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A Business & Marketing Planning Solution Center

Sample Business Plan
1 Executive Summary
1.1 Company Mission

XYZ Works, Inc., designs, develops and implements Web based applications for the construction industry that help general contractors and owners manage risk, decrease costs, and reduce project cycle time. XYZ’s Business Partner NetworkTM (BPN) simplifies and expedites bid package management, project management, procurement, and communication between teams. The BPNTM interfaces mobile and multi-media technologies with database and transactional systems to provide an interactive communication and business process workflow platform for better management of the full lifecycle of any building project - from design and planning through construction and closeout. The construction industry is a natural fit for such externally hosted Web enabled applications. Various industry publications have covered the concept of such Web sites i. Unfortunately, these sites require a level of technical expertise to set up and manage that many construction companies do not have or are unwilling to invest in. XYZ is strategically positioned to provide an alternative to managing one’s own information technology infrastructure to provide such services. XYZ's networked solutions require little or no investment in the IT infrastructure from the clients, reduce cycle time, save cost of procurement, reduce cost of changes & extras and eliminate inefficiencies in the construction value-chain. These solutions result in significant savings, 10-15% of the total cost, to the owners and other organizations involved in a construction project. XYZ’s solutions bring the convenience, ease of use, speed, and “anytime-anywhere-access” of the Web and wireless devices to the bricks-and-mortar world of designing, engineering and building large construction projects. At the moment XYZ is collaborating with various user firms to develop and implement the components of the system. This includes the construction of an office complex for a major manufacturing firm in Southeast Michigan, a general contractor and an engineering firm. 1.2 Market Trends

Large construction projects involve managing geographically dispersed teams. The challenges and problems facing the firms managing these projects include communications between various teams, coordinating activities of all entities, and keeping up with paper documents whether they are for routine request for information (RFI) or changes in the specifications and design. Increasingly, the industry players are exploring the applicability of technology for document management, communication and applications sharingii. During the last few years, the use of Internet for managing project documentation and improving collaboration has started to take hold in the industry. According to New York Times, many construction executives believe that this medium offers a ready solution to their thorniest problem – how to coordinate the efforts of hundreds of separate teams across the life span of a project as the
Sample Business Plan 1 July 29, 2013

A Business & Marketing Planning Solution Center

original plan evolves. Just as CAD has come to dominate the architectural and engineering design process, and the expenditure for it is considered as part of the cost of doing business, so will Web based services dominate the project management, document management, and communication between construction teamsiii. 1.2.1 Building & Construction Industry

The building and construction industry is the largest in the United States: ♦ Over the last five years, it has had 6% average annual growth and the value of new construction for 1999 is well over $700 billion Industrial Buildings 26,643 Hotels & Motels 15,581 Offices 47,239 Other Commercial 135,897 Residential 321,668 Public 158,104

♦ The purchasing cost of materials, components and supplies is 26% of the total value of new construction, or $216 billion for 1999 ♦ In a given quarter there are approximately 17,000 on-going projects, in various phases, of value between $5 millions and $4 billions, including 4,000 new projects starts ♦ The capital equipment acquisition cost is 1.5% of total business, or $12 billion for 1999 ♦ The eBusiness for the industry is estimated to grow in five years from $6.3 billion to $141 billion or 10% of the total construction spendingiv The value-chain of the industry has numerous inefficiencies:  Up to 15% of the projects are typically over budget and delayed  Expenses related to communication constitute up to one-third of a project’s cost, directly or indirectly, including the opportunity costs related to delays, and rearranged activities  According to informal studies, the average design and engineering firm that does over $100 million annually spends 5% of its gross revenues on collaboration activity, including plotting and reproducing documents, courier services, travel, and other communication expenses v  The purchase orders are executed on paper and the requests for changes take weeks to go through the approval processes and require the contractors, engineers & architects to add their approval on the same sheet of paper  Many times, due to paper-based system, the sub-contractors bid based upon in-sufficient information, and if a discrepancy is not resolved at the bidding time then it costs greatly later in terms of changes and extras, which are usually priced at a much higher mark-up 1.3 Target Market Segments

XYZ’s product offerings are designed for the complete life-cycle activities of a construction project. The company is initially targeting the companies that are involved in the construction of large commercial structures. These structures include industrial units, offices, hotels & motels, religious buildings, educational complexes, hospital & institutional and residential complexes. This target group consists of the owners of the property, general contractors and construction management firms. These targets provide opportunities for repeat businesses, long-term growth and financial stability. Designing, planning and constructing large buildings pose a series of challenges to these firms. XYZ’s solutions effectively addresses these challenges, which include:  Coordinating activities of multiple contractors in multiple locations
Sample Business Plan 2 July 29, 2013

A Business & Marketing Planning Solution Center

Sharing information with geographically dispersed teams  Managing large documents & drawings and keeping up with changing specifications & requirements  Collaborating and communication with on-site and off-site team members  Maintaining strict control of policies & procedures

1.4 1.4.1

The Products

Business Partner Networktm: an eBusiness Environment

XYZ Works' Business Partner Networktm (BPN) solution enables construction industry professionals to collaborate, communicate and conduct business over the Web. It simplifies and expedites bid package management, project management, procurement functions, and communication between teams. The BPNTM consists of:  Project War Roomtm: The Virtual Workspace XYZ’s Project War Roomtm (PWR) is a Business-Process workflow management system. It enables supervisors to share work schedules, site engineers to file field reports, architects to amend blueprints and executives to check the status of the whole project online. Through this the teams can collaborate, share applications, exchange documents, communicate and conduct virtual conferences. The key features and benefits of PWRTM are: • Change Order and Request For Information (RFI) Management • Project management, reporting, and monitoring • Communication and collaboration • Anytime, anywhere Access  Bid Management Systemtm XYZ’s Bid Management Systemtm (BMS) is an interactive and intuitive multi-media communication platform for bid package preparation, response solicitation and addendum management. It is a Web driven database and document management system that allows users to create, maintain, transmit and monitor specification documents and drawings online. Using the BMSTM, the architects, engineers and contractors can: • Prepare bid packages, addendum and proposals electronically • Distribute documents electronically • Access information and Control the bidding process 1.4.2 Benefits to Clients

The BPNtm offered by XYZ brings significant economic benefits to the clients. The tangible and intangible benefits of BPNtm can save 10%-15% of the total project cost. It will cost 0.5% to 0.75% of the total cost of a mid-sized project. The payment would be spread over the life of the project. The expected ROI to the clients is over 600%.  Reduced cost − Communication costs lowered by 20-60% − Lower printing and distribution cost − Reduced travel and lost opportunity cost − Requisition processing costs cut by 70%
Sample Business Plan 3

 Potential to reduce cycle time by 10-15% − Timely and accurate notification of bid addendum eliminates delay − RFI turnaround time cut by 60-80% − 3-5 days reduction in submittals
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2% of the total construction projects by the end of first year and 3% by the end of fifth year. market-exchanges and integrated service providers. These include project Webs.5  Lower investment in IT infrastructure − Leveraging the investment made by XYZ in IT infrastructure Competition The business-to-business eCommerce industry is very competitive.434 EBIT (3.957 Operating Margin (200%) 32% 51% 57% 58% At this time we are seeking to raise $4 million for business and product development.6 Pricing & Financials The pricing structure includes initial setup fee and monthly license fee for a project. • Series ‘A’ .$3. Our pricing structure is expected to give 600% ROI to our clients.059) (393) 21. and a number of business models are in practice that includes business eCommunities.662 203. online bulletin boards. can absorb many eCommerce firms. Our return on sales is estimated to be 37% for the year five.Fourth month 2% Development Salary 27% Operations Salary Operations Mktg & Promotion 20% 14% 11% SG&A Salary Cash • 26% Sample Business Plan 4 July 29. mobile & multi media communication.$300K: For recruitment. The potential market is also very large and geographically dispersed.452 381.066 13.683 63.600 272.$250K: Milestone . Few start up companies are targeting the online construction and building industry.$750K − First Month . therefore. 1. and document exchange platform.550 Gross Profit (Loss) 135 8.122 Y1 Y2 Y3 Y4 Y5 ROS (287%) (3%) 25% 31% 34% Gross Margin 13% 65% 74% 75% 76% Year 5 499. communication platforms.250K . 2013 Where the Money Is Going First Five Quarters . XYZ expects to get 0. marketing and promotion − Second Month .888 170.273 86. and networks.279 85. development.$200K − Third Month . XYZ feels that it has a competitive advantage because no other offering provides such a comprehensive solution that integrates the interactive bid management system with the transaction system.A Business & Marketing Planning Solution Center − − Procurement cost cut by as much as 15% Lower litigation expenses − − Processing time reduced by 50%-70% Prompt and precise delivery of documents  Improved Productivity − Freeing of critical resources − Administrative work-time cut by up to 30% − Work-site visits reduced by 10-50% 1.Beta site launch Series ‘B’ . A summary earnings projection follows: ($000) Year 1 Year 2 Year 3 Year 4 Revenue 1.

7 Team Sample Business Plan 5 July 29. 2013 .A Business & Marketing Planning Solution Center 1.

XYZ will reach its mission by:  Achieving Profitability Attain positive cash flow and offer services with values that command premium price  Providing Satisfying Customer Experience Deliver a high quality and economically beneficial customer experience that is rich in content  Ensuring Quality and Performance Meet or exceed customer quality expectations and industry standards  Maintaining Dynamic Work Environment Provide challenging and satisfying opportunities for personal and professional growth  Staying Ahead of Competition Establish competitive edge through hard-to-clone applications and first-to-market Sample Business Plan 6 July 29.A Business & Marketing Planning Solution Center 2 Mission and Vision Our mission is to create competitive advantages and greater economic value for our stakeholders and achieve strategic initiatives through technology. employee involvement and a culture of continuous improvement. 2013 .

The value of business-to-business transactions conducted on the Internet is 10 to 20 times greater than the value of business-to-consumer transactions.1.1 Business-to-Business eCommerce Business-to-Business eCommerce. though still immature. 34% of users take less than 5 minutes to find information and 30% take more than 10 minutes 70% of users give up if they do not find what they are looking for in 10 minutes viii Professionals find Web Communities usefulix 3.A Business & Marketing Planning Solution Center 3 The Market Opportunity 3.1. companies realize ROI of over 300% resulting in 28% increase in profits x 63% of the companies that have implemented eCommerce applications have saved cost.4 − Over 56% of professionals get more connected with people having similar interests after getting online as compared to not getting online The ROI for business-to-business eCommerce application is high 3.1. Finding information on the Web is not easy − − − 3.3 million companies for eCommerce Professionals find doing business on Web beneficial − More professionals are going online for business activities to save time. is the fastest growing segment of the Internet.1 Market Trends 3.1. 31% increased revenue and 31% reduced cycle time xi Sample Business Plan 7 July trillionvi in 2003 A number of companies are going online to do business and by 2002 and Internet is expected to connect 1.1. compare prices and to get information Over 60% of professionals make purchases online at least once a month after getting information from the Web and 20% make more than five purchases a monthvii. 3. 2013 .5 − − On an average.2 − Save Time Convenience Access to Customer Opinions Availability of Vendor Information Personalized Information No Pressure From Sales Person Reviews Other 80% 85% 30% 87% 15% 59% 49% 3% Reasons For Professional Shopping (Source: Georgia Institute of Technology) 3.1 Business-to-Business eCommerce has significant growth − The segment is expected to grow from $28 billion in 1998 to $1.

3.629 Hospital & Institutional 13.000 to $250.701 7.359 12. $3.000 Subtotal Range $0 to $155.2 trillion worldwidexiii.094 9. 45% by midsize firms and only 3% by small firms Merchant Server (with database) $25.914 Total Private Residential 294.822 321.911 183.4 trillion. residential buildings 47% and the highways and other public non building structures account for 13% of the industry 350 750 300 700 250 650 200 600 150 550 100 1994 1995 1996 1997 Residential 1998 Total 1999 500 In $Million 1998 Non-Residential Buildings Industrial 32. accounting for about 10% of a country's GNP.1 US Construction Industry • Segments. and the number of people employed.444 $705.136 Total Public Non-Buildings 79.326 Total Public Utilities 37.783 Religious 6.$2.1.000 Business logic development tools $25.663 Miscellaneous 9.697 5 Yr.000 Subtotal $95.729 Educational 9.2 billion on eCommerce softwarexii .1.406 87.539 70.000 System management & database middle-ware $25.000 Total Software Cost: $95.2.668 41. Change 3% 17% 35% 9% 15% 19% 3% 12% 11% 6% 2% 8% 3% 6% Non Residential Total Construction $665.294 9.Source: US Census Bureau Sample Business Plan 8 July 29.A Business & Marketing Planning Solution Center 3.132 Value of New Construction Put .52% of this expenditure will be by large firms.5 Mil Midrange eCommerce site .395 Total Non-Residential 181. size and growth − The value of business conducted is 4% of GNP and 8% of GDP xiv − The industry has had 6% average annual growth − The value of new construction for 1999 is over $700 billion − The size of the commercial real estate market is estimated at $2.581 55.000 Content development tools $20.270 Office 41.643 47. businesses will spend $3.267 Total Public Buildings 66.(Source: Forrester Research) 3.6 − − Developing eCommerce Sites is Expensive Building eCommerce sites is expensive By 2000.236 1999 26.904 Other Commercial 53. 2013 .000 Configurator $100. which is roughly 50 times the contract value of annual new commercial construction xv − Non-residential buildings accounts for 24% of the industry.541 Hotels & Motels 14.000 Total implementation cost ranges from three to 10 times of Software cost or $300K .000 High-End Optional Software Parametric search $20.2 The Building & Construction Industry The building and Construction industry is the largest industry in the world both in terms of value of business conducted.239 15.000 Data mining and analysis $35.

8 8.380 45. 1997 1st Quarter .154 • Industry Purchases − The cost of materials.5% of total value of construction xvii 1999 estimated capital equipment purchases is $12 billion − General contractors make 95% of the purchasing decisions xviii − The building supplies market is highly fragmented. components.765 48. Sample Business Plan Projects Between $5M & $4Bn in Miami Source: F. 1999) 1992 Census -$ Million USA Miami Buildings Offices Value of Construction 528.762 Office Buildings All Buildings Project Phase # Of Projects Value # Of Projects Value Start 524 5.520 258.926 East North Central 106. mostly as sub-contractors. Dodge. supplies & fuel constitutes 26% of total business xvi . 10 Gilcrest-Jewett 9 Builders Supply 9 Total 417 Top 20 Building Material Suppliers $ Million 1998 White Aluminum Products 21 Vans Lumber & Custom Builders 14 Judson Lumber 13 Lumber One 14 Gypsum Supply 7 Manning Building Supplies 17 Thompson Enterprises 6 Ply-Marts 30 Dillman & Upton 4 Gilcrest-Jewett 9 Goldston's Building Supply 13 Clintonville Lumber 4 Graber Post Buildings 6 Walker Brothers 4 A.085 68.G.505 Non Residential Buildings Residential Buildings Public 39.096 30.1 (Source: National Home Center News.1999 estimate for subcontracted work is $225 billion − There are over 650.106 7. W. components.1999 estimated cost of materials. May 24.585 30.801 9 Estimate for USA is based upon Miami' share and estimates for all buildings are based upon the share of 2013 office buildings July 29.448 27.054 390.7 47.000 establishments.A Business & Marketing Planning Solution Center • Midwest region has significant construction activities (In Millions $) Total Total Midwest 149.394 42. supplies & fuel is $216 billion − The capital equipment acquisition cost constitutes 1. doing business in the construction industryxx • Large Projects − In a given quarter there are approximately 17.0 72.000 projects of value between $5 million and $4 billion in various phases Office Project s Pre-Planning Planning Final Planning Bidding Start Total % 14% 46% 11% 4% 25% # 4 13 3 1 7 28 Value 42.814 46.436 4.5 242.966 17. top 20 stores have sales of $400 million and top 20 suppliers have sales of $200 million Top 20 Building Material Stores $ Million 1998 Carolina Holdings 58 Wickes Lumber 46 BMHC 44 BSL Holdings 36 Ply-Marts 30 White Aluminum Products 21 Manning Building Supplies 17 84 Lumber 17 Chase-Pitkin Home & Garden 16 Sutherland Lumber 16 Lumber One 14 Vans Lumber & Custom Builders 14 Standard Companies 13 Judson Lumber 13 Goldston's Building Supply 13 Eagle Hardware & Garden 11 Tualatin Valley Builders Supply 11 10 Lanoga Corp. Mauro 7 Standard Companies 13 Stenerson Brothers Lumber 3 Builders Supply 9 Humphrey's Building Supplies 3 Harbin Lumber 2 Total 199 Suppliers & Stores: Installed Sales • Subcontracting − The cost of work sub-contracted out to other construction contractors constitutes 27% of total value of constructionxix .6 496.428 Total 2.

Given the diversity of the participants.2. using Internet. Not only are data sets large. but also they typically involve many types of somewhat unstructured. architectural firms use project-specific Web sites and about a third are using Intranetsxxiv • The use of turnkey software solutions are declining as they are expensive and difficult to maintain . project managers . but there are reductions in crew sizes. the industry used computers for little more than financial accounting and project scheduling.4 billion in 1998 and $6. software and maintenance requirements between participants. interrelated data. For example. approximately 45% of these firms use IT as an integral part of corporate strategy xxiii • About 20% of the largest U. fewer project starts. any combination of the following participants may require access to query or modify the project data set for various purposes: .500 respectively • The total construction employment varies approximately by 25% from summer to winter and the work does not stop during the winter months.1 Trends • The eCommerce revenue for the industry is estimated to grow from $0.2 Technological Analysis The building and construction industry has not gone through a major technological change in over two decades. it is not surprising to find a wide variety of software systems and users with varied degrees of computer expertise on the same project. engineers.2.The owner/operator of the subject facility . and the magnitude of the data.the city of Denver spent over $1 million to install a system to manage the documents for its airport and installing and managing this system was a full time job for several individualsxxv • The Application Service Provider business model. Until recently.Suppliers.Architects.000 projects of value between $5M & $4B are started each quarter The estimated number of such projects in the Midwest and East North Central are 3.Contractors. at any time in a project cycle. consultants . managing documents for construction projects is very challenging. The highly complex world of construction has largely been ignored or under served by high-tech software application developers who have not recognized the distinct needs. of this business.S. estimators. it has been hampered in adopting and using computer technology for day-to-day work amongst the distinct companies on a project. Though the industry has benefited from the development of CAD systems. layoffs.Government regulatory agencies 3. 2013 Sample Business Plan . The data is created and used by many types of users and software applications. for managing project documentation and improving collaboration has started to take hold in the industry 10 July 29.2. designers. and weather delays • Approximately 80% of the construction is privately financed and 20% by public agencies • A typical project spends about 8% of the total project cost on design xxi 3. product manufacturers .500 and 2. or the vast potential. No common application can be shared due to complexities in the hardware.3 billion in 1999 to $141 billion or 10% of the total construction spendingxxii by 2004 • More architecture and design firms use computers than the builders.A Business & Marketing Planning Solution Center − − Approximately 4. From an information technology perspective.

change orders . i. and even bad weather. permits. including engineering. paper work.M anual of operations P intensive.Submittals.” Sample Business Plan 11 July 29.Develop bid packages has traditionally been process-bound and paper. Each large population center generally has a number of smaller. including reputation. how to coordinate the activities of geographically dispersed teams The concept of project web sites is being embraced by the industry e-Commerce sites require a level of technical expertise to set up and manage that many construction companies do not have or are unwilling to invest in Industry Dynamics and Value-Chain The United States building construction industry is intensely competitive and highly fragmented with no participant having greater than 5% market share. building code compliance.Construction Oversight . The practices. architectural and contracting firms. instance.Status Reports . union and . and are only involved in small roles in the project (although these smaller companies tend to work on many projects at the same time). design legal contracts to purchase orders.Clarifications. Enormous numbers of documents come into play. 2013 .3 Architects and managers are realizing that they can take advantages of historical data and documents for new projects if they can access them Many construction executives believexxvi that Internet offers a ready solution to their thorniest problem.Planning.Package Distribution r issues that are not found in other industries. The building industry . locally based building contractors accustomed to undertaking all but the largest and most complicated projects. The matrix of participants. particularly when plotted over its complete life cycle. Competition in the industry takes a number of forms. for o Pre bid meeting. from technical drawings and . quality of service and degree of risk assumption.2. and projects are often slowed by workflow . fee levels. engineering. notwithstanding their lack of a local presence.Payments to subs Project Close out c u r e m e n t Drawings Specifications Clarifications Pre-Bid M eeting Addendum Bid Award Owner Architect General Contractor Major Subcontractor RFI Qualifications Substitution Drawings Proposal Pre-Bid M eeting Subcontractor Documents & Information Flow prevailing wage concerns.e. or even years. working closely together in an intense environment over a period of months.A Business & Marketing Planning Solution Center • • • • 3. information and transactions for a project is quite large. requests for information (RFI) and schedules. planning . contractors who have no local presence in areas where a construction project is going on can successfully compete for and obtain projects there.Dispute resolution . Many of these participants are small to medium companies. procedures and processes used in the industry have evolved over the past two decades from “pure paper” to today’s “computer automated paper. RFIs. Also. Substitions . Construction projects typically involve dozens of distinct companies.Pre-construction meeting.

in hospitals.1 Challenges of large projects Designing. The periodicity of these reports varies from weekly. Most projects require changes during construction. A typical project may last 2-3 years and involve 30-50 firms located in different cities. The bidding process to select all the firms for the construction may involve 250 or more firms xxvii. Some of the jobs are awarded based upon competitive bidding and some may be awarded based upon the negotiations. entailing a range of operations management tasks such as purchasing. monthly minutes. packaged and delivered by the professional firms and the sub-contractors. For example. new equipment develops rapidly and must be accommodated during construction. 3. shipping. in the private construction projects. quarterly and half annually xxix.A Business & Marketing Planning Solution Center 3. planning and constructing large buildings pose a series of challenges to the general contractors and the construction management firms responsible for the construction: ♦ Sharing information with geographically dispersed teams ♦ Managing complex and large documents & drawings ♦ Ensuring that the information is always current and easy to find ♦ Keeping up with changing specifications and requirements 3. job minutes etc.1 Bidding for Contracts The industry uses the various methods for contract awards. the owner selects the architect through a non-competitive process. inventory control. though not for the design: − 27 states use Design-Build contracts as project delivery method xxviii − 45 states select architect/engineer services through a qualifications-based process − 48 states award construction contracts that do not include design by competitive bids 3.4 Project Management Managing construction projects is a complex process. Accommodating changes smoothly is one of the biggest factors for the timely completion of projects. Various periodic meetings that a project team conducts include forward-looking report reviews. ♦ Managing project files in order to eliminate duplicates and ensuring that no file gets lost ♦ Managing "as designed" versus "as built" ♦ Coordinating activities of multiple contractors ♦ Collaborating with on-site personnel.2. monthly. scheduling.2. contractors and other team members ♦ Complying with safety & regulatory measures ♦ Communicating last minute changes to all Inefficiencies in the existing Value-Chain Management processes • The bid specifications and drawings are sent through the mail or hand delivered − The specs and drawings are commercially printed. Some times the owners may make the change. fabrication at the job site. operations management meetings. coordinating and supervising the network of subcontractors. owner-architect-contractor meetings etc. are difficult to process and take excess time 12 July 29. Usually. forecasts.3. Public construction projects use more competitive bidding. 2013 • • Sample Business Plan . owner and others purchase copies from them − On an average $33 are spent to mail the packages On an average a project sees 3-4 addendum to its initial bid package and communicating each addendum may take 1-3 weeksxxx The purchase orders are executed on paper. The reports used by a general contractor (GC) or construction manager (CM) include forwardlooking reports about the indicated outcome for the project. operations reports.

2013 . travel and other communication expenses xxxii Many times the sub-contractors bid based upon in-sufficient information due to paper-based communication and. engineers & architects to add their approval on the same sheet of paper Up to 15% of projects are typically over budget and delayed Engineers spend as much as 30% of their time looking for information or in paper work xxxi Communication constitutes up to one-third of a project’s cost in direct and indirect expenses including the lost opportunities due to the delays and rearranged activities According to informal studies.A Business & Marketing Planning Solution Center • • • • • • The requests for changes take weeks to go through the approval processes and require the contractors. including plotting and reproducing documents. which are usually priced at a much higher level xxxiii Sample Business Plan 13 July 29. courier services. if a discrepancy is not resolved at the bidding time then it costs greatly later in terms of changes and extras. the average design and engineering firm that does over $100 million annually spends 5% of its gross revenues on collaboration activity.

It enables the contractors to share work schedules. 4. 4. payrolls. workers. site engineers to file field reports. equipment management. submit. route and track change orders • • RFI Management − Create. insurance. 2013 • • Sample Business Plan . scheduling.A Business & Marketing Planning Solution Center 4 XYZ Works’ Product Offerings 4.1 Project War Roomtm: The Virtual Workspace The Project War Roomtm (PWR) is a data and Business Process Management system that includes a repository of project documents. architects to amend blueprints and executives to check the status of the whole project online. labor relations. retrieve and route RFIs electronically Work Flow − Enforce procedures through automated workflow framework − Electronic log of transactions and communiqués − Transactions routing Project Reporting − Report and monitor project status online − Maintain project debriefing and review documents − Maintain online weekly & monthly status reports and meeting minutes Communication and Collaboration Zone − Automated email and fax notification 14 July 29. The value Chain is a network of organizations that add value to the raw materials and intermediate components through upstream and downstream linkages to produce the final product or service. architects. decrease costs. It may operate within an Extranet or over the World Wide Web. surety bonds. procurement. government bodies.2. insurance companies. The key features and benefits of PWRTM are: • Change Order Management − Create. bidding. coordination & management of these processes. a multi-media communication and collaboration platform and a process workflow framework. engineers. contract negotiation. The value-chain for the construction industry includes planning. field cost control. supervisor training. and reduce project cycle time.1 Overview XYZ Works’ e-Business environment for the construction industry interfaces the mobile & multimedia technologies with the database and transactional systems allowing industry professionals to securely collaborate. communicate and access the information needed to manage the industry valuechain. material control and storage.2 Business Partner Networktm XYZ Works' Business Partner Networktm (BPN) solution is a suite of Web based construction management applications that helps general contractors and owners manage risk. project planning. owners. material suppliers and others parties. accounting. project safety. A construction project team comprises of various combinations of contractors. lending agencies. and many others. communication and collaboration between teams that may be geographically dispersed. submit. The construction of a structure involves a number of separate and diverse activities covering cost estimating.

tasks. 2013 .2 Bid Management Systemtm The Bid Management Systemtm (BMS) is customizable document management system for bid solicitation and management. drawings. Conduct virtual multi-media conferences Share applications etc. tasks. policies and procedures to all promptly and precisely • Access and manage project information − Archive and store documents at close out − Anytime access using the Web from anywhere − Track changes and maintain revision history of all documents • Communicate − Conduct virtual multi-media pre-bid meetings − Automated review. white papers and reviews − Experience book. and other related documents − Track. manuals etc. references and experiences with vendors. industry news. Sample Business Plan 15 July 29. deliverables list Security and Access Control − Role based system access and Multi-tiered security authorizations Mobile Access − Get mobile access to data and transactions Virtual University − Reference lessons learnt. It is an interactive Web driven database system that allows users to create. • Prepare bid packages & proposals electronically − Create bid packages and addendum with specifications and drawings − Submit proposals with specifications. etc. The tangible and intangible benefits of the BPNtm have the potential to save 10-15% of the total project cost.A Business & Marketing Planning Solution Center − − − − • Access to unified messaging . • • • 4. clients − Multi-media training. and monitor bid-packages. evaluate and compare proposals • Distribute documents electronically − Distribute and track bid packages and addendum − Distribute documents. fax. in real time Share schedules.2. deliverables list etc. articles. maintain. pros & cons of doing something.3 Benefits to Clients XYZ Works' solution will bring significant benefits to all participants by reducing the direct and indirect cost associated with the value-chain management functions. Project Detail Maintenance − Maintain project profile and other details − Maintain action items. approval and notification • Control the business process − Control data access by user or document type to eliminate unauthorized changes − Enforce procedures through automated workflow framework 4. action items.

2013 . phone and fax − Virtual conferences reduce travel expenses and lost opportunity cost − Web-based applications could reduce requisition processing costs by 70% per order xxxv − Lower opportunity cost due to early commissioning of structures  Reduction in cycle time − Potential to reduce time by 10-15% (up to 4 weeks for a one year project) − 60-80% reduction in turnaround time for RFI − 3-5 days reduction in submittals turnaround time − Prompt and precise delivery of documents and notifications to the concerned parties − On an average. courier. components and other materials in bulk quantity − Awarding contract through a competitive bidding process results in prices as much as 30% lowerxxxvii than that achieved through a non-competitive process − Web based procurement could reduce procurement cost by as much as 15% xxxviii − Most organizations realize 5% to 10% reduction in prices through increased use of preferred suppliers and improved leverage of contract negotiations  Web based services (ASP delivery model) bring significant economic advantages − Much lower cost for similar solution as XYZ will leverage the investments in technology & infrastructure by providing services to many clients − Scalable and modular multi-platform system ensures customizable solutions for individual project needs − Single point of access for all project related resources. distribution.A Business & Marketing Planning Solution Center  Reduced cost − Communication costs reduction by 30%-60%xxxiv − Electronic media reduces costs of printing. Web-based applications reduce processing time by 50% to 70% xxxvi  Higher competitiveness of the process would reduce procurement cost of large construction equipment. documents and processes  Critical resources will be freed up resulting in higher productivity − Productivity improvement by as much as 75% − Time spent on administrative work reduced by up to 30% − Site visits would be reduced by 10-50% Sample Business Plan 16 July 29.

the cost may be borne by the General Contractor • Other affected contractors will need to estimate the cost of remedy (direct cost) 17 July 29. and one that ends up over time and over budget.A Business & Marketing Planning Solution Center 4. 4.1 Business Partner Networktm In Action Construction Project Entity Interaction Architect Engineer Owner Bid Management System General Contractor Construction M anager Lending Institutes Project War Room Architect Engineer Bid Management System General Contractor Construction Manager M aterial Suppliers Subcontractors Tradecontractors Transaction Systems 4.4. Effective communications is one of the most important requirements in ensuring the timely completion of the project. The example below demonstrates how the Project War Room can save a significant amount of cost overruns.2 Sample Business Plan .2 Project War Roomtm in Action A key element for projects to be profitable is time.1 A Typical Problem in a Construction Project • A sub-contractor discovers a discrepancy in the blueprints that results in some job being done incorrectly.2.4. 2013 4. The ability to recognize a problem and resolve it quickly can make the difference between a successful project. with all the attendant cost and inconvenience. for everyone to inspect the problem • The meeting might require several people from various firms to travel long distance.4.4 4.2. a problem which may require large change order and expensive remedy • The various firms involved in the construction are in different cities • Other components of the job may also be delayed down the line The Typical Approach (non PWRtm) • A meeting would take place on the job site.4.

and then route it Sample Business Plan 18 July 29. after approval it is exported and loaded into other systems 9. A window manufacturer could query the design documents to get a list of window assemblies and their design parameters. 2013 . Integration with ERP system . 1. a contractor could get a product manufacturer to send him the estimation data that the manufacturer obtained from the design documents 4. cutting down on secondary schedule slip • Remedial costs are limited to the direct costs of added expense to the work to be redone • This not only saves two-thirds of the cost but also reduces the likelihood of litigation Other Use Scenariosxxxix 4.2.g.a change order is initiated in PWRtm and is routed through the work flow for approval.4. such as an item being added to a punch list. which may hold up several other aspects of the job The problem may turn into a large cost overrun . and later the information is transferred to BPNtm 5. PDA devices could be used to store information at a construction site.3 Use cases are examples of situations where BPNtm and its components would be employed to perform the construction value-chain management activities.a job that requires $35K in direct fix may cost the GC close to $100K The Project War Roomtm Approach • When the problem is identified. which he could associate to specific catalog items from his product line that meet the relevant design specifications 3. rather it is a general indication of the scope of BPNtm. so there is only the time involved in the online meeting itself • This is a savings of most of travel.3 The remedial work may not begin until a change order is issued. the information will then be exported to other systems 10. An HVAC representative could query the design documents to get a list of air-handling units and their design parameters which he could to associate to catalog items from his product line that satisfy the design specifications 2.) 6. ASTM E283 etc. Kynar Finish. the superintendent takes digital photos. Daily time sheet can be entered through PWRtm at the job site and reviewed on-line. To prepare a bid document. on-site meeting expense and the opportunity cost • The solution is in works within a few hours. RFI). A contractor could extract quantities from an estimating tool and dispatch a procurement request to suppliers over the Web 8. along with a report and a change order request • The system sends an e-mail to the required parties. alerting them to the condition and schedules an online conference when all participants are available • The conference and all communication for resolution is completed online • The change order is agreed upon and issued online the same day The Outcome • Nobody has to travel. goes on-line from the job site and downloads the photos. A general contractor can use the system to create a document (e. This is not a comprehensive list.g. An architect designing an office building could search the Web for the availability of window systems that meet the a set of criteria (e. A mechanical engineer could query the Web to find out about CAD modeling software that integrates with duct sizing tools 7. ANSI z97.A Business & Marketing Planning Solution Center • • 4.4 4.

3 Main Office The personnel in the main office are concerned with the administrative functions of the company.4.A Business & Marketing Planning Solution Center through the workflow to other parties (architects. including accounting. engineers) 4. • Typical day before system − Site visits and phone calls to supervisors to check project progress − Assist supervisors in resolution of problems • Dilemma − Ensuring that the supervisors have sufficient information to do their jobs effectively − May not be able to catch supervisors at available time. owners. He or she oversees the functional areas through department or functional managers. and marketing. 4.4. • Typical Day Before System Sample Business Plan 19 July 29.4.2 Construction Manager A construction manager tends to have more hands on approach to management and field issues. cash flow.4. or for manager to compile the information requested in order to be able to make informed decisions • Dilemma − Must track down multiple entities to gather information on project timelines.4. He or she is concerned about handling multiple projects and priorities and is responsible for monitoring the progress of all development projects and ensuring that the supervisors are maintaining schedules and quality as required. • Typical Day Before System − Phone functional managers to ask for reports on their functional areas − May need to wait for return call.4. allowing for quicker response time to Subcontractor/Supplier issues and Customer Concerns 4.4. purchasing. eliminating unnecessary site visits made to gather information. 2013 . and sales information • Typical Day After System − Access online the project schedules to predict cash flow and settlement pace − Check Project War Roomtm for any issues that should get his attention − Check approved WO/PO list to gauge cash-flow requirements − Check ‘Lot Control’ information and see the number of deposits and purchase agreements at any given time 4. delaying the receipt of information • Typical Day After System − Check schedules online or see if any special issues need his or her attention − Review site photos and correspondence from office.1 Principal or business owner A business owner is concerned with the P/L of business and wants maximum return on investment. customer satisfaction.4 A day in the life of Following sub-sections depict how the routine activities of some of the entities involved in the construction project would be affected by the implementation of BPNtm.

purchase orders. download completed WO/PO for processing − − Sample Business Plan 20 July 29. 2013 . or late payment − Ensure that files are complete and up-to-date and that the field offices have the same information Typical Day After System − Generate Work Orders and Purchase Order and export to Web-site. double-payments.A Business & Marketing Planning Solution Center • • Find information on file and forward to relevant parties Process paper invoices − Maintain files for paperwork including work orders. print settlement statement from complete and accurate information. PAs. often resulting in lost invoices. Change Orders − Assemble “closing packet” from files that may not be complete Dilemma − Paper invoices go through a long cycle of approvals through the field and central office.

hotels & motels. light industrial. engineer-constructors. This segment accounts for 3035% of the new construction.648 7.358 33. 2013 . The suppliers of materials and equipment to the industry are also affected by the dynamics of the construction industry. These production processes are distinguished by their specialized use of human resources and physical capital.650 9. Sample Business Plan 21 July 29. and other land preparation. Production. land drainage.869 4. earthmoving. Web-enabled services provide great opportunities to create strategic and operating advantages in the planning. supervision and procurement areas in the building and construction industry.1. design builders.783 55. document management and transactive systems for the projects that last for a long duration and involve various geographically dispersed firms.002 6. and Supervision. hospital & institutional and residential complexes. reconstruction. test drilling. and maintenance and repairs. landfill.338 6.580 37. XYZ Works’ Business Partner Networktm is ideally suited for the construction of large commercial structures. sale of materials from the demolished structures. social. commercial. governmental. educational complexes.252 18.305 41. They are very useful for communications.013 34.112 10. offices.820 222.904 15. These activities include construction of buildings and other structures. The industry also includes establishments engaged in demolition or wrecking of buildings and other structures. With respect to construction industry. these areas would be Planning. The value chain management processes can be divided in four key areas xl: Planning. turnkey contractors and construction management firms specializing in commercial.809 53. manufacturing and industrial buildings.613 27. joint venture contractors.326 4.551 42.541 47.568 22. These structures include industrial units.458 216. Private capital finances most construction.282 27.654 48. excavating. Procurement. Internet technologies and ASP delivery model is ideal for some of the activities and construction companies. 5.219 15. religious.886 34.484 16.223 9. The industry comprises of establishments engaged in a variety of activities.071 7.1 Types of Construction Different segments within the construction industry have unique production processes.277 16.178 25.062 166. educational. leveling.188 51. and recreational purposes. institutional.777 6.898 14.912 12.545 43.358 202. additions. blasting. institutional Miscellaneous Total 1994 1995 1996 1997 1998 1999 30. installation.A Business & Marketing Planning Solution Center 5 Target Market Segments Construction activities are generally administered or managed at a relatively fixed place of business. motels Other commercial Religious Educational Hospital. 5.709 The non-residential buildings other than housing are constructed for institutional. religious buildings. The types of construction firms that undertake such projects include manufacturing and industrial building general contractors. alterations.412 34.239 4.1 Non-Residential Building Construction Industrial Office Hotels. Construction. clearing of building sites. and Distribution.890 37. but the actual construction work is performed at one or more different project sites.729 7.395 9.480 17.094 25.183 31.549 183.276 33.046 32.911 146.702 3. Procurement.641 16.534 5.608 39. 80% of the educational construction and 25% of hospital and institutional construction is financed through public funds.

steel. Construction is performed by the owner. This segment also includes additions and alterations to mobile homes and on-site assembly of modular and prefabricated houses.1.316 148.326 321. general contractors Sample Business Plan 22 July 29. These firms construct the structures for others or on their own account for sale as speculative or operative builders.874 230.009 159. This segment includes highway & airfield construction. or for rental as apartments. • Single Family Housing The single-family residential housing units include single family detached houses.701 138.012 78. architects. or the builders themselves.A Business & Marketing Planning Solution Center 5. 5. concrete.669 • Multifamily Housing Construction The multi-family residential housing units include high-rise apartments. Less than 2% of construction is financed through public funds. Design of this type of construction is generally done by owners.3 Engineering and Non-Building Construction This is a very broad category that covers structures planned and designed by the engineers and whose design is more concerned with functional aspects rather than 1994 1995 1996 1997 1998 1999 aesthetics and involves field Non-Building 132.2 Residential Construction This segment consists of single-family and multi-family housing. This category of construction is dominated by small building firms and normally accounts for 40-45% of new construction. row houses where each housing unit is separated by a ground-to-roof wall and where no housing units are constructed above or below. Historically. and town house apartments where each unit is not separated by a ground-to-roof wall. builder-vendors. Single Family Multi-Family Improvements Total Residential 1994 1995 1996 1997 1998 1999 153. The units may be constructed for sale as condominiums or cooperatives.670 238. general contractors.324 22.460 265.417 319.457 27. design builders.889 20.124 164.838 145. timbers. garden. residential construction has been characterized by instability of market demand and is strongly influence by government regulation and national monetary policy.132 materials such as earth.883 24. 2013 .955 67.720 70. engineer-constructors. town houses. 5.1. The company is initially targeting the companies that are involved in building of large commercial structures.688 256. Firms that undertake such projects include single-family housing custom builders. or independent contractors.453 212. This target group consists of the owners of the property. Most engineering projects are publicly financed and account for 20-25% of the new construction. turnkey contractors and single-family construction management firms. asphalt.2 Primary Users of the System XYZ’s product offerings are designed for the complete life-cycle activities of a construction project. joint-venture contractors.668 14.081 17.294 142.554 145.567 135.790 77. and piping.535 80.863 294. heavy construction and utility construction.444 189. rock.

including procurement and provision of necessary construction materials and equipment. This target provides opportunities for repeat businesses. these firms specialize to some extent. either in its entirety or for some specialized portion thereof. contract provisions. is the instigating party for whose purposes the structure is designed and built. public or private. coordinated effort. The chief contribution of the general contractor to the construction process is the ability to marshal and allocate the resources of manpower. XYZ’s solutions effectively addresses the challenges of designing and building these projects:  Coordinating activities of multiple contractors in multiple locations  Sharing information with geographically dispersed teams  Managing complex and large documents and drawings  Keeping up with changing specifications and requirements  Communicating with on-site and off site team members  Maintaining strict control of policies & procedures  Ensuring that the information is always current and easy to find  Communicating last minute changes to the team  Managing project files in order to eliminate duplicates and ensure that no files get lost  Complying with complex safety & regulatory measures 5. Most owners relegate by contract the design to professional architect-engineer firms and the field construction-toconstruction contractors. and other matters relating to design and construction process. Public owners must proceed in accordance with applicable statutes and administrative directives pertaining to the advertising for bids. 5. construction contracts.2. Specialization is usual and necessary due to radically different equipment requirements. construction methods.1 General Contractor A general contractor (GC) or the prime contractor is a firm that is in contract with the owner for the construction of the project. Types of owners that present good opportunities are: • Commercial Real Estate Developers • Corporate Owners • Health Care Buyers • Public Buyers (Buildings) • Hotels and Residential Sample Business Plan 23 July 29. and materials to the project in order to achieve completion at maximum efficiency of time and cost. and financial arrangements involved in different construction categories. 2013 . trade and supervisory skills.2. bidding procedures.A Business & Marketing Planning Solution Center and construction management firms. longterm growth and financial stability. The essential function of the general contractor is close management control of construction and ordinarily. In general. The general contractor is a party that brings together all of the diverse elements and inputs of the construction process into a single. limiting their efforts to a relatively narrow range of construction types. equipment. this contractor is in complete and sole charge of the field operations.2 Owners of Propertiesxli The owner. contract administration. Many industrial and public owners have established their own construction organizations that work actively and closely with the design and construction of their projects. e-marketplace for the building industry. Its solution. The barriers to entry are low hence the intensity of competition is expected to increase in the future resulting in price reductions and reduced gross margins. Inc. Cephren. drive down costs.1 Bidcom. per month license Buzzsaw.1.1. Turner Construction. Inc. strategic alliances and strong balance sheet. The owners and clients who have used in-Site include Charles Schwab & Co. Siemens. DPR Construction. The direct competition for XYZ Works is likely to come from Bidcom. and Summit Architects. EDI service providers. The eCommerce market is evolving fast and is subject to rapid technological changes.3 Bricsnet. GE Power Systems. Bidcom. a provider of product and equipment procurement services. a European company.. The prices start at $1. University of San Francisco. The principal competitive factors affecting this market include a significant base of customers. and eBricks. City and County of San Cephren. These services are designed to support all participants through the complete lifecycle of multiple building projects.. HOK.1. In 1997 Bentley acquired the rights to the Bricsnet technology and Bricsnet continues to be a reseller of Bentley. Gensler. RFQ posting boards and integrated service providers. In-Site is priced based on per user. scope and breadth of the products and services offered. Cephren has raised over $50 million from GE Equity Investments. In-Site. Bricsnet. Goldman Sachs & Co.1. Ziff-Davis.500 per month per project with discounts for enterprise agreements.1.4 Buzzsaw. 1999. 6. was founded in 1986 to develop high-end architectural computeraided design software. obtain mission-critical software applications.A Business & Marketing Planning Solution Center 6 Competition The Business-to-Business eCommerce industry is very competitive and a number of models are in practice. a provider of Internet-based project collaboration services to construction industry.1. On December 1. which include bid-opportunity search is the new entity formed by the merger of Blueline Online. 6. Bricsnet launched the Bricsnet. and share project information. supplier catalogs. 1999 on the pan-European stock exchange EASDAQ. 6. and Grupo Picking Pack (GPP). Its Initial Public Offering took place on June 30. Later it acquired three Internet companies. customer service. business eCommunities. Inc. breadth and depth of solution. product quality and performance. Stanford University. The and e-Builders. Sun Microsystems. and helps companies manage risk. SOKA Bricsnet. based in San Francisco was established in early core is an integrated work-centric Cephren. eCommerce competitors vary in size.. product features. the company has raised over $64 million in venture capital funding from organizations such as Internet Capital Group (ICG) and Oracle Venture Fund. where building professionals access industry is a privately held company backed by Autodesk®. Buzzsaw. and complete building projects on time. Visa. Swinerton & Walberg. Federated Department Stores. is delivered as a suite of business-to-business services. a supplier of PC design software and digital content creation tools for the building industry. 2013 .1. One of the largest software Sample Business Plan 24 July 29. critical mass of buyers and suppliers.

731 29.126 38. e-Builder™ is an Internet-based communication tool that dramatically enhances the exchange of information among construction project participants. Founded in 1999 and headquartered in San Francisco.630 48. a company founded in February 1995.827 13.939 1.954 2. It is created by MP Interactive Corporation.425 30.5 e-Builder.433 33. • The size of the industry creates room for many more eCommerce solution providers • Most of the present competition is concentrated in the Silicon Valley in California.359 21.028 52. The current technology has capabilities to develop services to benefit the industry.423 83. buzzsaw. East North Central region gives provides XYZ with a good opportunity to establish a strong beach-head within next nine to twelve months Due to the critical nature of supply-chain management and lack of a long track-record of Internet based solutions.2 Competitive Advantages Business-to-Business eCommerce has good potential to impact the value-chain for the building and construction industry.631 Non Residential Buildings 6.152 • Midwest and especially.505 43.808 82.320 47. as proposed by it. The competitive advantages amongst various business models will depend upon: • Technical superiority and reliability of the solution • • Relevancy and value proposition of the services to the supply-chain network Ability to select and dominate a niche market segment XYZ feels that it has a competitive advantage because no other offering provides such a comprehensive solution.A Business & Marketing Planning Solution Center companies in the world.286 12.294 51.818 18.602 32.361 114. organizations want close relationship with the solution provider Sample Business Plan 25 July 29.416 106. mobile & multi media communication and document exchange platform.000 21.154 12.361 27.293 Public 6.298 8.438 1. that integrates the interactive bid management system with the transaction system. Autodesk has more than four million customers in over 150 countries.055 4.455 Projects between $5mil and $4bn 487 1.431 32. 2013 .369 9.766 15.883 Residential Buildings 11.765 11. and headquartered in Gainesville.577 19. Florida.1.1.422 181.114 47.585 19. and would not be able to target rest of the country for some time − Table below breaks down the construction market estimates by regions (In $ Million except Projects) New England Middle Atlantic East North Central West North Central South Atlantic East South Central West South Central Mountain Pacific − Total 24.827 70.841 947 1.939 has created an Internet hub that delivers integrated business-to-business collaboration and e-commerce services 6.188 2. XYZ Works plans to create a market for itself and establish a strong customer base by taking advantages of the present competitive environment that offers good opportunities.

i. XYZ will target them for the initial customer base as it is easier to quantify the bottom line impact for them and also as they have significant influence over other entities in the value chain about the implementation of technological solutions. the owners of the property . Our operations and strategies will be to become the customer intimate firm. a new entrant needs to take a niche market approach and that is what XYZ Works will adopt. engineers and contractors.2 Target Market The initial target market decision would be an early source of differentiation for XYZ. The products and services are designed for a complete construction project. 7. redundant and time consuming processes. real-estate companies and government are the ones that pay the cost of a project. 'Easiest to use' and provide 'Best value for money'. The industry values the relationship aspect along with the cost and quality.1. and cost 2. supervisors. XYZ will become a 'Business Process Improvement' company that brings a 'New Approach to Value Chain Management'. To establish in this market.1 Positioning The positioning strategy is designed to define a target competition for XYZ. More specific positioning and the reason to buy would be that our products and services are 'Most Reliable'. This group consists of facilities and construction departments of real estate developers. The Web platform along with the multi-media and mobile technology offer the opportunity to develop business solutions that will eliminate significant inefficiencies XYZ Works will position itself broadly as a technologist company that uses the technology to provide business solutions. which are often typical of the construction industry.e. large corporations. Only some of them would be either the decision-maker or instrumental in making the decision to purchase our services and we would seek them out to market our services.1 Marketing Strategy Early business-to-business eCommerce service providers have demonstrated the advantages of real-time competitive bidding and e-market spaces. though some components could be used by smaller groups within a construction contracting company or by a network of these companies. health care firms. 7.1. Our products and services will reduce their cost of construction and also enable them to better manage the projects and improve the procurement operations. Sample Business Plan 26 July 29. 2013 . consultants and lending institutions also have influence to initiate the implementation of technology solution and we will target them to become our endorser. They would also be the significant beneficiaries of our products and services. Another target group consists of general contractors and construction management firms. public agencies and hotels. paper based systems and other elements that increase the cycle time. In this industry. architects. The architects. The fundamental premises behind the products and services offerings of XYZ are: 1. The building & construction industry has lots of inefficiencies that arise from communication gaps. corporations.A Business & Marketing Planning Solution Center 7 Growth Strategies 7. The users of these products and services include executives. Concentration on this type of client base will also allow us to mitigate the cyclical and seasonal revenues.

management consultants and clients to accelerate growth rate and to develop ancillary & support products and applications.3. The segment-targeting strategy has potential to generate word-ofmouth leverage. The experience and knowledge gathered in Phase I would help in selecting these narrow market segments. The relationships with consultants and Sample Business Plan 27 July 29.4 Strategic Alliances and Partnerships To ensure the delivery of a comprehensive solution to customers.1. These organizations would have demanding requirements that would rigorously test our solution. 7.3. Phase I New Products For New Types Of Customers Phase II Sell M ore of Existing Products to Existing Types Of Customers Design N ew Products for Existing Customers Phase III M odify Existing Products for New Tyeps Of Customers 7. implementation and client development effort estimation.1 Phase I The objective of Phase I is to deploy the base product and establish customer references. 7. To achieve this XYZ would implement ‘beta-sites’ for different components of the BPNtm.2 Phase II The objective of phase II is to achieve a dominant position in one or two narrowly bounded market segments. 2013 . This phase would also be used to develop strategic alliances with technology companies.3 Phase III This phase would adopt a mass-market strategy for the deployment of the common standard infrastructures. The objective of these alliances is to focus on the core area of expertise. provide customer demonstration and build a track record. XYZ would develop specific strategies to counter the competition. construction consultants. Systems Integrators. Such relationships will be in following general categories: Software & Hardware vendors. The target customers in this phase would be the organizations that are looking to build competitive advantages through the strategic use of sourcing processes. architects and contractors.1. The relationship with software platform providers would be helpful in developing products and infrastructure solutions.1. These early customers would provide excellent consulting resources for product development. while leveraging the strengths of complementary technologies and the influence of partners.1. The market for Web based applications and services for building & construction industry is not yet fully developed and such a category is not properly defined so the initial strategies would define the target competition and develop the differentiation value proposition. In this phase. XYZ Works will need to establish strategic relationships with various organizations. XYZ is already in discussion with some of software and hardware vendors for product development and implementation partnership. assisting us in designing a robust.3 Rollout Plan The rollout market penetration strategy will occur in three phases. These initial beta-sites are used to evaluate the performance benefits of the solution.1. 7.A Business & Marketing Planning Solution Center 7. expand distribution channel and implement different components of the BPNtm in other industries.3. This phase is expected to last six months. reliable and scalable solution. This phase is expected to last 12-18 months.

the message needs to be taken to the senior executives and decisionmakers in purchasing. The initial selling would be done by the core team members.2 Implementation Team For the initial launch period. Relationships with industry players would be important for the project implementation and generating sales leads. operations. XYZ will adopt a more active communication strategy. Sample Business Plan 28 July 29.5 Communication and Promotion Strategy The initial communication strategy will rely on the personal contacts. the users would need some handholding to get the benefits out of the systems. as the deployment BPNtm solution would entail close working relationship with the clients. This approach is adopted so as not give away too much of our competitive information and to focus the efforts of the company on the product development and build a reference customer base. Such an approach is feasible for the initial phase. XYZ plans to develop this team gradually. board of directors and their network of contacts. It is assumed that a number of potential users may not be highly computer savvy.1 Direct Sales Team Building and Construction industry is a relationship dominated industry and will remain so.A Business & Marketing Planning Solution Center System Integrators would be useful to implement product solutions. 7. XYZ is also augmenting these activities by forming partnerships with the professional marketing services that provide such client development services. Initially.2 Client Development The client development efforts would be directed to find opportunities where an organization is looking for savings opportunities and improving the construction project activities. 2013 . 7. XYZ will also use other communications avenues including: • Presentation at hospital associations to generate awareness among the hospital facilities managers • Becoming part of the local community and having relationships with local planning boards and construction organizations • Establishing relationships and partnerships with architects. After the launch of few beta-sites. To make the adoption of our products. scalability and performance of its solutions on various hardware platforms. Web presence would also be minimal. The primary model for the client development would be direct sales approach. For the success of the company. XYZ will also need to develop relationships to ensure the reliability. a good training program would be developed and implemented. The decision-makers in IT department would also play a role.2. engineers and consultants to generate word of mouth leverage and references • Email list notification about the industry developments and XYZ Works 7. 7. and finance.1. The subjective criteria including referrals have significant influence over the decision making process. and the use of computers in the industry. A direct sales model would be needed to establish relationship and network with these senior level executives.2.

The products and services are designed to be offered as Web driven application from a central server. Next it will work with them to identify the requirements and options available for savings. owner or the general contractor. Another initial sales method would be trial-period for the use of services.Business Partner Networktm Implementation The implementation team would work with the owner and general contractor to help them make a strategic decision to use eBusiness environment for their project.A Business & Marketing Planning Solution Center Pre Archive + Close Out Close Out Decid ing What & How to DO Take Strategic Decision Consulting Understand Requirement & Options Feasibility + IT advice + Expertise M aintain + Support Operations Customer Activi ty Cycle Develop Solution System Integration Keeping It Go ing Post Doing It Install During Pilot + Setup Training + Get Users Online Train Customer Activity Cycle . It is possible that due to privacy concerns and some other reasons an owner or general contractor may insist upon having their project hosted at servers maintained by their in-house IT department. 2013 . During installation. In some cases. This way we can support many projects and leverage our hardware investment and support and maintenance team. they will make excellent referrals. We would not view a project as a one-time sales but as a continuing relationship with repeat business opportunities. However. The starting up strategy includes implementations of beta-sites. the team may need to incorporate some requirements specific to a particular project. A solution will be developed that will serve their needs.3 Revenue Model Increasing the number of revenue streams is at the heart of our business development objectives. This would require different implementation methods and team. XYZ work will maintain the system. For the duration of the construction project. 7. provide support and assist the users in achieving their objectives. Sample Business Plan 29 July 29. train the users and enable the group of users to access various features and function. the team will set up the project environment. The revenue from these implementations is expected to be negligible. The idea behind this is that XYZ would not only sell the superior purchase value but also superior use value. These beta-sites would be used to test the products and develop detailed functional requirements.

200 $1.200 $ Unlimited responders for bid management system The procurement network will use transaction fee of 0.920 Sample Business Plan 30 July 29.500 $2.400 $3.000 Monthly $750 $1. paid by the Owner or the GC/CM Current tiered pricing Initial setup fee 10 concurrent users monthly license 25 concurrent users monthly license 25+ concurrent users monthly license One Time $2.1.1 Business Partner Networktm − − Monthly user license.000 Monthly $750 $1. half-annual and annual contracts Current tiered pricing Initial setup fee 10 concurrent users monthly license 25 concurrent users monthly license 25+ concurrent users monthly license One Time $1.000 Monthly $1.25-0.3. The modular approach will enable XYZ to reach a bigger customer base.3.920 7.5% of the total value of the transaction charged to the supplier Project War Room − − Monthly user license. These components have potential to generate following revenue types of streams: 7. with discounts for quarterly. launch the products and services earlier and also gradually introduce the customers to the complete BPNtm.840 − − 7.A Business & Marketing Planning Solution Center Different components of the BPNtm provide opportunities to be packaged separately. 2013 .3 Bid Management System − − Monthly user license.1. half-annual and annual contracts. half-annual and annual contracts Current tiered pricing Initial setup fee 10 concurrent users monthly license 25 concurrent users monthly license 25+ concurrent users monthly license One Time $1. with discounts for quarterly. with discounts for quarterly.

The founders provided the initial startup financing.367 Sample Business Plan 31 July 29.Beta site launch • Series ‘B’ . The funds would be used for product development.338 2. We are also open the structure of the investment deal.3 million. we are willing to explore alternate forms of investment such as convertible preferred stock or convertible debt. marketing and promotion − Second Month . $1. we prefer that each party invest a minimum of $75. consulting and payroll.250K .1 Funding Requirements Currently.First Five Quarters Uses of Funds . • Series ‘A’ .112 1. hardware.482 Financing Revenue 4.5 million.2 million and the rest.$3. and the team for prototype development. product development plan.Fourth month 2.281 Year 1 Year 2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 12 22 22 30 30 30 30 10 13 13 14 15 28 40 353 600 617 852 870 1.864 Year 3 Q2 Q3 Q4 35 35 35 67 75 75 2. development.$250K: Milestone . is for general business development. which includes estimates for software.104 2.000.$750K − First Month . Though. This money is used to develop the business plan.A Business & Marketing Planning Solution Center 8 Financials 8. 2013 .2 ($000 except people) Q1 Development Personnel 7 Support & Implementation Personnel 5 Total Payroll 204 HW.143 2.334 24 80 15 74 17 80 33 377 680 632 925 887 1.191 1. & Infrastructure 44 Total Development 248 Product Development Q1 35 51 1.266 2. Estimated need for marketing and promotions $1.000 26% 2% Development Salary 27% Operations Salary Operations Mktg & Promotion 14% 11% SG&A Salary Cash 20% Sources of Funds . we are seeking an equity investor. business development and building the team.266 39 72 15 2.$300K: For recruitment. Although we would welcome multiple investors.780 84 1.$200K − Third Month .First Five Quarters 8. Estimated needs for product development is $1. XYZ Works is seeking the investment of $4 million for business development. SW.

703 85.888 4.641 EBIT (Loss) (789) (377) (172) 946 (3.398) (3.299 4.564 381.517 2.600 22.059) Year 2 ($000 except projects) Q1 Q2 Q3 Q4 Year 1 Year 2 New Projects 77 81 152 328 115 638 New Construction Value 770 810 1.191) (2.059) (393) (3.330 206.376 21.453) 600 Year 3 3.609 114.491 1.784 47.280 1.3 ($000 except people) Total Personnel Total Payroll Infrastructure & Mktg.849) (4.520 3.A Business & Marketing Planning Solution Center 8.4 Income Projections ($000 except projects) Month 1 Month 2 Month 3 Month 4 Month 5 Month 6 Month 7 Month 8 Month 9 Month 10 Month 11 Month 12 New Projects 1 1 2 2 3 5 7 11 16 16 22 29 New Construction Value 10 10 20 20 30 50 70 110 160 160 220 290 Projects on hand 1 2 4 6 9 14 21 32 48 64 86 115 Revenue 4 5 11 15 23 36 55 85 129 165 229 308 Total Cost Of Sales 40 26 33 43 48 71 99 91 105 112 125 140 Operating Profit (Loss) (36) (21) (22) (28) (24) (34) (44) (5) 24 54 105 168 Total Development 67 43 43 80 75 76 173 133 133 132 132 132 Total SG & A 72 85 101 110 151 144 154 170 191 235 245 318 EBIT (Loss) (175) (148) (167) (218) (250) (254) (371) (308) (300) (313) (273) (283) EBIT (Loss) Cumulative (175) (323) (490) (708) (958) (1.226) (4.273 Total Cost Of Sales 579 750 1.861 36.590 Operating Profit (Loss) 837 1.016 30.850 2.005 1.066 13.410 8.556 55.122 102.380 Projects on hand at the End 185 237 288 351 115 351 Revenue 1.550 69.416 2.318 34.600 170.434 3.150 6.218 2.827 Year 4 4.303 1.777) (3.976 6.840 482 272.491 1.452 117.504) (2.059) (3.906 500 400 300 Revenue EBIT 200 100 0 Year 1 (100) Year 2 Year 3 Year 4 Year 5 EBIT (Loss) Cumulative Sample Business Plan 32 July 29.662 3.586 6.267 3.279 17.453) (3.783 Q4 32 908 1. 2013 .560 518 499.235 567 896 1.482 109. Expense Promotion Total SG&A Q1 8 165 73 20 258 Year 1 Q2 Q3 12 12 283 305 76 76 45 135 404 515 Q4 18 390 127 281 798 SG & A Q1 19 510 133 354 997 Year 2 Year 3 Q2 Q3 Q4 Q1 Q2 Q3 22 28 30 30 29 32 578 739 784 855 831 908 159 214 206 352 712 1.949 Year 5 5.501 480 3.435 Total SG & A 997 1.160 434 86.974 931 4.891) (2.303 1.030 135 8.583) (1.683 Total Development 630 591 621 594 1.116 203.938 63.640 1.007 39.957 273.688 4.212) (1.020 111.850 2.287 1.

95 8. Month 2 $200K Month 4 $3.11 $3. 2013 . At this moment.01 $19.1 Measurement Ratios • Profitability Ratios Y1 Y2 Y3 Y4 Y5 ROS (287%) (3%) 25% 31% 34% Gross Margin 13% 65% 74% 75% 76% Operating Margin (200%) 32% 51% 57% 58% • • • Positive gross margin after ten months and 50 projects Positive EBIT after seven quarters and 800 projects Management discipline and Capital Efficiency Y1 Y2 Y3 R & D $0.45 $28. We aim to establish the viability of the business model and the solution. attain positive cash flow and then seek one of the following two exit strategies.250K Month 9 IPO window opens Potential Valuat ion . Window of opportunity for this strategy will open between six-nine months of operations. The second preference is to take the company public within next three years after establishing the profitability.$200+ Million Month 18 Month 24 Month 6 Month 1 $300K Month 1 $200K Beta Site Month 10-12 Next round of funding . build a reference customer base.A Business & Marketing Planning Solution Center 8. The preferred exit strategy is to get acquired by a pure Internet play company that has competence in our area of expertise.88 $5.4.29 G & A $1.95 $28.05 $5. it is developing the product.$40+ M illion Sample Business Plan 33 July 29.$17-20 M illion Buyout window opens Potential Valuat ion .80 Marketing $1.5 Exit Strategy The company is in very early stage of its life cycle.

we must continue to enhance and improve the ease of use. and when we will achieve the profitability is not certain. If we experience system failures. Our profitability will depend upon the our success in increasing the revenue and number of revenue streams The eCommerce market category has limited history so it is difficult to evaluate any business Financial results may be affected by fluctuations in the construction industry and seasonal impact. technological barriers to entry are relatively low − Some of our competitors have more resources and broader and deeper customer access than we do − Our competitors may be able to respond more quickly than we can to new technologies or changes in Internet user preferences and devote greater resources than we can to the development. Some of these risks are: • • • • We will accumulation large losses in the beginning. we could lose these rights and our business could be harmed. We are currently unable to assess the seasonal effect on our business Our market is becoming more competitive and we may suffer price reductions − The B-to-B eCommerce market for our services is intensely competitive. promotion and sale of their services Our failure to develop brand recognition could limit or reduce the demand for our services and result in significant loss of the anticipated benefits from our marketing expenditures If we fail to manage our growth.A Business & Marketing Planning Solution Center 9 Risks XYZ Works’ business model faces significant risks. responsiveness. 2013 . our ability to compete could be harmed If we fail to adequately protect our proprietary rights. our reputation would be harmed and users might seek alternative service providers. our ability to market. Our services could infringe the intellectual property rights of others causing costly litigation and the loss of significant rights. which may reduce our future profitability − In addition. causing us to lose revenues We may have capacity restraints that could limit the growth of or reduce our revenues General Contractors and sub-contractors may be reluctant to accept an internet-based application service provider services We depend on the increasing use of the Internet and if the use of the Internet does not grow. reduced gross margins etc. evolving and subject to rapid technological change − To remain competitive. sell and develop our services could be harmed If we fail to attract and retain qualified personnel. our revenues may not grow and could decline and our business could be harmed Failure to raise additional capital or generate the significant capital necessary to expand our operations and invest in new products and services could reduce our ability to compete and result in lower revenues • • • • • • • • • Sample Business Plan 34 July 29. functionality and features of our services − We expect the intensity of competition to increase which may result in changes in our pricing model.

A Business & Marketing Planning Solution Center 10 Organization Technology Client Relationship Corporate Affairs Engineering & Technology Client Solutions: Technology Client Solution: Construction Finance Product Development Operations & Support Project Implementation Architecture & Technical Specifications Business Specifications M arket & Relationship Development Personnel Development M edia & Brand Equity Business Strategy Sample Business Plan 35 July 29. 2013 .

December 1999 iv Forrester Research v A-E-C Automation. December 1999 vi IDC vii Georgia Institute of Technology – 10th GVU User Survey viii Georgia Institute of Technology – 10th GVU User Survey ix Georgia Institute of Technology – 10th GVU User Survey x Killen and Associates. W. Dec. Oct.. government. BNI Building News. 2000 xxvii Interviews with Industry Experts & contractors xxviii The Cost Of Inaction Does Massachusetts Need Public Construction REFORM? Pioneer Institute of Public Policy Research xxix Harvard Business Review Case: Turner Construction Company 9-585-31 xxx Interviews with Industry Experts & contractors xxxi Aberdeen Research Group xxxii A-E-C Automation. December 1999 xxxiii Interviews with Industry Experts & contractors xxxiv Industry Sources. Massachusetts (1997) xxii Forrester Research xxiii : Financial Executives Institute & Computer Sciences Corp. August 1999 Wall Street Journal.1992 Census xvii Census Bureau . including automotive. March 1997 xxvi New York Times Feb 21. 1998 xxiv American Institute of Architects (AIA) xxv A-E-C Automation Newsletter. Mahoney. competitive offerings xxxv Aberdeen Research Group xxxvi Aberdeen Research Group xxxvii Aberdeen Research Group survey of large companies in several key industries. Public Works 1997 Cost book. 1996 xi A Forrester Research survey xii Forrester Research xiii Engineering-News Record xiv Engineering-News Record.i A-E-C Automation xl Supply-Chain Council’s Supply Chain Operations Reference Model xli Harvard Business Review Case: Turner Construction Company 9-585-31 ii iii . chemicals. 1998 xv F. Dodge Division of The McGraw-Hill companies xvi Census Bureau . computer equipment.1992 Census xx Census Bureau xxi William D. Boston. 11/15/99 A-E-C Automation Newsletter.1992 Census xviii Sweet's Group. and utilities xxxviii Aberdeen Research Group xxxix aecXML. A division of McGraw Hill companies xix Census Bureau . telecommunications.