Project Feasibility Study on Installing Laundry/Washing Machine Service in the Main Campus of Addis Ababa University
Creators: name: Abebe, Zelalem
Publisher: name: National Academic Digital Repository of Ethiopia
Year: 2007

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