1.

PROJECT SUMMARY

Project type------------------ construction machinery and equipment rent/hire.

Owner of the project----------------------------Mr.Riyad omer
Mr.Riyad omer live in West omo zone, Bero woreda, Jeba. He is well experienced
in the service rendering business sector for many years. Now a days, he wants to
expand his business by investing his accumulated capital in construction
machinery and equipment rent/hire business.
Project location ----------------------------------------SWEPRS, West omo zone, Bero
woreda, Jeba.
Investment capital ------------------------------------------------10,000,000.00 birr
Owners equity----------------------------------------------------25% (2,500,000.00 birr)
Bank loan --------------------------------------------------------75% ( 7,500,000.00 birr )
From the total capital birr 10,000,000.00 ; 80%------------------------ is allocated for
fixed investment capital and the rest ------------------ or 20% is allocated for
working capital.
To minimize the risk amount that will face the project the owner allocated 4%
(333,200) insurance of the total fixed investment capital.
The bank loan is to be paid back in five years with the interest of 11.5%.From the
bank loan interest the bank will get 5,834,000 with in five years as an interest.
The proposed project shows its suitability and profitability by in the table of
income and loss statement. The project will get a net profit of more than birr 1.9
million birr annually at an average.
The project will create a job opportunity for----------permanent and----------
temporary workers.
The investor will pay a tax 35% of the net profit, and through the tax payment the
government will get more than 1 million birr per year.

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 2. INTRODUCTION
The inflow of foreign direct investment has been increasing over the last 20 years.
It is not by chance, but due to the government created conducive investment
environment in the country.

Ethiopia has extensive opportunity in the construction industry sector ,like road,
and dam construction ,residence home development and real estate development,
commercial and industrial building construction ,water construction works and low
cost housing development. Also construction machinery and equipment rental
service are also other opportunities in the sector.

At the present time urbanization and rural construction and building of

infrastructure and social service sector being motivated by the government. For the
encouragement of such growing development work heavy duty machines,
equipment and building materials has to be supplied in the form of impact with
duty free.

Therefore the promoter Mr.Riyad omer motivated to involve general construction

machinery and equipment rent by fulfilling the required machinery ,vehicles and
equipment to make the project feasible. The promoter aims to create job
opportunities for the local community and through this it may take part of reducing
poverty, pay government tax and planed to get reasonable profit. The project can
to accelerate prosperity of the country as a whole.

3. PROJECT OBEJECTIVES

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3.1 GENERAL OBEJECTIVE

The main objective of the project is participating and sharing part of the country

economic development and minimizing poverty.

3.2 SPECIFIC OBJECTIVE OF THE PROJECT

 To overcome shortage of construction machinery and equipment in the local

community and the region,

 To create job opportunity for the local community,

 To get reasonable amount of profit form machinery and equipment rent,

 To provide the general construction industry on the current scenario of the

construction.

4. EXPECTED MARKET CONDITION

In the region and the zones, market information is assumed to have positive

implication in the construction works device. In the region the growth of

infrastructure and building works. Annually the project hold a construct of

projects at a price of 20 million as an average.

As the proposed project is highly demanded ,in the country and the region as

a whole ,there will no doubt of market access.

5. PROJECT SUITABILITY STRATEGIES

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 The proponent of this project has set this strategy for the suitability of the

project. The project office will be set at Jeba town administration.

To make the project suitable ,the project have finance ,employees, working

machines, and raw material or inputs. To have these things the owner and

the manager of the project set to strategy to make the project feasible and

suitable.

Professional workers will be hired according to their qualification nd work

experience. Other worker will be hired from local community based on

experience and the necessary training will be given for the short period of

time including practical orientation. The project worker will also be

motivated by being providing 10% bonus from the annual net profit.

6. PROJECT BENEFICIARIES

 The local community will get job opportunity,

 The promoter earns profit from the business,

 The government will collect tax from the business and employees

income

 Bank will collect interest income,

7. PROJECT MANAGEMENET

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 The project main office will be opened in Jeba town the center of West

Omo Zone and will gives a service contractual agreement for the project to

be maintained with the employers or customers in urban and rural areas .

The man power will be assigned as their qualification with having different

level those are professional and high level experience.

All the activities and duties of the project will be guided supervised and

managed by the promoter.

The financial system and procedures will be applied at every stage of

activities by the finance administrator and also be checked by internal

auditor monthly and annually.

8. OPERATIONAL POCEDURE

Construction projects are becoming more demanding and complicated in

construction and delay of projects would arise. Construction machineries are

used in order to achieve larger output, cost-effective, execution of work that

is not feasible by manual efforts, reduce the amount of heavy manual work

which would cause fatigue, maintaining large output, and finalize projects

on time.

The common types of construction equipments to be discussed in this

chapter are:

1. Surveying Equipment

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A . Theodolites---------------------price 200,000

A theodolite is an instrument for measuring both horizontal and vertical

angles, as used in triangulation networks. It is a key tool in surveying and

engineering work, particularly on inaccessible ground. A modern theodolite

consists of a movable telescope mounted within two perpendicular axes, the

horizontal or turn-on axis and the vertical axis. When the telescope is

pointed at a desired object, the angle of each of these axes can be measured

with great precision, typically on the scale of arc seconds.

B. Total Stations-------price1,200,000

A total station is an electronic/optical instrument used in modern surveying.

It is an electronic theodolite (transit) integrated with an electronic distance

meter (EDM) to read distances from

theinstrumenttoaparticularpointwhereanassistantstaffholdsreflector.Robotict

otalstationsallow the operator to control the instrument from a distance via

remote control. This eliminates the need for an assistant staff member as the

operator holds the reflector and controls the total station from the observed

point.

C. Global Positioning System (GPS)-----price 5,000

For accurate navigation in the field applying the Global Positioning System

(GPS) which uses satellite signals is used for navigation.GPS are available

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as a manageable , light weight, water proof (and floating) instrument with a

clearly readable LCD screen. These equipment works on principle of

navigation. Navigation using up to 12 satellites, WAAS enabled (Wide Area

Augmentation System is System of satellites and ground stations that

provide GPS signal corrections), memory for up to 500 landmarks and 50

routes. These equipments have built-in database showing the location of

towns and cities and have large user friendly control button sand menu

controlled software. They have accuracy for position less than 15meters.The

accuracy of position can be increased to within 3 meters applying WAAS.

Compaction Equipment: Vibratory

Salient Feature

Transported in standard normal vehicle dual to compact design

180° rotation of operator seat with controls & locking at 90°, 45° & 30° in

both direction.

Optimum configuration of drum axle load, dual amplitude & dual frequency.

Hyd. kit for longer Life.

Thick & rigid drum construction to ensure smooth & wobble free

compaction.

Articulated sturdy chassis design.

Superb all-round view and improved front rear visibility.

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Uniform working pressure on front - rear drums.

Higher gradeability due to higher capacity engine.

Table Vibrator:

Table vibrators are used extensively for pre casting. Its main function is to

compact the granules for which the controlled vibrations are required.

Shutter Vibrator:

This type of vibrator is attached with formwork with nut and bolt attachment

where concreting is to be done. After concreting this machine is started and

vibration is produced which helps in expelling voids from concrete.

3. Plate Compactor

Plate Compactor is particularly suitable for application like compacting

loose gravel and sand on footpaths, sub-grade for concrete floors, trenches,

column footings & for small repair works like pot-hole repairs.

Mixer

There are two main categories of mixer: batch mixers and continuous

mixers. The first type of mixer produces concrete one batch at a time, while

the second type produces concrete at a constant rate. The first type needs to

be emptied completely after each mixing cycle, cleaned (if possible), and

reloaded with the materials for the next batch of concrete. In the second

type, the constituents are continuously entered at one end as the fresh

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concrete exits the other end. The various designs of each type of mixer will

now be discussed.

Pan Mixers

All pan mixers work on basically the same principle: a cylindrical pan (fixed

or rotating) contains the concrete to be mixed, while one or two sets of

blades rotate inside the pan to mix the materials and a blade scrapes the wall

of the pan. The shapes of the blades and the axes of rotation vary. Figure

below shows the different combinations of blade configurations and pan.

The other element of the mixer is the scraper

Dump truck

Dump truck used in any specific country is likely to be closely keyed to the

weight and axle limitations of that jurisdiction. Rock, dirt and other types of

materials commonly hauled in trucks of this type are quite heavy and almost

any style of truck can be easily overloaded. Because of this, this type of

truck is frequently configured to take advantage of local weight limitations

to maximize the cargo. For example, the maximum weight limit of 40 tons

throughout the country, except for specific bridges with lower limits.

Individual states, in some instances, are allowed to authorize trucks up to

52.5 tons.

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The first step of the project to be implemented, machineries and vehicles

will be purchased. At the next step the office will be opened ,the third step

is recruiting manpower that is required for the project implementation.

At the operational level the project will be improvement depending on the

demand of building and road construction works.

o Participating in water works construction the bid,

o After wining the bid ,making an agreement and confirm with

signature between the contractor and the customer,

o The required type of machines ,vehicles or equipment will be ready

for the work and moved to the project site,

o Constructing camp and site clearing,

o Making the construction work based on the agreement like buildings

and road,

o Dismantling the camp site.

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9. THE INVESTMENT COST

The investment cost includes annual working capital and fixed investment

costs. The project cost is birr 10,000,000.00birr

10.FIXED INVESTMENT COST

The fixed investment cost includes machineries, vehicles, office furniture

and equipment and the total fixed investment capital accounts for birr

8,000,000.00 birr

10.1 COST OF MACHINERIES,VEHECLES AND EQUIPMENT

s/no. Description Qty Unit cost Total cost remark

1 Damp truck 1 2,000,000 4,000,000

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 2 Pick up 1 2,000,000 2,000,000
3 Mixer 2 125,000 250,000
4 Vibrator 2 75,000 150,000
5 Office equipment and furniture l/s 75,000
6,475,000 8,195,000

11.VARIABLE COST

It includes the annual salary of employee and other operating costs. The total

working capital consists of the initial operating cost will account about birr

1,805,000.

12.WAGES AND SALARY

s/n Personal Qty Monthly Monthly Annual Remark

salary Total salary
1 Project manager 1 4,000 4,000 48,000
2 Secretary/cashier 1 1,500 1,500 18,000
3 Accountant 1 2,500 2,500 10,000 4 months
4 Engineers 2 5,000 10,000 120,000
5 Driver 3 3000 9,000 108,000
6 Carpenter 2 2,000 4,000 48,000
7 Masson 2 2,000 4,000 48,000
8 Guard 4 1,500 6,000 72,000
9 Laborers 10 1,500 24,000 180,000

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 Total 29 652,000

13.CONSUMPTION COST

Fuel and oils----------------------------------------------------487,750

Maintenance ---------------------------------------------------326,250

Electricity -----------------------------------------------------20,000

Water -----------------------------------------------------------25,000

Telephone ------------------------------------------------------5,000

Total -------------------------------------------------------------864,000

14. Necessity costs

Bill payment ---------------------------------------------------------80,000

Insurance (4% fixed investment )----------------------------------259,000

Total --------------------------------------------------------------------339,000

15. Summary of project cost

Machinery ,vehicles and equipments--------------------------------6,475,000

Salary--------------------------------------------------------------------652,000

Necessities --------------------------------------------------------------339,000

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 Consumption-----------------------------------------------------------864,000

Total ------------------------------------------------------------------8,330,000

16.Proportion of the working capital and fixed investment cost

Consumption, salary and necessity costs are working capital of the project

cost. The total working capital is calculated to be birr 1,855,000 it is 22.3%

of the total project cost.

The cost of machineries and vehicles is the fixed investment of the project.

The allocated budget for fixed investment is birr 6,475,000it is 77.7% of the

total project cost.

17.Depreciation cost of fixed asset

s/n Description Total price Life time Dep. Dep. Cost

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1 Vehicles 6,000,000 10 10% 600,000
2 Machineries 400,000 7 14.5% 58,000
3 Other equipment 75,000 5 20% 15,000
Total 673,000

18.Financial sources and loan repayment

The promoter of the project contributes 25% of birr (2,500,000birr) the

remaining 75% (7,500,000 birr) will be bank loan.

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 BANK LOAN REPAYMENT SCHEDULE

Loan Duration: 5 Years

Interest Rate: 11.5%

Monthly payment :125,000.00birr

No. Total Amount Principle Interest Total Payment

Bank Loan Payment Payable
0 7,500,000.00
1 6,000,000.00 1,500,000.00 862,500.00
2,362,500.00
2 4,500,000.00 1,500,000.00 690,000.00
2,190,000.00
3 3,000,000.00 1,500,000.00 517,500.00
2,017,500.00
4 1,500,000.00 1,500,000.00 345,000.00
1,845,000.00
5 00 1,500,000.00 172,500.00
1,672,500.00
Note: the proceed is assumed to be granted with six months elegance period

19.INCOME PROJECTION

The project has the capital to accomplish projects annually that have the value of

20 million birr using the available construction machineries and equipments. The

project will be financed annually an average with a net profit of about birr 1.9

million

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 20.CONCLUSION

The profit and loss statement shows the profitability and suitability of the project.

The gross revenue and the working capital will grow by 5% every year.

This project proposal has planned to be implemented by preparing and mobilizing

the required machineries and equipments. The fulfillment the required

professionals for successful achievement of the desired goal is the main duty. The

plan shows how to arrive to the desired objective and to gain some economic

benefit for the promoter. From the initial investment capital of the staff members

as well as the government financials cooperation.

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 21. PROFIT AND LOSS STATEMENT OF THE PROJECT FOR 5 YEARS

S/N Description Years

1 2 3 4 5
1 Gross revenue 19,500,000 20,500,000 21,550,000 22,652,500 23,810,125
2 Working capital 1,855,000 1,947,000 2,044,387.5 2,146,606.9 2,253,936.34
3 Depreciation 673,000 673,000 673,000 673,000 673,000
4 Loan interest 670,910 536,728 402,546 268,364 134,182
5 Total cost 3,198,910 3,156,728 3,119,933.50 3,087,970.9 3,061,118.34
6 Profit before tax 16,301,090 17,343,272 18,430,066.5 19,564,529.1 20,749,006.66
7 Income tax(35%) 5,705,381.5 6,070,145.2 6,450,523.275 6,847,585.185 7,262,152.33
8 Profit after tax 10,595,708.5 11,273,126.8 11,979,543.225 12,716,943.915 13,486,854.33
9 Motivation(10%) 1,059,570.85 1,127,312.68 1,197,954.3225 1,271,694.3915 1,348,685.433
10 Net profit 9,536,137.7 10,145,814.12 10,781,588.90 11,445,249.5235 12,138,168.897

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