full Annual Report 2006 (PDF 3.2MB)

Civil EngineeringReview of OperationsDomestic Construction Business14Market Conditions: CompetitionFierce as Public-Sector InvestmentContinues to FallInvestment in domestic civil engineeringprojects during the financial year endedMarch 31, 2006 is estimated at ¥22.7 trillion,of which ¥17.5 trillion is public-sectorinvestment, and ¥5.2 trillion is from the privatesector. Although private-sectorinvestment is showing signs of recovery,public-sector investment (which accountsfor the majority of civil engineering projects)has declined for seven consecutiveyears, and the government shows nosigns of relaxing restraints on such spending.Moreover, fewer large-scale projectsare moving forward, making the businessenvironment for civil engineering evenharsher.Performance: Kajima Continues toReceive Several Important ContractsDomestic civil engineering contracts for thefiscal year ended March 31, 2006 totaled¥213 billion. Throughout the term, theCompany offered technical, consulting andengineering capabilities, combined with acollective ability for management that ishighly regarded by its clients.Of particular note is a contract for renovationand enhancement of the runway tarmacand surrounding infrastructure of theinternational runway at Tokyo’s HanedaAirport, awarded to a special purposecompany (SPC) of which Kajima forms apart. This project follows the award duringthe previous financial year of a contract forconstruction of a new runway at the airport,in which the Company represented aconsortium of companies. This project hasdrawn much attention as a PFI in the civilengineering field.Hakkoda TunnelKannagawa Hydropower PlantShin-Taishakugawa HydroelectricPower StationIn environment-related business, Kajimawas awarded a contract for the SummitWind Power Kashima, in recognition of itsefforts to lower the environmental burden.Strategies for GrowthIn response to a new law enacted duringthe previous financial year designed toenhance and ensure the quality of publicworks projects, the Ministry of Land,Infrastructure and Transport has issued aseries of new contract award guidelinesemphasizing technical capabilities. Thetechnical capabilities are now being evaluatedmore thoroughly than ever before,and major construction firms such asKajima will likely enjoy an even greatercompetitive edge.In response to this shift in the businessenvironment, the Company set a target forcontracts in its domestic civil engineeringdivision of ¥240 billion for the financial yearending March 31, 2007. By actively andstrategically pursuing a proposalorientedsales strategy fully utilizing thedistinctive technologies it has acquiredthrough its experience to date, Kajimashould be able to succeed in the competitionfor contracts while securing profitability.We will also continue to aggressivelypursue R&D and technological advancementto support the growth expected inparticular areas of civil engineering thatallow us to fully capitalize on our extensivecapabilities, including large-scale urbandevelopment, environmental, renovationand PFI.