I.

PROJECT BACKGROUND

The municipality of Gen. Luna is one of the major tourist

destinations of the province. Located in Siargao Island along the coastline
facing the Pacific Ocean, it has the longest white sand beach and boasts of its
famous Cloud Nine surfing area.

Despite the growth in the tourism sector resulting from the growing
influx of tourists and the establishments of resorts and other related facilities,
the town does not have a market building. The existing facility that it is
presently using as a market is the fish landing structure.

Basically, the existing structure with 12 vendors operating in a 96 m2

floor area is already congested. Six of the users establish their makeshift stalls
within the vicinity while the rest used the stalls that were set-up by the local
government.

Considering the expected growth in population and increasing influx

of visitors and tourists, there is a pressing need to establish a good public
market facility. It for this reason that the project was prioritized in the
development agenda of the municipal government of Gen. Luna.

The establishment of the project will benefit not only the vendors
and the buying public but also the local government with its increased
revenues, as well as the marginal fishermen and farmers whose products will
be sold in the market.
II. PROJECT DESCRIPTION

The proposed project is the construction of new public market of the

municipality of General Luna. It will be located on the site identified in the
municipal comprehensive land use plan and approved by the Municipal
Development Council and the Sangguniang Bayan. This is situated in Brgy.
Poblacion 4 which is approximately 450 meters away from the central built-
up area of the town. The site has a flat terrain alongside the national
highway.

The building is a one storey structure containing a total floor

area of 535 m2, consisting of 12 wet section stalls, 16 built-up dry stalls and
14 spaces available for various commercial uses. The target users or lessors
will be the market vendors, traders and service establishments.

The main structure will be made of concrete, wood and galvanized

iron roofing. The project will have its own water system and will also offer
comfort room facility for male and female use.

The project will be owned by the municipal government of Gen.

Luna, Surigao del Norte and will be directly managed by a Market
Management Team headed by the Market Inspector. As a local
government enterprise it will be a revenue generating entity and expected to
defray its operating costs requirement. The main source of revenue of the
project is stalls and space rentals from the users/lessors.

2
III. MARKET STUDY

The proposed project, being an economic enterprise will develop the

area into a central business district of the poblacion. It will be located along
the national highway where it is easily accessible and convenient for the
market goers.

The new market facility will offer different types of market spaces
which will benefit the fisherfolks, vendors, various business enterprises and
the buying public. It is expected that it will be able to offer more
convenience not only to the vendors but also to the people who might buy
products and avail of various services in the market facility.

Analysis of the Market

The municipal government is the only provider of market spaces and

stall for lease to traders. There is no other private business that leases
market spaces in the municipality. At present, the existing market has 6 wet
stalls/table and 2 dry stalls. But as of December 2007, there are 12 vendors
operating in the public market since there are users that operate in makeshift
stalls within the premises. In 2002, it had started only with two users
gradually increasing to its present number.

3
Table 1. Historical Demand

YEAR OPEN WET BUILT-UP STALL

STALLS INSIDE THE WITHIN THE TOTAL
MARKET VICINITY BUILT-UP
2002 2
2003 4
2004 4 2 2
2005 4 2 2
2006 6 2 2 4
2007 6 2 4 6

Projected Demand

Based on the existing trend of the usage of open wet and built-up
stalls, the rate of increase is computed to be at 0.8 and 1.33 stalls per year
respectively, the following is the projected demand of market stalls:

Table 2. Projected Demand of Stalls

YEAR OPEN WET

STALLS BUILT-UP STALL
2008 6.80 7.33
2009 7.60 8.66
2010 8.40 9.99
2011 9.20 11.32
2012 10.00 12.65
2013 10.80 13.98
2014 11.60 15.31
2015 12.40 16.64
2016 13.20 17.97
2017 14.00 19.3
2018 14.80 20.63
2019 15.60 21.96
2020 16.40 23.29
2021 17.20 24.62
2022 18.00 25.95

4
 Based on the foregoing table, it is projected that about 18 open wet
stalls and 26 dry stalls for a total of 44 stalls will be needed by the year 2022.
The proposed project is designed to have 12 open wet stalls, 16 built-up dry
stalls as well as 14 commercial spaces for a total of 42 units available for
interested users.

Despite this scenario, we expect that all the available spaces will be
occupied within a year after start of commercial operation considering the
increasing number of potential users interested to lease the facilities. With the
aggressive tourism promotion efforts of the present administration, influx of
visitors will correspondingly trigger certain surge of business activities in the
municipality.

Product

The main products of the project are market space and stalls for rent by the

market vendors. The comfort room within the market building although a regular

service facility is a product in itself since fees will also be collected from the

users.

Table 3. Type of Stalls, Number and Area

TYPE OFPRODUCT NO. OF UNITS AREA/M2

BUILT-UP STALL 16 5.72
OPEN STALL 12 5.72
SPACE ‘A’ 1 11.44
SPACE ‘B’ 11 11.18
SPACE ‘C’ 2 21.50

5
Users

The primary target users of the market stalls are the fish and vegetable
vendors, sari-sari stores operators and other interest micro-entrepreneurs planning
to set-up trading or service business. For the comfort rooms, the vendors and
individuals going to the public market are the potential users.

Pricing

Market lessors are required to pay goodwill money upon approval of their
lease agreement with the municipal government. The market stall and spaces will
have the following monthly rental rates as presented in Table 4.

Table 4. Products and Pricing

TYPE OF MONTHLY GOODWILL

PRODUCT RENTAL MONEY
BUILT-UP (DRY) STALL 750.00 5,000.00
OPEN (WET) STALL 500.00 3,000.00
SPACE ‘A’ 1,500.00 10,000.00
SPACE ‘B’ 1,500.00 10,000.00
SPACE ‘C’ 2,500.00 15,000.00
COMFORT ROOM 2.00/USE

The monthly rental is assumed to increase at a rate of five (5%) per year.
At this rate, the total revenue on stall rental for the first year at PhP 492,000.00
will reach 974,126.35 by the fifteenth year. Comfort room user’s fee is set at P
2.00 per person.

6
Promotion

To ensure public awareness and reach potential users of the new market
facility, the local government will undertake a number of promotional activities as
follows:

1. Consultation Meeting with the Business Sector - Existing and

Potential Market Lessors
2. House and Firm Visits/Campaign
3. Posters on Conspicuous Places

Projected Revenues

The revenue of the project will be coming from stall rentals, goodwill
money, comfort room fees as well as business and license fees from the vendors
within the public market. Stall rentals being the main source of income will
contribute much on the first year with a total inflow of Php 492,000.00 and is
expected to increase to PhP 974,126.35 on the 15th year.

A total of Php 261,000.00 of goodwill money on the first year and PhP
77,800.00 of comfort room users’ fees every year will contribute to the cash
inflow of the project. The business and license fees which will increase every
five years will be substantial contribution to the project’s cash inflows. The total
revenue on the first year of operation is Php 1,063,388.00 and by the 15th year,
annual cash inflow is expected to reach PhP 1,284,514.35. By the end of the 15th
year of operation, the project will have accumulated revenues of PhP
15,533,473.29.

7
 Table 5. Projected Revenues

REVENUE SCHEDULE

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

GOODWILL MONEY 261,000.00

RENTALS* 492,000.00 516,600.00 542,430.00 569,551.50 598,029.08 627,930.53 659,327.06 692,293.41 726,908.08 763,253.48 801,416.16 841,486.96 883,561.31 927,739.38 974,126.35
COMFORT ROOM
FEES* 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00

BUS. LICENSE & FEES 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00

TOTAL 1,063,388.00 826,988.00 852,818.00 879,939.50 908,417.08 938,318.53 969,715.06 1,002,681.41 1,037,296.08 1,073,641.48 1,111,804.16 1,151,874.96 1,193,949.31 1,238,127.38 1,284,514.35

8
IV. TECHNICAL STUDY

1. Project Description

The proposed project is the construction of new public market of the

municipality of General Luna. It will be located on the site identified in the
approved municipal comprehensive land use plan. This is situated in Brgy.
Poblacion 4 which is approximately 450 meters away from the central built-up area
of the poblacion. The site has a flat terrain alongside the national highway.

The proposed building is a one storey structure containing a total floor area
of 535 m2, consisting of 12 wet section stalls and 13 spaces available for various
commercial uses. The project will also offer comfort room facilities for male and
female use.

2. Site Selection

There are two alternative sites considered for the proposed project location –
in Barangay 4 along national road and Barangay 5 along provincial road. The first
site in Barangay 4 was chosen due to inherent advantages as follows:

 Preferred by the buying public

 Accessible being located along national road
 Near electric power transmission line
 Flat terrain and not easily flooded

9
Table 6. Site Selection Criteria and Findings

Parameters Site 1 Site 2

1. Location Barangay 4 (along Barangay 5 (along provincial

national highway) road)
2. Area Available 0.5 ha. 0.4 ha.
3. Ownership Private Land Government Property
4. Distance from .45 kilometer 7.4 kilometers
Central Built-up
Area
5. Type of Terrain Flat Flat (easily flooded)
6. Type of Access Concrete pavement Gravel road
Road
7. Availability of
Utilities:
a. Water No existing water No existing water facilities
b. Power facilities Far from electric
Near electric transmission
transmission Line
line Cocoland (no settlements)
8. Actual Land Use cocoland (trend of
expansion of settlements)
9. Price per sq.m. P500.00/sq.m. P200.00/sq.m. (land
assessment based in the Mun.
Assessor’s Office)
10. Environmental
Condition
a. Geology Sandy soil Sandy soil
b. Highest flood .30 m. 1.0 m.
level
c. Vegetation 90% grassland 60% grassland
70% cocoland 40% cocoland

11. Other -for acquisition -government-owned

Parameters -favored by the buying -no support
Public & stall owners
-approved site in the
MCLUP

10
3. Area Plan

The over-all lot area of the project is 5,000 m2. A total of 535 m2 for
the market building while an open space of which includes the parking area
totals to 4,425.00. The separate structures of the comfort room and elevated
water tank will occupy 15 m2 and 25 m2 respectively (Table 7).

Table 7. Lot Area Utilization Details

Description Area % to Total

(m2)
Market Building 535 10.7
Toilet 15 .3
Elevated Water Tank 25 .5
Open Space 4,425 88.5
Total 5,000 100

4. Market Building Stalls Space Allocation

The building having an area of 535 m2 will be having a total of 42 built-up

and open stalls and commercial spaces available for lease by interested users. The
aisle and walkways will have a total floor area allocation of 197.42 m2.

Table 8. Market Building Floor Area Details

Space Description No. of Area Total Area % to

Units (m2) (m2) Total Floor Area
Built-Up Stall (Dry) 16 5.72 91.52 17.10
Open Stall (Wet) 12 5.72 68.64 12.83
Space ‘A’ 1 11.44 11.44 2.14
Space ‘B’ 11 11.18 122.98 22.99
Space ‘C’ 2 21.50 43.00 8.04
Aisle, Walkway 197.42 36.90
TOTAL 535.00 100.00

11
 Figure 1. Floor Layout of Market
Building ______

12
5. Project Component and Cost

The main structure of the project is the market main building estimated to
cost about PhP 2,786,000.00 equivalent to 90.92% of the cost of all structures and
about 78.35% of the total project cost (Table 9). The building will be established in
a 5,000 m2 lot to be purchased by the local government at PhP 100,000.00. The
market facility will have comfort rooms and water system estimated to cost PhP
115,000.00 and PhP 98,000.00 respectively. The total cost of building and facilities
is PhP 3,000,000.00 equivalent to 84.34% of the total project cost.

Table 9. Cost By Component

Project Component Area Total Cost Cost Per

(m2) (PhP) Square Meter
1. Lot 5,000 100,000.00 20.00
2. Main Building 535.00 2,787,000.00 5,209.34
3. Comfort Room 15.00 115,000.00 7,666.67
4. Water System - 98,000.00
5. Equipments - 50,000.00

Other resource requirement of the project includes weighing scale. The

acquisition cost of the weighing scale, wheel barrow and waste containers is
estimated to be PhP 10,000.00, PhP 3,000.00 and PhP 10,000.00 respectively.
Included in the budget for equipments is the acquisition of a computer.

For utilities, electric power supply is estimated to cost P 2,500.00 per month
during the first year of operation and will increase at a rate of 1% per year. Water
will be supplied by the project’s water system comprising a dug well with an
electric water pump and elevated water tank.

For cleanliness and proper waste management of the facility, wheelbarrow,

waste containers and other minor items such as broom, shovel, rake, etc. will be

13
acquired. The minor items will be purchased chargeable to supplies and materials
while the wheelbarrow and waste containers will be included in the capital outlay of
the project. These items shall be acquired before formal operation of the market.

6. Construction Activities and Cost Estimates

The project will generally be implemented in two phases namely, pre-

operating phase and actual commercial operation. The pre-operating phase will
cover 7 months starting from mobilization until de-mobilization. The concrete
works until installation of roofing will last for about five (5) months after which
painting and tile works will follow for 1 month period. Building construction
activities will entail a total cost of PhP 3,000,000.00 covering fourteen major
activities (Table 9). The highest budget allocation is for the reinforced concrete
totaling PhP 1,395,000.00.

Table 10. Construction Activities and Cost Estimates

Activities Cost
1. Mobilization 8,000.00
2. Clearing and Grubbing 20,000.00
3. Staking & Lay-out 5,000.00
4. Enbankment / Foundation Fill / Agg. Subbase Course 215,000.00
5. Reinforced Concrete Works 1,395,000.00
6. Electrical Installation 45,000.00
7. Carpentry Works 475,500.00
8. Masonry Works 301,500.00
9. Plumbing 90,000.00
10. Roofing 340,000.00
11. Tile Works 100,000.00
12. Demobilization 5,000.00
Total 3,000,000.00

14
7. Environmental Impact Assessment

The implementation of the project has minimal impact to the immediate

environment such as the cutting of 25 coconut trees within the lot area during pre-
operation phase. During operation, bad smell is expected, especially in cases if the
stalls particularly in the fish section will not be regularly cleaned.

The proposed mitigation measure is to plant trees around the market area
premises. Strict implementation of cleanliness and sanitation program as well as
putting up of waste containers and the installation of appropriate drainage system
and septic tank will also be done (Table 10).

Appropriate ecological solid waste management (SWM) practices like waste

segregation and other practices shall be adapted in the public market. Disposal of
solid waste to designated area identified by the local government will be done
regularly as one of the proposed mitigating measures during operation. Of course
the most important aspect of this undertaking is the cooperation of the stall users
and the general public considering the limited manpower of the LGU’s market
management. Hence, SWM advocacy effort shall be intensively done within the
market along with its municipal wide implementation.

The cost of undertaking the proposed mitigating measures during

construction activities shall be charged to contingencies and other appropriate
budget items. During the actual operation, any expenditure relative to
environmental impact mitigation shall be charged against the operating expenses.

15
 Table 11. Environmental Impact Assesment (EIA)

POSSIBLE EFFECTS ACTIVITIES / COMPONENT

LAND DEVELOPMENT CONSTRUCTION OPERATIONAL
MAGNITUDE MITIGATING COST MAGNITUDE MITIGATING MEASURES COST MAGNITUDE MITIGATING MEASURES COST
MEASURES (PhP) (PhP)
1. TERRAIN & NATURAL LOW – SLIGHT ELEV. OF FLOOR LOW - EXCAVATE ACCORDING TO
DEV’T. INCREASE IN SHOULD EXCEED EXCAVATION PLAN LAY-OUT; USE
ELEVATION EXISTING ROAD 100,000.00 EXCAVATED SOIL AS
FILLING MATERIALS
2. SOIL STABILITY NO EFFECT NO EFFECT
ERROSION
3.SURFACE WATER NO EFFECT NO EFFECT
FLOWS/QUANTITY
4.GROUND WATER NO EFFECT HIGH – USE OF THOROUGH GROUND MEDIUM MINIMIZE WATER USE; 5,000.00
QUANTITY ELECTRIC WATER WATER LEVEL ASSESSMENT UTILIZE RAINWATER AS
PUMP PRIOR TO CONSTRUCTION ADDITIONAL WATER
SUPPLY
5.GROUND WATER QUALITY NO EFFECT NO EFFECT HIGH – LEACHING ENSURE FUNCTIONALITY 350,000.00
AND SEEPAGE OF OF DRAINAGE SYSTEM
EFFLUENTS AND SEPTIC TANKS
6.CLIMATE NO EFFECT NO EFFECT
7. AIR QUALITY NO EFFECT LOW – FOUL MAINTAIN CLEANLINESS 10,000.00
ODOR AND SANITATION;
IMPLEMENT SOLID
WASTE MANAGEMENT
PRACTICES
8. NOISE LOW – USE OF MINIMAL USE OF LOW – USE OF MINIMAL USE OF HEAVY
HEAVY HEAVY HEAVY EQUIPMENTS
EQUIPMENTS EQUIPMENTS EQUIPMENTS

16
 Table 11. Environmental Impact Assesment (EIA)

POSSIBLE EFFECTS ACTIVITIES / COMPONENT

LAND DEVELOPMENT CONSTRUCTION OPERATIONAL
MAGNITUDE MITIGATING COST MAGNITUDE MITIGATING COST MAGNITUDE MITIGATING COST
MEASURES MEASURES MEASURES
BIOLOGICAL EFFECTS
1.ECOSYSTEM FUNCTIONTERRESTRIAL NO EFFECT NO EFFECT
2. VEGETATION LOW – ONLY 10 LANDSCAPING, 5,000.00 LOW
COCO TREES PLANTING OF
WILL BE CUT TREES AROUND
DOWN MARKET
PREMISES
3. WETLANDS NO EFFECT NO EFFECT
4. FOREST RESOURCES NO EFFECT NO EFFECT
5. WILD LIFE TERRESTRIAL AVIAN NO EFFECT NO EFFECT

6.TERRESTRIAL HABITAT NO EFFECT NO EFFECT

7.BIO DIV ERSITY NO EFFECT NO EFFECT
8. REAR SPICIES/ECOSYSTEM NO EFFECT NO EFFECT
9. PROTECTED AREAS NO EFFECT NO EFFECT
10. ECOSYSTEM FUNCTION/AQUATIC NO EFFECT NO EFFECT
12. WILDLIFE AQUATIC NO EFFECT NO EFFECT
13. FISH STOCKS NO EFFECT NO EFFECT

17
 8. Social Impact Assessment

The expected social impact during the construction activities is the

excessive noise caused by heavy equipments disturbing residents near the
construction site, and the preference of men in the hiring of workers. Although
considered to be minor, such concerns shall be addressed accordingly. Appropriate
hiring policies shall be set allowing interested women to be given job opportunities
and setting work schedule such that use of heavy equipments will be during daytime
only.

During operation, similar gender issues on hiring preference may also crop up.
Hiring criteria has to be set in such a way that equal opportunities shall be given to
men and women interested in their qualified positions (Table 11).

Table 12. Social Impact Assessment (SIA)

COMPONENT ACTIVITIES POSSIBLE IMPACT MAGNITUDE MITIGATING MEASURES COST

LAND Cutting of Coco None
DEVELOPMENT trees
Hauling of filling Complaints – Noise, traffic, road Medium  Travel at minimum speed, do not
materials littering overload filling materials
Leveling Complaints-noise Medium  Work should be done at day time only.
CONSTRUCTION Job Hiring Limited number of applicants High  Conduct interview to all applicants. P5,000.00
are hired  Set criteria /qualification for hiring
-% women against men.  Even equal opportunity to both women
& men.
 Hire female applicants in applicable
positions
Purchase of Materials Possible conflicts of interested High  Strictly follow RA 9184 P10,000.00
suppliers
Construction proper Complaints-Noise, traffic, Medium  Work should be done at day time only
littering  Maintain house keeping
OPERATIONAL Selections and * Excess of interested High  Set proper system and criteria for P2,000.00
acceptance of stall stall users selection of stall users
applicants * % of women & men users.
Hiring of market * Limited number of applicants medium  Conduct interview to all P5,000.00
personnel are hired applicants.
% women & men in the  Set criteria /qualification for hiring
organization.  Ensure equal opportunity for both
* % women in supervisory women and men.
position.  Hire female applicants in applicable
positions
Maintenance and Improper sanitation and waste High  Established appropriate sanitation
Operation disposal and waste disposal system

18
9. Project Implementation Plan

The foremost concern on project implementation is fund sourcing. How

and where does the municipal government get the needed financial resource to
implement the project considering its financial condition? Although the project is
a priority need of the community, the local government simply doesn’t have the
ready funds to implement it. It has to seek financial support from the national
government and other donors such as congressmen and senators. Despite the fact
that there are some funding institutions that can offer loan to the municipality, it
has to seek low interest bearing credit facility considering the project’s overall
financial scenario.

Being as it is, fund sourcing activities is expected to be done by the

municipality the soonest possible with the support of other agencies such as the
National Economic Development Authority and other agencies. It will start
before construction and will end until funding commitments enough to finish the
project will be achieved. The Chief Executive being the primary responsible for
finding ways on securing funding for the project will have to seek support and
established linkage with various entities.

The project may be started using available funds of the municipality as its
equity build-up, while working on to get funding support from donors and
financing institutions. Since the construction period will last about seven months
based on the technical study, the project will be operational by the end of the eight
month (see Gantt Chart).

The most critical activity of the project is of course the fund sourcing and
construction. Once the main structure is complete along with the comfort room
and water facilities, it will now be ready for commercial operation upon
placement of personnel.

19
 The responsibility of the overall implementation, from project packaging,
fund sourcing up to construction and operation shall be lodged to the Technical
Working Group (TWG) headed by the Municipal Planning and Development
Coordinator. Although the Municipal engineer will directly supervise the
construction activities while the direct management during operation will be
handled by the market management team, the TWG will continue to oversee its
operation under the direction of the Municipal Mayor to ensure its long term
sustainability.

The project will generally be implemented in two phases namely, pre-

operating phase and actual commercial operation. The pre-operating phase will
cover 7 months starting from mobilization until de-mobilization (see Gantt Chart).
Immediately after demobilization, hiring or designation of market personnel will
follow. Once the complete manpower complement will be in place, the training of
market administration staff will be undertaken. During the training, market
management Policy, Systems and Procedures (PSP) drafted by the TWG will be
finalized with the inputs of the staff considered and discussed. Aside from the basic
operational concerns of the market, to be considered in the PSP among others will
be the market lessors application procedures, finance and administrative procedures,
monitoring and evaluation system as well as sanitation and cleanliness maintenance
program within the context of the ecological solid waste management mechanism
that will be implemented by the LGU under RA 9003 otherwise known as
Ecological Solid Waste Management Act of 2000.

The Technical Working Group will facilitate the formulation and

finalization of PSP together with the market management team. The finalized PSP
will be submitted to the Municipal Mayor for approval before actual
implementation. The over-all project implementation timetable is presented in the
following Gantt Chart.

20
 Gantt Chart: Project Implementation Timetable

ACTIVITIES MONTHS

0 1 2 3 4 5 6 7 8
Pre-Operation
1. Det. Engineering Design Preparation (completed)
2. Fund Sourcing
3. Mobilization
4. Clearing and Grubbing
5. Staking & Lay-out
6. Structure Excavation
7. Enbankment / Foundation Fill / Agg. Subbase Course
8. Reinforced Concrete Works
9. Electrical Installation
10. Masonry Works
11. Truss Installation
12. Plumbing
13. Roofing
14. Tile Works
15. Demobilization
16. Acquisition of Waste Containers, Wheelbarrow, etc.
17. Formulation of Policy, Systems & Procedures
Operation
18. Hiring / Designation of Market Personnel
19. Training – Market Operation Management
20. Finalization/Approval of PSP
21. Start of Operation
22. Acceptance of Lessors
23. Monitoring & Evaluation

21
V. ORGANIZATION AND MANAGEMENT STUDY

1. Pre-Operation

The project will be implemented upon approval and appropriation of funds

of the project by the Sangguniang Bayan. The Municipal Mayor will be responsible
in sourcing out funds to finance the implementation of the project in whatever
means that is acceptable to the Sangguniang Bayan. The Chief Executive will have
general overseeing function in the implementation of the project upon approval of
the Sangguniang Bayan.

During the pre-operating period of the project, task and responsibilities will
be undertaken by the Technical Working Group (TWG) created by the LGU by
virtue of an executive order of the Municipal Mayor to be composed of selected
employees capable of performing the activities. The TWG which is to be composed
by the Municipal Planning and Development Coordinator, Municipal Engineer and
Municipal Health Officer, will perform necessary technical preparations and tasks
during pre-construction and construction period. The TWG will be chaired by the
Municipal Planning and Development Coordinator. It will be the job of the TWG
to regularly monitor the progress of the project such that problems and concerns
regarding its implementation will be addressed promptly.

The Municipal Engineer will directly supervise the construction of the

building to ensure that technical requirements and specifications will be complied
and followed according to the plan. The Municipal Engineer will report to the
Municipal Mayor and the Chairman of the TWG on the progress of the construction
activities.

The Municipal Treasurer, Budget Officer and Accountant will provide

necessary administrative support to the project implementation especially during
the construction phase.

22
Figure 2. Organizational Structure (Pre-Operating & Construction Phase)

Municipal Mayor Sangguniang Bayan

Technical Working Group

MPDC – Chairman Administrative Support
MEO, MHO MTO, MAcct, MBO

Project Supervision
Municipal Engineer

23
 The following local officials and their respective functions will be involved in
the project implementation:

Table 13. Positions and Functions of Officials Involved in Project Implementation

POSITION TITLE FUNCTIONS

Municipal Mayor *Direct and oversee the
Implementation of the project.
*Advice and recommend changes in the execution of project, as
the case maybe.
Sangguniang Bayan *Formulate enact Ordinances and resolutions for the project.
*Approve and appropriate funds for the project.
Municipal Treasurer *Act as funds custodian
Of the project.
*Disbursing officer of the project.

Municipal Budget *General control of the project appropriation.

* Check all the possible
Project requirements and the rules and regulation for the project
limitations.

Municipal Accountant * Examine all supporting documents for the project.

Municipal Planning and
Development Coordinator
Municipal Engineer
Municipal Health Officer
* Maintain audit and check
all necessary requirements for the project implementation, if in
lines with the standard of accounting rules and regulations.
* Coordinate with various officials involve in the project to ensure
that all activities are properly undertaken.
* Monitor and evaluate
Progress of the project implementation .
* Conduct regular inspection and prepare monthly progress report.
*Prepare program of works, plans and specifications.
* Implement project.
* Supervise the project.
* Monitor the work done.
* Prepare accomplishment report of the project.
* Prepare paper works for labor and materials payroll.
* Negotiate equipment owner for rental
*Supervise the sanitary condition of the project.

24
2. Operation

The project will be managed by the Market Inspector who will administer the

overall supervision of the public market operation. Supporting the Market Inspector will

be the Market Collector and Utility Worker. The Market Inspector will be reporting

directly to the Municipal Mayor on the status of operation of the Public Market and

coordinate with other department in the municipal government in various requirements of

the project. The Technical Working Group will provide advisory services in project

operation while the administrative support requirement will be provided by the Municipal

Treasurer, Budget Officer and Accountant.

To ensure proper operation of the public market, appropriate policies, systems and

procedure (PSP) shall be formulated and adapted. Cleanliness and sanitation will be the

concern not only of the management but also shall be the collective responsibility of the

vendors and the buying public.

The public market administration office shall be equipped with basic furnitures

and equipment such as desks, chairs, tables, and computer. The weighing scale shall be

used in determining the volume of fish, meat and other agri-fishery products that will

serve as basis in computing the amount of cash tickets to be paid by traders within the

market.

25
 Figure 3. Organizational Structure during Operation

Municipal Mayor

Technical Working Group

MPDC – Chairman Administrative Support
MHO MTO, MAcct, MBO

Market Inspector

Market Collector Utility Workers

26
 2.1 Manpower Requirement

The actual management of the municipal public market will be the responsibility
of the Market Inspector. There will be two personnel assisting the Market Inspector in
various tasks to ensure effective and efficient operation of the municipal market - the
Market Collector and Utility Worker. These three (3) personnel will constitute the
market management team.

The function, salaries and wage level is presented in the succeeding table. At the
existing old market, all the market employees are casuals. However, it is proposed that
workers in the proposed new public market shall be hired as regular employees.
Considering that the prospect and long term financial viability of the market still remains
to be seen, projected salary increase has been set to 2% only per year. However, salary
level may be adjusted accordingly when in actual operation substantial earnings could be
generated resulting from cost reduction and revenue enhancement measures implemented
by the management. Or in worst case scenario, it can be set constant if the revenues will
not warrant an increase over the years.

Table 14. Public Market Management Staff

POSITION QS No. Salary Grade Monthly Functions, Duties &

Salary Responsibilities
(P)
Market Inspector Career Sub- 1 6 6,000.00 Generally supervise
Professional market operation.
Market Collector Career Sub- 1 5 5,000.00 Collect fees and remit
Professional to MTO; Undertake
other task relative
market operation.
Utility Worker High School 1 1 4,000.00 Undertake janitorial
Graduate tasks & other utility
responsibilities.
TOTAL 3

27
3. Monitoring and Evaluation

During the construction phase, it will be the responsibility of the Municipal

Engineer to prepare progress report on physical accomplishment of the project for
submission to the TWG and the Municipal Mayor. However, regular assessment
and evaluation shall be undertaken not only in the pre-operation period but also
during operational phase by the Technical Working Group chaired by the Municipal
Planning and Development Coordinator. This is to ensure that other important
concerns such as formulation of Policy, Systems and Procedures for the market
operation as well as cleanliness maintenance issues will be taken cared of.

The Market Inspector will be reporting regularly to the Mayor and the TWG
on the progress of the market operation. Appropriate forms shall be developed to
track and capture essential elements and vital activities in the project
implementation phases. Regular project assessment and feed backing sessions shall
be institutionalized to address pressing concerns in project implementation at all
levels.

Some of the vital information that has to be consideration in the project

monitoring among others are as follows:

Construction
- Physical accomplishments of different project components/activities
- Status of fund disbursements based on Program of Works /
accomplishments
- Problems, issues and concerns

Operation
- Stall Occupancy – Numbers and Percentage
- Cleanliness and Maintenance / Waste Disposal

28
 - Collection of Rentals, Business and License Fees
- Financial reports – revenues, operating expenses, incomes, etc.
- Problems, issues and concerns

The TWG being the advisory body to the chief executive shall consistently
look and help ensure that the project will operate successfully generating the
expected revenues for long-term sustainable operation.

29
VI. FINANCIAL STUDY

A. Project Financing and Information

1. Project Cost

To implement the project, a total sum of Php 3,557,200.00 is needed. This

will be applied to the following budget requirement of the project as presented in the
following table:

Table 15. Total Project Cost

Major Budget Items Cost

Pre-Operating Php 235,000.00

Training 20,000.00

Building, Equipments & Furniture 3,160,000.00

Operating Capital 142,200.00

Total PhP 3,557,200.00

2. Required Amount of Investment and Source of Funding

The project funding requirement will be taken from the following sources:

Table 16. Source of Fund

Source  Amount (PhP)  % 

Loan 1,811,060.00 50.91%
     
Grant 1,335,530.00 37.54%
     
LGU Equity 410,610.00 11.54%

Total 3,557,200.00 100.00%

30
 The loan component which is 50.91% of the total project cost will be sourced
out from low interest bearing portfolio from government financing institution or
private development organizations at a rate of 6%. The 37.54% grant component of
the project budget will be sourced out from donors such as senators, congressman,
and local or foreign development agencies. While the remaining 11.54% will be the
equity of the Gen. Luna municipal government. The detailed breakdown of the total
project cost with its corresponding distribution and sharing according to funding
sources is presented below:

Table 17. Breakdown of Project Cost and Fund Sources

  COST ITEMS TOTAL EQUITY GRANT LOAN %

PRE-OPERATING COST      
         
  SITE SURVEY 5,000.00 5,000.00   0.14%
  SITE DEVELOPMENT 100,000.00 13,410.00 86,590.00   2.81%
  ENGINEERING DESIGN 25,000.00 25,000.00   0.70%
  BENCHMARKING MISSION 40,000.00 40,000.00   1.12%
  PROJECT STUDY PREPARATION 50,000.00 50,000.00   1.41%
CLEARANCE AND BUILDING
  PERMIT 15,000.00 15,000.00   0.42%
PROJECT STAFF TRAINING      
MARKET ADMINISTRATION
  TRAINING 20,000.00 20,000.00   0.56%
FIXED ASSESTS     0.00%
  LAND 100,000.00 100,000.00   2.81%
  BUILDING & FACILITIES 3,000,000.00   1,188,940.00 1,811,060.00 84.34%
  EQUIPTMENTS 50,000.00   50,000.00    
  FURNITURE & FIXTURE 10,000.00   10,000.00   0.28%
     
OPERATING CAPITAL      
  SALARIES 142,200.00 142,200.00   4.00%
         
TOTAL 3,557,200.00 410,610.00 1,335,530.00 1,811,060.00 100.00%

31
B. Financial Feasibility Analysis

1. Financial Assumptions and Other Figures

1. Stalls and space rental will increase at 5% per year.

2. Fifty per cent of the total number of the present number of households
(1,056 as of 2007) will go the public market daily of which 20% will
use the comfort rooms. There will be no increase in comfort room fees
collection for 15 years.
3. Collection of business and license fees of the vendors/stall users in the
public market is considered income of the public market. There will
be an increase of these fees by 5% every five years.
4. Estimated life of building and other structures will be 40 years while
equipments and furniture will be 10 years with no scrap value.
5. Power cost on the first year will be PhP 2,500.00 per month that will
increase 1% per year.
6. Cost of supplies will be PhP 3,000.00 per month on the first year
which is assumed to increase 2% yearly.
7. There will be no repair and maintenance cost from the first up to 5th
year of operation. A PhP 5,000.00 monthly or a total of PhP 60,000.00
repair and maintenance cost is allocated for the sixth year. This will
increase at a rate of 10% per year up to the 15th year.
8. Salaries/wages expected to increase at 2% per year.
9. Employer share of Philhealth and PAG-IBIG contributions is assumed
to be 2% of salaries.
10. GSIS employer contribution is assumed to be 9% of salaries
11. The loan component will bear an interest of 6% per year payable in 10
years. Computation of interest is on a declining balance.
12. Operating expenses excluding interest payment for 6 months is
assumed as LGU equity worth PhP 142,200.00.

32
 Revenues

Rate per
Goodwill Money stall/space
Built-up Stall 5,000.00
Open Stall 3,000.00
Space A 10,000.00
Space B 10,000.00
Space C 15,000.00

Rate of Rentals on the First Year

Monthly Monthly Rate

Built-up Stall 750.00

Open Stall 500.00
Space A 1,500.00
Space B 1,500.00
Space C 2,500.00

Breakdown of Equipments and Other Semi-Expendable Items

No. of Units Unit Cost Total

Weighing Scale 1 10,000.00 10,000.00
Computer 1 27,000.00 27,000.00
Wheelbarrow 1 3,000.00 3,000.00
Waste Containers 20 500.00 10,000.00
Total Capital 50,000.00

2. Projected Financial Data

Projected financial data such as revenues, depreciation, loan principal

and interest payment, salaries and wages and other cost are presented in the
following tables/pages.

33
 Table 18. Revenue Schedule

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

GOODWILL MONEY 261,000.00

RENTALS* 492,000.00 516,600.00 542,430.00 569,551.50 598,029.08 627,930.53 659,327.06 692,293.41 726,908.08 763,253.48 801,416.16 841,486.96 883,561.31 927,739.38 974,126.35

COMFORT ROOM FEES* 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00

BUS. LICENSE & FEES 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00

TOTAL 1,063,388.00 826,988.00 852,818.00 879,939.50 908,417.08 938,318.53 969,715.06 1,002,681.41 1,037,296.08 1,073,641.48 1,111,804.16 1,151,874.96 1,193,949.31 1,238,127.38 1,284,514.35

Table 19. Operating Expenses

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Salaries & Wages 180,000.00 183,600.00 187,272.00 191,017.44 194,837.79 198,734.54 202,709.24 206,763.42 210,898.69 215,116.66 219,419.00 223,807.38 228,283.52 232,849.19 237,506.18

Employees Benefits 38,400.00 28,152.00 28,715.04 29,289.34 29,875.13 30,472.63 31,082.08 31,703.72 32,337.80 32,984.55 33,644.25 34,317.13 35,003.47 35,703.54 36,417.61

Power 30,000.00 33,000.00 36,300.00 39,930.00 43,923.00 48,315.30 53,146.83 58,461.51 64,307.66 70,738.43 77,812.27 85,593.50 94,152.85 103,568.14 113,924.95

Supplies 36,000.00 39,600.00 43,560.00 47,916.00 52,707.60 57,978.36 63,776.20 70,153.82 77,169.20 84,886.12 93,374.73 102,712.20 112,983.42 124,281.76 136,709.94

Repair and Maintenance 60,000.00 66,000.00 72,600.00 79,860.00 87,846.00 96,630.60 106,293.66 116,923.03 128,615.33 141,476.86

Interest Payment 108,663.60 97,797.24 86,930.88 76,064.52 65,198.16 54,331.80 43,465.44 32,599.08 21,732.72 10,866.36 0.00 0.00 0.00 0.00 0.00

TOTAL 393,063.60 382,149.24 382,777.92 384,217.30 386,541.68 449,832.63 460,179.78 472,281.55 486,306.07 502,438.12 520,880.84 552,723.87 587,346.30 625,017.97 666,035.54

Table 20. Depreciation Schedule

Depreciated Values
Useful Annual
Cost Life Cost 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15
3,000,000.0 75,000.0 2,925,000.0 2,850,000.0 2,775,000.0 2,700,000.0 2,625,000.0 2,550,000.0 2,475,000.0 2,400,000.0 2,325,000.0 2,250,000.0 2,175,000.0 2,100,000.0 2,025,000.0 1,950,000.0
Building 0 40 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,875,000.00

Equipment 50,000.00 10 5,000.00 45,000.00 40,000.00 35,000.00 30,000.00 25,000.00 20,000.00 15,000.00 10,000.00 5,000.00 0.00

Furnitures & Fixtures 10,000.00 10 1,000.00 9,000.00 8,000.00 7,000.00 6,000.00 5,000.00 4,000.00 3,000.00 2,000.00 1,000.00 0.00
3,060,000.0 81,000.0 2,979,000.0 2,898,000.0 2,817,000.0 2,736,000.0 2,655,000.0 2,574,000.0 2,493,000.0 2,412,000.0 2,331,000.0 2,250,000.0 2,175,000.0 2,100,000.0 2,025,000.0 1,950,000.0
Total 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 1,875,000.00
Annual Depreciation
Cost 81,000.00 81,000.00 81,000.00 81,000.00 81,000.00 81,000.00 81,000.00 81,000.00 81,000.00 81,000.00 75,000.00 75,000.00 75,000.00 75,000.00 75,000.00

34
Table 21. Amortization Schedule

Amount of Loan: 1,811,060.00

Interest Rate: 6% per annum computed declining balance
Repayment Period: 10 years

Total
Year Principal Interest Amortization Balance
1,811,060.00
1 181,106.00 108,663.60 289,769.60 1,629,954.00
2 181,106.00 97,797.24 278,903.24 1,448,848.00
3 181,106.00 86,930.88 268,036.88 1,267,742.00
4 181,106.00 76,064.52 257,170.52 1,086,636.00
5 181,106.00 65,198.16 246,304.16 905,530.00
6 181,106.00 54,331.80 235,437.80 724,424.00
7 181,106.00 43,465.44 224,571.44 543,318.00
8 181,106.00 32,599.08 213,705.08 362,212.00
9 181,106.00 21,732.72 202,838.72 181,106.00
10 181,106.00 10,866.36 191,972.36 0.00

35
3. Projected Financial Statements

At the project’s investment level with all the expected revenues collected promptly,
it is expected to generate cash inflows during the first year amounting to PhP 1,063,388.00
(Table 21). Aside from rentals being the major revenue source, goodwill money contributes
significant share of the total revenues on the first year amounting to PhP 261,000.00. With a
cash outflow for the same year of PhP 574,169.60, an increase in cash by PhP 489,218.40 is
expected.

All throughout the projected 15 years of operation, the project will have a positive
cash position. Projected cash flow statement shows that revenues will be increasing starting
on the third year of operation. First year cash revenue is higher than on the second year due
to the payment of one-time goodwill money.

On the first year of operation, the project will be generating a net income of PhP
589,324.40 (Table 22). The average yearly income for 15 years is computed at PhP
539,213.99. The accumulated retained earnings for 15 year of operation will be PhP
8,088,194.78.

Bigger bulk of the revenue is coming from stall rentals which during the first year
will amount to PhP 492,000.00 equivalent to 46.27 % of the total revenues. While on the
cost component, significant amount is allocated to salaries which on the first year will be
PhP 180,000.00 that is 37.97 % of the total cost. Another major cost item of the project is
loan interest payment which cost PhP 108,663.60 on the first year equivalent to 22.92 % of
the total expenditure on the first year.

With its start-up capital outlay of PhP 3,557,200.00, the project’s asset after 15 years
is expected to reach PhP 9,834,334.78 as reflected in the projected balance sheet of the
proposed project (Table 23).

36
Table 22. Projected Cash Flow

0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

CASH INFLOW

Grant 1,335,530.00

Loan 1,811,060.00

Equity 410,610.00

Goodwill 261,000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

Stall Rental 492,000.00 516,600.00 542,430.00 569,551.50 598,029.08 627,930.53 659,327.06 692,293.41 726,908.08 763,253.48 801,416.16 841,486.96 883,561.31 927,739.38 974,126

Comfort Room Fees 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088

Business Fees & Licenses 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300

TOTAL 3,557,200.00 1,063,388.00 826,988.00 852,818.00 879,939.50 908,417.08 938,318.53 969,715.06 1,002,681.41 1,037,296.08 1,073,641.48 1,111,804.16 1,151,874.96 1,193,949.31 1,238,127.38 1,284,514

CASH OUTFLOW

Land Acquisition 100,000.00

Site Survey 5,000.00

Site Development 100,000.00

Engineering Design 25,000.00

Benchmarking 40,000.00

PFS Preparation 50,000.00

Clearance & Building Permit 15,000.00

Market Administration Trng 20,000.00

Building Construction 3,000,000.00

Equipment 50,000.00

Furnitures & Fixtures 10,000.00

Salaries & Wages 180,000.00 183,600.00 187,272.00 191,017.44 194,837.79 198,734.54 202,709.24 206,763.42 210,898.69 215,116.66 219,419.00 223,807.38 228,283.52 232,849.19 237,506

Employees Benefits 38,400.00 28,152.00 28,715.04 29,289.34 29,875.13 30,472.63 31,082.08 31,703.72 32,337.80 32,984.55 33,644.25 34,317.13 35,003.47 35,703.54 36,417

Power 30,000.00 30,300.00 30,603.00 30,909.03 31,218.12 31,530.30 31,845.60 32,164.06 32,485.70 32,810.56 33,138.66 33,470.05 33,804.75 34,142.80 34,484

Supplies 36,000.00 36,720.00 37,454.40 38,203.49 38,967.56 39,746.91 40,541.85 41,352.68 42,179.74 43,023.33 43,883.80 44,761.48 45,656.70 46,569.84 47,501

Repair and Maintenance 60,000.00 66,000.00 72,600.00 79,860.00 87,846.00 96,630.60 106,293.66 116,923.03 128,615.33 141,476

Interest Payment 108,663.60 97,797.24 86,930.88 76,064.52 65,198.16 54,331.80 43,465.44 32,599.08 21,732.72 10,866.36 0.00 0.00 0.00 0.00 0

Principal Payment 181,106.00 181,106.00 181,106.00 181,106.00 181,106.00 181,106.00 181,106.00 181,106.00 181,106.00 181,106.00

TOTAL 3,415,000.00 574,169.60 557,675.24 552,081.32 546,589.82 541,202.75 595,922.19 596,750.21 598,288.97 600,600.65 603,753.47 426,716.30 442,649.69 459,671.48 477,880.70 497,386

Increase in Cash (Decrease) 489,218.40 269,312.76 300,736.68 333,349.68 367,214.32 342,396.34 372,964.85 404,392.44 436,695.43 469,888.01 685,087.85 709,225.27 734,277.83 760,246.68 787,128

CASH BALANCE BEGINNING 142,200.00 631,418.40 900,731.16 1,201,467.84 1,534,817.52 1,902,031.84 2,244,428.19 2,617,393.03 3,021,785.47 3,458,480.90 3,928,368.92 4,613,456.77 5,322,682.04 6,056,959.87 6,817,206

CASH BALANCE, END 142,200.00 631,418.40 900,731.16 1,201,467.84 1,534,817.52 1,902,031.84 2,244,428.19 2,617,393.03 3,021,785.47 3,458,480.90 3,928,368.92 4,613,456.77 5,322,682.04 6,056,959.87 6,817,206.55 7,604,334

37
Table 23. Projected Income Statement

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Revenue
Goodwill 261,000.00

Stall Rental 492,000.00 516,600.00 542,430.00 569,551.50 598,029.08 627,930.53 659,327.06 692,293.41 726,908.08 763,253.48 801,416.16 841,486.96 883,561.31 927,739.38 974,126.35

Comfort Room Fees 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00 77,088.00

Business Fees & Licenses 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00 233,300.00
1,063,388.0
Total Revenue 0 826,988.00 852,818.00 879,939.50 908,417.08 938,318.53 969,715.06 1,002,681.41 1,037,296.08 1,073,641.48 1,111,804.16 1,151,874.96 1,193,949.31 1,238,127.38 1,284,514.35

Expenses
Salaries & Wages 180,000.00 183,600.00 187,272.00 191,017.44 194,837.79 198,734.54 202,709.24 206,763.42 210,898.69 215,116.66 219,419.00 223,807.38 228,283.52 232,849.19 237,506.18

Employees Benefits 38,400.00 28,152.00 28,715.04 29,289.34 29,875.13 30,472.63 31,082.08 31,703.72 32,337.80 32,984.55 33,644.25 34,317.13 35,003.47 35,703.54 36,417.61

Power 30,000.00 30,300.00 30,603.00 30,909.03 31,218.12 31,530.30 31,845.60 32,164.06 32,485.70 32,810.56 33,138.66 33,470.05 33,804.75 34,142.80 34,484.23

Supplies 36,000.00 36,720.00 37,454.40 38,203.49 38,967.56 39,746.91 40,541.85 41,352.68 42,179.74 43,023.33 43,883.80 44,761.48 45,656.70 46,569.84 47,501.24

Repair and Maintenance 60,000.00 66,000.00 72,600.00 79,860.00 87,846.00 96,630.60 106,293.66 116,923.03 128,615.33 141,476.86

Depreciation Cost 81,000.00 81,000.00 81,000.00 81,000.00 81,000.00 81,000.00 81,000.00 81,000.00 81,000.00 81,000.00 75,000.00 75,000.00 75,000.00 75,000.00 75,000.00

Interest Payment 108,663.60 97,797.24 86,930.88 76,064.52 65,198.16 54,331.80 43,465.44 32,599.08 21,732.72 10,866.36 0.00 0.00 0.00 0.00 0.00

Total Expenses 474,063.60 457,569.24 451,975.32 446,483.82 441,096.75 495,816.19 496,644.21 498,182.97 500,494.65 503,647.47 501,716.30 517,649.69 534,671.48 552,880.70 572,386.11

Net Income 589,324.40 369,418.76 400,842.68 433,455.68 467,320.32 442,502.34 473,070.85 504,498.44 536,801.43 569,994.01 610,087.85 634,225.27 659,277.83 685,246.68 712,128.23

Projected Retained Earnings:

Retained Earnings Beg 589,324.40 589,324.40 958,743.16 1,359,585.84 1,793,041.52 2,260,361.84 2,702,864.19 3,175,935.03 3,680,433.47 4,217,234.90 4,787,228.92 5,397,316.77 6,031,542.04 6,690,819.87 7,376,066.55

Add : Net Income/Surplus 0 369,418.76 400,842.68 433,455.68 467,320.32 442,502.34 473,070.85 504,498.44 536,801.43 569,994.01 610,087.85 634,225.27 659,277.83 685,246.68 712,128.23

Retained Earnings , End 589,324.40 958,743.16 1,359,585.84 1,793,041.52 2,260,361.84 2,702,864.19 3,175,935.03 3,680,433.47 4,217,234.90 4,787,228.92 5,397,316.77 6,031,542.04 6,690,819.87 7,376,066.55 8,088,194.78

38
Table 24. Projected Balance
Sheet

Pre-Op 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15

Current Assets

Cash 142,200.00 631,418.40 900,731.16 1,201,467.84 1,534,817.52 1,902,031.84 2,244,428.19 2,617,393.03 3,021,785.47 3,458,480.90 3,928,368.92 4,613,456.77 5,322,682.04 6,056,959.87 6,817,206.55 7,604,334.78

Non-Current Assets

Land 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00 100,000.00

Building 3,000,000.00 2,925,000.00 2,850,000.00 2,775,000.00 2,700,000.00 2,625,000.00 2,550,000.00 2,475,000.00 2,400,000.00 2,325,000.00 2,250,000.00 2,175,000.00 2,100,000.00 2,025,000.00 1,950,000.00 1,875,000.00

Equipments 50,000.00 45,000.00 40,000.00 35,000.00 30,000.00 25,000.00 20,000.00 15,000.00 10,000.00 5,000.00 0.00 0.00 0.00 0.00 0.00 0.00

Furnitures & Fix. 10,000.00 9,000.00 8,000.00 7,000.00 6,000.00 5,000.00 4,000.00 3,000.00 2,000.00 1,000.00 0.00 0.00 0.00 0.00 0.00 0.00

Pre-Opertg Exp. 255,000.00 255,000.00 255,000.00 255,000.00 255,000.00 255,000.00 255,000.00 255,000.00 255,000.00 255,000.00 255,000.00 255,000.00 255,000.00 255,000.00 255,000.00 255,000.00

Total Non-Current Assets 3,415,000.00 3,334,000.00 3,253,000.00 3,172,000.00 3,091,000.00 3,010,000.00 2,929,000.00 2,848,000.00 2,767,000.00 2,686,000.00 2,605,000.00 2,530,000.00 2,455,000.00 2,380,000.00 2,305,000.00 2,230,000.00

Total Assets 3,557,200.00 3,965,418.40 4,153,731.16 4,373,467.84 4,625,817.52 4,912,031.84 5,173,428.19 5,465,393.03 5,788,785.47 6,144,480.90 6,533,368.92 7,143,456.77 7,777,682.04 8,436,959.87 9,122,206.55 9,834,334.78

Liabilities

Non-Current Liabilities

Loans Payable 1,811,060.00 1,629,954.00 1,448,848.00 1,267,742.00 1,086,636.00 905,530.00 724,424.00 543,318.00 362,212.00 181,106.00 0.00 0.00 0.00 0.00 0.00 0.00

Total Current Liabilities 1,811,060.00 1,629,954.00 1,448,848.00 1,267,742.00 1,086,636.00 905,530.00 724,424.00 543,318.00 362,212.00 181,106.00 0.00 0.00 0.00 0.00 0.00 0.00

Equity

Grant 1,335,530.00 1,335,530.00 1,335,530.00 1,335,530.00 1,335,530.00 1,335,530.00 1,335,530.00 1,335,530.00 1,335,530.00 1,335,530.00 1,335,530.00 1,335,530.00 1,335,530.00 1,335,530.00 1,335,530.00 1,335,530.00

Owner's Equity 410,610.00 410,610.00 410,610.00 410,610.00 410,610.00 410,610.00 410,610.00 410,610.00 410,610.00 410,610.00 410,610.00 410,610.00 410,610.00 410,610.00 410,610.00 410,610.00

Ret'd Earnings Beg. 589,324.40 958,743.16 1,359,585.84 1,793,041.52 2,260,361.84 2,702,864.19 3,175,935.03 3,680,433.47 4,217,234.90 4,787,228.92 5,397,316.77 6,031,542.04 6,690,819.87 7,376,066.55 8,088,194.78

Total Equity 1,746,140.00 2,335,464.40 2,704,883.16 3,105,725.84 3,539,181.52 4,006,501.84 4,449,004.19 4,922,075.03 5,426,573.47 5,963,374.90 6,533,368.92 7,143,456.77 7,777,682.04 8,436,959.87 9,122,206.55 9,834,334.78

Total Liabilities 3,557,200.00 3,965,418.40 4,153,731.16 4,373,467.84 4,625,817.52 4,912,031.84 5,173,428.19 5,465,393.03 5,788,785.47 6,144,480.90 6,533,368.92 7,143,456.77 7,777,682.04 8,436,959.87 9,122,206.55 9,834,334.78

39
4. Financial Analysis

An average of about 1.61 % yearly increase in revenues is expected for its

15 years of operation in as much as only the stalls and space rentals are projected
to increases at a rate of 5 % while comfort room fees remain constant for 15
years. Another revenue source is business and license fees are projected to
increase by 5 % every five years. The operating income is expected to increase at
a rate of 2.19 % per year considering that certain major expense items such as
salaries were expected to increase in certain degree except for the interest
payments.

Based on the projected financial statements, the project’s financial internal

rate of return (FIRR) is computed at 9%. As it is, the project may not be as
profitable like other enterprise venture considering that the computed Net Present
Value at a discount rate of 6% is only 869,136.43. Since being a business service
facility designed to serve micro-entrepreneurs, i.e. the town’s market vendors, the
lease rates were practically lowered for it to be affordable by the users and just
barely enough sustain the project’s operation.

The perception is that a much higher start-up rate of stall rental that can
possibly increase revenues thereby improving the project’s financial profitability
is believed to be no longer attractive to the target users. Based on the project’s
financial performance, the project is capable to recover its capital investment
within a period of almost 10 years.

40
    
Discount Rate 6%
   
Cash Flow -3,557,200.00
  489,218.40
  269,312.76
  300,736.68
  333,349.68
  367,214.32
  342,396.34
  372,964.85
  404,392.44
  436,695.43
  469,888.01
  685,087.85
  709,225.27
  734,277.83
  760,246.68
  787,128.23
NPV 869,136.43
IRR 9%

PAYBACK
PERIOD

Cost of Project 3,557,200.00

Payback Period 9.51 years

  Annual Cash Inflow    

Year    
1 489,218.40    
2 269,312.76 758,531.16  
3 300,736.68 1,059,267.84  
4 333,349.68 1,392,617.52  
5 367,214.32 1,759,831.84  
6 342,396.34 2,102,228.19  
7 372,964.85 2,475,193.03  
8 404,392.44 2,879,585.47  
9 436,695.43 3,316,280.90  
10 469,888.01 240,919.10 0.51
11 685,087.85  
12 709,225.27  
13 734,277.83  
14 760,246.68  
15 787,128.23    

41
5. Sensitivity Analysis

One of the variables used in the sensitivity analysis is the interest rate in as
much as interest payment eats up a big chunk of the cost of operation. It is found
out that the project is sensitive at 9 % loan interest rate turning NPV at a negative.
Trying a higher borrowing rate above 9% would drive down further the NPV and
IRR values. This implies that loan component should be reduced in certain
degree and must be availed at possibly lower borrowing rates.

Exploring on other selected items, it is found out that an increase in

operating cost by 10% does not affect the IRR and NPV figures. The project is
however sensitive when a 10 % reduction of revenues is factored in resulting to a
negative NPV of -53,652.11 pushing down proportionately the IRR to 6%.

Table 25. Sensitivity Analysis Using Loan Interest Rate

Loan    
Interest Rate IRR NPV
%  
4 10% 1,722,307.41
5 9% 1,303,804.43
6 9% 869,136.43
7 8% 354,840.33
8 8% 96,494.21
9 8% -268,139.99
10 7% -542,051.83

Table 26. Sensitivity Analysis Using Aggregate Operating Cost and Revenues

Selected Cost/Benefit Items NPV FIRR

     
Increase in Aggregate Operating Cost by 10% 869,136.43 9%
Decrease in Revenues by 10% -53,652.11 6%
     

42
VII ECONOMIC STUDY

A. Economic Benefits

1. Revenues

The project will generate direct revenue from stall and space rentals,
business and license fees, comfort room fees and goodwill money from lessors
totaling PhP 1,063,388.00 on its first year of operation. As one time pay,
goodwill money contributes significant share of the total revenues on the first
year. On the second year, revenues totals to 826,988.00, this will gradually
increase up to Php 1,284,514.35 on the 15th year. By the end of the 15th year
accumulated revenues will reach PhP 15,533,473.29 (Table 26).

Table 27. Direct Revenues

   
Year Revenues
   
0
1 1,063,388.00
2 826,988.00
3 852,818.00
4 879,939.50
5 908,417.08
6 938,318.53
7 969,715.06
8 1,002,681.41
9 1,037,296.08
10 1,073,641.48
11 1,111,804.16
12 1,151,874.96
13 1,193,949.31
14 1,238,127.38
15 1,284,514.35
Total 15,533,473.29

43
2. Increased Income of Stall Users

Another benefit of the project is the potential increase of market

vendors’ income estimated to be at an average of P 2,000.00 per month per
vendor. Assuming that all the 42 stall and spaces will be rented, the aggregate
increase income per month of stall users will be PhP 84,000.00. In a year, this
will total to PhP 1,008,000.00 and will accumulate to PhP 15,120,000.00
within 15 years of operation on the ideal scenario of a 100% occupancy rate
whole year round (Table 27).

Table 28. Increased Income of Stall Users

   
Year Increased Income

   
1 1,008,000.00
2 1,008,000.00
3 1,008,000.00
4 1,008,000.00
5 1,008,000.00
6 1,008,000.00
7 1,008,000.00
8 1,008,000.00
9 1,008,000.00
10 1,008,000.00
11 1,008,000.00
12 1,008,000.00
13 1,008,000.00
14 1,008,000.00
15 1,008,000.00
Total 15,120,000.00

44
B. Economic Cost

The basic cost of the project is the initial capital outlay amounting
PhP 3,557,200.00. During formal operation, basic expenditures of salaries
and wages, interest payment, power and other administrative maintenance
were considered in the computation of the economic cost of the project.
During the first year of operation the cost will reach PhP 284,400.00 and will
gradually increase to PhP 497,386.11 (Table 28) on the 15th year. By the end
of the 15th year the economic cost will accumulate to reach PhP 5,662,628.70.

Table 29. Economic Cost

   
Year Economic
  Cost
0  3,557,200.00
1 284,400.00
2 278,772.00
3 284,044.44
4 289,419.30
5 294,898.59
6 360,484.39
7 372,178.77
8 384,583.89
9 397,761.93
10 411,781.11
11 426,716.30
12 442,649.69
13 459,671.48
14 477,880.70
15 497,386.11
Total 5,662,628.70

45
C. Economic Analysis

On the economic development perspective, the project is found to be

viable with an economic internal rate of return (EIRR) of 46% and with an
economic net present value (ENPV) of 5,278,899.32.

The economic benefits that were considered are the direct revenues
of the project as well as the increased income of the market vendors using the
market facility which during the first year of operation alone will total to PhP
1,063,388.00 and PhP 1,008,000.00 respectively. The total economic benefit
of the project is computed to reach a total of PhP 30,653,473.29 after 15 years
of operation.

Contrasted to economic cost of PhP 284,400.00 during the first year

of operation, the economic benefits of PhP 2,071,388.00 will give off a net
benefits of PhP 1,786,988.00 gradually increasing to PhP 1,795,128.23 by the
15th year. The project’s computed benefit-cost ratio is computed at 3.32:1. In
other words, for every peso of cost of the project, this will give off some
economic benefits worth PhP 3.32.

46
Table 30. Comparing Economic Cost and Benefits

    Revenues      
Increase
Year Revenues Income Total Benefits Economic Net Benefits
    of Stall Users   Cost  
0       -3,557,200.00
1 1,063,388.00 1,008,000.00 2,071,388.00 284,400.00 1,786,988.00
2 826,988.00 1,008,000.00 1,834,988.00 278,772.00 1,556,216.00
3 852,818.00 1,008,000.00 1,860,818.00 284,044.44 1,576,773.56
4 879,939.50 1,008,000.00 1,887,939.50 289,419.30 1,598,520.20
5 908,417.08 1,008,000.00 1,916,417.08 294,898.59 1,621,518.48
6 938,318.53 1,008,000.00 1,946,318.53 360,484.39 1,585,834.14
7 969,715.06 1,008,000.00 1,977,715.06 372,178.77 1,605,536.29
8 1,002,681.41 1,008,000.00 2,010,681.41 384,583.89 1,626,097.52
9 1,037,296.08 1,008,000.00 2,045,296.08 397,761.93 1,647,534.15
10 1,073,641.48 1,008,000.00 2,081,641.48 411,781.11 1,669,860.37
11 1,111,804.16 1,008,000.00 2,119,804.16 426,716.30 1,693,087.85
12 1,151,874.96 1,008,000.00 2,159,874.96 442,649.69 1,717,225.27
13 1,193,949.31 1,008,000.00 2,201,949.31 459,671.48 1,742,277.83
14 1,238,127.38 1,008,000.00 2,246,127.38 477,880.70 1,768,246.68
15 1,284,514.35 1,008,000.00 2,292,514.35 497,386.11 1,795,128.23
Total 15,533,473.29 15,120,000.00 30,653,473.29 5,662,628.70 21,433,644.58

Discount Rate 15%

Assumption: ENPV 5,278,899.32
No. of Stall Users: 42 EIRR 46%
Increase in Monthly Income per User 2,000 BCR 3.32 ::1

47
D. Sensitivity Analysis

The result of the sensitivity analysis using different variables shows

that the project is sensitive at "60% decrease in benefits" scenario. More so it
is sensitive at worst case scenario which is increase in cost and decrease in
benefits that by 50 % level this will result already to a negative Net Present
Value. Reduction in cost although somehow affects the NPV figures resulting
to a corresponding reduction does not however totally affect its over-all
viability.

Table 31. Sensitivity Analysis Using Benefits and Cost

  Net Present Value (NPV)

% Change Increase Decrease Increase in Cost
  in Cost in Benefits Decrease in Benefits
     
10 5,071,584.54 4,234,372.87 4,062,971.14
20 4,900,182.81 3,225,759.47 2,882,956.00
30 4,728,781.08 2,217,146.06 1,702,940.86
40 4,606,508.06 1,208,532.66 522,925.73
50 4,438,615.52 199,919.25 -657,089.41
60 4,270,722.98 -808,694.15 -1,837,104.55
70 4,102,830.44 -1,817,307.55 -3,017,119.69
80 3,934,937.90 -2,825,920.96 -4,197,134.83
90 3,767,045.36 -3,834,534.36 -5,377,149.96

48
E. Socio-Economic Impact

Aside from the direct economic impact earlier cited, the project being
a vital trading facility is expected to trigger more economic activity in the
community. This is aside from the convenience it offers not only to the
vendors but also to the buying public. With a bigger market, it is expected
that more volume of goods and services will be traded. This would mean an
increase in income not only of the vendors but also the producers of the
products such as small fishermen, farmers and other producers.

Being a self-liquidating economic enterprise, the market building itself

and the lot acquired is an investment that will be an additional asset of the
local government. Moreover, the expansion of the number of vendors will
allow an increase of micro-entrepreneurs that will help boosts in certain
degree the local economy.

Considering the over-all socio-economic impact that the project will

have to the community, the project is worth implementing based on its own
merits.

49