University of Gondar

College of Business & Economics

Department OF management
Masters of Business Administration Program
Project Management
Project title PROJECT PROFILE ON THE ESTABLISHMENT OF
POULTRY

By eden efrates

Submitted to; Yihays F. (PhD)

Feasibility Study
1 Market analysis
As to the environment the land and whether condition, around amhara rgion is suitable
for poultry farm. This selected business is an area that has many market opportunities for
demand and supply, necessary human power, infrastructure availability, and other factors.
The target markets /customers/ of the project products are local farmers for genetically
exotic cocks and layers, urban consumers in Gondar , and other small towns in the area
for eggs, and hen, food processing factories and exporter companies for egg, other
products.
The project planned to use short distribution channels and retailer agents, because hens
and hen’s products need high care and can easily damage.
Other distribution channel may be woreda agricultural office & farmer training center at
kebeles level to reach each farmer at his/her village.
The population in the project area i.e. central Gondar zone, and half of west Gondar Zone
estimated more than 3 million. Out of those populations 80-85% is living in rural area
and their livelihood is depending on agricultural products.
From those various agricultural activities hen breeding, needs small investment, small
land and it possible to have 10-20 genetically exotic hens at each family (house
hold/level.)
Thus the project planned to satisfy its target customer /market demand/ by its products by
using its own distribution channel, strategy and reasonable price per unit of out put.
The main product that the project will be offered to the market & projected sales that
depend on capacity of the project production & demand of the market as follow:-
 21,000 Cocks at 22 birr each per year
 21,000 layers at 20 birr each per year
 1,200.000 eggs at 0.40 Birr each per year
 13,000 chicks (0-1 month) at 3 birr each per year and by products.
From these sales the project will earn birr 1,406,000 revenue per year.

2 Raw Materials and supplies analysis

To establish the project the necessary materials and equipments are easily available in the
market. At the beginning of the production, the project can purchase genetically exotic
chicks and eggs from local modern poultry farms & it is possible to import the necessary
genetically more productive hens from foreign market.
Food and medication supplies are the most necessary material for poultry farm, for chicks
at different level of age. The project organizes its own miller and food mixer to provide
balance diet for the hens from its farm’s crops and local purchased food supplies.
Annual supplies input, types, quantity and cost are later presented in table form. Supplies
marketing concentrate on quality of supplies for health of the product, by minimum cost
as much as possible.
3 Location, site and environmental analysis
Gondar city poultry farm located in amhara region, the strategic criteria used to select this
site are, suitability of whether condition for the poultry farm, availability of infrastructure
and transportation means, market opportunity, human power and provision of 2 hectors
land or site of investment free from lease for three years from administrative office and
amhara investment office. The project operation has no any negative impact on the
environment and socio economic factors. The location has full infrastructures like power,
communication, road, water and other facilities.
Specially the promoters are live in Gondar city and needs to follow up their project.
The preliminary cost for the site are included land and site labeling, fence construction,
drainage line construction and others.

4 Engineering and technology analysis

Technology selected for the project includes different main plants and other equipment
Example:-
 Incubator, with hatchery with capacity of holding/hatching/ 15,000 eggs per round
 Deep freezer miller, and mixer
 Generator, thermometer etc.... Refer table 3
Since the products are highly sensitive for damage they need a strict care having healthy
environmental condition especially for younger and thus can be achieved only by
implementing such technologies.
Construction of buildings and installation of machines depends on per design for the
poultry farm by special consultancy and engineers. Moreover the technology selected is
can easily available from the market. But most of the equipment and instruments in the
production activities are very sensitive and they need high care operation. It has high risk
of damage.

5 Organization design
The project has the following organization structure during production period

Project Manager

Production and Marketing, sales Administration

technique and distribution and Finance

6 Human Resources analysis

One advantage of the project is it creates employment opportunity. During production
period the project will be employed more than 20 permanent and 5-10 temporary
 employees. The major skilled employees needed are animal science professionals,
managers; electrician, accountants, and semi skilled and unskilled local people also have
got employment opportunity in the project. The trainings needed are operating machines,
care needed for the products, west handling (disposal), and chickens feeding. The cost
and all lists of employees presented on table 9. Most of the trainings are on job trainings
are on job training provided by the project's experts for sometime.

Table 1 for List of employees and labor cost per year

Position Qty Qualification Monthly Annual
Salary Salary
Manager 1 BA in Management with one year 1500 00 18000.00
work experience
Production and Technical 1 Diploma in Agricultural Eco with 1150 00 13800.00
head three years work experience
Marketing sales and 1 Diploma in Marketing 1150 00 13800.00
distribution head Management with three years
work experience
Export 2 Diploma in Animal Science with 1040 00 24960.00
two years work experience
Administration and 1 Diploma in Management 1040 00 12480.00
Finance /Accounting with two years of
experience
Personnel 1 Diploma in Management 760 00 9120.00
Accountant 2 1 Diploma in Accounting with one 760 00 9120.00
year work experience
Accountant 1 Diploma in Accounting 630 00 7560.00
Casher 1 Diploma in Accounting 630 00 7560.00
Electrician 2 Diploma in Elect. 760 00 18240.00
Secretary 1 Diploma in SSOM 630 00 7560.00
Lab.techician 1 Diploma in Lab. Tech. 760 00 9120.00
Animal health tech. 1 Dip. In Animal Health 800 00 9600.00
Purchaser 1 Diploma in Pur. and sup. Mgt 760 00 9120.00
Store Keeper 2 Certificate 630 00 15120.00
Driver 2 420 00 10080.00
Janitor 1 300 00 3600.00
Guard 4 250 00 1200.00
Daily workers 5 250 00 15000.00
Total 227400.00
6% Provident fund 13644.00
Grand Total 241044.00

Financial analysis and investment appraisal

Investment costs
1) Land and site preparation, fence construction, non- building constructions restructuring costs

Description Unit Qu't. Unit Cost Total Cost Remark

1 Site labeling M2 1200 8.33 10,000
2 Fence Construction M 400 50 20,000
3 Electric line installation M - - 5000
4 Water line installation M 500 24 12,000
5 Water tower and tank No 2 10,000 20,000
6 Drainage line construction - 1 8000 8000
7 Disposal Pit No 2 500 10,000
8 Telephone line 4000
9 Others 5000
Contingency (10%) 9,400
 Total Cost 103,400
Table 2: list and estimate costs of investment for site preparation and non building construction
ii) Structure and civil engineering work costs for site, building, equipment installation
and all civil works estimated to Birr, 50,175.00
iii) Building Construction; the project buildings has different categories:-
o Office building: - for the preciseness effectiveness of works, relative and
convenient working environment.
o Feed store: - Since the project /farm/ will process it own home fabricated feed by
using the established miller and mixer, it needs two feed store, one for raw
material of food and other will be used for processed food, ready for consumption.

o Clinic and isolation house: - to control the transfers of idiomatic and contingence
disease building of poultry clinic highly considerable with approaches through
identification, isolation and separately treat of infected hens.
o Other non resident /Production/ building:- to confirm health hearing, operation,
maximization of productivity of minimizing morality, the main building include
incubator room, checks room layer room, egg storage.

No Items description Quantit Unity cost Total cost Remark

y
1 Office with 10 classes 1 120,000 120,000
2 Broader house 2 60,000 120,000
3 Isolation house 1 80,000 80,000
4 Hatchery and eggs storage 1 80,000 80,000
5 Feed store 2 30,000 60,000
6 Toilet, dressing room shower 1 20,000 20,000
7 Clinic 1 30,000 30,000
Contingency (10%) 51,000
Total 561,000
Table 3, List and estimated cost of investment for buildings construction
iv) Plant, equipment and instrument investment cost poultry farm equipments,
machineries instrument include the following items in the table below.

No Item Description Unit Quantity Unit Cost Total Cost

1 Incubator with hatchery P/c 1 150,000 150,000
2 Thermometer P/c 4 110 440
3 Hygrometer P/c 4 300 1,200
4 Sensitive electric chicks balances P/c 2 6,000 12,000
5 Weighing balance digital P/c 1 6,000 6,000
6 Chicken transporting cubes P/c 30 385 11,550
7 Feeder for layer P/c 55 275 15,125
8 Day – Old transportation cubs P/c 70 275 19,250
9 Feeder for chicks P/c 55 328 18,040
10 Feeder for pullets and cockerels P/c 40 275 11,000
11 Automatic drinker for chicks P/c 25 575 14,375
12 Automatic drinker for chicks P/c 120 252 66,240
13 Eggs transporting and candling machine P/c 1 25000 25,000
14 Egg collection baskets P/c 20 70 1,400
15 Eggs cooling machine P/c 1 6,750 6,750
16 Eggs laying nest P/c 20 150 3,000
17 Electrical Candler P/c 1 2,500 2,500
18 De-baker electrical P/c 1 15,525 15,525
19 Eggs grader P/c 1 3,000 3,000
Total - - 381,395
Contingency (10%) 38,139
Grand Total 419,534
Table – 4 List and investment cost of poultry farm production equipment and instruments

V) Other investment cost for far farm tools and materials

No Items Unit Qu't Unit cost Total cost Remark
1 Bucket plastic Pc 10 25 250
2 Bucket metal Pc 10 60 600
3 Barrel - metal Pc 5 450 2,250
4 Barrel plastic Pc 5 250 1,250
5 Fork harrow Pc 10 50 500
6 Axe Pc 5 45 225
7 Rubber (plastic) hare Pc 200 5 1000
8 Cutting saw Pc 5 75 375
9 Sickle Pc 20 25 500
10 Spade Pc 10 30 300
Total 7250
Contingency (10%) 725
Grand Total 7,975
Table 5-Other investment cost & list for farm tools and materials
vi). Animal Clinic and Veterinary equipment investment
No Item Disruption Unit Quantity Unit cost Total cost
1 Cover side (Slip) P/C 10 250 2500
2 Capital P/C 100 10 1000
3 Slade Rack P/C 5 75 375
4 Surgical kit No 1 4500 4500
5 Steles cope Veterinary Stethoscope No 2 150 300
6 Surgical instrument sterilizer No 2 450 900
7 Universal bottles No 25 45 1125
8 Starting jar No 4 75 300
9 Syting 1ml No 150 50 7500
10 Syting 10ml No 40 55 2,200
11 Filter paper No 5 45 225
12 Test tube 20 ml No 1 240 240
13 Test tube 50 ml No 2 150 300
Total 21,465
Contingency (10%) 2146
Grand Total 23,611
Table 6: Animal clinic and Veterinary equipments list and investment cost
VI) Vehicles investment cost
No Description Unit Quantity Unit Cost Total cost
1 Delivery truck (100 on capacity) No 1 400,000 400,000
2 Landrace No 1 350,000 350,000
Total 750,000
Contingence (10%) 75,000
Grand total 825,000
Table 7 Vehicles investment cost

VII) Office equipment and furniture investment

No Description Unit Quantity Unit cost Total cost
1 Deferent type office table No 10 250 2500
2 Office chair Different type " 25 125 3125
 3 Office ratifying arm chairs " 2 1200 2400
4 Shelf with different levels " 2 500 1000
5 Iron cash box (cazna) " 1 3000 3000
6 Table adding machine " 2 1450 2900
7 Pencil sharpener " 10 25 250
8 Puncher No 10 25 250
9 Manual binder " 12 55 660
10 Steeples " 12 20 240
11 Briefcase " 4 250 1000
12 Computer with printer " 5 12,000 60,000
13 Ruler " 10 2.50 25
Total " 77,550
Contingency (10%) " 7755
Grand Total " 85,305
Table 8, Office equipment and furniture list and investment costs
ix. Preproduction expenditures: - it includes pre-investment studies, preparatory
investigation and company formation costs, which estimated to Birr, 24,000
Capital cost during implementation of the project before production estimated to Birr 61,500

Total investment cost

Estimated cost
No Description including 10% Remark
contingency
1 Land, and site preparation non-building 103,400 00
2 Structure and civil engineering work 50,175 00
3 Building construction cost 561,000 00
4 Production plant, equipment, and instrument investment cost 419,5341 00
5 Other farm tools and materials cost 7,975 00
6 Animal clinic and veterinary equipment investment cost 23,611 00
7 Vehicles purchase cost 825,000 00
8 Office equipment and furniture cost 85,305 00
9 Pre-production expenditures 24,000 00
10 Total fixed investment 2,100,000 00
11 Networking capital 120,000 00
Total investment 2,220,000 00
Capital cost during implementation of project (7.5% of 61,500 00
820,000)
Table 9- Summary of Total cost of investment for Adama poultry farm P.L.C
 Cost of Product/ Production/ & Operating costs analysis
Direct labor cost/ human power/ cost per annum,
No Position Qun't Qualification Monthly Salary Annual Salary
1 Project Manager 1 BA in management 1500 00 18,000
2 Production and Technical Manager 1 BA in agricultural Eco. 1150 00 13,800
3 Marketing Manger 1 BA in Mrkting Management 1150 00 13,800
4 Export 2 BSC in Animal Science 1040 00 24,960
5 Administration and Finance 1 BA in Management 1040 00 12,480
6 Personnel 1 Diploma in Management 760 00 9,120
7 Accountant II 1 Diploma in Accounting 760 00 9,120
8 Accountant I 1 Diploma in Accounting 630 00 7,560
9 Casher 1 Diploma in Accounting 630 00 7,560
10 Electrician 2 Diploma in Elect. 760 00 18,240
11 Secretary 1 Diploma in SSOM 630 00 7,560
12 Lab, technician 1 Dip. in lab tech. 760 00 9,120
13 Animal health tech. 1 Dip Animal Health 800 00 9,600
14 Purchaser 1 Diploma 760 00 9,120
15 Store keeper 2 - 630 00 15,120
16 Driver 2 12 Complete 420 00 10,080
17 Janitor 1 300 00 3600
18 Guard 4 250 00 12,000
19 Daily workers 5 250 15,000
Total 227,400
6% provident fund 13,644
Grand Total 241,044
Table 10-List of employees and labor cost per year

ii. Annual feed consumption cost

No Description Unit Qun't Cost per unit Total cost Remark
1 Feed for chicks (0-3 months) Qunt 200 134 78 26,960 00
ages
2 Feed for 3-5 months age " 230 130 29,900 00
3 Feed for layer " 240 127 30,480 00
Total 87,340 00
Contingence (10%) 8,734 00
Grand total 96,074 00
Table 10:- Annual feed consumption cost of hens
 Note:-0-3 months chicks feed 6 gm/ day/ chicks
 Grower (3-5 months) feed 50-60 gm/day
 Layers feed 130 gm/day
iii. Medication cost estimated to Birr 60,000 per year, Note, Medication is give to hens depend
on conditions.
iv. Fuel and lubricant costs, for vehicles and generator depend on consumption and current fuel
costs in the market estimated annual consumption cost to be birr, 55,500 per year
V. Maintenance cost estimated (in average) of 1% of total fixed investment cost per year i.e. Birr
21,615
vi. Utility, over head, and other expense included in the following total production costs
summary table for the project production period of five years.

No Description Year 1 Year 2 Year 3 Year 4 Year 5

1 Labor cost (salary and wage) 241,04 241,044 241,044 241,044 241,044
4
2 Annual feed consumption 96,074 96,074 96,074 96,074 96,074
3 Medication cost 60,000 60,000 60,000 60,000 60,000
4 Fuel and lubricant 55,500 55,500 55,500 55,500 55,500
5 Worker uniform 2,500 2,500 2,500 2,500 2,500
6 Office supplies 2000 2000 2000 2000 2000
7 Maintenance cost 21,615 21,615 21,615 21,615 21,615
8 Utilizes exp. (water telephone 6000 6000 6000 6000 6000
elect.)
9 Perdium exp and local training 5000 5000 5000 5000 5000
costs.
10 Other expense 4000 4000 4000 4000 4000
11 Marketing Costs 23,120 23,120 28,120 28,120 28,120
12 Interest exp. 61,500 61,500 46,125 30,750 15,375
Description exp. 320,00 320,000 320,000 320,000 320,000
0
Total cost of production and 903,35 903,353 887,978 872,603 857,228
expense 3
Table 11:- Summary of total production marketing and over head costs per year for five years

 Marketing and selling cost estimated to 2% sales per year

depreciation expense computed 20% of fixed investment per year by straight-line method
when fixed investment salvage value at end of the project estimated to 561,500, depreciation
expense per year 320,000.

Project Financing
The project activities to be financed by equity contributed by the owner and long term
financing (loan) from Bank. The repayment of the loan arranged for installment of equal
payments in four years (at the end of year 2, 3, 4 and 5). The interest of the loan paid at end of
each year. The interest rate of the loan is 7.5% per year on the balance of the loan.

No Sources Amount in Birr Remark

1 Equity 1,400,000 00
2 Long term loan 820,000 00 At 7.5% interest per year
Total 2,220,000 00
Table 12:- Sources of finance for the project

Investment Income
Income/revenue/ to be generated per year from the sales of products and by products of the
project (Gondar poultry farm PLC). Summarize as follows.
Note: - Price per unit of the product is forecasted from current market price and demand in the
future market situation analysis
 Cost per
No Description Unit Qun't Total cost Remark
unit
1 Cocks No 21,000 22 00 462,000 00
2 Layers No 21,000 20 00 420,000 00
3 Chickens No 13,000 3 00 39,000 00
4 Eggs No 1,200,000 0 40 480,000 00
5 By product Quint. 250 20 00 5000 00
Total 1,406,000 00
Table 13 Annual sales of the project production

Note: - Each layer lays 240 eggs per year there should be 5000 egg producer layer per year other than
those sold to the market.

Net cash Flow of the project

Years
No Description
0 1 2 3 4 5
A Investment fixed (2,100,00)
B Working capital (120,0000)
C Revenue - 1,406,000 1,406,000 1,406,000 1,406,000 1,406,000
Total operating -
cost including
D deprecation exp. 841,853 841,853 841,853 841,853 841,853
(excluding,
interests, tax)
E Depreciation exp. - 320,000 320,000 320,000 320,000 320,000
F Interest expenses - 61,500 61,500 46,125 30,750 15,375
G Profit before tax - 502,647 502,647 518,022 533,397 548,772
[C-(D+F)]
H Tax (35%) - 175,926.4 175,926.4 181,307.7 186,688.9 192,070.0
5 5 0 5 0
I Profit after tax - 326,720.5 326,720.5 336,714.3 346,708.0 356,701.8
(G-H) 5 5 0 5 0
J Net salvage Value - - - - - 561,500
of fixed asset
K recovery of - - - - - 120,000
 working capital
L Operating cash - 646,720.5 646,720.5 656,714.3 666,708.0 676,701.8
flow (I+E) 5 5 0 5 0
M Terminal cash (2,220,000) - - - - 681,500
flow total (J+K) (A+B) (J+K)
N Net cash flows (2,220,000) 646,720.5 646,720.5 656,714.3 666,708.0 1,358,201.
(L+M) 5 5 0 5 80
Table 14: net cash flow statement of the project per year

Investment appraisal
In table 14:- above, annual cash flow from sales and net cash flow from the project are
computed clearly.
 When we evaluate the project by project appraisal criteria,

ii. Net present value (NPV):- the Net present value of a project is equal to the sum of the
present value of all the cash flows associated with it symbolically.
n
∑ cft (1+r )t −I o
NPV = t=1

Discounted cash flow per year

Year Discount Cash P.V
Value flow (With D. rate=8%)
0 1 (2,220,000.00) = (2,220,000.00)
1 0.92592 x 646,720.55 = 598,811.03
2 08573 x 646,720.55 = 554,433.53
3 0.793 x 656,714.30 = 520,744.44
4 0.735 x 666,708.05 = 490,030.42
5 0.680 x 1,358,201.80 = 923,577.22
NPV ................................................................ = 867,596.64
 The project has high amount of NPV on the investment therefore it is best to implement according to this
feasibility analysis result.
ii. Internal rate of return (IRR):- is the discount rate which makes its net present value (NPV)
equal to zero. It is the discount rate in the equations.
n
∑ cft (1+r )t −I o
NPV = t =1 =0
(2 ,220 , 000 ) 646 , 720 .55 646 ,720 . 55 656 , 717 .30 666 , 708. 05 1 , 358 ,201 .80
0
+ 1
+ 2
+ 3
+ 4
+
0= (1+ke) (1+ke ) (1+ke ) (1+ke ) (1+ke ) (1+ke)5
Year Cash Discounting Discounting
Inflow @ 20% @ 21%
0 (2,220,000.00) (2,220,000.00) (2,220,000.00)
1 646,720.55 538,933.29 534,479.79
2 646,720.55 449,111.49 441,718.84
3 656,714.30 380,043.00 370,698.10
4 666,708.05 321,522.15 311,024.23
5 1,358,201.80 545,830.84 523,045.59
NPV ....................................... 15,441.27 38,433.45

Step1 = /NPV1 / + /NPV2/

= /15,441.27/+/38,433.45/
= 53,874.72
Step 2 = 15,44.27/53,874.72
= 0.2866
IRR = 20% + 0.2866
= 20.2866%
There fore, the project should be implemented because IRR > the cost of the capital (8%)
III, Net cost Benefit Ratio = Net present value
Initial investment
867,596.64
= 2,220,000.00
 = 0.391 OR
PVB
Benefit cost ratio = I
3,087,596.64
= 2,220,000.00
= 1.391
When RCR NBCR decision
>1 >0 Accepted
>1 =0 indifferent
<1 <0 rejected
Therefore, the project should be accepted because RBC >1 & NBCR >0
IV. Pay back period: - is the inks of time required to received the initial cash out
A) With discounting period:-
Year Net Cash flow discounting @ 8% Present Value Cumulative present value

1 646,720.55 0.92592 598,811.03 598,811.03

2 646,720.55 0.8573 554,433.53 1,153,244.56

3 656,714.30 0.793 520,744.44 1,673,989.00

4 666,708.05 0.735 490,030.42 2,164,019.42
5 1,358,201.80 0.680 923,577.22 3,087,596.64

PBP = YEARS BEFORE FULL RECOVER + UNCOVER COST

 CASH FLOW DURING NEXT PERIOD
= 4 YEARS + 55,980.58
923,577.22

PBP = 4.06 YEARS

There fore, the pay back period is 4.06 years.

B) Without Discounting period.

Year Cash Cumulative Net
Flow Cash flow
1 646,720.55 646,720.55
2 646,720.55 1,293,441.10
3 656,714.30 1,950,155.40
4 666,708.05 2,616,863.45
5 1,358,201.80 3,975,065.25
PBP = YEARS BEFORE FULL RECOVER + UNCOVER COST
CASH FLOW DURING NEXT PERIOD
= 3 YEARS + 269,844.60
666,708.05
PBP = 3.40 YEARS
Therefore, the pay back period is 3.40 years.

V) Accounting rate return

Accounting rate return = Average Net income
Average investment
 = Total Net income
n-years
Initial investment
2
795,013.05
= 2,220,000.00
= 0.36
Therefore, the project should be implemented.
DECEISION: - According to the project appraisal criteria, the project has high amount of net
present value, high rate of internal rate of return, the benefit cost ratio is greater than one ,&
has a good pay back period . So it is best to implement according to these all feasibility
analysis.

Risk and uncertainty related to the business are:

 The main risks and difficult to control are major materials disasters
 Major diseases attack all birds at one time like bird flue,
 The products like eggs are easily damaged (broken, spoiled.)
 Other damage of major instruments.

1 Project implementation schedule

The major activities to be performed are:-
 Site/land/leasing /hand over/ from June 1 to 31/2013
 Site labeling, restructuring, fence construction from July. 1 to 28, 2013.
 Constructing of the building (by bid winner contractor) from august 1, 2013 to
September 31, 2013
 Procurement of necessary plants, equipments and materials for production from
October 1, 2013 to December 31, 2013
Installation of incubators, machineries, from January 1 to February 31, 2014
 Internal materials and instrument arrangement from march.1, 2013- April 31, 2014
 Recruitment of all necessary employees in may. 2014
  Purchasing of genetically exotic breed chicks /hens/ & eggs from June 1-5, 2014.
 Production started /take place/ June, 2014
From site labeling, fence construction, building construction ... to the beginning of
production stage it takes one year i.e. from June 2013 to July 31, 2013. The critical
activities in the implementation are installation of machineries and arrangement of
instruments.

Conclusion
As it presented in detail in this project document the project has different types of
advantages. Such as, it generate high amount of profit to owners, it creates job
opportunities for local people and skilled persons, it provide quality product for
consumers at reasonable price, it provide more productive types of hens for local
farmers and etc.
On the other hand the project operation and products are very sensitive to various
factors, easily affected by diseases; it has high risks and need high care operation.
As a conclusion this project has a chance of implementation because it advantage are
more attractive and those draw backs can be minimized and controlled by different
mechanisms through effective and careful production activities by manpower and
adaptable technology.