Business planning: Uncertainty and change in the Year of the Horse
January 10, 2014 00:00 By Supitcha Chaipipat
In the past, business planning was routinely set once a year, and a revised target in the middle of the year. However, the rapidly changing situation over the past few years has prompted companies to adjust their plans every quarter, which is an exhaustin
Now, if we think about it, adjusting the plans even monthly is arguably not enough, thanks to our encounters with bouts of political risk that can bring our economy down at any given time.
A month after my Homebuilder column in December talked about the prospects for home-building business in 2014, I am inclined to adjust my perception because of the volatility of the political and economic situation in the past month – and what to anticipate this month.
It is well understood that no one expected the anti-government protest would turn into this great mass of people towards the end of last year. Indeed, people’s prime concern over the unfolding political situation has clearly slowed down demand for home-building, especially in Bangkok and surrounding areas.
And it is certain that the political chaos will continue in the next two quarters.
Besides this, the commercial banks’ loan policy will be another factor that determines the growth in demand for home-building.
Banks’ loan policy will become stricter, as a rise in the non-performing debts has reared its ugly head. This will inevitably slow down economic growth, and consumers are accordingly likely to adopt a stringent spending plan due to the rising level of household debt.
To sum it up, the demand for home-building will be affected by both an economic slowdown and the political crisis. The sooner the latter is addressed, the faster things will return to normal and we can start to move on.
Turning to prefabrication
To adjust to this situation, it is necessary that home-builders turn to the prefabrication system to ease the problem of a labour shortage in the construction sector.
At present, only one or two home-builders use this system, but with a combination of the prefabrication system for columns and beams and traditional construction methods for bricklaying and stuccoing (rendering).
It is now time, however, to introduce the bearing wall to the construction process, since it saves time currently taken for bricklaying and stuccoing.
Even though the new system may cause some problems with the transportation of equipment if the house is built in a small space and located in a small street or soi, the business operator needs to craft new working methods and techniques to overcome the difficulties.
Moreover, tests have shown that this system can reduce the on-site workforce by 30 per cent and cut the construction period by 20 per cent.
The most important and urgent thing home-builders need to do is to promote this prefabrication concept among consumers, even though this seems quite a challenge because using the new system would mean the owner of the house would no longer have total freedom to make changes or adjustments to the structure of the property or architectural style.
Admittedly, this is an inconvenient truth because those customers who buy a house in an estate normally seem to pay less attention to the construction system, structural change or functional adjustment of the property they purchase than those who build their own house.
It might be difficult to convince consumers in the beginning, but with the above-mentioned situation and structural change in Thai society, they will be forced to accept this new system.
After witnessing the higher cost of conventional construction and the longer time spent on waiting for the house to be completed, consumers will finally give in.
So the Year of the Horse will be very challenging for home-builders, following on from the challenges presented by the flood crisis in 2011 and then the minimum-wage increase, which we just survived last year.
Change and uncertainty are absolute truths in our lives. So be creative – and be prepared!