assignment 2014.pdf

Department of Construction CONS7820 Professional Business Management

ASSIGNMENT 2014

DEVELOPMENT OF A BUSINESS Introduction This assignment requires you to take the role of a person developing a new business which they will own. After the first block you are required to create an idea for a business and develop that idea into a business plan. You are then required to do some financial modelling to test whether the business is likely to be successful from a financial perspective. During the second block you will be required to develop your thinking concerning the people management aspects and ethical issues that you will need to address as you grow your business. This will be assessed through group presentations and in the examination. Basic Scenario You are a qualified construction manager, quantity surveyoror property developer with five years post qualification experience. Until now you have been working as an employee in a well established company and have risen to a senior position, however the internal politics of the company are such that you are unable to progress any further. Together with one or two friends who are in a similar position in another company you have decided to go out into business on your own. Some clients of your existing employer have indicated that you will be able to do some work for them in your new company. The business you select to enter must be involved in the creation of buildings or infrastructure. However you are encouraged to think of innovative ways of doing business in this area. You are expected to develop a realistic scenario based on the realities of the current market, investigate your perceived business opportunity and formulate a complete plan for your new venture. Requirements Item Marks % of Total Assignment Business Plan 60 60% Financial Forecast 40 40% Hand In: Two copies of your report including financial data to Student Central by Monday 19th August. Your presentation is to be of a professional quality and a standard that you would submit to a potential partner or financial backer. Plastic covers and bindings are not required; a single staple in the top left hand corner is the preferred option. This assignment comprises 45% of your total course mark. Other assessment events: Block 1 Presentation 5%

Block 2 Presentations 20% Examination 30%

Professional Business Management & Engineering Management 2014 1

Assignment Submission Requirements

Part 1 Business Plan Note: Set out below is a typical outline of a business plan. If you wish to use another format which is more appropriate to your business proposal you may do so. Executive Summary:

A brief overview of your proposal (you will need to do this last) Introduction:

Brief overview of the business Yourself (credentials and experience)

Business Description: Vision Values Industry sector or niche Products or services Why you have chosen this niche or sector Why you think you will be successful

5 Marks Market Analysis:

The economic and business environment as it affects your chosen sector: This section should include data on economic trends over a period of years (available from Moodle) as well as industry specific data (refer to the Rider Levett Bucknall Forecast on Moodle for examples of broadly based industry specific data) wherever possible analysis of your chosen niche should be provided. Presentation of the data in a graphical format is encouraged. Major trends that provide you with opportunity: This section may contain further data on trends in your chosen niche or may contain information on matters such as technological developments or social developments. The size of your chosen sector or niche: This should be presented in numeric or dollar terms and should be the size of the market for your chosen product or service in the selected niche. For instance if you have chosen to offer construction services building upmarket homes in West Auckland you need to determine the dollar value of construction services for upmarket homes in West Auckland using building consent data from Statistics NZ. If you are proposing to offer cost management services for seismic upgrade work you need to determine the value of QS fees on seismic upgrades. If you are proposing to develop houses for Housing New Zealand you need to determine from their website their budget allocations for this type of work. Who your customers are: You are expected to identify specific customers by name where possible (eg Housing NZ or Melview Developments). In some instances you will only be able to describe groups of people. Who your competitors are and how they position themselves: you are expected to demonstrate you have investigated the market and be able to name and describe the activities of your main potential competitors. Note: Data in this section must (wherever possible) be up to date ie 1st quarter 2014 or more recent. Use of out of date data will not earn marks.

35 Marks Market Positioning:

The market position you propose to adopt (low cost vs high value) How you will brand your business How you will package your product or service

5 Marks Sales and Promotion Strategy:

What is your unique selling proposition and key sales message (expressed as a single sentence. Where and how you will sell your product or service What promotional tactics will you use


5 Marks Business Operations:

How you propose to deliver your product or service including: • People and their skills • Sub-contractors and allies • Premises • Computing and communication systems and tools • Production equipment.

This section should demonstrate that you have thought through how you will achieve and sustain the low cost or value added position you have described.

5 Marks Report Quality

5 Marks Part 2 Financial Forecast Financial Information

A forecast of how your business will work from a financial perspective including: • Money to be invested • Profit and loss forecast • Balance sheet forecast • Cash flow forecast

For the first two years of your business. Note: Some typical scenarios have been provided in appendix A which illustrate the manner in which your business might start building up. If it is appropriate you may use these as the start point for your financial modelling. If you do use them you will need to add to them to extend the build up of your business over the two year period. If they do not reflect the type of business you are proposing you will need to develop a complete scenario of your own. Your modeling must align with your business proposal, For instance if in the “Business Operations” section you have said you will use a large number of sub-contractors or will need to purchase or lease production equipment then this should be shown in your financial modelling.

30 Marks Interpretation of Financial Data and Market Information

Analyse the financial and market data you have developed and write a conclusion within which you reflect on whether or not your proposal is likely to be successful in the current market place. Consider particularly:

• Market demand for your service or product in the form that you are proposing. • Whether the proposed business will generate the necessary cashflows to allow it

to grow in the manner you have predicted. • Whether the proposed business is likely to be profitable

• 10 Marks

Note: marks will not be deducted if your analysis shows that the business is not viable. However marks will be deducted if your conclusion is inconsistent with the information you present in parts 1 & 2.


Appendix A SCENARIOS

General You are based in Auckland and the time is now (2014), your proposal must be directed at an actual market. You own your own home and are able to raise a $200,000 loan to invest in your new company. Your partners are in a similar position. The scenarios below are intended to give you a start point for your financial analysis. However they may not be appropriate for your chosen business. If this is the case make some alternative assumptions. These scenarios are intended as a start point you are expected to make assumptions as to how the workload in the business will build as you progress over the two year period for which you are required to provide financial analysis. Note: Financial Forecasts which use figures from scenarios in previous year’s assignments will not be marked. Construction Managers You are currently working for a medium sized construction company that builds a broad range of buildings. Your experience has tended to be in the area which you intend to focus on in your new business. As a result you have developed a good range of contacts in your target market. You have the following projects which fit with the proposed market focus of your business already lined up:

• Project 1. You are contracted to start work in two months time. The contract period is nine months.

Approx value of building work = $900k • Project 2. You are contracted to start work in four months time. The contract period is

five months. Approx value of building work = $1,050k

• Project 3. You are contracted to start work in four months time. The contract period is 9 months.

Approx value of building work = $1,960k Quantity Surveyors You have been working in a practice that is involved with a broad range of buildings. Your experience has tended to be in the area which you intend to focus on in your new practice. As a result you have developed a good range of contacts in your target market. You have the following projects which fit with the proposed market focus of your business already lined up:

• Project 1. Financial management of the post contract stages of a development, value $15.5m, on site start due in November, contract period 19 months, fees 2.5%

• Project 2. Full service on a project, value $5m, commencing September pre-contract period 6 months, post contract period 10 months, fees 3.5%.

• Project 3. A feasibility study of a shopping centre upgrade, fee $65,000, the work is to be carried out in January 2015.


assignment 2014.pdf

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