Business Plan - Jeddah

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§§§§§§§§§§ Business Plan 2013 Document Authors: Wael Ghazzawi Contributions by: Nidal Hamdan & Fadi Halabi Oger Sys. NEXT GENERATION SOLUTIONS Oger Systems Ltd. is a technology system integrator that pro- vides Turn-Key solutions and services starting from concept, design, implementation to comissioning wrapped with Project Management Methodology. www.OgerSystems.com OGER SYSTEMS

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Transcript of Business Plan - Jeddah

Page 1: Business Plan - Jeddah

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Business Plan 2013 Document Authors: Wael Ghazzawi Contributions by: Nidal Hamdan & Fadi Halabi

Oger Sys.NEXT GENERATION SOLUTIONS

Oger Systems Ltd. is a technology system integrator that pro-vides Turn-Key solutions and services starting from concept, design, implementation to comissioning wrapped with Project Management Methodology.

www.OgerSystems.com

OGER SYSTEMS

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nderstanding the government planned future city expansion of both Jeddah and Makkah allows us to

better forecast the expected categories, distribution, and size of business opportunities that will become available at the different growth phases. And as such would allow us to create a customized set-up that uses selective brands and develops industry specific services that would insure providing a selective edge on competitors which is integral for securing Mega-sized projects that follow international standards.

The size of our investment should however have an upper limit that is a set reflection of the company’s planned size of growth, which maintains an acceptable ratio between our trained & integrated staff to the Man-Power infrastructure required to implement these projects.

At the same time the investment needs to be distributed over a multi-category multi-sized type of acquired projects that mitigates risk by allowing a smooth cash flow-cycle that prohibits large projects from hogging all the liquidity in favour of small short cycle projects that offer faster returns with lower margins.

To do so we need to first start by building financial return models that reflect the investment-cycle for a specific category of projects (“Hotels, Universities, Schools, etc.“) in a specific region (Makkah or Jeddah) highlighting the factors that sets or drives the delivery deadline, while integrat-ing the effects that certain region specific risks might pose on our investment (Floods). From that point we can then define the project portfolio that is most profitable and has the least amount of risk for maximum returns on our invest-ment.

Furthermore we will be introducing a new prototype Arial based survey software system that allow us to analyse vast areas and pin-point areas of interest with potentially high yielding projects in addition to providing an initial idea about the type, size, and construction phase of the project before even having to visit the site in person.

In the sections to follow we will discuss in depth the strat-egy we are proposing, while presenting a list of upcoming major projects specific to Jeddah - Makkah region.

INTRODUCTION

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eddah Municipality released a draft of its upcoming strategic 20 years growth Plan reflecting the zone dis-

tribution and land use schema to be followed (Please refer to figure 1 on the next page).

The major change was the creation of a new international Airport (KAIA - King AbulAziz International Airport - Jeddah) located closer to Obhur Creek. This effectively allowed the move of the city business center to Obhur Al-Shamaliah ( 21°43’43.40”N, 39° 5’24.27”E) where the new Kingdom tow-er is being built in a Mega-Construction Zone surrounded by an entirely new city -(Refer to Opportunity Zone 1).

More importantly the municipality is planning to release the old airport land space in favour of urban development, with an area of around 1,200 hectares of vacant strategi-cally located land space surrounded by several important historical, cultural and educational districts as well as other proposed developments. The site is due to become the larg-est single development in jeddah history which will be in close proximity to a proposed major transportation hub, that is directly adjacent to the expanded national raid network. Making this area a prime investment location for hotels and

services tailoring to both Hajj and tourism where by the distance between Jeddah and Makkah is reduced by the high speed train services that are in close proximity constituting a second hot area for future growth - (Refer to Opportunity Zone 2).

Note: Additional Opportunities will be presented below.

In addition the municipality has created a list of areas that are considered a priority for investment and growth which consist of the following: Thuwal, Dhaban, Asfan which need to be investigated further to understand the type of invest-ment they will attract based on their proposed purpose in the overall picture.

A small highlight of the potential project opportunities that are currently or will soon be available in Jeddah Region will be presented in the upcoming pages with a short summary of the logistical value of each opportunity.

MAJOR GROWTH ZONES - JEDDAH

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arameen high Speed Rail project (Jeddah Station) is also known as the “Western Railway” or “Mecca-Medina high speed railway”, is a 449.2 kilometres (279.1 mi) high speed inter-city rail transport system under construction in Saudi Arabia.

It will link the Muslim holy cities of Medina and Mecca via King Abdullah Economic City, Rabigh, Jeddah, and King Abdulaziz International Airport. It will connect with the national network at Jeddah. Its primary purpose is to facilitate the inter-connec-tion between Makkah and Maddinah (the Harameen) facilitating pilgrimage.

OPPERTUNITY ZONE 1 - HHR - JEDDAHCENTRAL JEDDAH

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Logistical Value

The project is one of 4 building hot spots in Jeddah with a gov-ernment investment value of over 773 Million USD,

Project Duration

From: Q1 2011To: Q4 2014 (Delayed)Status: Under Construction - Bidding for LC Systems

Opportunity

Nidal Hamdan will be forwarding the information for the bid requirements for El-Seif which is a saudi Oger subcontractor.

General Information

Engineering designs have been prepared by Foster + Partners and Buro Happold. According to SRO, the stations will be ‘to the highest international standards and specifications’, with ‘aestheti-cally iconic’ designs which take into account Islamic architectural traditions. The stations in Makkah and Madinah will be ‘consistent with the religious dimension’ of the holy cities.

Main Contractor

Saudi Oger - El-Seif Engineering Contracting Company.

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he decision to reutilize the old airport for urban development made available 1,200 hectares of vacant strategically lo-cated land space surrounded by several important historical, cultural and educational districts as well as other proposed

developments. The site is due to become the largest single development in jeddah history which will be in close proximity to a proposed major transportation hub, that is directly adjacent to the expanded national raid network. Making this area a prime investment location for hotels and services tailoring to both Hajj and tourism where by the distance between Jeddah and Makkah is reduced by the high speed train services that are in close proximity constituting a second hot area for future growth

Logistical Value

No Information available yet.

Project Duration

From: -To: -Status: -

Opportunity

Expected to be a hotel dominated region that service the Hajj season and pilgrims.

General Information

No Information available yet

Main Contractor

No Information available yet.

OPPERTUNITY ZONE 1 - OLD AIRPORTCENTRAL JEDDAH

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eddah Center Project Development is dedicated to redeveloping the central business hub of the city of Jeddah and pre-serving the historic area, the project will be the largest city center urban project in the Arab world. Jeddah Center Project

has a land area of around 6 million square meters and the project will result in a total built-up area of 12.7 million square meters. In co-operation with the Jeddah Municipality, the vision is for the Jeddah Central District to once again become the heart of the city. The project will economically rejuvenate Jeddah Central District, create world class business, residential and retail facilities, revive the historical and cultural heritage of Jeddah, purify its marine environment and reunite the city with the sea. The end result will create job and housing opportunities for Jeddahs young population, 60 % of which is under 25.

OPPERTUNITY ZONE 2 - JCPDCENTRAL JEDDAH

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Logistical ValueThe project is one of 4 building hot spots in Jeddah with a gov-ernment investment value TBD USD,

Project Duration

From: -To: -Status: Under construction.

Opportunity

A new city center consisting of business towers, water front, flood gateways, new infrastructure, Malls, Hotels, Entertainment facili-ties.

General InformationThe consortium includes world renowned companies such as Solidere International, the company behind the re-birth of Beruit city center, the Urban Development Company, a Saudi real estate developer engaged in multiple mega projects in the Kingdom, and renowned regional partners such as Siraj Capital and Al-Tijaria & Venture Capital Bank.

Main Contractor

No Information available yet.

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ing Abdullah Sport City (KASC) consists of a 60,000 seats football stadium, a 2,000 seats multi-sports hall, external athletic stadium with a 1,000 seats tribune, several training fields (football pitches, tennis courts, athletic sports,…), a

mosque and parking for 45,000 cars. The Major size of the business opportunity will be centered around Public Address, Audio-Visuals, Fire Alarm, CCTV, and news reporter rooms.

OPPERTUNITY ZONE 3 - SPORT CITYOBHUR AL-SHAMALIYAH

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Logistical ValueThe project is one of 4 building hot spots in Jeddah with a gov-ernment investment value of over 552 Million USD,

Project Duration

From: Q3 2012To: Q4 2014 (October 31, 2014)Status: Under Construction - Concrete Phase

Opportunity

Nidal Hamdan is currently working to set a meeting with BESIX since Al-Muhaidib is only responsible for concrete work.

General Information

On 12th September, 2011, BESIX signed the Contract for the construction of the King Abdullah Sports City Project. In a 50/50 joint venture with Al Muhaidib Contracting, BESIX will develop the KASC Project in Jeddah Saudi Arabia.

Main Contractor

Aramco - (Al Muhaidib & BESIX)

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he expansion and growth Plan set for Jeddah City requires the creation of a new business center that utilized the unused space at Obhur Al-Shamaliah which is logistically located close to the new KAIA international Airport and KASC

Sport City. This new area has a central peace which is the Kingdom Tower but more importantly it is surrounded by an entirely new city similar to KAFD in Riyadh with multiple Tower, Hotels, Hospitals, Malls and an entirely new infrastructure to service it. Moreover the location is considered as one of the major attractions for tourism in Jeddah, which allows us to predict that the major distribution of building will be for tourism services with Hotels and Malls constituting the majority of the buildings.

Logistical Value

The project is one of 4 building hot spots in Jeddah with a gov-ernment investment value of over 15 Billion USD,

Project Duration

From: Q4 2011To: Q1 2017Status: Under Construction - Concrete Phase

Opportunity

The real value for us is actually in the vacinity towers and hotels being constructed where we can secure a full Solution Contract.

General Information

The partners of Jeddah Economic Company (JEC) are Kingdom Holding Company, Mr. Samaual Bakhsh, Abraar, International Hold-ing Company, prominent Jeddah businessmen Mr. Abdulrahman Hassan Sharbatly and Saudi Bin Laden Group (SBG). The capital of JEC is made up of SR8.8 billion in land value, assets that are SR7.3 billion, plus SR1.5 billion in cash contributed by SBG that further demonstrates their confidence in this extensive project. The Tower will be surrounded by a new City with its own hotels and towers.

Main Contractor

TBA

OPPERTUNITY ZONE 4 - KT - CITYOBHUR AL-SHAMALIAH

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akkah as a city is built around the holy tourism indus-try and as such the majority of construction projects

are either Hotels or Residential houses that are active seasonally. This fact presents an interesting component to projects that are specific to the Makkah region, where by their date of completion is actually driven by the season start date of major holy events such as Hajj. This is why no hotel in Makkah would have a construction span longer than 2 years and the period becomes shorter as the property becomes closer to the haram location.

The high demand and low availability of housing in the holy seasons creates a highly competitive environment for deliv-ering on time to maximize the profit returns of the investor which is an insured 400% reservation rate as a minimum, we note here that the pervious value is not a mistake but is a result of standard hotel policy in Makkah where by they modify the room layout to fit the maximum number of beds in the available area as such a hotel with 300 single bed rooms would actually contain 1200 people during the season as a minimum.

This continues seasonal demand creates a business environ-ment that is short-cycle low-risk fast-return with small to medium investment values where by a standard full system hotel would have a sale opportunity value of around 14 Million SAR.

This means that when we decide on the type/location and return of our to be acquired projects we need to take into consideration the profit margin versus the investment peri-od. Since and if the selection of the client was done properly the rate of return from these small investments provides a very profitable model for Oger Systems to grow.

Furthermore we highlight the fact that most construction sites in our field would actually provide the physical cable pulling via their own child company meaning that our implementation phase is reduced to testing commissioning and programing which can be fit in around 4 month at most.

MAJOR GROWTH ZONES - MAKKAH

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nlike Jeddah, Makkah has a continuous build spree of hotels and residential housing in nearly any free space available and as such you would see hotels in an otherwise uncommon non-logical place this is a result from having Hajj Offices

do the reservation and provide transportation to and from The Hajj Fara2id. This leads to an interesting setting whereby and as a result of the distribution complexity and high build rate resulting in a market that is simply harder to survey and report resulting ultimately in less competition and higher profit margins. Add to that the lack of IT solution service providers whereby IT companies have the choice of selecting which projects to take to maximize return based on their limited maxi-mum man power.

Logistical Value

Project values differ based on the solutions required by the hotel but are usually between the value of 6 Million and 14 Million SAR.

Project Duration

From: AnytimeTo: Next Year at Ramadan or Hajj season.Status: -

Oppertunity

Electronic GIS Survey followed by site visits allow us to pin-point potentially rewarding areas where multiple hotels are being constructed simultaneously.

General Information

A sample of these projects that are common to Makkah and Ma-dinah are Bazel Al-Kheir 3, Al Rayan, Jabal Al Kabaa, Al Shurfah Project, Burj Al-Jiwar, Multlaq Tower, Abraj Al-Bait, etc...

Main Contractor

Private Company (IBS, etc...)

OPPERTUNITY ZONE 4 - MAKKAHANY

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PROJECT PIPELINE

§ SAR 62,161,757.96 SAR 12,500,000.00 TBA TBA

S I OTAIR Group SAR 5,900,000.00 S I Al-Khoreji Co.

PROJECT PIPELINE

Our plan moving forward is to have 64% of our business opportunities per year in small investment cases, which allows a high profit margin in a short return cycle imple-mentation project. This allows us to become more agile as the liquidity will not be held for elongated period in MEGA project scenarios.

The Chart Above reflects in 3 colors the project pipe-line for Q1 and Q2 of 2013, in which the color Green designates in Bid Projects, the color Blue designates already won projects being implemented, the Color Purple reflects newly won projects that will have a start in implementation in the designated Quarter.

The total sell value of the above projects totals 74 mil-lion SAR not including the selling value of the upcom-ing KAP 1 which is undergoing final PO generation. Of which the total profit is larger than 11 million SAR.

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PROJECT PIPELINE

UPKEEP SPENDING PLANThe following information specified below reflect the upkeep cost for maintaining and operating Oger Systems’ Jeddah Office that coveres the area in and around Jeddah province and Makkah province for the purpose of detecting upcoming projects and generating the financial paperwork required for the targeted projects.

Oger Systems - Jeddah Office 2013 Q1 Q2 Q3 Q4

Office Rent (Jeddah) 75,000.00 SAR 0 0 0

Office Supplies (Consumables) 1500.00 SAR 1500.00 SAR 1500.00 SAR 1500.00 SAR

Design Workstations (1 units) 8,250.00 SAR 0 0 0

Design Software (NetformX License - 1 seat) Quotation R. 0 0 0

AutoCad 2013 (License - 1 seat) Quotation R. 0 0 0

Fax Line (Cancelation) -2000.00 SAR -2000.00 SAR -2000.00 SAR -2000.00 SAR

PABX Service (Cancelation) -325.00 SAR -325.00 SAR -325.00 SAR -325.00 SAR

Internet Solution - 6MB - Unlimited (Replaced) 380.00 SAR 290.00 SAR 290.00 SAR 290.00 SAR

Local redundant Back-Up - 6 TB - Network Drive 0 0 0 0

Car Rent (1 units) 3800.00 SAR 3800.00 SAR 3800.00 SAR 3800.00 SAR

Project Acquisition - Fuel Cost (estimate) 1200.00 SAR 1200.00 SAR 1200.00 SAR 1200.00 SAR

Project Acquisition - Mobile Calls (estimate) 800.00 SAR 800.00 SAR 800.00 SAR 800.00 SAR

22” LCD Screen (6 units) 4800.00 SAR 0 0 0

NoteBooks (4 units) 12,000.00 SAR 0 0 0

Annual Spending Total = 130,500.00 SAR

(Excluding Licenses)

1.2% The Spending Plan presented above covers the requirements for operating an actively project seeking office where by a large per-centage of the spending allocation is directed towards the opera-tions required to establish communication with clients and to process required paperwork to generate a successful bidding solution. The Up-Keep Value represents 1.2% of the

current Net Profit return taking only Q1 & Q2 into consideration and is expected to shrink to a value of 0.8% by the end of Q4.

TOTAL UPKEEP VALUE

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ORGANIZATIONAL CHART

Nidal HamdanWester Region Branch Manager

Wael El-GhazzawiWestern Region Project Manager

Fadi HalabiSales Manager Jeddah - Makkah

Raafat HassanienSales Manager Madinah

Ali ZimmoSETA Manager

Project Manager Site Forman

KAI - CCJ Project

Technicians

Project Manager Site Forman

IBS- ARAC Hotel

Technicians

Project Manager Site Forman

Al-Hamraa Hotel

Technicians

Project Manager Site Forman

KAP 1 - Maddinah

Technicians 32 SITE

Project Manager Site Forman

KAP 1 - Makkah

Technicians 16 SITE

Project Manager Site Forman

KAP 1 - Jeddah

Technicians 14 SITE

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WORKFLOW CYCLE

The organization chart on page 12 reflects the report-ing and responsibility chain of command that will be in effect on the western region (Makkah, Jeddah, Madinah).

The Sales department will be centralized in Jeddah which is the most logistical location to cover all 3 provinces taking into consideration the project hot spot distribution, where the structure calls for a per-manent presence of a sales manager in Madinah and another sales manager to cover Jeddah and Makkah.

Both Sale managers will be reporting to the Western Region Branch Manager, who will coordinate and as-sist in the communication and information transfer between the sites which are mostly located in Makkah and Madinah and there respective owners and

REPORTING HIERARCHY

Oger SystemsDesign Team

Nidal HamdanWester Region Branch Manager

Wael El-GhazzawiWestern Region Project Manager

Fadi HalabiSales Manager

(1)

Pro

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Det

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(4)

Pro

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specified consultants which are mostly centralized in Jed-dah.

The Western Region Project Manager will handle the as-sessment of potential projects and identifying the unique technical difficulties specific to each site this will be reflected in the implementation costs of any out-going Bid.

In addition he will handle the Planning, Coordination and selection of the Project Managers, formans and technicians specific to each acquired project while providing high level technical direction for the different technologies being deployed and handling the logistics of shifting man-power between sites to keep the overall delivery deadline of all projects on track.

Jeddah - Makkah

Raafat HassanienSales Manager Madinah

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