Gulayan sa Batasan

A Project Feasibility Study on an Urban Farming Project in Barangay

Batasan Hills, Quezon City

Written by Jenifer C. Camilon, Michelle C. Castillo, Dianne M. Gammad, Maria Pilar

M. Lorenzo, Karla Sio, Rani Shannon Ulbata, Pauline Marie S. Villar

Presented in the International Research Forum on the Philippines 2017

Theme: Interrogating Paradoxes in the Philippines
Organized by the Filipino-Australian Student Council Victoria and La Trobe University
23 November 2017, Melbourne, Australia
Project Summary

Project Title: Gulayan sa Batasan: An Urban Farming Project

Project Cost: Php 2, 061, 802.25

Location: Brgy. Batasan Hills, Quezon City, National Capital Region

Project Description: “Gulayan sa Batasan” is an urban farming project for the

benefit of drug surrenderers from the youth sector of Barangay
Batasan Hills, Quezon City. Through urban farming, the project
introduces an innovative approach in giving former illegal drug
users with a viable source of additional income for their
families while providing them with a community that can help
them avoid reverting back to drug abuse. It aims to (a) provide
supplemental source of income, addressing the issue of
financial problems in the family that leads to poor family
relations and incidence of out-of-school youth (OSY).

Feasibility Indicators: Financial Net Present Value (NPV) is at Php 1,417,698.89.

Financial Internal Rate of Return (IRR) is at 21%.

The financial feasibility of the project is highly influenced by

changes in the expected amount of subsidy and cost of
operations and management. Aside from additional income,
some of the benefits that can be derived from the project are 1)
community for the drug surrenderers that can facilitate their
reintegration to the society, 2) creation of safe places and green
sceneries, 3) improvement of air quality in the immediate
environment, and 4) learning experience for beneficiaries.

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Recommendations: As the project is found to be feasible with net socio-economic
benefits to both the beneficiaries and the community, it is
recommended for the authorities of the Brgy. Batasan Hills to
consider the project proposal in the development plan of the
barangay’s extension office. The plan to use the roof deck for
the urban farm shall also be considered in the building’s design
and blue print.

For its possible funding, it is recommended to submit the

project proposal and this feasibility study to cognizant agencies
such as: (1) the Local Government Unit of Quezon City which
has a parallel project dubbed as “The Joy of Urban Farming”;
(2) Department of Agriculture (DA) which supports urban
farming by providing seedlings; and (3) Department of Social
Welfare and Development (DSWD) which is the agency tasked
to develop and implement projects for illegal drug surrenderers
and which also has an urban farming project for 4Ps
beneficiaries.

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Table of Contents
Project Summary 1
Table of Contents 3
List of Figures 5
List of Tables 6
List of Annexes 7
Acknowledgments 8
Chapter 1. Introduction 9
Background 9
Project Description 9
Chapter 2. Market Analysis 11
2.1. Project beneficiaries and their profile 11
2.2. Willingness of the beneficiaries to participate in the project 11
2.3. Competitive advantage of other agencies and organizations 11
2.4. Competitive advantage of the project 12
2.5. Demand for the vegetable products produced in the farm 13
2.6. Projected demand for vegetables from the farm 14
2.7. Supply of Vegetables Produced in the Urban Farming 15
2.8. Marketing strategies and mechanisms 16
Chapter 3. Technical Analysis 18
3.1. Products 18
3.2. Production process and schedule 18
3.3. Office and farm lot location 19
3.4. Lot Size 19
3.5. Office Building, Farm Lot Layout and Facilities 19
3.6. Materials, supplies, and equipment 22
3.7. Waste disposal 24
3.8. Production Cost 25
3.9. Labor Requirements 25
Chapter 4. Financial Analysis 26
4.1. Budget and accounting system in the Philippine government 26

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 4.2. Assumptions in the Formulation of Financial Projections 27
4.3. Various Financial Statements 28
4.3.1. Total Cost and Assets 28
4.3.2. Sources of Funds 29
4.3.3. Income Statement 30
4.3.4. Cash Flow 31
4.3.5. Balance Statement 32
4.3.6. Profitability 34
Chapter 5. Socio-Economic Analysis 35
5.1. Benefits 35
5.2. Costs 36
5.3. Measurement Tools 36
5.3.1. Net Present Value (NPV) 36
5.3.2. Internal Rate of Return (IRR) 38
5.3.3. Benefit-Cost Ratio 39
Chapter 6. Risk and Sensitivity Analysis 40
6.1. Sensitivity Test 40
6.2. Risk Assessment 43
Chapter 7. Organization and Management Analysis 44
7.1. Project Offices/Units 44
7.2. Project Ownership 45
7.3. Organizational Chart 45
7.4. Job Roles and Functions 46
7.5. Job Qualifications 48
7.5.1. Project Manager 48
7.5.2. Operations & Administrative Manager 49
7.5.3. Finance Manager 49
7.5.4. Marketing Manager 50
References 51

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List of Figures

Figure 1. 2016-2022 Vegetable Utilization per capita kg/yr in the Philippines

Figure 2. Projected Annual Vegetable Production of Gulayan sa Batasan 2018-2022

Figure 3. Layout of the Farm Area

Figure 4. Office floor plan dimensions

Figure 5. Floor plan layout

Figure 6. Office and farm roof deck layout

Figure 7. Organizational Chart for the Proposed Project

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List of Tables
Table 1. 2006-2015 Vegetable Utilization per capita kg/yr in the Philippines

Table 2. Forecasting: 2016-2022 Vegetable Utilization per capita kg/yr in the Philippines

Table 3. Projected Annual Vegetable Production of Gulayan sa Batasan

Table 4. Production Schedule of Vegetables

Table 5. Area allotted per vegetable type

Table 6. Office Computer Specifications

Table 7. Monthly Depreciation Expense for Fixed Assets

Table 8. Net Present Value Calculation

Table 9. Sensitivity Indicator Calculation for Subsidy

Table 10. . Sensitivity Indicator Calculation for Operating Expenses

Table 11. . Sensitivity Indicator Calculation for Revenue from Operations

Table 12. Sensitivity Test Results

Table 13. Offices and Units of "Gulayan sa Batasan" Project

Table 14. Roles and Functions

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List of Annexes

Annex A Problem Tree on the Youth Dependency on Illegal Drugs

Annex B. Objective and Strategy Tree Analysis/

Annex C Logical Framework

Annex D Number of Drug Surrenderers from Brgy. Batasan Hills

Annex E. Financial Statements

Annex F. Risk Assessment

Annex G. Project Schedule

G.1. Work Breakdown Schedule

G.2. Gantt Chart

Annex H. Photo Documentation

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Acknowledgments

This feasibility study would not have been possible without the willing partnership of
the Barangay Council of Brgy. Batasan Hills, Quezon City.

Mr. Earwin Belen and the Department of Agriculture were instrumental in the
development of the project design and technical analysis.

The data from the Quezon City Anti-Drug Abuse Council also helped in study.

Gratitude also goes to Engineers Eric Castillo and Lizyl Legaspi, and Ms. Charmaine
Shane Acutin, as well as the Philippine Navy’s Engineer Support Operation Center for the
technical analysis of this study.

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Chapter 1. Introduction

Background

Drug abuse and drug trafficking are lingering problems that have been confronting the
Philippines (BINLA, 2016). Recently, addressing this issue has gained a sense of greater
urgency, with the current administration including its resolution as one of its top priorities
Abella, 2017). But solving the drug problem requires not only stop-gap measures to curb both
the supply of and demand for illegal drugs but also strategies to address the root causes of the
problem. This is an imperative particularly in the case of drug abuse among the youth.

“Gulayan sa Batasan” was borne out of the desire to contribute to this effort.
Centering on Barangay Batasan Hills, Quezon City, initial assessment which was done
through focus group discussions (FGDs) and interviews showed that drug abuse among the
youth are traceable to various reasons. The three major factors identified were 1) family-
related issues (poor family relations and economic challenges), 2) negative influence on the
youth (wrong perception on illegal drugs, poor environment, and out-of-school youth) and 3)
shortcomings on the side of agencies tasked to address illegal drug trafficking and abuse
(easy access to illegal drugs, limited rehabilitation) (See Annex A). In addition, drug
surrenderers who were interviewed remarked that “they use drugs because of hunger and it is
a form of escapism to their problem.” The proposed project focused on the first factor and
hopes to contribute in addressing the issues on the financial problems as a supplemental
source of income of families whose child/ren have been a victim of drug abuse (See Annex
B).

Project Description

The project is designed as a five-year pilot intervention initiative that aims to

contribute in the reduction of the incidence of youth dependency on illegal drugs in Brgy.
Batasan Hills, Quezon City. Working on the pre-condition that the target beneficiaries have
availed of treatment and rehabilitation program of the LGU, the project will provide them
with an avenue to increase their family income with the goal of improving family relations

9
and reducing the possibility of staying out of school.

It is proposed to be undertaken by the Barangay Council of Barangay Batasan Hills in

partnership with institutions and foundations which support the thrust of addressing the drug
problem in the country. It will begin by providing the target beneficiaries with training to
manage and operate the urban farm. They will likewise be in charge of running the farm, with
the Barangay Council and its designated Project Management Team (PMT) supervising the
operations.

The detailed objectives, success indicators, and activities of the project is found in
Annex C: Logical Framework of “Gulayan sa Batasan” Project.

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Chapter 2. Market Analysis

2.1. Project beneficiaries and their profile

The beneficiaries for the urban farming project are youth drug surrenderers who are
residents of Barangay Batasan Hills in Quezon City. The barangay’s total land area is
517.3815 hectares wherein 210,000 residents (as of 2012) are living in subdivision (30%),
depressed area (50%) and private land occupied by informal settlers (20%). In 2017, there
were a total of 102 drug surrenderers in the barangay (see Annex D). Out of this figure, a
total of 30 participants, aged 16 to 30 years old, will be the target beneficiaries for the project.

2.2. Willingness of the beneficiaries to participate in the project

As mentioned in the preceding chapter, the project is designed to provide the

beneficiaries with a source of added income, hence addressing one of the issues that they
raised which is insufficient income for the family which in turn results to poor family
relations and incidence of OSY. Likewise, during the consultation, the barangay council
remarked that the drug surrenderers exhibited willingness to participate in projects offered by
the barangay, particularly those that will provide them with income. Hence, this project
expects the target beneficiaries to patronize and participate in the urban farming initiative.

2.3. Competitive advantage of other agencies and organizations

There are two agencies/organizations that are currently offering livelihood projects for
the drug surrenderees: 1) Villar SIPAG (Social Institute for Poverty Alleviation and
Governance) Farm School; and 2) Technical Education and Skills Development Authority
(TESDA).

a. Villar SIPAG Farm School

Senator Cynthia Villar, Chair of the Senate Committee on Agriculture and

Food, through Villar SIPAG Farm School located in Bacoor in Cavite, Las Pinas, and San
Jose del Monte in Bulacan, provides 12-week drug rehabilitation training program for drug

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surrenderers. The program is being implemented in cooperation with Department of Health
(DOH), Department of Interior and Local Government (DILG), Local Government Units
(LGUs), and Couples for Christ Family for Life (CFCFFL). The training program includes
free training on urban farming; lectures on health and wellness, ethical and legal aspects of
substance abuse, values formation, involvement in environmental protection activities such as
coastal clean-up and mangrove planting, and physical training and dance exercises. For the
urban farming, Allied Botanical Corporation provides the training on the proper way of
planting through lessons in modern farming methods and technologies. It also includes values
formation, capacity building, and social entrepreneurship (Senate of the Philippines, 2017).

b. TESDA

TESDA implements “Barangay Kasayanan para sa Kabuhayan at Kapayapaan

Program” that provides skills training programs for the self-employed, overseas employment,
cooperators, entrepreneurs, family enterprises, drug dependents, and rebel returnees (TESDA,
n.d.). Currently, drug surrenderers in mild and moderate condition are being prioritized in this
barangay-based program that directly responds to the skills requirements and employment
opportunities in a specific locality. The participants can choose any TESDA trainings (hollow
block-making, welding and automotive, electronics and cell phone repair, cookery,
dressmaking, carpentry, hairdressing and baking, etc.). DILG and the Philippine National
Police (PNP) help in identifying qualified beneficiaries who are interested to undergo
TESDA’s skills training program (Philippine News Agency, 2017).

2.4. Competitive advantage of the project

“Gulayan sa Batasan” offers an innovative and focused approach in helping solve

some of the root causes of drug abuse among the youth in the target community. The project
will provide additional income to the beneficiaries hence, they will avoid using illegal drugs
due to poverty and their socio-economic status can be improved. Likewise, the project will
provide an avenue for the beneficiaries to participate in worthwhile activities and to be part of
a community, shifting their attention from reverting to illegal drug abuse. Third, the skills
learned by the beneficiaries in the training can be applied in setting-up their own urban farm
at their homes. Therefore, they will have an additional income and source of food in addition
to their earnings from the community farm.

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2.5. Demand for the vegetable products produced in the farm

“Gulayan sa Batasan” will be producing vegetables from thesetwo kinds of baskets:

(1) Pinakbet basket (ampalaya, sitao, talong, and okra); and (2) Sinigang basket (upland
kangkong, labanos, and tomato).

In estimating the demand for these products, the data was based on the Philippine
Statistics Authority’s figures for the 2006-2015 Vegetable Utilization per capita (kg/yr).
However, the data was not disaggregated per region, hence this study used the aggregate data
covering entire Philippines. Data for the Ampalaya and Stringbeans were also unavailable.
Arithmetic-Geometric Method was used in forecasting the projected utilization in 2016-2022.

Table 1. 2006-2015 Vegetable Utilization per capita kg/yr in the Philippines

Source: PSA, n.d.

Ampalaya Eggplant Okra Radish Tomato

Year U* ARC** U ARC U ARC U ARC U ARC

2006 0.82 -- 2.03 -- 0.28 -- 0.1 -- 1.57 --

2007 0.86 4.88% 2.18 7.39% 0.29 3.57% 0.1 0.00% 1.66 5.73%

2008 0.87 1.16% 2.03 -6.88% 0.27 -6.90% 0.1 0.00% 1.69 1.81%

2009 0.87 0.00% 2.03 0.00% 0.26 -3.70% 0.1 0.00% 1.7 0.59%

2010 0.87 0.00% 2.06 1.48% 0.25 -3.85% 0.1 0.00% 1.71 0.59%

2011 0.84 -3.45% 2.02 -1.94% 0.24 -4.00% 0.09 -10.00% 1.68 -1.75%

2012 0.83 -1.19% 2.02 0.00% 0.22 -8.33% 0.09 0.00% 1.64 -2.38%

2013 0.84 1.20% 2.06 1.98% 0.23 4.55% 0.09 0.00% 1.65 0.61%

2014 0.83 -1.19% 2.08 0.97% 0.23 0.00% 0.09 0.00% 1.68 1.82%

2015 0.82 -1.20% 2.12 1.92% 0.24 4.35% 0.09 0.00% 1.66 -1.19%

Ave. 0.85 0.02% 2.06 0.55% 0.25 -1.59% 0.10 -1.11% 1.66 0.65%
*U = Utilization, per capita kg/year
**ARC = Annual Rate of Change
*No available data for Kangkong and Stringbeans

The table above shows the utilization of vegetable per capita in the Philippines (2006-
2015). In a span of ten years, eggplant is considered as the most utilized vegetable among the

13
five vegetables with an average of 2.06kg while the least utilized vegetable is radish at an
average of 0.10kg.

2.6. Projected demand for vegetables from the farm

Table 2. Forecasting: 2016-2022 Vegetable Utilization per capita kg/yr in the

Philippines

Ampalaya Eggplant Okra Radish Tomato

2016 0.8202 2.1210 0.2448 0.0909 1.6564

2017 0.8204 2.1422 0.2497 0.0918 1.6730

2018 0.8206 2.1636 0.2547 0.0927 1.6897

2019 0.8208 2.1853 0.2598 0.0937 1.7066

2020 0.8210 2.2071 0.2650 0.0946 1.7237

2021 0.8212 2.2292 0.2703 0.0955 1.7409

2022 0.8214 2.2515 0.2757 0.0965 1.7583

Average 0.8208 2.1857 0.2600 0.0937 1.7069

Figure 1. 2016-2022 Vegetable Utilization per capita kg/yr in the Philippines

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 The above table shows the forecasted vegetable utilization per capita in the
Philippines for 2016 to 2022. In comparison to the average utilization for 2006-2015, three
out of five vegetables increased in terms of the average utilization for 2016-2022 – Eggplant
(2.1857kg), Okra (0.2600kg), and Tomato (1.7069kg) as illustrated in the graph. On the other
hand, the average utilization for Ampalaya (0.8202kg) and Radish (0.0937kg) decreased.
However, utilization of Ampalaya is increasing in 2016-2022 in comparison to its 2015
utilization.

2.7. Supply of Vegetables Produced in the Urban Farming

Table 3. Projected Annual Vegetable Production of Gulayan sa Batasan

Ampalaya Eggplant Okra Radish Tomato Kangkong Stringbeans

2069.7300 682.5000 650.0000 858.0000 231.2700 1625.0000 130.0000

The table shows the annual vegetable production in the urban farming project. Among
five vegetables, Ampalaya (2069.7300kg) will have the highest production rate while
Stringbeans (130.0000kg) will have the least production rate.

Figure 2. Projected Annual Vegetable Production of Gulayan sa Batasan 2018-2022

15
2.8. Marketing strategies and mechanisms

Wholesaling

Wholesaling is defined as the sale and distribution of goods to specific

customer types such as those most commonly referred as resellers (retailers, other
wholesalers or merchants who will resell the good to an end user) (Technopedia, n.d.). The
beneficiaries can encourage the five markets in Brgy. Batasan Hills (Presidential Road Wet
and Dry Market, Batasan Wet and Dry Market, Puregold, Talipapa Consti, and Kagawad
Road Market) to get “Gulayan sa Batasan” as one of their suppliers of vegetable products
because of the following reasons: (1) cheaper transportation cost because the supplier is
nearer to the resellers and (2) vegetable products are still fresh when these reach the market
because the delivery will take about 30 minutes from the urban farm.

Distributing products to the retailers is an advantage to the beneficiaries

because of the following reasons - (1) retailers have established customer base, (2) retailers
know how to sell, (3) retailers use marketing as part of their strategy, (4) retailers already
have an established and quicker route to market the products, (4) retailers already know their
customers, (5) retailers can broaden the beneficiaries’ sales, and (6) retailers can provide
customer service (Arimas, 2017).

Partnership with the Government

The beneficiaries can supply vegetable products in the feeding program

sponsored by the government. The beneficiaries can establish a partnership with DSWD,
through Memorandum of Agreement, for the Supplementary Feeding Program which is the
provision of additional meal for the following recipients - (1) children aged 2-4 years old in
the Supervised Neighboring Play, (2) children aged 3-4 years old enrolled in the Child
Development Centers (CDC), (3) children aged 5 years old not enrolled in the CDC, and (4)
malnourished children aged 5-12 years old and not enrolled in the CDC (DSWD, 2017).
Through partnership with government, the beneficiaries are ensured of having income and
product buyer throughout program implementation.

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 Rebate Program for the Beneficiaries

Rebate is defined as money that is returned to you after you pay for goods or
services, done in order to make the sale more attractive (Rebate, n.d.). Rebate program can be
done in the project by offering 10% rebate on the total purchases of a beneficiary in a year
hence, encouraging them to patronize their own product.

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Chapter 3. Technical Analysis

3.1. Products

The project will serve as a source of additional income for the beneficiaries. Aside
from producing vegetables for their own consumption, they can sell these under two kinds of
baskets: (1) Pinakbet basket (ampalaya, sitao, talong, and okra); and (2) Sinigang basket
(upland kangkong, labanos, and tomato). These vegetables will be produced using organic
agriculture practices which are free from synthetic pesticides and other harmful chemicals.

3.2. Production process and schedule

The vegetables produced by the farm have different harvesting time; thus, the
manufacturing process of the end-products varies. The cycle of production of each vegetable
is counted estimating the time from seed sowing to actual harvest, counted by the number of
weeks after sowing (WAS). Training and vegetable production will only commence once the
office building is fully constructed to avoid disruption in the training and production flow of
urban farming. Provided below is the estimated harvest schedule for the different vegetables:

Table 4. Production Schedule of Vegetables

Pinakbet Basket Sinigang Basket

Vegetables WAS* Vegetables WAS*
Bitter gourd 7-9 Upland Kangkong 5
Eggplant 7-9 Tomato 7-9
String beans 7-9 Radish 7
Okra 7-9

On the other hand, the establishment of the urban farm office is incorporated in the
construction of the new Barangay Hall of Batasan. Thus, production schedule and process of
the building is dependent on the ground breaking of the new Barangay Hall building. The
estimated construction period for the urban farm office is 45 days. The layout or blueprint of
the office is to be provided for reference and consideration of the foreman, engineer and
barangay officials.

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3.3. Office and farm lot location

Upon prior coordination with the barangay, both the building and the farm lot will be
located at the new Barangay Hall of Barangay Batasan, Quezon City. The farm area and the
office are both situated at the roof deck of the building. The new barangay hall is located near
the highway with commercial buildings around it that make it a suitable location for the
promotion and distribution of the end-products. Putting the urban farm in the roof deck,
which is an open area, is another advantage since the sunlight, which is an essential
component of the photosynthesis process, reaches the vegetables directly.

3.4. Lot Size

The total lot size is 500 square meters (m2), with the dimension of 25 meters by 20
meters. The total allotted size for the farm is 300m2 with the dimension of 15 meters by 20
meters. The allotted farm lot shall be further divided to 38 plots (16 subplots for Pinakbet
production, 22 subplots for Sinigang production) and a nursery shall be established for the
seedling production.

On the other hand, the allotted size for the office is 60m2 with the dimension of 6
meters by 10 meters.

3.5. Office Building, Farm Lot Layout and Facilities

TOTAL AREA: 300 square meters (20 m x 15 m) for the farm while 60 square meters
(6 m x 10 m) for the office building.

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 Table 5. Area allotted per vegetable type

Vegetables Area (m2)

Pinakbet Basket
Bitter gourd 90
Lady’s finger 30
String beans 30
Eggplant 30
Sinigang Basket
Upland Kangkong 30
Tomato 30
Radish 30
Building
Nursery 15

Figure 3. Layout of the Farm Area

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Figure 4. Office floor plan dimensions

Figure 5. Floor plan layout

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 Figure 6. Office and farm roof deck layout

The office building is to be integrated in the construction of the new barangay

Batasan. It is a one-storey building which will house three staff, one conference room,
comfort room and storage. The budget for its construction is separated from the actual cost of
the new Barangay Batasan. The material cost for the construction of the office is Php
842,453.25 while the total cost of labor is Php 336,981.30. Thus, the total cost allotted to the
construction of the office building is Php 1,179,434.55.

3.6. Materials, supplies, and equipment

Farming inputs will play a vital role in the success of the project. These inputs
include: seeds, fertilizers, pest management materials, polyethylene bags and seedling trays.

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 A 12-week training in Urban Agriculture shall be provided to the beneficiaries in
order for them to gain insights in this endeavor. With this training, the production and
utilization of these farming inputs shall be taught, of which are compatible with organic
agriculture practices. Seed-saving practices shall also be adapted in order for them to sustain
succeeding production cycles.

On the other hand, cement, aggregates, gravel, rebars and galvanized iron, plywood,
coco lumber, concrete nails, steel works materials (bar angular, c-purlins, sag rod, MS plate,
base plate, anchor bolts, flat bar, welding electrode, oxy-acetylene), tinsmithry materials,
doors and jambs, window sashes, plumbing materials, ceramic floor tiles, border tiles, tile
grout, PVC tile trim, adhesive tile, painting materials, and electrical materials are the inputs
needed for the building construction.

The estimate cost for the water consumption for the whole project is Php 204,000.00
for 1650m3 of water. However, considering that Philippines is a country with two seasons,
dry and wet, the annual cost of water was halved since rainfalls can be used as an alternative
for water source.

For the electricity usage, only the consumption of the office building is considered.
The price of electricity ranges to Php 16,765.06 for a year. The electricity is needed for the
operation of the computers, and ceiling fans.

On the delivery of the products from the desired consumers, the estimated cost for the
fuel is Php 10,000 a year. This estimate is based on the assumption that delivery expenses are
only incurred during the harvesting season of the crops. The estimate fuel consumption for a
delivery day is Php 1,000.00.

Moreover, the office will serve as an avenue for doing administrative works related to
the urban farm. Thus, the need for a computer. The office is to be provided with three (3)
computers, one for each staff. The minimum computer specification needed in order to run
and operate the basic software most end users use has a cost estimate of Php 21,500.00. Thus,
the total cost needed for the purchase of computers is Php 64,500. Below are the
specifications for the computer:

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 Table 6. Office Computer Specifications

Processor Dual core 2.4 GHz+ (i5 or i7 series Intel processor or equivalent AMD)
RAM 8 GB
Hard drive 320 GB 5400 RPM hard drive
Monitor 19” LCD
Operating System Windows 7 with Service Pack 1

Moreover, telephone, internet, wifi and photocopier shall be connected to barangay.

The consumption cost of these shall be determined from the monthly electric bill of the
barangay. In order to obtain the total cost of consumption for the electricity, calculate first the
hourly cost of the utility. The formula is:

Cost per hour = Rate x (appliance wattage/1000)

*where Rate = the price per kWh, which is dependent on bill amount

Then, after computing the hourly rate of the specific equipment, compute the monthly
cost. The formula is:

Cost per month = Cost per hour x number of hours used in one month

Therefore, the duration of the usage of the equipment should be logged in order to
monitor the electrical expenses.

3.7. Waste disposal

The farm will practice proper solid waste management. All biodegradable wastes shall
be used in composting processes that can be used in maintaining soil fertility. Non-
biodegradable wastes shall be further segregated to recyclable and residual wastes.
Recyclable materials (such as plastic containers) that will be recovered shall be utilized for
the farm’s use.

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3.8. Production Cost

A total of Php 487,369 will be needed for the production of the urban agriculture in
Barangay Batasan. This cost covers the 12-week training package to be provided for the 80
beneficiaries of the project. In addition, included in the 12-week training package are the
seeds and planting materials, the soil media, fertilizer materials, agricultural tools, containers,
and supplies.

On the other hand, the total production cost of the office building is Php 1,179,434.55
which covers the Php 842,453.25 material cost and Php 336,981.30 labor cost (See Annex E
for the breakdown of material and labor cost).

All in all, the start-up cost of the project, from the construction of the office and urban
farm to the conduct of training for the 30 beneficiaries, is Php 1,666,803.55.

3.9. Labor Requirements

The farm would require at least 10 personnel to operate the farm for a period of eight
(8) hours a day. The work shall include watering of the plants and pest management. This is
done everyday to ensure healthy yield of the crops.

For the construction, the office building is estimated to be constructed within 45 days.
The labor hours is also 8 hours a day, 0800H-1700H for five days a week. A total of 84
workers including engineer, foreman, mason, carpenter, plumber, painter, electrician, and
helper were identified to construct the building.

In addition, the management will hire three staff to man the office and perform the
necessary administrative tasks. The working hours are from 0800H-1700H, a total of 8
working hours for five (5) days or 20 days a month.

25
Chapter 4. Financial Analysis

4.1. Budget and accounting system in the Philippine government

In the recent National Budget Memorandum (No. 127) released by the Department of
Budget and Management (DBM) for the budget call for FY 2018, the agencies are asked to
incorporate the priorities and policy directions of the current administration. In the very first
point, it indicates the President’s 0+10-Point Socio-Economic Agenda as envisioned in the
Memorandum Circular No. 12 - Directing the Formulation of the Philippine Development
Plan and the Public Investment Program for the Period 2017-2022 - dated 24 October 2016
(DBM, 2016). Being the “zero” agendum of the President, it is in this context that this urban
farming project and the consequent specific financial details are envisaged.

In 2007, a thorough evaluation was carried out by the World Bank and the AusAID in
relation to the Philippines’ accounting system. They utilized an evidence-based and results-
oriented framework called the Public Expenditure and Financial Accountability (PEFA). The
then Public Financial Management (PFM) of the country was assessed against the following
benchmarks of a good PFM, namely: credibility of the budget; policy-based budgeting;
predictability and control of budget execution; accounting, reporting and auditing systems;
external and public scrutiny, among others. The PEFA assessment proved to be relevant as it
exposed major gaps and weaknesses in the previous PFM system employed by the Philippine
government (Pangan-Chatto, 2016; GIFMIS, no date indicated).

As such, reforms have been introduced since the time of the assessment. For the sake
of the financial study of this feasibility report, only the following areas come out to be
relevant: Budget Reporting and Performance Standards (DBM as the lead agency), Liability
Management (Department of Finance as the lead agency), and Accounting and Auditing
Reforms (the Commission on Audit as the lead agency) (Pangan-Chatto, 2016; COA, 2016).
All these new mandates were taken into account in the calculation of the projected five-year
financial feasibility of the project.

In addition, this report considered the Philippine Public Sector Accounting Standards
(PPSAS), the accounting standards set forth for the public sector by the COA in pursuit of

26
COA Resolution No. 2014-03 dated 24 January 2014 entitled “Adoption of the Philippine
Public Sector Accounting Standards” (COA, 2016; PFM, 2012).

As with the government accounting procedures that may affect the budget of the
proposed project on urban farming, this study includes the recently adopted accounting
method in the Philippine Accounting System, the accrual basis. This is defined as the “basis
of accounting under which transactions and other events are recognized when they occur (and
not only when cash or its equivalent is received or paid). Therefore, the transactions and
events are recognized in the accounting records and recognized in the financial statements of
the periods to which they relate. The elements recognized under accrual accounting are
assets, liabilities, net assets/equity, revenue, and expenses (COA, 2014:2).” Thus, items (e.g.
assets, expenses) were recorded in these financial documents only in those years they are
deemed to be incurred or acquired.

4.2. Assumptions in the Formulation of Financial Projections

Apart from the budget and accounting standards mandated by the Philippine
Constitution and the oversight agencies (namely COA, DBM and Local Government of
Quezon City), other assumptions that are crucial to the financial projections come into play.
These are localized components pertaining to the ecological and demographic conditions of
the targeted community beneficiary.

a. Climatic elements are primarily some of the greatest considerations that have
to be factored in. For instance, dependence on natural rainfall may make the production
seasonal (Cofie, et al, 2009).
b. Soil fertility is another factor that may affect the level of produce, and thus,
the revenue of the urban farmers. Consequently, related components such as pest control,
harmful insects and diseases also have to be considered. The farms being located in the urban
areas may pose greater risks. There are externalities peculiar to city/urban populations due to
the risk of water and soil contamination found in these areas (Cofie, et al, 2009; RUAF
Foundation, 2017).
c. Relations with traders and urban market people has to be looked into in terms
of flow of vegetable crops in the market, and thereby, sales of the produce.

27
 d. Types of crops grown are crucial as well. Growing highly sensitive (i.e.
perishable and/or high-value) products are particularly tied to the quality of farming
performance (Abdalla, 2012).
e. Farm income in urban agriculture may be affected by other factors such as the
following: farm size, lack of land security, animal resources, type of crops grown, kind of
fertilizer employed, technology, labor, inputs’ prices, age and experience on farming activity
(Abdalla, 2012; Hagey, et al, 2012).

4.3. Various Financial Statements

The following financial statements cover a five-year period. Through these

instruments, the resources needed and the ways they will be generated and utilized are
fleshed out. They are thus relevant inputs in analyzing the objectives, strategies and
feasibility of the proposed urban farming project for the drug surrenderers.

All the estimates and projections done in this financial feasibility report are based on
the most recent data gathered from various institutions like the Department of Agriculture
(DA), the Philippine Statistics Authority (PSA), the Quezon City Anti-Drug Abuse Council
(QCADAC), the Trading Economics, the local government of Quezon City, the Food and
Agriculture Organization (FAO) of the United Nations (UN), as well as from the practices of
local urban farmers as found in various community websites. The projections for second to
fifth year are made based on the latest estimated inflation rate pegged to be at 3.6 to 3.9 for
the next five years (Trading Economics, 2017).

To refer to the financial statements, kindly see Annex E. They include the following
reports: total cost and asset, sources of funds, income statement, cash flow, balance
statement, and profitability.

4.3.1. Total Cost and Assets

Assets are defined as “resources controlled by an entity as a result of past events, and
from which future economic benefits or service potential are expected to flow to the entity
(COA 2014:2).” They can be classified either as fixed or current.

28
 The fixed assets for the urban farming project mostly point to the construction of the
farming nursery and of the office of the management. These will be built upon the rooftop of
Barangay Batasan. Hence, their assets exclude building construction of the entire building
(i.e. the Barangay Hall). There will also be a jeepney that will be purchased for transportation
of their goods from farm to market, and three desktop computers for the use of the three
management staff members.

Current assets are mostly seeds and soil, those direct inputs that are required for
farming process. Other small materials are also included such as rake, sprinkler, tray and
funnels. Also included in the current assets are the intangible assets which include insurance
for each farmer and a 12-week training.

4.3.2. Sources of Funds

The Local Government of Quezon City has the following relevant departments
wherein appropriations can be obtained for the farming project for the drug surrenderees
(Quezon City, 2017):

a. Quezon City Anti-drug Abuse Council

b. City Planning and Development Office
c. Drug Treatment and Rehabilitation Center

Additional resource from the National Government can be tapped, specifically in the
Department of Social Welfare and Development (DSWD). They have a provision for people
from the marginalized sector of the society through their program called Sustainable
Livelihood Program (SLP).
In the long run, the yearly appropriation for this project can be assured should the
proposed urban farming bill by Senator Cynthia Villar (2016) will be passed into a law. In its
Section 12 (“Appropriations”), it specifies that there is a minimum of Php 50,000,000.00
yearly appropriation for urban farming in the country (Villar, 2016). Thus, when this
proposed bill becomes a law, the Brgy. Batasan could apply for financial coverage of their
urban agriculture program.

29
4.3.3. Income Statement

This financial document shows the projection of both revenues and expenses for the
first five years of the operation of the urban farming project.

As stated in PPSAS 9, revenues are all the gross inflows of economic benefits/service
that are received or to be received by the agency during the accounting period, other than the
contributions coming from the owners. They also involve the decrease in the liabilities of the
entity (COA, 2014). For this project, revenues flow in solely due to the farming operations;
that is, from the sales of the farmers’ produce. Cost of goods sold such as factory overhead,
raw materials and directly labor expenses are discounted off because they are either part of
the projected expenses already or that they are not applicable to this project. Furthermore,
there are no estimated opening and closing stocks because the objective is to sell immediately
the farming produce as they are harvested. This kind of distribution is to be maintained as the
products being sold are highly perishable.

On the other hand, expenses are those “decreases in economic benefits or service
potential during the reporting period in the form of outflows or consumption of assets or
incurrence of liabilities that result in decreases in net assets/equity, other than those relating
to distributions to owners (COA, 2014:11)”. Expenses pertain to advertising &
communication, legal fees, accounting, supplies, raw materials, electricity, water, salaries of
personnel for office building construction, salary of personnel (management staff), vehicle
maintenance, rent, repairs & maintenance, delivery expenses, and training.

The following are the important details to highlight in understanding the projected
five-year expenses:

● Legal fees: As can be seen in the report, legal fees are only recorded in the
first year. It is expected that there will be no more succeeding expenses on legal fees because
registration of business is done only once.
● Supplies and raw materials: The highest expense is only to be incurred during
the first year as all materials have still to be bought. They just need to be utilized and kept

30
properly so that their lifespan can last long. The only materials and supplies that have to be
bought on a yearly basis are the seeds, net bags, and fertilizer.
● Lights: This was computed using the standard wattage for one split-type
aircon (to be used only at times such as during trainings) and two ceiling fans.
● Water: This was projected based on the standard estimate of water
consumption per square meter. Only six months of water consumption are included in the
computation. The source of hydration of plants for the other half of the year can be derived
from rainfall.
● Salary of personnel for the office building construction: This will naturally be
incurred only in the first year of operation.
● Monthly salary of the management staff: This has to cover one Project Head
(Php 30,000 per month) and three Management Staff Members (Php 18,000 per month).
● Rent: The rental fee is not pegged at the usual rate of urban lot. It is to be
emphasized that this is a social project; hence, discussions with the barangay to give a
friendly rate are to be done.
● Repairs & maintenance: As all the equipment and materials are still new at the
onset of the operation, there is no appropriation for this during the first year. The budget for
this year increases as the shelf-life of the items are prolonged.
● Delivery expenses: The estimate transportation expense is only Php 1,000 as
the idea is that the market that is identified has close proximity to the farming site. It also
incorporates the fact that there is an average of 6.5 cropping seasons in a year. Most of the
vegetables identified have a 6-9-week cropping season cycle (kindly refer to the technical
study). There was a conservative leaning in the computation; hence, the average number of
cropping seasons is only 6.5.
● Training expenses: These are incurred only in the first year. The proposed
project is targeted to the same set of drug surrenderers to maintain the continuity of the
results (not just on the economical benefits of the project but also on the rehabilitative impact
of the project upon the beneficiaries).

4.3.4. Cash Flow

The cash flow involves not just the revenues from the farming operations but also other
sources of income. As a subsidized government project, there is evidently a cash inflow

31
itemized as government subsidy. As the proposed project is designed and intended as a
rehabilitative scheme for the drug surrenderees, it is not expected that the project will be
financially viable within a short span of time (within five-year timespan). The subsidy is
sought to cover the large expenses of the project, specifically the required fixed assets and the
salaries of the personnel.

The cash flow heavily relies on the Php 1M-subsidy from the local government (or may
include other sources of money such as national agencies). If cash will only be relied upon
from the revenues gained, this amount of money cannot recoup the starting capital/fixed
capital investment needed and the monthly operating expenses.

4.3.5. Balance Statement

The Balance Statement shows the assets and liabilities of the project. As explained
earlier, assets are those resources through which future positive benefits for the project can
flow in. On the contrary, liabilities are defined as the “firm obligations of the entity arising
from past events, the settlement of which is expected to result in an outflow from the entity of
resources embodying economic benefits or service potential (COA, 2014:3)”.

The five-year projection of fixed assets has to incorporate depreciation. The following
computation from the COA (2004) is employed to arrive at the monthly depreciation expense.
It is based on the COA Circular Letter 2004-003 entitled “Computation of Depreciation
Expense of Government Property, Plant and Equipment with Revised Useful Life and
Adjustments Arising from the Revision.”

The descriptions are found below:

● Carrying Amount: It shall be the cost minus the accumulated depreciation.

● Residual Value: It shall be 10% of the cost.

32
 ● Remaining Useful Life: It shall be the revised useful life less the age of the
asset expressed in months.

The table below shows the values in relation to the calculated monthly depreciation
expense:

Table 7. Monthly Depreciation Expense for Fixed Assets

Fixed Asset Carrying Residual Life Span Calculated Monthly

Amount Value Depreciation Expense

Nursery 6,280.00 628.00 15 years or 180 Year 1: no depreciation

months yet
Year 2: 33.64
Year 3: 36.23
Year 4: 39.25
Year 5: 42.82

Office 859,933.00 85,993.30 30 years or 360 Year 1: 0

Building months Year 2: 2,223.96
Year 3: 2,303.39
Year 4: 2,388.70
Year 5: 2,480.58

Machinery & 2,950.00 295.00 10 months or 120 Year 1: 0

equipment months Year 2: 24.58
Year 3: 27.66
Year 4: 31.61
Year 5: 36.88

Vehicle 350,000.00 35,000.00 15 years or 180 Year 1: 0

months Year 2: 1,875
Year 3: 2,019.23
Year 4: 2,187.50
Year 5: 2,386.36

33
Computer 21,500.00 2,150.00 5 years or 60 Year 1: 0
months Year 2: 403.13
Year 3: 537.50
Year 4: 806.25
Year 5: 1,612.50

The monthly depreciation expenses above were considered in computing the amount
of fixed assets from year two to five.

As to the liabilities, there is zero amount recorded because the start-up capital and the
rest of yearly assets are extended not on a loan basis but under subsidy. Lastly, tax is fixed at
2%, which is the rate for percentage tax (for cooperatives).

4.3.6. Profitability

Given all the abovementioned considerations and computations, the financial study
reveals that this kind of urban farming project is profitable only when there is subsidy from
the government agencies. The high expenses that will be incurred which do not pertain
directly to the farming operations are in the forms of fixed assets such as the construction of
the office building and the computers, salary of personnel (management staff), salary of
employees/construction workers for office building construction, and training of farmer
beneficiaries. The only projected high expense that is directly involved in farming operations
is the water consumption. Hence, if the other overhead expenses and the indirect costs will be
covered by the subsidy, the project can be seen as viable.

34
Chapter 5. Socio-Economic Analysis

Socio-economic analysis is an important process in a feasibility study as it determines

the socio-economic desirability of a project – whether the society and the economy derive net
positive gains from the project (DAP, 2007:68). Government projects, like this one, place
utmost importance to socio-economic desirability unlike private sector projects which
generally consider profitability as the primary criterion.

In this regard, this feasibility study will assess the benefits of an urban farming
cooperative to its beneficiaries, in particular, and the community, in general. It will also
consider the project’s economic benefits along employment, wages and salaries, taxes, supply
of commodities, and demand for materials. To this end, the net present value, internal rate of
return, benefit cost ratio and the cash payback period will be the quantifiable indicators
needed in this economic analysis.

5.1. Benefits

The identified benefits from the project can be tangible and intangible. The intangible
benefits are:

a. Community building – creation of a high level of social organization, giving

many individuals in the community a vested interest in its success (The Ecology Center,
Udtd).
b. Creating safe places and green sceneries – establishment of safe spaces to
recreate and improve the physical space of the neighborhood. Urban farms provide green
sceneries and serenity while employing the residents, which in return, creates more local
pride and attachment to the space.
c. Improvement of air quality in the immediate environment – urban farms,
as vegetation, reduces the carbon dioxide in the air and increase oxygen. They also oxygenate
the air and offset negative effects of contaminates (BStone, 2010).
d. Learning experience for beneficiaries – beneficiaries learn how to cultivate
plants and manage farms. These can be translated into a working knowledge for the
beneficiaries in establishing livelihood and agri-business.

35
 e. Direct access to fresh produce– produce can be directly sold to the
community, thereby securing access to fresh vegetables.

Direct tangible benefit is as follows:

a. Revenues from the sale of produce – revenues from the produce enables the
project to be sustainable.

b. Additional source of income – opportunity for illegal drug surrenderees to

earn supplementary living from the urban farm and pursue other personal goals through the
monetary support from the credit cooperative.

5.2. Costs

The costs of the project are mainly from the investment and operation of the urban
farm and the cooperative’s office. These costs involve the use of real resources, classified
into: Capital Costs, and Operating and Maintenance Costs.

1. Capital Costs are the costs for the development, construction and building of
the project. These are fixed costs incurred on the purchase of tangible goods such as the
construction of the urban farm
2. Operating and Maintenance Costs include the costs of materials, labor and all
costs to finance the day-to-day operations of the urban farm cooperative. These include all
administrative costs, wages and salaries, utilities payments, security and other monitoring and
evaluation costs.

5.3. Measurement Tools

5.3.1. Net Present Value (NPV)

The Net Present Value (NPV) provides a good criterion in determining the economic
desirability of projects as it considers the difference between the present value of cash

36
inflows and the present value of cash outflow. It is used in capital budgeting to analyze the
profitability of a projected investment or project. A positive net present value indicates that
the projected earnings generated by a project or investment exceeds the anticipated costs,
both in present currency. The present value of the future cost depends on the interest rates in
the nation’s financial market. The discount rate to be considered in this study is 15% which is
applied by the National Economic and Development Authority (NEDA).

In general, an investment with a positive NPV will be a profitable one and one with a
negative NPV will result in a net loss. In computing for the NPV, you must identify the
annual benefits and costs. Next, discount all costs and benefits using the discount factor:

df = 1
(1 + r)

Where df = discount factor

r = discount rate (3.6%)
n = Number of years over which a future value is being discounted

Then, calculate the Present Value (PV) using the formula:

PV = FV x df

Where: PV= Present Value

FV= Future Value
df= discount factor

Finally, the following formula is used to get the NPV:

NPV = ∑ [ (B – C) * df]
or
NPV = ∑ [ (B – df) - ∑(C – df)

Where B= benefit
C= cost
df= discount factor

37
 Table 8. Net Present Value Calculation

Year Benefits Costs n Net Worth df

2017 0 2,061,802.25 0 -2,061,802.25 1

2018 1,312,092.30 550,264.06 1 761,828.24 0.8696

2019 1,323,327.62 173,609.60 2 1,149,718.02 0.7561

2020 1,323,639.72 187,367.15 3 1136272.57 0.6575

2021 1,323,951.81 196,509.85 4 1127441.96 0.5717

2022 1,324,263.90 206,042.74 5 1118221.16 0.4972

Total 6,607,275.35 3,375,595.65 3,231,679.70

The NPV of the project is Php 1,417,698.89. Since the NPV is greater than 0, this
means that the discounted value of the future total benefits is greater than the costs or the
investment therefore getting a higher return than expected. The calculation shows that the
project is economically feasible.

5.3.2. Internal Rate of Return (IRR)

The Internal Rate of Return (IRR), also called Economic Rate of Return (ERR),
measures the profitability of potential investments. It attempts to determine the rate of return
that the project earns by identifying the discount rate that makes the NPV of all cash flows
from a particular project equal to zero, that is, discounted benefits equal discounted cost. The
project is a good investment if the IRR is greater than the rate of interest if spent in an
alternative investment. The formula for the IRR is as follows:

IRR = r+ + NPV + x (r- - r+)

NPV+ + NPV

Using financial calculators and programs that can instantly identify the IRR, the

38
calculated IRR is 21%. This means that the project is profitable as it is above 1%.

5.3.3. Benefit-Cost Ratio

Benefit Cost Ratio (BCR), also called the Profitability Index Rate, summarizes the
overall value for money of a project or proposal. It is the ratio of the benefits of a project or
proposal relative to its costs, both expressed in monetary terms. The total discounted benefits
or the sum of the product of the annual benefits and the discount factor, and the total
discounted costs or the sum of the product of the annual costs and the discount factor, as
follows:
BCR = Total Discounted Benefit
Total Discounted Cost

The B-C ratio of the project is 1.47. With a value greater than 1, this indicates that the
benefits from the project is greater than the costs, hence, it makes the project a good
investment.

39
Chapter 6. Risk and Sensitivity Analysis

In order for the project to be successful, it is important to analyze the estimates and
projections vis-à-vis the reality that uncertainties will inevitably affect the variables and
elements of the project.

This chapter on risk and sensitivity analysis addresses this crucial component, which
brings the estimates contained in the preceding chapters “from a deterministic world … to a
probabilistic one where uncertainty prevails, but where some knowledge of likely probability
distribution exists” (NEDA, 2005). Using sensitivity analysis, key variables are identified and
changes in their value are gauged based on their effect on the success of the project. An
enumeration of project risks is also included.

6.1. Sensitivity Test

In conducting this sensitivity test, a reappraisal of the project is essentially done

(Umeh, 1977) by calculating the effect of the changes in project variables to the NPV. More
specifically, the sensitivity indicator (SI) is computed to show “which variables the project is
or is not sensitive to” (Nwanekezie, Iroegbu, Okorocha, & Wogu, 2011).

Three key variables are initially identified and analyzed: subsidies, operating
expenses, and revenue from operations. Base case values of these variables with the
NPV were derived from the previous chapters. For the sensitivity test, the values of the
variables were adjusted to increase or decrease by 20% while NPV1 was computed using
these adjusted values. The formula used to compute SI is shown below:

40
6.1.1. Subsidy

The project is highly dependent on the funds that will be provided by the local
government and other fund sources. An annual appropriation is pegged at Php 1,000,000.00
with a total of Php 5, 000, 000.00 for the project’s life period of 5 years. In the test, this is
projected to decrease by 20%.

Table 9. Sensitivity Indicator Calculation for Subsidy

Variable Subsidy
Xb Php 5, 000, 000.00
X1 Php 4, 000, 000.00
NPVb Php 1,417,698.89
NPV1 Php 747,267.87
SI 2.36

NPV at sensitivity test is negative. The resulting SI is 2.36, which indicates that a
20% change in the expected amount of subsidy will result to 47% (3.77 X 20%) change in the
NPV.

6.1.2. Operating Expenses

Operating expenses are estimated to be at Php 3,375,595.65 for five years. In the test,
this is projected to increase by 20%.

Table 10. . Sensitivity Indicator Calculation for Operating Expenses

Variable Operating Expenses
Xb Php 3,375,595.65
X1 Php 4,050,714.78
NPVb Php 1,417,698.89
NPV1 Php 815,787.24
SI (2.12)

41
 The resulting SI is (2.12), which indicates that a 20% increase in operating expenses
will result to 42% (2.12 X 20%) change in the NPV.

6.1.3. Revenue from Operations

The harvest sales are the source of the revenue from operations of the project,
estimated to be at Php 1,607,275.35 for five years. Production, marketing, prices, and other
variables affect the revenue. For the purpose of this study, the test is limited to the actual
revenue in order to test the underlying assumption of the estimated value which is that all the
crops harvested will be sold at prevailing market prices. Any change in this assumption, such
as decrease in demand, decrease in selling price, and underproduction will result in the drop
of revenue. In this test, it is projected to decrease by 20%.

Table 11. . Sensitivity Indicator Calculation for Revenue from Operations

Variable Revenue from Expenses
Xb Php 1,607,275.35
X1 Php 1,285,820.28
NPVb Php 1,417,698.89
NPV1 Php 1, 202, 678.48
SI 0.76

NPV is negative. The resulting SI is 0.76, which indicates that a 20% decrease in
revenue from operations of the urban farm will result to 15.17% (0.76 X 20%) change in the
NPV.

6.1.4 Assessment

Among the three variables, a change in the amount of subsidy exerts the greatest
influence on the financial feasibility of the project. A mere 20% reduction from the expected
amount of Php 5 M for five years will result to 47% reduction of the NPV. Meanwhile,
change in the operating expenses exerts almost similar influence, pegged at 42%, as with
subsidy. Finally, change in expected revenue from the operations have minimal influence,
with only 15.17%.

42
 Table 12. Sensitivity Test Results
Variable Change Xb X1 NPVb NPV1 SI
Subsidy -20% Php 5 M Php 4 M Php 1.4 M Php 747,267.87 2.36
Operating Expenses +20% Php 3.4 M Php 4.1 M Php 1.4 M Php 815,787.24 (2.12)
Revenue from -20% Php 1.6 M Php 1.3 M Php 1.4 M Php 1.2 M 0.76
Operations

6.2. Risk Assessment

In addition to the uncertainties surrounding the financial viability of the project, risks
must also be identified regarding its over-all implementation and success. Doing so allows
one to assess probability of poor outcomes and “identify ways in which the project can be
made more robust, and to ensure that the risks that remain are well managed.”

For the “Gulayan sa Batasan” project, major risks identified were 1) underproduction,
2) overproduction, 3) extreme weather conditions such as heavy rains and extreme heat, and
4) low involvement and commitment among target participants (See Annex F for the
complete details on the risk assessment).

Specific contingency plans and mitigation initiatives are likewise identified for these
risks. On the level of production, regular monitoring and control of production should be
done. While unavoidable, effects of extreme weather conditions can be mitigated through
proper installation of materials to protect the crops and coordination with the local DRRM
council for monitoring occurrence of natural disasters and how to properly respond. The
commitment and involvement of target participants ought to be prevented and addressed at
the onset through advocacy initiatives presenting to them the benefits of the project.

43
Chapter 7. Organization and Management Analysis

In every organization, institution, or any social unit that composes of a group of

structured and managed individuals with a common goal or objective set in place, needs to
have their own organizational and management structure. The organizational and
management structure is significant in an organization’s decision-making and its processes
(Suttle, 2017). It is vital in the proper distribution of authority, roles, functions and
responsibilities of a given organization, institution, or even in programs or projects of such
entities. Furthermore, through the organization and management initiatives, the performances
of employees and staff are evaluated to ensure that their works and functions are still in
accordance to what is expected of them, as well as to have a general view of the status of the
project through the collated analysis of such evaluations.

7.1. Project Offices/Units

In consideration of the analyses presented in the earlier parts of this paper, the group
has identified below the offices or units that are relevant to the organization and management
of the urban farming project in Barangay Batasan Hills:

Table 13. Offices and Units of "Gulayan sa Batasan" Project

Office/Unit Needed Main Functions

Office of the Executive Responsible for the successful leadership and management of the
Director urban farm project and its staff, activities, expansion, and
execution of its mission, according to the strategic direction set
by the Board

Operations & Responsible for overall administrative operations, planning,

Administrative coordination and implementation of administrative systems of
the project

Financial Responsible for the overall financial functions of the project

including financial management and execution

44
 Marketing Responsible for the overall management, supervision, planning,
development, and implementation of the project’s marketing
initiatives

7.2. Project Ownership

This feasibility study on Barangay Batasan Hills’ urban farming project will be owned
by the local government unit as a single proprietorship. Hence, it will be managed and
operated by the barangay itself. They will have the authority to create their own
organizational structure and allocate necessary work functions as they deem necessary and
appropriate.

7.3. Organizational Chart

Moreover, the management and operation of the project that will highlight the flow
and relationship of authority among the staff or employee will be in accordance to the
organizational chart indicated below:

Figure 7. Organizational Chart for the Proposed Project

45
7.4. Job Roles and Functions

Not only does a hierarchical structure provide a more formal organizational scheme in
the management of the urban farming project, but it will also define and clarify the necessary
roles, functions, and responsibilities of each staff or employee (Lohrey, J., 2017). Clear and
defined roles will help the workers appreciate more their functions in the management of the
project. In fact, those who know well the tasks given to them and what are expected of them
are able to cooperate more in the growth and success of the project (Xaxx, 2017).

The urban farming project of Barangay Batasan Hills needs the following positions
with given defined roles and functions in order to properly carryout and execute the said
project:

Table 14. Roles and Functions

Position Main Functions

Project Manager ● Responsible for the successful leadership and

management of the urban farm project and its staff,
activities, expansion, and execution of its mission,
according to the strategic direction set by the Board
● Acts as a professional advisor to the Board on all
aspects of the project and its activities and fosters effective
team work between Board and Executive Director, and
between the Executive Director and the staff
● Oversees planning, implementation, and evaluation
of the project
● Monitors day-to-day delivery of the activities and
services of the project to maintain or improve quality
● Works with the Board and staff in preparing a
budget; sees that the project operates within budget
guidelines; and ensures that adequate funds are available to
allow the project to carry out its mission

46
 Operations & ● Responsible for overall administrative operations,
Administrative Manager planning, coordination and implementation of
administrative systems of the project
● Maintains administrative staff by recruiting,
orienting and training of personnel
● Monitors inventory of farming supplies and
purchasing of necessary materials and equipment
considering budgetary limitations
● Oversees facilities services and maintenance
activities under the project
● Ensures the organization and supervision of other
administrative activities and operations of the project
including adherence to policies and regulations

Finance Manager ● Responsible for the overall financial functions of the

project including financial management and execution
● Responsible for the overall coordination, planning,
allocation and management of financial investment
activities and partnership strategies to engage relevant
partners and raise necessary funds and grant opportunities
for the project’s sustainability
● Maintains and ensures that funds and grants are
utilized in the most efficient manner and in accordance
with the approved budget
● Produces transparent and consistent financial reports

47
 Marketing Manager ● Responsible for the overall management,
supervision, planning, development, and implementation
of the project’s marketing initiatives
● Develops marketing strategies in line with the
project’s objectives
● Oversees the marketing budget of the project
● Monitors and reports effectively all marketing
communications
● Manages the publication of all marketing materials of
the project in line with its marketing plans
● Works closely with partner and design agencies for
product plans and launches

7.5. Job Qualifications

Defined and clear roles and functions will not only be the basis in selecting the best
person to handle a specific project position. As much as the employees would also like to
know what are expected of them, job descriptions or qualifications would also be an
advantage to both the employer or the employee, but it would also help both determine how
critical the position is (Financial Wisdom Online Resource Library, n.d.) The qualifications
would not only determine the potential of the applicant, but it can also be the basis in
interviewing applicants and eventually, evaluating their job performances.

The applicant for each position determined below should have at least, but not limited
to, the following qualifications:

7.5.1. Project Manager

● Education: A 4-year degree graduate from an accredited institution

● Experiences: At least with 2 years of experience on managing and supervising
professional staff or personnel; experience working and reporting with Board of
Directors; experience interacting with different constituents such as donors, nonprofit
organizations, civil society organizations; local leaders and officials; experience in

48
 managing projects and budgets, fundraising and development; experience on
agriculture and urban farming
● Skills: Excellent in writing and public speaking; leadership skills; operational and
program planning and management; organizational management skills; negotiation
skills; program management; can utilize computer applications
● Training: Relevant training on the given experiences, skills and position; training on
urban farming and agriculture is an advantage
● Traits: Should show competence on adaptability, building relationships, effective
communication, creativity, innovation, ethics, sound judgement and decision-making.
Should foster teamwork and focus on the client's’ needs, as well as being organized
and disciplined

7.5.2. Operations & Administrative Manager

● Education: Graduate of business administration or any related course
● Experiences: At least with 1 year experience on administrative management or work
as well as managing and supervising professional staff or personnel; experience
interacting with different constituents such as donors, non-profit organization and
civil society organizations; experience in managing projects and budgets
● Skills: Tracking budget expenses; quality and process management; staffing skills;
leadership skills; organizational skills; communication skills; reporting skills;
financial skills; program management; can utilize computer applications
● Training: Relevant training on the given experiences, skills and position; training on
urban farming and agriculture is an advantage
● Traits: Should show competence on adaptability, building relationships, effective
communication, creativity, innovation, ethics, sound judgement and decision- making.
Should foster teamwork and focus on the client's’ needs, as well as being organized
and disciplined

7.5.3. Finance Manager

● Education: At least earned a bachelor’s degree in finance, business administration,
accounting, or any related course
● Experiences: At least with 1 year experience on financial management or work as
well as managing and supervising professional staff or personnel; experience

49
 interacting with different constituents such as donors, non-profit organization and
civil society organizations; experience in managing projects and budgets
● Skills: Tracking budget expenses; quality and process management; staffing skills;
leadership skills; organizational skills; communication skills; reporting skills;
financial skills; program management; can utilize computer applications
● Training: Relevant training on the given experiences, skills and position; training on
urban farming and agriculture is an advantage
● Traits: Should show competence on adaptability, building relationships, effective
communication, creativity, innovation, ethics, sound judgement and decision- making.
Should foster teamwork and focus on the client's’ needs, as well as being organized
and disciplined

7.5.4. Marketing Manager

● Education: At least earned a bachelor’s degree in marketing, business administration,
accounting, or any related course
● Experiences: At least with 1 year experience on marketing management or work as
well as managing and supervising professional staff or personnel; experience
interacting with different constituents such as donors, non-profit organization and
civil society organizations; experience in managing projects and budgets
● Skills: Tracking budget expenses; quality and process management; staffing skills;
leadership skills; organizational skills; communication skills; reporting skills;
financial skills; program management; can utilize computer applications
● Training: Relevant training on the given experiences, skills and position; training on
urban farming and agriculture is an advantage
● Traits: Should show competence on adaptability, building relationships, effective
communication, creativity, innovation, ethics, sound judgement and decision- making.
Should foster teamwork and focus on the client's’ needs, as well as being organized
and disciplined

50
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