Introduction of the Building Company’s Economy

1. Introduction of the Building Company’s Economy

2. Specifications of the Building Industry • Each building object is unique • Production equipment moves to the product - building object • Long production cycle, complicated production process • High dependence of the production process on weather • For construction there are used product from all branches of national economy that then influence the result quality of the building object Introduction of the Building Company's Economy

3. Subject of Building Market • Investor corporation or individual, from his sources the building is financed and that usually ensures its preparation and realization. Investor usually becomes the owner or the user of the building, in the relation towards supplier he is in a role of a customer • Designer corporation or individual ensuring a supply of a project documentation of a building • Supplier corporation or individual that realize building works and ensures a supply of a building object • Sub supplier corporation or individual that is by main supplier entrusted with realization of specified part of works on a building order • Provider of financial sources corporation that provide to investor financial sources for a realization of a building order Introduction of the Building Company's Economy

4. Subject of a Building Activity Activity of a building company is based on a realization of building orders Building order • Supply of outputs, works and services for purpose of creating of new building object or adapting of an existing object A result of a building order realization can be: • New building: newly created building object having a character of long-term tangible property and creating a compact or at least technically separate part of a building • Reconstruction of an object: construction work including interference with building constructions • Modernization of an object: construction work substituting existing parts of an object by more modern parts and increasing availability and usability of an building object • Extension of an object: additional building Introduction of the Building Company's Economy

5. Kinds of Building Production Building production it is possible to divide into following kinds: • Basic structural production • Includes supplies of building works realized own workers or sub suppliers • These supplies it is possible next to divide into following kinds of production: • Main building production • Includes supplies of building works realizes mainly on fabric (foundations, horizontal and vertical constructions etc.) • Associated building production • Includes professions and handcrafts • Subsidiary production • Includes preparation of resources and facilities needed for basic structural production, e.g. production of intermediate products and production of building materials Introduction of the Building Company's Economy

6. Kinds of Building Orders According to the Investor From the aspect of a investor character (or sources of financing) it is possible to distinguish following kinds of works: • Public order (state or institutions of public and self administration (towns, regions) or other organizational parts of the state) • Privat order • Individual orders (investors are usually in a form physical persons that don’t realize the order in the frame of own business activity) • Orders in the frame of a business sphere (investor is in the form of private person that realize the order in the frame of own business activity) Introduction of the Building Company's Economy

7. Building Company - Foundation Business plan as a basic groundwork for the company foundation includes following parts: • Realization summary • Characteristic of a company and their objectives • Organizational management • Overview of basic results of a feasibility study • Conclusions • Annexes Introduction of the Building Company's Economy

8. Contents of a Business Plan Realization summary shows basic features of a company in brief and convincing for and includes following parts: • Name and address of a company, contacts • Characteristic of a product or service that are objects of a business, their specific features and advantages in comparison in the face of competition • Description of markets where the company wants to assert itself • Strategic focusing of a company for the period of three to five years including an identification of long-term objectives and ways to achieve them • Valuation of manage experiences and of quality of key employees • Financial aspects including presumptions of a profit in following five years, amount of needed capital sources and their purpose Introduction of the Building Company's Economy

9. Feasibility Study Overview of basic results of a feasibility study • Market analysis and marketing strategy • Capacity of a production unit • Material inputs and energies • Location of a production unit • Labor power • Organization and management • Financial analysis and valuation • Risk analysis Introduction of the Building Company's Economy

10. Building Company – Legal Aspects of a Foundation Aspects for decisions about legal form of business: • Number of founders • Competence for management, representation of the company • Requirement for initial capital • Business risk according to the way of guarantee • Limited guarantee • Unlimited guarantee • Administrative difficulty • Participation on a profit or a lost • Difficulty of financing Introduction of the Building Company's Economy

11. Legal Forms of Business Trades • Notification trade • unregulated • regulated • License trade Trading companies • Personal • Public trading company • Limited partnership • Capital • Limited company • Corporation (joint stock company) Introduction of the Building Company's Economy

12. Building Company - Association Objectives of association it’s possible to characterize in following areas: • Supply area • Association of companies with suppliers (mainly companies dependent on supplies of materials or services) • Production area • Better use of production capacities • Exchange of experience • Common research and development • Sale area • Achievement of better position on the market • Financial area • Higher availability of capital • Easier financing of orders (big projects, eng. in the area of infrastructure) • Tax area • Transfers of returns into countries with the lowest tax rates • Others • Common promotion or advertisement, common work with public, common information services Introduction of the Building Company's Economy

13. Association systems According to the economic and legal independence of associated companies • Co-operation (in not in contract agreed areas companies stay legally and economically independent) • E.g. joint venture (association for fulfilling of directly defined objective) • Concentration (companies conform themselves to one management, they lose economic and sometimes also legal independence) • Takeover of majority share in the company (legal independence without changes, sometimes limited economic independence in decision making etc.) • Fusion (association of companies that by this lose legal subjectivity and there arises new legal unit) According to the associated economic degrees • Horizontal (companies are associated in the frame of the branch in order to protect common interests) • Vertical (assurances of particular degrees of production) • Interdisciplinary (association in various branches on various degrees in order to spreading the risk) Introduction of the Building Company's Economy

14. Sanitation and Downfall of a Company Sanitation • It consists in an analysis of activities in order to find reasons of undesirable position and to suggest and realize for achievement of desirable position Basic steps of sanitation: • Decreasing of basic capital • Fusion with economically stronger partner • Delay of some payments based on an agreement with the second side Downfall • Based on a voluntary decision • Decision of partners • Expiration of time for what the company was founded • Downfall of an objective or purpose, for what the company was founded • Constrainedly • Decision of a court of justice • Bankruptcy proceedings Introduction of the Building Company's Economy

15. Objectives of a Building Company Basic objectives of a building company • Maximization of market value of a company • Maximization of benefits of company’s owners • Maximization of a profit as a difference between returns and costs Profit = Returns – Costs Particular functional departments allows the assurance of maximum profit: • By maximization of returns • Minimization of costs Introduction of the Building Company's Economy

16. Organizational Structure of a Building Company Organizational structure • Formal structure of organizational units in the formally organized company Main objective of an organizational structure • Delegating of authorities of the owner (owners) of a company to the management from the reason of limited managing abilities of the owner • Achievement of maximally possible efficiency of production based on effectively running system of management Basic suppositions for the organizational structure creation • Identification of activities necessary for the company’s objectives achievement • Aggregation of identified activities into organizational units (specialization) • Dividing of authorities and responsibilities of organizational units and responsibilities for organizational units Introduction of the Building Company's Economy

17. Organizational Structure of a Building Company Way of organizational units creation • Functionalization • Specialization according to company’s functions • Specialization of organizational units on specific activities • Diversification (specialization according to an object), an object can be in the form of: • Group of products • Product • Market • Project From this dividing basic kinds of organizational structure result: • Line organizational structure • Project organizational structure • Matrix organizational structure • Divisional organizational structure Introduction of the Building Company's Economy

18. Line Organizational Structure Characteristics: • Base on particular functions a company is divided into partial departments • Each department is responsible for realization of directly defined activity • Employees of the department are directly subordinated to heads of particular departments • Partial departments communicate with each other through heads of particular departments Advantages: • Clear determination of subordination and superiority • Possibility of reaching of high specialization in the frame of the department • Efficient work for one chief Disadvantages: • Sometimes quite long information flows (communication among departments usually through they heads) • Low involvement for whole company’s objectives (above all the best effort for department not for the company as a whole) Introduction of the Building Company's Economy

19. TOP MANAGEMENT MANAGEMENT A MANAGEMENT B MANAGEMENT D MANAGEMENT C A1 B1 D1 C1 A2 B2 C2 D2 A3 B3 C3 D3 Line Organizational Structure Introduction of the Building Company's Economy

20. Project Organizational Structure Characteristics: • In the frame of basic organizational structure of a company there is provisionally created new organization oriented on a realization of certain project (a load with specific features) • Project structure is interdisciplinary, there is named the head of the project that creates team of workers of various professions needed for the project solution Kinds of project organizational structure (according to the way, how much the basic structure is influenced): • Co-ordination of the project • Line still dominates • Head of the project only connects workers creating the team • Workers work on the project in the frame of their position in the line structure • Net project organization • In parallel with the existing structure there the new fully organizationally independent project team arises • Workers of the project team are completely freed form their duties in the frame of the department and they are fully subordinated to the head of the team Introduction of the Building Company's Economy

21. TOP MANAGEMENT MANAGEMENT A MANAGEMENT B MANAGEMENT C MANAGEMENT OF PROJECT 1 A1 B1 C1 A2 B2 C2 A3 B3 C3 Project Organizational Structure Introduction of the Building Company's Economy

22. Matrix Organizational Structure Characteristics: • Primary structure is created according to the one criteria (e.g. line structure) and it is connected with the secondary structure created according to the second criteria (e.g. project structure) • This form can better react to changes in the surrounding through project managers • However this higher elasticity brings a failure of a management unity • It concerns about “structure of two chiefs”, where the first chief is represented by head of the department and the second is represented by head of the project or order (site manager) Introduction of the Building Company's Economy

23. TOP MANAGEMENT MANAGEMENT A MANAGEMENT B MANAGEMENT C MANAGEMENT OF PROJECT 1 MANAGEMENT OF PROJECT 2 Matrix Organizational Structure Introduction of the Building Company's Economy

24. Divisional Organizational Structure Characteristics: • Structure intended mainly for high companies with wide portfolio of production • According to the kind of output the company is divided into particular divisions (dividing according to the product - similar with the project structure) • Particular divisions are organized according to the line or project organizational structure • Divisions in the project structure are completed by departments common for the whole company Introduction of the Building Company's Economy

25. Example of Divisional Organizational Structure Introduction of the Building Company's Economy

26. Functional Departments of a Building Company Functional departments ensuring the achievement of basic objectives of a building company • Marketing department • Trading and technical department • Production department • Department of sub-supplies management • Economic department • Department of the stock management • Personal department • Legal department • Investment department • Quality management department • Other departments Introduction of the Building Company's Economy

27. Marketing department Basic objectives of the marketing department: • Forecasts of long-term and short-term development of production activity of a company • Market analysis and a choice of suitable business (production) opportunities • Support of the sale of own product in the form of suitable advertisement or another form of promotion • Contact with customers Introduction of the Building Company's Economy

28. Trading and Technical Department Basic objectives of trading and technical department: • Preparation of groundwork for selection procedures • Assurance of documents needed for the selection procedure • Preparation of supply budgets and calculations • Responsibility for correct offer and participation in the selection procedure • Preparation of a production • Preparation of a realization project documentation • Preparation of realization budgets and prices calculations • Preparation of organizational plan and time harmonogram • Plan of production sources • Financial plan • Preparation of groundwork for selection procedures for the choice of sub-suppliers • Preparation of groundwork for invoicing of building works (in co-operation with the site manager responsible for the order) • Next activities connected with the assurance of the production Introduction of the Building Company's Economy

29. Production Department Basic objectives of a production department • Assurance of a supply of agreed works • In agreed amount • In agreed quality • In agreed time • For agreed price • Assurance or providing of information about production to the other departments using next this information (trading and technical department, economic and personal department) • Next activities connected with assurance of clean production process running Introduction of the Building Company's Economy

30. Department of sub-supplies management Basic objectives of the department • Assurance of a choice of the most suitable supplier of works that the main supplier doesn’t want (or is not able) to produce by its own capacities • Assurance of draft agreements with particular sub-suppliers including an agreement about: • Specific subject of the supply • Price of the supply • Term of the supply • Quality of the supply • Evidence of information about a co-operation with particular sub-suppliers on particular orders • Other activities connected with the sub-supplies management Introduction of the Building Company's Economy

31. Economic Department Basic objectives of an economic department • A costs and returns evidence, next accounting evidence, a tax evidence • Controlling (costs analysis, comparison of planned and real costs, analysis of differences, suggestion of operations for achievement of higher efficiency of production activity) • Assurance of financing of the production • Invoicing of outputs (based on groundwork provided by production department and trading and technical department) and encashment of receivables • Payment realization • To sub-suppliers (of services and materials) • To employees (wages) • To the state (payments of social and health insurance, payments of taxes etc.) • Communication with bank and other financial institutions Introduction of the Building Company's Economy

32. Department of the Stock Management Basic objectives of the department • Assurance of effective activity in the area of the stock management • Optimal size of a supply (e.g. of a material) to cover all requirements of the production without arising of risk of production break and with this break connected losses • Optimal time of supply cycle • Evidence of the material outgoing, basic accounting evidence of the stock economy • Contact with suppliers and other activities connected with the stock management Introduction of the Building Company's Economy

33. Personal Department Basic objectives of the personal department • Objectives in the area of the employees evidence and wages • Evidence of all employees of the company • Preparation of wages for particular employees • Evidence of sickness absence including assurance of payments of a sickness benefits • Providing of meal tickets • Creation of declarations of taxes for particular employees • Next objectives • Objectives in the area of receiving of new employees and ending of the contract of work • Co-operation on preparation of a selection procedure for a receiving of new employees • Participation on the choice of new employees • Preparation of new contracts of work with new employees • Ending of contracts of work with employees Introduction of the Building Company's Economy

34. Legal Department Basic objectives of the legal department • Preparation and check on the concluding contracts • Interpretation of new law or novels of existing laws • Orientation in basic legal norms and juridical consultation to particular departments • Other activities connected with legal issue Introduction of the Building Company's Economy

35. Investment Department Basic objectives of the investment department • Analysis and suggestions for the company’s development in the area of obtaining of investments in the form of: • Long-term tangible property (whole expenditures for the realization of new building, modernization, reconstruction or sanitation of the company’s property) • Financial investments • Intangible investment (research, education, social development) • Creation of investment plan of the company arising from the strategic business plan Introduction of the Building Company's Economy