Despite the prolonged slide in the industry, the housing segment in the US construction market gained a record of $550.14 billion last year. The sector will continue to grow steadily over the next two years. New single-family housing construction, which accounted for 67% total residential construction in the US, is one of the highest revenue-generating segments in this segment.

Over the years, the industry’s business model had changed to increase efficiency and reduce costs. There are no barriers to entry (other than state-based registrations and licenses) which have led to more service providers. It is difficult for new competitors to quickly establish themselves in the market because of this high level of competition.

Existing businesses have many advantages over new entrants. They:

• Get access to skilled subcontractors.
• Keep in touch with your suppliers.
• Establish ongoing agreements with financial institutions and property development companies.
• Can display completed examples of their work in a local market and leverage off “word-of-mouth” referrals.

KnaelHaed ASPware – KnaelHaed is a provider Web based vertical market software applications. KnaelHaed ASPware offers the digitalSuspenders as an online solution to support the building construction process.

The Issue

In terms of R&D investment, the construction sector is behind other industries. R&D investments by mature US companies average around 3.5% to 4% of sales. For some industries such as aerospace that number can be 7% to 14%. Construction only reinvests 0.5%. The reasons for the low reinvestment vary, but are generally due to costs and complexity. Most construction firms are small (less than 10 employees) and operate on thin profit margins. So technology spending is often seen to be an expensive luxury.

The Solution

DigitalSuspenders is an integrated suite of Web-based software that supports the entire building lifecycle: from conception, through construction, and into management. The suite offers online collaboration, digital takesoff, estimating, as well project and property management capabilities. This is all in an easily understood and easy to use format.

The Market Size

The home construction industry is comprised of 163,703 establishments and employed 796,880 persons according to the most recent Economic Census. According to the most recent Economic Census, the industry has seen a record growth of 175,000 establishments over the past few years. Meanwhile, the US commercial and institutional building industries are comprised of 34,588 establishments. The US construction industry contributes approximately 8% to its GDP.

Start-up cost

KnaelHaed ASPware estimates that $120,000 will be required to build the digitalSuspenders beta prototype, cover legal and infrastructure expenses and cultivate potential customers. We will seek out initial capital from angel investors as well corporate partners to finance the start up.

Potential Payoff

KnaelHaed ASPware predicts breaking-even in just two years. We expect royalty revenue from the licensing of our position sensing technology and software technology. KnaelHaed ASPware plans to launch or sell the company within three to 5 years to stimulate further growth, and to provide liquidity for investors.

Management Team

Paul Peen is the President and Chief Executive Officer. He has more than 20 years experience in software development for commercial purposes, including stints with Microsoft and Expedia.com.

KnaelHaed ASPware combines connectivity, interactivity and speed. It is the first software of its kind to offer both efficiency as well as a cost-saving strategy for builders and subcontractors. KnaelHaed is able to offer outsourcing solutions at competitive pricing. KnaelHaed ASPware is dedicated to the development of new ideas that are useful in achieving clients’ objectives. Together, the owners’ passion and accumulated field work has made KnaelHaed ASPware more than “just-another-outsourcing-hub”, but a catalyst for the next e-commerce re-invention.

1.1 Objectives

The mission of KnaelHaed ASPware is to provide a medium for custom builders, general contractors, design builders, engineer-contractors, joint-venture contractors, and turnkey contractors to outsource their works with greater cost saving efficiency.

This model is positioned to be a “disruptive force” against most of the construction software companies that charge several thousand dollars for each copy of their software. KnaelHaed ASPware’s model is that it offers a subset only of these capabilities. KnaelHaed ASPware uses the open-source business model to achieve its ideal mission of providing better solutions for all stakeholders.

1.2 Mission

Our target market is builders and subcontractors who want to profit from outsourcing. The industry today is supplied independently by software companies whose products are quite costly for small and medium sized users. Given that home builders build only about 12 homes per year, it is difficult to find large companies with enough financial resources to purchase premium software licensing.

Our estimates are that 60% of the US market would be covered by small and medium builders. This would translate to approximately 118,980 businesses. These establishments will be our focus. They are focused on achieving cost efficiency and exact results.

1.3 Keys to Success

We targeted the construction industry for many reasons. The construction industry is worth $787 billion. It has significant growth potential. The annual unit growth of the number of establishments in the housing sector averaged 6.45% and commercial/institutional sector 0.46% last year.

Despite the low growth in the construction industry, it still remains a very fragmented market. Within the US alone there are over 200,000 establishments (both housing and commercial/institutional) on record.

These are the keys to our success:

• • Establishing and maintaining strategic alliances and business relationships with software vendors and industry-related business partners
  • Adopting a customer and market-oriented sales and marketing paradigm
  • Management of the business through the implementation, continuous measurement and adjustment of the fundamentals in a Balanced Scorecard.

• • Goals for Employee Learning and Growth Results
  • Financial Goals Vs. Results
  • Internal Business Process Goals Vs. Results
  • Customer Satisfaction Goals Vs. Results