ABIRHAM WODAJE, Construction Materials Manufacturing PLC

Project Budget: Br. 163,313,132.00

Project Location: Dejen Woreda, Amhara Region East Gojjam

Promoted by: Abriham Wodaje Kebede

Feb, 2022

i
 Bahir Dar

Contents
Executive Summary.....................................................................................................................................v

CHAPTER ONE..........................................................................................................................................1

1. INTRODUCTION.............................................................................................................................1

1.1. Investment in Ethiopia..............................................................................................................1

1.2. The Construction Sector in Ethiopia........................................................................................1

1.3. Amount, Source and Purpose of Project Finance,..................................................................2

CHAPTER TWO.........................................................................................................................................3

2. THE PROJECT.................................................................................................................................3

2.1. General Background and Description.....................................................................................3

2.2. Project Justification:..................................................................................................................4

2.3. Project Objectives......................................................................................................................5

2.4. Vision and Mission of the project.............................................................................................6

2.5. Project Location and Justification............................................................................................6

CHAPTER THREE...................................................................................................................................8

3. MARKET ANALYSIS......................................................................................................................8

3.1. General Overview......................................................................................................................8

3.2. Existing Market Supply.............................................................................................................8

3.3. Projected Demand.....................................................................................................................9

3.4. Capacity, The Product and Product Programm......................................................................9

3.4.1. Capacity..............................................................................................................................9

3.4.2. Product Description...........................................................................................................9

3.4.3. Raw Material Sourcing....................................................................................................11

ii
 3.4.4. Production Scheme Program..........................................................................................11

3.5. Success Factors and Pricing....................................................................................................11

3.5.1. Pricing...............................................................................................................................12

3.5.2. Key Success Factors/ Practical Tips...............................................................................12

Conventional Order Booking Arrangements – Distribution......................................................................12

3.6. Marketing Strategy..................................................................................................................12

3.7. Competitive Overview.............................................................................................................13

CHAPTER FOUR...................................................................................................................................14

4. TECHNICAL ANALYSIS..............................................................................................................14

4.1. Project Site...................................................................................................................................14

4.2. Core Facilities..........................................................................................................................14

4.2.1 Aggregate stockpiles.................................................................................................................15

4.2.2. Stabilizing Agents (Cement/Lime) store............................................................................15

4.2.3 Stacking area:...........................................................................................................................16

4.3. Production Process..................................................................................................................16

4.4. The Manufacturing Process....................................................................................................18

CHAPTER FIVE.....................................................................................................................................28

5. ORGANIZATION and MANAGMENT........................................................................................28

5.2. Organizational Structure........................................................................................................28

5.3. Manpower Requirement.........................................................................................................28

CHAPTER SIX........................................................................................................................................30

6. FINANCIAL ANALYSIS................................................................................................................30

6.1 Investment Cost Classification................................................................................................30

6.1.1 Fixed Cost.........................................................................................................................30

6.1.2 Operational Costs............................................................................................................32

iii
 Administrative costs........................................................................................................................32

Contents
Table 1: Product Mix and Size....................................................................................................................10

Table 2: Production Program.....................................................................................................................11

Table 3: List of Machinery and Equipment................................................................................................21

Table 4: Annual Raw Material requirement..............................................................................................21

Table 5: Utilities.........................................................................................................................................22

Table 6: List of Machinery and Vehicles....................................................................................................23

Table 7: Furniture......................................................................................................................................23

Table 8: Office Supplies.............................................................................................................................24

Table 9: Description of Land Use Plan.......................................................................................................24

Table 10: Man Power requirement...........................................................................................................29

Table 11: Land Development.....................................................................................................................30

Table 12: Building and Civil works.............................................................................................................30

Table 13: Machinary and Equipments.......................................................................................................31

Table 14: Procurement of Furniture and Fixtures......................................................................................31

Table 15: Summary of Fixed Costs.............................................................................................................31

Table 16: Raw Materials............................................................................................................................32

Table 17: Utilities.......................................................................................................................................32

Table 18: Initial Working Capital Requirement determination..................................................................33

Table 19: Project Capital and currency......................................................................................................34

Table 20: Loan Repayment schedule.........................................................................................................34

Table 21: Depreciation Schedule...............................................................................................................35

iv
 Executive Summary

Promoted by a private investor, the proposed organization will have a name, Abrham Wodaje
Construction Materials Manufacturing PLC. The proposed project envisages the setup of a Pre-
fabricated Construction Blocks manufacturing unit. The Construction blocks industry, at a
national and regional level, is an important industrial sector with a long term continuous annual
growth rate of 7.05 percent. The proposed project will be initiated with an estimated investment
cost of Br. 150,000,000.00 (one hundred and fifty million) with Br. 131,000,000.00 (one
hundred and thirty one million) and 19,000,000.00 ( nineteen million) for fixed investment and
working capital respectively. Given the initial investment cost and a six years projected operation
time assumptions, the project is expected to entertain a 45 % IRR and 2.5 pay back.
Ethiopia as one of the poorest countries in the world is experiencing problems such as a rapid
population growth rate, uncontrolled urbanization, housing shortages and deforestation and
erosion. Because of the numerous homeless people living in urban and rural area of the country a
need to develop affordable housing at a national and/or regional level is necessary. The
investment promoter, Ato Abriham Wodaje, putting in to consideration of the current sever
housing problem and his relevant experience in the sector; proposed a production and supply
project of quality, locally accessible and affordable construction materials called Compressed
Earth Blocks at industrial scale. Compressed Earth Blocks (CEB) use sand, silt and clay as main
component and water and cement working as a stabilizer, mixed and compressed in a pressing
machine.
The following are considered to be critical factors of success of the project.
 Social acceptance of the product, especially by constructors,
 Raw materials availability and proxy to manufacturing site.
 Local Government and community affirmative participation and assistance.
 Quality assurance production system and marketing strategy.

v
 ABIRHAM WODAJE, Construction Materials Manufacturing PLC

CHAPTER ONE
1. INTRODUCTION
1.1. Investment in Ethiopia

Ethiopia is now becoming more and more investment friendly country. The Government is
creating favorable condition that would highly encourage the private Sector to be engaged in
almost all areas of the economy. The country with population of more than 100 million offers
significant domestic market for locally produced goods and service. The country is also a
member of the common Market for eastern and southern Africa Comesa offering huge benefit of
Exporting commodities in preferential tariff rates to a wider regional market. Privet investment
should be encouraged to increase form year to year and Investment constraints have to be
alleviated in order to pave development ways so that investment sector happens to be
determinant about factor of economic development of the country like Ethiopia. Ethiopia federal
democratic government is also encouraging investors to invest their records to contribute to the
development of the country in all sectors by avoiding all barriers and facilitating all the mince for
the investment.
1.2. The Construction Sector in Ethiopia
While the country has achieved a considerable records in all investment sectors, the construction
industry has played a leading role in the last two or so decades. Construction sector has been
registered with a growth rate of 7.05 percent. The seven plus growth in this sub-sector is due to
rapid execution of work on various projects, increased investment in small scale construction and
rapid implementation of development schemes and other projects of federal and Regional
governments. Housing and construction is one of the major drivers of growth in more than 70-
100 other small industries are part of the construction industry. Currently construction is
everywhere; apart from roads, flyovers, bypasses and dams, there is a mass and consistent
construction of different purposed buildings across the country. Aside innumerable domestic and
household constructions being carried out nationwide, various real estate and public sector
development projects by government and private sector are in progress and continuously being
commissioned.

1
However empirical studies conducted by several stakeholders underpin the fact that over one
billion people in the world, most of who live in the developing nations, are either homeless or
live in very poor housing. Ethiopia as one of the poorest countries in the world cannot be escaped
from the global reality. High population growth rate, an uncontrolled urbanization, deforestation,
erosion and housing shortages in the last two or so decades especially, have continued to be the
country’s sever problems that challenged the government. A two sided constraint faced by
average to better off households; un affordability of the so called modern methods of
construction using hollow/solid blocks, pre-cast concrete and stone masonry; while traditional
methods of constructing houses with walls of mud made from wet soils or earth are unable to
withstand harsh rainy seasons cracks that appear on the walls due to extreme shrinkage. Cracks
appear because the soil particles are not held together with sufficient bonding strength. Given
that moisture from rainfall is the main cause of cracking and other durability problems. Besides
using wood pools and mud to construct houses contribute to deforestation and inconvenient
habituation. These and other convergent problems related to construction quality and
affordability have made significant matter for this project to introduce sustainable building
materials and building methods; it stabilizing the soil with cheap, easily available and renewable
raw materials.

1.3. Amount, Source and Purpose of Project Finance,

The source of the project finance is from the promoter’s equity and bank loan. Out of the total
investment capital of Br. 163,313,132.00; birr 48,993,939.60 (30%) is to be contributed by the
promoter (Ato Abrham Wodaje Kebede), while the remaining balance Br. 114,319,192.40
(70%) is expected to be covered by the local financing sectors (bank).
The purpose of the loan is to import machineries and purchasing inputs for construction of
facilities at production site. Beside this the promoter believes that, the loan will strengthen the
relationship between the investor and the bank. Furthermore, the investor is interested to scale a
portfolio and further engaged in various viable economy sectors in the country.

2
 CHAPTER TWO
2. THE PROJECT

2.1. General Background and Description

General Project Description:

The production of construction blocks industry is an important industrial sector, producing blocks
used as prefabricated material for various construction activities i.e. construction of road side pave
ways, garage parking floorings, walls making, block paved driveways, and floor coverings of
commercial buildings, etc.
The proposed project organization, Abriham Wodaje Construction materials Manufacturing
PLC, will be engaged in the production and supply of high quality construction blocks at an
affordable price. The company will use locally abundant soil type minerals, sand, Clay and Silt
at different proportion to produce walling blocks. The manufacturing plant will be set to develop
alternative walling materials other than the commonly used hollow/solid blocks; pre-casted
concrete and mud that will provide immense benefit to customers through minimize building
cost and impact on the environment. Earth can be used for construction of walls in many ways.
However, there are few undesirable properties such as loss of strength when saturated with
water, erosion due to wind or driving rain and poor dimensional stability. Hence, the proposed
project is designed to eliminate these draw backs significantly by stabilizing the soil with a
chemical agent such as cement. Cement stabilized soil will generally be used as individual
blocks compacted with hydraulically operated machines. The mechanical compression and
application of stabilizing materials, water and cement on soil minerals is expected to produce
compressed Earth Blocks of different size and shape appropriate to household and business
construction needs.
Compressed Earth Blocks: - using CEBs for construction of buildings would provide
costumers higher benefit, because of their a relative advantages over other construction blockes
in ;
Technical Performance: Compacting the soil using a press improves the quality of the
material. Builders appreciate the regular shape and sharp edges of the compressed earth block.
The higher density obtained thanks to compaction significantly increases the compressive
strength of the blocks, as well as their resistance to erosion and to damage from water.
3
Flexibility: The wide range of presses and production units makes the material very flexible to
use. With production ranging from small-scale to medium and large-scale semi- industrial or
industrial, CEBs can be used in rural and urban contexts and can meet very widely differing
needs, means and objectives.
Standard and Models: Compressed earth blocks are of standard sizes and meet quality
requirements which are suitable for carrying out large housing or infrastructure programmes,
based on the design of architectural models.
Practicality: The common dimensions of CEBs lend themselves to great flexibility of use in
various building solutions, as load-bearing masonry or as in-fill. CEBs can also be used for
arches, vaults and domes, as well as for jack-arch floors. Very fine masonry work, equal to fired
brick building traditions, can be realized thanks to the high quality of compressed earth blocks.
The architectural application of CEBs can range from social housing to luxury homes and
prestigious public buildings.
Substitution to importation: Whilst meeting the same requirements as other present-day
building materials, the CEB also presents a technological alternative to imported materials, the
use of which is often justified because of the need for standardization. CEBs have the advantage
of being produced locally, whilst still meeting this need

2.2. Project Justification:

With the aforementioned local and national level problems related to construction and access
to affordable and habitable housing, the project considered an urgent intervention to develop
suitable and affordable housing and other buildings construction materials. According to the
this feasibility study conducted for this proposed project, the production and application of the
compressed earth block is viable complying the following parameters;

Technology: Research centers, industrialists, entrepreneurs and builders have developed a

very sophisticated body of knowledge, making this technology the equal today of competing
construction technologies. CEB production meets scientific requirements for product quality
control, from identification, selection and extraction of the earth used, to quality assessment of
the finished block, thanks to procedures and tests on the materials which are now

4
 standardized.
Role in Local Economy and Development: The setting up of compressed earth block
production units, whether on a small-scale or at industrial level, in rural or urban contexts, is
linked to the creation of employment generating activities at each production stage, from earth
extraction in quarries to building work itself. The use of the material for social housing
programmes, for educational, cultural or medical facilities, and for administrative buildings,
helps to develop societies' economies and well-being. CEB production forms part of
development strategies for the public and the private sector which underline the need for training
and new enterprise and thus contributes to economic and social development

Social Acceptance: CEBs represent a considerable improvement over traditional earth building
techniques. When guaranteed by quality control, CEB products can very easily bear comparison
with other materials such as the sand-cement block or the fired brick. Hence the allegiance it
inspires amongst decision- makers, builders and end-users alike

Future Applicability: CEB technology has made great progress thanks to scientific research,
to experimentation, and to architectural achievements which form the basis of a wide range of
technical documents and academic and professional courses. A major effort is now being
devoted to the question of norms and this should help to confer ultimate legitimacy upon the
technique in the coming years

2.3. Project Objectives

The main objective of the project is aimed at to maximize the return on invested capital in the
form of profit for the promoter. However, its implementation will benefit the employee, the
consumer society and the government at different levels. In this respect the project is aimed to
promote the following objectives:-
 To maximize the return on invested capital through hydraulic motorized production of
construction blocks,
 To raise the significance and importance of the sector and thereby raising its contribution
to the national economic development
 To produce and supply quality, affordable and environmental friendly construction
blocks.
5
  Effectively use local inputs and strengthening the linkage between
Natural resources and other sectors of the economy
 To provide gainful employment to a large segment of the population of the project area
and augment earning capacity at the grassroots level,
 Increase government revenue through the different forms of taxes, which in turn used to
facilitate social and economic development.
In general, the project is believed to have significant social and economic benefits that accrue to
the society, the region and the country beyond the financial returns to its owner.
2.4. Vision and Mission of the project
Vision:

The primary vision of the proposed project organization is, to make construction of residential and/or
business buildings affordable, environmental friendly and local material and local labor oriented.

Mission:

Apart from other detail intended and untended expected results, the project organization in going to
operate setting the following missions.

 Produce standardize and adequate Compressed earth blocks at a relatively competitive price,
 Contribute to alleviate current rural and urban housing problems
 Replace the wood and mud made housing practice with CEB and reduce deforestation and
construction period.
 Participate in local community service provision activities and
 Be a role model and prove , struggle for a better life and economic independences can do
business and bring change and can make a difference if opportunities are given

2.5. Project Location and Justification

The proposed project production and supply of motorized compressed earth blocks for construction of
different purposed buildings planned to be located in Dejen Woreda, East gojjam Zone Amhara Region.

Location: project will have two distinctive sites, the quarry site and the manufacturing sites.
Both sites are already identified and found in Amhara Region, East Gojjam Zone, Dejen
Woreda. The quarry sites are located in Abay Gorge Basin where necessary raw materials are
6
adequately found. The quarry site constitutes of about 100 Hectares of land in two different
places, the sand and silt quarry found adjacent to Abay River while the clay quarry will be
located on the upper porstion of the Abay Vally right to Dejen town. The manufacturing site will
be sited in Dejen Town on 20,000 square meters constituting all required facilities.
Dejen Woreda is found only 200 km away from Addis Ababa on the way major asphalt road to
major towns of Debremarkos, Bahirdar and Gonder. The town is also found at a junction point
to Addis Ababa, Oromiya, Afar and South Peoples regional states. Geological field survey
conducted and review of secondary resources about structural and petrological information about
the quarry site, Abay Gorge there are abundant soil minerals of good quality for the production
of CEB at industry level. The manufacturing site is also near to the quarry sites. Besides
stabilizing agents, cement and water are available in Dejen town.

7
 CHAPTER THREE

3. MARKET ANALYSIS
3.1. General Overview

The Construction sector is one of the largest economic sectors of Ethiopian particularly in big
cities like Bahir Dar, Addis Ababa, Adama, Debremarkos in terms of employment. The
construction sector directly and indirectly affects more than 150 allied industries which also
includes pre-fabricated construction material industry. Block making has a significant position in
the construction process particularly in the housing sector where prefabricated blocks are used
extensively with more than 40% of the total structure of the building.
Traditional construction has been relying on hand made bricks rather than concrete block which
have been a high cost option while selecting material for the house construction both in urban
and rural areas of the country. Concrete based construction is comparatively new phenomena and
historically has been employed in the urban areas where technology and machinery was
introduced due to mass demand of building material and comparatively high average income.
Concrete and Hollow/solid block production uses cement as a major constituent which in recent
times made the products disposable price high.
3.2. Existing Market Supply

Apart from the household construction materials wet mud, different size and shape hollow/solid blocks,
paving blocks, curbstone used for construction of road side pave ways, garage parking floorings,
walls making, block paved driveways, and floor coverings are being produced by small,
medium and large scale manufacturing suppliers in the target market area. Yet the information
from Amhara region Bureau of Construction confirms an existing 50% supply gap to the
current construction blocks demand. Specific to the proposed product, stabilized compressed
earth blocks, there are only a few Universities and Aid-organizations engaged in housing service
which produce for academic research purpose at pilot level. While there are neither producing
nor importing organizations of similar material in regional and/or national level. The exiting
supply gap plus the proposed product quality and price competitiveness will guarantee a
considerable market share at regional and national level.

8
 3.3. Projected Demand

The construction sector has been registered with a growth rate of 7.05 percent. The seven plus
growth in this sub-sector is due to rapid execution of work on various projects, increased
investment in small scale construction and rapid implementation of development schemes and
other projects of federal and Regional governments.
Housing and construction is one of the major drivers of growth in more than 70-100 other small
industries are part of the construction industry. The ever increasing construction of residential
and/or business buildings in rural and urban areas has created a massive and consistent need of
pre- fabricated blocks across the country. Various construction and real estate development
projects which include the projects of public sector development and private sector projects are
in progress and are continuously being commissioned which will have high demand of
prefabricated construction material all over the country. Besides government incentive in the
sector like availability of loan for investment cost, the reduced interest rate and close technical
and evaluation support are all positive for the construction industry. The aforementioned
statistics provide enough evidences and ensure a steep and continuous growth vis-à-vis
investment opportunity in the Prefabricated Construction Blocks business. The proposed project
product, stabilized Compressed Earth blocks will also have a vast demand locally, regionally and
across the nation.

3.4. Capacity, The Product and Product Programm

3.4.1.Capacity
From the market study, it is observed that there is a great demand gap between the demand and
supply of prefabricated construction blocks. Therefore, taking in to account the market study and
economic scale, stabilized CEBs Production capacity of the plant manufacturing unit would be
10,000 blocks of different shapes and categories per day at operation start and will scale up to be
20,000 blocks afterwards..
3.4.2.Product Description

Compressed earth blocks are small masonry elements, parallelepiped in shape, but the common
dimensions of which differ from those of hand-moulded earth blocks or of fired bricks and vary
depending on the type of specially developed press and mould used. For masonry constructions,
9
solid blocks are most commonly used. For this reason, compressed earth block production has
typically used block dimensions consistent with a unit weight in the order of 6 to 8 kg and with
the possibility of building walls 15, 30 or 45 cm thick. The most common (or nominal) work
dimensions in use today are 29.5 x 14 x 9 cm (I x w x h), which gives a material which is very
easy to handle and very flexible in its use for many configurations of wall and roof building
systems (jack-arch floors, vaults and domes) and of arched openings. The project organization
operation system will be designed in to separate units that will produce four main families of
blocks
 Solid blocks: These are mainly prismatic in shape. They fulfill very widely differing
functions

 Hollow blocks: Generally the voids of hollow blocks account for a total of 5 to 10%,
and up to 30% using sophisticated techniques.

 Perforated blocks: These are light but require fairly sophisticated moulds and greater
compressive force. They are suitable for reinforced masonry

 Interlocking blocks: These can be assembled without mortar, but they require
sophisticated moulds and high compressive force. They are often used for non-load
bearing structures

All four families of blocks will be produced with compressing hydraulic machine applying
cement and/or lime as stabilizing agent with different standard shapes and size,

Table 1: Product Mix and Size

No. Products Size (L X W) in cm Remark

29 X 14 Standard
1 Solid Blocks 21 X 14 ¾ Block
14 X 14 ½ Block
30 X 20 Standard
2 Hollow Blocks
30 X 10 ½ Block
3 Perforated blocks 25 X 10

10
 4 Interlocking variable Land oriented
blocks
3.4.3. Raw Material Sourcing

Final out put unit cost of pre-fabricated construction blocks production industry critically
depends on suitability and availability of raw materials.
Raw materials to be used for the production of stabilized compressed earth blocks (CEB) are
abundantly available in the project area. The main production material components include
components of soil type minerals: Sand, Silt, clay and cement and/or lime as stabilizing agent:.
Volatility in cement prices is the biggest threat while working in construction industry. Yet the
proposed project counters this risk in two ways, one the production process uses cement at only
6-8 % and second by making long term supply contracts with the cement manufacturers.
3.4.4.Production Scheme Program.

At the initial stage of the production period, the proposed project organization would require
Some years to penetrate into the market and capture a significant market share. Therefore, in the
first and second year of production the capacity utilization rate will be 75% and 90%,
respectively. Full production and supply provision shall be attained in the third year and then
after. The proposed service provision program is depicted below

Operation Year
S.N Product
1 2 3-10
1 Production rate 75% 90 % 100 %
Table 2: Production Program

3.5. Success Factors and Pricing

This construction blocks production and supply business is dependent on the pricing and margins
given to builders, suppliers and retail customers. It also depends on efficient supply of blocks to
the customer and transportation facilities provided to the prospective clients, retailers and order
booking agents.

11
 3.5.1. Pricing

Construction blocks industry is an important industrial sector and producing blocks used as
prefabricated material for various construction activities. to this end availability and accessibility
of raw materials, technological soundness of the production process and raw materials and final
product transportation cost determines unit price of compressed earth block used for residential
and/or commercial buildings The successful block yard must however make blocks of uniform
quality and sell them at a price high enough to cover costs and make a reasonable profit. Hence
the envisaged project will dispose its products at average market price of Birr 12.00 for a single
block of 230 x 190 x 100mm average dimensions
3.5.2. Key Success Factors/ Practical Tips

Conventional Order Booking Arrangements – Distribution

As we have discussed earlier, construction blocks is one of the allied sectors of construction
industry. Therefore, rental truck suppliers for the transportation of raw materials are considered
to be the part of the distribution network for the pre-fabricated construction blocks.

Hence the production set up of a block yard, should in advance institute contacts with the dump
track suppliers and signup a contract in order to appoint them as order booking agents.
Generally, pre-and post production transporters, construction and building material whole sellers
and retailers, customers and suppliers are part of the whole organizational supply chain,
3.6. Marketing Strategy

The proposed project envisages the setup of a pre-fabricated construction blocks manufacturing
unit that will produce various size and shaped stabilized CEB. Before to start a block yard, it is
essential therefore to investigate the economic feasibility of the venture. Determination of level
of demand for blocks in the area (how many per month) and degree of competition from other
block yards are important factors having a significant bearing on the feasibility of the venture.
Hence, according to the feasibility study, the promoter has the following marketing strategies:

 Contacting government and private contractors engaged in construction on a regular

basis, informing them of any corporate rate, discount programs, availability of products, etc.
 Emphasizing the access of the proposed products to support client’s interest,
12
  Special effort will be made to emphasize the price-value relationship of the products
available,
 Actively marketing the product and project organization prior to the completion and
commencing operation,
 An aggressive local marketing effort and promotion of the construction block market to
enable the company capture a more than proportionate share of support within the market and
 Working with local people to establish a competitive amenity package responsive to
specific requirements.

3.7. Competitive Overview.

There are plenty of Pre-fabricated construction block producer locally and regionally. The
products have different categories from smallest size of a brick to a huge sized pre-cast concrete
bridge. However, for the purpose of this pre- feasibility, we have focused on the manufacturing
setups where various types of blocks are manufactured with the help of automatic or semi-
automatic plant and machinery. This sector is largely unorganized and no statistics are available
in terms of how many block manufacturing units are working and their scale of operations. In
addition to the above, the failure stories that I have observed from others and the comments
collected from customers will help the proposed project organization to win competitors, through
developing contacts with the building material suppliers, well known builders and contractors.
And placing the following marketing strategies

 Keep up to date information on civil and construction works initiated by local,

provincial and central government.

 Draw linkages with material suppliers to the housing industry at town level.

 Emphasis on image development and building acquaintances across individual

contractors serving private sector.

 Establish contacts with local civil engineering firms, individuals and

professionals.

13
 CHAPTER FOUR
4. TECHNICAL ANALYSIS.

The technical analysis of the proposed project proposal constitutes information, description and
quantity of project are required, quarry and production facilities, production process, required
raw materials, machinery and equipment, land, building facilities and environmental impact
assessment

4.1. Project Site

The proposed project production will be set in two different sites, the production facilities site
and the quarry site. Bothe sites are selected in a very convenient location considering criteria:
availability of raw materials, Market for blocks, availability of the labor force, Security and
infrastructure (roads, water, sewerage, electricity, etc.)
The Quarry Site: accessibility and raw material availability are the determining factors to select
a quarry site; the project selected the quarry site of 100 Hectares in Abay Gorge basin in which
all required raw materials are found abundantly. Thanks to the east African Palentozic to
Mecezic penplation and denudation geological process, the predominant input material (65-80
%) for the block production, sand is found in the area in abundant volume than anywhere else in
the globe. The other constituents Silt (10-15) % and Clay (10-15) % are also available in
considerable amount near to the production site. Besides there is all weathered asphalt road
accessible to dump trucks, field vehicles, heavy machine for transportation, excavation, loading
yet a 3 km and so rural road needs some upgrade.
The Production Site: The Pre-fabricated construction blocks, Compressed Earth Blocks (CEB)
production project is selected considering accommodations of facilities: stockpiling of raw
material, production of blocks, cement storage and storage of finished product. Besides
considering access to mobility of heavy machinery and vehicles i.e. dumper, fork lifters ,
frequent movement of heavy transportation and delivery vehicles, and open space for machinery
installation, storage and vehicle parking and different necessary services about 20,000 square
Meters of area in Dejen Woreda required.
4.2. Core Facilities.
The envisaged project should have sufficient and comfortable space to accommodate the core
production process as per the requirements of a large scale pre-fabricated blocks production
14
manufacturing. Actually this has been considered seriously at the design stage of the building
along with the allocation of appropriate area and placement of each components with the
building accordingly. To this end the following core facilities will be considered in the
production facility

4.2.1 Aggregate stockpiles

Aggregates must be stockpiled in such a way that: they do not become contaminated by soil,
leaves, etc.; different aggregates are kept separate; and rainwater can drain away. Ideally
therefore, aggregates should be stockpiled on a concrete slab. If this is not done, the layer of
aggregates in contact with the soil should not be used for production. Aggregates must not be
stockpiled under trees. Partitions should be erected between different types of aggregate.
Stockpiles should be on a slight slope so that rainwater does not collect in the aggregates.

4.2.2. Stabilizing Agents (Cement/Lime) store

The best way to store cement is in a silo. For small scale block yards, however, cement will be
delivered in bags. Cement in bags should preferably be stored in a weather-proof room. Bags
should be stacked on a plastic tarpaulin or on closely spaced wooden strips so that they do not
absorb damp from the floor. The storeroom should be big enough to hold at least a week’s supply
of cement.

Raw Material and Curing store Facilities

15
4.2.3 Stacking area:

An area big enough to stack two weeks’ production is needed for curing and drying blocks. It is
normally not necessary to pave this area. To avoid muddy conditions, a layer of concrete stone,
about 100 mm thick, should be enough.

4.2.4 Office and Staff facilities:

These include toilets, ablutions, and possibly change rooms. An office should be provided for all
but the smallest of yards.

4.3. Production Process

The production lay out will constitute description of the production site, production cycle and
scale of operations
Production Site
Production requires quite a lot of space, because of the different stock requirements (raw
materials and blocks). The choice will be influenced by parameters which include the duration
and volume of production, and transport distances, which should be kept to a minimum.

Access to the site must be good for supplies and for removing stocks of blocks. The site should
preferably have a water supply and electricity.

Generally the production facility should consider the following indispensable parameters
Area: A flat concrete slab, big enough for at least one day’s production, is required. To
minimize breakages in cold weather, it is recommended to increase the cement content of the
mix or the curing period before moving the blocks.

16
 Slope: Normally block production is carried out in the open, and the concrete slab should have a

minimum slope of 1 in 100 to ensure proper drainage.

Thickness: Large production machines require a minimum slab thickness of 150 mm.

Production Process Flow Chart

17
4.4. The Manufacturing Process

The production of stabilized compressed earth blocks consists of four basic processes: crushing,
screening, mixing, molding, curing, and cubing. The manufacturing plant will produce different
size and shape blocks with hydraulic compressing machine. The following steps are commonly
used to manufacture concrete blocks

Crushing: - "Tread-mill" and Blade grinders crushers will be used interchangeable according to
raw material size and type, the former is suitable for fine soils with no stones or coarse gravel.
While the later is suitable for all soil types, even stony ones, since the hammers or cutters will
split stones. This means that grinders do modify the grain size distribution of the soil, by
increasing its fine graves and coarse sand content and eliminating stones and coarse gravel.

Crushing machines units

Screening:- The operation of separating raw materials in accordance with size, density and
moisture would use Mechanically-driven vibrating and/ or rotating screening machines which
are suitable for producing medium to large sized units of CEB They often allow several grids to
be used in combination in order to break the material down into various grain size fractions.

Screening Machine units

18
 Mixing: Mixing and preparation are important operations in the manufacture of a block. Obtaining
a mix with the optimum moisture content for compaction is crucial to the quality of the product;
for example, a 2% difference in moisture content can reduce the density of the block by nearly 100
kg/m³. The cement should be evenly distributed for its effect to be equal throughout the mix. The
more homogenous the mix, the more the degree of stabilization can be reduced, i.e. lowering costs
without affecting quality. Mixing should be done first dry, if dry materials (cement, sand, gravel)
have to be added to the soil, followed by wet mixing, spraying the water on gradually. If water is
added too quickly, it will be difficult to mix the dry and wet parts together. This applies both to
stabilized and unsterilized blocks.
The proposed production system will use motorized mixing system so that the mixer would be
filled using either buckets or measuring boxes which have to be emptied by hand, or using a
sloping ramp for wheel barrow access, or - for large production units - through measuring hoppers.

Mixing Units

Compressing: - Compression is of course the key operation in the manufacture of CEBs.

Nevertheless, the quality of the product will depend heavily on what "goes into" the press (the
type of soil and all the preliminary operations: preparation, mixing, retention time, etc.) as well
as the way in which the products are going to be treated when they come out of the press (curing,
storage, transportation, etc.) the proposed project will employ an automated compression
machine. The following are compression activities that would be set sequentially,

19
 i. Filling: Generally, moulds are designed to be completely filled with the mixed material.
The soil therefore has to be scraped level with the sides of the mould. The operation system will
use both manual and automatic mould leveling systems, (using brushes, a roller, a leveller etc.),
generally fitted to rotating table presses. The presses will be equipped with an adjustable
measuring system, either using sliding valves or tipping boxes. And the systems would be
manual or mechanically-driven.
In both compression systems the operator should have access to the mould before compression
takes place, he should preferably check on the content of the mould and, for example, top up or
remove some material (if necessary) or press the soil down into each corner of the mould with
his fingers (particularly for low pressure presses), and if necessary remove any stones, lumps
or clods of soil
ii. Compressing the block: The compression process would be done with a the press fitted
with a lid, it must be correctly positioned and soil must not get trapped in the angle between the
mould and the lid as this can cause the lid to be displaced or the compression system to jam.
The compression force should also be regulated and remains uniform. It is therefore impossible
to check during compression if the mould has been correctly filled
Curing and Drying: Curing and drying are one final crucial process that greatly influences the
final quality of the block. Curing and drying periods are directly related to type and amount of
stabilizing agent used. For very slightly stabilized blocks (< 3 to 4 %), drying should not be
allowed to take place too quickly, as this would cause shrinkage cracks. Unsterilized blocks
should also be sheltered from direct sun and wind, but not kept in a humid environment. For
cement (or lime) stabilized blocks, the presence of water within the block is crucial for the
stabilizer to attain its maximum strength. High temperatures will also help in this respect. Not
only do the blocks have to be sheltered from direct sun and wind, but they also have to be kept
in a hot, humid environment with the help of tarpaulins or heat-absorbent (black, for example)
plastic sheets, which can be sealed off as hermetically as possible. The duration of this humid,
hot curing stage will also depend on the climate, but should be not less than 7, and if possible
14, days. For cement-stabilization, complete curing takes 28 days.
4.5. Machinery and equipments:

For the proposed project operation purpose a complete set of mechanized plants would be
20
 imported. European and American plants are available which give good quality output;
however, these are very expensive and not generally preferred even by the leading players due
to high capital requirement. Therefore, an alternative Chinese machinery will possible be
considered.

Machinery with the following specification has been proposed for the project with estimated
cost of cost around Br. 45,500,000.00.
Table 3: List of Machinery and Equipment

Equipment
S.N Assumptions Infrastructure
Type Quantity

Covered Area: 60 m2 Excavator belt (7m) 1

Fully mechanized Paved Area: 200 m2 Conveyer belt (6m) 1

1
Production Line
Electric screen
Total Area: 1000 m2 1
grinder

Stock of soil: 250 m2 Soil-cement

measuring unit 1
Stock of Blocks: 100 m2 system
Productivity : 5,000-7,500 Possible Extension: 300 m2 Planetary mixer-320 1
Blocks per day
2
(29.5X 14 X 9 cm Blocks) Slide valve hopper 1

Motorized press 1

Rollers belt (2m) 1

3 Operators: 6-8 persons Pallet trolly 1

4.6. Raw Materials and Utilities

4.6.2. Raw Materials
Table 4: Annual Raw Material requirement

s.n Description Quantity Cost/Month Annual Total Cost

21
 1 Cement 540 qtl 405,000.00 4,860,000.00

2 Excavator (Rental) 1 403,200.00 4,838,400.00

3 Loader (Rental) 1 345,600.00 4,147,200.00

4 Dump Truck (Rental) 5 650,000.00 7,800,000.00

5 Other inputs Lump sum 500,000.00

Total 22,145,600.00
4.6.3. Utilities

Pre-fabricated construction blocks plant will be operated using electricity for production
purposes. This would draw considerable amount of electricity. Likewise, heavy vehicles i.e.
Fork lifter, truck/dumper, etc. would require huge quantity of fuel for which diesel will be used.
The cost of the utilities including electricity, diesel/fuel, telephone, and water is estimated to be
around 55 million per annum. Approximate cost of utilities has been given below.
Table 5: Utilities

s.
Description Cost /Month Total Annual Cost
n

1 Power (Gen Set & Electricity, Fuel) and) 1,845,953.00 22,151,436.00

(Grnunits)
2 Water 645,933.00 7,751,196.00

3 Telephone, fax, Internet 50,000.00 600,000.00

Cleaning materials and other

4 20,000.00 240,000.00
miscellaneous uses

Total 30,742,632.00

4.7. Vehicles and Machinery

The proposed setup would require excavator, loader, and raw material transportation dam truck
on rental bases. And other three or four vehicles for field, office and employee service. Details
22
of required vehicles have been provided in the following table
Table 6: List of Machinery and Vehicles

s.n Description Quantity Cost/Month Annual Total Cost

1 Fork Lift 2 3,000,000.00

2 Pick Up (4WD) 3 - 9,000,000.00

3 Coaster Service Bus 2 - 6,000,000.00

4 Other Tools and Equipment Lump Sum 2,000,000.00

Total 20,000,000.00
4.8. Furniture and Office Supplies
Furniture and fixtures

A lump sum provision of 700,000 for procurement of office/factory furniture is

assumed. This would include table, desk, chairs, and office stationery. The breakup of
Factory Office Furniture & Fixtures is as follows:

Table 7: Furniture

Description Quantity Unit Cost Total Cost

Office Tables & Chairs 10 10,000.00 100,000.00

Waiting Area Chairs 20 5,000.00 100,000.00

Chairs for 25 2,000.00 50,000.00

Workers/Labor
Electric wiring & lighting 3 50,000.00 150,000.00

Air conditioners (1.5 ton) 6 50,000.00 300,000.00

total 700,000.00

Office Supplies

23
Following office supplies will be required for Name of Pre-feasibility Study

Table 8: Office Supplies

Description Quantity Unit Cost Total Cost

Copy machine 2 40000 80000

Disc top computer 2 20000 40000

Laptops 5 45,000.00 225,000.00

Printer 1 30,000.00 30,000.00

Telephone Exchange 1 50,000.00 50,000.00

Telephones 5 2,000.00 10,000.00

Fax Machine 1 25,000.00 25,000.00

TOTAL 460,000.00

4.9. Land Building and civil Work

Land use plan of the project
A properly designed building construction starting in last year before and insures smooth
functioning of all operations. The building will have well
Table 9: Description of Land Use Plan

Details Area in Civil Work Cost/m2 Total Construction

2 Cost
m
Management Building 3000 2500.00 7,500,000.00

Production & Stacking 5500 2500.00 13,750,000.00

Area

In put Material Store 1500 5000.00 7,500,000.00

Out Put (Blocks) store 500 5000 2,500,000.00

Cafeteria & Staff Facilities 500 2500 1,250,000.00

24
Pavement / Driveway 500 2500 1,250,000.00

Land acquisitions and Site Lump - 13,400,000.00

preparation sum
Total Construction Cost 20000 47,150,000.00

4.10. Quality Control

The proposed project production, supply, distribution and other related activities will be cared out with
strict control mechanisms which adhere to quality assurance.
Raw Materials Control

Soil: As soils will have been identified and selected beforehand, it is only necessary to check that a
delivery of soil is more or less identical to the soil originally selected. The cigar test (see p. 28) can be
used, checking that the length of the cigar obtained with the tested soil does not differ from the
measurements obtained with the original soil.
.Water: The presence of salts in the water is to be avoided, particularly if the blocks are stabilized with
cement or lime. Check that the water is clear and that it is not salty. Let it evaporate completely and
check for any deposits. These could include organic matter, which are acceptable only in very small
quantities, or salt crystals which are totally unacceptable
Sand or gravel: These are used as additives to lower the proportion of fines, and must therefore
be checked to ensure that they do not contain too much clay, using the jar test. If the water
above the sand and gravel is cloudy, this suggests the presence of clay, which should not exceed
10 to 15%. The evenness of the particle size distribution can be checked at the same time by
comparing the sample tested with a standard sample.

25
Cement: Cement must be checked to ensure that it has not started to react on contact with
moisture. A little cement is sieved using a 1 or 2 mm mesh; if tiny balls of cement which cannot
be crushed between the thumb and forefinger are left behind, then the cement is bad. If the
delivery cannot be refused, it may still be possible to use the cement by passing it through a 0.5
mm sieve and then mixing it with 50% good quality cement. The strength of the cement can also
be checked. Make a mortar using a 1:3 mix of cement sand and mould it into short bars. Wrap up
the bars and the moulds in a plastic bag. 24 hours later, remove the bars from the moulds and
allow them to cure, either submerged in water, or in a hermetically sealed package. Subject a bar
to a tensile force after 24 hours, and another after 28 days: they should withstand minimum 100 g
and 500 g respectively.
Manufacturing controls

Soil preparation: Proceed as described before for controlling raw materials, i.e. using the cigar

or the jar test and comparing results with those of control samples.

Measuring out: This is controlled by weighing or counting, allowing a tolerance of ± 5%:

 the number of blocks obtained per mix;

 the number of mixes made per sack of cement used;
 the number of blocks obtained per sack of cement used

Mixing:

 Manual mixing: count the number of times the pile is turned. This should be at least twice
for each mix (dry and wet).
 Mechanical mixing: check the time taken for dry mixing and wet mixing 3 to 5 times: the
tolerance is 5 to 10%.
 Dry mix: Visual examination of the evenness of the mix (texture, colour).
 Wet mix: Check that the moisture content is at the optimum using the drop test:
Take a fistful of moist material and shape it into a ball in the hand;

i. drop the ball from a height of -1 m onto a hard surface;

ii. Observe the result: if the ball has completely disintegrated, the mix is too dry; if it has
26
 broken up into 4 or 5 pieces, the moisture content is right; if it has flattened out without
breaking, or broken into 2 pieces, the mix is too wet.
Compression

Check the freshly moulded block for:weight, which should not differ from the optimum weight by
more than 5 to 10%; appearance (tolerance criteria are detailed on p. 74);
Dimensions and also any deviation from right angles: these should not vary by more than 1 to 3
mm. Measurements should be taken using a ruler and a mason's set-square
An orthogonal gauge can also be made from wood or metal and used to measure dimensions and
parallelism at the same time, with small nicks at the ends showing acceptable tolerances
Curing

Examine the quality of wet curing, notably check for condensation (drops of water) (see below) on
the inside the tarpaulin or polythene sheets.

The moisture content of blocks while they are curing can also be measured, and compared to their
moisture content when freshly moulded. The moisture content of the block during curing should not
vary by more than 1 or 2% from the moisture content on compaction.

4.11. Environment Assessment

The project will seriously involve itself protecting conserving and developing the natural and flora
of the project area in line with the millennium development goal. To this to will play a vital role in
participating the varies organization and the community around the project area to from an
environmental commute in charge of all environmental issues to be handled in accordance to
varies environmental and water policies of 97/99. The owner of the project believes to undertake
several environmental issues for the conservation development and creation of sustainable
environmental around the project area.

27
 CHAPTER FIVE

5. ORGANIZATION and MANAGMENT

5.2. Organizational Structure
The organizational structure of the project is designed by including all the necessary personal
under the right division. At the top of the organizational structure, there will be a general
manager with the responsibility of supervising the overall activity of plant. Depending up on the
nature of the center and the amount of work to be performs under each will be supervised by the
unit head that is accountability for general manager.

CEO

Procurement Audit & Inspection

Manager

General Admin & Operations Marketing &

Finance Promotion

5.3. Manpower Requirement

28
 Construction and allied industry is a labor intensive industry; therefore, a total 39
persons prepositional and temporary /labor/100 will be required to handle the production
operations of a pre-fabricated construction blocks making unit. The business unit will work on
two shift basis (16 hours daily). Technical staff with relevant experience will be required for
operating production plant. The staff will be provided training by the plant & machinery
supplier. Total approximate manpower required for the business operations along with the
respective salaries are given in the table below:

Table 10: Man Power requirement

Title No of Persons Monthly Salary Annual Salary

General Manager 1 8,000.00 96,000.00

Manager Operations 2 7,500.00 180,000.00

Manager Marketing 1 6,000.00 72,000.00

Assistant Manager 4 6,000.00 288,000.00

Operations
Assistant Manager Finance 1 6,000.00 72,000.00

Assistant Manager Marketing 2 6,000.00 144,000.00

Operation Staff 16 3,500.00 672,000.00

Receptionist 1 3,000.00 36,000.00

Outdoor Staff 2 3,000.00 72,000.00

Peon 2 3,000.00 72,000.00

Guards 4 2,000.00 96,000.00

Drivers 3 3,000.00 108,000.00

TOTAL 39 1,908,000

5.4. Training Requirements

29
Since the machinery, equipment and the product process and out puts are new to domestic
market a special training will be arrangement. Especially operators, chemists, mechanics &
electricians will be provided with training during erection, commissioning period on the
production process, raw material and product quality and operation and maintenance of
machinery and equipment by the domestic and international expertise.

CHAPTER SIX

6. FINANCIAL ANALYSIS
Financial analysis of the proposed project of Construction Blocks, CEBs production will be
projected to test the financial visibility if the investigated organization. Quantifying both project
cost and benefits over the assumed project life, which is five years, made the project visible.
Besides it has been tried to make a realistic forecasting of costs and the benefits based in current
market price of all necessary materials. Once the anticipated construction blocks operation has
been attained both projects cost and revenue is estimated to be consumed to be compensated by
increasing in sales revenue
6.1 Investment Cost Classification
The cost of the project is classified as fixed incitement cost and initial working capital. With
regards to fixed investment cost of the project, the land lease, building and civil works cost,
machinery and equipment cost office furniture costs and fuel costs will be required. As to
working and operating cost a brief illustration will be given as to utilities, salary expense,
maintenance cost and depreciation cost and the other related costs.
6.1.1 Fixed Cost
Fixed cost that include Land development, Building and civil work, machinery equipment and
vehicles and office furniture estimated Br. 111,310,000.00, which is 68.16 % of the total project.
Table 11: Land Development

s.n Description Qty Unit Price Total price

1 Site Clearing & Leveling 10,000.00 m2 500.00 5,400,000.00
30
2 Land Lease & compensation 10,000.00 m2 450.00 4,500,000.00
3 Access road & Supplement site Lump sum - 3,500,000.00
works
Total 13,400,000.00

Table 12: Building and Civil works

s.n Description Qty Unit Price Total price

1 Main Building 3000.00 m2 2,500.00 7,500,000.00
2 Production and Stacking 5,500.00 m2 2,500.00 13,750,000.00
3 Raw Material Store Lump sum - 7,500,000.00
4 Finished products (Blocks) store Lump sum - 5,000,000.00
5 Administrative and staff Lump sum - 1,250,000.00
Facilities
6 Walk Ways and pavements 500 2,500.00 1,250,000.00
Total 36,250,000.00

Table 13: Machinary and Equipments

Annual Total
s.n Description Remark
Cost
1 Operation Machinery (purchase) 3,000,000.00 Fork lift
2 Pulverize Machines Grinding and Crushing
3 Screen Machine 40,500,000.00 Sorting and aggregating
4 Mixing machines
5 Compressing Machines
6 Other tools and equipment 2,000,000.00
Total 45,500,000.00

31
Table 14: Procurement of Furniture and Fixtures

s.n Description Qty Unit Price Total price

1 Pick up (4WD) 3 3,000,000.00 9,000,000.00
2 Service mini-bus 2 3,000,000.00 6,000,000.00
3 Office Furniture Lump sum - 700,000.00
4 Office Supplies Lump sum - 460,000.00
Total 16,160,000.00
Table 15: Summary of Fixed Costs

s.n Description Cost Estimate Remark

1 Land Development 13,400,000
2 Building and Construction 36,250,000.00
3 Machinery and equipment 45,500,000.00
4 Procurement of Vehicles and Furniture 16,160,000.00
Total Fixed Cost 111,310,000.00

6.1.2 Operational Costs

Production cost of the project includes direct production and overhead costs. The major cost
item under this category includes cost of material and labour inputs, fuel and lubricants, repair
and maintenance, employee salary and benefits, insurance, office supplies and other
miscellaneous expenses; the total estimated production cost is Br. 52,003,132.00 (31.84 %) of
the total project capital is
Direct Cost
Table 16: Raw Materials

s.n Description Qty/ month Cost/ Month Annual total cost

1 Cement (6%) % 540 qtl 405,000.00 4,860,000.00
2 Site Machinery rent 2 748,800.00 8,985,600.00
3 Raw Materials Transportation 5 650,000.00 7,800,000.00
5 Other Inputs Lump sum 500,000.00
Total Direct Cost 22,145,600.00
32
 s.n Description Qty/ month Cost/ Month Annual total cost
1 Power -
1,245,953.00 14,951,436.00
2 Water -
645,933.00 7,751,196.00
3 Telephone, Fax & Internet -
50,000.00 300,000.00
Total Variable Cost 23,002,632.00
Variable Costs (Utilities)
Table 17: Utilities

Administrative costs
 Employee benefits: It includes medical expense, uniform and other incentive package
and assumed to be 25% of annual salary expense (1,908,000.00) = Br. 477,000.00
 Travel expense: It is assumed to be 10% of annual salary expense (1,908,000.00) i.e.
Br. 190,800.00
 Repair and Maintenance
ITEM Cost Estimate Per Year
% Amount per Annum
Land Development 2 268,000.00
Building and Construction 2 725,000.00
Machinery and Equipment 3 1,365,000.00
Vehicles and Furniture 5 808,000.00
Sub-Total 3,166,000.00

 Insurance: it is assumed to 1 % of Fixed investment cost = Br. 1,113,100.00

Table 18: Initial Working Capital Requirement determination

s.n Cost Item Annual Cost Estimate Remark

1 Raw Materials
1.1 Direct Cost 22,145,600.00

33
2.2 Variable Cost 23,002,632.00
Sub-total 45,148,232.00
2 Administrative Costs
2.1 Salary and wages 1,908,000.00
2.2 Employee Benefits 477,000.00
2.3 Travel Expenses 190,800.00
2.4 Repair and maintenance 3,166,000.00
2.5 Insurance 1,113,100.00
Sub-Total 6,584,900.00
Initial Working Capital 52,003,132.00
6.2 Project Financing and Capital
6.2.1 Project Capital
The total investment capital of the project is estimated at birr 163,313,132.00 of which Br.
111,310,000.00, which is 68.16 % is for fixed investment items while the remaining balance of
Br. 52,003,132.00 (31.84 %) will be initial working capital.
The detail of investment capital of the project is given below
Table 19: Project Capital and currency

Investment Amt.
S/N Description Currency Remark
Br.
1 Land Development 13,400,000 Local
2 Building and Construction 36,250,000.00 50 % Foreign Duty Free
3 Machinery and equipment 45,500,000.00 45 % Foreign Duty Free
4 Procurement of Vehicles 16,160,000.00 90 % Foreign Duty Free
and Furniture
Sub-Total 111,310,000.00
5 Working Capital 52,003,132.00

6.2.2 Financing:
The total investment capital of the project is to be financed from the promoter’s equity and bank
loan. Out of the total capital Br. 48,993,939.60 (30%) is contributed by the promoter, Abriham
34
Wodaje Construction Materials Manufacturing PLC, and The remaining balance
114,319,192.40 (70%) is to be financed by local banks. The bank loan will be repaid based on
the following terms and conditions:
 Loan amount = 114,319,192.40
 Installment period/ term = 10 years

 Interest on loan (including service charge) = 11.5%

Table 20: Loan Repayment schedule

Year Repayment Amount Year Ending

Principal interest Balance
0 114,319,192.40
1
2
3
4
5
6
7
8
9
10

Depreciation of fixed investment items

The straight-line method has been used to depreciate/amortize all fixed items of the project. The
depreciation rate applied for all fixed assets is given.

Table 21: Depreciation Schedule

s/n Item Original Value Annual Depreciation

35
 % age Amount (Br.)
1 Land Development 13,400,000 10 1,340,000.00
2 Building and Constructions 36,250,000.00 10 3,625,000.00
3 Machinery and Equipment 45,500,000.00 10 4,550,000.00
4 Vehicles and Furniture 16,160,000.00 10 1,616,000.00
Total 11,131,000.00

6.2.3 Revenue Projection

The project will collect its revenue from the sales of its different block products. The proposed
project will have a total of 10,000 Blocks daily product volume indifferent proportions at a
promotion price.. The annual program program is formulated based on proposed plant capacity
considered the following table.

Product Type % age Product Volume Sales Annual sales

Proportion Monthly annualy Price (Br)

Solid Blocks

Standard (29 X 14) cm 30 72000 864000 19.75 17,064,000.00

2/3 (14.5 X 14) cm 10 24000 288000 13.5 3,888,000.00

½ (14 X 14) cm 5 12000 144000 9 1,296,000.00

Hollow Blocks

Standard (29 X 14) cm 25 60000 720000 17.75 12,780,000.00

2/3 (14.5 X 14) cm 10 24000 288000 12.75 3,672,000.00

Interlocking blocks

Standard (29 X 14) cm 15 36000 432000 21 9,504,000.00

Perforated blocks

Standard (29 X 14) cm 5 12000 144000 25 3,600,000.00

Total 100 240,000 2,880,000 51,804,000.00

36
 N.B Project profit /Loss will be calculated with The following Assumptions.
- Project Operation time, 10 years.
S/n Items Assumptions ( Annual % )
1 Sales Volume 15 (Increasing)
2 Operation Costs 10 (Increasing)
3 Administration cost 5 (Increasing)
4 Depreciation of Fixed asset 10 (constant
5 Loan Interest (compounded) 11.5 (compounded)
6 Tax 35 (constant)

37