FACULITY OF BUSINESS

DEPARTMENT OF ACCOUNTING AND FINANCE

Project Proposal on Installing Laundry Service at

Kotebe Metropolitan University

GROUP- ASSIGNMENT

Section -12

GROUP NAME ID
1. MERONE W/YOHANNES 2344/16
2. ASTER MELAKU 2343/16
3. ZEREYAKOB GIRMA 1931/16
4. ARSEMA KEFLE 2403/16
5. ACHAMYELAH SHEGAW 2055/16
6. HABTAMU CHAKE 2422/16
7. SELAMAWIT MOKERYA 2393/16
8. MARTA FEKADU 2302/16
9. MARTA ESHETA 2298/16
10. AZEB G/MARYAM 2385/16

SUBMITTED TO – INSTRUCTOR SOFONIYAS MEKONNEN

June 11,2019

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 Table of Contents
Title Page

Table of contents ..........................................................................................................................i

List of tables .................................................................................................................................ii

Abstract ........................................................................................................................................iii

1. Context (Project Impact)..............................................................................................................1

2. Beneficiaries (Target Groups).....................................................................................................1

3. Project Justification.....................................................................................................................1

4. Project Goals and Objectives.......................................................................................................2

5. Outputs (Outcomes).....................................................................................................................2

6. Human Resource..........................................................................................................................2

7. Feasibility Study..........................................................................................................................3

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 List of Tables

Title Page

Table1: Manpower and Salary Schedule.....................................................................................3

Table 2: Cost estimation..............................................................................................................5

Table 3: Projected income statement...........................................................................................6

Table 4: Projected cash flow statement.......................................................................................7

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 ABSTRACT
The community’s of university as a hole and students in particular require various services in
university campuses. Like; Library services, Dormitory service, Laundry/washing machine
service sport and physical exercise facility services, and Cafeteria service are some of the most
important services that students would like to access as easily as possible from their universities,
among others. As the case of kotebe metropolitan university students have access to most of the
abovementioned services except the laundry/washing machine service. Hence, the arrangement
of laundry/washing machine services is still not available to the university community,
particularly to the students.
As commonly known students ought devoted and spent significant portion of their time to the
academic issues and related co-curricular activities. Indeed, there are also some activities which
must be performed by students and hence which consume their study time directly or indirectly.
Activities like Cleaning dormitories, washing clothes, Leisure times etc are among the other
major items that take a share from the total active time of the students.
Among others the time taken to wash cloth supposed to be significant. According to our
observation the on-compass students of kotebe metropolitan university students use concert dish
so as to wash their close manually currently. Unless students are being free from such kind of
inefficient, ineffective and tiresome activities their academicals achievement could be adversely
affected. Hence, introducing washing machine can be the solution so as to tackle this challenge.
The main objectives of this project is to solve the current problems related to washing clothes by
providing laundry/washing machine facility service to the students of kotebe metropolitan
university with affordable price and earn reasonable return to maintain its sustainability. The
project is believed to minimize the time and energy that students devote to wash their clothes.
This in turn might increase the time and energy that they allocate for their academic causes. So
that students be able to be active players in this effort and have to spend a considerable part of
their time to their curricular activities.
While the project successfully implemented waste products around the dormitories of students
will be minimized and the environment around the residence buildings will be clean wastage of
water will be significantly reduced it can also generate additional revenue to the University
through the fees that the users pay for the service. Accordingly the students will have clean
clothes and better looks, which indirectly help to create a healthy and confident academic
society. This is also either directly or indirectly related to the missions of the university.
The feasibility of the project is determined based on the market analysis, organizational
analysis, political-legal analysis, technical analysis, financial analysis, economic analysis,
social analysis, and environmental analysis made. Project appraisal is made based on financial
analysis cost and benefits valued at market price. In doing so different appraisal methods were
used like return on investment, payback period, net present value, and benefit cost ratio.
Regarding project implementation work breakdown structure (WBS) Gant chart, network
techniques, CPM, and, PERT are applied based on the analyzed project cost-time, risk,
performance and communication plan. Project monitoring will be made through internal
activities’ of the project management that consists operational and administrative activities
based on periodic report, regular project management and staff meeting, observation, and field
and supervision. Finally project evaluation process will be proceeding based on three schemes
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as before project implementation, during implementation, and after implementation. Hence,
based on evaluation result necessary measure will be made.

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1. Context (Project Impact)

The project is environmentally friendly. It is located around the compass dormitory which is
nearer to the safety thanks where by the detergents used for washing and wastewater
automatically dispended to the safety thank. Since the machines operate by electric power, no
toxic waste substances will release to the surrounding that may pollute the environment. So that
it will not have adverse effect on the nearby society. As long as the project is environmentally
compatible and creates job opportunity for some unemployed, it can also go with government
agenda.

2. Beneficiaries (Target Groups)

The university community in general the students in particular are the beneficiaries from this
project. The students willingness to pay has no doubt as long as the fee is fair and affordable. In
return they can utilize their precious time to their curricular activities and avoid problems such as
wasting time on waiting to get free washing compartment, tiresome and inefficient washing
clothes activities.

3. Project Justification

Students supposed to spend significant portion of time out of their total daily time for class
attendance and other curricular activities. But there are other activities like cleaning and washing
clothes those which consuming considerable portion from this time cannot underestimate. In this
regard, spending such considerable time on tiresome as well as inefficient activities, which
possibly tackled, does have adverse effect on the academic performance of the students.
Therefore, introducing washing machine can a solution so as to tackle this particular problem.
Students feel wonder if such washing machine facility service is accessible to them with fair and
affordable price. This is because of the fact that such facility services enable them to save ample
time so that they can do whatever activities that they are required to do as smoothly as possible
with no much difficulties. Simply it facilitates life to be simple in the compass to the students.

The washing machine installation incorporates three (3) washing machine and two (2) drying
machine. The selected machines will supply from a well known company called Dere weast

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point plc. This company is well-organized in technical shop and required technical personnel for
installation and maintenance activities.

The university board supposed to recognized the magnitude of the problem and be optimist offer
the required assistance as a stakeholder.

Since, the project should be located proximately to the customer; it is situated inside the compass
dormitory particularly under the new building of women dormitory which also proximate to
safety thanks of the compound.

4. Project Goals and Objectives

The main objectives of this proposal is to bring solutions for the problems that the students
encounter with washing clothes that required significant amount of waiting time, inefficient,
ineffective and tiresome too.

The project will generate additional revenue to the University itself and/or to the university
whoever is pursing in the investment activity.

5. Outputs (Outcomes)

While the project is successfully implemented; the following out comes or results are expected.

The project is believed to minimize the time and energy that students devote to wash their
clothes.

Laundry or washing machine facility service to the University community in general to the
students in particular up on affordable and fair price.

Generate reasonable revenue that enables the investors to maintain the sustainability of the
project as well as facilitates investment expansion and or to recover their investment cost.

6. Human Resource

The man power of the project is composed of seven individuals including laundry service head,
secretary, tailor, and four attendant machines/clears. The management structure is shown as
follows.

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Table1: Manpower and Salary Schedule

Position Number of employee Monthly salary Annual salary

Laundry service head 1 2300 27600
Secretary 1 1800 21600
Cleaner attendant 4 1500 18000
Total 6 5600 67200

7. Feasibility Study

a. Market analysis

Market analysis is made based on the target groups of demographic statistics of regular and
summer students

Male =4108

Female =3416

Total=7524

In addition to these even though regular and summer students are supposed to be the target
groups academic staffs and administrative staffs are potential customers during off peak season.
The income level of the target groups allows them to pay as long as the pricing scheme is
Affordable and fair provided that they are fully sponsored with full payment of their monthly
salary. More significantly students can save ample time so that their willingness to has no doubt.
The market is large enough because of the nearby location affordable with no ample competitors
by the nearby distance. Regarding distribution channel production inputs will be supplied
directly from the domestic factory through contracting system whereas the service is hand to
hand because of proximity the project site to student dormitory is just a walking distance.

b. Technical analysis

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Project production inputs or supplies to be contract base directly from domestic detergent
company by their transporting channels. The laundry service facilities will be delivered by using
latest, modern and power saving machines with the capacity ranging from 15Kg-25Kg washing
capacity at a time and dryers too. On top of the production process is designed to be
environmentally friendly without hearting the health of janitors.

c. Organizational Analysis

The organizational structure of the project is designed in such a way that the authority and
responsibility is properly linked where by the project manager is directly responsible to the
organization board of director and the remaining employees are under the supervision of the
project manager. The project is manageable enough in build team, motivating mechanisms,
rewarding scheme. The project has sufficient authority to keep its account in order and to make
prompt disbursement.

d. Political-legal Analysis

Regarding the political visibility, the project is politically correct because the vision, mission and
goals the project directly compatible with the vision, mission and goals of the government in
general and to the university in particular. While the project is fully operating it will create job
opportunity to the community. It also contribute significant role in the production competent
skilled and account public servant because of the fact that the project enable the students to have
ample time to be spent on academic activities for whom they can be well nourished with the
required knowledge, skill and competency level.

e. Social analysis

The project creates job opportunity to the community so that it facilitate on income distribution.
It has no adverse effect on the community as long as the waste disposed to the safety thank. This
project more importantly contributes in improving the quality of life of the community as well as
the students. In doing so the project is well designed in furthering investment so that its
significant for the community will increase in the long run.

f. Environmental analysis
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While the project is in full operation, it will not have adverse effect on the environment because
no fuel is used for the operation purpose that causes air pollution. Ruther the technology used is
environmentally friendly that consumes electric power which has no depletion effect in the
atmospheric air. On top of this waste released from washing as residual containing detergent
chemicals will carefully disposed to the safety tank through closed sewerage system.

g. Financial analysis

This project uses two main sources of funds.

These are;- Loan from Addis credit and saving=Birr 600,000.00

- Contribution from share holders =Birr 600,000.00

- Project total investment capital =Birr 1,200,000.00

The financial feasibility of the project profitability index is analyzed and its projection is made
based on different appraisal methods as follows.

Table 2: Cost estimation

Cost item Estimated cost
1 Operating cost
A Labor cost 121,200 birr/year
B Electric consumption 12,000 birr/year
C Water consumption 6,000 birr/year
D Hanger 70,177.50 birr/year
E Plastic cover 75,479.80 birr/year
Total 284,857.3
2 Over head cost
A Telephone bills 1200 birr/year
B Repairs 5000 birr/year
C Supplies 3000 birr /year
Total 9,200
3 Depreciation
A Two laundry machine 256000 birr
B Iron steamer 28000 birr

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C Singer sewing machine 28000 birr
D Cash register machine 5,000 birr
E Four Tables 4,400 birr
F Eight chairs 5,600 birr
G Desktop computers 11,000
H Lex mark (MS 610 dn )printer 9,500
Total depreciation value 432,500
4 Interest
Loan (600,000)x0.13 78,000
5 Selvage value
Expected 8 %
432,500x0.08 34,600

3: Projected income statement

Year 1st 2nd 3rd 4th 5th

Sales in units of 122,654.675 126,334.275 127,560 128,787.405 130,013.955
cloths
Sales Revenue of 1,226,546.75 1263,342.75 1275,608.65 1287,874.05 1300,139.55
clothes
Sales in unit of 130,380 134,291.94 235,595.2 136,899 138,202.8
suit
Sales Revenue of 4346 4476.38 4519.84 4563.3 4,606.76
suit
Gross revenue 1,356,926.75 1,397,634.69 1,411,201.85 1,424,773.05 1,438,342.35
Operating cost 444,308.05 457,637.152 462,080.374 466,523.441 470,973.53
Gross profit 912,618.7 939,997.538 949,121.476 958,249.609 967,368.82
Overhead cost 9,200 9,200 9,200 9,200 9,200
Depreciation 79,580
Operating income 823,838.7 851,217.54 860,341.476 869,469.609 878,588.82
Interest on loan 107,099.03 110,658.28 111,844.39 113,031.05 114,216.65
Earnings before 716,739.67 740,559.26 748,497.086 756,438 764,339.17

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 tax(EBT)
Tax (20%) 143,267.93 148,111.85 149,699.42 151,237.71 152,867.834
Earnings after Tax 573,471.74 592,447.41 598,797.67 605,150.85 611,471.34
(EAT)
Cumulative EAT 573,471.74 1,165,919.15 1,764,716.82 2,369,867.67 2,981,339.01

Table 4: Projected cash flow statement

Year

0 1st 2nd 3rd 4th 5th

Cash in flow

Capital 600,000

Loans 600,000

Salvage value 34,600

Sales Revenue 156,926.75 40,707.94 13,567.16 13,571.20

Annual cash inflow 1200000 1,356,926.75 1,397,634.69 1,411,201.85 1,424,773.05

Cash out flow

Investment 120,000

Working capital 55000 50691.624 50000 -155,691.624

Operating costs 444,308.65 457,637.152 462,080.374 466,523.441 470,973.53

Over head costs 9,200 9,200 9,200 9,200 9,200

Loan interest 107,099.03 110,658.28 111,844.39 113,031.05 114,216.65

Tax 143,267.93 148,111.85 149,699.42 151,287.71 152,867.834

Annual cash out 158,875.01 776,298.906 782,824.184 740,042.201 591,566.39

flow
Annual cash flow 598,051.74 621,335.784 628,377.666 684,730.849 846,775.96
balance

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Project Appraisal
1. Return on investment (ROI)

ROI= Average Annual net income x 100

Total Investment
Average yearly income =2,981,339.01 = 596,267.802 per year
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ROI=596,267.802 x 100 = 49.69 % per year

1,200,000

2. Payback period (PBP)

PBP= year (1) year (2) + x x 12 month
Year (3)
=573,471.74+592,447.41 + 34,080 x 12
598,797.67
PB.P=2 year and 20 day
3. Net present value (NPV)
n
CF
∑ (1+kt )t )−Io
NPV = t=1

= 573,471.74 + 592,447.41 + 598,797+605,150.85+611,471.74

(1.07)1 (1.07)1 (1.07)1 (1.07)1 (1.07)1

=536,954.897+517,466.51+488,797.267+461.666.686+435,970.61=2,439,855.975
=2437, 855.975-1,200,000
NPV= 1,239,855.975
Decision: accept the project

4. Benefit cost Ratio (BCR)

BCR=1,239,855.975 =1.03 BCR=1.03

1,200,000
`

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