The Production Of An Alternative Construction Material Economics Essay

To fix an industry survey of all the building stuffs presently being used in lodging and commercial developments.

To reexamine the waste direction system in the Philippines and look for countries that are sustainable beginnings of PET stuffs.

To place the current drivers and tendencies of the existent estate and building industry, every bit good as the Non-government Organizations ( NGOs ) in order to research the viability of presenting the EHB merchandises for their building demands.

To fix a concern theoretical account for each market section, viz. : ( 1 ) Non-government Organizations ( NGOs ) and ( 2 ) Real Estate Developers and Contractors.

This MRR is focused on the following market sections: existent estate developers, building companies and NGOs. The survey is limited to the Philippines specifically the National Capital Region ( NCR ) and states within a 130 kilometer radius. Other building stuffs that have the possible to be used with PET flakes aside from the concrete hollow block are excluded from this survey.

This MRR focuses on the Ecoblock venture into the Filipino market through the NGOs specifically on lodging and development plans ; and finally cater to the local real-estate developers and contractors. Hence the coveted result of this MRR would be a venture scheme sing the economic conditions, market mentality, competitory analysis, hazards analysis and capital sourcing.

President Aquino ‘s State of the Nation Address ( SONA ) last July 2010 highlighted the importance of Public-Private Partnerships ( PPP ) .[ 1 ]The PPP was seen as an of import scheme for substructure development. It has besides been estimated that the grapevine of PPP undertakings ( substructure undertakings for transit, H2O, power, wellness, and agribusiness ) for the twelvemonth 2012 will amount to USD 5.49B.

Another factor that can hold an consequence on these undertakings is the approaching election in the twelvemonth 2013 that can increase authorities passing on substructure developments. Last, the issue of corruptness ( specifically in authorities substructure undertakings ) is seen as an of import political factor in the building industry of the Philippines. The corruptness issues of the Philippines sing substructure was discussed during Finance Secretary Cesar Purisima ‘s meeting with Ernie Bower, the senior advisor and manager of the Center for Strategic and International Studies in Washington DC.[ 2 ]In this meeting, it was cited that the PPPs plan of the Philippines will be able to turn to the current issues on corruptness. Harmonizing to Purisima, the right substructures should be accompanied by advanced policies for the Philippines to be competitory through highly-viable and promising ventures. It was besides made clear that corruptness is a major factor that will impede the authorities to increase disbursement for substructure undertakings.

As shown in Figure 1, the Philippines ‘ gross domestic merchandise ( GDP ) decreased from 7.6 % in 2010 to 3.7 % in 2011. This is due to the negative export growing rates in 2011 that was influenced by the planetary economic conditions peculiarly the economic and fiscal crises in US and Euro states[ 3 ]. The domestic factors on the other manus include the decreasing demand and negative growing rate in agricultural production and the under disbursement of the authorities in substructure undertakings. Based on the GDP projections of the International Monetary Fund ( IMF ) , Asian Development Bank ( ADB ) and World Bank, the Philippine economic system will somewhat better in 2012 due to the support of growing in private ingestion ( higher OFW remittals ) , investing, and authorities disbursement[ 4 ]. However, if the debt woes in Europe will decline and the recovery of the US economic system will non be sustained, the Philippines will see lower exports and foreign investing that may take to lower GDP growing. Sing these factors the Filipino authorities must be able to increase authorities passing on substructure undertakings to forestall the economic system to decelerate down farther.

As shown in Figure 2, even if demand in the economic system is lower in 2011 due to the lower GDP growing rate, overall monetary values still increased which was brought approximately by the addition in monetary values of crude oil in the planetary market.[ 5 ]Looking at the disposable income of Filipinos, if the overall monetary values addition, the buying power will be given to diminish. This might impact the sum of disposable income that might be allocated for house purchase. Based on Figure 2, rising prices is lower in the first one-fourth of twelvemonth 2012.

Meanwhile, the 91-day Treasury measure involvement rate decreased when the Bangko Sentral ng Pilipinas ( BSP ) attempted to excite economic growing. The peso-dollar rate remained stable due to the addition in influx of remittals. The stableness of the peso-dollar rate is really of import in the building industry due to the fact that some of the stuffs being used in building are imported. The instability of the peso-dollar rate will impact the monetary value of these stuffs.

As shown in Figure 3, building end product in 2011 went down. This is due to the under disbursement of the authorities in substructure undertakings.[ 6 ]The construction-to-GDP ratio decreased from 5.7 % to 5.2 % . The addition in authorities disbursement can increase the GDP for the coming old ages.

Growth of other industries will besides open chances for the building industry. As shown in Table 1, the touristry industry, the Business Process Outsourcing ( BPO ) , and the excavation industry are continuously sing growing which may take to more building undertakings. For the touristry industry entirely, 47 hotels with 14,000 suites will be constructed by the twelvemonth 2013.[ 7 ]

Due to the Philippines ‘ stronger fiscal place, the Standard and Poor raised the Philippines ‘ international debt evaluation to one notch below investing class ( BB+ ) .[ 8 ]Harmonizing to the DBS Group, the Philippines can accomplish investment-grade recognition evaluation with a twelvemonth or two. Once this is achieved, more investings will flux to the state.

The societal factors that we will be sing in this survey will give accent on the population growing rate, age profile, and lodging backlog in the Philippines and seek to correlate them with the building industry in the state.

As of July 2011 the Philippines has an estimated entire population of 103.775 million and out of this, 11.86 million reside in the National Capital Region ( NCR ) . The Philippines has an mean population growing rate of 1.9 % and the NCR has an mean population growing rate of 1.78 % .

The bulk of the population in the Philippines belongs to the working category ( 15-64 old ages: 61.1 % or 62,201,170 as of 2010 ) . This is the part of society who are about to get down their ain households until those who are about to retire from their several callings. Peoples in this section are besides the 1s who have the capacity to put in residential developments.

As of 28 December 2011 Philippines ‘ lodging backlog is presently 3.6 million.[ 9 ]The authorities will tap shelter bureaus like the Housing and Urban Development Coordination Council ( HUDCC ) , the Housing and Land Use Regulatory Board ( HLURB ) , the Pag-ibig Fund, the Social Housing Finance Corporation, the National Housing Authority, the Home Guaranty Corporation, and the National Home Mortgage Finance Corporation to cut down the lodging backlog by 50 % with an one-year mark of 350,000 lodging units. To accomplish this, the Aquino disposal highlighted the demand for more PPP plans to utilize the underutilized authorities lands. The inadequacy of available support resulted to this lodging backlog. The authorities needs Php 1.7 trillion to turn to the Philippines ‘ lodging demands.

In 2011, several typhoons and brassy inundations occurred in the Philippines between May and September. The Department of Social Welfare and Development ( DSWD ) will develop recovery and rehabilitation undertakings for victims of brassy inundations in NCR and other states with a sum of 187,008 households. Besides, undertakings will be developed for the victims of typhoons that entered the state, which affected 1.4 million households[ 10 ].

Last June 28, 2012, the general rank meeting of the Philippine Constructors Association ( PCA ) was held to discourse the current issues that the industry presently faces. In this meeting, invention was considered as a driver of productiveness. Harmonizing to Executive Director Cosette V. Canilao, the participants of the industry must be able to re-evaluate their resources and procedures to do it more efficient, antiphonal and relevant to the present stringent demands of the industry.[ 11 ]Sing PPP for substructure undertakings, the authorities must demand from its private spouses new engineerings that will speed up bringing clip while guaranting public safety. However, Canilao besides recognized the fright of “ being the first to seek something different ” . With this, he emphasized that those participants who will non put in technological invention might be left behind at command clip.

Harmonizing to the Department of Public Works and Highways ( DPWH ) , the Philippines may follow new building tendencies in Japan, peculiarly on the latest engineering on roads and span building.[ 12 ]The building and technology engineerings from Japan through the Japan International Cooperation Agency ( JICA ) will assist the Philippines construct disaster-resilient substructures that would extenuate the effects of clime alteration.

Technological invention in the Philippines does n’t merely go on with authorities undertakings, private makers of building stuffs besides try to introduce the merchandises and procedures to better the merchandise offering. Cement makers like the Holcim Group created a green sustainable solution for cement.[ 13 ]The company is seeking to minimise the impact of cement fabrication in the environment. The company focuses on conveying down C dioxide ( CO2 ) emanations by cut downing the cinder factor by utilizing mineral constituents as alternate stuffs.[ 14 ]Invention on the usage of natural stuffs was accompanied by betterment in the procedure viz. : ( 1 ) usage of alternate fuels ; ( 2 ) co-processing ; and ( 3 ) prey habilitation policy. Co-processing is considered as a globally recognized engineering that helps the company procedure H2O watercourse in the cement kilns to decently dispose risky industrial wastes.[ 15 ]The quarry habilitation policy would guarantee that the prey sites can be used fruitfully by the community before they are wholly mined out. Holcim Philippines was the first company to subject a Final Mine Decommissioning and Rehabilitation Plan to the Department of Natural Resources ( DENR ) , which will function as a design in reconstructing prey sites.

Land development and building have a direct impact on the environment wherein land transition from agricultural to urban and residential greatly reduces bio-capacity ( ability of the land to bring forth nutrient and other resources for the society ) .[ 16 ]Because of this, sustainable land development is going more of import in the building industry. The World Wildlife Fund ( WWF ) and Ayala Land, Inc. ( ALI ) developed an ALI Sustainability Framework to chart, proctor, and describe the company ‘s advancement in sustainable land development. The increasing consciousness about environmental impact of building activities will finally impact the manner residential and commercial developments are built.

In 2006, the Philippine Green Building Council ( PHILGBC ) was formed as a national non-profit organisation through the confederation of edifice and building industry leaders from the private and public sector.[ 17 ]This organisation was formed to guarantee an ecologically and economically sustainable industry. This resulted to a local green edifice evaluation system that is now called Building for Ecologically Responsive Design Excellence ( BERDE ) . The BERDE strategy will function as a benchmark for all belongings developers in the state.

Last August 17-19, 2011, the first Philippine International Total Green Movement Exhibition and Conference was held at the SMX Convention Center, Mall of Asia Complex in Manila. The joint venture of the Philippine Constructors Association, Inc. ( PCA ) , Global-Link Exhibitions Specialist, Inc. ( GESI ) , Philippine Society of Ventilating, Air-conditioning, Refrigerating Engineers, Inc. ( PSVARE ) , Philippine Center for Environmental Protection and Sustainable Development, Inc. ( PCEPSDI ) , and Society of Manufacturing Engineers ( SME ) Manila, created the Green Philippines 2011.[ 18 ]This event featured four exhibit sections on building ( Green Construct ) , fabricating ( Green Manufacturing ) , lifestyle ( Green life style ) , and energy ( Green Energy ) . Besides, last August 16-17, 2011, the 2nd Sustainable Building Technology Conference was held that invited international sustainability experts to discourse the best patterns for a green industry. These events would demo that the participants in the building industry are already tilting towards environment friendly development undertakings.

The building industry is one of the most risky and hazardous businesss in the state. With this, the Department of Public Works and Highways ( DPWG ) , the Department of Interior and Local Government ( DILG ) , the Department of Trade and Industry ( DTI ) , the Department of Labor and Employment ( DOLE ) , and the Professional Regulation Commission ( PRC ) signed a Memorandum of Agreement last May 4, 2011 to beef up the run to minimise accidents in building activities. This MOA aims to “ advance the public assistance of building workers and prevent the return of construction-related incidents, notably the 1s that late killed or badly injured workers early 2012.[ 19 ]Besides, this MOA is an off-shoot of DOLE Department Order No. 13 ( which provides the Guidelines Governing Occupational Safety and Health in the Construction Industry ) and aims to escalate the holistic and extended executing of the policies and plans set Forth in D.O. No. 13 in building sites ” .

The building industry in the Philippines is presently tilting toward ecological friendly stuffs due to the planetary run to salvage the environment. The stuffs that are available scope from pre fabricated walls and blocks to bricks that is considered to be the oldest edifice stuff used. The pre-fabricated walls and blocks use polystyrene as an sum that is added to the concrete mixture to bring forth a lighter and insulating merchandise. Reinforced fire bricks are besides one of the common building stuffs that are used in building of places. Reinforced bricks are made of industrial wastes such as rice hull, coal ash, silt, clay and clay.

The bing market for pre-fabricated walls and blocks are the contractors for commercial edifices and high-rise residential edifices. There are besides some contractors that use pre-fabricated stuffs for place building but the householders still prefer to utilize concrete hollow blocks ( CHB ) because of the high cost of the pre-fabricated stuff. The walls are pre-ordered by the contractor and are sometimes manufactured on site to avoid bringing disbursals. On the other manus, the strengthened firebricks are used in place building. This stuff is normally specified by the people who belong to the higher category of society chiefly because of the monetary value of this building stuff.

Pre-fabricated walls are used in exterior and interior applications in edifice building. The lighter wall means that the foundations of a edifice undertaking could be smaller due to the decrease in weight that the foundation needs to back up. Installation clip for the pre-fabricated wall is shorter compared to utilizing conventional stuffs in wall building. The merchandise is smoother and does non necessitate extra daubing ( merely the articulations require extra concrete ) because of the smooth coating that these walls by and large have. The pre-fabricated walls besides serve every bit good dielectrics that result to less energy ingestion. A noteworthy disadvantage of utilizing this merchandise, aside from the cost, is that the sizes that are available are merely limited and could non be cut to size. The advantages of utilizing strengthened fire brick in building is that it uses less cement and is stronger than concrete. Bricks are besides upwind resistant and are considered to be ideal in tropical states like the Philippines because it easy absorbs heat to maintain the interior of the house ice chest. Bricks do non necessitate cement daubing and the walls do non necessitate to be painted. The disadvantage of utilizing this stuff is the high cost. Even if it requires less cement and no pigment the cost of the stuff is still higher compared to common building stuffs used.

In the Philippines, CHB remains as a backyard industry because it is easy to bring forth, particularly the non-load bearing CHB. The CHB can be produced manually by utilizing an jury-rigged cast. In bring forthing a non-load bearing CHB, a mixture of sand, crushed rock, cement, and H2O can be manually compressed utilizing the jury-rigged cast.

There are three grounds why CHB is still being used in building, viz. : ( 1 ) cost ; ( 2 ) handiness ; and ( 3 ) easiness of installing and handling. CHB still remains as the a cheaper pick in building of a concrete house. As a backyard industry, CHB is available countrywide with similar merchandise specifications. Last, CHB is a traditional merchandise. With this, bulk of the labourers or building workers are familiar with CHB in building. The acquaintance of the labourers with a merchandise is the chief ground why CHB is still being used.

The demand for quality, economic system, and completion clip are the major considerations for all building undertakings that normally dictate the pick of engineering[ 20 ]. The traditional building stuff presently being used for building undertakings is the CHB. Based on the interview with cardinal participants in the existent estate industry, another option is the pre-fabricated walls. For fancied walls, the full wall is built off- site or on-site earlier installing as compared to CHB that are stacked one on top of another. In the Philippines, merely 5 % are utilizing prefabricated constructing stuff in lodging building[ 21 ].

Over the old ages, different types of building stuffs have been offered incorporating recycled plastic, such as PVC pipes. Recycling is particularly of import for thermoset polymers since this signifier of plastic can non be reheated and melted back to liquid signifier.

In the Philippines and in other states, shredded plastic has been used as sums for bricks and building blocks. Most of these, nevertheless, are non widely offered commercially and are non load bearing.

The demand for this merchandise is readily accessible in most countries and the market is sensitive merely to the monetary value relation to the quality of the merchandise they receive. At present the 4-6inchconcrete hollow blocks monetary values are standard for all and vary merely between the volume providers and the backyard providers because of their several attack to the concern. The purchasers of the merchandise favour the providers who are nearer to them ( because of transit costs ) and if satisfied with the quality they retain their providers. However there are cases where the purchaser changes providers in stead of quality issues for this ground, industry competition will be considered medium.

The proficient accomplishment and labour required is n’t advanced nor does it necessitate extremely specialised machines to present the merchandise, the lone obstruction is the hard currency required to: 1 ) purchase the hollow block shaper and ; 2 ) to procure working capital demands. The cost of a concrete block sociable is between Php30,000-P40,000, and a mold container would be about Php5,000 per piece. Normally a block shaper can get down a nickel-and-dime concern with 6 casts which is tantamount to Php30,000 hence a backyard concern can get down at a Php60,000 investing excepting working capital.

The disadvantage of this pattern is it sacrifices the quality/durability of the blocks due to the deficiency of compaction of the block being formed thereby ensuing in a lower PSI evaluation. The trouble in procuring support for this peculiar concern is high because the concern is non alone while the returns in this type of concern do non immediately interpret to high growing net incomes. The local venture capitalists who provide seed capital to startups expression to sunrise industries such as the BPO sector and IT services bringing, or the following large web site investing. The chances of a possible participant to gaining control market portion will chiefly be on their ability to cut down the cost of their concrete hollow block while keeping a sensible quality and service. In order to accomplish this, the possible participant must hold a big base of clients in order to accomplish economic systems of graduated table in their production of quality merchandises and a individual who will supply aid to the client to guarantee proper bringing and satisfaction, a backyard hollow block shaper will non be able to be competitory and for this ground the menace of new entrants is rated as medium taking into consideration these factors.

Some undertakings outsource their hollow block while others make it onsite. While it is preferred to purchase the merchandise in order to avoid the cost of investing and taking into consideration that there is abundant supply for this merchandise ( but at changing monetary values depending on which type of provider: backyard provider, volume provider or a jobber, and depending on the volume purchase of the purchaser the bargaining power of purchaser is average given the handiness of a quality merchandise in the market.

The demand for moderately priced hollow blocks are assumed to be turning at 10.5 % and building stuffs 5.4 % which supports the statement that demand is good. Another consideration is that the real-estate residential development is in the signifier of condominiums and they make utilize other merchandises such as pre-fabricated walls alternatively of hollow blocks. The building roar does n’t straight interpret to increased hollow block usage and the monetary values of hollow block are by and large stable therefore for these grounds the provider ‘s bargaining power is low.

The bargaining power of cement and sand providers remain low since there are abundant beginnings for these providers. The PET flakes providers have a medium bargaining power since they are less abundant than the cement and sand providers. Furthermore, the local PET providers have different methods in shredding and cutting the plastic such that those providers that have the ability to shred PET flakes at a certain size have a stronger dickering power than others.

For the low cost lodging sector and other lodging undertakings hollow blocks are still preferred. The emerging sector of high-rise residential undertakings make usage of pre-fabricated merchandises and gypsum boards nevertheless the market portion of these merchandises is merely 5 % for building stuffs, hence the menace of replacements are rated medium.

The success in this industry will be in the costing of the merchandise and the quality. In order to cut down the overall cost of the merchandise there is a demand to run into operation efficiency and effectual selling in order to accomplish economic systems of graduated table that will convey down overall costs for our house while bring forthing a good quality merchandise.


Emphasis on PPP plans for authorities substructure undertakings

Good prognosis for the touristry, BPO, and excavation industry

Movement towards sustainable community development

The usage of plastic as an sum is non yet widely introduced in the Philippines

The high sum of investing on PPP plans is seen as a good chance for the building stuffs industry. For twelvemonth 2012, several PPP undertakings are in the grapevine, viz. : ( 1 ) 14 undertakings on transit ; ( 2 ) 2 undertakings on utilities-water ‘ ( 3 ) 2 undertakings on power ; 1 undertaking on wellness ; and ( 4 ) 2 undertakings on agribusiness that amounted to USD 5.49B will increase the demand for building stuffs. These PPP plans will besides function as an chance for private companies to increase their one-year building undertakings.

The growing of three industries, viz. : ( 1 ) touristry industry ; ( 2 ) BPO ; and ( 3 ) excavation industry will besides lend to the growing of the building stuffs industry. The increasing one-year foreign tourer reachings and domestic travellers opted for the increased in resorts, hotels, and condominiums. The addition in figure of adjustment installations was accompanied by the Republic Act of 9593 or Tourism Act of 2009 wherein the roads that are non ab initio classified as national but lead to tourism sites, airdromes, and havens will be improved which will be included in the DPWH budget for 2012.[ 22 ]For the BPO, building of commercial edifices is besides expected to increase to run into the demand of the industry. The investing of the Mines and Geosciences Bureau ( MGB ) would demo that the excavation still remains as a promising industry ( Table 1 ) . Investing on excavation would ensue to more office sites and barracks for excavation companies.

The motion towards constructing more sustainable developments is seen as an betterment for the building industry. New engineerings for merchandises and procedures will assist better the viability of building undertakings in the Philippines. By concentrating on the impact of building of the environment, the demand for environment-friendly merchandises may increase as the industry attempt to include the society ‘s public assistance in be aftering building undertakings.

The usage of plastic as an sum is presently being used in Germany. However, this new sum is non yet widely introduced in the Philippines. This is seen as an chance for the company to present a merchandise with more benefits than the bing merchandises in the market.


Competition ( big companies )

Emergence of new merchandises

Competition particularly against big rivals is seen as a major menace because these companies are already established in the industry. New companies that may present new merchandises in the market may confront troubles particularly if these merchandises are non patented. Large companies can merely establish the same merchandise at a larger graduated table. The handiness of support for these big companies will give them an advantage to bring forth more merchandises. The more merchandises a company manufactures, the chance to capture a larger market is bigger. Besides, big companies can be seen as good providers for developers and contractors who want a steady supply of stuffs.

Even if CHB presently remains as the primary pick for wall building, outgrowth of new merchandises as a replacement may present as a menace for the CHB market. Even if merely 5 % in Philippines utilizations prefabricated constructing constituents in lodging building, the roar in the building industry may increase the market for pre-fabricated walls. Across clip, if more lodging developments will be built utilizing pre-fabricated walls, the demand for CHB may diminish.

The cost of the EHB is at P5.90 per unit. The cost of direct labour is the largest at P2.52 per unit, followed by natural stuffs at P2.12 and mill operating expense at P1.26. The cardinal premises for these figures are presuming that 2,991,150 units of hollow blocks will be manufactured for the twelvemonth. The hollow blocks will be used for 5,175 houses which represent merely a conservative 5 % of Gawad Kalinga ‘s projected lodging undertakings. The cost of EHB at the terminal of the 3rd twelvemonth of operations will be at P4.94 presuming that measure manufactured has grown to 4,307,206 units. The cost nest eggs is achieved largely on the labour side at P1.91 per unit ( 24 % nest eggs from P2.52per unit ) brought about by more productiveness. The hollow block machine ‘s full capacity for one twelvemonth is 9,000,000 of hollow blocks, hence every bit long as measure improves to no greater than this sum, economic systems of graduated table can be achieved since there is small ground for labour and overhead costs to increase.

Presently the market monetary value for concrete hollow blocks is at P13.30 per unit which is 56 % more than the cost of our EHB, the EHB is projected to sell at the CHB market monetary value therefore we feel this cost is competitory plenty to be in concern. The pricing of EHB will non be lower since the EHB is a superior merchandise compared to the CHB nor will be priced higher since the market may still be critical of the merchandise in its launching stage therefore the best entry scheme is to monetary value it sharply at par with the CHB market monetary value

There is a 21 % cost nest eggs per square metre with the usage of EHB versus CHB. This is based on Table 2. The add-on of PET flakes lessens the demand for both cement ( 27 % less cost ) and sand ( 32.7 % less cost ) . Extra nest eggs is realized from the labour cost on picture, layering and stick oning in hollow block sum constituents, which lead to an overall decrease in cost per square metre.

The Filipino building stuffs market experienced an one-year growing of 6.54 % but is expected to witness a more sustainable growing of 5.36 % until twelvemonth 2015[ 23 ]. Bing a supply-driven industry, supply of building stuffs come from local providers based on the location of the undertaking. However, with the roar in the building industry ( 10.5 % mean one-year growing rate ) , smaller undertakings like GK undertakings experience deficit, as the growing of the building stuffs market is no longer in line with the growing of the building industry[ 24 ].

The demand for quality, economic system, and completion clip are the major considerations for all building undertakings that normally dictate the pick of engineering[ 25 ]. The traditional building stuff presently being used for building undertakings is the CHB. Based on the interview with cardinal participants in the existent estate industry, another option are the pre-fabricated walls. For fancied walls, the full wall is built off- site or on-site earlier installing as compared to CHB, which are, stacked one on top of another. In the Philippines, merely 5 % are utilizing prefabricated edifice constituent in lodging building[ 26 ].

The listed NGOs have varied intents such as instruction grants and medical specialty grants while other NGO ‘s would specialise their intent for specific causes such as medical specialty for the blind and societal public assistance for coconut husbandmans ( UCPB foundation ) . The mark clients for EHB Philippines in the NGO industry are those companies that have a budget for lodging or substructure undertakings. The listed NGOs in the state have a typical one-year budget runing from Php208,000 to Php1.16 Billion depending on the size of the NGO and this budget is shared with the NGO ‘s other intents such as instruction, poorness, societal public assistance and preparation development among others. Therefore, conservative premises must be made when gauging how much a typical NGO would apportion for the building stuffs budget.

The first measure was to choose from the Philippine Council for NGO Certification ( PCNC ) the NGOs that specifically province in their intent they engage in lodging, catastrophe direction, and funding undertakings geared towards bettering life conditions. Once the NGO have been filtered through its intent the 2nd measure is to acquire their recent one-year budget size. The current size of the NGO market for EHBin footings of one-year budget is Php6.16 Billion[ 27 ]. From this sum, the premise for conservative intents is that the allocated budget for lodging would be at the scope of 5-10 % , which represents P308-P616 million. The scope of Php 308 to Php616 million represents a conservative premise on the budget of the assorted NGOs for lodging and catastrophe direction related undertakings. Assuming the hollow block costs of a lodging undertaking would typically represent 30-40 % of the undertaking, so the estimated NGO market for EHB sums to Php 92.4 to Php246.4 million.

In a more optimistic scenario it can be assumed that the allotment for lodging undertakings from the mark NGOs would be at 20-30 % of their entire budget, this brings up the allocated lodging budget to Php 1.23 to Php1.84 billion. Using the same premises of the building stuffs budget at a 30-40 % scope, this fetches a figure of P369-736 million.

The profitableness in this market is high since the cardinal nature of the NGO is non-profit seeking and thereby the services and merchandises they intend to buy will most probably be based on the contributions they have already secured and have budgeted yearly for the twelvemonth.

The cardinal success factors in capturing the NGO industry are 1 ) Network and Business Relationship 2 ) Discount and 3 ) Fast Delivery. In order to follow with these factors, it is of import for EcoBlockPhilippines, Inc. to set up a strong relationship with the NGOs and this can be in the signifier of price reductions for lodging and catastrophe direction[ 28 ]related undertakings. The company ‘s scheme is to construct trade name equity as a concern that works closely with the NGO sector with the end of turn toing the betterment of Filipino populating conditions by supplying a superior merchandise at a competitory monetary value.

One scheme is for EcoBlockPhilippines, Inc. to ask for these assorted NGO ‘s for a cocktail party in AIM in order to present the company and affiliation with them for their lodging undertakings by supplying superior building stuffs at particular monetary values.

The two latter factors are to be accomplished by transfusing a strong civilization by upper direction and procedure betterments under the Thin civilization. At present, the current planetary clime in Asia continues to undergo monolithic dazes and alterations which had resulted in doomed lives, places and farther taking to the rehabilitation of countries in order to recover what had been destroyed. In the Philippines entirely, the Ondoy ( Typhoon Ketsana )[ 29 ]calamity rendered many metropoliss flooded at degrees ne’er experienced before thereby doing people to lose their places. Philippine PresidentA ArroyoA declared a province of catastrophe ” embracing most of Luzon after at least 86 people were ab initio reported dead in landslides and other incidents.Flood H2O degrees reached a record 20 pess ( 6.1A m ) in rural countries. As of October 24, 2009, at least 464 deceases in the Philippines were officially reported from the typhoon. In another recent incident, in August 2012, the southwest monsoon rains[ 30 ]had even surpassed the inundation degrees of the Ondoytragedy. These two separate incidents show the altering planetary clime brought approximately by the planetary heating phenomenon[ 31 ]. Both natural catastrophes have amounted to extraordinary sums of amendss[ 32 ]in the one million millions of pesos and the response from both the authorities and private sectors have improved in twelvemonth 2012 since the Ondoyevent has served as a strong reminder for the state to ever be prepared in instance of drawn-out rains brought approximately by today ‘s clime.

The placement in the NGO market will be by manner of presenting EHB Philippines as beginning of Green and environment-friendly merchandises that are readily-available in order to turn to the state ‘s lodging and catastrophe management-related undertakings. The EHB ‘s benefits will cut down the overall cost since the promise of nest eggs will be in the signifier of lower building costs. For catastrophe direction intents, EcoBlock Philippines, Inc. selling scheme is to give a particular monetary value as its contribution to the community in seeking times. The catastrophe direction primary selling scheme is to construct the EHB trade name as a trade name with a strong societal duty that aims to be the spouse of NGO ‘s that will readily supply building stuffs at a lower than market cost in order to help the Philippine community in its rebuilding procedure.

From 2007 to 2010, the Housing and Land Use Regulatory Board ( HLURB ) issued a licence to sell to a sum of 358,000 house and batch units in the Philippines. As shown in Figure 5, after the 54 % growing from 2007 to 2008, the figure of units launched for the following two old ages remained between 95,000 to 105,000 units.

In the National Capital Region ( NCR ) and the nearby states within a 130-km radius, 76,219house and lot units were launched between 2010 and 2012with 27 % mean one-year growing rate. As shown in Figure 6, the figure of units that were launched decreased by 55 % between 2010 and 2011. However, a 110 % addition was achieved for the 2nd one-fourth of twelvemonth 2012. This twelvemonth ‘s entire figure of house and batch units might still increase due to the release of licence to sell for the 3rd and 4th one-fourth.

The major issue that can be considered for the private existent estate developments is the engagement of the designers, applied scientists, and contractors. The planning phase of a development undertaking would include the readying of the maestro program by the designers. The architectural program will be prepared which will include the types of stuffs that will be used for the houses. These stuffs will be coordinated with the applied scientists to verify the stuffs. If a new type of stuff will be used, different trials will be required from the provider based on the applied scientists ‘ appraisal. Once all of these are verified, this information and the programs will be coordinated with the contractor. The function of the existent estate developer is to O.K. the programs based on the recommendations of the designers and applied scientists and to verify if the projected cost will adhere to their ain projections.

The indorsement of a new merchandise will come from the designers. The quality will so be verified with the aid of the applied scientists. Last, the costs that will be incurred will be approved by the developer.

There are two success factors, viz. : ( 1 ) quality, and ( 2 ) cost. Quality is really of import in mass building. This is one of the grounds why the blessing of a new merchandise may take some clip. The quality of a merchandise should be verified for this merchandise to be used in large existent estate developments. The cost factor can come in two scenarios. First, the new merchandise can be more expensive but in can shorten the building time.This would intend that nest eggs on labour will be realized. Second, the new merchandise can be cheaper with the same quality but the building clip would be the same. The nest eggs will come from thedecrease in the cost of building stuffs.

Major considerations for purchase

The demand for quality, economic system, and completion clip are the major considerations for all building undertakings that normally dictate the pick of engineering[ 33 ]. The traditional building stuff presently being used for building undertakings is the CHB. Based on the interview with cardinal participants in the existent estate industry, another option is the pre-fabricated walls. For fancied walls, the full wall is built off- site earlier installing as compared to CHB which are stacked one on top of another. In the Philippines, merely 5 % are utilizing pre-fabricated edifice constituent in lodging building[ 34 ].

The Filipino building stuffs market experienced an one-year growing of 6.54 % but is expected to witness a more sustainable growing of 5.36 % until twelvemonth 2015[ 35 ]. Bing a supply-driven industry, supply of building stuffs come from local providers based on the location of the undertaking. However, with the roar in the building industry ( 10.5 % mean one-year growing rate ) , smaller undertakings like GK undertakings experience deficit as the growing of the building stuffs market is no longer in line with the growing of the building industry[ 36 ].

Market Acceptance

Market credence is dependent on the possible clients who include existent estate developers, contractors, designers, applied scientists, NGOs, and the authorities. Based on the interview with cardinal participants in the industry, each client has several considerations in taking a building stuff. Developers have three considerations before accommodating a new engineering: ( 1 ) quality of the merchandise, ( 2 ) velocity of installing, ( 3 ) costs. The quality of the new merchandise should be similar or even exceed the quality of the bing stuff. The quality of the merchandise should be reflected on the coating of the wall. The new merchandise should besides be easy to put in. Any new engineering should be easy used by the labourers. The acquaintance of the labourers with a merchandise is the chief ground why CHB is still being used. The 3rd consideration is the most of import as the new engineering should either be at par or should take down the cost of building.

In sing a new merchandise, applied scientists will ever look at the trials to verify if a merchandise satisfied criterion and the cost. The designers and contractors ‘ will considerany new engineering that is easy to utilize and shorten installing clip to rush up building.

For NGOs and the authorities, the cost of stuff is the chief consideration. Decreasing the cost of stuffs could cut down the entire building cost of granted houses.

Market Cleavage

Market will be segmented based on location ( NCR and nearby states within the 130-km radius of the fabrication installation ) and the primary consideration for taking the building stuff for a undertaking: ( 1 ) NGOs ; and ( 2 ) existent estate lodging undertakings.

Target Market

EHBs will be offered to NGOs and existent estate developers. These NGOs from PCNC that seek to better the Filipinos ‘ life conditions through lodging, catastrophe direction, and funding undertakings. For residential undertakings, the company will besides aim designers and contractors as cardinal influencers for the pick of building stuffs.

Marketing Positioning

EHB will be offered as an eco-friendly merchandise which is a better alternate to CHB with extra benefits for ( 1 ) householders ( insulating belongingss and less H2O soaking up ) ; and ( 2 ) NGOs and industry participants ( easiness of use, shorter building clip, and lower wall building cost by 21 % ) . For NGOs, EcoBlock Philippines, Inc. will function as the spouse that will readily supply building stuffs at lower than market cost in order to help the Philippine community in its rebuilding procedure. For existent estate developers and cardinal influencers, EcoBlock Philippines, Inc. will go a beginning of advanced merchandises that will lend to the betterment of the building procedure.


EHB has more benefits than the regular CHB

EcoBlock Philippines, Inc. is a level organisation

The company ‘s strength is on the merchandise itself. EHB ‘s characteristics make it a better merchandise than the bing hollow blocks in the market. Due to lighter weight, lesser re-bar and cement, and easier handling and installing, the usage of EHBs will rush up building clip. It will besides take down building cost through nest eggs in labour and other building stuffs.

As a start-up, EcoBlock Philippines, Inc. will hold a level organisation which is considered as a strength primary due to the easiness in the determination devising procedure. Bing a little organisation, the flow of information would be quicker. As the company gears toward merchandise development, employee engagement is of import to be able to better the merchandise being offered.


EcoBlock Philippines, Inc. is a new company

EcoBlock Philippines, Inc. will get down as a small-scale concern

EHB is easy to copy

Bing a new company, it will be harder to vie against larger established companies as a provider. For each building stuff, contractors and developers prefer one supplier per undertaking. It may be hard for a new company to acquire a contract if the clients would prefer their bing providers. Besides, clients may be loath to make concern with a new company that offers a new merchandise that is non yet tested by the market.

Bing a start-up, support would be hard for the company because Bankss do n’t normally supply loans for start-up companies. The company will use 100 % equity ensuing to a small-scale concern. This is seen as a failing because the company will be viing with big companies who can fabricate a larger volume of merchandises. It may be hard for the company to pull clients with a big volume demand. Immediate enlargement may besides be hard compared to larger companies who have more entree to resources to obtain capital.

As mentioned in the company ‘s menaces, it is more hard to vie with big companies if the merchandise can non be patented. This serves as the company ‘s failing because the merchandise can be copied. Even if the company will be one of the first to present this merchandise in the market, this no longer be seen as an advantage if big companies decide to offer a similar merchandise.

Maxi-Maxi Strategy ( Strengths-Opportunities )

The Maxi-Maxi Strategy focuses on how the company will be able to widen the exposure of EHB. To have the benefits of the merchandise, the company will take part in events for building stuffs to showcase the merchandise to the key participants in the industry ( designers, contractors, and developers ) . Booklets will be distributed in these events as marketing collateral to set up merchandise callback. The company will besides seek to have the merchandise in web sites of organisations in the building industry.

Mini-Maxi Strategy ( Weaknesses-Opportunities )

Direct merchandising is considered as a good scheme to minimise the failings by taking advantage of the chances. By setting-up assignments to show the merchandise, the company will be able to demo the benefits of utilizing a new sum that can lend to the publicity of sustainability for community development. This scheme will besides take advantage of the building roar in the Philippines.

Maxi-Mini Strategy ( Strengths-Threats )

To be able to minimise the menace of big companies, EcoBlock Philippines, Inc. can develop a design for the hollow block that can be patented. With the extra benefits that the company offers, a patented design will increase the barrier to entry. Using an engagement design, the company will offer regular and corner blocks with a proviso for horizontal rebar. As portion of merchandise development, this design will guarantee the quality of wall building, peculiarly on block alliance.

Mini-Mini Strategy ( Weaknesses-Threats )

For this scheme, it is really of import for the company to set up relationships with clients to be able to acquire contracts from established developers. The end is to be after a purchasing experience that will make loyal clients.

Merchandise development is the chief scheme to minimise the menaces to the company. After presenting EHB, the company will develop a new merchandise with a design that can be patented. The company will still keep the characteristics and benefits of the first merchandise. The bing merchandise utilizing PET flakes can be easy copied. However, if the company can be able to develop a new design for the plastic sum, this will increase the company ‘s competitory advantage against rivals.


EHB will be offered in the signifier of 4-inch engagement blocks: ( 1 ) regular block ; and ( 2 ) corner block.

Monetary value

EHB will be priced at Php13.30 per block or at par with CHB. EcoBlock Philippines, Inc. aims to increase the monetary value of EHBs at 2 % per twelvemonth or together with the monetary value addition of CHBs in the market. NGOs will be given a 5 % price reduction regardless of volume.

Topographic point

EHB will be straight sold to the mark market for lodging undertakings located in NCR and nearby states ( within 130-km radius of the fabrication installation ) .


Nongovernmental organization

EHB will be introduced straight to NGOs and some authorities establishments specifically discoursing the benefits of the merchandise peculiarly the consequence of utilizing the EHBs on the entire building cost. Events will be organized to ask for NGOs to the Asian Institute of Management ( AIM ) . In these events, the company will be introduced and affiliations will be established such that changeless supply at particular monetary values will be offered.

Real Estate Developers, Architects, and Contractors

EcoBlock Philippines, Inc. will take part in conventions that are held yearly by the United Architects of the Philippines ( UAP ) and the Philippine Contractors Association ( PCA ) to showcase the merchandise to cardinal participants in the existent estate industry. Booklets will be distributed in these events. EHB will be featured in web sites specifically in the web site of UAP and PCA. The company will besides put meetings with industry participants to show the merchandise. After one twelvemonth, EHB will be advertised in technology and architecture publications.


The company will hold gross revenues officers that the interested clients can reach. The clients can order straight from the office with a lead-time of at least one hebdomad before bringing of the EHB. In the event that a client places an order less than one hebdomad before bringing the gross revenues officer will accept the order depending on the sum of the current stock list of EHB. The gross revenues officer will acquire information about the client like the contact individual, company name, name of contact, type of undertaking, undertaking continuance, EHB demand per twenty-four hours, frequence of bringing and other information that are relevant to the telling procedure and for the profiling of the client. The gross revenues officer assigned to the client will inform the contact individual on the footings of the company. The footings that will be discussed include price reductions ( for NGOs ) and the needed 50 % down payment before the order is processed. The gross revenues officer will besides function as the dealingss officer to the client to ask about the merchandise and make a different purchasing experience for the company or the NGOs involved.

“ EHB is an environment-friendly merchandise that serves as a better alternate to CHB. A merchandise of good quality that shortens building clip and reduces the usage of rebar and daubing stuffs for NGOs, existent estate developers and contractors who continuously seek for superior merchandises in the face of increasing costs of building stuffs. ”

Eco-Block Philippines Incorporated aims to present an environment friendly alternate to the building stuffs market in the Philippines. The company will offer a cheaper merchandise that will profit the developers of lodging undertakings by take downing the entire cost of a lodging undertaking by about 20 % . Another intent is to cut down non-biodegradable waste stuff in the landfills of the National Capital Region ( NCR ) by recycling these stuffs as an sum in fabricating an alternate merchandise to CHB. The venture will besides take to supply building stuffs at a lower monetary value to NGOs who provide places to the marginalized sector of society and monetary value the merchandise at par with the CHB to private developers of lodging units. Establish a fabrication installation to bring forth 1,650,000 units of EHB per twelvemonth on the first twelvemonth of operation.

Eco-Block Philippines is presently in the procedure of holding the company registered with the Securities and Exchange Commission ( SEC ) and late opened a corporate history with the Bank of the Philippine Islands ( BPI ) . The paradigm EHB has been tested at the University of the Philippines for compaction strength and the consequences will be released by mid October. Ecoblock Philippines is besides in the procedure of looking for a ideal location for the fabrication installation. Merchandise trials with the Department of Science and Technology ( DOST ) will be started by the first hebdomad of November.

Merchandise Description

The Ecological Hollow Block ( EHB ) is an option for the common Concrete Hollow Block ( CHB ) , which is the most widely used building stuff in the market. The EHB ‘s dimensions will be comparable to the CHB to let easiness of usage and acceptableness in the building industry. Using non-biodegradable stuff as sum the ensuing block will be stronger and lighter compared to a CHB.

Features and Benefits

Environment. The usage of EHBs will assist cut down non-biodegradable wastes in garbage dumps and landfills. ADB estimates that Metro Manila produces 6,700 metric dozenss of refuse per twenty-four hours, and that 2.25 % of these are PET bottles.

Better quality and lesser building costs. The usage of EHBs will increase the quality of building, lessening building clip, and diminish overall building costs. While keeping the same supporting capacity, a typical EHB ( 15.5 x 6 ten 7.8 inches ) weighs merely 8.6 kilograms compared to a concrete hollow block, which weighs 16 kg. This elation of the EHB allows a construction to utilize lesser steel support ( rebar ) , lesser foundation and dilutant columns for support. EHBs may besides be molded to mesh each other for easier installing. Furthermore, EHBs are besides smoother, which requires less cement for completing and consequences in fewer defects. Due to lighter weight, lesser steel and cement, and easier handling and installing, the usage of EHBs will rush up building clip and will take down labour costs for building. For a typical 30-square metre home, building or existent estate companies may salvage an estimated 20 one ( 21 % ) per centum in wall building costs.

Benefits for end-users. In add-on to the psychological value of having an environmentally friendly house, end-users may potentially profit from the lower building cost of a house, which uses EHB.

The purpose of merchandise development is to be able to develop a new design that can be patented. There are two designs that the company will concentrate on, viz. : ( 1 ) design of EHB as an engagement block ; and ( 2 ) design of the plastic that will be used in the blocks. These designs will hopefully give the company two patents.

For the design of the EHB, the company will develop a new design of the regular and corner blocks. These new design will concentrate on the meshing part of the block to guarantee block alliance for wall building.

Initially, the company will utilize chopped PET flakes for EHB. In developing the design of the plastic, the company will look for other fictile stuffs that can be used as an sum that can be assorted with PET. The purpose is to blend different types of plastics that can be melted and molded. With the aid of an industrial applied scientist, the new design will be develop that will function as a better sum. This new sum will increase the structural unity of the merchandise.

The Company will beginning its cement from bing cement companies in the National Capital Region ( NCR ) that is closest to the works to minimise bringing costs. The type of cement will be Rizal Super Portland cement that contains Philippine tuff/volcanic ash, which increases strength and lastingness.[ 37 ]A sum of 1,474 kilograms or 37 bags of cement is required per twenty-four hours.

The company will be utilizing lahar as a replacement for sand in fabricating the EHB. This will be sourced from the prey site in Concepcion Tarlac and will be delivered straight to the works. The cost of lahar is Php3,500 per truck burden that contains 18 to 20 three-dimensional metres ( M3 ) of lahar ( Php 175.00 – 194.44/ M3 ) . This is adequate to bring forth 2,500 – 3,000 units of EHB. A sum of 38 m3of lahar is needed per twenty-four hours or 2.12 truckloads per twenty-four hours.

The company will beginning the chopped PET from providers in NCR and Batangas City that are capable of providing 40 metric dozenss ( MT ) of chopped PET per month. PET bottles for natural stuffs are the most common consumer plastics and typically used for boxing such as containers for drinks, cosmetics, detergents and pharmaceutical merchandises. PET bottles can be processed into “ PET flakes ” and used to do vesture, rugs, strapping, or once more into PET bottles.[ 38 ]A survey published by the Asian Development Bank ( ADB ) found that 6,700 MT of waste is generated daily in Metro Manila, 15 % ( 1,005 MT ) of which are plastic.[ 39 ]Out of this volume an estimated 150.75 MT ( 15 % ) are PET bottles and merely half of these are presently being recycled.

To bring forth 5,288 units of EHB daily, the venture requires 71.5kg of chopped PET bottles per twenty-four hours or 22.3 MT per twelvemonth, which is merely 0.04 % of the entire sum of PET bottles discarded in Metro Manila per twelvemonth.

Natural Materials

The fabrication of EHBs requires cement, lahar and shredded plastic from PET bottles for natural stuffs. These will be delivered based on a Just-in-Time footing to take down material stock list costs. The cement and lahar will be sourced straight from makers and the prey site, severally, while the chopped PET bottles will be sourced from independent providers in the NCR and Batangas country.

Direct Labor

The fabrication works will run for eight hours per twenty-four hours and will hold six yearss of operation per hebdomad. This will necessitate a sum of 8 labour hours per twenty-four hours ( 2,496 labour hours per twelvemonth ) to be able to run into the mean one-year capacity of 1,650,000 units of EHB with an mean cost of Php1,935,752.00. Ten ( 10 ) employees will be needed to run the equipment. Loading the natural stuff into the concrete sociable will necessitate 2 labourers, runing the hollow block shaper will necessitate 5 operators and reassigning the blocks from the machine to the bring arounding country requires 3 labourers. We will besides engage a civil applied scientist and an industrial applied scientist to supervise the day-to-day operations of the works and the quality of the merchandises.

Factory Operating expense

The one-year mill operating expense is Php240,000.00, which will cover electricity demands of the equipment and the costs of H2O to bring forth the EHB.

The works is capable of fabricating a upper limit of 6,610 units of EHBs per twenty-four hours at full capacity ( 12 hr works operation ) . During the first twelvemonth of operations, the works will merely fabricate 5,288 units per twenty-four hours.

The natural materials-shredded plastic, cement and lahar -will be fed into the cement sociable manually where H2O will be added to bring forth a mixture. From the cement mixer the resulting mixture will be transferred into the cement hollow block shaper via a conveyer, and will be molded into the finished EHBs. The hollow block shaper can bring forth a upper limit of 550 units of EHBs per hr ; merely 9.6 machine-operating hours are needed per twenty-four hours to bring forth the budgeted 5,288 units per twenty-four hours. After modeling, the blocks will be moved to a drier to take extra wet content, and will be allowed to put for 1-2 yearss depending on conditions conditions. The works has allotted 3,500 square metres of unfastened infinite for the hardening procedure and for finished goods stock list.

The Company aims to present EHBs right after bring arounding to cut down managing costs of stock list. The company will sub-contract the bringing services to clients. The stock list will be limited to 5 yearss worth of EHB to function as buffer for first-come-first-serve orders or unexpected events that may straight impact the production agenda.

For the first twelvemonth of operation, the company will hold a sum of Php 4,624,392.50 in other disbursals. These disbursals include rent of the mill ( Php 1,440,000.00 ) , legal and licensing fees ( Php 126,000.00 ) , admin and office supplies ( Php 50,000.00 ) , gas and oil ( Php 2,280,600.00 ) , public-service corporations disbursals ( Php 240,000.00 ) , fix and care of equipment ( Php 313,792.50 ) , and depreciation costs of machinery ( Php 170,000.00 ) .

The thin system will be applied in EHB Philippines with the end of guaranting high quality while maintaining costs low and bettering the bringing clip in the procedure. In order to implement an effectual tilt system, the upper direction will be the first to