FairBuilding Network meetings of MK in Manila on 2 September 2015

Meeting with Johnson Ongking, Boysen

 He continues to believe in the FBN, especially because of its economically sustainable

concept
 I did not raise this with him but I would approach him for a renewed support payment for
the FBN ($10,000) late 2015 along with a semi-formal account of the last year.
 Because they ‘don’t have their own foundation’ they ‘run their entire CSR activities through
“PBSP” (Philippine Business for Social Progress)’. – We should know more about what PBSB
do and how it relates to us.
 He suggested I red “Who buys what and why – how markets work” (I have it).

Meeting with Yolanda Reyes

 Yolanda is now the UIA Vice President for Region IV (Asia)

 She is also the Commissioner for 40-some professional associations. In this role she reports
to the president. She may be promoted to Chairman which would give her the rank of a
cabinet minister
 Yolanda is fiercely supportive of the FBN and wants to tie it into her work within the UIA:
o There is a ‘Responsible Architecture Workgroup’ within the Region IV.
 She/ we developed this idea:
o FairBuilding becomes a framework for architects to become socially active
o UIA causes the UAP to start a program where UAP architects work on FairBuilding
projects pro bono.
 E.g. there is a Bohol Chapter of the UAP: this chapter would organise that its
architect members project manage/ oversee FairBuilding projects such as
Habitat’s
o I probed with Charlie Ayco if this would be appreciated. He agreed, provided that
architects do ‘the whole job’ of supervising projects and not randomly dropping in
and out of projects.

Meeting with Charlie Ayco – main outcomes/conclusions

 We need to introduce an accreditation system for FB Partners

o FB Partners (manufacturers/ suppliers) can’t be expected to offer meaningful
discounts ‘on their own’.
 There is a huge demand for building materials,
 e.g. contractors ‘have to stand in line for concrete-  this is not climate
that fosters willingness to give discounts.
o We need to commit FB Partners to specific discounts.
  Charlie suggests that 15% would be helpful, 10% would be ok, 20% would be
great
 Given that HH projects are co-invested by the government at the tune of
80% a 15% discount represents a 75% savings for HH
o Charlie will send us the bill of quantities (BOQ) of their next big project (Bohol, 3500
units)
 Gladys please follow up.
 We need to select the 5 – 7 most important products
 We then need to find approx. 20 – 25 corresponding suppliers among the
FBP Partners
o Franziska, please develop a one-page accreditation agreement between FairBuilding
and FairBuilding partners and run by me.
 Requirements of accreditation are:
 15% discount on commercial retail price for all orders relating to
FairBuilding Network-listed projects
 Benefits of accreditation are:
 exclusive access to FairBuilding projects
 preferred supplier status with FairBuilding social developers (need
to confirm with all NGOs, not just Habitat)!)
 NGO gives a receipt for a tax deductible donation in the PHP amount
of the discount given
 FBN awards ‘Gold Partner’ status once first transaction is completed
o Includes separate landing page on FBN
o Inclusion of brand and logo in ½ page celebratory ad in the
Philippine Star

o Ayn, Gladys, Hershey and Markus: our big challenge then is to put this accreditation
agreement in front of the 20 – 25 companies mentioned above and get them to sign
it.
 The accredited companies need to then inform their distributors that they
are entitled to the FBN discount

 This is how the process would work (a live current example of Habitat):
o In the next few weeks Habitat signs an agreement with the government regarding
the next 3,500 units tranche of Bohol.
 Habitat secures 80% co-funding for the project.
 Units are originally designed by the government and improved upon by
Habitat
 Every unit has a budget of appro. PHP120,000
 Units are specified as having to cost less than PHP 200,000
 … withstanding winds of up to 250 km/h
 … withstanding earthquakes of 8 on the Richter scale
o Within a month of signing with the government Habitat then tenders out the project
to a handful of their 20 implementing partners
  Implementing partners (IAs) are either former Habitat people (manning
Habitat’s regional offices) or mom&pop construction operations.
 The implementing partners source from their own preferred local suppliers
(often those who can provide payment terms)
 For cement, for example, both CEMEX and Lafarge (but not Holcim) have a
local distributor in Bohol to whom the implementing partner would turn to
get a good price and favourable terms.
 Say CEMEX is accredited with the FBN but Lafarge is not, then the
implementing partner would go to the CEMEX distributor in Bohol knowing
that CEMEX headquarters in going to reduce the price for them by 15%.
 Say the project requires cement for 40,000 PHP [commercial retail price] per
unit, rather than passing on the CEMEX price reduction of 15% (PHP 6,000)
to Habitat the Implementing partner would charge the full PHP 40,000 per
unit and make a tax deductible donation to Habitat of PHP 6,000 per unit.
o In summary the calculation would be as follows (per unit):
 Charge CEMEX  Bohol Distributor: PHP 35,000 [wholesale price] minus
(PHP 40,000*15%) = PHP29,000
 Charge distributor  Habitat Implementing Partner in Bohol: PHP 40,000
[commercial retail price] minus PHP 6,000 CEMEX discount = PHP 34,000
 Charge implementing Partner  Habitat project: PHP 40,000
 Donation Implementing Partner  Habitat: -PHP 6,000

Next steps:

1. Manila team to secure Bohol bill of quantities from Charlie Ayco

2. Franziska to develop accreditation agreement and get okay from MK and Charlie Ayco
3. Manila team to secure 20 suppliers based on key products from Bohol BoQ that sign the
accreditation agreement and that instruct their distributors accordingly
4. Charlie Ayco to inform Implementing partners about preferred FBN sourcing from accredited
suppliers
5. Meeting required between suppliers, distributors, Habitat and Implementing partners all in
one room?
6. Transactions!!
7. MK to send one page proposal re. UIA support to Yolanda (by end of September 2015)