Portfolio

Management of
Builders

By:
Sanjay K. Sayankar(170101171016)
Sandip University, Nashik
Department of Civil Engineering
M. Tech. - II Construction & Management
 Contents
• Introduction
• Objectives of Dissertation
• Key Findings from Literature Review
• Problem Statement
• Methodology
• Data Collection
• Data Analysis
• Results and Discussions
• Conclusion
• Future Scope
• References

Portfolio Management of Builders 2

 Introduction
• Infrastructure development is the fastest growing sector in India.

• People, construction firms/ companies are having keen interest is investing money in land, real

estate, construction equipment etc.

• How much to invest is biggest problem faced by the investors.

• This problem can be tackled by portfolio analysis and management considering the risks

associated with the investment.

• Portfolio management refers to managing an individual’s investments.

• That may be in the form of bonds, shares, cash, mutual funds etc so that he earns the maximum

profits within the stipulated time frame. Portfolio Management of Builders 3

 Need of the Study
• To analyse the risk and return on securities.
• The purpose of the study is to help the unknown investors for investing in securities.
• The purpose of the study is to know the effect of fluctuations in the price of assets, plants,
equipment, etc.
• To update the portfolio reviewed and adjusted from time to time in tune with market condition.
• To test portfolio strategies before taking decisions.

Portfolio Management of Builders 4

 Objectives of the Dissertation
• To determine the amount of risk involved in the investment.
• To make comparative study of risk and returns on investments.
• To arrive at decision where to invest and how much to invest.
• Determination of future risk and return in holding various blends of individual securities.
• Gives predetermined probable returns on the investments
• To earn maximum profit in the securities.
• To make investment plans .

Portfolio Management of Builders 5

 Key findings from literature review
• The best investment strategies which maximises the net returns on investment
• The associated probable risks involved on investment
• The mitigation of the associated risks
• The evaluation of parameters required for portfolio design such as risk, period of investment,
returns, strategy for investing, different portfolios etc.

Portfolio Management of Builders 6

 Problem Statement
• There is great chance to invest money in construction sector.
• But problems involved are various projects going on and where to invest? How much to invest?
When to invest etc.
• Hence there is need to analyse better as and wise investment strategies which maximize the return
on the investments.
• At the same time it will provide the platform for where to invest based on the study made for this
project.

Portfolio Management of Builders 7

 Methodology

• ARR- it is also known as Average Rate of

Return. • 
• It is a financial ratio used in capital budgeting • ARR is calculated as ×100
without considering time value of money.
• And Net profit = ∑ net income or gain - ∑net outcome or expenditure.
• ARR calculates the return, generated from net
income of the proposed capital investment.

Portfolio Management of Builders 8

• Identifying critical risk elements based on its Impact and Occurrence on a 5-point scale

Combined Risk Percentage Significance

20-25 75-100 Very High Risk

10-20 45-75 Medium Risk

5-10 20-45 Low Risk

1-5 1-20 Very Low Risk

Portfolio Management of Builders 9

Flow Chart showing methodology for the dissertation

Portfolio Management of Builders 10

 Data Collection
• Primary Data:
The data provided by the firm/ individual was been analysed by using ARR and Identifying critical
risk elements based on its Impact and Occurrence on a 5-point scale.
Here the data of three firms is collected and the various parameters for portfolio analysis are studied
to arrive at decision and to predict the future investment options/ opportunities.
• Secondary Data:
The data that is used in this study is of secondary nature. The data is to be collected from secondary
sources such as various websites, journals, newspapers, books, banks etc. the analysis used in this
study has been done using selective technical tools. Risk is analysed and trading decisions are taken
on basis of technical analysis.

Portfolio Management of Builders 11

Portfolio Management of Builders 12
 Data Analysis
•• The
  collected data is been analysed through the following methods:
1. ARR Calculations
2. Identifying critical risk elements based on its Impact and Occurrence on a 5-point scale.

1. ARR of real estate residential business for Bhagyashree Developers

2. ARR of real estate residential business for Bhagyashree Buildwell

•

Portfolio Management of Builders 13

•  ARR of real estate commercial business for Bhagyashree Buildwell
2.
•
3. ARR of real estate residential business for K S Developers

• Risk calculations on 5-point scale considering its impact and occurrence by taking higher risk into
consideration.
• And interpolating the combined effect to get exact percentage of the associated risk from table.

Portfolio Management of Builders 14

• For Bhagyashree Developers:

• For Bhagyashree Buildwell:

• For K S Developers :

Portfolio Management of Builders 15

 Results and Discussions
• We have analysed the three various firms as follows:
• 1. Bhagyashree Developers
• 2. Bhagyashree Buildwell Pvt. Ltd.
• 3. K S Developers
• As per the ARR calculations and the data available from the firms it seen that the ARR for the
given above firms is as below:
• ARR = 145.161%
• ARR = 113.154%
• ARR = 201.356%

Portfolio Management of Builders 16

• We have also determined the risk for the firms in their project involved:
• Low Risk for Bhagyashree Developers: The reason for low risk in the firm is basically if there is
a small project and that too a residential one there are only a few parameters to look out so the risk
involved in such projects is very low.
• Medium Risk for Bhagyashree Buildwell Pvt. Ltd.: The reason for medium risk in the firm is
because it is a residential as well as commercial project, so there are many factors to be taken into
consideration and many parameters to look out so the risk involved in such projects is medium.
• Medium Risk for K S Developers: The reason for medium risk in the firm is because it is a
residential as well as commercial project, so there are many factors to be taken into consideration
and many parameters to look out so the risk involved in such projects is medium.

Portfolio Management of Builders 17

 Conclusion
• The portfolio management sets benchmark for minimum returns on the investment made.
• So that one can be assured of getting net returns after stipulated years of investment.
• This is the best example of diversified portfolio management.
• Which is a risk management strategy that mixes a wide variety of investments within a portfolio.
• The rationale behind this technique is that a portfolio constructed of different kinds of assets will,
on average, yield higher long-term returns and lower the risk of any individual holding or security.
• The firm is having multiple investment opportunities & made investment in multiple projects of
different categories such as Land, Real estate residential, Real estate, commercial, etc. due to this
return on investment is assured. 

Portfolio Management of Builders 18

 Future Scope
• From the above analysis and discussions, the future scope use would be for an upcoming firm or
an upcoming entrepreneur in the civil industry.
• That the respective person should start by investing in small projects initially and then can move
forward to large projects.
• It is also seen that investing in both residential and commercial projects can help the firm on
maximising the profit margin.

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 References
• [1] Cooper, R.G. & Kleinschmidt, E.J., “Benchmarking firms’ new product performance and
practices”, Engineering Management Review, 23,3, Fall 1995.
• [2] Cooper, R.G. & Kleinschmidt, E.J., “Winning businesses in product development: Critical
success factors”, Research-Technology Management, July-August 1996.
• [3] Day, G.S., “Diagnosing the product portfolio,” Journal of Marketing, 1977, pp. 29-38.12.
• [4] Evans, P., “Streamlining formal portfolio management”, Scrip Magazine, February, 1996.
• [5] Faulkner, T, “Applying “options thinking” to R&D valuation”, Research-Technology
Management, 39:139-146, 1988.

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Thank
You