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Medium Profitability Investment Decision Bidding Strategy

Parking & Co

#Real Estate #Parking Management #Urban Infrastructure
ProHub Comment

This case requires candidates to build a bottom-up financial model for a parking concession business. The key challenge is identifying the three main operational cost components (maintenance, salaries, software) and calculating the contribution margin to determine the maximum bid price that still achieves the 5-year payback target. The recommendation then applies strategic thinking about competitive positioning.

Estimated Time 15 minutes
Difficulty Medium
Source IESE
50 / 100
A tender to own the concession of a street in Madrid has recently opened and our client is interested on the bid. They have come to us to help them on the bid. The street is C/Jorge Juan located in the prestigious neighborhood of Barrio Salamanca. How much should the client bid for?

Clarifying Information

  1. Objective: to payback the investment within the next 5 years.
  2. The client owns the concession of other streets in Madrid and other Spanish cities.
  3. No financial constraint, the bid can be as high as we want.
  4. The concession lasts 8y.