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|Title: ||PROJECT FEASIBILTY STUDY ON INSTALLING LAUNDRY/WASHING MACHINE SERVICE IN THE MAIN CAMPUS OF ADDIS ABABA UNIVERSITY|
|Authors: ||ZELALEM, ABEBE|
|Advisors: ||ZEWDIE SHIBRIE (PhD)|
|Copyright: ||2007 |
|Date Added: ||18-May-2008 |
|Publisher: ||Addis Ababa university|
Laundry/washing machine facility is one of the service areas that students and other university
community members would like to get nearby their campuses. Despite its old age and the high
number of its community, Addis Ababa University has not yet availed laundry/washing machine
service to its community members. Laundry/washing machine service is specially required by the
student population of the University who is currently facing various problems in connection with
washing of clothes. The students have to spend considerable time to wash their clothes; have to
wait for some time to get free washing compartments; have to wash within shabby compartments
and dirty surrounding; and finally end up with unsatisfactory wash quality.
This study investigates the economic and technical feasibility of installing a laundry/washing
machine service in the main campus of Addis Ababa University.
The project aims at solving the current problem that students face in washing their clothes which
is crowded, time taking, tiresome, and inefficient. In addition, the project will generate additional
revenue to the University itself or to the credit association of the university whoever is pursing in
the investment activity.
The project is located inside the main campus of the university. The university officers have
already appreciated the magnitude of the problem and are optimistic that the project will get the
required assistance from all stakeholders. The rationale for the project location is that the project
should be located proximately to the customers, who are the residing students of the main
campus in this case. Regarding the site, the Physical Plant Development Office of the University
has identified the open space near the foreign students residence block (near Block 505 in the site
map) as a suitable site.The project is generally environmentally friendly and proper sewerage system will also be
constructed to remove all waste produced in the business.
The market survey conducted in connection with this project has revealed a number of important
points. The students are eager to see a modern washing machine installed in their campus. Out of
5370 regular residing students of the main campus, 270 were randomly selected to participate in
the survey. 70% of the participant students have expressed that the service is important to them
and are ready to pay a reasonable amount for the service. As most students have stressed their
concern on the affordability of the service due care has been given to set a price which is fair and
affordable to most of them. From a field survey of the price that janitors charge students and
from the questionnaires distributed, a price of Birr 2.00 per kilogram seems affordable to the
students and also acceptable to the investor. The total annual demand determined through the
market survey is about 294179 kilograms of clothes. At the proposed price of Birr 2.00 per
kilogram the total sales for the business for the first year of operation is about Birr 588,358.68.
The project does not process physical raw materials to physical outputs. However, it has to hold
some amount of detergent that will be sold to the customers at cost. In addition, the project
requires reliable electric power and water supply to perform effectively which all are available
The washing machine service facility incorporates the installation of coin operated washers and
driers. The machines selected are supplied by OMEDAD Plc. The company has well-organized
technical shop and required technical personnel for installation and maintenance activities. The
project requires nine (9) washing machines and three (3) dryer machines. The total cost of these
washing and drying machines is Birr 998,000.00. The project also requires auxiliary equipment
such as scale, fire extinguishers, and furniture which are estimated to cost about Birr 14,235.00.The machines will be housed in a building made of hollow cement blocks which is ideal for
laundry operations. The project requires a building lying in an area 92.9m2. The estimated cost of
the building at the current construction rate is 116,125.
Regarding organization and management, the assumption under this feasibility study is that the
management structure and control aspects of the project will be aligned with the current structure
of the recommended investors i.e. Addis Ababa University or The Credit Association of the
University. However, a specific structure for this division is also developed. The division will be
headed by a laundry service head and shall supervise all activities of the laundry/washing service
facility. With respect to manpower, the project is not as such labor intensive. However, to
safeguard mishandling and misuse of the machines and to provide efficient service, about seven
employees are required in the project.
The total investment required in this project is Birr 1,155,860.00. This includes, among other
things, the cost for building and civil works, machinery and equipment, feasibility study costs
and working capital. The project is assumed to be financed with 100% equity contribution.
The investment appraisal criteria used in this project are Net Present Value, Internal Rate of
Return and Payback Period. The net present value of the project is positive (Birr 2,207,108.19),
the internal rate of return is 39%, and the payback period is about 3 years. By all this measures
the project is acceptable. In addition, a sensitivity analysis has been conducted by introducing a
reduction in the price of the service and an increase in the costs of the major inputs. The project
still stands acceptable in all of the above three criteria.
Finally, the project requires the commitment of some resources for proper implementation. The
university management has to look at the proposal and give consent on the implementation of the
project. In addition, procuring the machines and equipment, installing the machines, constructing the building and other civil works, and many other activities require some time. The total
estimated time for implementing the project is about 23 weeks. Financially, the implementation
phase is estimated to cost about Birr 6,000.00.|
|Description: ||A PROJECT WORK SUBMITTED IN PARTIAL FULFILLMENT OF THE
REQUIREMENTS FOR THE DEGREE OF MASTER’S OF BUSINESS
|Appears in:||Thesis - Business Adminstration|
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