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Market Segments
The heavy construction and civil engineering industry is segmented by geographical location,
type of service and size of projects. The Philippines is geographically divided by DPWH to seventeen
(17) areas namely: NCR, CAR, Region I, Region II, Region III, Region IV-A, Region IV-B, Region
V, Region VI, Negros Island Region, Region VII, Region VIII, Region IX, Region X, Region XI,
Region XII, and Region XIII. These regions are further divided into the different provinces and
engineering districts. For example, Region I is additionally divided into Ilocos Norte with two (2)
engineering districts , Ilocos Sur with two (2) engineering districts, La Union with two (2)
engineering districts and Pangasinan with four (4) engineering districts.
SP-LS (Landscaping)
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The Philippine Contractors Accreditation Board (PCAB) has generally classified the types of
service into General Engineering, General Building, and Specialty. These classifications are further
divided into the specific construction services as shown in Table 4.5. For example, General
Engineering is classified into roads and highways, flood control, dam and reservoir, water supply and
port and harbor. Companies are allowed to participate in a maximum of two (2) different
classifications. Furthermore, it can be seen in Figure 4.7 that highway construction gets the biggest
slice of the budget at 62.7% or PHP 204.12Bn. This is followed by flood control at 16.9% or PHP
64.20Bn. This shows that most of the DPWH budget goes to the general engineering classification.
Another way the market is segmented is through project size. As previously shown in Table
4.3 above, the Philippine Contractors Accreditation Board (PCAB) has divided these project sizes into
six (6) license categories, namely: D, C, B, A, AA, and AAA. Each type of license limits the company
to participate in a specific project size. For example, holders of B licenses can participate in projects
amounting to a maximum of PHP 100M, while companies that have A licenses can partake in projects
amounting to a maximum of PHP 200M.
Badoc Builders and Supply is favorably positioned to service the second district of Ilocos
Norte, providing general engineering services that specialize in roads and highways. The company
holds a category B PCAB license that allows it to secure projects up to PHP 100M.
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Market Forecast
Historical data sourced from DPWH shows that the trend in infrastructure spending has been
increasing year-on-year since 2011. Looking at the behavior of the growth rate, it has progressed at
different rates depending the needs and priority of the government. The growth in 2012 was minimal
at only 10% while the biggest was in 2013 at 45%. Some of the factors that have affected their
decisions in the past include aging infrastructures, tourism, and population growth.
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The DPWH projected the 2017 budget to have a 15.5% increase from the 2016 budget. This
paper will assume that this growth, which is known is also known as the golden age of infrastructure,
will persist until 2019 as part of the current administration’s thrust to prioritize infrastructure spending
and development.
Distribution Strategy
Construction Firm
Customer
The distribution channel in the heavy construction and civil engineering is direct with the
client. All tasks revolving around construction should directly be accomplished by the company. Sub-
contracting any part of the construction process is not allowed.
Marketing, promotions and pricing strategies for BBS and its key competitors are the same.
Marketing and promotions are executed to establish an excellent relationship with key government
officials. These strategies include support in election campaigns and in forms of monetary and non-
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monetary gifts. For pricing, the strategy being used is cost plus pricing. All costs are computed related
to operations, from which the company’s target profit margin is also added. The client’s budget is also
considered since the lowest bid wins the project.