Redevelopment of Jetts Fitness Club - Case Study Example

TITLE: FEASIBILITY STUDY: REDEVELOPMENT OF JETTS FITNESS CLUB YOUR NAME NAME OF THE TUTOR DATE OF SUBMITION YOUR COURSE EXECUTIVE SUMMARY Jetts Fitness Club is one of the many fitness clubs of the Jetts fitness club franchise located all around Australia. This is a gymnasium frequented by people from the local community of all ages. This particular club can brag to be one of the most technologically advanced 24 hr. health and fitness clubs in the country. Clients are unable to fully get the Jetts fitness club experience due to the limited floor space housing the facility. This has led to very tight schedules and appointment cancellations due to the increased membership. Despite the cutting edge technology, capitalizing on it has been a problem due to crowding with every member seeking an opportunity to have the experience. There is a fitness craze all over the country and this is an opportunity to tap into new sources of revenue. Additional floor space is required to accommodate this euphoric demand for health and fitness services which will make Jetts Fitness the leaders of this industry. This feasibility study report analyses the need for the re-development and or renewal of facilities in the club so as to capitalize on demand for our services. Table Contents EXECUTIVE SUMMARY 2 Background 4 Scope of the project 4 Needs Assessment 5 Prepare Management Plan 5 Form a Needs Assessment Committee 5 Identification of areas major concerns 6 Determination of need indicators 6 Data sources 6 Decide on preliminary priorities 6 Market Analysis 7 Project Description 7 Demand Assessment 7 Supply 7 Conclusion 8 Financial Analysis 8 Organisational philosophy 9 Alignment of interests 9 No outside ownership 10 Sustainability 10 Risk management 10 Risk Register 11 References 12 Background The gymnasium is located at (Shops 1-4,584 Grimshaw, Street, Bundoora, and VIC 3083) adjacent to… andhouses a boxing ring, swimming pool, treadmills, punching bags, weights and an assortment of various body building equipment.The gymnasium has 400 members with an average attendance of 200 people per day. Scope of the project The scope of this project is how to increase the facility’s capacity and improve the quality of its amenities. The main aim of this report was to gather views of the users on how to go about accommodating the growing number of people requiring fitness services and for appraisal on a planned face-lift of the facility. The target is to raise capacity to comfortably accommodate 400 members per day without crowding and better services. There has been an increased demand for fitness service centres in this area. With increased clientele portfolio, the developer hopes to increase revenue, promote sports in the society, and help keep the youth from alcoholism, drugs and the evils that come with idleness. There has been an increased demand for fitness service centres in this area. The study was commissioned by the board of directors of the Jetts fitness club franchise and was conducted by students from a local university through questionnaires, observation, key informant and short interviews with members many of who use the facility. The question is whether to re-locate to larger premises or re-develop the current facility to fit present and future requirements. The study was done in 14 days. Since client satisfaction is the goal of any business, their input is necessary before any substantial financial investment is considered. A feasibility study is necessary because it gives the developer accurate information on whether the projected revenues will sufficiently cover the expected costs. It also gives an indication of potential social impacts of changing the facility. This in turn helps in making the decision of which options to proceed with, those to avoid or abandon the entire project altogether (Wolfsont, 2002). Highest and best-use studies in conjunction with general market studies were preferred in this case because of the personal goals of the developer. This analysis was performed for the development project of this nature since will assess the existing demand and supply for the services offered in the market. Needs Assessment Thereis never enough money to do everything, thus a needs assessment need be conducted to ensure that the limited resources go to where they’re most needed. It gives the criteria on how best to distribute resources (Aphramor, 2005). The needs assessment was done through survey and questionnaire to users of the facility. The following steps were undertaken to establish a needs assessment plan. Prepare Management Plan The road to any successful project requires proper leadership. The project manager is the in planning and managing a needs assessment. Form a Needs Assessment Committee Members of the committee comprised of the public relations, customer care and maintenance departments, trainers and individuals crucial to ensuring commitment and follow-up. Weekly reportsto top management and other important stakeholders, with opportunities for interaction on major issues were to be availed for discussion (Bordo, 2003). Identification of areas major concerns The committee decided to carry out a survey using questionnaires and short interviews to identify issues of major concern to the target group and a list was created. Namely; Inadequate training space Inadequate training equipment Amenities Inadequate parking space Shortage in training staff Determination of need indicators The need indicators for the points of major concern were; Queuing in the showers and toilets Crowding and queuing around various equipment Inadequate qualified staff Poor maintenance of lockers Faded and stained walls; worn out tiles Inadequate parking space Data sources Data was obtained from membership records, CCTV video feeds from the parking lots and security cameras, traffic reports, surveys data, interviews and reports from key informants. Decide on preliminary priorities Floor space and amenities are competing factors, thus there is an urgent need to increase the floor space. The need for new space was inevitable considering that there are new residential developments around that facility therefore the high probability of increase in population thus demand for fitness services (Cash, 1990). Also noted was that the facility needed a facelift to match the state of art equipment and also to retain current and attract more clients. Therefore floor space can only be increased through; Leasing extra floor space Moving to a building with larger floor space Increasing the number of stories on the existing structure It was proposed that modifying the building so as to accommodate an extra floors would be the most logical option since renting or leasing extra space would increase overheads exponentially. A team of structural engineers and architects were consulted and preliminary examinations found the building to be structurally sound and capable of carrying 4-5 extra floor. Since the target group includes masons, welders, steel fixer, painters etc. it would be advantageous if they were to employ their skills in the project to get a feeling of being part and parcel of the club (Cramer &Steinwert, 1998). Current employees would undergo rigorous training and other qualified trainers would be employed to cover the projected demand once the project was complete. An apprenticeship programme would be put in place so that less experienced trainers are paired with less experienced so that they can impart skills. Market Analysis The aim of a market analysis is to find the point where supply and demand curves intersect in order to supply the right quantity of a good or service at the right price. The target group considered in this case is the youth and working class i.e. 16-40 years. Most of whom are working class. It is not an exact science so statistical data, assumptions and educated guesses have to be made (French et al., 1995). The following factors are considered in market analysis; • Project description • Demand assessment • Review of supply • Synthesis Project Description The project description lays the foundation by comparing the demand for a service against the available supply in relation to the prices.Factors that influence the project description such as; zoning, utilities, parking, environmental impacts, government services, change in legislation and prevailing public attitudes play major role were considered and the necessary permits and licences will be collected (Hyatt, 2007). Demand Assessment For factors affecting demand such as; Population level of income Employment Due to the numerous construction projects which are well underway within the area there is a large civilian labour force and an expected influx in population and these are also potential clientele for health and fitness services. The 24 hr. system allows the working class to access the fitness club after working hours. Supply Factors affecting supply include; Existing supply Expected supply Competitive environment Availability of land The cost of land, labor and capital. Conclusion After all factors are considered, a synthesis of the various different factors was done to assess the combined effect of these factor so as to draw an informed conclusion. In coming up with a conclusion, we posed the following questions; What are the indirect economic constraints? (cons) Changes in legislation, change in tax regimes What is the size of the future market and what percentage of the overall market can be attracted to the proposed development? (pros) Increased population, no direct competition, income levels are favorable, better employment opportunities. What is the market-determined price range? Community based(below market prices) Number of equipment required and number of idle equipment to be disposed of? The conclusion was favourable since the advantages outweigh the disadvantages. Financial Analysis LEASING NEW SPACE CURRENT PROJECTED 2013 INCOME EXPENSES GROSS INCOME INCOME EXPENSES GROSS INCOME   FEES COLLECTIONS SALARIES OVERHEADS   FEES COLLECTIONS SALARIES OVERHEADS   1 20000 2580 3000 5000 14580 35000 2980 3000 11500 23480 2 18000 3000 3000 5100 12900 35000 3400 3000 11600 23800 3 19560 2700 3500 4800 13960 35000 3100 3500 11300 23300 4 18450 2750 3500 5000 12700 35000 3150 3500 11500 23150 5 21500 2180 3500 4900 15280 35000 2580 3500 11400 22680 6 22350 2000 3500 4900 15950 40000 2400 3500 11400 27500 7 24600 2200 4000 5000 17800 40000 2600 4000 11500 27100 8 23450 2350 4000 5100 16700 40000 2750 4000 11600 27150 9 25750 2450 4000 4900 19300 40000 2850 4000 11400 27450 10 28500 3080 4000 4800 22780 40000 3480 4000 11300 28180 11 29750 3200 4000 5200 23750 40000 3600 4000 11700 27900 12 31550 3000 4000 5100 25450 40000 3400 4000 11600 27800           211150         309490 Financial feasibility analysis is performed to test whether the project's return will exceed opportunity costs. The financial feasibility analysis was performed when the preliminary drawings and construction cost estimates were developed (Ogle et al., 2005). The initial capital cost would be high but the project would break even within a year’s time using the projected revenue and cost. New facility would cost the developer USD 4,000,000 @USD 135/ft2 Leasing new space would cost the developer USD 50,000 per month By combining the results of the market analysis and the cost estimates, the feasibility analysis will estimate financial returns. The analysis estimates values based on current and expected market prices, costs and revenues (Quinn & Crocker, 1999). The operating costs are bound to rise due so increased staff requirements and other overheads such as lighting. Below is a table comparing the current levels of incomes and expenses in comparison with the projected? Organisational philosophy The principle behind organisational philosophy is that in order to deliver maximum long term investment performance, considerations have to be made on how the facility is managed. The following factors have to be taken into account; Alignment of interests The facility must provide its members value for money for goods and services delivered. Thus it will develop a good reputation for excellence and its goods and services will be sought after (Rich & Evans, 2005). This is achieved byhiring highly trained and qualified staff and personalized services. Socially, it promotes sports and athleticism providing the youth with potential career paths whilst at the same time keeping them away from the evils of drug abuse. No outside ownership This is a community based facility, the ownership structure gives the members the opportunity to make tough unpopular decisions and stick with them (Shilling, 2003). This is true from the operational structure given that almost all employees working in the facility come from the neighbourhood. Sustainability The facility will inevitably grow in terms of demand for services offered and such growth will present both opportunities and challenges. In order to meet those challenges there is need to continually invest time and resources towards maintaining and developing better investment and operational capabilities (Brain Gym International, 2014). The policy of no outside ownership enables to prioritise long-term investments, and social benefit over short-term profitability Financial returns will be smaller but the social gains will be quite substantial. Given that the project is community based, the social benefits accrued outweigh the profitability of the facility. Social gains arising include; employment opportunities sports and athletics stars may discover and grow their talent in this facility drop in cases of drug abuse due to idleness drop in crime rates provides an avenue for people to meet, socialise and exchange ideas A healthier, fitter society. Hence from a quick cost benefit analysis, it can be seen that the community will gain and the project is sustainable and profitable in the long term. Since the project is community based, there is no outside owner hence this promotes equity, availability, flexibility and access to the community unlike private facilities which have strict membership rules and exorbitant fees (De los Santos et al., 2002). Risk management Risk is defined as an event with a probability of occurring, and could have either a positive or negative impact to a project should that risk occur. A risk may have one or several causes and, if it occurs, one or several impacts (Dennison, 2007). Risk management is the process in which risks are identified, analyzed and ranked, and actions to avert these threats determined. The following risks were identified; Inadequate participation; the closure period during the re-development may lead to employee and client fatigue. Poor project management; adventurous project managers run the risk of causing project failure leading to project failure, increased costs and delays or savings and benefits. Change in environment; a rival competitor may take advantage of the period of renovation to open up shop nearby thus grabbing a share of clientele. Government action; this may be in form of difficulty in giving permission for development or change in legislation such as zoning lawsmay kill the project. Weak upper management commitment; decisions should be made through constant consultation with all concerned members in the project. Unilateral decisions especially unpopular ones are bound to cause unnecessary delays. Change in policy of loan repayment Lack of public approval Risk Register A risk register for some of the risk is as follows RISK OVERALL IMPACT MITIGATION CONTIGENCY COST OF IMPACT TIMING/OPTION POOR PROJECT MANAGEMENT Occasional and moderate 3C Constant monitoring and appraisal; regular consultations Remove any dysfunctional/non cooperating department, staff changes if necessary Planning phase Bureaucracy and delays in approval Occasional and moderate Early and frequent meetings with approving authority Update drawings and proposals to the authority Inadequate participation Occasional and moderate Contract negotiations failure References Aphramor, L. (2005). Is a weight-centered health framework salutogenic? Some thoughts on unhinging certain dietary ideologies. Social Theory & Health, 3, 315-340. Bordo, S. (2003). Unbearable weight: feminism, western culture, and the body (10th anniversary ed.). Berkeley: University of California Press. Cash, T.F. (1990). The psychology of physical appearance: Aesthetics, attributes, and images. In T. F. Cash & T. Pruzinsky (Eds.), Body images: Development, deviance, and change (pp. 51-79). New York: Guilford Press. Cramer, P., &Steinwert, T. (1998). Thin is good, fat is bad: How early does it begin? Journal of Applied Developmental Psychology, 19(3), 429-451. French, S.A., Perry, C.L., Leon, G R., Fulkerson, J.A. (1995). Changes in psychosocial variables and health behaviors by dieting status over a three-year period in a cohort of adolescent females. Journal of Adolescent Health, 16, 438-447. Ogle, J.P., Damhorst, M.L., & Lee, H.H. (2005). Perceptions of body malleability: Linkages with body-related feelings and behaviors among undergraduate women and men. Family and Consumer Sciences Research Journal, 34(1), 35-56. Quinn, D.M., & Crocker, J. (1999). When ideology hurts: Effects of belief in the Protestant ethic and feeling overweight on the psychological well-being of women. Journal of Personality and Social Psychology, 77(2), 402-414. Rich, E., & Evans, J. (2005). Fat ethics’ – The obesity discourse and body politics. Social Theory & Health, 3, 341-358. Shilling, C. (2003). The body and social theory (2nd ed.). Thousand Oaks, CA: Sage. Brain Gym International® [BGI] (2014). Brain Gym International. Retrieved from http://www.braingym.org on April 19, 2015. De los Santos, G., Hume, E.C. Cortes, A. (2002). Improving the faculties effectiveness in increasing the success of hispanic students in higher education-pronto! Journal of Hispanic Higher Education, 1(3), 225-237. Dennison, P.E., Dennison, G.E. (2007). Brain Gym® 101: Balance for Daily Life. Ventura, CA:Edu-Kinesthetics, Inc. Hyatt, K.J. (2007). Brain Gym®: Building stronger brains or wishful thinking? Remedial and Special Education, 28(2), 117-124. Wolfsont, C. (2002). Increasing behavioral skills and level of understanding in adults. A brief method integrating Dennison’s brain gym balance with Piaget’s reflective processes. Journal of Adult Development, 9, 187-202. Read More