CONSTRUCTION ANALYSIS

Construction Analysis



Construction Analysis

Introduction

Construction is a booming industry in UK, as many firms are doing well in the sector. Ashtongates Construction is also a very renowned name in the UK construction companies. It is a Portsmouth based construction company who had set up their office in Brighton five years ago. On the basis of Brighton office, they carry out construction contract on the basis of competitive tendering. These tender usually range between £0.5 million to £3.0 million. Moreover, there are several opportunities for the company to expand, that could generate sufficient cash flows and revenues for the company.

The performance of the company has been exceptional for last few years and it is expected that the Turnover of the company may reach to £8 million in the year 2012.

Factors Affecting Demand

The development of real estate depends on both the level of development of the construction market, housing market and overall economy. The development of the construction market and the real estate market depends on many factors, including macroeconomic, legal, demographic and institutional factors. The direction of the impact of these factors may affect the development of the real estate sector, inhibit or even prevent further development.

The economic factors influencing the development of the real estate sector include: - The level of economic growth, - Level of economic activity of the country, region, city, - Income of the population, the level of wealth of the society, - The level of inflation, - Interest rates and credit availability, - The level of savings, - The situation and the quality of the labor market, - Development of technical progress, - Competition from other investment options

If the economy is in growth phase, property market faces recovery and growth, which in turn translates into the development of the construction market. Economic development causes an increase in production, employment, increase incomes, which increases demand, including real estate development. If the demand for real estate market increases, it is a signal for developers to start investment. In the case of commercial space growth leads to an increase in demand for retail, office, warehouse. In the case of economic recession the real estate sector continues to suffer the consequences, in particular the declining demand for real estate, which often leads to an oversupply of space for sale and rent, resulting in a fall in prices of real estate.

Justification of Expansion Program

The company has sufficient capital and labor resources in order to expand its operation and businesses. It has been performing very well and it could produce great results, if it goes for expansion project. The Brighton area could offer great potential for enhancing the turnover of the company. The management of the company wants to increase the revenue of the company up to £ 12 million per annum till 2017. Moreover, the contracting work of the company is expected to grow by 2%.

The company has already started shop fitting work in the Portsmouth/ Southampton and Bournemouth ...