FEASIBILITY STUDY ON

THE ESTABLISHMENT OF VEHICLE

ASSEMBLY PLANT

OWNER: - Ms. FOZIA MOUSSA GUEDI

Oct, 2024

Dire Dawa
 Content
1. Introduction……………………………………………………………………………………..2
2. Background……………………………………………………………………………………..3
2.1 General ………………………………………………………………………………...3
2.2. The Region; Dire Dawa Administration ……………………………………………...4
2.3 Economic Activities …………………………………………………………………...6
2.4 Socio-economic Infrastructures………………………………………………………..6
3. The proposed project……………………………………………………………………………9
3.1 Rational ………………………………………………………………………………...9
3.2 project description……………………………………………………………………..10
3.3 Project objectives……………………………………………………………………....11
4. Market situation ………………………………………………………………………………11
5. Raw material and input availability…………………………………………………………...16
6. Organization and management………………………………………...……………………..18
7. Implementation schedule …………………………………………………………………….18
8. Environment aspect of the project…………………………………………………………….19
9. Project cost and Source of Finance……………………………………………………………19
10. Project detailed cost………………………………………………………………………….19
10.1 Fixed cost……………………………………………………………………………......19
10.2 Operational cost…………………………………………………………………………21
11. Project Cost Summary…………………………………………………………………….....24
12. Project Beginning Balance Sheet……………………………………………………………25
13 Profit and Loss Statement ……………………………………………………………………27
14 Depreciation ………………………………………………………………………………….29

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 SUMMARY
Following the liberalization of the Ethiopian economy, business and investment activities are
witnessing substantial progress. New buildings are replacing dilapidated houses and offices in
urban enclaves. Innumerable new factories, commercial farms, hotels, roads bridges, dams,
reservoirs, irrigation canals, airports, have been constructed in recent years by domestic and
foreign investors. Thus, by realizing the current enabling investment climate in Ethiopia in
general and the investment opportunities in Diredawa in particular, the promoter has proposed
the establishment of poultry farm in Dire Dawa administration
The fact that, Dire dawa investment promotion has expanded to a wider horizon, the flow of
investment at the national as well as regional level has shown dramatic change. Currently, it is
attracting both domestic and foreign private investment; and it is the driving force for the
initiation of this project intended to establish a vehicle Assembly in Dire Dawa city, Dire Dawa
Administration. Thus, this project envisages the establishment of a vehicle Assembly Industry
project. The location of the proposed project is in kebele 01 locally Melka Jebdu. It is
estimated total area is around 30,000 m2 and believed to be obtained according to the existing
city master plan and urban lease policy and regulation of the administration of Dire Dawa the
project.
The estimated total cost of the project is nearly 150,000,000 birr. From this amount around
140,000,000 allocated to fixed asset while the remaining 10,000,000 birr for working capital.
Around 100% i.e. Birr (150,000,000) of the total cost needed for the realization of this project
will be covered by owner’s equity.
The financial analysis of the proposed project over the first 10 years of its operation indicates
that it can generate an average net profit of birr 32,856,541 on the second year. Besides creating
55 permanent jobs for local people, it also contributes its share to the growth of the regional
economy through taxes paid on revenue and others, i.e around 461,214.60 birr on the third year.
Therefore, in order to achieve the objectives, I would kindly request concerned government
institution to provide us the specified land for our project.
Upon the realization of this project, it is expected to enhance the effort to the betterment of the
socio-economic benefits to the citizens of Dire Dawa. Moreover, the enterprise will generate
employment opportunities during the initial phase as well as the operational phase for both the
economically active segment as well as the other parts of society.

3
1. Introduction

A good investment climate fosters productive private investment. Investment is the engine for
growth and poverty reduction. It creates opportunities and jobs for people. It extends the variety
of goods and services available and reduces their cost to the benefit of consumers. It supports a
sustainable source of tax revenues to fund other important social goals. Moreover, many features
of a good investment climate including efficient infrastructure, courts, and finance markets
improve the lives of people directly, whether they work or engage in entrepreneurial activities or
not. Improving the investment climate, the opportunities and incentives for firms to invest
productivity, creates jobs and expand is the key to sustainable progress in attacking poverty and
improving living standards (World Bank, 2005).

Despite the fact that, the significant role the private sector would play in promoting national and
regional development in the past few decades in Ethiopia, the prevailed policy environment that
has highly discouraged the participation of private investors both foreign and domestic was made
the potential to be far from the relaxation. This has resulted in hindering national and regional
socio-economic progress in almost all sectors of the economy receiving the existing low
productive capacity of the economy and significant socio-economic losses in various dimensions
recognizing the extent to which the past policy environment has highly impeded the development
of the national economy and the necessity to promote private sector participation in various of
investment ventures that are believed to be, more rewarding with me current national and
regional development objects and priorities the new investment policy in the country has open
the wider opportunity for private sector participation.

Beside on this, at present the private sector has started to mobilize and invest their knowledge
and financial resources in various investment activities, which they assumed to be beneficial for
them and to the country.

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2. Background
2.1 General
After long years of civil war and poor socio-economic development, Ethiopia has embarked
upon structural change to repair the damage done to the economy by the protected civil war and
bad policies. With a total population of over 70 million Ethiopia stood as the fourth largest in
size and the second most populous nation in sub-saharan Africa, the Ethiopia economy features
peasant dominated agriculture as the mainstay of the economy with GDP share of about 50% and
accounting for over 85% of export and total employment. The countries export is dependent on
primary agricultural commodity, coffee, hide, skin and accounting nearly 60% of the foreign
exchange earnings.
The share of the manufacturing sector is minimal with a share of 4.5% of the total GDP. On the
other hand, the merchandise import of the country constitutes food, energy other consumable
goods, in intermediate and capital goods. The share of capital goods is a mere 30% of the
aggregate and export shows that the former is increasing much higher than the latter. Importing
was climbing with an average annual growth rate of 4.8% while that of export was 3.8%.
Though the country’s economy has been overshadowed by two decades crisis, it possesses a
considerable potential for development. The country’s development potential lies on the huge
work force, arable and nature resources. It can be said that the overall national situation
resembles a paradox when viewed to the actual living standard and the potential that could alter
it. The basic reason for this situation was the bad polices and strategies selected by the former
regime and added to these were the abused practices of implementing them. With the end of the
command socialist economic system, the new government was faced with numerous social and
economic problems. Above all the government has to face the task of engineering economic
recovery to address the long-run needs of sustainable economic growth and development. To that
end, the economic reform measures were taken to reduce macro economic imbalances, to
liberalize trade, to decentralize economic management and most important of all, to lift the
restrictions imposed on the private sector. This favorable policy environment has played a crucial
role to attract private investment in the country and it is to benefit from this situation that the
owner of the project came up with idea of Vehicle Assemble Industry project in industry village.

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2.2. The Region; Dire Dawa Administration
2.2.1 Physical features
Dire Dawa administrative council is located in the eastern part of Ethiopia between 9 0 27' and 90
49' North latitude and between 410 38' and 420 19' East longitude. In the north, west, and east it is
bordered by the Somalia national regional estate which is in the south it shares a common
boundary with the eastern Hararge zone of the Oromia Natinoal regional State. It has a total area
of 1997km2 out of which is 187km2 is urban and the remaining 1790km2 is rural.
The climatic condition of the region is characterized by a relatively warm weather and thus it fall
in the semi arid agro climatic zone. The average maximum and minimum temperature are 31.4 0
and 18.10c respectively. In relative terms May, June, July are the hottest months of the year while
November, December, and January are the coldest months. The estimated average annual rainfall
is round 603 mm. regarding the topography of the region 25% hilly, 45% is sloppy and 30%
plain. The major source of water for both the urban and the rural population is ground water.
There is a large untapped potential of ground water, estimated well over 20 million cubic meters,
can be developed and used for irrigated farming in the vast plains of the fertile soil around
assoliso and melkajebdu. The region is also known as for its mineral resource potential. A variety
of non metallic and construction minerals, the reserve of which is known are round within easy
reach from the town of Dire Dawa. A high quality sand, marble, limestone, sandstone is some of
the construction minerals, found in abundant quality. Non-metallic minerals found in the region
include Mica, Garnet, Feldspar, limestone, marble etc. The metallic mineral available in the
region includes Iron, Copper and Galena.

2.2.2 Socio-economic setting of the Administration

Administrative Structure
Dire Dawa Administration (DDPA) comprises Dire Dawa town and the surrounding rural areas.
It is divided into nine urban kebeles and 38 rural kebeles.
Population Characteristics
According to 1994 census conducted by the central statistical Authority (CSA) the total
population of the DDPA is projected to reach at 383,529 in July,2005, out of which
192,095(50.1%) are male and 191,434(49.9%) are female. The majority of the population
resides in urban areas, i.e 283,773 (74%) and the remaining 99,756(26%) lives in rural areas.

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Out of the total urban population of 283,773, the males constitute 142, 131(50.1%) where as the
remaining 141,663 are females. There are also 49,964(50.1%) males in the rural areas out of the
total rural population of 99,756, and the balance 49,792(49.9%) is females. The population
density of the DDPA estimated to be 316.13/km 2. The urban area of the administration is highly
populated, i.e about 16,050.5- person living/ km2. The rural area is sparsely populated; about
83.44 persons live per km2.
The eastern and western parts of the administration densely populated relatively than the
northern part, which dominantly inhabited by pastoralists. The average household size from
DDPA, based on the 1994 census, is 4.7 persons per household. Rural areas have larger
household sizes (on the average exceeds by 1.2 person per/household sizes in urban and rural
parts of the administration are 4.4 and 5.6 respectively. Based on various assumption made with
regards to fertility, mortality and urbanization, the population of DDPA is estimated to reach 775,
964; 811, 837 and 867, 123, respectively by the year 2030 (low variant, Medium variant and high
variant). The population of the administration is, thus expected to double within the coming 20 to
25 years. The Oromo constitutes the majority of the population of the administration i.e 48%.
The next largest ethnic group is Amhara followed by the Somali comprising 27.7% and 13.9% of
the population, respectively. Guragie, Tigre, and hararge constitute 4.5 %, 1.8% and 1.7%, in that
o order. The five largest ethnic groups found in urban areas of the administration are also
amhara, oromo, Somali, Guragie and tigre. The oromo and Somali comprise the overwhelming
majority in rural areas making up 85% and 14.3% of the rural population, respectively.
2.3 Economic Activities
According to the 1994 census, activity rate for the administration in general and for urban and
rural population were 60.6%, 55.25% and 73.9%, respectively. Trends on the economically
active and inactive population of the administration also shows that the activity rate more or less
remained stable for the administration in general and the urban centers in particular but slightly
increased for rural area and reached at 61.8%, 55.5% and 77.56%, respectively in the year 1999.
Economic activity rate of the urban part of the administration has also slightly decreased and
stood at 54.2% in the year 2003. The rural part of the administration is predominantly agrarian,
and therefore, the majority (82.0%) of the economically active persons found to be skilled
agricultural and fishery workers in the years 1994.
However, the overwhelming majority of the population lives in urban areas; and among the

7
economically active persons in the urban areas, service workers and shop and market sales
workers group ranked first constituting 30% followed by those engaged in elementary
occupation, and craft and related trade workers group making up 22.9% and 12.8%, respectively
in the year. About a decade later, in the year 2003, elementary occupation took the lead
constituting for 35.43% followed by service, shop and market sales workers, and crafts and
related trades accounting for 22.1% and 16.63% respectively.
The total unemployment rate for DDPA reported to be 24.1% in the year 1994. The
unemployment rate for male and females were 20.65 and 28.9%, respectively. About 10 years
down the road, the unemployment rate in urban areas increased by about 2.6% and reached 38%
in the year 2003.

2.4 Socio-economic Infrastructures

Infrastructures
Dire Dawa is relatively equipped with good infrastructure facilities necessary for the expansion
of industrial and trade activities. In addition to the already existing capacity, many of the
infrastructures supplying government institution had already began or have a further plan to
enlarge their capacity to meet future demands of the development activities in the region. Thus,
one can say that the city has a relatively:
Improved transportation facilities International airport, railway connection with the capital and
the Djibouti port, and adequate road connection with Addis Ababa, major towns of
the neighboring regions, and with its surrounding hinterlands,
Modern telecommunication services The Ethiopian Telecommunication Corporation is
increasing its existing capacity and has planned to introduce modern
telecommunication services like mobile telephone services.
Adequate water supply The presence of rich groundwater in the city assumed to provide
adequate water supply in the city and its surrounding areas,
Reliable power supply Ethiopian electric power corporation (EEPC) is the main electric power
supplier in Ethiopia and the corporation applies two different power systems; namely,
the inter-connected system (ICS) and the self contained system (SCS). The ICS is
supplied from seven hydro powers/13 diesels and one geothermal station. The SCS

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 consists of three hydro powers and the number of isolated diesel generators. Dire
Dawa is within the ICS and power is distributed to the town from three substations;
namely, the Sabian, the Legehare, and the Hanz substations. There are 18,649
subscribers in the year 2004/05, of which 15,911 (85%) are residences whereas the
balance 2,738 (15%) was subscriber by the various industries found in the town,
businesses and government organizations. EEPC had started to supply electric power
to the rural areas of the administration as of 2007.

Education
There are 74 primary, 9 secondary and 20 kindergarten schools in DDPA. Out of the primary
schools, the government owns 52 whereas the community, religious institutions, and the private
sector own the remaining 20 schools. Out of the 52 government schools, 38 of them are located
in rural areas, i.e., 73%. From the total number of primary schools, however the share of rural
areas is 49% and the remaining 51% are located in Dire Dawa town. All of the secondary schools
are found in the Dire Dawa town. All of the secondary schools are found in the Dire Dawa town
and the government owns two of them while the rest are privately owned. All the kindergartens
are also located in Dire Dawa town (education Office of DDPA). Moreover, there are two
technical and vocational schools owned by the government, five private colleges, and a
university, i.e., an extension of Haramaya University in Dire Dawa town and Dire Dawa
University. The total number of students enrolled in primary education in 1997 E.C is 49,422:
and 27,475 of them (55.6%) are male while the remaining 21,947 (44.4%) are female. Out of the
49,422 students registered in the year 2004/2005, 11,434 students (22.8%) are found in rural
areas and the balance 37,988 (73.2%) are in urban areas. There are 7,088 students in the first
cycle secondary schools (Grade 9-10) of which 3,847 (54%) are male and the balance 3241
(46%) are female students. The number of registered students in the second cycle secondary
schools are 1,009 and 401 then, i.e. 40%, are male while the remaining 608 (60%) are female
students. The total numbers of students in both cycles, thus, are 8,097 in 2004/2005 academic
year.
The Gross enrollment Ratio (GER) in primary education in the DDPA was 72.7% in the year
2003/04. There is a remarkable gender and urban-rural disparity in GER. The GER for males and
females show a big gap favoring the males, especially in rural areas. The GRE for males in the

9
Administration is 82.5% whereas that of females is 62.5% in 2003/4:i.e., the gap widens in the
rural areas and the GER for females is only 29.6% while that of males is 71.9%. The gender gap
in urban areas is relatively better and stood at 88.3% and 79.2% for males and females,
respectively: but still far from being equally proportional. There is also disparity between urban
and rural areas where the GER for urban and rural areas being 83.8% and 51.8%, respectively.
The GER for secondary education is also extremely lower than the rate achieved for primary
education, and it stood and 20.64% both for males and females: and 26.04% and 15.01%,
respectively, for males and females in the year 2003/04. The NER for primary education if
DDPA is 59.8% indicating that only 59.8%s of the relevant/appropriate age group for primary
education attends school. This ratio for male and female students is 66.9% and 52.4%,
respectively. The NER for secondary education is also low and stood at 18.8% for the
Administration: 25.75% for males and 14.9% for females.
The dropout rate in primary (1-8) education, in the administration for the year 1996 E.C. was
8.4%. The dropout rate for males in marginally higher than female, the rate being 8.5% and
8.2%, for males and females, respectively. Repetition rates for the Administration were also
reported to be 3.9%. There were 1, 029 and 146 primary and secondary school teachers,
respectively, in 1996 E.C with different qualification. According to the MOE, 88.2% of male and
95.4% of female teachers in the administration were certified teachers in 1996 E.C in the first
cycle primary school. The proportion of certified teachers was 62% and 59.3%, respectively, for
male and female teachers in second cycle primary schools. About 75.4% and 37.5% of male and
female teachers respectively were also qualified teachers in secondary education.
Banking and Insurance services: - all government as well as most private financial institution
found in the country operates in the administration and has branches in Dire Dawa
town.
3. The proposed project
3.1 Rational
During the Derg regime the participation of the private sector was hindered, and the existing
ones were also shifting their activities from basic development activities to illegal trade
activities. The situation was aggravated by various pull factors for migration, which resulted in
the exploitation of the urban population. This urban population was not accompanied by the
required respective development in the socio-economic infrastructures of the city. All these

10
contributed to the prevailing problems of the extreme urban poverty and other social evils such
as poor access of the majority of the people to employment opportunities and other social
amenities.
Currently the federal democratic Republic of Ethiopia paves the way for easy access for private
investors to make investment in any social and economic development sector with no capital
limitation. Change and adjustment made on various supporting policy and regulations
undoubtedly hamper the revival and smooth implementations of development projects.
Existence of rail, road, air transport, hydroelectric power supply, clean potable water, digital and
cable communication and wide and reliable market make Dire Dawa eligible for such
investment. Dire Dawa virtue of its location to the real-sea port of Djibouti and being the final
big town in the east with rail and high way links with neighboring Djibouti, almost all exportable
goods produced with in the country and those imported from abroad reach their destinations via
Dire Dawa. The majority of its urban residents earn their life with various business and trading
activities. The population of the region has doubled with in the last two decades .At the same
time, with the lifting of restriction imposed on private sector, business that require branch offices
start appearing and creating a wider gap between market demand and supply for Vehicle
Assembly Industry project. At present, as the city become unable to supply the Dire Dawa
made by these institutions, the rationality of establishing vehicle assembly become
unquestionable.

3.2 project description

The establishment of a vehicle assembly plant in Dire Dawa increases the supply of and
motorized vehicles for personnel as well as for good transport in the urban and possibly in the
rural areas. Such facilities will not only care the transportation problem but are also expected to
bring about some qualitative change in the lives of the population at large.
Vehicle assembly plants in the country are mainly engaged in buses and trucks with limited size
and brand. Therefore, establishment of assembling plant of low cost vehicle (Motorcycle, 3 -
wheelers, pick-up and auto rickshaw, van) will have a good market in the country. Overseas
technical collaborators will be required for establish and start production and for the supply of
components and transfer of the basic technology and know-how. The plant will have both a

11
manufacturing section for components and an assembly section where parts are manufactured
within the plant, bough-in and imported parts will be assembled.

3.3 Project objectives

The general objective of the project is to establish vehicle assembly industry project will be used
to assemble and to earn reasonable income to the promoter of the project, the following goals are
expected to be achieved. These goals are:
 To assemble the product different vehicles in Dire Dawa City;
 Creating job opportunities for the population that are living in the administration;
 Contributing to the growth of the regional economy in general and to growth of
government revenue in terms of taxes and the like,
 Demonstrating the importance of investing in developmental sector.

3.4 Project location and land requirement

The location of the proposed project is in kebele 01 locally Melka Jebdu. It is estimated total
area is around 30,000 m2 and believed to be obtained according to the existing city master plan
and urban lease policy and regulation of the administration of Dire Dawa the project.

4. Market situation
Past Supply and Present Demand

The vehicles identified for this study are motorcycles, vans, pick-ups and three-wheelers. The
country's requirement for these products is met through imports. The imports of motorcycles,
vans and pick-ups during the period 1997-2004 are shown the table given below. During the
period under reference, imports exhibited substantial fluctuations and averaged at 2415, 1048,
and 790, respectively, for motorcycles, vans, and pick-ups.

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 Imports of Motorcycles, Vans and Pick-ups (In numbers)
Year Motorcycle Van Pick-up
1997 1325 396 189
1998 1404 537 967
1999 1581 461 1149
2000 1316 632 677
2001 1387 661 1145
2002 1427 1578 962
2003 7133 2510 562
2004 3744 1607 667
Average 2415 1048 790

Assuming supply was driven by demand, the average annual supply of motorcycles, vans, and
pick-ups for the period under reference, which constitutes only imports, is considered as the
effective demand for the products for the year 2004. The demand for these products is mainly
associated with expansion in economic activity, development of economic infrastructure
(particularly improvements in road network), the size and the rate of growth of the population,
and the level of income, which are influenced by the rate of growth of the economy.
Taking into account the double-digit rate of economic growth that has been achieved since the
recent past, the huge investment of the government on road construction, and the large
population size characterized by a rate of growth among the highest in the world, the demand for
the products is assumed to grow at the rate of 10%. The present demand (i.e., for 2006) for
motorcycles, vans, and pick-ups is thus estimated at 2922, 1268, and 956, respectively.
Three-wheelers are recently introduced in the country for public transport service. According to
engineers involved in this study, three-wheelers are essentially similar to motorcycles in the
sense that they use the same engine. Considering their suitability to the road conditions in many
parts of the country, the advantage they may provide in terms of cost, their technical similarity to
motorcycles so much so that they essentially constitute close substitutes of motorcycles, and
hence assuming their popularity will grow overtime, the demand for three-wheelers is estimated
at 10% of that for motorcycles. The current demand (i.e., for 2006) for three-wheelers is
therefore estimated 292.

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2. Projected Demand

For the reason stated above, a rate of growth of 10% is adopted in projecting the demand for
motorcycles, vans, pick-ups and three-wheelers. The table given below presents the projected
demand for the products.
Projected demand for Motorcycles, Vans, Pick-ups and Three-Wheelers (in
Numbers)

Projected Demand

Year Motorcycle Van Pick-Up Three-

wheeler
2007 3214 1395 1051 321
2008 3535 1534 1156 353
2009 3889 1687 1272 389
2010 4278 1856 1399 428
2011 4705 2042 1539 470
2012 5176 2246 1693 517
2013 5694 2471 1862 569
2014 6263 2718 2048 626
2015 6889 2989 2253 689
2016 7578 3288 2479 757
2017 8336 3617 2726 833
2018 9170 3979 2999 916
2019 10086 4377 3299 1008
2020 11095 4814 3629 1109
2021 12205 5296 3992 1220
2022 13425 5825 4391 1342
2023 14768 6408 4830 1476
2024 16244 7049 5313 1623
2025 17869 7754 5844 1786

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Pricing and Distribution

Based on current market price of the products a factory-gate price of Birr 8,000 and 10,000 for
motor vehicles and three wheelers respectively is proposed. The envisaged factory is
recommended to distribute its products by establishing distribution centers in major towns of the
country.

Plant Capacity and Production programme

Plant Capacity:- The market study indicates that demand for motorcycle and three-wheelers for
the year 2007 is 3,214 units and 321 units, respectively. These figures would grow to
6,889 units and 689 units, respectively, for the year 2015. In the year 2025, the projected
demand for motorcycle would grow to 17,869 units, and for three-wheelers, the demand
would be 1786 units. Based on projected demand shown in Table 3.2 the annual capacity of
the envisaged plant will be 3,000 units for motorcycle (125cc) and 300 units of three-
wheelers (auto rickshaw). The plant will operate double shift 16 hours a day, and for 300
days a year.

Production Programme:- The plant will start operation at 75% of its capacity during the first
year. Then production will grow to 85% during the second year, and then to 100% in the
third and successive years.

Production programme

Year Capacity Production (Units)

Utilization % Motorcycle Three-wheelers
1 75 2250 225
2 85 2550 255
3-5 100 3000 300

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Production Process
a) Motor vehicles
The major activities (unit operations) involved in the manufacture of motorcycles are:-
Unloading crated (SKD Kits), Checking contents and storing, Batching components for sub and
final assembling, Preparing sub-assemblies (Font wheels - Truing, tyre fitting inflating and Rear
wheels - truing, tyre fitting, inflating), Final assembly, Inspection, Packing and storage. The
components identified for local manufacture will be Main frame, Parking stand, Rear footrests,
Rear carrier, Saddle, Press formed components, and Tubular components. Manufacturing of
components by local industries (Addis Tyre, Ethio-plastis, Addis Gas & Plastic crates factory,
Addis Ababa foam factory, Akaki Metal Factory, etc.) are Tyres, tubes an dother rubber
components, Plastic components, Forged components, Filters, and, Battery.

Motor Vehicle Assembly

Once the various automotive parts are produced, they are ready to be brought together for
assembly. Automotive assembly is a complex process that involves many different steps.
Assembly begins with parts which arrive in the assembly plant “just-in-time.” “Just-in-time” is a
concept that means parts arrive only when they are needed for assembly; only enough product is
sent for a given day’s work. This concept, which revolutionized the automotive industry, has
improved productivity, lowered costs, and provided for better quality management. Although
techniques used to assemble an automobile vary from manufacturer to manufacturer, the first
major step in assembly is the body shop. At this stage the car begins to take shape as sides are
welded together and then attached to the underbody of the car. The underbody is composed of
three primary pieces of galvanized steel which include the floor pan and components for the
engine and trunk. After the underbody has been welded together by robotics, it is tested for
dimensional and structural accuracy. It is then joined together in a tab-slot fashion with the side
frame and various other side-assemblies. A worker then taps tabs into slots, and a robot clamps
the tabs. Roof supports and the roof are now ready for installation. The car is now ready for final
welding. Approximately 3,500-4,000 spots require welding. Most welding is done by robots,
with workers doing only spot jobs. Trunk lids and hoods will then be installed.

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Motor Vehicle Painting/Finishing

Automotive finishing is a multi-step process subdivided into four categories: 1) anti-corrosion

operations, consisting of cleaning applications, a phosphate bath, and a chromic acid bath; 2)
priming operations, consisting of a electro deposition primer bath, an anti-chip application, and a
primer-surface application; 3) joint sealant application; and 4) finishing operations, consisting of
a color coat application, a clear coat application, and any painting necessary for two-tone color
or touch-up applications.

b) Three wheelers
The manufacture of these items requires a much more significant body building. The body,
frames, axles and chassis can only be produced on appropriate and up-to-date designs supplied
by manufacturers. Therefore, the assembling of these units from imported SKD components at
the initial stage will be the most appropriate approach for the production of passenger cars (auto
rickshaw).

5. Raw materials &Inputs availability

The manufacturing process of motorcycles and Three-wheelers (for the purpose of this project
the envisaged plant will produce auto rick Shaw) is based on the assembly of appropriate
component parts made on design specifications suitable for each vehicle type. The cost of these
components covers quite a high proportion of the production cost. It is proposed that the plant
should produce simple components with relatively low capital investment. Local production of
components will progressively be increased, thereby increasing the local component of the
vehicle parts. The quantity of components and materials required at full capacity of production
is shown in the Table below. Materials required by vehicle assembly plant are given the table
below.
Total Imported and Local Materials and Components (At Full capacity)
No Description Total cost
1 Moter cycle
 Imported Components 180,120
 Imported materials 160,110
 Local Materials 920,430
Sub total 21,260,660
2 Three- wheelers
Imported components (Auto rickshaw – passenger cars) 8,515,750
Total 30,776,410

17
The assembly / manufacturing plant shall have to import various types of materials and
specialized components that cannot be supplied locally. These imported material inputs include
motorcycle and three-wheeler components, mild rods, mild steel welded tubes, mild steel and
hard bright wires, high carbon steel tubes, vinyl leather cloth, welding wires, brass for brazing,
paints, plating chemicals and anodes. The components shall be imported in SKD form, i.e., in
semi-knocked down kits from overseas sources through long term agreements.
Local materials required for the production of motorcycle units such as tubes and sheets from hot
and cold rolled mild steel can be obtained from local factories (e.g. Kaliti Steel Industry). Tyres
and tubes, rim tapes, hand and twist grips, indicator lenses, wiring looms, freewheels, cranks,
bushings, leaf springs, shackles, foam, wooden frames, etc can be supplied by local ancillary
industries.
Imported materials and components

No Description
Component Materials Quantity
1 Motorcycle
 Frame Carbon steel tube 95
 Rear foot rest Mild steel rod 0.53
 Rear carrier Mild steel rod 7.90
 Saddle Hard bright wire 5.30
vinyl leather Req.
foam Req.
2 Three- wheelers
 Imported components Complete SKD kit for auto 300units
rickshaw

18
Local Materials and components Requirement (At full capacity)

No. Description Martial Qty (tonnes)

Motorcycles Cold rolled mild steel sheets 49.35
Frame Cold rolled mild steel sheets 10.5
Parking stand Cold rolled mild steel tube 23.10
Cold rolled mild steel sheet 1.05
Rear foot rests Cold rolled mild steel tube 14.7
Cold rolled mild steel sheet 5.25
foam 3300 units
Saddle Mild steel sheets 26.25
Pressed components Cold rolled mild steel tube 18.3
Tubular components Types and tubes 6600 sets
Rim tapes 3300 pairs
Wheels Hand and twist grips 3300 pairs
Indicator lenses 13200 units
Wiring looms 3300 units
Other components Cold rolled mild steel sheets 49.35

6. Organization and management

Organization is a managerial process of planning, coordination and control of company on and

off site activities, resources, process and output effectively and efficiently. Organization is among
the most important tolls which enable all stakeholders to have shared understanding of company
objectives, act independently and yet collectively to achieve common goals. Without appropriate
and sound organization and management. It is not possible to benefit from available resources
and satisfy the demand for the output of the business. Inability to benefit from optimal utilization
of resources and satisfy the needs and requirements of customers would definitely lead to failure
planned business objectives. The argument which states that there is no bad business but bad
management clearly defines the roles and significances of organization and management. Under
normal condition every manager needs his or her company to be profitable, competitive and
maintain leadership position. To successfully achieve the above ambitions of managers,
attainment of management efficiency and effectiveness is a must. To this effect existence of
sound organization and management capacity has found out to be an important tool.
Analysis if fundamental aspects of optimal organization and organizational capacity assessment

19
tools and procedures reveal that; existence of clearly identified and defined company vision,
Missions, Values, Short nad long term objectives including the following are among major
indicators of sound organization and management.
 Existence of shared understanding among company stakeholders
 Existence of compatibility of company missions with company organizational structure
 Existence of fully staffed and operational organizational structure
 Existence of clearly identified and defined lines of authority, responsibility, lines of
communications and guide lines.
 Existence of clearly identified and defined administrative and working systems
procedures and guide lines
 Existence of leadership, management and supervisory skills, experience and capabilities.
 Existence of adequate and desirable professional, technical and other support staff etc.
Business process are central to the functioning of an organization. Yet, they have been neglected
for a long time in managerial studies mainly due to the fact that departments in companies are
structured in a functional or product oriented way. Many companies, under business process
improvement are breaking away from this type of organizations and intend to establish process
based organizations in order to cope with the increasing complexity and dynamics of the
economic environment.
To distinguish process based organizations from other types of organizations it is essential to
start with the definition of business process. Davenport (1993, p.5) defines a business process as
<<... a structured, measured set of activities designed to produce a specific output for a particular
customer of market>>. Hammer and champy (1993, p.35) defines. <<... a business process as a
collection of activities that takes one or more kinds of input and creates an output that is of value
to the customer>>.

Functionally organized companies have considerable problems taking a customer’s perspective,

because process that produce value for the customer. E.g fulfilling funds transfer order cut across
several departments. However, the latter only report to higher level managers, so that a customer
perspective can be realized only at that level. Frontline managers will be reluctant to take the
same perspective since they are not accountable for the outcomes of other departments taking
part in the same process.

20
Companies organized along product lines also have problems taking customers perspective as
well. A product structure leads to poor coordination across product lines which are a major
drawback when divisions serve the same customers. Information systems in different units are
likely to be incompatible with each other, resulting in a fragmented approach of customers,
which in turn leaves lost of possibilities untouched to create value from them. Because most
product divisions are functionally structured the same shortcomings o functionally organized
companies are applicable on the business level of product-based companies.

8.2 Workflow process organization & MGT

Based on the above basic principles and procedures of project workflow process has planned to
be organized and managed.
A Operations Core Process
The parking and garage, the shopping, offices and hall rental day to day operations shall be
carried out by operations/ customer core process. The operations core process shall have retail
customer group, corporate customer group, engineering and technology group and treasury
group.
B. Development Core Process
The development core process shall be entrusted in creating fertile ground, designing and
developing systems and strategies which would help the company to expand business
development horizons, markets, customers etc. Accordingly, this core process shall have the
following business groups
Research and development group
Business development group
Market new and development group
Systems and strategies design and development
C Support and Control Core Process
The support and control core process shall be responsible to provide necessary inputs, facilities
enabler and related support to the operations and development core process and ensures the
validity of their performance against pre-planned budget and use of resources, etc at large.
Accordingly, the support core process shall have the following major business groups.

21
 Human resources and personnel mgt group
Finance and accounts mgt group
Materials, property and logistics mgt group
Supervision and control business group

8.3 Project admin levels

The entire project activities, resources, process and output shall be planned, coordinated,
implemented managed and controlled through three management and administrative levels.
A The Owners/Promoters
The general meeting of the project promoters shall be the top management and ultimate decision
making organ. The major duties and responsibilities of this administrative level shall be,
- To provide strategic plan and leadership support to the project general management
- To appoint the general manager and supervisory level managers
- To determine and approve the wages, salary and benefits of the general manager and
supervisory level managers
- To approve the plans and budget proposals of the general management office
- To review and comment on the performances and achievement results of the project.

B. General management office

The project day to day activities shall be planned, coordinated and controlled by the general
manager. General Manager shall be reporting to the general meeting/president of the promoters.
General Manager shall be responsible to monitor, control support and facilitate the individual
and team efforts of all core process staff
C Supervisory MGT level
There shall be three supervisory management level operations, marketing and business
development, support and control core process heads/team leaders. The supervisory level
managers shall be reporting to the general manager
Each supervisory level manager shall be responsible to plan, coordinate and control the
activities, resources; process and output of his/her respective core process in an efficient,
effective and economical manner.

22
7. Implementation schedule
The total time required for the establishment of the project will be one to one and half year.

During this period of time all the construction works and erection of the machinery’s will be

completed and operation will be commenced. Once the construction and erection work

completed the project will start to assemble vehicles the stated output of the project under

consideration. Initially the project brought un assemble vehicles from foreign market. Once the

project starts the operation, it will immediately import the required materials that are added as

inputs. To realize the objectives of the planned investment, the promoter will put the following

approach in place. These are:

 Initially the project purchase the required materials from foreign market to avoid
financial constraints
 After years of operation the project erect the vehicle assembles and start the
operations and it cap itself.

8. Environmental aspect of the project

The proposed project has no environmental impact rather this type of investment project could

help to mitigate the environment in general and climate of the project area in particular. Thus,

this is an environmental friendly project that will contribute much for the improvement of the

environmental through growing various types of plant species in the project area. The project

location is also ideal for the disposal and treatment of wastes and the promoter is prepared to be a

minimum polluter and environmental friend through providing incentive to local people to grow

seedling and manage accordingly. On the other hand the positive social impact of the project on

the society is significant. The project creates employment opportunities.

23
9. Project cost and Source of Finance

The estimated total cost of the project is nearly 150,000,000 birr. From this amount around
140,000,000 allocated to fixed asset while the remaining 10,000,000 birr for working capital.
Around 100% i.e. Birr (150,000,000) of the total cost needed for the realization of this project
will be covered by owner’s equity.

10. Project detailed cost

10.1 Fixed cost

Land, building and Civil Works

The new plant requires a total of 30,000m 2 and built-up area of 25,000 square meters, out of
which 5,000 square meters is covered by the factory building. Estimating unit building

construction 1,500 per m2, the total cost of land will be birr 197,800 which is birr 19,780 (10%)
will be paid at the beginning while the remaining 178,020 will be distributed over 30 years

period. The cost of land leasing is Birr 19.78 per m 2, and for 30 years. And also this includes
construction of hollow block and hollow pipe production shade, store, shade for vehicles, office,
toilet and shower rooms, guardhouse, and compound fencing. The total construction expense is
estimated to be birr 336,600
Construction Costs
No Description Unit Qty unit cost total cost
1 Production shade M2 150 350 552500
2
2 Store for raw materials M 100 1,000 1100000
2
3 Shade for vehicles M 90 350 2131500
2
4 Office M 10 2,000 3420000
2
5 Guard house M 6 4,000 3424000
2
6 Toilet and shower M 6 1,000 586000
7 Septic tank M3 36 1800 2264800
8 Compound fencing Lm 126 300 1137800
Total
110,336,600

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Infrastructure installation
Electric, water, and/telephone installation are considered to be important factor for the normal
operation of the project, they will be obtained from their respective suppliers prior to the
commencement of the normal operation of the project on its site. In addition to theses, telephone
lines will be installed so as to have a better and faster communication with customers of the
project. The estimated cost requirement of electric, water, and telephone an installation is birr
132,286.
Office furniture and equipment
The required room furniture and equipment of the project need to be purposed with estimated
cost of birr 120,000.
Office furniture and Equipment
No Description unit qty Unit cost Total cost
Office tables No 30 1190,000
Office chairs No 30 123,400
Computer with printer No 6 207,340
Other office equipment No 4 160,000
Complete sofa seat set 1 145,000
File cabinet No 10 185,000
Total costs 120,000
Machineries, equipment’s and hand tools
Machineries and equipment’s that worth birr 58,296,414 is purchased. In accordance with the
incentive regulation, all the relevant project items is procured from abroad. The table below
indicates the list of machineries and equipment’s required for the project.

No Description Equipment Specification Cost ('000 Birr

FOB)
1. Motorcycle and Three Consisting of a decoiler, strip joiner, strip
wheelers manufacturing roll former, roll tools, hydraulic flying
units cut-off punch, roller seam welder, a rim 2,977,344
hole punching machine
2. Bank, freight, insurance, - 250,000
customs and handling costs
CIF landed cost - 69,070
Total cost 22,296,414

25
10.2 Operational cost
Operating cost includes all the necessary expenditure required for the project on a day today
activity, which labor cost &inputs expenses are the main ones. As it has been described on the
previous sections, the nature of the project is not seasonal and it has 300 effective working days
within a year. With this consideration, the required operating cost is calculated for the project life
time. It includes the following cost category.
Employee salary and wages
Manpower requirement for the envisaged project is estimated to be 44 persons, out of which 44
are production workers, managerial staff and support staff with the corresponding annual salary
and fringe benefit of Birr 229,200and Birr 57,300 respectively.
No. Job title Qty. Monthly Salary Annual Salary
Administration

 Plant manager 1 3000 36000

 Secretary 2 600 7200
 Quality control supervisor 1 1800 21600
 Administration & finance 1 2000
24000
 Personnel & training head 1 1200
 Marketing and sales head 1 1200 14400
 Procurement and stores head 1 1200 14400
 Clerks 2 800 14400
 General services 6 500 9600
6000
Sub-Total 16 147,600
2

Production

 Production engineer 1 1800 21600

 Design engineer 1 1600 19200
 Draftsman 1 800 9600
 Production statisticians 1 550 6600
 Production Foreman 2 800 9600
 Forklift operator 2 650 7800
 Production workers 20 600 7200
81,600
Sub-Total
Workers' benefit (25% BS) 57,300
44 2,286,500
Total cost

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Utilities
Basic utility items required by the plant are electric power, compressed air and water. Electricity
will be required to run the various production machinery and auxiliary equipment. Compressed
air will be required to inflate tyre, tubes to operate various pneumatic equipment and hand tools,
and to serve as a medium for hand spraying and for cleaning purposes. A compressor of 10m 3
per minute is required for the plant. Water will be mainly required for drinking and sanitary
purposes. Water is also required to prepare chemical solutions and for rinsing in the plating and
painting sections. The total water demand is about 8.5 m 3 per day at full capacity double shift
operation. Annual water requirement of the plant operating for 300 days a year will then be 2550
m3. Table below shows annual requirement of utilities at full capacity operation of the plant.

No Description unit qty Unit cost Total cost

1 Electricity Kwh 240,000 0.83 199,200
2 Telephone - - 26,750
3 Water expense M3 2550 0.50 1275
4 Total 2,227,225

Training requirement

All production workers and lower level supervisory staff will have to be given proper training
through technical assistance by the overseas collaborator. A total of Birr 2,175,000 is allotted for
executing the training programme. The training period will be two to three months.

11. Project Cost Summary

27
No Description Cost in Birr

1 Fixed Investment Cost 140,000,000

 Building construction ,&civil works 110,336,600

 land lease cost 2,119,780

 Installation 2,132,286

 Office furniture and Equipment 2,120,000

 Machineries and equipment 22,296,414

2 Operational cost 50,465,135

 Employee salary &wages 2,229,200

 Utilities expenses 2,227,225

 Training requirement cost 2,175,000

 Other operational cost 12,157,300

 Raw material cost 30,776,410

3 Working capital 10% 10,000,000

4 Project total cost 150,000,000

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12. Project Beginning Balance Sheet

1 Asset

Current Asset ……………………………….... 10,000,000

Fixed Asset ……………………………….........140,000,000

Total Asset……………………………….....................................150,000,000

2. Liability

2.1 Short term Liability …………………………---

2.2 Long term Liability ………………………----

Total Liability …………………………..-----

3. Capital

3.1 Owners Equity………………………………. 150,000,000

Total Equity ……………………………...150,000,000

4. Project worth ………………………………............................................150,000,000

13.1. PROJECT IMPLEMENTATION STRATEGY

29
 13.1 Project Formulation and Establishment
A. exchange of views and creating shared understanding
The project proposal and strategic planning management document shall be distributed to all
potential stakeholders such as concerned members of the family, government institutions and to
selected financer with a view of creating satisfactory exchange of views and promote shared
understanding in advance.
B. Determination of establishment phase target activities
During the project formulation and establishment phase, the following major tasks are required to
be successfully accomplished.
Registration, licensing and acquisitions of operations commencement authorization
Acquisitions of construction permits
Preparation of every legally required document
Appointment of strong and capable implementation team
C. Promotion and Fund Raising
To prepare promotional strategic planning mgt guidelines
To prepare promotional ideas, materials, logistics and facilities
To conduct promotional tasks and build strong constituency of support
To evaluate the process of promotion and progress
To prepare fund raising strategic planning guideline
To assess and identify major project donors
To assess and identify the interests, rules, regulations and conditions of targeted and prioritized
financers
To prepare all necessary requirements of financers and apply for fund
To undertake follow ups and secure fund
D. Organizational Builds up
Establishing and organizing project office
Preparing project working and administrative systems and procedural guidelines
Commissioning construction
Purchase of all on and off site durable and consumer goods
Staff recruitment, orientation and employment
To conduct pre operational trial runs, checking the validity of all activities

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 13.2 Budgeting Implementation strategy
A. Budgeting concept Definition
The realization of any strategic decision needs proper identification and understanding of project
objectives, and necessary activities. Moreover, determination of time phase out process and
resources to the completion of each task which calls for budget making process and existence of
effective strategic budgeting is a key implementation strategy for the success of project objectives.
In consideration to the significance of sound budgeting system and procedures, it has been selected
and proposed as one of the best implementation strategy.
There is no doubt that the internal and external activities, resources, process and output of any
organization should be managed effectively and efficiently. To attain short and long term objectives
of the project the management must chart the entire tasks in advance in a comprehensive and
coordinated manner. A budget is a comprehensive and coordinated plan expressed in financial term
for the operation and resources of a project for some specific period in the futures. A budget is the
plan of project’s expectation in clear & formal terms to avoid confusion and to facilitate their
attainability. Thus the roles and significances of budgeting are;
● To state the project’s expectation in clear and formal terms, to avoid confusion and to facilitate their
attainability
● To communicate expectation to all concerned
● To provide a detailed plan of action for reducing uncertain and proper direction of institutional
group and individual efforts
● To provide a means of measuring and controlling performance
● To coordinate all institutional, group and individual efforts towards the success of project
objectives.

Thus, it is inconsideration to the above roles and significance of budgets and budgeting that we
select it as the best implementation strategy.
B kinds/types of budgets & budget setting process
Although, there are various kinds/types of budget items, to simplify it, the types of major budgets
have been categorized in to four.
Sales budget
Operations budget

31
Financial budget
Capital budget
Statement of Smart objectives and goals is probably the starting point and pace maker for all other
types of budgets. The sources of sound project objectives/goals are again the internal and external
environments. Analysis of the patterns of project internal and external environments, pinpointing
project opportunities and challenges with a focus on the demand for the project services, existence
of external opportunities and internal capabilities, it is pertinent to define project objectives and
goals in clear and formal terms at the outset.
The objectives and goals of any project emanate the operations, financial and capital budget needs.
The project corporate level objectives and goals, operations and capital budgets are required to be
further apportioned for all core process which together form corporate budget.
The process of setting sound budget is a complex and complicated process, because of the
involvement of various factors in it. However, budget setting process starts with the determination
of limiting factors at the outset. The most important project limiting factors are,
The demand for the project services
The economic life of the project
Existence of factor and non factor inputs
External opportunities supporting the project ideas and internal capabilities to establish, operate,
manage and control etc are some among others. Based on the above limiting factors, the first step of
budget setting process starts with definitions and establishment of project basic objectives and goals
Second step: at this stage, it is necessary to identify and describe all on and off site activities
necessary to successful achievement of stated objectives and goals, determination of logical
sequence of activity execution process, time phase out to complete each task in clear and
unambiguous terms. Third step: at this stage, it is very important to assess identify and define the
resource needs of all activities, measure, quantify and state in clear and formal terms.
Fourth step
Group all activities according to their similarities
Establish major budget centers
Allocate the resources required to major and sub budget centers
Prepare objectives/goals, operations, financial and capital budgets at corporate, core process and
sub process and assign centre of responsibilities

32
 B. ESSENTIALS OF BUDGET MGT
To make the objectives and purposes of budgets productive and positive impact generating we
propose the following budget administration. It should be well recognized that corporate and
functional levels budgets are prepared by line executives while the organization and implementation
of budgeting is a staff function. Joint efforts of all line execution and a staff function in the
preparation, administration organization and implementation of budgeting should be done in a
coordinated manner. To this effect there should exist the following systems of budget
administration.
The budget committee consists of all members of the management committee which bring together
all activities of different project functional unites.
The primary function, of the budget committee is to decide on the general policies of the project
and directs all project functional unites to prepare their respective budgets.
● Budget director/officer

The budget officer shall have the following tasks;

▪To draw a detailed time table for the preparation of budgets.
▪To calculate and consolidate individual budgets into the project master budget.
▪To design and develop necessary budgeting systems and procedures.
▪To design and develop budgeting formats.
▪To generate accumulate and transfer budgeting parameters information data and indicrs.
▪To undertake satisfactory exchanges among all project concerned stakeholders on budgets and
budgeting
▪To educate all concerned on budget and budgeting
▪To undertake monitoring evaluation and control activities
▪To prepare periodic or extra ordinary budgeting reports
▪To disseminate the feedbacks of budgetary monitoring and evaluation to all concerned stakeholders
▪To suggest sound and workable recommendations for immediate corrective measures
● Budget manual

The budget manual is a written set of instruction which serves as a rule book and reference for the
implementation of a budget.

33
● Budget management principles
o Existence of top management support
o Specific measurable achievable realistic and time bound goals.
o Existence of clearly defined assign ment of authority and responsibility
o Creation of canters of responsibility
o Existence of appropriate accounting system
o Budget education and effective communication
o Flexibility

13.3 PERFORMANCE MGT AND CONTROL

A. monitoring, Evaluation and control strategy

The success/ failure of any planned objectives should be known with certain degree of accuracy. To
this effect all activities, resources process and output should be monitored evaluated and controlled
timely and regularly. To undertake monitoring, evaluation and controlling activities timely and
regularly there should exist.
Clearly identified and defined description of planned objectives, outcomes output and inputs.
Existence of, sound, and appropriate, indicators, which show, the success/ failure, of the planned
objective outcome, output and inputs used.
Appropriate source and means of verifying that the planned, objective outcome, output and inputs
were in accordance with/ deviated from the planned
Clearly stated important assumption with/without which the planned objective would/would not be
successful.
The role and significance of monitoring evaluation and control are briefly described as follows.
● Monitoring

Monitoring is a continuous and process oriented information gathering, and data mining on what
has happened, who did it, when, how much, for whom etc. aimed at measuring the magnitude, time
quality and impact of the initiative. Monitoring helps to compare the input human, material
financial etc output product/service result and the outcome (achievement against the planned tasks.
Effective monitoring must be completely integrated into all tasks. Existence of sound monitoring
system, enable organization to make appropriate and timely decision making and ensures

34
 transparency and accountability.
● Evaluation

Evaluation is the process of analyzing information and data gathered during monitoring process. The
evaluation system helps to think critically and search into ways of achieving desirable results. It is a
periodic process of reviewing monitoring data and drawing sound conclusion from it. Good
evaluation system enables organization to analyze the pre and post patterns of existing and future
plans and search into ways of achieving desirable results.
● Control

Control is a managerial process of detecting errors of principles system, procedures etc aimed at
avoiding resource miss allocating unemployment, fraud, wastage and all other misfortunes which
hinder the success of planned objectives. Control enables organization to continue their production
of goods/ products without jeopardizing internal and external resources for better future. Thus, an
integrated monitoring and evaluation system in a single whole enables organizations optimally
benefit from available resources through satisfaction of existing and potential customers in their
best interests.
The monitoring evaluation and control system should be designed to serve both the strategic and
operational phases. The monitoring evaluation and control system designed for both strategic and
operational phases are described as follows.
This is a continuous and systematic monitoring evaluation and control of the validity of basic
assumption under which it operates. Thus, a regular and continuous proactive check against the
validity of planned strategy aimed at changing or improving the condition of vital assumption.
Performance management and control is a managerial process of designing and developing sound
indicators parameters means and sources of verifications necessary to measure activities resources,
process and output of individuals, groups and institutions against the targeted standards and come
up with logical results which would help to make sound decisions. Although there are numerous
areas whose performance are needed to be well managed and control, the most important areas and
performance management indicators used in laundry and dry cleaning business are briefly identified
and described as under.
Operational control strategy is designed to guide monitor and evaluate the progress of all planned
activities against their respective planned objectives as in meeting targets representing the planning

35
 horizon. Accordingly, all planned activities shall have the following basic system to be used as a
monitoring evaluation and control mechanisms.

● Components of narrative description

⮚ Objectives
⮚ Outcome
⮚ Output
⮚ Input
● Indicators that show
⮚ Objectives have been achieved
⮚ Planned outcome has been attained
⮚ Desired output has been obtained
⮚ Input are properly allocated and employed in all terms

● Source and means of verification

Relevant means and source of verification shall be clearly identified and employed accordingly;
⮚ Strategic planning documents
⮚ Audit report
⮚ Field visit and on site survey
⮚ Past data etc shall be used

13.4 CHANGE MANAGEMENT IMPLEMENTATION STRATEGY

In connection with the application of the project strategic plan, certain changes are inevitable and
these changes may take place in a continuous/discontinuous process. The fact that all types of
changes must result in supportive, adverse or neutral effects, necessitate management needs to
identify and understand the types and impacts of each planned changes, to be able to benefit from
change offers and deal with the challenges of changes.
In general, transformational, transactional, transitional and Incremental changes in the project
workflow process organizational culture and behavior are expected to occur both at strategic and

36
 operational dimension of this proposal. The impact of all of these changes should be managed in
favor of the project at large
The following major implementation strategies are proposed to manage these changes.
● Work flow process

This is a targeted economy of scale process intervention, aimed at attaining cost minimization,
profit maximization, efficient service delivery and customer satisfaction. To do this it is pertinent to
understand the dynamics of project realities in the changing world. To change the workflow process
to desirable small scale the following implementation strategy are proposed.
❖ To undertake a detailed task analysis and determine the condition, process and time phase out for
each task.
❖ To determine the resource requirements availability quality magnitude and cost
❖ Determination of technology and system requirements
❖ Determination of skill, profession and experience requirement
❖ To design and develop strategic fit and incorporating human resources into system integration
❖ Acquisition of top management support.
● Organizational culture change implementation strategy

Change in organizational culture refers to change in project belief, values, strategy, purpose and
expectations. Conductive conditions to cultural changes proposed are
⮚ To create appropriate environment for team work, process focus, action oriented and low level
decision making
⮚ Outstanding and effective trial of many alternative tools and techniques and selecting the most
appropriate
⮚ Building the skills and competence of management and staff
⮚ Setting standards to measure performance
⮚ Analysis and initiating corrective measures
● Behavioral change implementation strategy

Organizational behavior refers to employee individual and collective behaviors. The most
challenging task is to manage employees’ behavior towards the success of desired changes.
The following strategies are proposed for project organizational behavioral change implementation

37
 and management
✔ Involving employees in planning and decision making process
✔ Promotion of rewarding and incentive system
✔ Promotion of employee career and skill development operational plan
✔ Avoiding under/over employment
✔ Promotion of transparent, accountable and non discriminatory data based decision making practices
✔ Provision of clearly defined job description, evaluation, lines of authority and responsibilities as
well as lines of communication and information flows.
✔ Provision of management and leadership support and guidelines.
✔
● Staff motivation strategy

Experiences has demonstrated that the most difficult and resistance to organizational transformation
and improvement process is the behavior of employee, unless employees are properly managed
motivated and participated in the process the efforts of achieving planned objectives would carry
meaningless. Moreover, the fact that there are various knowledge skill, experience dedication
commitment sense of ownership belongingness moral ethics honesty, reliability etc. among
employees there exist differences in their effort contributing and performance results. Employers
contributing extra efforts and time require recognition need reward and development. Because
recognition, reward and development.

38