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5A’s Hollow Blocks

A Paper Presented to the

University of Mindanao
Bolton, Davao City

In Partial Fulfillment of the Requirements

In Research 1b

Presented to:

Prof. Adrian Tamayo

Research Adviser


Arianne Cheryl Aspiras

Allan Alberastine
Asriel Madulin
John Allen Marilla
Arianna Reyes

December , 2010
Chapter 1

Even before the birth of Christ, buildings and other establishment have

long been built around the globe. These establishments serve several needs of

the society. A building serves as a shelter of the human habitat. Others define it

as an edifice, an enclosed structure over a plot of land having a roof and are

used in different man’s activities such as manufacturing or living. One of the most

famous and probably the most common building of all is a house. Houses

definitely serve as a dwelling for one or more persons, especially for a family.

The construction industry’s history dates back to the early civilization,

even during the era of Barter trade economy of which people trade their strength

and ability to built or construct a house for something of a value. As years pass

by, the construction industry nurtures; the first skilled carpenters began to trade

their services for money as payment of their efforts. Due to technological

developments, there had been a dramatic shift in the usual paradigm of the

construction industry.

Beforehand, these structures have been built out of clay bricks.

Nowadays, with the introduction of steel and concrete the construction industry is

now unstoppable from booming. Steel gives the strength while the concrete

blocks provide the outside support that was too expensive to do using bricks.

Though these past few years, constructing houses such as building

condominiums and subdivision have suffered much due to the fall of the global

economy because of excessive loan mortgages in United States and Europe.

Today, the Asian economy starts to rebuild itself, particularly the Philippine’s

construction industry is starting to boom day by day.

Parallel with the growth of the Asian economy, American and European

investors start to take a risk and put up businesses in the country. This growth of

the Philippine economy is depicted by the vivid boom of Davao City’s economy.

According to Davao City Chamber of Commerce (2010), Davao City is crowned

as the best city when it comes to being the city with the fastest construction

clearance and permit processing, furthermore, Davao ranked second as the city

with the easiest processing to start up a business.

Companies and business establishment owners in the Davao City have

long been using hollow blocks as a foundation of their establishments,

nevertheless, they are also in search of other alternatives to hollow blocks in

order to have a longer durability and sturdier building. Having a good structure’s

foundation would also mean a longer building’s useful life.

The proponents of this feasibility study, decided to start up a hollow block

manufacturing company. The proponents intend to add rice hull ashes to make

the hollow blocks sturdier and stronger. Having rice hull ashes added on mixture

used in making hollow blocks would also mean waste reduction and recycling of

materials which turn out to be useless.

The proponents intend to name their company 5 A’s Hollow Blocks., which

will be situated along Malagamot Road, Panacan, Davao City, since the area is

accessible for potential market and supplier’s area.

Chapter II
Marketing Aspect

This chapter will discuss thoroughly the whole marketing aspect of the

research. The proposed business’ market description, the past and projected

demand as well as the supply made available in the market. In addition, this

chapter will discuss the pricing strategy and the proposed marketing program of

5A’s Hollow Block Company.

The market study is the lifeblood of virtually any business feasibility study.

The market study is the first step that the proponents of a research should do in

order to test the feasibility of their study. This is done to properly understand the

customers’ needs and how should the proposed business penetrate the market.

If in this stage of the research, it is found to be feasible, hence, it will give

confidence to the researchers to pursue the study.

Market Description

Hollow Blocks are dense and hollow cement concrete blocks used as an

alternative to bricks. It is cheaper than bricks, it is lighter and easier to place,

furthermore, it grants the economics of cost and cement consumption. These

blocks find wide applicability and construction cost is minimized. Hence,

numerous construction companies prefer the use of hollow blocks today.

As the construction industry grows wider day by day, the demand for

hollow blocks is good. In Davao City, different national and multi national

corporations intend to penetrate the city, commerce becomes good and more

malls, establishment, subdivision, etc are being constructed. This economic

boom in the city asks for a greater demand for hollow blocks. For this reason,

5A’s Hollow Blocks considers construction companies as our market as well as

individual citizens who needs hollow blocks.

Discussion of the Survey

The proponents conducted a survey and an interview on different hollow

block manufacturing firm in Davao City. The results of the survey were combined

with the data gathered from Davao City’s business bureau. This is done to

identify if there is an ample supply of hollow blocks or if there’s a deficit on its


In the survey, each hollow block manufacturing firm owner or manager is

asked how much do they produce in a month, whether they produce daily or they

just produce whenever there are orders. Each Hollow block firm is also

interviewed and minutes of the interview were made.

The demand data was gathered through the combination of a survey

made to carpenters and the data gathered from National Statistics Office annual

Report for the 3rd Quarter of 2009. The carpenters were asked if how many

hollow blocks will be utilized in building a house with the dimensions 6.2 m x

2.7m and 9.7 m x 2.7 m. The number of household built during July to October of

2009 is multiplied by four (4) in order to get the total number of households built

last 2009. The results of the survey on the sample carpenters were accumulated

and averaged multiplied with the number of households built during 2009.
Past Demand

Table 1 shows the demand for Hollow blocks for the past five (5) years.

According to the statistics gathered by the proponents, it revealed that in the

Davao City alone, 1,944 houses were built in each quarter of 2009 or 7 776

house were built for the whole 2009. Consequently, using the data gathered from

the survey which states that approximately 760 hollow blocks were used in

building a 60 square meter house, the proponents conclude that in 2009,

5,909,760 hollow blocks were demanded and used in building the

aforementioned number of houses.

Using the 2009 demand, 2005, 2006, 2007 and 2008 data were calculated

using a 1% deviation rate. See table 1.

Projected Demand

Based on the past five (5) years data on the demand for hollow blocks, it

can be assumed that the 1% increase in annual demand for hollow blocks will

continue. Assuming that there is a 1% increase in the annual demand of hollow

blocks, then the 2010, 2011, 2012, 2013 and 2014 demand of hollow blocks can

be calculated. Table 2 shows the projected demand for hollow blocks. This

projected demand is corroborated by the facts that businesses both local, national

and multinational companies have emerged in Davao City which equated to the

boom of the construction industry which is also parallel to the increase in the

demand for hollow blocks.

Demand 2005 2006 2007 2008 2009

5,679,163 5,735,955 5,793,314 5,851,248 5,909,760


Table 1. Demand Table for the past 5 years.

Figure 1. Demand Chart for the past 5 years.

Demand 2010 2011 2012 2013 2014

5,968,858 6,028,546 6,088,832 6,149,720 6,211,217

Table 2. Projected demand for the next five years.

Figure 2. Projected demand Chart for the next five years.

Past Supply

Table 3 shows the data about the supply of hollow blocks for the past five

(5) years. The data was from the survey conducted to the selected hollow block

manufacturing firms in Davao City and the data gathered from the Davao City’s

Office of the Mayor-Business Bureau.

Through the survey conducted, it revealed that in 2010, each firm

produces approximately 5500 blocks a month or a total of 66 000 blocks for the

whole 2009. The average number of blocks produced by each firm is then

multiplied to the total number of hollow block manufacturing firms in Davao City.

According to Davao City’s Business Bureau (2010), there were 83 firms in the

whole Davao City. Therefore, a total of 5,478,000 blocks are being supplied by

the 83 firms for the whole Davao City. Having assumed a 1% annual increase in

the supply of blocks, the 2005, 2006, 2007, 2008 and 2009 supply of hollow

blocks can be calculated. See table 3.

As mentioned, the proponents only assumed the 1% increase for this is

the most conservative percentage increase in any research study. In addition, it

is a fact that the cost of expanding business is far too high that most companies

are not risk takers enough to do so.

In the interview conducted by the proponents with KBF Hollow blocks, the

manager cited that there is actually a risk in producing too much because it might
cause inventory obsolescence since most of hollow block companies’

manufacture more when there are orders. And when orders come, they

sometimes reject such orders for they are no longer able to meet the quota ask

to them because of a lot of factors. This rejection is a clear picture of the lost

sales of the company and an unanswered demand of the customers.

Projected supply

In as much as there is a 1 % increase on the annual supply for hollow

blocks for the past five years then it would be safe to assume that there will also

be a continuous 1 % increase in the annual supply for the next five years. The

projected supply for hollow blocks is shown in Table 4.

Comparison of Demand and Supply

Table 5 and Table 6 compare the demand and supply data. Table 6 shows

a comparison of the past 5 years demand and supply. As shown in table 5 and

table 6, there is a big gap between supply and demand since 2005 and this gap

continues to grow. This gap allows 5A’s manufacturing to penetrate the market.

Consequently, 5A’s Hollow Blocks intends to cater a big portion of the

gap. 5A’s hollow blocks aim to produce 130% more than the usual production

level of the existing hollow blocks manufacturing companies. Our assumption is

based on our goal to be a major supplier of hollow blocks of the different

construction companies in Davao City. It is also a fact that parallel to the growth
of the construction industry in Davao City is the growth of hollow blocks

manufacturing industry.

Supply 2005 2006 2007 2008 2009

Average number
of blocks 5233 5285 5338 5392 5446
produced by
single firm

Average number
of blocks 62,797 63,425 64,059 64,700 65,347
produced by a
single firm

Annual Supply
of Blocks in the 5,212,129 5,264,250 5,316,893 5,370,062 5,423,762
whole Davao
Table 3. Past supply for the past five years (Average number of blocks that
each hollow block manufacturing firms are able to supply
Figure 3. Graph of the Annual Supply of Blocks in the whole Davao City for
the past 5 years

Supply 2010 2011 2012 2013 2014

Average number
of blocks 5,500 5,555 5,611 5,667 5,723
produced by
single firm

Average number
of blocks 66,000 66,660 67,327 68,000 68,680
produced by a
single firm

Annual Supply
of Blocks in the 5,478,000 5,532,780 5,588,108 5,643,989 5,700,429
whole Davao

Table 4. Projected Supply for the next five years (Average number of
blocks that each hollow block manufacturing firms are able to supply)
Figure 4. Graph of the Annual Supply of Blocks in the whole Davao City for
the next 5 years

2005 2006 2007 2008 2009

DEMAND 5,679,163 5,735,955 5,793,314 5,851,247 5,909,760

SUPPLY 5,212,129 5,264,250 5,316,893 5,370,062 5,423,762

GAP 467,034 471,704 476,421 481,186 485,997

Table 5. Comparison of Annual Supply and Demand for the past 5 years
Figure 5. Comparison of Annual Supply and Demand for the past 5 years

2010 2011 2012 2013 2014

Demand 5,968,857 6,028,546 6,088,831 6,149,720 6,211,217

Supply 5,478,000 5,532,780 5,588,108 5,643,989 5,700,429

GAP 490,857 495,766 500,724 505,731 510,788


(5% 150,000 157,500 165,375 173,644 182,326


Table 6.Comparison of the projected Supply and Demand for the next 5
Figure 6.Comparison of the projected Supply and Demand for the next 5


Price Study

Price is an essential part of the product for price is paramount in every

buyers mind. 5A’s decided to use Skim the cream pricing or also known as Price

Scheming. Based on the result of the survey that the proponents conducted, the

market are willing to buy 3 and 4 inches thick hollow blocks at 7.50 pesos and 6

inches thick hollow blocks at 12.0 pesos. This price is just within the range of the

average market price for hollow blocks.

With the set average market price for hollow blocks, 5A’s will take a risk

and offer its hollow blocks for 8 pesos every 3 or 4 inches blocks and 12 pesos

for every 6 inches blocks.

The addition of rice hull ash reduces the ratio of sand and gravel.

Researches show that the addition of Rice Hull Ashes by at least 30 percent by

weigh or 50 percent by volume of Rice Hull ashes will not distort the hollow

blocks hence it will make the cement lighter, porous and stiffer. In addition, the

cost of producing a single piece of hollow blocks using a mixture of sand, gravel,

cement and rice hull ashes is cheaper than the ordinary mixture for the reason

aforementioned above, the ashes reduces the ratio of expensive cement and

gravel. Table 7 shows our products price and our close competitors’ price.

Proposed Marketing Program

Promotions and other marketing strategies are done to make the product

known to its market. Promoting the product links the buyer and seller. 5A’s

Hollow blocks will conduct different Marketing programs in order to catch and

penetrate the market.

The entity considers marketing of its product vital for the business to be

feasible. 5A’s hollow blocks will be utilizing radio advertisement for its first month

of its operation and 5A’s will be distributing pamphlets and business cards to

different construction companies. 5A’s will also be distributing stickers to be

posted on different public utility vehicles around the metro for this will stimulate

demand of the product, it will persuade the customers to patronize 5A’s hollow

blocks product

In addition, 5A’s hollow blocks will be contracting different construction

companies in Davao City. Not only that, 5A’s hollow blocks will be initiating
discount programs to those construction companies whom will sign contacts with

5A’s hollow blocks.

3 inches 4 inches 6 inches

Traditional 7.50 7.50 11.50

Hollow Blocks

Rice Hull Ash 8 8 12.00

Hollow Blocks
Table 7. Price Table

Sir/ Madam
We are 3rd year student from the University of Mindanao taking up BS in
Accountancy. As part of the requisites of our research subject, we are currently
conducting research about the feasibility of a Rice Ash Hollow Block
manufacturing company. We would like to ask you some questions stated below.
Rest assured hat all information taken will be treated with utmost

Thank you so much.

The Group


Name:____________________________________ Occupation:

How many block are used in building a 60 square meter house having a wall
dimension of 6.2 m x 2.7m and 9.7 m x 2.7 m? _____

How often do you purchase hollow blocks (please check)?

Daily _____ Monthly _____ Semi annually _____ Quarterly _______ annually

Others (specify) ______________

What type and How much are you willing to purchase?

___ 3 inches ___ 4 inches ___ 6 inches

P 7.00 P 7.00 ___ P 8.00 ___
___ P 10.00 ___ P 11.00 ___
P 10.00 P 13.00 ___ P 14.00 ___
P 13.00


Signature over Printed Name

Sir/ Madam

We are 3rd year student from the University of Mindanao taking up BS in

Accountancy. As part of the requisites of our research subject, we are currently
conducting research about the feasibility of a Rice Ash Hollow Block
manufacturing company. We would like to ask you some questions stated below.
Rest assured hat all information taken will be treated with utmost

Thank you so much.

The Group


Company Name: ____________________________ Location:

Name:____________________________________ Position:

Company’s Operating Hours: ________________________

Average number of hollow blocks produced per month ________________

Do you make hollow blocks ahead of time? ___ yes ____ no

Do you produce only after every Job? ___ yes ____ no

How much is your price for 3 inches? _______ 4 inches? _______6 inches?


Signature over Printed Name

Chapter III
Technical Aspect

This section of the paper discusses the technical aspect of the study. It

reveals the description of the target market, market supply and demand, plant

lay-out and location of the proposed business.


The proposed location of the business will be at Km 14 Panacan Road,

near corner Malagamot, Davao City. This location is ideal for the site is

accessible to trucks delivering aggregates, cement, sand, and other direct

materials. Therefore, the location is suitable for the business because of its

accessibility to potential supplier of raw materials. In addition, the proposed

business is situated in a location that is a distant apart from its competitors; the

nearest competitor is almost 3 km away from our location. Furthermore, the

proposed location of the business belongs to an area of which there are a

minimal number of hollow block manufacturing firms.

Finally, the most important reason why the proposed location was

selected as the plant site is because Panacan belongs to District II, a district

categorized by city administrators as one of the fastest developing areas in

Region XI. The construction of factories around the proposed location provided

employment opportunities. Employees of these companies tend to demand for

housing programs which ensembles to the demand for construction of

subdivisions, apartments, etc. The construction of the aforementioned structures

will increase the demand for blocks would be parallel to business’ profit.

Figure7. Map

Plant Lay-out Size and Production Schedules

Plant Layout

Figure 8. Plant Layout

Production Schedules

Activity From Period Time Notes

Ordering Of Raw Mondays and Within 8 a.m. –
Materials Thursdays 12 noon. Done by the

Receiving and Tuesdays and Supervised by

Checking of Raw Fridays During delivery the clerk
Material and/or receipt of
purchased the purchases.

Stock Piling and Tuesdays and 1- 5 p.m.

Batching Fridays Supervised by
head mason
and the

Routinely Check Tuesdays and 8-9 am

Machines Fridays Managing

Mixing of Sand, Everyday Within the

Gravel, Cement day
and Rice Hull

Molding Everyday
Within the

Drying Everyday 2 to 32
days Within The

Curing Everyday Every 10 a.m Done to

All days and 5 pm. maintain
the satisfactory
blocks moisture.
Table 8. Production schedule

Gantt Chart

DATE (2011)
1 - 15

16 - 30

1 - 15

16 – 31

1 - 15

16 - 31

1 -15

16 - 28

1 - 15

16 – 31
Finding a
Securing a
Canvass and
bidding of
Purchase of
materials for
construction of
plant area
Start of Plant
Start of Plant
Purchase of
and materials
for operations
Hiring of

Grand Opening

Figure 9. Gantt Chart of 5A’s Hallow Blocks

The Gantt chart above shows the major activities that 5A’s Hallow Blocks

will perform before its Grand Opening. First is the gathering of capital that it will

need in starting its business. It may be from investors of the owners as well as
from external financing from outside sources like creditors. Second, is to find the

location suitable for the business. The proposed location will be along Km 14

Panacan, Davao City. Then secure the necessary business permits from City

Hall, DTI and other regulating government agencies. After that, is the canvassing

and bidding of materials from potential suppliers. If the required permits are

available, then construction of the plant area can be started. After the plant

construction is the purchasing of equipments and materials needed for the

operations. Simultaneously is the hiring of employees. Lastly, if the all things are

already set then the operation will start out rightly.

Product Specification

Products Name: 5A’s Sturdy Blocks

Usage: For Construction Purpose

Raw Materials: Cement, Sand and Gravel, and Rice Hull Ashes

Color: Lighter Gray

Particle Size: Sand and Gravel Pass through a wire mesh no. 15

The product that 5A’s Hallow blocks would like to produce is hallow blocks

made from cement, sand, and gravel, mixed with rice hull ashes to improve its

strength and durability.

Production Process
Ordering, Batching, and stock Piling of Raw
(Cement, Gravel, Rice Hull Ashes)

Equipment Quality Check

Mixing of Product’s Raw Materials




Quality Control and Sale

Figure 10. Flow Chart

The materials are being purchased from each product’s major supplier.

The delivery of the materials should be assured by the suppliers; nevertheless,

whenever the supplier notifies that they cannot delivery a certain raw material,

the alternative supplier should be contacted. Sand should at least be one load of

a six wheeler truck, gravel and aggregates should at least be 1 load, cement

should be Portland cement and should at least be 80 sacks per delivery, and the

rice hull ashes should at least be 20 sacks.

Raw materials should be properly piled. Each type of materials should

be batched in order to assure that no materials are being wasted and also to

have an internal control on the inventory of released inventory. Cement bags

should be stored in a less moist area and should be placed over a wooden

platform about 20 cm above the ground and 50 cm away from the walls. Each

cement pile should not be more than 10 bags of cement each row. The sand can

be stored outside the storage room; however, it should be covered by a tarpaulin

in order to protect it from being unwanted sediments such as animal dirt, etc.

Dirty sand should never be used in the production of hollow block because it

might distort or reduce the adhesive value of the concrete blocks. Thus, each raw

material should be checked before they are used.

Having checked the quality of raw materials, they can now be mixed up

in a ratio of 1:3:6 for cement, sand and gravel. In each 1 sack of cement, an

equivalent 30 % of that measurement is the ratio of the rice hull ashes to be

added. These are first mixed manually and then being place in a mixing machine.

Afterwards, these are being place in pails and are to be poured on the molding
machine. Each release of the machine, a plate is being prepared. The plates are

used in carrying the molded block towards the drying area. Once the blocks are

dried, they are placed in the storage or curing area in a manageable order. Every

day, the blocks are being cured in order to enough moisture. Curing allows the

cement’s hydration process and control the internal temperature that is being

generated by the hydration process in order to obtain optimal hardening and

strength of the cement.


Equipment Price Quantity Description
3 hollow block
3 "hollow machine -5pcs
block 27,000 1 per
machine" release w/ electric
4” hollow block
4 "hollow machine -5pcs
block 27,000 1 per
machine" release w/ electric
6” hollow block
6 "hollow machine -5pcs
block 27,000 1 per
machine" release w/ electric
A six (6) wheeler
Nissan truck that
1 will be used for
delivery of hollow

Cement- A cement and

20,000 2
sand Mixer sand mixer

A tool used in
Shovel 150 6 picking up sand,
cement and

Will be used in
the office for
A set of transaction, sales
office table 2459 and marketing
and chair transactions and
will also serve as
a front desk.
Will be used to
entertain visitors
Lounge Set 3450 1
and for business

A tin Pail used in

Pail 130 4
gathering water

Used to filter
Sand Sieve 300 1 cement, sand and

Used in any water

Hose 150 10 m

1500 litters , more

than pa
Water Tank 9500 1 118diameter cm
and 188 length

Table 9. List of Equipments

Source of Raw Materials

1. Cement

Major supplier: Direct Purchase of Block from Holcim Cement which

is less than 2 Km. away from 5A’s Hollow Blocks location

Minor supplier: Hardware in Panacan and Tibungco Davao City.

2. Sand And Gravel

Major supplier: Bunawan

Minor supplier: Panabo

3. Rice Hull Ashes

Major Supplier: Nabunturan NFA rice mills and other farmers’

Cooperatives around the area.

Alternative Supplier: Tagum NFA rice mills and other farmers’

Cooperatives around the area.

Chapter IV
Organizational Aspect

This section of the paper discusses the organizational aspect of the

business. It states the type of the business itself, the organizational structure of

its members with the corresponding the Job title, Job description, the

qualifications for the job and the remuneration.

Type of Business

5A’s Hallow Blocks is a partnership composed of 5 partners which are the

proponents of this study. Partnership was chosen because it is easier to organize

by mere agreement of the partners and can acquire a greater capital compared

to a single proprietorship. Moreover, partnership is better compared to a

corporation as far as the savings based on organization costs is concerned.

The firm shall be established udder the Civil Code of the Philippines after

the compliance of various requirements for its existence. It shall be a partnership

at will and id composed only of general partners in order for the entity to be able

to attract creditors in case the entity needs it so. In addition, the partnership shall

be a particular partnership. And so it means that each partner is to contribute a

particular amount of money as a capital of the business.

Organizational Structure



Sales Clerk Purchasing Officer

Delivery Staff

Figure 11. Organizational Structure

Job Position, Job Description, Qualification and Remuneration

Job Job Description Qualification Remuneration


Manager Supervises and Directs Must be one of the Must be

the whole operation and partners compensated
the administration of the based on the profit
business. sharing
agreement of
She/he shall represent partners.
the entity in all dealings
with its, suppliers and
major customers and
also deals with
representative from
government regulating

He is assigned to Business Must be

Sales Clerk
prepare the sales management compensated
invoices. In addition, he degree graduate. based on the profit
is tasked to keep the sharing
records of the business Must be one of the agreement of
when it comes to sales partners partners.

He shall also be held

responsible for the cash
and other forms of
payment within the day.

He shall be held Business Must be

Officer responsible to check the management compensated
stock of raw materials. degree graduate. based on the profit
Whenever the stock Must be one of the agreement of
level is critical, with the partners partners.
approval of the
manager, He shall be
the one to make the
purchase for such raw
Operates the Mixer and With experience in
pother machine. making hollow
block or had been
They are also the ones an experienced
who have a direct mason.
responsibility of
converting the raw Not more than 45
materials into finished years old.

The assist in transferring

of raw materials stocks
to the stock room and
they also assist in
loading the hollow block
to the delivery truck.

Composed of a driver The driver must

Delivery Staff
and other available be a licensed
laborers. professional
Tasked to delivery the
Hollow Block to its The laborers
ultimate user-the qualify with the
customer such as aforementioned
construction companies requirements.
at their construction

Table 10. Job Position, Job Description, Qualification and Remuneration

Chapter V

Total Project Cost

Initial Capital and Source

Financial Projection

ROI,ROE and Break Even

Income Statement
Chapter VI

Socio Economic Aspect

Contribution to Government Revenues

Contribution to the growth of Industries

Contribution to Common Household