Optimum-cost Housing Companies Proposal

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(Questions; criticism; remarks; and suggestions are most welcome)

……………Defining Housing Cost:
The major components and determinants of total cost in housing, whether for a single simple building or for a complex of housing project, are:
1- Cost of land; reclamation and building permits;
2- Cost of finance and lending;
3- Cost of building materials and supplies;
4- Cost of contractor; labor; and equipment;
5- Cost of building techniques and skills;

6- Cost of chosen technologies and design ;
7- Cost of establishing public amenities, services & utilities;
8- Cost of design; supervision; and quality assurance;
9- Cost of time or duration of project; and
10- Cost of future maintenance and repairs.

………………Conceptual Definitions:
Optimum-cost production is about achieving effectiveness and efficiency by producing great results with very little wastes. It covers the demands of all income sectors in the economy. The final products vary from very affordable to very luxurious. On the contrary, Low-cost building is mainly targeting the needs of low-income groups only; and it might not be effective (not doing the right things) or efficient (not doing things right). Low-cost production is usually the result of cutting both needs and costs simultaneously by conventional means and thus risking the quality of products and the quality of life.

……………….The Way to Articulating Solutions:
By analyzing the cost share of each cost component it is possible to pinpoint to the most expensive elements in order. It is very essential to reduce the costs of all housing components. But, doing much effort in reducing the cost of insignificant elements will yield little results. Therefore, any proposal that does not cut the costs of major components, particularly finance; land; and building materials, will be a mere theoretical exercise.
The order given in the first list reflects the average urban share of total cost. New initiatives for Optimum-cost housing shall work to achieve the following results in the same order:
1- Building integrated housing neighborhoods/ modern villages; instead of individual plots;
2- Develop savings from individuals and groups; instead of lending and installment sales;
3- Invest customers savings in local manufacturing and bulk imports; instead of purchases;
4- Establish specialized housing construction companies; instead of conventional builders;
5- Develop appropriate technologies and expertise; instead of using orthodox techniques;

6- Different and versatile designs, designers and standards; instead of typical few designs;
7- Group share of public amenities, services & utilities; instead of ad hoc construction basis;
8- Establish specialized private housing consultancies ; instead of state-run departments;
9- Change land allocation system to separate entitlement from actual delivery of land; and
10- Organize gradual transfer of neighborhood management to property owners’ board.

……………………Brief Summary
These companies shall build housing villages at optimum cost and high quality standards. Each housing neighborhood/village project shall be self-contained and comprises of the following segments:
1- Central commercial businesses blocks; parking; shopping malls; sports;  entertainment and worship facilities.
2- All public utilities. Including: village fences and gates; Water supply & storage; drainage; sewerage; electricity; backup generator; telephone network; fire extinguishers and street lighting & billboards.
3- All essential public services. Including: local security; Police post; primary health care & ambulance; Kindergarten; primary school; swimming pool; public library; adjacent public transport stops; local cable TV and satellite dishes; lawns & recreation; green grounds and community hall.
4- Village management offices; information & services office.

……………………The areas of reducing costs to get optimum-cost and high-quality housing projects construction are:
1- Finance from savings & bonds.
2- Diverse capital investments.
3- Production-line planning.
4- Direct bulk imports.
5- Integrated workshops.

6- Personalized designs.
7- Technologies development.
8- Value-added services & utilities.
9- High-returns central blocks.
10- Post-construction project management.

11- Comprehensive quality control system.
12- Location & town planning improvements.
13- Auction & sale returns.
14- Local manufacturing.
15- Minimal construction time frame.

16- Minimal overhead charges.
17- Economy of scale.
18- Specialized workmen force.
19- Efficient handling; storage & transport.
20- Mechanization & minimal manual labor.

………………..Types of targeted clients are:
1- Saving individuals & families.
2- Small & medium-size entrepreneurs.
3- Members and groups of pension funds & trade unions.
4- Private & public investment entities.
5- Cooperatives & civic organizations.

…………………..General rules:
1- Clients shall buy bonds in any particular housing village; and may subscribe in the company shares once available.
2- Both projects bonds and company shares shall be listed and be available in the money exchange market.
3- Shares and bonds shall be easily transferrable and the capital and its profits shall be repayable.
4- Advantage of choice of plot and delivery of completed units shall be given to those who complete their total cost payment first (First to pay; first to be served).
5- Completion of village project shall be conducted in four equal quarters as soon as each batch of clients acquires the total number of units in each quarter.

…………….Clients may pay directly in the forms of:
1- Regular or irregular cash or bank payments.
2- Value of old estates or assets.
3- Dividends of their benefits.

……………Stages of Housing village project implementation
The company shall perform the following processes:
1- Research the existing city/town planning design.
2- Buy prime undeveloped location for the village.
3- Make full town planning for the village project location.
4- Obtain all the necessary local authority development approvals and licenses.
5- Organize issuance of bonds with the national and local financial authorities.

6- Advertise for the new housing village and sales offers.
7- Start collecting the capital for the new village housing project from clients.
8- Sale and auction of clients’ old estates and assets to pay for their shares and bonds.
9- Form village community-company joint assembly and executive board.
10- Invest the village capital in approved diverse businesses.

11- Design housing units; once any client reaches 50% of the estimated cost of his/her unit.
12- Supervise any designs from a third party to comply with the village standards.
13- Manufacturing and importing building materials and fixtures.
14- Develop the central commercial blocks; village services and utilities.
15- Finalize detailed designs of the first quarter batch of clients reaching 65% of their units cost.

16- Commence construction of the first quarter batch of the village for the 80% ready clients.
17- Proceed with the other three quarters of clients and village as they become ready.
18- Resell the shares of defaulting clients or transfer of their ownership to other newer projects.
19- Deliver the management of the village to a transitional joint executive board for 10 years.
20- Final delivery of the village housing project at the end of the 10-year contract.
…………………….END