Group Case: Sheilas Construction

Sheila, born and raised in Alberta, is in the process of relocating to BC$.$ She has been working as a

contractor in the construction industry for the past five years, but believes there is more earning

opportunity outside of Alberta as the weather is often too cold and results in halted projects. However,

this is more a long$-$term outlook as developing a new market will take time.

Sheila casually mentioned to a supplier that she was considering relocating to the Vancouver region and

was surprised to learn the steel frames manufacturer was in the process of opening a new assembly

plant there. She met with the companys owner, Bruce, who grew increasingly interested in having

Sheila manage the new plant.

Sheila is hesitant to give up on her company so suddenly and expressed this concern to Bruce. He

offered her a $4-$day work week where she got Fridays off, but with a salary of $$70,000$ instead of

$$80,000.$ Sheila believes this can work well for her, as she would be able to work as a contractor on

Fridays and Saturdays. She feels that one day a week is necessary for rest and recuperation.

Typically, Sheila works $200$ days out of the year, eight hours per day. Her standard labor rate is $$40$ per

hour. She also marks up materials $($including motor vehicle expenses$)$ by $20\%$ and bills them to the

customer. In a typical year, materials add up to $$30,000.$

As she is entering a new market, Sheila believes that her work will decline to about $1,000$ hours next

year. She is also planning on quoting slightly lower prices $($perhaps at a rate of $$35$ per hour$)$ in the

hopes of gaining market share. Sheila believes she can grow her business to her usual volume in the next

year and raise her rates to $$40$ per hour in the third year. Her hope was to reach $2,000$ hours a year

within five years, but that might need to change if she decides to take on the plant manager role.

Sheila is wondering if maybe she should look for an opportunity to partner up with an established

contractor in the Vancouver region. She believes she can continue to charge $$40$ an hour this way and

still work up to $1,000$ hours in the first year. This approach could result in faster growth, with her

reaching $2,000$ hours in the second year. Of course, there would be the cost of buying into someone

elses business. Sheila wants to know if a partnership would be worthwhile if she were to pay $$15,000$ to

buy in$.$ She wants a detailed pros and cons analysis of partnering up with a reputable BC$-$based

contractor and a recommendation.

Shelia wants a detailed analysis with recommendations on which career option would be best for her.

While she is prioritizing long$-$term success, it is imperative that she earns money in the near$-$term as she

plans on buying a house in the Vancouver area. Sheila also wants some advice on how taxes work in BC

and how they might apply to her situation. She wants tax impacts of her career decision, assuming she

moves to BC for sure.

Group Case: Sheilas Construction

Another investment Sheila is considering is a new work truck. Her old Chevy is expected to last another

three years with a $$2,000$ repair next month. Alternatively, Sheila can sell the truck as is for $$3,000$

$($worthless after three more years of use$)$ and buy a used F$150$ for $$9,000($expected value of $$3,000$ at

the end of three years$).$ The new truck would be more efficient, saving Sheila an average of $$100$ per

month on repair and fuel costs. Sheila believes she can borrow money for the new truck at an annual

rate of $5\%.$ Sheila is wondering what the pros and cons of switching trucks are, and if she should

upgrade. She also wants advice on the accounting and tax treatment of a truck.

On a professional level, Sheila is wondering if she has the right business management skills to run the

plant. She feels as if she knows the ins and outs of the construction industry so she would be able to

make the right connections and keep on the pulse of the BC residential and commercial development

sectors$.$ However, she wants some insight on the role of a business manager. Some tips on performance

evaluation of employees and business ethics which relate to her situation would be greatly appreciated.

Sheila is also concerned that she is doesnt understand numbers well enough. She wants to learn more

about accounting for specific jobs, both in a sense of doing her own contract work and perhaps

monitoring costs for a steel frame order. She is wondering how to deal with overhead costs accurately in

a factory setting and how accounting can impact decision making in the short and long run. Additionally,

she wants to know about specific ethical standards for an accountant, as she, as plant manager, would

be directly involved in hiring an accounting manager along with Bruce.

Finally, Bruce emphasized the need to stay on budget at the new factory. Sheila agreed, but she didnt

fully understand what that meant. She wants some details on conducting budgetary analysis and how

that can influence business decisions. She has some experience making personal budgets which help her

save money, but she suspects its a whole other ball game with a factory.

Advise Sheila on her career path and the current outlook of the new manufacturing plant. Produce a

business report, including comprehensive analysis, recommendations, and any questions you may need

to ask Sheila.