Optimizing the Performance of Construction Companies using Goal Programming Model

. The construction industry is the driver to the social and economic development of a country. However, the construction industry is capital intensive and resource-reliance with high risk. These characteristics of the construction industry show high vulnerability to financial uncertainties. Therefore, this paper aims to examine the financial performance of the construction companies in Malaysia with goal programming (GP) model. This paper found that ECONBHD, GADANG, and MELATI have high liabilities while GADANG and MELATI have low profits. The powerful GP model has highlighted that the construction companies have high liquidity and solvency risks and could face problems to sustain their operations. This study could help the companies to determine the decremental and incremental values to reach the benchmark values for better financial performance.


Introduction
The construction industry drives the social and economic development of a country [1].Globally, in a year, about 13% of the expenditures are spent on construction while the total revenue of the construction industry is about $10 trillion and is expected to increase in the coming years [2].The construction industry develops the socio-economic infrastructure for residential, commercial, and industrial purposes for all range of activities to improve the peoples' standard of comfort.The construction industry plays an even important role in the urban development of developing countries for the planning and execution of high rise buildings, highways, tunnels, health facilities, sports centers, transportation system, and power plants [3].As a labor intensive industry, the construction industry also increases the employment rate of a country to help to reduce the poverty rate [4], [5].In Malaysia, local construction companies are also encouraged to perform knowledge, resource, and technological sharing with foreign construction companies to increase the productivity of the construction companies in their project completion [6].
Even though the construction industry supports the civilization and development of a country, there is high complexity in construction.Tserng et al. [7] noted that the construction industry is resource-intense and often engage in special projects with high complexity, uncertainty, and risk which require long period until project completion.The projects also involve specific teams from various companies that may lead to conflicts due to misunderstandings and diverse opinions.Moreover, increasing attention is being highlighted on the environmental, social, and governance (ESG) compliance which is to be undertaken by the construction industry [8].The construction industry consumes a lot of resources and leaves massive carbon footprint with their activities [9], [10].In adherence to the ESG framework, the construction companies have to shift to sustainable tools and technology for greener construction and climate resilient developments for the safety of the employees, public and the environment [11], [12].Sustainable tools such as unmanned aerial vehicles, Building Information Modeling, digital engineering, and intelligent decision support systems require high capital and budgeting [13]- [17].Besides, many construction projects are financed by debts such as bank loans [18].All these characteristics make the construction industry highly vulnerable to financial uncertainties that would eventually lead to bankruptcy.The underperformance or collapse of a construction company will pose substantial losses to the community and country [19].Therefore, there is a need to study the financial performances of the construction companies.
This paper aims to examine the financial performances of the construction companies in Malaysia using goal programming (GP) model.This process involves the planning, monitoring and assessment of the asset and liabilities in a company's balance sheets and income statement consideration of various goals and constraints to enhance the company value [20], [21].The GP model is constructed based on the weights method and preemptive method to reduce the deviation from the goals [22].The GP model is able to provide an optimal solution for multi-objective scenarios [23], [24].As such, the examination of the financial performance with GP model allows the construction companies to maximize returns and minimize risks coincidentally.This model can provide insights to the management of the company on the optimal amount of assets and liabilities for greater returns at reduced risks.The GP model in this paper also quantifies the incremental or decremental amount to reach the optimal levels of assets and liabilities.This study will also perform a comparison among all the indicators of the goals to derive the benchmark values for each goal for the GP formulation.
Based on our understanding, past studies have not applied the GP model to examine the financial performances of construction companies.Hamta et al. [25] applied the GP model to identify the optimal project implementation in a construction company in Iran.Zhao and He [26] performed a target cost control with GP model in China.Wang et al. [27] optimized the highway construction progress with GP model.Abdelkrim and Khadija [28] used the GP model to allocate time and cost for construction projects in Algeria.Vibahakar et al. [29] studied the financial performances of the Indian construction companies using exploratory factor analysis.GP model is simple yet powerful and has been applied in healthcare [30], [31], food and beverages [32], energy [33], [34], logistics and transportation [35], [36], portfolio optimization [37], [38] and education [39].This paper shall examine the financial performances of the construction companies with GP model.Section 2 explains the data and methodology.Section 3 discusses the empirical results.Section 4 concludes the paper.

Data and Methodology
The objective of this study is to examine the financial performances of the construction companies in Malaysia with GP model.The construction companies being evaluated are ECONBHD, GADANG, and MELATI.The period of study is from 2018 to 2022.The financial data are obtained from the annual reports of the construction companies respectively.Table 1 presents the goals to examine the financial performances of the construction companies.1, the goals to examine the financial performances of the construction companies are to maximize asset, equity, profit, revenue, and total goal achievement and to minimize liability.The maximization of asset, equity, profit, revenue, and total goal achievement indicates that larger values of the goals reflect higher financial performance.For liability, the aim is to bring down the value to lower the company's liquidity and solvency [22], [23].A goal is perfectly optimized when there is no deviational from the benchmark values.The goals to maximize asset, equity, profit, revenue, and total goal achievement are also achieved when negative deviation from the benchmark is not present.Negative deviational values show underperformance of these goals.Positive deviation from the benchmark of these five goals reflect outperformance.On the other hand, since the aim is to minimize liability, the presence of positive deviation from the benchmark is considered nonachievement because high amount of liability increases a company's liquidity and solvency risk [40].
The GP model development is as follows [22], [23], [40]: Subject to Asset constraint: Liability constraint: Equity constraint: Profit constraint: Revenue constraint: Total goal achievement constraint: + ×   − = 0 The sum of each goal will be compared among the three construction companies.The largest sum value of the asset, equity, profit, revenue, and total goal achievement goals are taken as the benchmarks for the respective goals.The lowest sum value for liability among the three companies is used as the benchmark for the liability goal.The underperformance and overperformance of the goals are mutually exclusive events which cannot happen at the same time.As such,   + ×   − = 0 [40].In this study, LINGO software is used to solve the optimization model [41]- [45].

Empirical Results
This section presents the results of the GP model on the financial performance of ECONBHD, GADANG, and MELATI.Table 2 shows the financial data of ECONBHD, GADANG, and MELATI from 2018 to 2022.(19.7203 trillion MYR) goals.The smallest value serves as the benchmark for the liability (0.8733 trillion MYR) goal.The optimal solutions of the GP model are then shown in Table 3 to Table 5.

Achieved
From Table 3, ECONBHD has achieved the asset, equity, profit, revenue, and total goal achievement goals because the model value has no negative deviation from the benchmark value.There is outperformance for equity, revenue, and total goal achievement with the presence of positive deviation of 1.4433 trillion MYR, 1.8532 trillion MYR and 2.9657 trillion MYR respectively.The positive deviational value of 2.3504 trillion MYR has been found for the liability goal, which means that ECONBHD has not achieved the liability goal.ECONBHD can reduce its liabilities by 2.3504 trillion MYR to reach the benchmark value of 0.8733 trillion MYR.Based on Table 4, GADANG has achieved 4 out of 6 goals, which are the asset, equity, revenue, and total goal achievement goals.GADANG has recorded no negative deviation for the asset, equity, revenue, and total goal achievement goals.GADANG also outperformed with positive deviational values in the asset (0.3348 trillion MYR), equity (0.8462 trillion MYR), and revenue (0.5240 trillion MYR) goals.However, GADANG has failed to achieve the liability and profit goals.There is an excess of 1.2756 trillion MYR in liabilities, as such, GADANG should bring down its liabilities from 2.1489 trillion MYR to 0.8733 trillion MYR.Besides, GADANG has low profit of 0.2457 trillion MYR.GADANG should increase its profit to 0.5462 trillion MYR, with a potential improvement of 0.3005.MELATI has also achieved the asset, equity, revenue, and total goal achievement goals with no negative deviation from the benchmark values.Outperformance of 1.4239 trillion MYR, 4.0550 trillion MYR, and 4.6842 trillion MYR can be found for the equity, revenue, and total goal achievement goals respectively.MELATI has not achieved the liability and profit goals.The liability of MELATI has to be reduced by 2.3687 trillion MYR from 3.2420 trillion MYR to 0.8733 trillion MYR.There is a deficit of 0.4858 trillion MYR of profit for MELATI.The company should increase its profit from 0.0604 trillion MYR to 0.5462 trillion MYR.
Table 6 summarizes the benchmark and model values for ECONBHD, GADANG and MELATI.From Table 6, ECONBHD, GADANG, and MELATI have achieved the asset, equity, revenue, and total goal achievement goals since there is no negative deviation from the benchmark value respectively.GADANG and MELATI have not reached their profit goal because their model values are lower than the benchmark values.ECONBHD, GADANG, and MELATI have higher than 0.8733 trillion MYR in liabilities, which exceed the benchmark value of 0.8733 trillion MYR.All the three companies have to reduce its liabilities.
Table 7 highlights the comparison of the deviational values from the benchmark for ECONBHD, GADANG, and MELATI.

Conclusion
This paper has fulfilled the objective to examine the financial performance of the construction companies using GP model.ECONBHD, GADANG and MELATI have high liabilities that would increase their liquidity and solvency risks.GADANG and MELATI have low profit, and this could be detrimental to the sustainability of the companies.This study has detected that the construction companies are relying on high debts for operation.This paper has also shown that the GP model is useful in examining the financial performances of the construction companies.

Table 1 .
Goals to examine the financial performances of the construction companies.

Table 6 .
Summary of benchmark and model values (trillion MYR).

Table 7 .
Deviations from benchmarks (trillion MYR).Table 7 highlights that excess liabilities of 2.3504 trillion MYR, 1.2756 trillion MYR and 2.3687 trillion MYR have been spotted for ECONBHD, GADANG and MELATI.It has also been detected that GADANG and MELATI have low profit as the companies are short of 0.3005 trillion MYR and 0.4858 trillion MYR respectively.