AMCProject 1

Acme Home Improvements de Mexico, SA de CV

Team Five (Excaliburs):

Charles Manu

Paul Mathew

Patrick Simon

AMBA 640 Section 9047

Professor Dr. Peggy Lee

January 24, 2010

AMCProject 2

Table of Contents

ExecutiveSummary ......................................................................................................................................3

Introduction .................................................................................................................................................4

Permits&MexicanGovernment..................................................................................................................5

PrepareSiteandLayFoundation .................................................................................................................7

BuildWalls,Floor,andRoofofStructure .....................................................................................................8

InstallElectricalandPlumbingFixtures......................................................................................................10

BuildtheGarage.........................................................................................................................................12

FinishInteriorandStockInventory ............................................................................................................13

CompleteallPaving,Landscaping,andFinalTouches ...............................................................................14

HiringandTraining .....................................................................................................................................14

Conclusion ..................................................................................................................................................16

References..................................................................................................................................................17

AppendixA .................................................................................................................................................18

AppendixB .................................................................................................................................................22

AppendixC .................................................................................................................................................23

AMCProject 3

ExecutiveSummary

ACME Home Improvements, based in Raleigh, North Carolina, has decided to expand

into the international market by forming a joint venture with a Mexican counterpart, ACME

Home Improvement de Mexico, SA de CV. Faced with both challenges and opportunities to

succeed in a foreign market, the company plans to employ a robust project management plan in

order to ensure success in 12 months or less. In this plan, the company lays out processes and

procedures for meeting license/permit requirements, construction of exterior and interior

systems, management of human resources, and management of operations.

The company plans on utilizing its relationship with affiliates in Mexico City and Mexico

Construction Associates in interfacing with Mexican officials for project requirements. Mexico

City Construction will be tasked as the main construction company for the project to include the

laying of foundation and erection of building, installation of electrical and plumbing fixtures, and

construction of a two-story garage adjacent to the store location. The company will be given full

authority to subcontract all portion of work that they deem necessary.

With the success of ACME SA de CV ultimately relying heavily on operations

management and staffing, the company plans to emphasize training and customer service.

Customers’ needs will be prioritized to ensure a smooth expansion into a foreign market. Staff

will be provided with necessary resources to execute the company’s agenda regarding operation

and customer service management. In an effort to manage the cost, schedule, and scope of the

project, the company has developed a clear project plan identifying project critical path and

dependencies, while budgeting based on probability estimating. This will ensure that the

company completes the project on cost, schedule, and scope within 12 months.

AMCProject 4

Introduction

With 125 locations in the U.S., ACME Home Improvements has decided to expand into

the international market in the interest of seeking greater profits and countering the economic

downturn in the U.S. The company will open up a store in Mexico City and, in following with

Mexican law, has established a joint venture with ACME Home Improvements de Mexico, SA

de CV. Dealing with such a huge undertaking, the company has outlined a plan for executing the

expansion, to include the management of cost, schedule, and scope in the construction of the

facility, inventory stocking, human resourcing, and managerial processes. An evaluation with

local partner SA de CV has concluded that the project can be completed within 12 months with

allocated budget executed if managed properly.

There will be many challenges with expansion into a foreign market in general, and

specifically with the establishment of ACME SA de CV. The company expects to encounter

cultural issues as well as other palpable risks. With a complete and detailed project management

plan in place, ACME intends on applying proven company management practices in order to

ensure that the project is executed within cost and schedule. Nonetheless, there have been risk-

mitigating measures put in place in the event of unforeseen challenges that threaten the project’s

critical path.

The following plan presents the details as to how ACME Home Improvements SA de CV

plans on executing its planned expansion into the Mexican market, including construction of the

facility, inventory stocking, human resourcing and managerial processes. Within these areas are

also project timelines and budgets, plans for cost and schedule management, and measures for

risk mitigation. Success in this project will be measured by several of these factors to include

AMCProject 5

cost, schedule, and risk management. The first section presented below discusses plans for

obtaining the appropriate licenses and permits in compliance with Mexican law.

Permits&MexicanGovernment

The first step in the Mexico operation of this project plan is to obtain all licenses and

permits required to build and operate AMC. We will use our relationship with AMC affiliates in

Mexico City and Mexico Construction Associates to obtain the building permits and all required

licenses from the local government offices as well as the state government offices. According to

our resident expert in Mexico, Dr. Judith Forbes, obtaining permits has been significantly

streamlined and we will not need to pay bribes to obtain the necessary documents (personal

communications, January 19, 2010). We are entrusting AMC affiliates in Mexico and Mexico

City Construction Associates to handle all the bureaucratic procedures to obtain all the required

building permits, licenses, and follow-up requirements with the Mexican government to include

obtaining utilities. According to “Doing Business.org” (2009), a World Bank organization, the

below table illustrates all the required procedures and the timelines required.

ProcedureTimeto

complete:Costtocomplete:

1Request and obtain the alignment certificate (alineamiento) and official number (número official)

15daysMXN660=USD

51.68

2Request and obtain single zoning certificate stating specific land use and feasibility

75daysMXN752=USD

58.89

3Request water and sewage services and pay the corresponding fees for service contracting

1dayMXN42,482=USD

3,326.70

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*4Register Construction Statement Type B 1dayMXN81,063=USD6,347.92

5 Request and connect to water and sewage services 30days nocharge

*6Request and connect to electrical power service 20daysMXN470=USD36.81

*7Request and connect to a regular telephone line 4daysMXN1,300=USD101.80

8Notify the Municipal Authority on construction work completion

1day nocharge

9Receive inspection on construction work completion from Directorate of General Works

1day nocharge

10Request and obtain use an occupancy clearance 6days nocharge

11Request and obtain authorization from civil protection 7days nocharge

12Update the building record at the tax ministry 1day nocharge

*Takesplacesimultaneouslywithanotherprocedure.

(Doing Business.org, Chart, 2009)

The above chart from Doing Business.org outlines all the anticipated fees we will

encounter from the Mexican government for the AMC project. Per this information, we will

need to expend MXN 2,796,270 or USD 218,971.81 at an exchange rate of MXN 12.77 to USD

1. Sine this information was obtained in 2009, we will budget MXN 3,000,000 (USD 234,926)

for these obligations in case fees go up while we are conducting the AMC project. We estimate

it will take approximately 90 days to obtain the required permits to begin construction and the

remaining requirements will be completed while construction is underway.

In addition to permits and licenses, to ensure we do not run into roadblocks from local

Mexican residents or officials, we plan to forge a relationship with Mexico City Mayor Marcelo

Ebrard to get his support for this project. We are further attempting to have a good relationship

AMCProject 7

with local leaders in the community. We hope to have a good enough relationship with the

Mayor and local leaders with expectation they will inform us of any issues that may arise. We

will make every effort to keep Mexican officials on board with AMC’s objectives to operate in

Mexico City.

PrepareSiteandLayFoundation

During the construction phase of AMC, our first step is to prepare the land and lay the

foundation for the buildings. We will use Mexico City Construction Associates for the overall

construction of this project. They will also be in charge of clearing and preparing the land as

well as laying the foundation. This step requires us to expend resources to pay the contractor as

well as for all materials and the rental of all equipment required to prepare the site and lay the

foundations.

To prepare the site, we will need to clear all obstructions and level the grounds. We may

need to evict any squatters who may be on the land. Land preparations may also include:

• Land Clearing and Disposal

• Demolition (if needed), Excavation and Trenching

• Grading

• Storm Water Drainage and Erosion Prevention

• Road Construction, Paving, and Resurfacing

• Laying Utility Lines and Sewerage and Water Lines

We will need to ensure all utilities are marked and accessible to the building.

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Upon the site being cleared and prepared, we will lay down the foundation for the

building and the parking garage. We expect a substantial portion of our budget will be exhausted

during the preparation of the land and laying the foundation. Our dependencies for this phase

include: the building permits have been obtained by our Mexico affiliates and Mexico City

Construction Associates; good weather; availability of laborers for our contractor; availability of

equipment; and availability of supplies. We expect the process for preparing the land will take

25 days and the foundation work will take 20 days. The land should be prepared and the

foundation for the building and the garage should be completed within 55 days. We have a

buffer of one week in between preparing the land and laying the foundation.

BuildWalls,Floor,andRoofofStructureOnce the site is prepared and foundation is complete, construction of the walls, floor and roof of

the 100,000 square foot structure will be accomplished by Mexico City Construction Associates.

The start of the building construction will be a major milestone and associated work packages

will be part of the critical path in the management of the project. This will begin with the

building of the floor, which is expected to take a total of 34 days, with 2 days built in as a buffer

against schedule slippage. Next will be construction of the walls, expected to take a total of 55

days. Finally the roof will constructed to complete the building. The construction of the roof

will take a total of 75 days.

The framing of the floor in sections will mark the beginning of the construction of the

floor. This is expected to take 7 days. The next step will be the placement of metal rods as

support for cement. This is also expected to take 7 days to complete. After the frame for the

floors is laid, then cement pouring commences. This is expected to take 20 days and will

complete the building of the facility floor. The budget allocated for the building of the floor is

AMCProject 9

$100,000. Next will be the framing of the walls. This will entail the placement of metal rods

and wood pieces for the frame, expected to take 35 days. Afterwards cinder block will be set for

outside walls, expected to take 20 days. The total amount of money budgeted for this portion of

the building process is $15000 (190,200M MXN). The construction of the roof will commence

afterwards with the construction of metal support, expected to take 40 days. Then plywood will

be laid across the metal support for the roof, lasting 20 days. Finally, to counter against the

extreme high temperatures in the location of the store, construction will roll in asphalt paper with

hot tar. This process is expected to take 15 days and will complete the construction of the roof

and at a budgeted cost of $20,000 (250,500 MXN). The company will allocate a total of 164

days and $45,000 (574,650 MXN) for the construction of the walls, floor, and the roof with extra

time built in to allow flexibility for schedule slips and other unforeseen risks. The contractor is

expected to procure all the materials required during this portion of the project as well as to

ensure compliance with Mexican construction material regulations. The contractor is expected

to follow design specifications provided by ACME designers in the construction of the walls,

floor, and roof of the structure. For the roof, all piping and ventilation work done are required to

be reviewed by a special team of ACME-trained inspectors to verify standards compliance. Also

schedule and budget limitations provided for this portion of the project are expected to be

adhered to by the contractor. In managing this portion, ACME will require the contractor to

provide weekly reports detailing status of cost, schedule, and scope. This will ensure that risks

in these areas are brought to ACME’s attention for proper mitigating steps to be taken. ACME’s

on-site team will hold regular project status teams with the contractor to be briefed on the major

issues of the day in order to keep ACME abreast of the project details.

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The construction of the walls will be monitored closely by ACME so as to ensure the

proper execution of the project scope in this area. Compliance with company standards is pivotal

in ensuring sturdy wall as those used in the company’s U.S. franchises. ACME will utilize its

inspectors during the construction of the wall again to ensure proper compliance.

InstallElectricalandPlumbingFixtures

After the construction of the building floor, walls, and roof, electrical and plumbing

fixtures will be installed. During this portion, the contractor again will follow ACME design

specifications in the installation of outlet boxes, internet and phone jacks, information systems

wiring, telephone wiring, cable wiring, ac/heating ducts, and water piping. The first step in the

installation of electrical and plumbing fixtures will be the installation of electrical outlet boxes.

The outlet boxes will be located on framing with spacing at every 15 feet. The time allotted to

complete this is 5 days. Next will be the installation of internet and phone jacks. This will be

done with the contractor following plans for work space layout. The time allotted for this

portion will be 5 days also. Next will be the installation for wiring for information systems.

This will provide the company with communications capability for products sold and inventory

and is expected to take 8 days. Next will be installation of the telephone wires throughout the

spaces, expected to take 3 days. Afterwards, cable wiring will be installed throughout and is

expected to take 3 days to complete. Next will be the installation of heating and air conditioning

ducts. This is expected to last 40 days. Water piping will be installed next and will be expected

to take about 90 days. Sewage piping will then be completed afterwards and will take 40 days.

Finally, gas and piping for heating will be put in place as the last step to the completion of piping

AMCProject 11

and electrical fixtures. This will take approximately 60 days. This will time allotted for this

work will be 40 days including five days for unforeseen risks.

The company will allocate two different budget amounts electrical and plumbing fixtures.

For electrical, the company will budget $33,050 (422,048 MXN) for the completion of work

packages in the installation of electric fixtures according to the following breakdown

Task Amount Budgeted

Install outlets $4000 (51,080 MXN)

Install internet jacks $5000 (63850 MXN)

Install IS wiring $6500 (83005 MXN)

Install telephone wiring $4500 (57465 MXN)

Install cable wiring $5550 (70873 MXN)

Install heat/ac ducts $7500 (95775 MXN)

Total 33,050 (422,048 MXN

The company will allocate $13,260 (169,330 MXN) for the installation of plumbing

fixtures according to the following breakdown.

Task Amount Budgeted

Install water piping $4000 (51080 MXN)

AMCProject 12

Install sewage piping 5860 (74832 MXN)

Install gas piping 3400 (43418 MXN)

In order to ensure proper electrical standard compliance, ACME will also seek to stay

abreast of the project during this portion by holding regular meetings with the contractor and also

utilizing the inspection team. Work packages developed for electrical and plumbing work are

also part of the critical path of the work and subsequent to the completion of floor, walls, and

roof.

BuildtheGarage

Mexico City Construction Associates will build the garage. The garage will be a two-

story structure that is adjacent to the store location. The garage is dependent on the building

permits, site preparation, and laying the foundation. Other dependencies may include obtaining

labor, weather, and building materials. The garage is independent of other variables for this

project and construction can begin immediately after the dependent criterion has been met. We

will have the garage constructed simultaneously with the primary AMC building. The garage

will be designed to handle heavy vehicles and enough space and clearance to handle tractor-

trailers to be driven and parked on the lower level. The upper level will have a load bearing to

handle industrial grade small trucks and box trucks. The garage will be painted in line with

AMCProject 13

Acme colors and the parking spaces will be lined according to Mexican standards for spacing.

We estimate the completion of the garage will take 45 days to include a 5-day buffer.

FinishInteriorandStockInventory

The finishing and final details for the interior of the facility are one of the final steps in

the construction of AMC. This process is dependent of the structure being completed and all

electrical and plumbing fixtures being installed. Finishing the interior is independent of all

paving and landscaping. We will ensure at this stage that all drywall is put up and painted

according to Acme color schemes. We will also ensure all the fixtures, shelves, and signage are

erected and up-to-spec per the AMC plan-o-gram. We will further ensure all electrical fixtures

and plumbing is functioning properly. If there are any problems with any prior construction, we

will ensure those issues are fixed at this stage of the process. We estimate it will take 30 days to

complete the final touches for the interior; this estimate includes a 5-day buffer. After the

interior is completed, we will begin stocking the inventory.

Stocking the store is one of our final steps prior to opening the facility and is concurrently

taking place with hiring employees. We will plan on stoking the shelves with merchandise

within 20 days prior to the grand opening. We plan to use the new stock employees as well as

some of the existing stock employees from other Acme Home Improvements in the US to stock

the store. We will use existing US stock employees to help stock the shelves as well as train the

Mexican local hires. The employees will use the plan-o-gram to stock the store according to

corporate standards. Further, we will ensure the US employees are bilingual for this

training/stocking activity. If there are not enough bilingual employees, we will seek translators

to help in this training/stocking activity.

AMCProject 14

CompleteallPaving,Landscaping,andFinalTouches

Once the completion of the garage and main building have been attained, Mexico

City Construction Associates will need to clear out debris and start designing the walk way for

the front of the store. In addition to the store, a paved asphalt parking lot with overflow parking

will begin to provide parking for employees and workers who need access to the store. It’s in the

best interest to provide an inviting atmosphere to customers, which is why we have allowed in

our budget, Landscaping that will line trees between the overflow parking and down every other

parking aisle. After the construction is complete, we will have painted lines outlining actual

spaces for the parking lot with designated handicapped parking, and crosswalks. Signs will be

posted in designated areas to facilitate the flow of traffic, as well as advertise the store and its

components. This will include a twenty foot by twenty foot sign that reads “ACME Home

Improvements”, with a Spanish translation underneath. A gate will be needed to enclose the

outdoor garden and seasonal section and include outdoor faucets to attach hoses to keep fresh

plants. Security cameras will be placed to cover the surrounding areas of the store, and be placed

on the roof. Lastly, trash cans, propane grates, soda machines, and carts will be strategically

placed to accommodate ACME’s customers.

HiringandTraining

The hiring process will begin with reviewing qualified candidates within the company

who are willing to relocate and have demonstrated sound professionalism and success. The

positions will also be advertised with the appropriate Mexican career sites with online companies

such as “Monster.com” as well. The qualifications that are necessary for the listed position are an

AMCProject 15

MBA or equivalent degree, 10 years of management experience, strong communication skills to

present ideas and status reports to upper management, deep knowledge of each department,

bilingual (Spanish and English), and experience with the inventory tracking system / information

system we currently use in the store. We will first hire a store manager and proceed with other

levels of management afterwards. The interviewing team will consist of ACME’s CEO, project

manager, representative from HR, project sponsor, and a district manager who will be taking this

store under their direction. The interviewing team for upper level management will look for

individuals’ who understand and adheres to the mission statement and how to conduct business

internationally. It is important that they recognize strong qualities and to adhere to equality laws

and not bias on gender, age, race, or religion. Next we will search for an assistant manager,

bookkeeper, information systems manager, and department managers will then be advertised and

selected with input from the new store manager. Qualified applicants will be administered

literacy tests, knowledge tests, mathematic tests, background checks and drug tests. Successful

completion of tests and satisfactory results then allow negotiations of salaries, work schedules

and benefits. Customer service employees, cashiers, receiving and stock employees,

maintenance and janitorial employees will be hired two months before the store opens and will

start training, preparing the store, fill out the appropriate paperwork for insurance and tax

purposes.

The overall budget allocated for the hiring and training phase will include salaries and

benefits for three months for store employees (roughly 250 positions covering early, late, and

overnight shifts), relocation costs, and computer setup to support computer based learning. With

the minimum wage at 3.40 USD, Acme remains competitive with trying to attract qualified

candidates and will pay 5.00 USD per hour. The increase is justified and will increase

AMCProject 16

productivity, help lower poverty levels, an nurture growth (Bell, p s102). Acme will also adhere

to labor laws of the United States for public relations appeal. The budget for Hiring and Training

will account for 360,000 USD. This includes salaries for upper management, middle

management, department heads, and employees for three months plus an additional 100,000 for

training supplies and miscellaneous costs. This will quickly turn over to operational budget

when the store opens and starts producing income.

Conclusion

Acme Home Improvements de Mexico, SA de CV (AMC) which is a joint venture with

Mexican affiliates, will be our first international venture and its success is instrumental to the

success of our future aspirations for expansion internationally. AMC will be competitive with

other Mexican hardware stores as well as US competitors who are already in Mexico such as

Home Depot and Lowes. We believe with the plan we have documented herein, this plan will

lead to the successful creation of the first Acme store in Mexico and will be operational within

twelve months of the acceptance of this project plan. We expect the project to cost

approximately USD 8million (MXN 102,160,000) and we expect our plans will not exceed the

budget nor the period allotted. We recommend Acme accept this project plan and move forward

with aspirations for international growth with Mexico City being the test bed for further

expansion to overseas markets.

AMCProject 17

References

Bell, L. (1997). The Impact of Minimum Wages in Mexico and Colombia. Journal of

Labor Economics, 15(3), S102. Retrieved from Business Source Complete database.

Doing Business.org. (2009, January). Dealing with construction permits in Mexico. Retrieved

January 20, 2010, http://www.doingbusiness.org/ExploreTopics/

DealingLicenses/Details.aspx?economyid=127

Fontaine Construction Corporation (2009). Site preparation services. Retrieved January 20,

2010, http://www.fontaineconstruction.com/

Schwalbe, K. (2004). Information technology project management (3rd ed.). Boston: Course Technology.

AMCProject 18

AppendixA

WBS:

Obtain required licenses & Permits

Request and obtain the alignment certificate (alineeamiento) and official number (numero ofiicial)

Request and obtain single zoning certifiacate starting specific land use and feasibility

Request water and sewage services and pay the corresponding fees for service contracting

Register Construction Statement Type B

Request and connect to water and sewage services

Request and connect to electrical power service

Request and connect to a regular telephone line

Notify the Municipal Authority on construction work completion

Receive inspection on construction work completion

Request and obtain use an occupancy clearance

Request and obtain authorization from civil protection

Sign contract with ISP telecommunications

Update the building record at the tax ministry

Prepare Site & Lay Foundation

Prepare Site

Land Clearing and Disposal

Demolition, Excavation and Trenching

Grading

Buffer for land to settle

Lay Foundation

Storm Water Drainage and Erosion Prevention

Road Construction, Paving and Resurfacing

AMCProject 19

Laying Utility Lines and Sweerage and Water Lines

Build Walls, Floor, & Roof of the structure

Frame the floor in section

Place Metal Rods to help support cement

Pour the cement for the floor

Frame Walls

Set Cinder Block for Outside walls

Construct metal supports for roof

Put down plywood across roof

Roll in asphalt paper with hot tar. (withstanding high temperatures

Install Electrical & Plumbing Fixtures

Install Outlet boxes on framing every 15 feet

Install high speed internet jacks and phone jacks

Install wiring to support Information systems that will allow communication for products sold and inventory

Run telephone wiring throughout

Run CAT 5 cable throughout

Install Ducts for heating air conditioning

Install water piping

install sewage piping

install gas piping for heating

Finish Interior & Stock Inventory

Drywall framing

Paint Throughout

Secuirty Cameras (outside and inside)

Registers

Tiling

Carpeting

AMCProject 20

Shelving

Bathrooms and sinks

Time Clock ( for employees)

Install Air Conditioning / Heating Utilities

Order inventory

Build Garage

Prepare site (verify ground stability)

Build 3 Level garage

Paint lines

Complete all Paving, Landscaping, and Final Touches

Concrete sidewalks

Asphalt parking lot

Painted lines for parking and cross walks

Signs

Stop signs

Disabled parking signs

ACME sign for Store Front (lighted)

Inside store

Trees to divide over flow parking (in medium strips)

Gate for Garden Center

Hoses for Garden and Front of Store

Trash Cans (outside and inside)

Hiring Process

Interview from within company

Post jobs with local agencies / Internet Job Sites

Research costs for positions

Review Candidates

AMCProject 21

Applicant Testing

Drug Testing

Literacy test

Mathematic testing for Management & Cashiers

Departmental knowledge

Background Checking (credit & convictions)

Fill Positions

Store Manager

Assistant Store Manager

Bookkeeper

Information Systems Manager

Department Managers

Plumbing / Electrical Supplies

Building Materials

Hardware and Tools

Seasonal and Garden

Paint, Flooring and Wall Coverings

Customer Service Employees

Cashiers

Receiving and Stock Employees

Maintenance / Janitorial employees

Start Training

Stocking Shelves

Store Opening

AMCProject 22

AppendixBCritical Path: 2 – 3 – 17 – 18 – 19 – 20 - 24 – 26 – 27 – 28 – 29 – 30 – 31 – 32 – 33 – 77 – 83 – 98 – 100

- Request and obtain the alignment certificate (alineeamiento) and official number (numero ofiicial)

- Request and obtain single zoning certifiacate starting specific land use and feasibility

- Land Clearing and Disposal

- Demolition, Excavation and Trenching

- Grading

- Buffer for land to settle

- Frame the floor in section

- Place Metal Rods to help support cement

- Pour the cement for the floor

- Frame Walls

- Set Cinder Block for Outside walls

- Construct metal supports for roof

- Put down plywood across roof

- Roll in asphalt paper with hot tar. (withstanding high temperatures)

- Review Candidates

- Background Checking (credit & convictions)

- Maintenance / Janitorial employees

- Stocking Shelves

AMCProject 23

AppendixCBudget Allocation:

BudgetForAcmeMexicoCityProject

Permits$9,923.80

PreparingSite&LayFounda]on$250,000.00

BuildWallsFloorRoofStructure$5,050,000.00

InstallElectricalandPlumbingFixtures$465,000.00

Garage$1,200,000.00

FinishInteriorandStocking$600,000.00

CompleteallPavingLandscaping$145,000.00

Hiring/Training$260,000.00