The College of Architecture

University of Santo Tomas

A Paper Submitted to
Ar. Rajelyn Busmente
HOUSING 1

PATRICK ABALOS MALLARI

5AR-6

May 06 2016

Case Study of Local Housing Project in the Philippines

Housing Project Title: The DECA Home Residences

Developed by: 8990 Holdings Philippines
Location: Mintal. Davao City, Philippines.

8990 Holdings, Inc. (the Company) is broadly renowned as the most

successful company in the Philippines in providing affordable housing to low- to
middle-income earners. It has received several awards such as Q Asia Magazines
best housing developer for the years of 2012 and 2013. The company conveyed a
gross income of 33.3 billion pesos or USD76.3 million for the year 2013. This gross
income margin of the company in 2013 had climbed to 63.3% compared to the
numbers produced for 2012 which was 62.2%. It was at in 2013 had increased to
63.3% compared to the figure for 2012 which was 62.2%. This increase was credited
to the procurement of land banks and to its efficient project budgeting course.

The company launched its mass housing project under the DECA Homes
brand in 1991. These projects were developed in high growth areas across Visayas,
Mindanao and Luzon. Most of the home buyers had a monthly gross income of more
than PHP25, 000 while 18% of home-buyers possess an income of PHP8,000 to
PHP 15,000 only, and 29% of the owners had an income of PHP16,000 to
PHP25,000. The company also offers a financing scheme for consumers who do not
have enough accumulated savings for a down-payment, but do have enough
recurring income for monthly amortization. Below is a table of the breakdown of the
homeowners of this housing project

Table 1: Monthly Gross Income of Home-owners

Construction technology, methods and materials

Rather than using traditional building methods, the Company used a pre-cast
construction process which quickens the accomplishment of its housing projects.
Through persistently utilizing, investing and upgrading the technology, the company
is capable of constructing townhouses and single attached units within eight to ten
days, and taking an additional five days to construct single-story houses with lofts.
This system they used boosts the overall time of construction thus providing a rapid
occupation.

DECA Homes Pre-cast Technology

This pre-cast is manufactured in a controlled casting environment with intense
provisions. The pre-cast is manufactured in a controlled casting environment. This
makes it easier to control the mix, placement, and curing, which facilitates quality
control.
The panels created from the pre-cast molds can withstand approximately four times
as much pressure per square inch than traditional cinder block structures.
The technology has also contributed towards reducing the construction cost,
particularly labor costs, as the construction phase is shorter than the average time
required to construct housing using traditional building methods. The quality of the
Companys project was tested during the earthquake in October 2013 which affected
Cebu and Bohol. Independent structural engineers commissioned to inspect the
units in the projects that were affected stated that there was only minor superficial
damage and that the units remained structurally stable and fit for occupancy.
Figure 1: Examples of the Company's housing units

Source: With permission from 8990 Holdings, Inc.

Framework agreement with key material suppliers

The raw materials used for the companys housing development projects are
from domestic suppliers, and the company maintains relationships with 200 of them.
They are selected according to a set of criteria which include the quality and prices
of raw materials supplied, reliability of supply, delivery time as well as the financial
and industrial strength of the supplier.
The companys strategy is to use bulk supply contracts which allow it to
negotiate for lower prices due to the high volume of transactions. Because the
company instead of its contractors handles the purchases of materials directly, only
the cost of labor and profit in the bill of estimates is negotiated with the contractor.
This gives the company more control over the cost of materials.
The company will order and purchase materials earlier than the date of
instigation of work on site. These transactions are done in cash after the contract has
been legally and properly settled. This is in contrast to other Filipino developers who
usually work through an association to negotiate with the suppliers for better pricing
deals for future projects. However, there is no guarantee as to when the projects will
begin, which leads to an irregular cash flow for the suppliers. Furthermore, the
association practices a 30-day credit loan, which constrains the suppliers cash flow.
In the case of 8890 however, the payment in advance empowers a healthy
cash flow for the supplier without facing pressure to produce and supply the
materials immediately. This gives an advantage to the company, as the suppliers are
more willing to provide the materials at a cheaper price owing to the commitment it
has negotiated on. Hence, the company is able to reduce its material expense costs,
which increases its profit margin as the materials are cheaper than the market and
discounted association price.
With this scenario the company is also able to advance more control over the
cost of materials through advance payment as it can lock in the applicable prices.
This works well especially in the case of price sensitive materials such as steel.
Finally, advance payment allows the company to receive the items only when they
need them so it does not have to incur high storage costs on site
.

Reference : http://www.krinstitute.org/Making_Housing_Affordable-@Chapter_7-;_Case_Studies.aspx