To: Housing The Development Board

From: Pulte Home Builders Corporation

Date: September 25, 2023

Subject: Third Quarterly Report – Project Housing Development (Sub-Urban Areas)

INTRODUCTION

Purpose of Report

In response to your June 25, 2023, request, the following is our Third Quarterly Report on the
Project Housing Development (Sub-Urban Areas). The Professional Develop Team, Finance
Team, and Engineers Team are already in the initial phase of our company’s planning,
financing and decision-making for the Housing Development in Sub-Urban Areas. This
Housing Development aims the following:

1. Affordable Housing
2. Safe and Healthy Living Environments
3. Economic Growth and Development
4. Community Revitalization

DISCUSSION

Work Accomplished

In this Third Quarterly Report which are the months of August, and September in the year
2023, we have completed the following:

Budget Tracking:

Shella Geyrozaga (Finance Department) aggregates the amount of the total budget for Phase
2 as Php10 million.

Budget Overview

 Total Budget: Php10,000,000

 Sources of Funding:
 Equity: Php5,000,000
 Loan from ABC Bank: Php4,000,000
 Grants and Subsidies: Php1,000,000

II. Expense Categories

 Land Acquisition
 Construction Costs
 Infrastructure Development
 Landscaping and Outdoor Amenities
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 Permits and Approvals

 Legal and Administrative Expenses
 Contingency Funds

III. Initial Budget Allocation

 Land Acquisition: Php1,500,000

 Construction Costs: Php6,000,000
 Infrastructure Development: Php1,200,000
 Landscaping and Outdoor Amenities: Php800,000
 Permits and Approvals: Php200,000
 Legal and Administrative Expenses: Php150,000
 Contingency Funds: Php1,150,000

IV. Actual Expenses

As of September 21, 2023:

 Land Acquisition: Php1,600,000

 Construction Costs: Php5,800,000
 Infrastructure Development: Php1,220,000
 Landscaping and Outdoor Amenities: Php790,000
 Permits and Approvals: Php210,000
 Legal and Administrative Expenses: Php155,000
 Contingency Funds: Php1,140,000

V. Variance Analysis

 Land Acquisition: Over Budget (+Php100,000)

 Construction Costs: Under Budget (-Php200,000)
 Infrastructure Development: On Budget
 Landscaping and Outdoor Amenities: Under Budget (-Php10,000)
 Permits and Approvals: Over Budget (+Php10,000)
 Legal and Administrative Expenses: On Budget
 Contingency Funds: Under Budget (-Php10,000)

VIII. Budget Adjustments

 No major budget adjustments have been made to date. The current budget remains
valid.

IX. Reporting
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 Monthly budget tracking reports are distributed to project stakeholders, including

investors, lenders, and the project management team.

This work accomplished last August 20,2023.

Cost Estimation Procurement:

Ms. Tanggaro (Cost estimator) and Loyola (Procurement Specialist)

Developed a procurement plan detailing the timing and quantities of materials and equipment
required. Established procurement milestones to track progress. Ms. Tanggaro (Cost
Estimator) detailed the Budget Development. The initial budget estimate for the project was
set at a million. This estimation was accomplished on September 21, 2023. Collaborated with
project architects, engineers, and contractors to create a comprehensive budget.

I. Cost Estimation

Land Acquisition

 Estimated Cost: Php1,800,000

 Details: Based on market analysis and negotiations with landowners.

Construction Costs

 Estimated Cost: Php10,000,000

 Details: Includes labor, materials, equipment, and contractor fees. Based on initial
architectural plans and competitive bidding.

Infrastructure Development

 Estimated Cost: Php1,500,000

 Details: Covers roads, utilities, and site preparation. Estimate provided by engineering
consultants.

Landscaping and Outdoor Amenities

 Estimated Cost: Php800,000

 Details: Includes Park development, green spaces, and landscaping. Estimate from
landscape design experts.

Permits and Approvals

 Estimated Cost: Php250,000

 Details: Covers permit fees, environmental assessments, and legal expenses. Based on
regulatory requirements.
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Legal and Administrative Expenses

 Estimated Cost: Php200,000

 Details: Includes legal consultations, contracts, and administrative costs. Estimate
from legal counsel.

Contingency Funds

 Estimated Cost: Php750,000

 Details: A 7% contingency to cover unforeseen expenses or changes in scope.

Loyola (Procurement Specialist)

Developed a procurement plan detailing the timing and quantities of materials and equipment
required. Established procurement milestones to track progress.

II. Procurement Plan

 Land Acquisition
 Procurement Method: Direct purchase from landowners.
 Procurement Timeline: Negotiations are to be completed within 3 months.

Construction Contracts

 Procurement Method: Competitive bidding.

 Procurement Timeline: Release Request for Proposals (RFP) and evaluation within 2
months.

Infrastructure Development

 Procurement Method: Engaging an infrastructure development firm through

competitive bidding.
 Procurement Timeline: RFP and evaluation within 3 months.

Landscaping and Outdoor Amenities

 Procurement Method: Contracting with a landscaping company through competitive

bidding.
 Procurement Timeline: RFP and evaluation within 2 months.

Permits and Approvals

 Procurement Method: Direct engagement with regulatory agencies.

 Procurement Timeline: Ongoing throughout the project; costs incurred as needed.
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Legal and Administrative Services

 Procurement Method: Retaining a legal firm through a competitive selection process.

 Procurement Timeline: Selection within 1 month.

Contingency Funds

 Procurement Method: Reserved within the project budget to be accessed as needed.

This work was accomplished last September 20,2023.

Financial Report

Financial Reporting Period: Third Quarter Ended [July, August, September]

This financial report provides an overview of the financial status of the Housing
Development project as of [Reporting Date]. The report includes budget vs. actual
comparisons, cash flow analysis, and explanations for significant variances.

Income Statement Revenue |

| - Sales of Residential Units Php8,000,000 |

| - Rental Income Php200,000 |

| Total Revenue. Php8,200,000 |

Expenses |

| - Land Acquisition Php1,500,000 |

| - Construction Costs Php5,000,00 |

| - Infrastructure Development Php700,000 |

| - Landscaping and Amenities Php300,000 |

| - Permits and Approvals Php100,000 |

| - Legal and Administrative Php50,000 |

| - Contingency Fund Usage Php300,000 |

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| Total Expenses. Php7,950,000 |

|Net Income. Php250,000 |

Balance Sheet as of September 23, 2023

Assets

| Current Assets

| - Cash and Cash Equivalents Php800,000 |

| - Accounts Receivable Php0 |

| Total Current Assets. Php800,000 |

Property, Plant, and Equipment Php8,000,000 |

Total Assets $8,800,000 |

Liabilities and Equity |

| Current Liabilities |

| - Accounts Payable Php100,000 |

| - Short-term Loans Php0 |

| Total Current Liabilities Php100,000 |

| Long-term Loans Php3,000,000 |

| Equity |

| - Owner's Equity Php5,700,000 |

| Total Equity. Php5,700,000 |

Total Liabilities and Equity. Php8,800,000 |

In this example:
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The income statement provides details on revenue and expenses for the quarterly ended
September 21, 2023. The project generated a net income of $250,000 during the quarter

The balance sheet reflects the project's financial position as of December 21, 2023. It shows
current assets, property, plant, and equipment, as well as liabilities and equity. The project
has a positive equity of $5,700,000. This was accomplished last September 9, 2023.

Site Clearing and Preparation:

Angelica Quilo (Surveyor) attained surveying the site and lining out the exact area where the
project or structures are built. Excavation and grading to prepare the land for building. This
was accomplished last September 15,2023.

Problem Encountered
 Cost Overruns: Construction projects often face unexpected expenses due to factors
such as changes in material price fluctuations and labor shortages.
 Material Price Fluctuations - Unexpected material price increases
impact construction costs, leading to increased expenses for materials
and transportation, resulting in cost overruns. Extended project
execution may exacerbate these overruns, especially when material
prices continue to rise.
 Labor Shortages - affect the quality of workmanship in housing
development projects. When there is a shortage of skilled workers,
contractors may be forced to hire less experienced or unqualified
individuals to fill the gaps. This can result in lower-quality
construction, which may require rework or repairs in the future, further
adding to the overall project costs.

 Inadequate Financial Planning: This can pose significant challenges during project
implementation. This includes insufficient forecasting of costs and revenues and a
lack of contingency plans for unexpected events.
 Insufficient Forecasting of Costs and Revenues - can increase the risk
of financial distress for the developer. Without a comprehensive and
accurate forecast of costs and revenues, developers may be unable to
accurately assess the financial risks of the project, leading to a higher
risk of financial distress.
 Lack of Contingency Plans for Unexpected Events - Without
contingency plans, the housing development program is vulnerable to
unforeseen events such as economic downturns, changes in market
conditions, or unexpected cost escalations. These events can lead to
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budget shortfalls, making it difficult to secure additional funding or
complete the project within the planned timeframe

 Lack of Transparency and Accountability: Lack of transparency can lead to

mismanagement of funds, corruption, and misuse of resources. Failure to address
issues related to transparency and accountability can undermine public trust in the
program and hinder its effectiveness.
 Mismanagement of Funds – Without proper oversight, funds may be
diverted away from their intended purpose. This can lead the program
to insufficient resources to complete its intended goals and lead to
delays.
 Corruption – When transparency and accountability are compromised,
corrupt officials or individuals may divert funds intended for housing
projects for personal gain. As a result, the quality and quantity of
housing units may suffer, leaving beneficiaries with substandard living
conditions.
 Misuse of Resources - When resources are not used properly, it can
lead to inefficiencies and waste. This can result in the program not
achieving its intended goals, and the resources being wasted could
have been used more effectively elsewhere.

Work Remaining

To complete our project the project we need to accomplish the following:

1. Community Engagement - This process aims to promote transparency, accountability,

and resident participation in financial decisions, such as budgeting, fee structures,
investments, and reserve funds. The primary purpose of financial community
engagement is to create a collaborative and well-informed environment where
residents have a voice in shaping the financial aspects of their community, ultimately
fostering trust and satisfaction within the housing development. Collaborating with
homeowners' associations and residents to address financial concerns, distribute
budgets, and ensure financial transparency. The target date of this task October 1,
2023

2. Tax Planning - Involves optimizing financial strategies to minimize the tax liability
associated with property development, ownership, and management. This can
encompass various aspects of taxation, including income taxes, property taxes, and
capital gains taxes. The target date of this task October 20, 2023

3. Landscaping and Outdoor Amenities: We are working with the “Green Paradise
Landscaping’ led by Rinze Ryan Rafael Berza to landscape the outdoor amenities like
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parks) playgrounds, and communal spaces. Serve as focal points for community
interaction and recreation.

*Playgrounds Equipment Installation

 Location: Playground area
 Descriptions: Installation of swings, sliders, and play structures.

*Tree Planting

 Location: Along community streets

 Descriptions: Planting of 50 deciduous and evergreen trees

The target date of this task is December 27, 2023.

4. Construction: The entire housing unit must be built. This construction comprises the
largest remaining task, Effective project management, quality control, and
coordination among contractors and stakeholders are essential to ensure a successful
transition from construction to occupancy.

*Utilities and Infrastructure

 Descriptions: Utilities, Infrastructure, and common area amenities

 Locations Housing units in areas where this work applies

The target date of this task is March 25, 2023.

Project Completion / Recommendation

 Despite the fact that we have only recently begun this project, we have completed
approximately 65% of the work. We developers and financialist can create
sustainable communities that contribute positively to the overall urban landscape.
 One of the primary causes of cost overruns is poor planning and budgeting. To
avoid this, project stakeholders must engage in early planning, including defining
project scope, identifying potential risks, and establishing a realistic budget. This
should involve a detailed cost estimation process, taking into account all relevant
factors such as materials, labor, and site conditions.
 One way to mitigate the impact of material price fluctuations is by diversifying
suppliers. By sourcing materials from multiple suppliers located in different regions
or countries, businesses can reduce their reliance on a single source. This helps to
minimize the risk of supply disruptions caused by factors such as natural disasters
or political instability. Additionally, having multiple suppliers provides businesses
with more negotiating power, allowing them to secure better pricing terms.
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 One of the primary causes of the labor shortage is the lack of immigrants to follow
skilled and high-skilled jobs. The U.S. government can increase immigration levels
to address this issue. According to the National Foundation for American Policy,
increasing immigration levels by 50% could help fill the labor shortage and boost
economic growth
 One of the primary solutions to inadequate financial planning is the establishment
of a comprehensive budgeting system. Creating a budget allows individuals or
businesses to track their income and expenses, enabling them to identify areas
where they may be overspending or not allocating enough resources. By tracking
expenses, it becomes easier to make informed decisions about spending habits and
prioritize financial goals. Utilizing budgeting tools or apps can simplify the process
and provide real-time updates on financial status.
 Advanced analytics techniques, such as machine learning, artificial intelligence, and
predictive modeling, can help businesses forecast costs and revenues more
accurately. These techniques can identify complex patterns and relationships in
data, which can improve forecasting accuracy.
 Collaboration among individuals, organizations, and communities is essential for
effective contingency planning. By sharing information, best practices, and lessons
learned from past events, stakeholders can collectively develop comprehensive and
adaptable contingency plans. This can be facilitated through the establishment of
networks, forums, and platforms where individuals and organizations can exchange
knowledge and experiences. Additionally, governments can play a crucial role in
fostering collaboration by providing incentives, resources, and regulatory
frameworks that promote information sharing.
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The Percentage chart in Figure 1 determines the status of work done for the Project Housing
Development (Sub-Urban Areas)

Land scaping

Budget tracking

Cost Estimation Procument

Financial Reporting Work Accomplished

Work Remaining
Site Clearing and Prepraration

Community Engagement

Tax Planning

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 00%
1

Figure 1 Project Status