MEXICO CITY EXPANSION PROJECT PLAN

Acme Home Improvements Mexico City Expansion Project Plan

Group Four:
Pavel Batkhan
Margerie Edwards
Justina Ilonoh
Brianna Shipp
AMBA 640
28 October 2014

MEXICO CITY EXPANSION PROJECT PLAN

Project Title: Acme Home Improvements Mexico City Expansion Project Plan
Start date: October 27, 2014 Project Finish Date: October 9, 2015
Project Manager: Andrea Vega, (52) (55) 93668590, AndreaVega@acme.com
Project Sponsor: James Montgomery, COO & President, James.Montgomery@acme.com
Acme Headquarters, NC

Executive Summary
Acme Home Improvement is a specialty retailer that specializes in providing products
and services for home improvement projects such as plumbing and electrical supplies, building
materials, seasonal and garden/yard items, paint, flooring and wall covering, hardware and tools.
Acme Home Improvements Inc, has about 125 retail stores in the United States and is now
looking to expand its operations internationally and increase its market share by opening up a
store in Mexico within a 12 month period. However, deciding to expand the company globally is
a decision that must be thoroughly examined and planned. Acme Home Improvements has
introduced a joint venture with local partners in Mexico City to construct Acme Home
Improvements de Mexico city. However, exploiting strategic alliances such as joint venture for
expansion has its challenges such as differences in national culture, language, business practices,
political and legal system and economic environment. These challenges can create
communication problems, inadequate cooperation, and lack of commitment (Ozorhon el al.
2008). In order to overcome these challenges, Acme has decided to create a Project Management
team with experienced individuals that will ensure the project is executed successfully. The team
will implement a complete plan focusing on the triple constraint of project management (scope,
time and cost). The plan will show the breakdown of the different stages involved in this project
such as the cost for acquiring the land, the primary creation of the facility and construction
design, anticipated cost for building materials, landscaping insurance, office space, taxes and

MEXICO CITY EXPANSION PROJECT PLAN

safety equipments, labor and training, inspection and testing, operations and administrative
staff, travel and housing costs, inventory, and other various expenses.

Introduction
Acme Home Improvements Inc. was founded in 1982 in Raleigh, North Carolina.
Currently there are 125 locations in the United States. Acme Home Improvements is opening its
first store in Mexico City SA de CV and since this is Acme's first store opening outside United
States and venturing into global market it is crucial that the project team is staffed with
individuals who knows the business, language and the culture thereby making the project process
such as obtaining permits go smoothly. Therefore majority of the project members are Spanish
speaking Mexicans: project sponsor is the Acme COO, James Montgomery, the project manager
is Andrea Vega, construction manager is Martin Ramos, Store manager Maria Rosario, Human
resource coordinator is Phillip Barros, operations manager is Marc Castillo, Mathew Flores is in
charge of the finance department and Juan Lopez is in charge of quality control. This project is
scheduled to begin October 27, 2014 and expect to be completed by October 9, 2015 with a
budget of $18.5 million. The Project manager Andrea Vega is in charge of supervising the new
Acme location in Mexico from planning to store opening, ensuring that all the tasks are started
and executed as scheduled and within budget. The Scope of this project is to expand Acme to
become a global company thereby increasing productivity and profit. The plan includes all the
necessary details and information needed for the structure to ensure a successful transition to the
global business world. The plan also includes the work breakdown structure (WBS), Gantt chart
with critical path shown, project team organization chart, budget of the project in detail, risk
management, human resources, stakeholder analysis, and communications sections.

MEXICO CITY EXPANSION PROJECT PLAN

Project Objective
Expand ACME to becoming a global company by constructing and opening the doors for
business of a new ACME Home Improvement store in Mexico City, Mexico.

Deliverables
A 100,000 square-foot, facility located on a lot with additional 10,000 square-feet of property
A completed attached garage
Store fully shelved and stocked with items
Hire and train staff, who are ready to assist customers

Milestones
1. Begin Store Construction11/4/14
2. Store Complete5/5/15
3. Garage Complete10/9/15
4. Store Grand Opening10/9/15

Technical Requirements
1. Store must meet local government requirements and building codes.
2. All shelves meet safety and height regulations
3. Employees providing customer support will speak Spanish
4. 15% of employees will be able to communicate in English.
5. Garage will have a secure gate for storage

MEXICO CITY EXPANSION PROJECT PLAN

6. Structure will pass stability codes.

Limits and Exclusions

1. Store will be constructed per the designs and blueprints pre-approved by the customer
2. All project scope changes will go through formal Change Control process and must be
approved by Change Control Board (CCB)
3. Hired employees will be Mexican Citizens
4. Contractor my use subcontractors for portions of the project
5. Primary contractor I solely responsible for subcontractors.
6. Project scheduled to begin October 27, 2014 and Complete by October 9, 2015
7. Regular work schedule will be Monday through Friday, 8:00 A.M. to 6:00 P.M. Mexican
Time (UTC-6)

Customer Review
James Montgomery

MEXICO CITY EXPANSION PROJECT PLAN

Project Organization

Project Responsibilities

Project Sponsor (James Montgomery) - James is the Chief Operations Officer (COO) of
Acme Home Improvements. According to Schwalbe, the project sponsors are responsible
for providing some type of target goals for a projects scope, time, and cost and define
other key constraints for a project (2012, p 7). The project sponsor and project manager
must be in constant communication to ensure the project stays on track.

Project Manager (Andrea Vega) - The project manager is ultimately responsible for the
success or lack thereof of the project. The project management should create and
maintain a good working relationship with all the stakeholders in the project. This will
promote honest communication so the project manager always knows the status of the

MEXICO CITY EXPANSION PROJECT PLAN

project (Schwalbe, 2012, p. 9) Andrea is local to the area so she will be able to
communicate effectively with are stakeholders.

Construction Manager (Martin Ramos) The construction manager is responsible for all
things building related. He is responsible for requesting the permits and documentation
needed to start construction of the store and garage. Martin is local to the area and his
team of workers will also consist of locals.

Store Manager (Maria Rosario) The store manager will be responsible for 4 areas
within the store, human resources, Operations, Finance, and Quality Control. It is
beneficial for the store manager to be local because they will be dealing with customers
on a daily basis.

Operations (Marc Castillo) The head of operations will be responsible for the
scheduling on cashiers and stockers, they will also be responsible for customer service.
Marc is a local of the area.

Human Resources (Phillip Barros) The head of human resources will be responsible for
all employee relations which includes, hiring/firing, promotions, employee benefits and
performance reviews. Phillip is a local to the area.

Quality Control/assurance (Juan Lopez) The head of quality control/assurance will

ensure the quality of the Acme product. He will test product and work to rectify any
customer complaints about quality. Juan is a local to the area.

Finance (Matthew Flores) The head of finance is responsible for the Acme Mexico City
budget. He is also responsible to maintain any financial forms or documentation.

MEXICO CITY EXPANSION PROJECT PLAN

Project Critical Path

The start of this project will be October 27, 2014 and we would like to see the project
complete within 12 months. It is important that the dates for the building of the garage stay on
track because if not it could move our stores grand opening on October 9th 2015. The employee
hiring process starts the same time the building of the garage starts but since the tasks will not
take as long it is not part of the critical path. There are 18 extra days in case a task runs over but
we would not like to use that time if possible.

Project Budget
ACME has an 18.5 million dollar budget to construct its store in Mexico City. The land
the store will be built has already been purchased thus the cost of land is not included in the
$18.5 budgeted amount. . ACME will also allocate a 15% contingency for unexpected expenses.
There are so many unknowns when embarking on a new business venture, therefore it is crucial
to have extra money on hand to cover those unknown expenses. Table 1 details the 12 month
construction, soft, overhead and labor costs.

MEXICO CITY EXPANSION PROJECT PLAN

Estimated Of Project Budget

1. Anticipated Materials Required for

Construction

Estimated Cost

Utilities Rentals
Excavation, blasting, footings, & drainage
Foundation
Underground Utilities
Concrete Slab
City water & sewer, Well & Pump
Gutters
Structural Steel
Lumber & woods
Plumbing fixtures
Heating, Ventilation, Air conditioning; Fire Safety
System
Electrical Lighting, Cabling, & generator
Roofing materials
Windows, Frames & Doors for building & garage
Exterior Siding, stucco, & painting
Insulation
Sheetrock/Taping
Cabinets, interior trim & doors
Hardware Bolts, screws, cords, etc.
Carpentry
Seeds & soils for landscaping
Granite / Rocks
Walkway Slabs
Interior Shelving units
Total Anticipated Cost for Materials

2. Overhead Costs
Personnel salaries
Workers & Consultants
Administrative personnel

45% of $18.5 million=$8.325

million

Estimated Costs

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10

Accommodation & Travel

Utilities & Supplies
Insurance for workers
Trainers for newly hired employees
Total Anticipated Cost for Overhead

3. Estimated Inventory and Labor Costs

Products
Shipping cost
Truck rentals
Duties (customs & tax)
Total anticipated of labor & inventory cost

Summary of Project Budget

20% of $18.5 million=$ 3.7 million

Estimated Costs

20% of $18.5 million=$ 3.7 million

Estimated Costs

Total Anticipated Cost for Materials

Total Anticipated Cost for Overhead
Total anticipated of labor & inventory cost
Contingency in project

45% of $18.5 million=$8.325 million

20% of $18.5 million=$ 3.7 million
20% of $18.5 million=$ 3.7 million
15% of $18.5 million=$ 2.775 million

Acme de Mexico Project Budget

Construction Costs
Foundation
Clearing site
Parking Garage
Fencing
Drywall
Framing
Electrical work
Plumbing
Roof
Parking lot/paving
HVAC
Taxes & Fees
Architectural fees (if
applicable)

$14,000,000 Store Completion Costs

Interior decoration
Security system
Stock inventory
Landscaping
Painting & Furnishings

$500,000 Miscellaneous
Travel
Training

$2,000,000

$2,000,000

MEXICO CITY EXPANSION PROJECT PLAN

Legal fees
Permits
Taxes
Inspection fees
TOTAL COSTS

11
Recruitment
Advertising

$18,500,000

The above mentioned anticipated costs are only estimations; however, there is a
possibility the costs for materials may differ depending on economic conditions and supply and
demand. The conversion rate of $1 equals to 13.24 Mexican Peso and the lower cost of living in
Mexico must also be considered. Therefore, the actual amounts may be lower after construction
is completed. Lastly, a 15% contingency of the total budget is set aside for any delays along the
critical pathways as well as delivery of required equipment for construction.
A Local Mexican construction contractor with a prestigious reputation will provide the
labor and skill set for the construction of the new store and parking garage. The budget could
have been lower if a less experienced contractor was selected but quality and on time completion
of the project is crucial thus a firm with a proven track record of success was chosen. As the
saying goes you get what you pay for.
Obtaining licenses and permits will be the responsibility of the General Counsel of Acme
de Mexico and managed by AMCE Headquarters in the US. The inventory on hand will be made
up of items ideal for a store located in a southern climate such as construction tools and materials
associated with hot weather and arid climates. ACME management will evaluate the inventory in
the future to determine if any adjustments need to be made based on demand in the local market.
Travel expenses over the next 12 months definitely need to be accounted for due to numerous
trips that will need to be made between the US and Mexico site visits, recruitment and training.
Citibank will be the financial institution of choice for ACME. Citibank provides banking
solutions in North America as well as Mexico. ACME locations in the United States have an

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12

established history with Citibank in terms of securing large loan amounts. ACME has already
secured a loan for 18.5 million to construct and open the store in Mexico City. There is a
Citibank location in close proximity to the site of the new store. It is crucial that strong
relationships are formed between AMCE and the bank to ensure confidence for future banking
transactions.

Risk Management
Identifying potential risk is key to avoiding complications which may delay or cause the
project to go over budget. The project team must identify a set of risk and put into place a plan of
how to prevent this risk from deterring the on schedule opening of the store. The project
management team will implement safe guards within the project plan to escape potential higher
cost, in terms of overtime payments and still make the 12 month completion date. The safe
guards will be put in place when the project team predicts the highest risk will occur.
The lack of experience doing business in Mexico is one of the major potential risk factors
of this project. Cultural differences will also play a considerable role in this business venture.
Cultural difference will exist between project team members, US vs Mexican legal systems and
language barriers. It is essential the project team work hand in hand with their Mexican
counterparts who will assist in interpreting and understanding Mexican culture and
rule/regulations.
Weather is also an unforeseen potential risk factor that needs to be accounted for. Weather
conditions play a huge role since AMCE must build a store a parking garage. Improper weather
conditions could negatively affect the plan, construction and rendering of the structures. In the
event of inclement weather the construction workers may not be able to work causing delays in

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13

the construction schedule. In that case a buffer plan should be outlined to compensate for days
not worked. The project team will outline an allotted amount of additional time to compensate
for missed construction days.
Supply Chain Management is yet another risk that must be factored into the project plan.
In the event materials such as electrical and plumbing components or store inventory products
are not received in a timely manner could be detrimental to the schedule planned opening. To
account for such mishaps, the project plan includes safe guarded additional time to allow for any
late deliveries. In the occurrence international rule/regulations cause delays in transporting
materials into the country, the project team will relay on its Mexican counterparts for their
guidance and expertise to allow the on time delivery of goods.
The last risk that has been identified is the exchange rate between Mexico and the United
States. To lessen this risk ACME will rely on local financial advisors/bankers to monitor
exchange rates. Forward Markets are over-the-counter marketplace that sets the price of a
financial instrument or asset for future delivery. Contracts entered into in the forward market are
binding on the parties involved. These markets are used for trading a range of instruments
including currencies and interest rates, as well as assets such as commodities and securities
(Dictionarist.com 2012). By utilizing forward markets the company will be able to lock in rates
thus having a better understanding of what the Mexican peso equates to in the US dollar.
Of course there will be risk that cannot be predicted for those risks the team can rely on
the 15% contingency budgeted amount. Should this amount be needed to cover expenses the
project sponsor James Montgomery will authorize the usage of the funds.

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Human Resources
Phillip Barros, the Human Resource Manager for ACME will be in charge of recruiting
and staffing of employees in Mexico City. He will also be responsible for ongoing HR services
when the store in Mexico City opens. Barros other responsibilities include being the main point
of contact for employee benefits information. The same HR policies will be followed in Mexico
City as in the USA with the exception of when Mexican rules and regulations defer from the
USA. Barros will report directly to the HR director, however Barros will provide the expertise
and advise for employees in terms of compensation, benefits, and training and employees
relations for Mexico City. ACME will adhere to all rules and regulations for operating a business
in Mexico.
According to Forbes only one foreign manager can operate a store. This fact is something
Barros must be aware of and implement in order to comply with local regulations. Andrea Vega
who is the project manager will be the one and only foreign manager. Mexican citizens must be
hired and trained for all remaining management roles (Forbes, 2012). Barros must make sure
ACME is in compliance with all laws for operating a business in Mexico.
The Humans resource manager must be knowable of the hiring protocol in Mexico. The
standard work week and minimum wage differ than those in the United States. For example,
Mexican workers are entitled to one day of rest with full wage for every 6 days of work (Penner
& Associates, 2012). Unskilled workers like cashiers, cleaning crews and floor employees
receive minimum wage earning (Forbes, 2012). General minimum wage also exist in Mexico as
well as various other minimum wages based on position type (Wage Indicator Network, 2012).
This greatly differs from the USA where there is only one minimum wage. For instance, the
minimum wage for a cashier is 80.58 pesos the equivalent of $6.03 (Wage Indicator, 2012).

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Compliance with all wage rates must be followed to avoid legal actions such as fines or even
imprisonment (Wage Indicator Network, 2012)
As in the USA the minimum wage is not applicable to skilled labor like people who have
experience or education that makes them more in demand or sought after in the work force
(Forbes, 2012). Skill workers salaries will be determined by taking a proportion of the general
minimum wage in the USA with the Mexican wage and use the calculated difference between
the two amounts to determine the wage for skilled workers (Forbes, 2012). For example, the
minimum wage for the USA is $7.25 (US Department of Labor, 2012). The general minimum
wage in Mexico City is 62.33 pesos which is equal to $4.67 (Wage Indicator Network, 2012).
The rate of Mexican minimum wage to the US is approximately 64% (4.67 divided by 7.25). A
US store manager on average makes $45,000 salary per year (Glassdoor, 2012). Therefore a
store manage in Mexico City would make approximately 29,000 (multiply 64.4% by $45,000).
The employee turnover rate is yet another issue ACME must address. As in the US there
is a high turnover rate in the retail industry in Mexico as well (Forbes, 2012). Since the same
high turnover issues exists in the US the HR director will be an excellent resource for Barros to
consult on how to best combat the turnover rate. Employees tend to stay longer at lager
organizations vs smaller organization in the US (Hope & Mackin, 2007). This fact may prove
positive for AMCE in that many businesses in Mexico are small or micro businesses ( Forbes,
2012, p 11). Also it has been shown that offering benefits to employees gives them an incentive
to stay thus decreasing turn over by 26.2% (Hope & Mackin, 2007). Based on this information
AMCE should consider offering employees a competitive benefit package that other companies
cannot offer. Due to cost savings associated with lower wages paid in Mexico vs the USA

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AMCE may also want to consider paying its Mexican employees more than the minimum wage
to attract and retain loyal employees.
Phillip Barros will have his plate full in terms of the amount of information he must
handle and understand. Not only must he comply with Mexican labor laws and reduce the
employee turnover rate, Barros has to be extremely knowledge of mandatory labor reporting
practices. The mail system is not always reliable therefore important documents may not be
received in a timely manner or at all (Forbes, 2012). It is the responsibility of Barros to be aware
and on top of all due dates and reporting requirements.

Communication
It is the responsibility of the project manager Andrea Vega to make sure the AMCE
project team, the project sponsor and the US ACME headquarter communicate effectively.
Andrea Vega will be located in Mexico City the majority of the 12 month construction period to
monitor the process and make sure the completion timeline remains on schedule.
Constant communication should occur between the team based in Mexico City and the
US based team to keep informed of the status of the project. Methods such as teleconferences
and Skype can be used for regular communication between the US and Mexican team members.
MS Project will also be utilized by the project manager to track the status of the project. MS
Project will be a great tool because it will allow approved team members to electronically make
changes/ modifications to the plan and indicate who and when changes were made.
The project manager must implement communication guidelines for the future operations
in Mexico. It is important that managers be fluent in English and Spanish to foster open
communication and understanding. This will promote a stable transition of AMCE into the

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Southwest regions. As with most things in life communication is one of the keys to success and
in this case AMCE must not only know but understand its new customer base.

Advertising and Marketing

From a business perspective ACME North America wants the Mexico City flagship store
to be successful in hopes of expanding and opening more stores throughout Mexico. To obtain
this goal a marketing plan will need to be configured in order to brand the new store for success.
Marketing plans and strategies used in the US may not necessarily be effective in Mexico.
ACME must investigate and determine the wants and needs of its Mexican consumers. It would
be advantageous if ACME was able to hire a Marketing Director who has experience working
for a company like Home Depot who has successfully already transitioned into the Mexican
market. Within the marketing plan it is imperative that goals are set in terms gaining certain
amounts of dominance in the home improvement industry. This will be the main factor to
determine if the ACME will expand in the future or even remain open in Mexico City. The Store
Manager and staff will also play a key role in terms of engaging with the customers and
providing knowledgeable insight in the Mexico City store. ACME will need to position itself as
something new and exciting than its competitors in the region cannot offer in order to be success
and profitable.
ACMEs two main customer bases will be Homeowners and Construction workers and/or
Contractors. Do it yourself projects are extremely popular for Homeowners looking to save some
money. Advertising weekly specials or offering classes are promotions that have helped promote
Home Depots loyal following. Gimmicks ACME my want to consider utilizing. Construction
workers and contractors are also major markets ACME should market and advertise to. Offering

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early opening hours for contractors or discounts for materials purchased in bulk my steer that
market share of business to ACME. The sources of advertising are plentiful from emails, apps,
TV or word of mouth. The important thing is to let Mexico City ACME will be opening and all
the products and services that will be made available to them.

Cultural Concerns
Although Mexico and the USA are both located in North America there are numerous
cultural differences and legal differences that must be addressed and understood to be successful
in this region. First and foremost being respectful and sensitive of cultural and legal difference is
imperative to avoid delays and financial hardships. ACME must provide cross cultural training
so all parties involved will be aware of these differences before operations commence in Mexico
City.
The language barrier is an aspect of opening in Mexico that may prove difficult if the
right people are not put into place to communicate. Even though most Mexican business people
speak English it is important to remember Spanish is the official language in Mexico. Many
English speakers have a bad habit of expecting everyone to speak English. People in other
countries appreciate when foreigners are respectful and speak the official language. All of
ACMEs managers will be fluent in both English and Spanish.
In general Mexicans are known to be hard workers, however religion, family obligations
and relaxation are top priorities (Forbes 2012) .The Mexican culture is more family originated
than in the US. In the US we tend to have a time is money mentality about life unlike in
Mexico. It will be important for ACME to understand and respect that its Mexican employees
will expect and require different incentives than its US employees. Also Mexicans tend to be

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more personal than their US counterparts. They prefer face to face interactions and like to take
their time and get to know the other party during negotiations ( Unger & Frankel, 2002). The US
executives must be patient and embrace these cultural differences to be successful.

Legal Concerns
Having a Mexican Attorney who understands the Mexican legal system is paramount. In
the US the legal system is practiced under common law, however in Mexico the legal system is
run under civil law. Therefore hiring an American Attorney would be a complete disaster. It is
advised that all legal advice in terms of drawing up contracts, especially regarding mutual
expectation and obligation and settlement of disputes (Unger & Frankel,p 36). Only original
contracts are legally binding in Mexico.
Corruption will be an issue in doing business in Mexico as well. ACME may encounter
Corruption from both the local and state levels. Yet another reason why it is key to have a legal
team in place that is aware of how to avoid and deal with such issues. ACME may want to
consider taking a strong stance against corruption within the company to influence fair business
practices (Unger & Frankel,p 25).Over the years Mexico has been trying get rid of corruption,
however old habits die hard and this is still an issue ACME will encounter.

Conclusion
As the project comes to the conclusion, the Project team will focus its objective on
completing the project and reviewing the results with Project Sponsor and the stakeholders. To
measure quality and success the project team will return back to the scope of the project, Project
Charter and the Scope Statement documents. The documents will be reviewed in details and act

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as a baseline to be compared to the actual end result. This is done to ensure that the Acme
project team has delivered on every objective of the project and has done exactly what it set out
to do. During the closure phase, the project team will review all the risks, ones that occurred and
ones that did not, documenting them and their mitigating actions. One of the final items that are
completed on the project is a customer satisfaction survey (BC Open Text, n.d.). This is
provided Acme to obtain information from the Project Sponsor as well as key stakeholders on
what was done right and key areas where improvement may be necessary. This information
along with other project documents will be archived and stored for future records and to act as
lessons learned. This information is vital as it provides key insight in to future expansion of
Acme Home Improvement stores to other global markets.
In the final days, the project team will have a celebratory party as a reward for
completing such a vast project. The following day, the project team will be disassembled and
returned back to its functional areas in the organization. Some of the employees will be
reassigned to other projects in support of future and ongoing efforts. At this point the project
will be transitioned to the store manager for managing day to day operations. He will be
expected to take over the store operations with minimal involvement with the project team after
the project completion date. He will have available to him all the archived documents,
assumptions and details of the project which have been finalized by the project team at
completion.

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References
Dictionarist.com (2012, July 21). Acme. Retrieved from http://www.dictionarist.com/acme
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Glassdoor. (2012). Store manager salaries. Retrieved from http://www.glassdoor.com/
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Hope, J. B and Mackin, P. C. (2007). The relationship between employee turnover and employee
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Ozorhon, B., Arditi, D., Dikmen, I., & Birgonul, M. (2008). Implications of Culture in the
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United States Department of Labor. (2012). Wages. Retrieved from http://www.dol.gov on July
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