mubarak al hajri jennifer gasser stephanie hudson zac huffman hanh nguyen
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Mubarak Al HajriJennifer Gasser
Stephanie HudsonZac HuffmanHanh Nguyen
Industry Size
2011 US Total - $787.2 billion 2010 US Total - $797.3 billion
2011 $39.9 billion Private Commercial Up 6.2% 2010 to 2011
Indicator 2010 2011 2012% Change2011-2012
Construction Spending – (millions, seasonally adjusted annual rate) – U.S. Census BureauPrivate NonresidentialLodging $10,904 $7,976 $8,455 6%Office $24,231 $22,315 $24,250 8.7%Commercial $37,647 $39,988 $43,050 7.7%Health Care $30,316 $29,575 $31,960 8.1%Educational $13,356 $13,424 $13,400 -0.2%Power $66,601 $75,105 $82,000 9.2%Manufacturing $37,478 $34,956 $37,753 8%Total – All Industries $261,796 $263,538 $281,836 6.9%
Estimated growth for 2012
Expected Growth
2011 to 2016 - US new public and private nonresidential construction - 7% annual compounded
13% growth next 2 years
Commercial and Heavy Construction Spending Growth Slows After Spike
Growth anticipated to taper down to 5% by 2016
Influencing Low Growth
Economy Slowed economy Tight financing environment for construction loans “Bad construction loans and commercial mortgages could
amount to more than $200 billion in losses.”Highly Cyclical Demand Demand for new building can change rapidly 1995 to 2005 annual US construction increased by 75% 2006 to 2010, it fell 65% Demand in local markets varies even moreUneven Revenue, Expenses Amount retained after a project is complete Bad weather can delay construction, creating uneven cash
flow
Trend Projections
Specialization Roofing, framing, demolition and green construction Existing customersGreen Construction Tax incentives Green Investment Fund Joint Ventures Larger projects On-time costs Pool expertise and financial resources
Barriers to Entry
Small Company - Low Need fewer pieces
of equipment Rent equipment,
project-by-project basis
Large company - High Bonding Human Capital
Recommended Associations
Strong relationships within the commercial industry Oregon Association of Minority Entrepreneurs
Bidding Posts Tradeshows
Associated General Contractors: Oregon Columbia Chapter AGC University – continuing education and
training Port of Portland | Small Business Development Program
Mentor-Protégé Program
Commercial Bidding ProcessB
ID S
OU
RC
ES
Contractor's WebsitesOAMEAGCNetworksWOM
BID
WA
LK
TH
RU
Thomas and Omar coordinate walk thru
BID
TR
AC
KIN
G
CalendarComputer Software ie BidTrack
BID
PR
EP
ER
ATIO
N
Each bid has individual guidelinesBid FormBid BondList of Subcontractors
BID
S
UB
MIS
SIO
N
SUBMIT
Transition to Residential and Commercial
Scouting for a Residential Superintendent
Incorporate Thomas into his Business Development role
Omar’s focus will be monopolized by both residential and commercial
Organizational Chart
OMAR | Owner/President
Commercial Employees
Commercial Subcontractors
EMPLOYEE 1 | Residential
Superintendent (Hired in 2014)
Residential Employees
Residential Subcontractors
BECKA | Owner/Business
Manager
THOMAS | Director of Business
Development
Networking Marketing
Accountant/CPA
Bookkeeping
Contractors
Urban Renaissance Group Management firm Repair and remodel buildings
Hoffman Construction Company Wide range of job Engineering News-Record’s Top
400 general contractors
PESTEL
Political Factors | Minority owned business
Economic Factors | Low growth in construction
Social Factors |Shift in housing market
Technological Factors | LEED certificate
Environmental Factors | Energy efficient
buildings
Legal Factors | Labor Law
Promotional Plan
Networking AGC | Mentorship OAME Tradeshows
Web-based Company website Social network
site
SWOT AnalysisSTRENGTHS
Omar’s Engineering Background
Minority Owned Business
Carpentry and Framing Minority Niche
Becka’s Networking Relationships
Low Overhead
WEAKNESSES
Cash Flow
Low Risk Taking
Human Resources
Low Market Share
Time
OPPORTUNITIES
Minority Business Enterprise
Sustainable/Green Construction
LEED Certification
THREATS
Cost Leadership
Competition
Need Financial Investment
Projected Income
Year 1 goal: Save money to finance the risk associated with hiring an employee
Year 2 goal: Minimize losses through effective cost management
Year 3 goal: Work back to a profit; rebuild cash savings for internal financing of projects
Year 4 goal: Establish stability and financial norms
Projected Cash Flow
Beginning cash savings of $10,000 (minimum) Prevents borrowing Allows internal financing for projects Limits exposure, allowing the commercial segment to stay
engaged in the market even in the face of sustained operating losses
Reinvest earnings to the cash savings balance, for all of the same reasons The ability to finance projects with cash savings will make
the company more attractive and provide new opportunities
Annual Cash Flow
2013 2014 2015 2016 $-
$5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000
$25,408
$19,188
$24,566
$35,199
Ending Cash Flow
*Starting initial investment of $10,000
Variables in Financial Performance
Hiring a supervisor Altering the pricing
structure for estimates
Initial investment in the commercial segment (cash savings balance)
Purchasing a vehicle for the commercial segment
Financial Milestones
Note that our recommendations follow a strict budget and require financial milestones Cash savings $10,000 Hire employee when cash savings exceed $25,000 and sales
exceed $80,000 Maintain cost basis hourly rate of $50 with a premium
gradually increasing from $10 to $35 Purchase a vehicle when cash savings exceed $35,000 and
sales exceed $125,000
Annual Revenue
2013 2014 2015 2016 $-
$20,000
$40,000
$60,000
$80,000
$100,000
$120,000
$140,000
$53,605
$83,112
$107,066
$128,226
Revenue
*50%, 25%, 12.5% Growth for years 2, 3, and 4 respectively
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