organisation outwith their own scope of responsibilities.

Each participating team (ie virtual company) is required to make key decisions. These decisions cover the various functions that interplay in the management of a construction company and include marketing, estimating, tendering, finance and personnel management. These decisions cover both strategic and operational aspects of the company’s management.

MERIT offered a breakthrough in the approach to training engineers in company and financial management which was inter-alia by experience, by attending formal courses or by reading. None of these traditional approaches offer the opportunity to practice, through simulation MERIT does. The new MERIT approach was much more dynamic and as such stimulates further study, encourages the participants to develop their analyses supporting their decision. In many cases these are sophisticated analyses and allows the participants to explore strategies and experiment with potential outcomes.

MERIT was also a breakthrough in the scale of training in these topics. For example the National Construction Business Game run on behalf of the Institution of Civil Engineers is in two phases, phase 1 whereby all the teams are competing against the simulation and phase 2 whereby the six leading teams come together to compete not only against the simulation but against each other. Phase 1 provides the opportunity for unlimited numbers to participate and this has made MERIT a very widely used training vehicle and arguable the most cost effective training vehicle current available.

Prior to phase 1 there is a multimedia tutorial that allows participants to familiarise themselves with the concepts and workings of MERIT, it allows access to the MERIT simulator, training them in the decisions they will have to make, allowing them to experiment without penalty. This is truly an educational phase and the lessons learned are tested in phase 1 where their performance is measured against all the other teams.

 

Operation

The operation of MERIT is as illustrated.

The advisory panel agree the defined market conditions for the simulation and once set up and running there is no intervention by the game controller.

Each team starts from the same set of company performance data representing one year’s trading so the growth or decline of companies over the next two simulated years of trading in phase1 can be directly compared and so generates the motivation of competition.

The performance of each company is measured by :

  • Turnover
  • Operating Profit to Turnover ratio
  • Company Value
  • Capital Employed
  • Contract Completion Rate
  • Forward Workload
  • Forward Margin
  • Share Price
  • Client Satisfaction

At the end of the two years trading the top six `teams are brought together for the final two years of trading and competition is accentuated by competing now against each other as well as the simulation. This heightens certain aspects such as competition for quality staff and project managers. This new level of competition makes outcomes from the decisions even more uncertain.

Starting from an historical position of one year's trading, a company must be managed through two phases:-

Phase 1: The Early Years

The team, operating as a board of directors, runs the company and competes against a computer-generated company for contracts over a number of rounds in a simulated construction market which is updated regularly to reflect the changing industry conditions.

Each round, known as a period, represents one quarter, or three trading months. The dynamics of this stage of the competition enable the teams to appreciate the impact of each decision they make.

Phase 2: The Final Years

The leading teams from the early years compete in the final years over a further number of rounds. Each team starts with their company operating from its position at the end of the early years, allowing them to benefit from their decisions to date.

During the final years the teams will compete against the computer-generated company and each other for both jobs and staff, ensuring an even more highly competitive environment.

Inter-alia MERIT:

  • Introduces the participants to company managerial and financial management which was not the focus of their previous technical training and experimentation is within a controlled environment
  • Provides a greater understanding of the problems and decisions that are involved in running a modern construction company and the interdependency of the management functions
  • Raises awareness of their own role in the commercial process
  • Gives a more holistic perspective of the construction process
  • Improves team-working, communication skills and other interpersonnel skills
  • Supports the development of broader and hybrid skills
  • Develops analytical and problem-solving techniques
  • Measures performance benchmarked against other competing teams and so develops a heightened sense of the existing competitive commercial environment and thus produces young executives more aware of the commercial realities of business
  • Facilitates development of skills required for managing in an IT dominated environment

 

Benefits

MERIT provides experience of and training in:

  • Company, business and financial management
  • Issues of competition not only for work but also staff.
  • The role of technical work and its contribution to commercial operations
  • Understanding the whole business of the construction process

There are a range of experiences within MERIT and this depends on the role allocated to the individual team player.

Below is an overview of the broad range of issues that team players will experience:

structure

The benefits of using the MERIT simulation as a learning vehicle are based upon principles of adult learning. It is widely accepted that adult learners acquire knowledge in a different way from the typical classroom environment.

Recognising that, MERIT utilises learning methodologies and tools that help transfer knowledge, skills and competencies that are needed to improve the business skills and understanding of young engineers so that they in turn deliver improved performance for their organisations.

In the jargon of education, MERIT is an action-learning exercise designed to anchor important lessons of business success with the participating teams. Thinking strategically, performing in the midst of chaos and balancing risk and reward, all play out in the simulation which most of the participants find engaging.

The simulation evolves and incorporates evolving legislative, regulatory and sector practices keeping the challenge of MERIT modern and relevant. Examples of changes introduced over the period of operation have included:

  • Tools to enable detailed interactive analysis of key business areas
  • Learning enhanced by detailed powerpoint tutorial, and participants can ‘trial’ the simulation prior to the start of a competition
  • Move from a contracting company to a PLC with ability to invest in other businesses
  • Enhancements to the 2-stage tendering process
  • Developments of risk, and its affect on bidding and job progression
  • Changes to the use of project managers to reflect what happens in the real world e.g., ‘golden hellos’, resignations, grudges
  • Labour fluctuations in the market
  • Expansion of the key performance indicators in line with industry trends
  • Introduction of Quality and Health and Safety into the overhead function
  • Client relationships impact on more areas of the business

The benefits of using the MERIT simulation as a learning vehicle are based upon principles of adult learning. It is widely accepted that adult learners acquire knowledge in a different way from the typical classroom environment. Recognising that MERIT utilises learning methodologies and tools to help transfer knowledge, skills and competencies need to improve the business skills and understanding of young engineers so that they in turn deliver improved performance for their organisations. In the jargon of education MERIT is an action-learning exercise designed to anchor important lessons of business success with the participating teams. Thinking strategically, performing in the midst of chaos and balancing risk and reward all play out in the simulation which most of the participants find engaging. The simulation evolves and incorporates evolving legislative, regulatory and sector practices keeping the challenge of MERIT modern and relevant. Examples of changes introduced over the period of operation have included:

  • Tools to enable detailed interactive analysis of key business areas
  • Learning enhanced by detailed powerpoint tutorial, and participants can ‘trial’ the simulation prior to the start of a competition
  • Move from a contracting company to a Plc with ability to invest in other businesses
  • Enhancements to the 2-stage tendering process
  • Developments of risk, and its affect on bidding and job progression
  • Changes to the use of project managers to reflect what happens in the real world e.g., ‘golden hellos’, resignations, grudges
  • Labour fluctuations in the market
  • Expansion of the key performance indicators in line with industry trends
  • Introduction of Quality and Health and Safety into the overhead function
  • Client relationships impact on more areas of the business

A key feature to MERIT’s success is that it does not take the trainees away from their work place for extensive periods and so fits with the demands of the modern industry that training is delivered effectively in the work place.

It demonstrates that with the appropriate development and support e-learning can be both inexpensive and effective.

 

History

The principles of MERIT began development in the early 70s as part of research into ‘Contractors Bidding Behaviour’ and experiments with game theory and competition theories to explore how contractors responded to fluctuating market conditions. This work was funded by contractors associations and by the Building Research Establishment. As part of this work primitive games were developed that were played in classrooms with students and in companies with company executives to explore responses to market conditions. These games were developed and computerised to more sophisticated levels but essentially remained bidding games. The breakthrough that produced MERIT as a simulation of the management of a construction company was sponsorship obtained from Balfour Beatty Construction Ltd. The funding was to design and develop the National Construction Business Game to be run on behalf of The Institution of Civil Engineers. This required the development of all the project and company management features to be included in the simulation.

Since the very beginning until the present MERIT has operated in two phases:

  • the early years, whereby individual teams are competing against the simulations and strategies embedded in the software. This has allowed MERIT to be a distance learning, mass market vehicle reaching a wide range of participants and develop skills in remote and collaborative working between the participants; and
  • the competitive phase whereby the leading teams are brought together and compete against not only the computer software but also the other teams. This introduces an additional dynamic that gives the ‘finals’ of the MERIT competitions almost unbounded tensions and excitement.

Both phases offer a dynamic, participative and stimulating learning experience.

The first version of MERIT, subsequently known as MERIT1, ran as the National Game from 1988 to 1993. The data exchange between participants and the Game organiser was, in keeping with the technology of the time, paper based, with participating teams sending in completed forms with their decision data, the data was processed at a centre and the results posted back. Balfour Beatty sponsored the development and operated the National Game which required a team of data processing staff.

The second version of MERIT which ran from 1994 to 1998, MERIT2, developed the software with additional features and aligned it with industry developments. Data exchange was by diskette thereby reducing the processing effort required. Balfour Beatty sponsored the development of MERIT2 and operated the National Game.

The third version of MERIT, known today simply as MERIT, developed the WEB based version. This removed the data processing burdens and provided a much more responsive exchange between the participating teams and MERIT. This development was sponsored by the DTI (DETR), Balfour Beatty Ltd, Mouchels, and the CITB. The staff involved from the Department of Civil Engineering at Loughborough University who had developed MERIT took responsibility for operating the National and other Games.

Building on the innovative means of dissemination through the National Game has established MERIT as a recognised and widely used training vehicle in the construction industry. Each participant is awarded 2 CPD training days by The Institution of Civil Engineers and the finalist in the annual competition are awarded 3 CPD training days. Other Professional Institutions award the CPD training days on individual application by the participants.

Over 20,000 young engineers and students have participated in the MERIT experience. This gives rise to the claim that MERIT has been responsible for introducing many of today's construction industry executives to the issues of company and financial management resulting from their engineering activities.

MERIT is also a dynamic and evolving training vehicle capable of responding to the inevitable changes the industry faces brought on by the demands of modern business.