BUSINESS

TBIC

Construction

Bison Extension

Executive Summary

SBC Construction is a construction company established by Sitting Bull College. The company is a part of the college and is managed by Dave Luger who is an instructor in the Building Trades Program at the college. The profits from this enterprise go into the General Fund at Sitting Bull College and become a source of financial support for the college. However, the primary purpose of setting up SBC Construction was to provide employment experience opportunities for graduates of the Building Trades Program.

SBC Construction operates its business from the campus of Sitting Bull College in Fort Yates, North Dakota. The company has built 21 houses and 8 office buildings since it started its operations in 1997. Recently, the enterprise has averaged 5 houses built per year. However, with the planned construction of a new campus for Sitting Bull College, this construction company plans to build 18 residential units in the next year and continue at that same level of activity as building progresses on the new campus. The construction company plans to accomplish this with the existing level of labor and equipment resources.

Company Background

The enterprise operates from the campus of Sitting Bull College in Fort Yates, North Dakota. The company office is used by Mr. Luger for both company management purposes and for his instructional duties at Sitting Bull College. Resources are available from the college for accounting, short term financing, computer, FAX and phone. Use of these college resources are part of the operational costs for SBC Construction.

Actual company activity takes place at the construction sites. These sites have been in the Standing Rock Sioux Reservation community and the company plans to continue to do its construction on the reservation.

Products

SBC Construction builds houses and office buildings as a general contractor. SBC Construction employees have building skills in the areas of framing, siding, roofing, trimming, drywall & texture, and painting. Other specialties are contracted out to subcontractors. These other specialties include electricians, plumbers and heating contractors.

As a construction contractor, the final product is a completed building ready for occupancy.

The types of buildings that SBC construction builds are residential and office buildings.

The Industry, Competition and the Market

Because for the relationship between the college and the company, there is a ready market for the services that SBC Construction provides. In addition, the company has established relationships with the tribal government as well as school districts on the reservation. For the next year, Sitting Bull College wants SBC Construction to build 18 residential buildings for its new campus. This volume of construction activity is significantly more that what the company has been doing during the last few years. As a result the market for the services provided by the company is in place if the company is able to come up with a plan to met the demands of its market. For the immediate future, marketing efforts of the company can be relatively minimal. Because of the work load already in place, SBC construction will not need to be involved in competitive biding in the immediate future.

Perhaps the most needed marketing activity is developing and maintaining good public relations with the stake holders in the new campus project. Activities needed to build and maintain good public relations would be to report to the administration and board of trustees on a regular basis, keep construction sites as clean as possible, and do what is necessary to avoid negative publicity. When reports are given, successes need to be emphasized rather than problems.

Operating Plan

SBC Construction builds houses and office buildings as a general contractor. SBC Construction employees have building skills in the areas of framing, siding, roofing, trimming, drywall & texture, and painting. Other specialties are contracted out to subcontractors. These other specialties include electricians, plumbers and heating contractors.

The coordination of these skills is the responsibility of management. Company employees use their specific skills at the construction site and when their tasks are completed, they move to the next construction site. Subcontractor skills are managed in the same way. With the campus project, the construction sites will be in close proximity to each other making the scheduling of skill activities more manageable.

Management, Organization and Ownership

The management function of SBC Construction will be performed by Dave Luger. Dave is an employee of Sitting Bull College.
The company operates as a division of Sitting Bull College. Sitting Bull College is organized as an educational institution and is a non-profit organization.

Goals and Strategies

The primary mission of SBC Construction is to provide employment opportunities to the graduates of the Building Trades Program at Sitting Bull College. These employment opportunities will give the former students/employees relevant building trades experience. This, in turn, will give them better job opportunities than they would have as program graduates with no experience.

The building of a new campus will employ SBC Construction as the primary construction company to build the new buildings needed for the new campus. Initially, this building activity will be the construction of 18 residential units. SBC Construction is to provide quality construction to units built and to do it in a cost effective manner.

Financial Assumptions

Assumptions behind the financial projections are as follows:

1. Three residential units will be completed during every two month period with one getting completed the first month and two the second month. average revenue from each residential unit is projected at $75,000. Revenue projected to increase 3% in years two and three.
2. Other Direct Costs are Subcontractors which are projected at 48% of total revenue. This percentage is based on previous years actual performance.
3. Materials are projected at 20% of total revenue. This percentage is based on previous years actual performance.
4. Wages based on present payroll and 3% annual increases. Other payroll costs projected at 15% of wages.
5. Insurance, office, phone & miscellaneous costs are based on recent performance of the company.
6. Fuel costs based on use of 1000 gallons per month at $1.50 per gallon.
7. Administration-SBC are costs relating to use of the facility and equipment at Sitting Bull College. This projection is based on 10% of the total direct and operating costs of the company.
8. While the cash flow projections show a substantial accumulation of cash by the company, the actual profits get transferred into the Sitting Bull College General Fund.