Hollow Blocks Making
Hollow Blocks Making
Hollow Blocks Making
A Feasibility Study
Nicko I. De Castro
Lloyd M. Licmoan
Rex O. Loquinte
Verly P. Vales
March 2015
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Table of Contents
1.1 Introduction
1.4 Summary of the Findings and Conclusion Regarding the following aspects:
- Marketing Aspect
- Technical Aspect
- Management Aspect
- Financial Aspect
Introduction
According to BSP, the share of construction industry to total GDP has been
the domestic economy from 2006 to 2010. Construction sector has been registered with
a growth rate of 7.9 percent according to NEDA Survey 2008. Housing and construction
is one of the major drivers of growth in more than 40 allied industries and directly adds
roads, flyovers and bypasses there is a mass and consistent need of prefabricated
blocks across the country. Various construction and real estate development projects
are in progress and are continuously being commissioned which will have high demand
In order to make
overall housing
construction industry
has to be raised to the level of 500,000 housing units per annum. This is the extent of
the annual housing market in the Philippines which positively predicts a permanent
the country engaged in producing blocks used as prefabricated material for various
construction activities i.e. construction of road side pave ways, garage and parking
floorings, walls making, block paved driveways, and floor coverings of commercial
buildings, etc.
It is easy to make a concrete block. The successful block yard must however
make blocks of uniform quality and sell them at a price high enough to cover costs and
investigate the economic feasibility of the venture. Determination of level of demand for
blocks in the area (how many per month) and degree of competition from other block
yards are important factors having a significant bearing on the feasibility of the venture.
Then comes the cost estimation based on various methods of production and output.
equipment
Wastage
According to BSP, the share of construction industry to total GDP has been
the domestic economy from 2006 to 2010. Construction sector has been registered with
a growth rate of 7.9 percent according to NEDA Survey 2008. Housing and construction
is one of the major drivers of growth in more than 40 allied industries and directly adds
roads, flyovers and bypasses there is a mass and consistent need of prefabricated
blocks across the country. Various construction and real estate development projects
are in progress and are continuously being commissioned which will have high demand
In order to make up the backlog and meet the shortfall in the next 20 years,
overall housing construction industry has to be raised to the level of 500,000 housing
units per annum. This is the extent of the annual housing market in the Philippines
which positively predicts a permanent growth in construction sector which directly adds
Yolanda, there are 527,013 housing units are still need to be counted for concrete
demand mass availability of blocks all over the year. Therefore, a block manufacturing
The legal status of business tends to play an important role in any setup; the
Production capacity of the plant for the proposed construction hollow blocks
making unit would be 2,000 blocks per day. It is estimated that Tacloban alone has a
daily demand of 1,680; construction hollow blocks. However, as there are a variety of
concrete based construction blocks i.e. hollow block, solid block, kerb block etc., cost
will largely depend on the selection of block type. Estimated countrywide requirement of
500,000 housing units per annum and development works in construction and civil
sector by the government; all these factors encourage a persistent high growth and
Raw material to be used for the production of concrete based block is available in
the local market at reasonable price. Main production material components include:
cement and sand/crushed stone. A number of suppliers are available for Sand and
Crush in each region and area of Leyte Islands and could easily be contacted, whereas,
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cement could be procured from any well known cement company. Cement suppliers
could also be one of the sources for sand and crush supply reference. Low quality
Chinese cement is also available in the local market which has been declared
industry. This risk can be minimized by making long term supply contracts with the
of cement.
Php. 2 million is estimated to be the cost of the project. The working capital
requirement is estimated around 0.9 million and 1.1 million would be the fixed
investment.
1. Solid Block
2. Hollow Block
3. Pavers
Marketing Aspect
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importance. In the construction hollow blocks industry, marketing parameters are very
limited and largely associated with the construction sector’s performance. Some of the
marketing promotion activities which should duly be rendered are given below:
Developing contacts with the building material suppliers, well known builders and
contractors.
Keep up to date information on civil and construction works initiated by local,
employment3. It directly and indirectly affects more than 40 allied industries which also
includes prefab construction material industry. Block making has a significant position in
the construction process particularly in the housing sector where prefabricated blocks
are used extensively with more than 40% of the total structure of the building.
Traditional construction has been relying on hand made bricks rather than
concrete block which has been a high cost option while selecting material for the house
construction both in urban and rural areas of the country. Concrete based construction
is comparatively new phenomena and historically has been employed in the urban
areas where technology and machinery was introduced due to mass demand of building
Prefab construction block have different categories from smallest size of a brick
to a huge sized pre-cast concrete bridges. However, for the purpose of this pre-
feasibility, we have focused on the manufacturing setups where various types of blocks
are manufactured with the help of automatic or semi-automatic plant and machinery.
This sector is largely unorganized and no statistics are available in terms of how many
block manufacturing units are working and their scale of operations. The prefab
sector mainly includes block yards where hand operated mechanical machines are used
to make concrete blocks which lay six and above blocks at a time. Therefore, their
operations are limited and usually work on the basis of area to area demand. Hundreds
of such setups could be seen in each area of the country where these setups are
fulfilling the local housing construction demand of blocks of three different sizes and
strengths depending upon the individual requirements of the customer. Standard blocks
are generally available in the sizes of 6”x8”x12”, 5”x8”x12” and 4”x8”x12”. As far as PSI
is concerned, no defined standard could be found; however, 400 PSI is normal in this
sector.
Unorganized sector hand made blocks is gradually shrinking and now operating
on a very small scale in the low income areas where concrete based structure is scarce.
Single mold is used which lays only one block at a time. Such blocks are easily
breakable; therefore they are generally not preferred even by the customers who have
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very limited capital to invest in house construction. The current scenario of this sector
shows that most of such block yard operators are switching to machine made blocks
option due to customer preference and production limitations of the hand made blocks
making process.
Technical Aspect
Process Flow
Ordering &
Stockpiling
Material
Batching
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Mixing
Molding
Curing
Storage &
Distribution
molding, curing, and cubing. Some manufacturing plants produce only concrete blocks,
while others may produce a wide variety of concrete hollow blocks, flat paver stones,
Mixing
The sand and gravel are stored outside in piles and are transferred into storage bins in
the plant by a conveyor belt as they are needed. The Portland cement is stored outside
As a production run starts, the required amounts of sand, gravel, and cement are
The dry materials then flow into a stationary mixer where they are blended together for
several minutes. There are two types of mixers commonly used. One type, called a
planetary or pan mixer, resembles a shallow pan with a lid. Mixing blades are attached
to a vertical rotating shaft inside the mixer. The other type is called a horizontal drum
mixer. It resembles a coffee can turned on its side and has mixing blades attached to a
After the dry materials are blended, a small amount of water is added to the mixer. If the
plant is located in a climate subject to temperature extremes, the water may first pass
through a heater or chiller to regulate its temperature. Admixture chemicals and coloring
pigments may also be added at this time. The concrete is then mixed for six to eight
minutes.
Molding
Once the load of concrete is thoroughly mixed, it is dumped into an inclined bucket
conveyor and transported to an elevated hopper. The mixing cycle begins again for the
next load.
From the hopper, the concrete is conveyed to another hopper on top of the block
machine at a measured flow rate. In the block machine, the concrete is forced
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downward into molds. The molds consist of an outer mold box containing several mold
liners. The liners determine the outer shape of the block and the inner shape of the
When the molds are full, the concrete is compacted by the weight of the upper mold
head coming down on the mold cavities. This compaction may be supplemented by air
or hydraulic pressure cylinders acting on the mold head. Most block machines also use
The compacted blocks are pushed down and out of the molds onto a flat steel pallet.
The pallet and blocks are pushed out of the machine and onto a chain conveyor. In
some operations, the blocks then pass under a rotating brush which removes loose
Curing
The pallets of blocks are conveyed to an automated stacker or loader which places
them in a curing rack. Each rack holds several hundred blocks. When a rack is full, it is
The kiln is an enclosed room with the capacity to hold several racks of blocks at a time.
There are two basic types of curing kilns. The most common type is a low-pressure
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steam kiln. In this type, the blocks are held in the kiln for one to three hours at room
temperature to allow them to harden slightly. Steam is then gradually introduced to raise
the temperature at a controlled rate of not more than 60°F per hour (16°C per hour).
while lightweight blocks are cured at 170-185°F (77-85°C). When the curing
temperature has been reached, the steam is shut off, and the blocks are allowed to
soak in the hot, moist air for 12-18 hours. After soaking, the blocks are dried by
exhausting the moist air and further raising the temperature in the kiln. The whole curing
Another type of kiln is the high-pressure steam kiln, sometimes called an autoclave. In
this type, the temperature is raised to 300-375°F (149-191°C), and the pressure is
raised to 80-185 psi (5.5-12.8 bar). The blocks are allowed to soak for five to 10 hours.
The pressure is then rapidly vented, which causes the blocks to quickly release their
trapped moisture. The autoclave curing process requires more energy and a more
Cubing
The racks of cured blocks are rolled out of the kiln, and the pallets of blocks are un-
stacked and placed on a chain conveyor. The blocks are pushed off the steel pallets,
and the empty pallets are fed back into the block machine to receive a new set of
molded blocks.
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If the blocks are to be made into split-face blocks, they are first molded as two blocks
joined together. Once these double blocks are cured, they pass through a splitter, which
strikes them with a heavy blade along the section between the two halves. This causes
the double block to fracture and form a rough, stone-like texture on one face of each
piece.
The blocks pass through a cuber which aligns each block and then stacks them into a
cube three blocks across by six blocks deep by three or four blocks high. These cubes
Quality control
Strength
Quality of blocks should be controlled so that strengths are adequate (to avoid
blocks should be regularly tested for strength and mixes and production processes
be continually assessed by noting whether corners and edges, or even whole blocks,
tend to break in handling. Strength can also be assessed by knocking two mature bricks
together.
Dimensions
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The length and width of the units are determined by the mould and will not vary greatly.
However, the height can vary and should be monitored using a simple gauge. Units of
inconsistent height will lead to difficulties in the construction of masonry and possible
rain penetration.
Shrinkage
Concrete masonry units shrink slightly after manufacture. In order to avoid this
happening in the wall, blocks should be allowed to dry out for at least seven days before
Materials Sourcing
Crushed Hard Lime Stone, Sand, Cement and Water will be used as raw material for
manufacturing prefab construction blocks. Crushed raw stone and sand could be
purchased directly from the excavator (quarry lease holder) or supplier, whereas,
cement could be sourced from manufacturers by signing a regular supply contract which
would lead to a controlled cost. For the purpose of this pre-feasibility, it is proposed to
hold a supply contract with the three types of material suppliers to avoid any possible
threat in procuring raw material as well as to keep the project economically stable.
Based on our discussions with the business operators, it has been estimated that 1 sq.
ft. of loose aggregate will yield 0.7 sq. ft. of concrete volume. For the proposed project,
a total of 5200 sq. ft. of aggregate would be required daily to produce 4000 sq. ft. of
concrete blocks. Sand-Cement ratio will largely depend on the type and desired
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strength of blocks, however, for this pre-feasibility study, assumed ratio is 100:1 (one
50kg bag of cement for each 100 blocks) by loose volumes. Daily cement requirement
Machinery Requirement
Although small mixing and molding units are available in the local market, yet, complete
mechanized plants are not available and organized setups are using imported plant and
Machinery with the following specification has been proposed for the project
With a solid and robust welded steel frame, this machine is operated using an advanced
control system. Has a compact size (6 x 3.5 x 2.95m), and overall weight of 9.6MT.
The mixer consists of a solid mixing trough and alloy steel rotary mixing blade, 4 vertical
supports with foot plates. The platform is adapted for service and working. To mix light
Elevator:
As the pallet and fresh block convey to the elevator, they are stacked to a maximum
Through the conveyor, the slightly moist concrete from the mixer is transported to
traveling material bin feeder for separating temporary storage. The material bin is
designed in a solid, rugged steel weldment and maintenance free track roller.
Specially designed for production of blocks or pavers with two layers (coloring).
Equipped with loading hopper with adjustable feeding system. The section can elevate
Heart of the control is a PLC with a touch screen color flat display. The
operator can select the functions and change the parameter directly via
the screen. The recipe can be stored and the statistics data can be
downloaded.
The proposed setup would require three to four vehicles (new machinery has been
considered for the proposed project) to carryout transportation of raw material and
finished products. Besides, dumping and loading vehicles for the transportation of
Material
1 Dumper/Truck 1 4,000,000
Transportation
Finished goods
2 Fork Lifter 2 1,000,000
transportation
Other Tools &
3 Equipment 200,000
Total 5,200,000
Location
Access
The site must be accessible to trucks delivering aggregates and cement and collecting
finished blocks.
Ground slope
Ideally, the site should be level or nearly so. Steep slopes make handling and
Size
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The site should be big enough for aggregate stockpiles, cement storage, production
(slab or stationary machine) block stacking, staff facilities, an office and on-site access.
With all provisions for the business, one acre would be sufficient for the project.
The site should have provision for stockpiling aggregates and storing cement, a
production area, a stacking area, staff facilities, an office, and access between different
Aggregate stockpiles
Aggregates must be stockpiled in such a way that: they do not become contaminated by
soil, leaves, etc; different aggregates are kept separate; and rainwater can drain away.
Ideally therefore, aggregates should be stockpiled on a concrete slab. If this is not done,
the layer of aggregates in contact with the soil should not be used for production.
Aggregates must not be stockpiled under trees. Partitions should be erected between
Cement store
The best way to store cement is in a silo. For small scale block yards, however, cement
room. Bags should be stacked on a plastic tarpaulin or on closely spaced wooden strips
so that they do not absorb damp from the floor. The storeroom should be big enough to
cement in bags should be stored in stacks raised above the ground and completely
The size of this area depends on the method of producing blocks. A stationary machine,
which forms blocks on pallets, needs a relatively small area with space around it for
operators. A mobile “egg-laying” machine needs a fairly large slab on which blocks are
Area
A flat concrete slab, big enough for at least one day’s production, is required. To
of the mix or the curing period before moving the blocks. As a guideline, an 80 x 80 ft. in
Slope
Normally block production is carried out in the open, and the concrete slab should have
Thickness
Joints
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To prevent uncontrolled cracking of the slab, it should be divided into panels which
should be square or as close to square as possible. The half round keyway prevents
differential settlement of adjacent slabs. The maximum joint spacing depends on the
thickness of the slab and should not exceed 6 m for slab thicknesses of 150 and 200
mm.
Stacking area
An area big enough to stack two weeks’ production is needed for curing and drying
blocks. It is normally not necessary to pave this area. To avoid muddy conditions, a
These include toilets, ablutions, and possibly change rooms. An office should be
Management Aspect
Proposed Location
Proposed location for setting up construction hollow blocks making unit largely
depends on the availability of raw material and its transportation to the factory at low
cost; however, factors like availability of manpower, utilities and easy access to the
target markets should also be carefully examined. It shall be located in the nearby
given to builders, suppliers and retail customers. It also depends on efficient supply of
blocks to the customer and communication facilities provided to the prospective clients,
A block maker when setting up a block yard, institutes contacts with the
construction material suppliers, retailers and signup a contract in order to appoint them
as order booking agents. Generally, construction and building material supplier is the
part of the whole chain, and brings together the customers and suppliers. Sometimes
the supplier has his own delivery vehicles and in most of the cases, keeps arrangement
with the commercial vehicle operators, material manufacturers, and buyer, having a
Block maker appoints order booking agents (building material suppliers) with in
the locality who entertain the customer. Customers usually send someone or personally
go to the booking office and place the order which includes details indicating quantity,
quality, size and time of delivery etc. Booking agent gets the payment in cash (mostly)
and issues an order / delivery slip to the customer, showing order details.
Buyer hires a truck or loading vehicle and goes to the block yard, where he
produces the order slip (kanvaser) to the person responsible for the physical delivery of
the blocks. That person renders the order as given on the slip. After loading the vehicle
he hands it over it to the order booker and here ends the role of the block maker.
Construction hollow blocks producers also book direct orders at site office for the
construction contractors, retail customers and builders on cellphone and supply directly
to the identified delivery points; however, these types of facilities are provided only for
bulk orders using hired delivery vehicles. Bulk deliveries typically account for around
Construction hollow blocks making units across the country are working mostly
as unorganized sector (about 80%) and no reliable data is available, precisely, for the
installed capacity and the number of units working etc. However, since it is an allied
a close proxy for the growth in prefab construction blocks sector which is 7.9% (NEDA
2006).
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blocks making unit. The business unit will work on one shift basis (8 hours daily).
Technical staff with relevant experience will be required for operating production plant.
The staff will be provided training by the plant & machinery supplier.
Total approximate manpower required for the business operations along with the
(PhP)
Monthl
No of y Annual
Staff Title Persons
Salary Salary
Owner (Business Unit Manager)
necessary for the person who will operate the prefab construction blocks plant. It is also
suggested that preference should be given to literate persons so that they could
Financial Aspect
The project cost estimates for the proposed “Construction blocks business” have
been formulated on the basis of discussions with industry stakeholders and experts.
The projections cover the cost of land, machinery and equipment including office
however, the specific assumptions relating to individual cost components are given as
under.
Land for setting up the proposed prefab construction blocks unit would be purchased
which will incur a cost of approximately Rs. 1.2 million. Construction and renovation of
site will cost around Rs. 4 million which has been assumed to depreciate at 10% per
To renovate the factory / office premises in Year 5 and Year 10, certain expenses will be
incurred for which an amount equivalent to 5% of the total site/office construction cost is
estimated.
Fixtures
assumed. This would include table, desk, chairs, and office stationery. The breakup of
Depreciation Treatment
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10% per annum on the following. The method is also expected to provide accurate tax
treatment.
3. Vehicles
UTILITIES
Construction hollow blocks plant will be operated using electricity for production
purposes. This would draw considerable amount of electricity. Likewise, heavy vehicles
i.e. Fork lifter, truck/dumper, etc would require huge quantity of fuel for which diesel
will be used. The cost of the utilities including electricity, diesel/fuel, telephone, and
water is estimated to be around Rs. 2 million per annum. Approximate cost of utilities
Annual
Total Total %age
Monthly Annual
Utility
Cost Cost Increase
(Php.) (Php.)
1. Electricity 58,000 696,000 5%
required as cash in hand to meet the working capital requirements. These provisions
have been estimated based on the following assumptions for the proposed business.
Plant and machinery installation and trial run expenses has been assumed to be
around Php. 100,000/-. It has been included in the plant and machinery cost.
An additional light loading vehicle would be required for providing services for the
maintenance, communication of machinery spare parts, labor etc. For this purpose, a
transportation vehicle has been proposed and an amount of Rs. 400,000 is assumed to
A lump sum provision of Php. 300,000 is assumed to cover all preliminary expenses
For the purpose of this pre-feasibility, it has been assumed that the block maker would
work in association with building material suppliers and will appoint 5 to 6 suppliers as
booking agents. These arrangements would raise the selling costs for the business for
which an amount equivalent to 2% of the annual sales has been assumed which also
covers the distribution cost of bulk supplies, entertained directly by the owner.
Miscellaneous Expenses
Miscellaneous expenses of running the business are assumed to be Php. 5,000 per
month. These expenses include various items like office stationery, daily consumables,
traveling allowances etc. and are assumed to increase at a nominal rate of 10% per
annum.
Revenue Projections
For the revenue projections, prefab construction blocks are assumed to be produced as
follows:
S. Production
N Size/ Selling
o Block Type Standard (as % of Color Price/
Dimension unit
. Total)
1 Masonry Block
600-800 Natural
Solid Block 4”x8”x12” psi 10% Grey 15
600-800 Natural
Solid Block 5”x8”x12” psi 20% Grey 16
600-800 Natural
Solid Block 6”x8”x12” psi 10% Grey 17
600-800 Natural
Hollow Block 5”x8”x16” psi 10% Grey 23
Natural
3 Kerb Stone/Block 6”x12”x12” 5000 psi 30% Grey 90
Working with the proposed plant and machinery, the project will be capable of
producing 4,000 sq.ft. of concrete blocks at 100% capacity utilization with single shift of
8 hours a day. It has been assumed that it will take some time for the business to reach
the optimal capacity utilization point for the projected period. Therefore, the first year
production of prefab construction blocks has been estimated with 70% capacity
period. All projections are based on 8 working hrs a day with 26 days a month.
Accounts Receivables
Considering the industry norm, particular to the construction sector and all of its allied
industries, it has been assumed that 70% of the sales will be on cash. Whereas,
remaining 30% sales will be on credit to the builders and construction contractors. A
All of the above assumptions are based on our findings during the discussions with the
industry experts and stakeholders. A provision for bad debts has been assumed
Financial Charges
It is assumed that long-term financing for 5 years will be obtained in order to finance the
project investment cost. This leasing facility would be required at a rate of 15%
Taxation
applicable on the income of an individual tax payer are used for income tax calculation
of the business.
Cost of Capital
Particulars Rate
Required return on equity 20%
Cost of finance 15%
Weighted Average Cost of Capital 17.5%
The weighted average cost of capital is based on the debt/equity ratio of 50:50.
Land 2,000,000
Vehicle for support and maintenance services - One light vehicle 400,000
IRR 26%
NPV 14,127,743
OTHER ASSUMPTIONS
Depreciation 10%
Plant and Machinery Annual Repair & Maintenance (as %age of total cost of plant)
3.00%
Operational Hrs./day 8
Operational Months 12
REVENUE CALCULATION
Production
Rated capacity of the Block Making Plant 500 sq.ft. of concrete / hr.
No. of Operating Hours - Single Shift Basis 8 Hrs / Day
Estimated Optimal Production 4,000 sq.ft. of concrete / day
Expected Capacity Utilization (At the beginning of the project) 50%
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Masonry Block
Solid Block 450 6,750
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Raw Material
Other Consumables
Difference 6,983,320
Return of Investment
23,812,600– 16,829,280
16,829,280
0.4146 x 100%
41.46%
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Establishing a building materials production like hollow block making will facilitate
scaling up of the stabilized hollow block technology by providing social emphasis on:
and returnees.
(c) Support supply of hollow blocks of small-scale businesses and revolving funding
Transfer of technology for local building material production can be achieved when there
is an adequate local capacity and the means to sustain the proposed technology