Designing and Planning are two factors that exist before a project comes into operation. Since the two processes are subject to the object we design or plan, it is clear that the specific guidelines may vary in reality. For example, people who intend to build a bridge might have different tools and requirement then ones who intend to build a theatre. Hence, in construction management, the requirement for tendering a project is different from others. There are many particular products in construction management such as roads, offices, apartments, hotels, factories, and houses.
Meanwhile, the activities in the industry involve building a completely new structure or merely modifications of existing ones. Concerning the construction business, this paper will discuss about the application of a concept to the start-up of a construction and/or real estate development company. This paper acts as a preliminary proposal for starting new construction company, named Algurashi Company. Segment(s) of construction industry The development of economy has increased the demands for many kinds of buildings to fulfill retail and corporate customers.
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However, in general, there are three major segments in construction business; they are general contractors or building contractors that build various kinds of building such as industrial, residential/homes, and commercial buildings (U. S. Department of Labor: Bureau of Labor Statistics, 2005). Second type of contractors is civil engineering contractors. They duty involves the development and build of bridges, roads, sewers, and highways, to name a few. The Third type is special trade contractors.
This contractor conducts activities that occurs during the construction activities such as electrical set up and installation, plumbing, painting etcetera (U. S. Department of Labor: Bureau of Labor Statistics, 2005). Concerning type of contractors, Algurashi Company is a construction company that acts as a general contractor especially serving the residential/homes buildings. The reason of this choice is because the number of residential building grows at faster rate than commercial buildings and customers may change or perform home renovation several times to fulfill their needs. Phases of the development process
The most interesting part in conducting residential construction industry is the products are heavily customized and thus it will give Algurashi Company many experience of dealing with different kind of customers and home designs. Therefore, Algurashi Company will be a general contractor that both design and build residential buildings. However, in the first step, Algurashi Company will focus on building residential building and works with several home designers (architects). At the next stage, the company may obtain some qualified architects to join the company to provide or more complete services to customers.
Since greater revenue comes from providing services to customers/home owners, at later stage, when Algurashi Company has developed housing that composes of teens or hundreds houses or apartments, the company may become the property management as well that provides the company with monthly revenue. However, during the development process, Algurashi Company must carefully take their steps in developing their business especially concerning the financing scheme to fund the company’s operation. Another challenging step for start-ups is to gather a sum of money to fund their operational cost as well as the capital expenditure.
If entrepreneurs develop start-ups with valuable experience in conducting business in other firm, it is just the matter of creating a good business proposal to attract investors. There are various source of funding available for start-ups such as personal saving, family members, banks’ loan, and venture capitalists. Personal saving is the least risky way since it does not provide any interest. While venture capitalist is a professional investors who may be in charge of a large pool of capital gathered from a range of sources (Isidro, 2004).
Since construction business requires a huge amount of money, Algurashi Company would be better to set up joint ventures with other company. By definition, joint venture is a contractual agreement between two or more companies to form a new company aims at executing a particular business undertaking. In this business model, all signed parties commit to share in the profits and losses of the company (WebFinance, 2005). There are at least three benefits of forming a joint venture as a way to expanding business and grab new opportunities as following:
Providing the new company (joint venture) with opportunity to grab new capacity and expertise ? Allowing the new company to explore business opportunities in new geographic market or obtain new technological knowledge ? Offering the new company with creative ways of doing business out of core competence (Kotelnikov, 2001) Organization chart/duties Following figure is the organization structure for the Algurashi Company. This proposed organization takes into account strengths and benefits of possible joint venture in the future in order to perform well in the new company.
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