BUSINESS MANAGEMENT 1

3RD QUARTER SY 2023-2024

INSTRUCTOR: AR. ARISTEO GARCIA
MAPUA UNIVERSITY

LECTURE 1: INTRODUCTION TO BUSINESS MANAGEMENT &

APPLICATION FOR ARCHITECTURE

Business Management

● A broad term that refers to the discipline of managing the operations of or within a
business (Architecture Services)
● Generally entails coordinating and organizing general or specific business activities
to help the organization thrive.
● Focuses on the organizing, planning and analyzing of business activities that are
required to efficiently manage and run a business.
● For the inspiring architecture, service, entrepreneurs and business leaders:
○ provides the academic knowledge and skills to pursue global career
opportunities
○ helps you develop a broad understanding of businesses and specific areas
such as finance and human resources

Business Management Skills (key management skills that are developed through studying
the course)

● Critical and strategic thinking

● Communication
● Problem solving
● Organization
● Presenting
● Reporting

1
 ● Leadership
● Project management

Employability

● Management
● Consultancy
● Marketing and advertising
● Human resources
● Retail and sales
● Finance

Introduction to the Business World

● Business management and application gain in-depth knowledge and understanding

of the core elements of business and management.
● A great introduction into the world of business if you have no prior experience.
● It also provides industry insights such as market trends, and industry reports which
improve to be valuable, and will be encouraged to apply academic theory to real life
business situations that will help kickstart the career.

Core Elements of Starting a Business

● Business idea to get started;

● Develop entrepreneurial skills and be able to test launch any business idea.

Main Business Functions that Contribute to the Success of a Business

● Human resource management

● Entrepreneurship
● Finance
● Service operations

Business Application

● A software solution, or a set of programs that provide business functionality

● Also used to enhance and monitor productivity throughout the organization

2
 ● Can be used externally internally, or with other business apps.

Five benefits of business applications

Business needs application development. There is an initial investment upfront for the
creation of these critical applications. They can provide a lot of benefits for growing your
organizations. Here are a few.

● Business apps, increase employee, productivity, by optimizing business processes to

improve efficiency
● Business apps, empower, fieldworkers, allowing them to stay connected to the
office and get real time insights into the process
● Business apps increase customer engagement, boosting loyalty and sales
● Business apps that are powered by intuitive, analytic stools that help provide
actionable insights to help you grow your business using more informed decisions.
● Developing custom business apps

Five categories of business applications

● Communications
● Customer relationship management (CRM)
● Lists
● Notes
● Cloud based file creation and management

Business for Architecture and Design

● A forward-thinking institution that provides visionary students with a new type of

design education.
● Focused on technological innovation, hands-on learning, and environmental
responsibility
● As architects, it increasingly depends on:
○ widening the vision;
○ identifying new business opportunities;
○ fresh approaches to problem solving; and
○ renewed ways to create value through design

3
Relevance of architecture and design in business management

● Balances the blend of technical, humanistic, and creative components

complementing the business management and application
● Empowers the entrepreneurial and innovative mindset in business for architecture
and design

What you will achieve in business management and application for architecture

● Gain perspective and control over the key management processes of creative
companies, with a particular focus on architecture and design
● Analyze the industry and the environment in order to identify business
opportunities in architecture, design, and the building environment in general as a
key step to build successful businesses.
● Acquire a global vision of the field of architecture and design, and its future
evolution by the hand of the most renowned architects worldwide acquire a global
vision of the field of architecture and design, and its future evolution by the hand of
the most unknown architects worldwide.
● you will learn to collaborate and work with agility and rapidly changing
environments with international teams and multiple cultures, becoming a leader
with potential for your field or organization.
● Put business and technology at the service of design in order to make better
professional decisions.
● More strategic in the company and build well structured corporations that can
affront bigger design challenges and motivate design talent more strategic in the
company and build well structured corporations that can front bigger, design
challenges and motivate design talent.

Business and Design, Stronger Together

● expanding the impact of design requires challenging the status quo of the building
environment.
● The power of business perspectives to observe its dynamics, identify opportunities
and propose new ways to solve problems

4
 ● This process builds an ecosystem that is a reference for its expertise in the
intersection of business and design

A Vision for Creative Leadership

● Do you evolution of design, will empower, multiple perspectives, and combine

complementary skills
● Leading in the future of the building environment will require understanding,
business design, entrepreneurial, initiative, and innovation altogether.

Design for the 4th Industrial Revolution

● The digital revolution is transforming the built environment, therefore, designers

must:
○ Expand the role as professionals pursuing value creation
○ Taking entrepreneurial initiative embracing technology within their
companies
○ Understanding the business and their profession of spatial design more
strategically.

Advantages of Business Management & Application for Architecture

● BECOME A DESIGN ENTREPRENEUR

○ Tomorrow's future architecture and design leaders must possess the
management and entrepreneurial knowledge, tools, and techniques, to bring
ideas to life, and create an impact.
● FOCUS ON DESIGN MANAGEMENT
○ creative process from the perspective of contemporary management, this
integrated approach, empowers design professionals to acquire a holistic
vision of their work from inception to implementation.
● BECOME A LEADER
○ Interactive, enhance on activities, whole interpersonal and professional skills
○ Develop and defined the career path and goes by taking a closer, look at
strengths and limitations
● BENEFIT FROM AN INNOVATIVE APPROACH

5
 ○ Diverse teaching methods that meet the needs and allow to grow
exponentially by combining case studies, project based learning, debates,
research, lectures, and immersive travel experiences.

Resources of Management (8Ms of Manufacturing)

● Man / Manpower / Mind power

● Machine
● Material
● Method
● Measurement
● Milieu / Mother Nature
● Management / Financial Strength
● Maintenance / Upkeep

LECTURE 2: ECONOMICAL ENVIRONMENT

Economical Environment

Introduction to macroeconomic and microeconomic environment in business.

You will learn to analyze the implications of economic situations and policies on the welfare
of people, companies and governments.

● Macro Environment: refers to the set of conditions that exist in the economy as a
whole, rather than in a particular sector or region in general, the macro economic
environment includes trends in the gross domestic product (GDP), inflation,
employment, spending and monetary, and fiscal policy.
● Gross Domestic Product or GDP per capita: is a gross domestic product divided by
a midyear population
○ Having consistently high GDP growth rate at 6-7% in the past years, the
Philippines is among the fastest growing economies in Asia:
■ Government debt and budget balance, both as percentage of GDP,
soundness of banks, regulation of securities, exchanges primary and
higher education among others Government debt and budget

6
 balance, both as percentage of GDP, soundness of blanks regulation
of securities, exchanges primary and higher education among others.
● Economic Environment Situation
○ The Philippines economic freedom is 61.1 making its economy the 80th
freest in the 2022 index. The Philippines is ranked 15th among 39 countries
in the Asia Pacific region, and its overall score is above the regional and the
world averages.
○ The Philippines has a mixed economy with privately owned businesses,
regulated by government policy. It is considered a newly industrialized
economy and emerging market, which means it is changing from an
agricultural based economy to one with more services and manufacturing.
○ Among the issues that they address are food security, hunger and poor
nutrition, poor quality of education, land and housing insecurity and poor
sanitation.
● Major Economic Problems in the Philippines
○ High inflation during crisis periods.
○ High levels of population growth
○ High and persistent levels of inequality (incomes and assets) which dampen
the positive impacts of economic expansion
○ Recurrent shocks and exposure to risks, such as economic, crisis conflicts,
natural disasters, and environmental poverty.
● Major Environmental Issues in the Philippines
○ Pollution
○ Illegal mining and logging
○ Deforestation
○ Dynamite fishing
○ Landslides
○ Coastal erosion
○ Wildlife extinction
○ Global warming
○ Climate change

7
 Environmental issues affect business management. Ex: Northern Mindanao had
many investors due to its climate but now, conditions have changed and so are the
businesses in the vicinity.

● Economic Systems Applicable in the Philippines

○ The Philippines has a mixed economic system that includes a variety of
private freedom, combined with centralized, economic planning and
government regulation. The Philippines is a member of the Asia Pacific
Economic Cooperation (APEC) and the Association of Southeast Asian Nations
(ASEAN).
○ The Philippines has a mixed economy with privately owned businesses,
regulated by government policy. It is considered a new industrialized
economy and emerging market, which means it is changing from an
agricultural based economy to one with more services and manufacturing.
■ Ex: agricultural lands are being converted to industrial and residential
lands.
○ Mixed economy is the best economic system

4 Types of Economies

● Pure market economy

● Pure command economy
● Traditional economy
● Mixed economy

5 Distinct Types of Economic Systems

● Traditional economic system

● Command economic system
● Centrally planned economic system
● Market economic system
● Mixed economic system

8
7 Economic Systems

By characterization of ownership of the economics resources and the allocation of the

same.

● Market economy
● Planned economy
● Centrally planned economy
● Socialist
● Communist economies

Systems adapt and vary to a certain place.

Difference between Microeconomics and Macroeconomics

● Microeconomics: deals with various issues, such as demand, supply, factor pricing,
economic, welfare, production consumption, and more.
● Macroeconomics: deals with various issues like national income, distribution
employment, general price level, money, and more.
● These are often considered for site selection. Study the site's economic conditions
to know its strengths in terms of profits and sustainability. It can also determine a
project proposal's success.

Microeconomic Environment

● Micro economics involves factors of resources, availability and usage, that impact
individuals and businesses
● If a place has a bank, it is economically sustainable. Great potential for business and
money. Manpower and materials, thus, would be available too.
● The micro economic environment refers to things that happen at the individual
company or consumer level
● Micro economic factors, do not affect the whole economy
● As level of economy increases, businesses flock. Businesses and investments
progress.

9
 ○ Ex: Cavite is now an industrial city and people went there. Needs such as
housing, food, and transportation emerged. SM, Mercury Drug, and other
establishments are also seen due to higher demand.
○ Architects and contractors also proliferated as more projects came in.

Six microeconomic business factors that affect almost any business are:

● Customers
● Employees
● Competitors
● Media
● Shareholders
● Suppliers

Importance of Microeconomics

Microeconomics has both theoretical and practical importance.

● It helps formulating economic policies, which enhance, productive efficiency, and

results in greater social welfare
● Microeconomics explains the working of a capitalist economy where individual units
are free to take their own this decision

Three Main Concepts of Microeconomics

● Elasticity of demand
● Marginal utility and demand
● Elasticity of supply

Most Important Concepts in Microeconomics

● Supply
● Demand
● Resources
● Allocation
● Equilibrium: supply and demand are balanced
● Production

10
 ● Labor
● Others

Economic Environment

● Consists of external factors in a business market, and the brother economy that can
influence a business.
● You can divide the economic environment into:
○ Micro economic environment: affects business decision-making, such as
individual actions of firms and consumers and
○ Macro economic environment: affects an entire economy, and all of its
participants.
● Many economic factors act as external constraints in your business. Which means
that you have little if any control over them.
● Macro economic influences: broad economic factors that either directly or
indirectly affect the entire economy and all of its participants, including your
business. These factors include:
○ Interest rates
○ Taxes
○ Inflation
○ Currency exchange rates
○ Consumer discretionary income
○ Savings rates
○ Consumer confidence levels
○ Unemployment rate
○ Recession
○ Depression
● Micro economic influences: how your business will make decisions. Unlike Macco
economic factors, these factors are far less broad in scope, and do not necessarily
affect the entire economy as a whole micro economic factors influencing a business
include:
○ Market size: magnitude of consumers where business is (ex: rural vs urban)
○ Demand
○ Supply

11
 ○ Competitors
○ Suppliers
○ Distribution chain such as retail stores
○ Savings rates
○ Consumer confidence levels
○ Unemployment rate
○ Recession
○ Depression

LECTURE 3: FINANCIAL MANAGEMENT

Financial Management

● Essential for all the fields, especially for the architects as they can generate enough
money
● Architects are the people who have a lot of deals, and can have huge amount of
money in their hands
● Therefore architects having good financial money management is a must as they
cannot proceed without it.

Financial Management Concepts

The following is an overview of an FM system. It is both a circular and linear process. The
goal of the FM system is the ability to read and comprehend the meaning and impact the
numbers on financial statements to facilitate sound business decisions and achieve firm
goals.

● 5 Primary Concepts of an FM System for a Professional Design Firm

○ An appropriately organized Chart of Accounts (CoA)
○ A systematic, timely, accurate method for tracking of time
○ A properly formatted Annual Budget and Profit Plan
○ Properly formatted financial statements
● Chart of Accounts
○ A list of all two tier numeric data entry codes to facilitate the populating of
the COA for:

12
 ■ Profit/Loss statement and
■ Balance Sheet
● Time Tracking
○ One of the critically important resources of an FM system is the capture of
time spent by every member of the firm
○ Without exception time, spent especially project related hours need to be
captured on a timely, accurate, daily timesheet
○ These daily entries facilitate the accounting software in separating the time,
spent into two primary categories, direct labor and indirect labor
○ Direct Labor
■ Chargeable-billable: Time spent on project activities that are
chargeable to a project and billable to the client
■ Chargeable-not billable: Time spent on project activities that, while
chargeable to a project, are not billable to the clients. (Not all
chargeable time is billable.)
○ Indirect Labor: time spent on non-project activities, referred to as general
and administrative labor, as an overhead cost.
● Annual Budget (AB)
○ A list of firm-appropriate line items descriptions can be developed for each
major account and their respective sub accounts
● Profit Plan (PP)
○ Step 1: estimate your expenses
■ do not include any of those that are reimbursed by your client. (e.g.
printing, travel, pass through consultant fees, etc.)
○ Step 2: Set a profit goal
■ This is generally thought of as your return on investment (ROI). It is a
percentage of your total expenses. All the effort and money you put
into the business should return to you as a profit. This is what you
would expect if you invested the money in something else like stocks,
bonds, or real estate. What's the return you want to see? I
recommend 20% otherwise take the money and invest it in the stock
market. You’re also pouring your life into these projects so return
should be commensurate with the effort.

13
 ○ Step 3: Add your expenses with your profit goal to get the net revenue goal.
■ This is called net because it doesn’t include those reimbursable
expenses.
■ Your net revenue goal is what you plan to invoice your clients for your
services.
● Financial Statements

Three types of financial statements that every accounting system should be able
to develop for the firm principal to review every month

○ Balance Sheet: This report indicates current status, on a real-time basis, of a

firms, financial condition related to assets, liabilities and equity
○ Profit/Loss Statement (P/L): This is the accrual basis report that is an
in-house only document, that reports the revenue earned, the expenses
incurred, and the net profit. This report does not relate to any incoming or
outgoing of the P/L define seven of the KFPI’s.
○ Income Statement: also profit loss, statement based on the cash basis
reporting of the firm's income received and expenses paid every month. This
report is almost always the source of a firm's cash flow statement.

Architectural Financial Management Strategies for Profitability and Growth

● Create a Comprehensive Budget

○ A well-defined budget is the foundation of sound financial management
○ Start by analyzing revenue streams and expenses including:
■ overhead costs,
■ employees,
■ salaries,
■ marketing expenses, and
■ project related expenditures
○ create a realistic budget, that align with your business goals in the law for
proper financial planning
● Monitor Cash Flow
○ Cash flow management is critical for maintaining the financial health of your
architectural firm

14
 ○ Stay on top of your inflows and outflows by regularly monitoring cash flow
statements. This will help you identify potential issues such as late payments
or excessive spending and take proactive measures to address them

● Implement Project Costing Strategies

○ accurate project costing is essential for profitability
○ Develop a systematic approach to estimate project costs, taking into account
factors, such as labor, materials, consultants, and contingencies
○ Regularly track project costs and compare them to the estimated budget to
identify any deviations and make necessary adjustments
● Streamline invoicing, and payment processes
○ Efficient invoicing and timely payments are crucial for maintaining a healthy
cash flow
○ Establish clear, invoicing procedures, including itemizing expenses, and
providing transparent payment teams
○ consider implementing automated invoicing systems to streamline the
process and reduce administrative overhead
● Negotiate contracts and fees
○ negotiating contracts and fees is an important aspect of financial
management for architects
○ Carefully review contracts, ensuring that they are fair and favorable to your
firm
○ Negotiate fees, that accurately reflect the value of your services and the
scope of the project
○ Do not be afraid to assertively negotiate for fair compensation
● Monitoring control expenses
○ keep a close eye on your expenses to avoid unnecessary over spending
○ Regularly review and analyze expenses looking for areas where you can
reduce costs or optimize efficiency
○ implement cost-saving measures such as energy efficient practices, digital
documentation, and strategic procurement strategies
● Invest in technology and tools

15
 ○ embrace technology to streamline financial processes, and enhance
productivity
○ Utilize accounting software that integrates with project management
systems, allowing for seamless, tracking of project expenses, invoicing and
financials reporting
○ Invest in tools that automaker repetitive tasks, freeing of valuable time for
strategic financial decision making
● Seek professional financial advice
○ Consider engaging a financial advisor or accountant with expertise in the
architectural industry
○ They can provide valuable insights and guidance to your specific financial
needs
○ A financial professional assist with tax planning, financial forecasting and
optimizing profitability
● Continuously, educate yourself
○ Stay updated on financial trends, regulations invest practices in the
architectural industry
○ Attend workshops, webinars, or conferences, focused on financial
management for architects
○ Enhancing your financial acumen, will empower you to make informed
decisions and adapt to evolving financial landscapes
● Regular financial performance review
○ Schedule regular financial performance reviews to assess the health and
progress of your architectural firm
○ Analyze key financial metrics such as profitability, revenue growth and
project profitability
○ Identify areas for improvement and develop strategies to optimize financial
outcomes

LECTURE 4: PROJECT STUDY & MANAGEMENT

Project Study

16
 ● defined as a careful in critical investigation, and or examination of a proposal
scheme, idea, or of a specific plan, or design for the purpose of obtaining or
achieving the desired goals or objectives

Objectives

● To finish the project at the earliest possible time (℅ the project manager)
● To complete the project at the minimum cost
● To run the project on a smooth and orderly manner as to avoid unnecessarily delays

Characteristics

● Projects are non-traditional, innovative processes for development

○ Introduce new products and technology
● Projects are complex efforts
● A project is the process of creating specific result
○ Result = product
● A project has a lifecycle
○ Mobilization to demobilization (birth to death; site selection to demolition)
● Projects need multidisciplinary skills

Objectives of Project Management

● to achieve proper control of the project to assure the completion, according to

schedule within the budget
○ Scheduling is an essential skill for project management
● to achieve the desired quality of the resulting product or service

Functions of the Project Manager

● Planning
● Organizing
● Staffing
● Directing
● Control
● Communicating

17
 ● Decision-making

Guidelines for an Effective Project Planning

● Project identification
● Project formulation, preparation and feasibility analysis
○ Abstract or summary of design
● Project Design
● Project Appraisal
○ Building Economics: initial cost, operational cost, factors for depreciation,
factors for appreciation
● Project selection, negotiation, and approval
● Project activation and organization
● Project implementation and operation
○ After 5 years of expected optimal condition of building, maintenance and
facilities management take place
● Project supervision, monitoring and control
● Project completion or termination
○ Project milestone is used instead of “deadline”
● Output diffusion and transition to normal administration
● Project evaluation
● Follow-up analysis and action

Process of Project Development

● Pre-investment phase
○ Project identification
○ Project formulation or preparation
○ Project, appraisal and financing
● Investment phase
○ Project implementation
○ Detailed project engineering
○ Project, construction or installation
● Operational phase
○ Project operation

18
 ○ Project evaluation

Project feasibility study

● Is the stage in the cycle which determine whether project can and should be
undertaken
● is a basic requirement to determine the viability, as well as economic feasibility of
the project

Feasibility study

● should include the requirements of the proposed project with respect to

○ Quantity
○ Quality
○ Specifications
○ Specific estimate of the total project cost
○ Detailed estimate of the production and overhead costs for the proposed
plant based on the unit cost of each item

Basic aspect of feasibility study

● Market study
● Technical study
● Financial considerations
● Economic returns
● Operational feasibility

Other factors

● Management aspect
● Social aspect
● Environmental considerations
● Choice of the most feasible alternatives

Market study

19
 ● requires assessment of the past, and present supply and demand situations,
including their behaviors
● The main objective of market study is to determine the extent of the services and
goods demand

Components of a market feasibility study

● Market demand
● Operational requirements
● Market conditions

Facts needed for market study

● Demand analysis: the estimation of total needs which are determined by identified
demand determinant such as
○ Population
○ Prices
○ Income
○ Change in the taste of people
● Estimate of the past, and present demand
○ Primary data
○ Secondary data
○ Interview
○ But econometrics method
○ By international comparison data
● Projecting demand
○ By trend projection
○ By the use of coefficients
○ By econometrics method
● Supply determinants, or determined by the following factors
○ Source
○ Products
○ Economic policy

Technical aspect

20
 ● This aspect answers the questions
○ Is the project technically feasible?
○ How will the project be implemented?

LECTURE 5: BUSINESS SUSTAINABILITY

Business Sustainability or Corporate Sustainability

● The management of environmental, social and financial concerns for your company
to ensure responsible ethical and ongoing success
● Business sustainability objectives, and goals help organizations stay true to
commitments to core business interest, such as operational, efficiency, and
shareholder value
● Is incorporated into other business movements, such as kaizen
○ Kaizen: a philosophy of continuous improvement that aims to reduce ways
in manufacturing and business processes through a focus on increased
quality control and productivity
● Business sustainability efforts also help build more resilient supply chains by
increasing efficiency, and better managing costs

What does sustainability mean in business?

● in business sustainability refers to doing business without negatively, impacting the

environment community or society as a whole
● Sustainability business generally addresses two main categories
○ The effect business has on the environment
○ The effect business has on society
● The goal of the sustainable business strategy is to make a positive impact on at least
one of those areas. When companies fail to assure responsibility, the opposite can
happen, leading to issues like environmental degradation, inequality, and social
injustice.
● Sustainable businesses consider a wide array of environmental, economic, and
social factors when making business decisions. These organizations monitor the
impact of their operations to ensure that short-term profits don’t turn into long
term liabilities

21
Sustainable business strategy

● Assess the problem and define objectives

● Assessing what sustainability means to your team, company, industry, and client
● Process
● How much waste is the organization creating?
● Company culture struggling?
● Hiring practices attracting diverse job candidates?
● Services or products targeted to help a certain audience?
● Impact does the company have on the local community?
● Establish mission
● Agreed on concrete objectives
● Define company’s mission
● A distinct mission statement is an important part of becoming a more sustainable
business
● An effective mission statement
○ outlines your company's focus on “doing”
○ It should capture organization’s values and purpose,
○ serve as a guiding light of why you do and what you do other words
○ your mission statement should define your companies, five W’s: who, what,
when, where, and why
● Craft strategy
● Realign your organization with sustainable business strategy
● Ensure your company remains profitable
● Consider the triple bottom line which refers to how a companies, actions, impact
profit people and the community

How to create a more sustainable business strategy

● Implement strategy and assess results

● It’s one thing to talk about a newfound motivation to do well and do good, but it’s
another to take a public stance. pledge quantifiable results and actually achieve

22
 them with your mission and strategy solidified, you are ready to make towards
reaching your objectives.

Importance of sustainability management in business

● Businesses that follow sustainability tend to protect nature, and make conscious
efforts to conserve natural resources. This not only enhances the image of the
business in the eyes of customers and other stakeholders, but also improves the
availability of the sources for everyone.

Integration of sustainable practices across business strategy

● Sustainability challenges and opportunities

● The business case and leadership for action
● Regulatory environment and international policy
● Production and consumption
● Design, technology, and planning for sustainability
● Communication and marketing
● Collaboration and partnerships
● Rewiring your business approach

LECTURE 6: BUSINESS PLAN

Project Feasibility Study

● A project feasibility study is the stage and project cycle, which determines whether
a project can, and should be undertaken.
● A feasibility study is a basic requirement to determine the viability as well as
economic feasibility of the project.

Project Study

● A project study is defined as a careful and critical investigation, and or examination

of a proposal, scheme, idea, or of a specific plan, or design for the purpose of
attaining or achieving the desired goals or objectives.

Business Plan

23
 ● A business plan is an essential written document that provides a description and
overview of your company's future.
○ All businesses should have a business plan.
○ The plan should explain your business strategy and your key to get from
where you are now to where you want to be in the future.
● Business planning is the process of developing a roadmap aimed at achieving a
business goal.
○ It involves key stakeholders coming together to brainstorm ideas and
strategies and collating them into a formal, written document, known as a
business plan.
● Business plan definition in architecture: Business entrepreneurship
○ A business plan is an essential written document that provides a description
and overview of your company's future.
■ All businesses should have a business plan.
■ The plan should explain your business strategy and your key goals to
get from where you are now to where you want to be in the future. all
businesses should have a business plan.
● Three most important purposes of a business plan
○ To create an effective strategy for growth
○ To determine your future, financial needs, and
○ To attract investors

The advantages of having a business plan

● Sets objectives and benchmarks: proper planning helps businesses achieve

realistic objectives, and the science stipulates time for these goals to be met.
● Maximizes resource allocation: a good business plan helps to effectively organize
and allocate companies resources.
● Enhances viability: a plan, greatly contributes towards words, concepts into reality
● Aids in decision-making: running a business involves a lot of decision-making:
where to pitch, where to locate, what to sell, what to charge.

24
 ● Fix past mistakes: when businesses create plans, keeping in mind the flaws and
failures of the past, and what worked for them, and what didn’t, it can help them
save time, money, and resources.
● Attracts investors: a business plan gives investors an in-depth idea about the
objectives, structure and validity of a firm.

The types of business plans

Fundamental types of business plans include:

● Start up plan: is documentation of the plants, structure, and objections of a new

business establishment. It describes the products and services that are to be
produced by the firm, the staff management at market analysis of their production.
● Feasibility plan: feasibility plan, evaluates the prospective customers of the
products or services that are to be produced by a company. It also estimates the
possibility of a profit or a loss of a venture. It helps to forecast how well a product
will sell at the market.
● Expansion plan: this kind of plan is primarily framed when a company decides to
expand in terms of production or structure. It lays down the fundamental steps and
guidelines with regards to internal or external growth.
● Operations plan: an operational plan is also called an annual plan. This details the
day-to-day activities, and strategies that the business needs to follow in order to
materialize its targets.
● Strategic plan: this document caters to the internal strategies of the company and
is a support of the foundational grounds of the establishment. It can be accurately
drawn based on a SWOT analysis.

The key elements of a business plan

● Executive summary: an executive summary gives a clear picture of the strategies

and goals of your business right at the outset
● Business description: a thorough business description, removes room for any
ambiguity from your processes. An excellent business description will explain the
size and structure of the firm, as well as its position in the market.

25
 ● Market analysis: a systemic market analysis helps to determine the current
position of a business and analyzes its scope for future expansions.
● Operations and management: much like a statement of purpose. This allows an
enterprise to explain its uniqueness to its readers and customers.
● Financial plan: this is the most important element of a business plan, and is
primarily addressed to investors and sponsors.

How to write a business plan

● draft an executive summary.

● Write a company description.
● Perform a market analysis.
● Outline the management and organization.
● List your services.
● Perform customer segmentation.
● Define a marketing plan.
● Provide the logistics and operations plan.

Guidelines for an effective project planning

● Project identification
● Project, formulation, preparation, and feasibility analysis
● Project design
● Project appraisal (estimates)
● Project selection, negotiation and approval
● Project, activation and organization

Feasibility study should include the requirements of the proposed project with
respect to:

● Quantity
● Quality
● Specifications
● Specific estimate of the total project cost
● Detailed estimate of the production and overhead cost for the proposed plan based
on the unit cost of each item.

26
Basic aspect of a project

● Market study
● Technical study
● Financial considerations
● Economic returns
● Operational feasibility
● Management aspect
● Social aspect
● Environmental considerations
● Choice of the most feasible alternatives

Market study and project study

● One of the main components of a feasibility study is a market demand analysis,

which assesses the current and future demand for your product or service in the
target market.
● Feasibility → Business Plan
○ Market Study → Market Entry → Financial Evaluation
○ Market Study → Market Attractiveness
■ Market sizing
■ Market segmentation
■ Customer analysis
■ Composition landscape
■ Value chain analysis
■ Market ecosystem
■ Regulatory environment
■ Opportunity assessment
○ Market entry → Go-to-market roadmap
■ Entry options
■ Site selection
■ Partner selection
■ 4P’s strategy
■ Distribution plan

27
 ○ Financial evaluation → Economic viability & investment plan
■ Scenario planning
■ Cash from models
■ Break even analysis
■ Project IRR

Key components of a market research feasibility study

● stakeholder in-depth interviews

● Demographic analysis
● Competitive assessment
● Survey

LECTURE 7: BRANDING

Key Components of Branding

● Identity
● Awareness
● Logo
● Strategy
● Trust
● Loyalty
● Voice
● Perception

Definitions of branding

● Branding refers to the deliberate actions you take to influence people's perception
of your product or service – so they will choose your product time and again.
Essentially, it is the way your product or service lives in the hearts and minds of your
customer.
● A brand is the set of expectations, memories, stories, and relationships together for
a consumer to choose one product or service over. Meaning branding is everything
you do to actively influence those decisions.

28
Branding in business

● Branding is a way of identifying your business.

● It is how your customers recognize and experience your business.
● A strong brand is more than just a logo – it is reflected in everything from your
customer, service style, staff uniforms, business cards, and premises, to your
marketing materials and advertising.

Marketing branding

● A brand name identifies a specific company, product or service and differentiates it

from similar brands within a category.

Four steps in building business branding

● Define how you want to be perceived. When your customers have finished using
your product services, how do you want them to describe their experience?
● Organize your business based on this promise.
● Communicate your promise.
● Be consistent.

Principles of branding

The 4 key principles of branding:

● Brand identity: the first step in creating that all important connection between
customer and brand is being recognized
● Brand meaning: manager knows and understands the brand identity, but what
message does she want consumers to take away?
● Brand response
● Brand relationship

Difference between brand and company

● Company refers to the organization, that markets or produces products or services;

● Brand refers to the image and “personality “accompany applies to its products.
● In reality, the two can overlap.

29
How do you brand products?

Building a new brand, essentially boils down to seven steps::

● Research your audience and your competitors

● Pick your focus and personality
● Choose your business name
● Write your slogan
● Choose the look of your brand (colors and font)
● Design your brand logo
● Apply your branding across your business.

Branding strategy

Success factors of any good brand strategy

● Target audience knowledge

● Strong, unique value proposition
● Passion is observable
● Out of the box thinking
● Consistency
● The branch objective comes first
● Exceptional brand slogans (or tag lines)
● The brand always provides value

How do you manage a brand?

● Set rules. Outline the parameters of how the branch should be represented.
● Bring employees on board
● Include third parties
● Define workflows
● Centralize assets
● Facilitate regional marketing
● Promote collaboration
● Bring brand and customer experience closer together

30
Types of brands

● Personal brand: personal brands are those individual brands people build around
them
● Product brand in order to sell goods and commodities, businesses have to work on
their product brands
● Service brand
● Corporate brand
● Investor brand
● Nonprofit brands or NGO brands
● Public brand
● Activist brand

Brand Personality:

● Brand personality is a free work that helps a company or organization shape the
way people feel about its product, service or mission. Accompanies, brand,
personality, elicits and emotional response in a specific, consumer segment, with
the intention of inciting positive actions that benefit the firm.

Brand values

● Business brand values are the core set of guiding principles that shape every aspect
of the business. They are the belief that you stand for. Brand values determine your
brands, identity and personality; these principles guide actions, behaviors, and
decision-making processes.

Brand awareness

● Refer specifically to the ways in which your business is perceived, both in market
position, and then consumers minds
● ideally, you want customers to have a positive impression of your brand with the
service or product that you offer

31
 ● Strong brand awareness is one of the main motivators to encourage your target
audience to select your brand explicitly, even if cheaper or alternative options are
available

Establish brand recognition

● Component of brand awareness, brand, recognition applies more more pointedly to

the way in which consumers remember your product or service also known as
brand recall
● this can be prompted by visual branding assets, like brand colors, a logo, or a catchy
slogan
● For example, imagine you are on the road trip and on the highway in the distance,
you see Golden arches without even thinking about it you already identified
McDonald’s

Build brand trust

● It is important for both the impression your business gives to potential customers
and within your industry
● over 60% of online adults want the companies they buy from to be transparent
about their business practices
● A company with a strong brand not only presents itself as more professional and
polished, but also evokes trust through transparency and authenticity.
● Beyond this, outlining your brand values upfront and keeping your brand promise is
what encourages prospective and current customers to believe in, and support your
brand.

Why does construction claim occur?

● Clients, contractors, and subcontractors try to reach their own goals and
expectations in order to increase their benefits. Conflicts may arise as a result of this
diversified goals and expectations of parties.
● They can be originated by several other reasons such as inadequate project
planning, changes in scope, change orders, errors, and omissions.

Give your business an identity

32
 ● Just as each person has their own unique identity, so does your brand.
● Imagine you’re setting up two friends on a blind date, and you need to describe each
person to the other. How might you identify or characterize them? Try to think of
your brand as a person rather than a commodity or an object.
● Known formally as brand anthropomorphism, this idea challenges you to visualize
your brand like a human to better define how the brand acts, speaks, dresses,
communicates or impacts the people around them.

Situations causing high-cost conflicts

Owner

● Inadequate and ambiguous scope definition in the bid documents

● Inadequate time provided for bid preparation
● Competitive bidding
● Major changes in the plans and specifications during construction
● Unrealistic schedules and underestimated costs
● Owner-furnished materials
● Failure to give adequate and timely access to the work site
● Delayed approval of submissions shop drawings or materials

Logo

● Oftentimes, the ideas of logo and branding are used in tandem, or thought of
synonymously when in fact they are two different entities. A logo, arguably one of
the most important branding assets, is still just a piece of the bigger branding
puzzle. Your logo serves as a symbol, a visual representation of your company that
should be easily recognizable and memorable. Everything fro the color palette to the
typography you use when you create your own logo speaks a visual language and
plays a vital role in branding.

33
Lecture 8: FINANCIAL ASPECT

Financial Aspect

● Deals with the commercial analysis occurring to the project such as the estimated
profit of the project. It involves the the projection of expected revenues which
generates income and also its expected expenditures determined by:
a. Projected cash flows
b. Profit and loss statement
c. Balance sheet
● Financial Aspect also includes considerations for different kinds of cost estimate
such as:
a. Estimated capital cost
b. Working capital requirement
c. Production cost

Financial Budgeting

● The process of planning company expenses and revenues for a time period. Budget
set forth the plans of management in financial terms.
● The process of calculating how much money you will earn during a particular period
of time, and planning how much you will spend, save, and borrow.
● It is vital if you want to pay your mortgage off early.
● A budget helps create financial stability. By tracking expenses and following a plan,
a budget makes it easier to pay bills on time, build an emergency fund, and save
major expenses such as a car or home. Overall, a budget puts a person on stronger
financial footing for both the day-to-day and the long term.
● Budget- an approved plan to spend a certain amount of money in a given fiscal
year or project period. The budget sets the spendable balance on centrally managed
and sponsored funds.

Economic Return

● The objective of this study is to ascertain the desirability of the project in terms of its
net contribution to the economic and social welfare of the people.

34
1.Economic Feasibility Evaluation

Can be done by following these steps:

1. Identification of a set development goals with which project studies are assessed.
2. Identify the cost and benefits as to:
a. Investment expenditures
b. Technological expenditures

3. Comparison of costs

4. Selecting the most beneficial alternative

5. Qualitative factors

2. Benefit Cost Ratio

● It is the quotient of the benefits expected from the project to the cost incurred. To
be feasible, a project must show a Benefit Cost exceeding 1.

BCR= Annual benefits/ Annual capital cost + annual maintenance expenses

Benefits occurring to the proposed projects are quantified and the different costs are
evaluated and the quotient of the benefits over the estimated costs to be incurred is the
benefit cost ratio, and the criteria for a viable Benefit Cost (BC) Ratio is:

If BC>1 go; If BC<1. no go or reject

If BC=1, go but delay firs until such time when benefits are already greater than the
cost by more than one

3. Internal Rate of Return (IRR)

● Establishes the discount rate at which the present worth of expected benefits equal
to the present worth of estimated cost.
● To be feasible, the computed IRR must be greeted than the opportunity cost of
capital prevailing in the country\

4. Selecting the most beneficial alternative that is identifying between two or more
alternatives.

5. Qualitative Factors

35
Other factors may be characterized in terms of economic situation in relation to the
following questions:

a. Does it promote employment?

b. Does it promote national security?
c. Does it promote regional growth?

Operational Feasibility

● The project must be acceptable to the leaders of locality and to the people whom
the project is intended for. Organization and management system must be well
organized to effectively carry out the planned undertaking.

Cost Estimation

Why do we estimate cost?

● A forecast of construction cost prepared on the basis of a detailed analysis of

materials and labor for all items of work.

Cost Profit Volume Analysis

● Cost Volume Graph

● Cost Volume Profit Graph
● Contribution or marginal Income
● Break Even Volume
● Margin of Safety
● How about Multiple Products?

36
CPV MODELS & BREAK EVEN POINT ANALYSIS

● Cost Volume Graph

●
● Cost Volume Profit Graph

● Break Even Analysis

It is an aid to management in policy making because it highlights the effect on

- Income

37
 - Volume of sales
- Variable Cost
- Fixed Cost

An understanding of the interaction of these factors assists management in:

- Budgeting
- Income planning
- Evaluating the effects of alternative course of …..

There are two approaches:

1. Contribution Margin Approach

2. Equation Approach

Limitations in CPV Analysis

1. Valid within relevant range and time

2. Classified as fixed or variable
3. Variable cost changes proportionately with volume within relevant range.
4. Fixed cost are constant within relevant range
5. Selling price is constant; sales revenue changes pro….
6. Changes in revenue and costs are brought….
7. Productive efficiency is constant
8. Inventories do not change significantly so that production volume is assumed equal
to sales volume.

COST ESTIMATION: CONSTRUCTION PROJECT ESTIMATE

I. Item no.
II. Description
III. Quantity
IV. Unit
V. Material Cost
VI. Labor Cost
VII. Tools and Equipment Cost

38
 ● Direct Cost

Total Cost of materials + Labor + Equipment

● Indirect Cost

Sum of Total Costs of types of incentives + Bonds + Building permits

Computation of Indirect Cost

1. Overhead and supervision - to be completed on the estimated manpower

requirement.

Bond Premiums

● BID BONDS - based on surety bond

● CONTRACTORS ALL RISK - Bid amount X.003= Amount of Premium
● GUARANTEE BOND- 20% of Bid Amount
● PERFORMANCE BOND - 20% of Bid Amount

Contingencies

● From 3% to 5% (Depends on the accuracy of estimate)

39
Building Permits

● Based on the national building code and its implementing rules and regulations
(PD-1096)

Profit

● Rangers from 5%-10% (Depends on the magnitude of the project)

Contractor tax/ Expanded Tax

● 4% of total Bid price

● 15% of total bid price

40
41
SUMMARY

1. Direct Cost
2. Contingencies (8%)
3. SUP. & O.H
4. Taxes
5. Indirect Cost
6. Total Cost
7. Profit (8% of T.C.)
8. Total Price

Management Aspect

● Primarily deals with planning, organizing, staffing, directing and control of the
project.

Social Aspect

42
 ● To be apple to know how and what will be the effect of the completed project in
the society , here are some questions to be considered:
1. Will it bring social upliftment in the area?
2. Will it solve the unemployment problem?
3. Will it bring social development to the people for whom the project is
intended?

Environmental Considerations

● The effect of the project with respect to the air, aland and water resources should
be considered seriously.

After gathering all data and information of the project studies, careful assessment is made
on the several projects that are recommended for the study, and the most feasible projects
are selected for implementation.

43