BILD 361_Project Two
Business Plan 2015 – 2020
Kent Horsley 300259789
1|Page
Contact Details Post: Phoenix General Services 17 Hadfield Terrace Kelburn Welly 6012
Phone: +64 27 967 3878 Email: kbhorsley33@outlook.com
Non-Disclosure Statement A Non-Disclosure and Confidentiality Agreement is made between Phoenix General Services and all the recipients of this Business Plan. In reading the following report, it is agreed upon that recipients must obtain all the given information. Many figures in this plan are based on calculated forecasts and therefore are not guaranteed. The recipient of this report agree to regulate its use as unauthorised disclosure of the long term plan may be damaging to the company.
2|Page
Table of Contents
Table of Contents Contact Details
2
Non-Disclosure Statement Executive Summary
4
Proposal Overview
5
2
Involved Companies 5 Construction Costs
6
Partnerships + Costs
7
Business Plan Overview
8
Vision + Mission Statement
8
Management And Personnel 9 Management And Personnel – Organizational Structure
10
Product and Services 11 Sales and Marketing 12 The Market
12
Operations
13
Finance
15
Finance – Discounted Cash Flow 15 Finance – Profitability
17
Finance – Forecast Assumptions 18 Finance – Profit/Loss Financial Statement 19
Risk Analysis
20
Bibliography
21
Appendix
22
Declaration
26
3|Page
Executive Summary
To whom it may concern,
This report consists of a proposal for Project 1, a mixed use complex including office, residential and retail spaces, and is followed by a Business Plan for Phoenix General Services for 5 years, beginning March 2015 and ending February 2020 The partnership required to complete Project 1 is as follows; 1. Living Green: 60% 2. Tasman General Services: 25% 3. Phoenix General Services: 15% Costs required for developing the complex is estimated to be $31,173. This initial cost will be covered by the $70,000 funding previously received from Business Solutions Investment Bank. This project is considered to be the first phase of the long term plan. The main objective of the business plan is to change the company type to outsource its main labour force and expand profitability through large development projects. Normal services will reduced over time and Phoenix will stop providing normal service by end of 2018. This plan underpins Phoenix’s main product as Facilities Management Services. This plan investigates how prioritising the most important service can outweigh the benefits gained from being adaptable to variety of normal services. A new organisational structure has been implemented to better fit the new company objectives and the redeveloped vision and mission statements. This resulted in 2 major departments getting introduced to the company; Project Management Office and Heads of General Services. A new Project Lifecycle system has also been instigated to give order, simplicity and therefore increased efficiency within the workforce. A Discounted Cash Flow has been put together for 2 years to analyse the effectiveness of the plan. The DCF takes into consideration costs of marketing, staff rates/training and relocating the business. 17 major projects are to be completed during the 5 years with the revenue increasing each project by at least 6%. The facilities management normal services will reduce by 5% each month, while the normal renovation services will decrease by 10%. The calculation was generated with an Inflation per year of 2.7% and Opportunity Costs per year of 5.0%. The Return on Investment is 14.41%. Phoenix is expected to make a present value profit of $102,518 between March 2015 and February 2017.
Please do not hesitate to contact me if you have any queries.
________________________________
Kent Horsley
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5|Page
Proposal Overview After generating the Managing a Company report, Phoenix General Services gained $70,000 from Business Solutions Investment Bank (BSIB) and is now capable of positioning themselves for a new project. This report includes a proposal for Project 1 which is a mixed use complex including office, residential and retail space. Some changes and strategies projected in the previous report will be reintroduced. How those strategies will be implemented in the next 5 years will be discussed later in the report in a Business Plan format. The long term plan for Phoenix is to shift to an outsourcing company which will expand its revenue through large projects whilst reducing normal services over time. The Proposal for the Project 1 is very important as it will be considered the first phase of the long term plan.
Involved Companies Multiple companies could fulfil the requirements for some tasks. What each company offered was analysed and the business which had the most beneficial asset to the current position of Phoenix and its long term plans were picked. Phoenix had the authority to make these decisions as they led the negotiations and intends to be a part of the main leadership force despite being a small company.
Architecture Design Out of the available architecture companies, Leuven Architects are by far the company with the largest capacity who will be able to complete both architectural requirements for the project. However, Leuven Architects do not state any sustainable values within their marketing front. Phoenix has recognised that a sustainability is a topic that is gaining more and more attention on a global scale. Sustainable input can also be used as a marketing tool, making the proposal more attractive to developers. For this reason, 550m2 of the architecture design required has been allocated to Studio Art Architects (SAA). The design for the earthquake proof structure will be provided by Leuven Architects alone. Even though SAA has a higher cost, the variance is outweighed by the long term benefits.
Interior Architects All interior architects were capable of providing the required 1000m2 for the project. For this proposal, the decision was made to work with Welly Interior Design (WID). WID is an internationally recognised company who specialises in office interiors, which is the exact intended use for the area requiring interior design attention. They rate themselves in the ability to deliver projects on time and on budget, which will be a big asset when collaborating. WID also offers furniture design and construction, which may be put into use later in the project without the need to approach new companies. Whilst offering these services Welly Interior has very competitive pricing.
Concrete + Real Estate Concrete Corp and Oxford Interior and Real Estate have been chosen simply from their competitive price of concrete and rate of real estate services respectively. Both of the companies have the capacity to complete required tasks.
6|Page
Construction Costs Following table shows total construction costs and the allocation. As stated in the brief, the first 6 month of Facilities and Management costs must be paid by the bidder. A contractor’s profit margin has been chosen at 15%. Note that this figure may change in future projects.
Figure 1: Total Construction Costs and
As it can be seen in figure 1, the construction costs after Profit Margin is $463,930. Project 1, Mixed Use Complex, requires collaboration between different disciplines as it is believed that no one company has the funds to fully develop the project.
7|Page
Partnerships + Costs During the negotiations of prices, possible partnerships were also discussed with limited companies. This proposal pursues 2 of these partnerships. The partnership coalition is as follows; 4. 5. 6.
Living Green: 60% Tasman General Services: 25% Phoenix General Services: 15%
Even though Phoenix is currently a small company, the new structure is designed to allow the company to monitor and control large amounts of work. The partnerships are primarily the division of expenses and therefore profit and does not represent who is in charge. It was agreed upon that every party will be responsible for costs of their own services. For this reason the services provided by Living Green and Tasman General Services have been subtracted from the project cost calculations. Also as a result of this partnerships, the combined corporation will be able to deliver all requirements which were optional.
Living Green Living Green holds the biggest segment of the project at 60%. Their proposal was the biggest partnership offer Phoenix received and was ideal as having 1 company responsible for a large segment meant there are less small companies collaborating, making the deal simpler with a smaller communication chain.
Tasman General Service Due to the size of the Facilities Management required and the available companies, there must be a collaboration between either 2 or more facilities management companies. A partnership with Tasman General Services was thought to be beneficial to compete with larger Facilities Management companies such as Welly Services in the long run.
Costs
Figure 2: Calculations showing Expenditure by Phoenix on Project 1
Costs required from Phoenix for Project 1 is $31,173. This will be covered by the $70,000 received from BSIB.
8|Page
Business Plan Overview Phoenix is a small Kiwi owned and operated company situated in Welly, New Zealand. Phoenix has been providing a wide range of Facilities Management and Renovations. However, the company identified some issues they have been facing as a result of the economic difficulties and recently initiated major changes upon its Functional Organisation, Project Integration Management and Project Quality Management. The changes will begin with achieving the newly proposed organisational model within the first 3 month. This plan is extended over 5 years beginning on March 2015. The main objective of the business plan is to shift the company to outsource focused organisation which will expand its income through large development projects. Normal services will reduced over time and Phoenix will close normal service by the end of 2018. This plan investigates how prioritising the most important service of Phoenix, (believed to be Facilities Management of large projects) can outweigh the benefits gained from being adaptable to variety of normal services. The effectiveness of this plan will be reinforced with a Discounted Cash Flow (DCF), showing the profit/loss forecast of the first 2 years. With the data gathered, a calculated hypothesis will be put together for the remaining 3 years.
Vision + Mission Statement The bases of the vision statement has been maintained from the previous report as it was written with the same objectives which the business plan aims to achieve. It has been slightly altered to exclude the notion of personalised services to aim the statement towards other companies and developers over individual customers from the public. For the Purpose of this report, the mission statement has been simplified to make a more concise statement and will be clearer for new employees coming into the company. The mission statement still focuses strategies and operations of the company towards its vision[CITATION Ire92 \p 34 \l 5129 ]. The focus of the mission statement is to create value for clients, employees and shareholders which is said to produce growth and profit as a consequence[CITATION Placeholder1 \p 86 \l 5129 ].
Vision Phoenix simply strives to be the leading Facilities Management and Renovations Company in Welly and within New Zealand. The company aims to continue to strengthen its market share by establishing itself as the first choice for quality and collaborative service in the industry.
Mission Phoenix is dedicated in providing exceptional services in Facilities Management and Renovations for clients within the Welly region and New Zealand. Phoenix provides services that add value to the client’s projects. Excellent services will be provided by Phoenix by constant evaluation of the client’s needs and changes in market standards. Phoenix is committed to providing long-term mutual benefit and trusted partnerships between clients and contracts. Effective communication within the company and between the customers is at the forefront of all decision making. Phoenix is proud to be a Kiwi owned and operated company. Phoenix values its employees and is devoted in creating platforms for employee expression through their work. Phoenix is committed to deal with both clients and employees in a manner that is respectful, honest and trusting. Integrity is the cornerstone of the company and ensures that all business activity is underpinned with the concerns of all parties involved. All business at Phoenix is to be conducted with the confidentiality of all parties in mind.
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Management and Personnel One of the major changes that is to be implemented in the long term business plan is the alterations of the Organisational Structure of the company. This was the very cause for different management teams and personnel’s getting introduced into the company.
Project Management Office (PMO) The first of the new key roles is the introduction of Project Management Office (PMO). This position is to be filled by the previous Project Manager and appropriate new staff recruited into the company. The PMO will overlook each department within the organisation and the contracted companies also, thus improving efficiency. Ingram states that an organisational structure “improves operation efficiency by providing clarity to employees at all levels of a company” (par. 3). The PMO will work closely with the CEO and will be capable of providing insightful feedback. A study of a New Zealand commercial printing company shows that the firm experienced positive outcomes by identifying that “controls and rules were clearly lacking in the firm (and in response) laying down the rules so that the members know what is expected of them” [CITATION Lee88 \p 47 \l 5129 ]. The PMO is considered to be an important management position required for the plan as it will give the company a clearer work flow and obtainment of a Management Hierarchy.
Heads of General Services (HGS) There is also a new position introduced to the company titled Heads of General Services (HGS). The members for this position are to be selected from the top performing staff or the team leaders of each of the old general services departments. This interchange keeps individuals who are familiar with the roots of the company, maintaining the culture and upholding any internal and external relationships. The members of the new department HGS will carry the site manager role and are also qualified to carryout services as required 24 hours, 7 days a week. This method gives the company the ability to perform minor jobs without outsourcing other companies and therefore the ability to adjust its expenditure for each project. It is intended that HGS will only perform minor jobs temporarily whilst the company changeovers to a larger development focused organisation and therefore a growth in the HGS department is expected in the near future.
Financial/Asset Management/Marketing (FAMM) Financial, Asset Management and Marketing team (FAMM) will be least impacted by the changes of the organisational structure. They will be proving the same services as per the previous model. They are still highly regarded as an important department within the company as they are responsible for the economic analysis and growth of the company. This department will be working closely with the PMO.
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Management and Personnel (Continued) – Organisational Structure The Implementation of these management positions and personnel’s will be carried out in phases over 3 month to insure a controlled transition and to ensure the members getting let go from the company has enough notice. Phase 1: The first phase will be to clearly communicating to all staff members and associated stakeholders the changes that the company is making and why. This will includes letting the employees know of their new position or if they are getting let go. Advertising the new position available for the PMO will begin simultaneously. Members of the Company Representative Team may also be invited to join the PMO depending on his/her capabilities.
Figure 3: Original Organisational Structure of Phoenix General Services – March 2015
Phase 2: The first movements of staff will be seen in the 2 nd month. The PMO is established with the original Project Manager, Company Representative(s) and newly employed staff. They will work together during April 2015 and become familiar with the new operational systems. The PMO has been put together first to supervise the establishment of HGS as they will be the main service providers of the company. Landscaping and Cleaning/Waste Management departments will be cut from the company.
Figure 4: Second phase of transition to the new organisation model – April 2015
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Management and Personnel (Continued) – Organisational Structure Phase 3: The final organisational structure will be reached in the last phase. HGS team will be finalised. With the preparation gone into organising the team, it is expected that the HGS department will instantly become fully operational. These phases are reflected in the first 3 months of the DCF.
Figure 5: Third/last phase of transition to the new organisation model – Completed May 2015
Product and Services Phoenix General Services has previously provided variety of services including facilities management, security/special services, renovation, plumbing, electrical services and cleaning and waste management services. The new structure provides all of these services either through the HGS or through an outsourced company. The new model does not include groundworks & landscaping as it adds unwanted complexity within the company. This is reinforced by the publication in 1982 of Peters and Waterman’s ‘In Search of Excellence’ where successful corporations from observation did not diversify widely. They tended to specialize in particular industries and focused intently on improving their knowledge and skills in the areas they knew best[CITATION Goo \p 7 \l 5129 ]. Unarguably this plan underpins Phoenix’s main product as Facilities Management Services for large scale projects. Phoenix intends uphold their new vision focussing their core business on Facilities Management. For this reason, normal services will also be reduced over time. This objective within product and services will require constant evaluation and increase in Maximum Facilities Capacity.
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Sales and Marketing Sales and Marketing Strategies will be put in place by FAMM. CEO of Schlotzskys Kelly Roddy has shown that the “best time to steal the spotlight from your competitors is during a recession” (par. 7). In light of this, a strategic plan was formed to rebrand in order to stay ahead of competition (Figure 7). I t is an unpredictable move that competitors will not be expecting[CITATION Rod11 \p "par. 9" \n \y \t \l 5129 ]. Phoenix aim to employ the ‘make new friends, but keep the old’ rule. It is expected by Roddy that “the relationships built with consumers during times of crisis are stronger and last longer than those built during times of economic prosperity” [CITATION Rod11 \p "par, 5" \n \y \t \l 5129 ].
Figure 6: Old Logo
Figure 7: New Logo (Advertising 24/7 services)
FAMM will aim to think from the consumer side to insure Phoenix is the first choice in facilities and management in Welly. As well is the narrowing the product and services scope, promoting the 24 hour 7 days a week service immediately gives the viewers a reason to choose Phoenix, simplifying the decision making process for consumers. The new branding label will be implemented in August 2015.
The Market It is important to establish Phoenix’s current position in the industry identifying which unique services Phoenix has to offer its clients. Each of the case studies analysed in Lee’s ‘Strategies For Survival In Small Businesses’, kept a close eye on competitors making a conscious effort to monitor and compare strategies in order to survive and this was proven to be the key to their success [CITATION Lee88 \p 76 \n \y \t \l 5129 ]. Phoenix has identified their direct competition and are dedicated to safeguarding their business during Welly’s difficult economic times. An analytical approach has been taken by Phoenix in order to recognise what each competitor has to offer, asses their operations and then review its own strategies. Please see Appendix 1 for a full analysis of competitors
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Operations Project Lifecycle Phoenix will be making alteration in the way each job is carried out. The Project Lifecycle model gives order, simplicity and therefore increased efficiency within the workforce [CITATION PMBOK \n \y \l 5129 ]. It has also been recognised as one of the first principles of management to ensure that “Everyone is working towards the same or similar project goals” [CITATION Max00 \p 4 \l 5129 ]. This method is intended to enhance the knowledge, and clarify the responsibilities of each individual staff. In doing so, the maximum facilities services and management capacity of the company will increase. The awareness and ability to control/adapt actions whist maintaining the core structure of the Project Lifecycle process adds to the prolonged existence of the company. The Project Lifecycle model into the organisation allows Phoenix to quickly adapt to different project scenarios to solve the issue of inefficiency.
Six Sigma To attain a high level of production quality, Phoenix will incorporate the Six Sigma process control strategy. This method aims to improve process quality, providing a better structure for working conditions by eliminating process defects[CITATION Placeholder1 \p 85 \l 5129 ]. Application of the Six Sigma method works through the process of defining, measuring, analysing, improving and controlling a problem within a project thus creating a solution, referred to as DMAIC [CITATION Sha09 \p 17 \l 5129 ]. To effectively use this method for company improvement, Phoenix’s project managers will attend regulated training courses to obtain the highest level of qualification as a Six Sigma black belt. The cost of these trainings are also evident on the DCF.
Internal Communications From Dr Young’s research, studies have shown that improving communication is perhaps the most critical improvement needed in most organisations[CITATION You08 \p 404 \n \y \t \l 1033 ].”It has been estimated that a project manager’s job is 90 percent communications.” [CITATION You08 \p 70 \l 1033 ]. For this reason a planned process to manage internal communications is vital for Phoenix to secure the successful completion of their projects. See Appendix 2 for Internal Communications Model.
Operating Location The expenditure statements suggested that the company had potential to save costs on the rent of their facilities. By changing to an outsourcing company, the amount of land and storage needed will dramatically reduce as the company will no longer be responsible for large amounts of materials and equipment. Reducing the area or moving to a more suitable location may incur short term costs, however this will be out-weighed by long term benefits. The remaining $38,827 received from BSIB may be used to relocate the business to better premises. The relocation will approximately take place over November 2015.
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Operations – Project Lifecycle Diagram
Figure 8: Project Lifecycle Diagram
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Finance – Discounted Cash Flow
The context of the business plan discussed so far has been put into a DCF to forecast the ideal financial movement of the company. In doing so, certain assumptions and decisions had to be made. This DCF model gives a Return of Investment (ROI) value of 14.41%. Inflation (year) OC (year)
5%
2.70%
$
$ 5,145.64
$
$ 4,888.36
$
$ 4,643.94
$
0.62%
$ 5,416.47
-
$ 2,367.57
Complex (Month)
5,701.54
-
2,500.00
3,000.00
Aug-15
$ 2,500.00
$ 3,000.00
Sep-15
$ 2,500.00
$ 3,000.00
Oct-15
$ 2,500.00
$ 3,000.00
Nov -15
$ 2,500.00
$ 3,000.00
Dec-15
-
$
-
Jul-15 $
$
$ 2,630.63
$
Dec-15 $
-
$ 7,011.51
$
Nov -15 $
$ 2,922.93
$
-
Oct-15 $ 6,001.63
$ 3,247.70
$
$ 7,518.99
$
Sep-15 $
-
$ 86,264.39
$ 78,195.82
Aug-15 $ 6,317.50
3,608.55
$
-
Jul-15 6,650.00
$
-
$ 8,664.16
$
Jun-15
$
$ 4,009.50
$
-
May-15
7,000.00
$ 4,455.00
$
$ 9,310.09
$
Apr-15
NPV $
4,950.00
-
$ 83,780.77
$ 73,769.64
Mar-15
Rev enue -
$ 21,000.00 $
$
-
$ 3,000.00
-
$ 5,500.00
-
$ 10,772.50
$
-
20,870.60 $
$
-
Jun-15
$ 2,500.00
-
90,782.57 -
$ 69,594.00
$ 11,600.00
$
$ 3,000.00
-
May-15
$ 2,500.00
-
$ $ -
$ 82,094.00
$
-
$ 47,512.72 $ -
3,000.00
-
Job 1 + 2
68,739.00 $ 21,000.00
$
2,500.00
-
Normal Serv ices (F&M) $ 586,231.57
$
Normal Serv ices Rennov ations $ 814,136.46
-
Project 1 $
$
$
Total
New Projects
$
Apr-15
NPV
$
Mar-15
Expenses
3,000.00
$ 1,500.00
2,500.00
$ 1,500.00
$
$ 1,500.00
$
$ 1,500.00
$ 3,000.00
1,500.00
$ 2,500.00
$
69,034.58
$ 1,500.00
57,916.62
$ 1,500.00
$
1,500.00
$
$
-
Staff HGS
1,500.00
$
Staff PMO
$
-
$
-
$
-
$
-
$
-
$
-
-
$ 1,500.00
$
33,353.85
-
$
$
-
Staff Financial/Marketing
500.00
$
$
-
-
$
$
958.11
-
$
$
500.00
-
500.00
$
500.00
-
500.00
$
Staff Training
-
$ $
$ 5,000.00
$ 4,969.19
-
$
$
Cement
-
-
200.00
$ 2,000.00
$
500.00
$
$
$
$
-
200.00
$ 2,000.00
$
500.00
-
$
$
$
$
200.00
$ 2,000.00
$
500.00
-
$
$
$
$ 35,027.01
200.00
$ 2,000.00
$
500.00
-
$
-
2,000.00
$
$
$
500.00
1,200.00
$
$
$
$
4,000.00
$
200.00
$ 2,000.00
$
500.00
$ $ 31,173.92
$
$ $
$
-
200.00
$ 2,000.00
$
500.00
$ -
500.00
5,750.00
$
$ 33,044.35
$
$
2,000.00
$
$
$
200.00
-
30,790.92
$
500.00
$ 253,455.87
500.00
5,750.00
$
$ 13,700.00
$ 4,000.00
$
$
$
2,000.00
$
$ 19,450.00
$ 4,000.00
$
$
200.00
$ 50,977.01
$ 4,000.00
-
Project 1 Costs
$
500.00
$15,950.00
$ 4,000.00
-
New Project Costs
$
$ 16,950.00
$
$ 3,500.00 $ 5,750.00
$
$ 48,994.35
$ 4,000.00
$ 9,250.00
-
$ 2,000.00
$
500.00
$ 15,950.00
$ 4,000.00
$ 5,750.00 10,621.03
100,772.54
$
4,000.00
$ 5,750.00 $
44,471.80
$
$ 15,950.00
$
500.00 $
5,212.01
4,000.00
5,750.00
Rent
$
11,117.95
$ 47,623.92
$
$
Insurance
$
$ 20,250.00
$ 4,000.00
$
Loan Repayment
$
88,943.61
500.00
Marketing
711,618.10
$ 5,750.00
G& A
$
$
500.00
Tax
$ 5,750.00
Total
102,518.37 14.41%
0.144063743
$ Net Present Value (NPV) Sum Return on Inv estment (ROI) Return on Inv estment %
Figure 9: Discounted Cash Flow 1, Part 1
16 | P a g e
Finance (Continued) – Discounted Cash Flow
Jan-16
Feb-16
Mar-16
Apr-16
May-16
Jun-16
Jul-16
Aug-16
Sep-16 $
Oct-16 -
3,243.04
$ 3,080.89
$
$
$
2,926.84
$
2,780.50
Nov -16 -
Dec-16
-
$
Jan-17
-
$
-
Feb-17
$ 2,264.73
2,383.93
-
$
$
-
3,413.72
2,509.40
-
$
$
$
$
$
-
$
$
-
$ 3,593.39
$ 2,641.48
-
-
541.62
$
$
3,200.00
Oct-16
$ 2,700.00
$ 3,200.00
Nov-16
$
$
2,700.00
3,200.00
$
$
2,700.00
3,200.00
Jan-17
$ 2,700.00
$ 3,200.00
Feb-17
-
2,700.00
-
$ 3,782.52
601.80
$
-
$
-
-
$
668.67
$
-
$ 3,981.60
$
-
$ 2,806.36
$
-
742.97
$
$ 115,753.36
$ 112,767.63
$
$
-
-
$ 4,191.16
$
$
$
-
-
-
$
$
$ 3,384.44
$
$ 4,411.75
-
$ 108,020.49
$ 104,414.47
825.52 $
-
$
3,844.09
$ -
$
$
917.24 $
-
$
$
$ 4,100.05
$
$ 1,019.16
-
$ 101,055.50
$ 96,680.06
1,132.40
$ -
$
4,671.95
$
$
$
1,258.22
$ -
$
$ $ 4,991.42
$
$ 1,398.03
$ 94,854.46
$ 89,518.58
$ 1,553.36
$ -
$ 1,725.96
$ 5,707.56
$
$ 1,917.73 $ -
$ 2,130.81 $ $ 6,108.89
$
3,200.00
3,178.07
$ 89,430.13
$ 82,887.57
2,700.00 -
$
-
Dec-16 Aug-16 $
Sep-16 Jul-16
$
Jun-16
$ 3,200.00
May-16
$ 2,700.00
Apr-16
3,200.00
Mar-16
2,700.00
Feb-16
$
Jan-16
$
$ 2,700.00
$ 3,200.00
3,200.00
$ 3,200.00
-
2,700.00
$ 2,700.00
-
$
$ 3,200.00
$
-
$
$ 2,700.00
$
-
$ 2,700.00
$ 3,000.00
-
$
$ 3,200.00
$ 2,500.00
$
-
$
$ 1,500.00
$
-
1,500.00
-
$
$
-
$ 46,874.04
1,500.00
$
-
$
$
-
$ 1,500.00 -
$
1,500.00
-
$
$
$
-
1,500.00
$
-
$
-
$
$ 1,500.00
$
-
$
1,500.00
$
-
$
-
$
1,500.00
-
$ 44,220.79
$
$ 1,500.00 $
$
-
$ 1,500.00
$ 1,500.00 -
$
$ 1,500.00
$ 1,500.00 $
-
$
$
-
-
-
$
$
-
$
500.00
$
-
$ -
$
$
$
-
-
$ $
$
-
$ 39,356.35
-
$ -
$
-
-
$ $
$
$
-
$ -
-
-
-
$
$
$
$
-
-
$
-
$ 37,128.63
$
500.00
3,500.00
$
$
-
$
$
500.00
3,500.00
$ 41,717.73
$
$
500.00
$ 3,500.00
$
500.00
200.00
$
$
500.00
200.00
$
$
500.00
200.00
$
$
500.00
200.00
$
$
500.00
200.00
$
$
500.00
200.00
$
$
500.00
200.00
$
$
500.00
200.00
$
500.00 500.00
3,500.00
$ 3,500.00 $
$
$
$ 500.00
3,500.00
500.00
$
3,500.00 $
$ 500.00
3,500.00
$
$
500.00 $
$ 3,500.00 500.00
$ 3,500.00
$
$ 500.00
$ 3,500.00
200.00
$
500.00
$ 3,500.00
500.00
$
500.00
$ 3,500.00
$
$
500.00
$ 3,500.00
$
$
200.00
$ 2,000.00 500.00
$ 14,100.00
$ 4,000.00
2,000.00 $
4,000.00
$ $
$ 60,974.04
$
2,000.00 200.00
4,000.00
$ 500.00
$ 14,100.00
$
$ 2,000.00 $
$ 14,100.00
$ 4,000.00
2,000.00 $
4,000.00
$ 200.00
$ 58,320.79
$
2,000.00 500.00
4,000.00
$
$
$ 14,100.00
$
$ 2,000.00
$
$ 14,100.00
$ 4,000.00
2,000.00
200.00
4,000.00
$
500.00
$ 55,817.73
$
2,000.00
$
4,000.00
$
$
$ 14,100.00
$
$ 2,000.00
200.00
$ 14,100.00
$ 4,000.00
$ 2,000.00
500.00
$ 53,456.35
$ 4,000.00
$ 2,000.00
$
$ 14,100.00
$ 4,000.00
$ 2,000.00
$ $ 14,600.00
$ 4,000.00
$ 2,000.00
$ 50,828.63
$ 4,000.00
Figure 10: Discounted Cash Flow 1, Part 2
17 | P a g e
Finance (Continued) – Profitability Revenue Breakdown The main objective of the plan is to expand its revenue through large development projects. Normal services will be reduced over time. Phoenix will aim to work on one large scale project every 3 month. With the experience and the improved efficiency, the company intends to grow their maximum Facilities Management Capacity each project and increase their revenue gained by at least 6%. The Facilities Management normal services will reduce by 5% each month, while the normal Renovation Services will decrease by 10% each month. The DCF allows a calculated estimate on the remaining 3 years and it is expected that Phoenix will stop offering normal services by the end of 2018. The revenue from the project has been split between 3 month in the below graph as the company will be reliant on this income during this time. The graph shows that profitability can be increased by prioritising the most important service of Phoenix, and outweighs the benefits gained from being adaptable to variety of normal services. The company will aim to complete 17 large scale projects within the 5 years, excluding Project 1.
Figure 12: Bar Graph showing revenue breakdown of first 2 years of Business Plan
18 | P a g e
Finance (Continued) – Forecast Assumptions Marketing The expenses of Phoenix now includes a constant allowance of $200 every month to be used on Marketing. This is to be used by FAMM and is to cover any costs incurred through implementing sales and marketing strategies. The new branding strategy will be implemented during August 2015 and extra $1000 has been allocated in the DCF calculations.
Relocate Phoenix General Services will relocate its business to more suitable premises during November 2015. Phoenix will no longer require large storage needs as changing to an outsourcing organisation means the company is no longer responsible for large amounts of materials and equipment. The new location must be picked with the possibilities of staff numbers increasing in the near future. To ensure a smooth changeover, there is an overlap in the rent costs in November. Some of the remaining $38,827 received from BSIB may be used to relocate the business to better premises.
Staff With the project sizes continuously growing, Phoenix intends to grow its force by employing more staff members in the PMO and HGS departments in February 2016. This will allow an increase in the Facilities Management capacity to manage bigger or larger shares of projects. With the amplified team, Phoenix will aim to increase its revenue on larger project by 8% rather than the previous 6%. Staff training has been considered for this period. This also falls at the end of the 1 st year of the business plan and therefore pay rises are also considered in the increased expenditure towards staff.
BSIB Money How the money received form BSIB will be used has been stated throughout the report. To summarise, following shows the expenditure of the $70,000. 1. 2. 3.
Project 1: $31,173 Relocation: $5,750 Staff Training: $1,000
The remaining $32,077 will be left untouched as the float in the company. The money from BSIB has been considered an asset and therefore it has not been added to the revenue of the DCF or financial statements.
19 | P a g e
Finance (Continued) – Profit/Loss Financial Statement (2 years)
Figure 13: Profit/Loss Statement March 2015 – February 2017
20 | P a g e
Risk Analysis All of the above statements and alterations is assuming that the current economic state stays constant. Small amount of risk-taking is unavoidable during economically problematic times. Phoenix has implemented an ongoing Monitoring and Controlling process to identify risks, provide immediate solutions and in order to remain the benchmark company. Monitoring and controlling process is part of the new Project Lifecycle where the PMO constantly evaluating staff performance, identifying/solving issues, providing feedback and making changes to optimise performance of projects. This reduces the likelihood of issues rising and escalating without awareness. Insurance has been added to the cost calculations In the case of major unforeseen issues and accidents. The outsourcing structure also safeguards the company if there are further downfalls in the economy. The company is not obliged to make continuous high salary payments to staff as the majority of onsite work will be outsourced to external organisations at fixed term lengths. Brimson proposes arguments around how “the growth and profitability (of a business) are critical to sustainability� (84). The action of employing more staff will also be carefully reviewed in January 2016. Delays on the critical path is a major setback in the project delivery and may result in late payments from the client. Phoenix will aim to deliver all project on time and on budget, however Phoenix is relying heavily on outsourced companies. A solution to this risk is to not be 100% Reliant on the date payment, not invest all profit into upcoming projects so the company has backup to cover overheads. In the case of subcontract company failures, rates from other potential companies will be obtained
Plan B The Business Plan is based on the assumption that Welly’s economic downfall will recover within the next 5 years. There are possibilities that this is not the case and large projects may not come into Welly as often. A Plan B has been put together through another DCF which focuses on the keeping the normal services running and shifting the focus to staying in the market. This plan aims to keep normal services constant with the expectation of completing a major job every 5 month with only a 2% increase in revenue. New staff will not be employed and the brand change strategy will also be delayed. The ROI of Plan B is currently at 5.98%. Please see Appendix 3 for DCF 2.
Figure 14: Bar Graph showing revenue breakdown of Plan B
21 | P a g e
Bibliography
Bibliography Brimson, James A. “Management Process Principles.” Journal of Corporate Accounting & Finance (2011): 83-96. Burlton, Roger. “Principles of Process Management.” Business Process Management; Profiting From Process. Sams Publishing , 2001. 65-97. Campbell, Andrew and Sally Yeung. “Creating a Sense of Mission.” Long Range Planning (1991): 1020. Document. Goold, Michael and Kathleen Luchs. “Why diversify ? Four decades of management thinking.” The Academy of Management Executive (1993): 7-8. Institute, Project Management. “PMBOK.” Knowledge, A Guide to the Project Management Body of. Fourth Edition. Project Management Institute, 2009. Ireland, R. Duane and Michael A Hitt. “Mission Statement; Importance, Challenge, and Recommendations for Development.” Business Horizons (1992): 32-42. Lee, Lian Geok. Strategies for survival in small businesses, a case study approach. Masters Thesis. Victoria University of Wellington. Wellington, 1988. Roddy, Kelly. “How to Effectively Rebrand During a Recession.” March 2011. International Franchise Association. Document. <http://www.franchise.org/keys-to-success-how-to-effectivelyrebrand-during-a-recession>. Shankar, Rama. Process Improvement Using Six Sigma: A DMAIC Guide. ASQ Quality Press, 2009. Tonnquist, Bo. “6. Budgeting Risk and Quality.” Tonnquist, Bo and Jens Hølück. Project Management a complete guide. Aarhus: Academica, 2009. 154. Wideman, Max R. “First Principles of Project Management.” Wideman, Max R. Vancourver: AEW Services, 2000. Young, Dr Jim. The Framework for successful project management. Wellington: First Edition Ltd, 2008. Book.
22 | P a g e
Appendix Appendix 1: Competitor Analysis
Appendix 2: Internal Communication Model
23 | P a g e
Appendix (Continued) Appendix 3: DCF 2, Part 1(Plan B)
Inflation (year) OC (year)
5%
2.70%
$ 5,000.00
6,500.00 $
$
5,000.00
6,500.00
May-15
$ 5,000.00
$ 6,500.00
Jun-15
$ 5,000.00
$ 6,500.00
Jul-15 $
$
5,000.00
6,500.00
Aug-15
$82,485.88
$ 70,985.88
$ 5,000.00
$ 6,500.00
Sep-15
$ 11,500.00
$
$ 5,000.00
$ 6,500.00
Oct-15
$ 11,500.00
$
$ 5,000.00
$ 6,500.00
Nov -15
$ 11,500.00
$
$ 5,000.00
$ 6,500.00
Dec-15
0.62%
138,929.47 $
$ 11,500.00
$
Complex (Month)
$
NPV 106,868.82
$ 11,500.00
$
Apr-15
Normal Serv ices (F&M)
Rev enue $
$ 11,500.00
$
2,500.00
3,000.00
$
$
2,500.00
3,000.00
May-15
$ 2,500.00
$ 3,000.00
Jun-15
$ 1,500.00
$ 2,500.00
$ 3,000.00
Jul-15
$
$
$
$
-
1,500.00
2,500.00
3,000.00
Aug-15
$
-
$ 1,500.00
$ 2,500.00
$ 3,000.00
Sep-15
$
-
-
-
$ 1,500.00
$ 2,500.00
$ 3,000.00
Oct-15
$
$
$
-
-
-
$ 1,500.00
$ 2,500.00
$ 3,000.00
Nov -15
$
$
$
-
-
-
$ 1,500.00
$ 2,500.00
$ 3,000.00
Dec-15
-
Normal Serv ices Rennov ations
$ 11,500.00
$
$
-
$
-
$ 81,094.00
$ 69,594.00
$
$ 1,500.00
$
$
-
338,273.71
64,121.29
1,500.00
-
-
-
584,072.01
NPV 53,434.41
$
$
$
-
$
$
$
1,500.00
-
$ 31,797.39
-
Projects
Expenses $
$
$
-
-
Total
Staff PMO 32,060.65
500.00
-
Apr-15
Staff HGS $
$
$
$
Staff Financial/Marketing
496.92
-
-
$
$
$
Staff Training
-
$
200.00
2,000.00
$
$
200.00
$ 2,000.00
$
500.00
$
$
200.00
$ 2,000.00
$
500.00
500.00
$ 5,750.00
$
$
$
$
$
500.00
200.00
2,000.00
500.00
5,750.00
$
$
500.00
200.00
$
$
500.00
200.00
$ 19,450.00
$ 4,000.00
$
$
500.00
200.00
$ 13,700.00
$ 4,000.00
$
$
500.00
200.00
$ 2,000.00
$ 2,000.00
$ 2,000.00
$ 2,000.00
500.00 $
500.00
$ 15,950.00
$ 4,000.00
$ $
$47,747.39
$ 4,000.00
$ 3,500.00 2,000.00
$
4,000.00
500.00 200.00
$ 15,950.00
$
$ $
500.00
$ 15,950.00
$ 4,000.00
$ 9,250.00
$
$ 15,950.00
$ 4,000.00
500.00 42,747.53
$
4,000.00
$ 4,274.75
$ 15,950.00
$
$ 5,750.00 $
10,686.88
4,000.00
500.00 $
$ 47,623.92
$
$
Loan Repayment
$
85,495.06
$ 5,750.00
Marketing
551,177.92
500.00
G&A
$
$
$ 5,750.00
$
30,981.83
500.00
5,750.00
$ 120,544.39
$
$
-
$
500.00
5,750.00
-
$
$
$
$
Project 1 Costs
10,686.88
95,647.33
$
New Project Costs $
$
Tax
-
Rent
$ 31,173.92
Insurance
Total
32,894.09 5.97%
0.059679617
$
Net Present Value Sum (NPV) Return on Inv estment (ROI) Return on Inv estment %
24 | P a g e
25 | P a g e
Appendix (Continued)
Appendix 3: DCF 2, Part 2 (Plan B)
Feb-16 $ 6,500.00
Mar-16 $ 6,500.00
Apr-16 $ 5,000.00
$ 6,500.00
May-16 $
$ 5,000.00
6,500.00
$
$
5,000.00
6,500.00
Jul-16
$ 5,000.00
$ 6,500.00
Aug-16 $
$
5,000.00
6,500.00
$
$
5,000.00
6,500.00
Oct-16
$ 5,000.00
$ 6,500.00
Nov -16
$
$
5,000.00
6,500.00
$
$
5,000.00
6,500.00
Jan-17
$ 5,000.00
$ 6,500.00
Feb-17
Dec-16
$ 6,500.00 $ 5,000.00
$ 11,500.00
$
Sep-16
Jan-16 $ 5,000.00
$ 11,500.00
$
Jun-16
$ 6,500.00 $ 5,000.00
$ 86,830.79
$ 75,330.79
2,500.00
3,000.00
Oct-16
$ 2,500.00
$ 3,000.00
Nov -16
$
$
2,500.00
3,000.00
$
$
2,500.00
3,000.00
Jan-17
$ 2,500.00
$ 3,000.00
Feb-17
-
$ 5,000.00
$ 11,500.00
$
$
$ 11,500.00
$
$
$ 11,500.00
$
3,000.00
$ 11,500.00
$
2,500.00
$ 85,353.71
$ 73,853.71
$
-
$ 11,500.00
$
Aug-16 $
-
$ 11,500.00
$
$ 3,000.00
-
$ 11,500.00
$
Jul-16
$ 2,500.00
-
$ 11,500.00
$
3,000.00
-
$ 83,905.60
$ 72,405.60
May-16
2,500.00
-
$ 11,500.00
$
Apr-16
$
Dec-16
Mar-16
$
Sep-16
Feb-16
3,000.00
Jun-16
Jan-16
2,500.00
-
$
$
-
-
$
-
$
$
$ 3,000.00
-
$ 2,500.00
$
-
$ 3,000.00
$
$ 2,500.00
-
$
$ 3,000.00
$
-
$ 2,500.00
$
$ 3,000.00
-
$ 33,743.65
$ 2,500.00
$
-
-
$ 3,000.00
-
$
$
$ 2,500.00
-
$ 1,500.00 $
-
1,500.00 -
$
$
$ -
1,500.00 $
-
$ $
$ 1,500.00 -
$
1,500.00 -
$ $
-
1,500.00 -
$
$ $
$
$ 1,500.00 -
-
1,500.00 $
$ 33,082.01
$
$ -
-
1,500.00 $
-
$ -
$
$
$ 1,500.00
$
-
$ 1,500.00
-
-
$ 1,500.00 $
$
$ 1,500.00
-
$
$ 1,500.00 $
-
$
500.00
200.00
2,000.00
$
$
500.00
200.00
$ 2,000.00
$
$
$
500.00
200.00
2,000.00
$
$
$
500.00
200.00
2,000.00
$
$
200.00
$ 2,000.00
$
500.00
$
$
$
500.00
200.00
2,000.00
$
$
$
500.00
200.00
2,000.00
$
$
500.00
200.00
500.00
$ 3,500.00
$
$ 2,000.00
$
500.00 200.00
3,500.00 $
500.00
$ $
$
$
500.00 200.00
$ 2,000.00
$
500.00
$ 13,700.00
$ 4,000.00
3,500.00
$
4,000.00
$
$
$ 13,700.00
$
$ 200.00
4,000.00
500.00
500.00
$ 47,443.65
$
$ 3,500.00
-
500.00
3,500.00
$
$
$
$
-
500.00
3,500.00
-
$
$
$
500.00 $
$ 13,700.00
$ 4,000.00
$
$ 3,500.00
$
-
500.00
3,500.00
$
$
$ 32,433.34
$
-
500.00
3,500.00
-
$
$
$
$
500.00
$ 3,500.00
$
4,000.00
500.00
$ 3,500.00
200.00
$ 13,700.00
$
$
500.00
4,000.00
$ $
$ 13,700.00
$
500.00
$ 3,500.00
$
$ 13,700.00
$ 4,000.00
500.00
$ 3,500.00
200.00
4,000.00
$
500.00
$ 46,782.01
$
500.00
$ 3,500.00
$
4,000.00
$
$
$ 13,700.00
$
$ 2,000.00
200.00
$ 13,700.00
$ 4,000.00
$ 2,000.00
500.00
$ 13,700.00
$ 4,000.00
$ 2,000.00
$
$ 13,700.00
$ 4,000.00
$ 2,000.00
$ $ 46,133.34
$ 4,000.00
$ 2,000.00
$ 13,700.00
$ 4,000.00
26 | P a g e
Appendix (Continued) Appendix 4: Phoenix General Services Numbers â&#x20AC;&#x201C; March 2015
27 | P a g e
Declaration
Word count without Cover, Contact Details, Contents & Bibliography: 4326
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