Those Years When I Was Forced to Top the Forbes List

Chapter 391 Turnover Rate, the Insider's Guide
Half an hour later, Gu An and the Transportation Department staff left the scene and went to the project site a few hundred meters away, and the atmosphere relaxed a bit.

"Safety is a very heavy responsibility."

As Chen Xuebing spoke, he flipped through the construction log and shook his head: "The efficiency is also poor, with a work efficiency of only 0.35m per hour. There are only 13 hours of daylight each day when construction is possible, and it's a double-hole design. How long will it take to open the road? How long will it take for formwork, steel reinforcement, and curing?"

"Chairman, we are currently in a high-gas danger zone where we are conducting both detection and construction. We need to slow down now, but once the gas concentration decreases, we can catch up and complete most of the project in the summer or autumn. We can open the tunnel by the end of the year and make it open to traffic before March next year. The outer sections of the road will not be affected by the tunnel section."

Bi Yaxiong said confidently.

The chairman gave a timeframe before the Spring Festival, but that was only an ideal scenario, a timeframe he believed would be foolproof.

“No way.” Chen Xuebing shook his head. “The manual probing team relies on bringing three caged thrushes into the cave for early warning (the birds will faint first when the gas exceeds the limit). The concrete spraying rebound rate is so high, and you have to wear masks while spraying. I don’t dare to rush you to do it like this. Just tell me, what kind of machinery can be introduced to better ensure safety and improve efficiency?”

“Uh…” Bi Yaxiong glanced at Director Xian, somewhat hesitant.

Chen Xuebing laughed: "I already said, just tell me directly. If we can afford it, we'll use it; if we can't, I won't force it. If we switch to a more expensive plan, we need to let the leaders know where the costs are. Even if they don't give us more money, they should at least put in a good word for us regarding the project payment guarantee period, right?"

Director Xian smiled, his hands behind his back. This General Manager Chen is quite a character.

“Hmm,” Bi Yaxiong then began to elaborate, “If we change to a mechanical solution, we need a dual-arm hydraulic rock drilling rig. The infrared positioning system can prevent drilling deviation and double the efficiency. There is also a concrete robot that can be remotely controlled from 10 meters away. It also integrates a dust concentration alarm, which can greatly reduce the risk of suffocation accidents during manual spraying.”

"Can you get your hands on it? How much would it cost?"

"Atlas' BOOMER L2 rock drill costs 2.8 million yuan per unit, and Putzmeister's upgraded PM500 electro-hydraulic pump truck costs 1.6 million yuan. If we change the plan, we will need more than three units. However, we can rent them. Atlas' Chengdu office charges 480,000 yuan per month to rent one unit, and a Swedish technician will accompany you. The Xiangyu Railway Line 2, which is currently under construction, also has them. We can ask them to arrange for the rock drill and pump truck. They should have them, and it should be cheaper. However, if the drill bit of the rock drill is damaged, it has to be transported from Shanghai. Currently, Pudong Airport prohibits the transport of hydraulic equipment, and the road transport cycle is more than four days, which is quite troublesome."

"Oh." Chen Xuebing had made up his mind: "We can rent rock drilling trucks from the manufacturer's office, so let's rent them. We can buy pump trucks, let's buy five of them. Anyway, the real estate side can use them for multiple projects. After the rainy season, we can rush to finish the work and pour concrete at key points without waiting for the commercial concrete plant to schedule. This will make it easier for you to meet the construction schedule."

"No, no, no."

Before Bi Yaxiong could speak, Bai Ning, the purchasing director standing to the side, couldn't hold back any longer.

"Chairman, tunnel construction has been done manually for so many years, and the workers are very skilled! They've survived the most dangerous times, and we have excavators and drill bits! That's enough! We don't need to rent specialized engineering vehicles! That's redundant and wasteful! If you do it that way, all the work of our cost specialists will be wasted! Besides, buying pump trucks isn't a necessity; you have to provide pump trucks when you buy commercial concrete! Scheduling is just a matter of adding a little money and a few packs of cigarettes! Five trucks, that's almost a million yuan a year in driver salaries and maintenance costs! You have to trust us!"

By saying this, Bai Ning had already toned down his temper considerably, saving face for the chairman.

She had already heard that within the group, wherever the chairman went, the money was spent.

The company leaders were all eager for the chairman to come and inspect the company.

But she works in the cost control department.

Since you've come in, you've spent all the money. Where is the value of our work then? At the end of the year, the costs have gone up and exceeded industry standards. How are we going to give out bonuses then?

Chen Xuebing raised his eyebrows.

These female generals under my command are really... incredibly audacious.

Che Rumei from Changzheng Risk Control dared to confront Lao Kan, but Bai Ning went even further and directly confronted him.

However, a woman with this kind of personality is truly irreplaceable in such a door-guarding position.

They are thrifty yet outspoken; arguing with them would only make the male leader look bad.

"We must buy rock drilling trucks, and let's buy three pump trucks. Our own operating team is more familiar with the project requirements. In the future, we also need to train our own technical team for our projects. How can we tackle tough challenges if we've never used professional equipment before?"

Chen Xuebing said with a straight face, then coughed lightly, softening his tone a little, and said, "President Bai, I came to the construction site in person, my face must be worth at least ten million, right?"

Bai Ning fell silent.

But he didn't nod either, silently reserving his opinion.

Chen Xuebing smiled, pondering a question.

Alone Better Together.

Should we also put two women in the singularity?
Forget about the group company. Ren Ying has finally been taught a lesson by him and no longer nags him about costs every day, so she shouldn't add to her troubles.

In the project office where the prefabricated houses were being built, Chen Xuebing and Director Xian sat around a fire, having a private conversation.

"I met Liu Yonghao in Shanghai."

Chen Xuebing poured Director Xian a cup of tea and said, "He promised to send someone to Ziyang transit warehouse to take a look. If Huaxi's design is acceptable, they will take over the remaining 9 cubic meters of the first phase of the project. I have successfully completed the task assigned to me by Director Liu. The bonded logistics park in Chongqing is the core of the entire Sichuan-Chongqing logistics plan. I have contacted Central Huijin and Social Security Investment. The project should start bidding soon, and the Chengdu-Chongqing economic circle will generate benefits as soon as possible."

He spoke in a relaxed tone, as if he were talking to a regular friend.

In reality, figures like Director Xian of the Transportation Department, Director Luo of the Housing and Urban-Rural Development Department, and especially Director Liu of the Development and Reform Commission, are all high-ranking officials in their respective regions. Ordinary people simply cannot contact them. Even when he goes to other places, he has to treat such figures with great respect.

However, in Sichuan and Chongqing, he was the one helping with projects and making large investments, yet he received very few requests, so his status was naturally different.

Director Xian understood this and never put on airs in front of Chen Xuebing.

Investors like Chen Xuebing, who have influence in many industries and resources across the country, can solve many problems that others cannot. With his background as a representative of Chongqing, several leaders in Sichuan have a high opinion of Chen Xuebing. At a provincial meeting, the leaders also mentioned that Chongqing has a keen eye for talent. Such investors are not just outsiders, but timely help. We should leave a good impression on them and strive for more cooperation.

"President Chen is very efficient. Working with you is reassuring," Director Xian said with a smile, giving a thumbs up. "We plan to start construction on the Chengdu-Qingbaijiang Railway in May. Can your company's 400 million yuan financing keep up?"

“No problem.” Chen Xuebing said readily, “I’ll have General Manager Bi handle this.”

The investment in Sichuan is a difficult amount to calculate at present, but the 400 million yuan financing for the Qingbaijiang Railway was exchanged for 1 million square meters of residential land. The land cost only 400 yuan per square meter. If the plot ratio is 4.0 and the floor area is 4 million square meters, the floor price is only 100 yuan. The land price is not a concern at all; only the construction cost needs to be considered.

This is definitely a profitable investment.

Moreover, this area is large and has room for development. As long as the international logistics hub of Qingbaijiang is developed, and the flow of people is increased, and the supporting commercial facilities at the bottom are well-developed, the construction cost of residential buildings will not be high, and 2,000 yuan per square meter will be sufficient. Selling them for 4,000 to 5,000 yuan per square meter is very reasonable.

A profit of 2500 yuan multiplied by a construction area of ​​400 million square meters equals 100 billion yuan.

Of course, such a development volume is not without risk. The biggest fear is that the products will not sell and will lead to stagnation. At this profit level, 30% unsold inventory would be fatal. This can be controlled through the development cycle.

The key to whether or not to speculate on these less desirable plots of land within the Fifth Ring Road is whether they are suitable for speculation and whether the speculation is successful.

We need to see if Qingbaijiang's development can surpass its predecessors and whether it can persuade the government to build a subway.

He now has the authority to make suggestions on this matter. At least once the Qingbaijiang hub is developed, persuading Chengdu to build an intercity railway connecting to the city's East Station should not be a problem.

The public rapid transit system connects to the East Station, making the land valuable.

Secondly, we need to see if Gu'an Construction can establish its brand and gain the trust of homebuyers.

He believes that after next year, Gu'an's brand will be very strong, at least in Sichuan.

We still need to work on brand building.

Furthermore, in the short term, as long as the bank shareholder is acquired, this land can also be included in the mortgage and credit assets. The irregularities in related-party transactions involving bank shareholders specifically refer to unsecured loans and interbank financing channels without asset collateral, not such mortgage loans. As long as the valuation is not inflated and the disposal of the mortgaged property is not difficult, the loan is compliant.

Why invest in a nationwide bank?

This is because these types of banks have the ability to liquidate collateral nationwide, rather than being limited to first- and second-tier cities.

Moreover, the key to mortgage transfer is speed. After acquiring the land, it takes one or two months to complete the procedures, and another month to wait for the loan to be disbursed, which is too slow.

The entire process has to be completed in just over ten days.

The key lies in the relationship with the bank.

With 70% of land loans being compliant, plus the average annual premium for land, the loan ratio can reach over 85%, which is a leverage ratio of 6.6 times.

Based on his annual profits, coupled with his keen eye for land selection and its appreciation potential, and the turning point brought by the financial crisis and the four trillion yuan stimulus plan, he could leverage this to expand for at least three years.

Brand and funding channels will be the foundation for him to become the number one real estate brand in the country.

As for building a brand first, it depends on technological accumulation, having talent and control over machinery and materials, and undertaking mega-projects.

Seeing a glint in his eyes after he finished speaking, Director Xian blew on his tea and chuckled softly, "President Chen, you sound more confident than last time. You must have made a lot of money on your investments recently, right?"

"Really?" Chen Xuebing glanced sideways.

"Hehe, last year when I mentioned 400 million yuan in financing to you, you kept making excuses. This time you're much more agreeable."

Chen Xuebing was momentarily stunned when he heard the word "last year".

That happened in mid-November, and it's now the end of March, more than four months later.

"Time flies," Chen Xuebing sighed. "We've made a lot of money from our investments outside, but for the projects in Sichuan, it all depends on Chengdu. Director Xian, I've come to talk to you about two things. First, the cash flow problem for the Dujiangyan-Wenchuan Expressway. Could the department increase the proportion of progress payments? Second, Changshi is negotiating that piece of land in Chenghua. I hope the province can help me contact Chengdu."

Besides the already completed section, the Dujiangyan-Wenchuan Expressway still has 18.5 kilometers to be built, with a total cost of nearly 20 billion yuan. The project has material suppliers providing advance funding, so the pressure is not too great for the time being. However, the progress payment ratio will determine whether he needs to set aside some money for this project.

The purpose of this trip to Chengdu is twofold: first, to secure the land in Chenghua District; and second, to assess the cash flow of the entire Sichuan project, calculate the total costs, and determine how much money needs to be allocated.

He can mortgage and pre-sell real estate projects, and also apply for subsidies. He can also use the franchise rights to get loans for national highway service area projects.

Having secured the suppliers and the banks, he hardly needed to use any construction funds.

These are all insiders who can figure out the tricks of the trade, so he planned ahead for the Western Development subsidies for the entire project. The first thing he did upon arriving in Sichuan was to secure the suppliers, and then he set his sights on the banks.

However, for government highway projects, if they are not PPP projects, there is no operating right pledge, and they still need loans for construction, which requires government guarantees and invoices from core suppliers. How can they ask suppliers for invoices when they haven't even paid the money yet?
That depends on the progress of project disbursement.

"We agreed on 154 for this project before, right?" Director Xian asked.

154 means the prepayment ratio is 10%, the construction phase is 50%, and the settlement is 40%.

During this phase of the project, a 5% to 10% quality guarantee deposit will be deducted, and some repair fees will be deducted when the money is returned. The median actual return is around 90%.

Even with strong connections, the settlement period for government projects can take one or two years.

"Yes, but we haven't asked the client, Sichuan Transportation Investment Group, for an advance payment yet. We plan to discuss it further and change the ratio to 73, with 70% paid during construction and 30% settled upon completion."

Once it reaches 70%, it's the break-even point, because highway engineering data can be inflated by about 15%, meaning that the progress payments received during construction can almost cover the costs.

Of course, this fictitious amount may not be recognized during the settlement and auditing process; it may be subject to a reduction, the extent of which depends on the relationship and the solidity of the documentation.

But at least the inflated figures were reported, the progress payments were received, and it was guaranteed that the construction would not require upfront investment. When it came time to settle accounts, all we talked about was profit.

How much money is received during the construction process, and whether it can cover the costs, is the lifeline for civil engineering.

Those who are good at creating fake transactions can directly inflate the reported progress payment by 30%. After receiving the progress payment, they pocket all the profits and are not worried about whether the settlement is finalized or not.

Those with very close relationships can even obtain the full amount of work that was falsely reported during the settlement process.

The most amazing ones are those where suppliers and construction teams advance funds, so they don't have to spend a single penny; they pocket all the progress payments and then disappear.

Of course, the story might be featured in a Spring Festival Gala skit.

Building construction relies on pre-sales to clear inventory, while civil engineering relies on progress payments.

The underlying principle is zero cost.

The amount of capital occupied is 0, and the capital turnover rate is also 0.

Once you reach this point, you can undertake any project, no matter how big, as long as the budget is profitable.

So in those years, the engineering industry saw countless white gloves, dreamers, brokers and swindlers, as well as suppliers who misplaced their trust and workers who shed tears.

"Um," Director Xian thought for a moment, then nodded and said, "Transportation is Director Sun's responsibility, let me ask him for you."

Jiaotong is a unit directly under the Department of Transportation, and its head is also a deputy director-general.

"Okay, it's the weekend, how about you help me arrange a meal with Director Sun?"

Chen Xuebing thought that if he couldn't change the contract, he would increase the reported amount of work, and the other party wouldn't make things difficult for him; he just needed to cover the construction costs.

As for how much money we'll make, we can discuss that when we settle the accounts.

"No problem." Director Xian was always willing to help in such matters. "I've heard about the Chenghua plot. There's a lot of controversy surrounding plot 03 in the High-tech Zone, and now they're in court with Huang. I heard they're negotiating plot 101. Are you going to put up 20 billion to bid?"

Chen Xuebing chuckled upon hearing this. Secretary Jin had called him several times about Huang's matter. Things had quieted down for a while after the New Year, but recently it had caused quite a stir again in Chengdu.

The reason is simple: Chengdu's housing prices have recently recovered from the land value-added tax controversy and have risen a little again.

Hutchison Whampoa, whose trading privileges had been revoked, has returned, this time not to stall for time, but to fulfill its obligations at the auction price.

However, Chen Xuebing had already intercepted the contract and signed it. Today, the bank's money has been transferred to the High-tech Zone's account, and the transaction is a done deal. Only then did he come to Chengdu to discuss the next matter.

"For Plot No. 03, they first reported it and then breached the contract. The High-tech Zone has reached its limit, and so have I. Doesn't Chengdu have any anger towards that Mr. Li? I am genuinely committed to developing Chengdu and don't want to get into a war of words with those who hoard land. So, I would like to ask the province to help me with this matter."

Mr. Chen stood up, exuding righteousness.

"Hehe, don't be in a hurry." Director Xian smiled: "Chengdu already knows that you are going to offer 20 billion, and the city leaders have no objection. However, I heard that Changshi is a bit furious. If you want to acquire the land smoothly, you may have to pay a high price to get through this."

“High price.” Chen Xuebing chuckled. “Director Xian, the reason I asked you to help me make the contact is to add some conditions to this land. At least the auction deposit should be increased to 300 million, and the payment contract should be made strict so that they don’t run away again. This time, I must see Cheung Kong’s strength.”

(End of this chapter)