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PROJECT COST MANAGEMENT

FEASIBILITY REPORT OF ZIKAR EDUCATION CENTER

GROUP MEMBERS:
HUMERA SEULMAN

MADIHA SHAHZEB
EXECUTIVE SUMMARY

• Education plays a vital role in the progress of any nation and is responsible for its
advancement towards success.
• This Feasibility Study is about setting up the venture of a High School (Franchise) in small
cities of Pakistan.
• The motive to propose small city is due to market saturation in metropolitan cities of
Pakistan and unavailability of quality education institutes in semi urban areas or small cities.
• The proposed school will offer its services from the classes from middle to Matric education.
• The school will be catering to children of middle to low-income economic stratum,
recognizing the need for a high caliber yet low-cost institute.
BUSINESS OBJECTIVES & GOAL

• Proposed capacity of Primary School (Franchise) is 480 Students in one year.


• Initial capacity utilization is estimated at 60% with a growth rate of 15% per annum.
• Pre-feasibility study is primarily to facilitate potential entrepreneurs in project identification for investment.
• This study will help potential investors take important decisions by providing them with general understanding of the business.
• To project proposal is about education center construction of which will be known as Zikar Education Centre. Upon completion,
it will have secondary education till matric..
• To construct the education center within five years, whereby pre-secondary school will start simultaneously in one year while
building construction will be progressing. secondary school is planned to commence in year three and advanced level in year
four.
• To offer education of high quality basing on Pakistan Ministry of Education curriculum.
• The education centre has its plan in future to have branches in different regions depending on availability of fund as it is in the
process of requesting grants from the government.
LOCATION

• Bitholdi Colony, Sahiwal District, Punjab.


• Bitholdi colony there are about six plots of lands ready to be sold to intended buyers at the rate of
850,000 per plots.
• The Punjab ministry of education suggested that we use two plots of land, but due to the facility we have
in mind and to create a conducive and recreational environment for learning, we have decided to buy
three plots out of these six plots of land.
• There is a public primary school and several other privately owned schools in that premises.
• The available schools in this area have poor teaching standard,
• Inadequate facilities and poor staffing, many parent prefer to send their children to far away distances
where few standard schools exist.
REQUIREMENTS

• Human Resources Requirements

 Academic staff (Headmaster, Assistant Headmaster, Teaching staff)

 Non-academic staff (Secretary/PRO, Accountant, Librarian, Medical staff, Technical team, Sport Coordinator)

 Auxiliary Staff ( Bus drivers, Security Men, Gardener, Cleaners)

• Equipment (class furniture, laboratory equipment, computers, stationary, tools etc.)


STAKEHOLDERS

• People living in vicinity


• Pakistan Schools Association
• Government of Pakistan
• Investors
PROJECT COST SUMMARY
KEY ASSUMPTIONS

• The revenue items including school fees are assumed to increase by 10% in year 2-3 and by 12 % in year
4-5.
• The registration cost is assumed to be incurred in year zero alone.
• The loan is agreed to be paid at RS 10, 000,000 per year starting from year one.
• The interest on loan shall be on the balance of each year.
• There is a 10% increase on other expenses starting from year 2.
• The cost of capital for the calculation of the present value is assumed to be the bank interest rate of
15%.
• Debt equity Ratio is 2:5
FINANCIAL PROJECTIONS

• A commercial bank provides us with the initial capital outlay at an interest rate of 15% per annum. The loan is
provided at the beginning of year zero and to be repaid before the end of the fifth year together with the
interest

• The interest payment shall be from year zero as the bank insisted on deducting it from the loan before
disbursing it to us

• Year zero is the year of all requisite capital items, therefore, operation does not start in year zero. It starts in
year one, being the year after year zero.

• TAX deduction is 20%

• Depreciation is charged on the following rates:


BUILDING 5%
MOTOR VEHICLE 15%
PLANTS AND MACHINERY 10%
FURNITURES AND FITTINGS 10%
BREAK DOWN OF KEY COST ELEMENTS

FIXED COSTS RS
LAND ( 3 PLOTS) @ RS850,000/plot 2,550,000

DEVELOPMENT INCLUDING DRAINAGE, 15,800,000


LANDSCAPING,FENCING AND OTHER DEVT
& SCHOOL BUILDING

TOTAL (RS) 18,350,000


FIXED COSTS
PLANTS AND MACHINERY RS

PRE-SCHOOL EQUIPMENT & TEACHING AIDS 660,200


BORE HOLE DIGGING 250,000

STAFF COMPUTER 5 @ RS40,000 Each 200,000


PRINTERS 3 @ 9000 Each 27,000
100 KVA GENERATOR 50,000

TOTAL RS 1,187,200
FIXED COSTS
FURNITURES AND FITTINGS RS

OFFICE FURNITURE 1,500,000


CEILING FANS 20 @ 2,000 Each 40,000

AIR CONDITIONS 5@ 50,000 Each 250,000


OTHERS 27,000
500,000
TOTAL RS 2,290,000

School Bus 1 @ RS 4m 1,500,000


OTHER COSTS RS

ACADEMIC STAFFS 3,660,000 per yr.


NON-ACADEMIC STAFFS 1,884,000 per yr.
AUXILIARY STAFFS 1,272,000 per yr.
ACADEMIC STAFFS 3,660,000 per yr.
NON-ACADEMIC STAFFS 1,884,000 per yr.
AUXILIARY STAFFS 1,272,000 per yr.
ACADEMIC STAFFS 3,660,000 per yr.

TOTAL 6,816,000 PER YR


ADVERTISEMENT: RS
INTERNET(SCHOOL WEBSITE) 65,000
RADIO(Splash FM) 5,000
BILL BOARD 36,000
POSTERS 4,500
PAMPHETS 2,500

TOTAL 113,000
RS
REGISTRATIONS 500,000

MISCELLANEOUS 1,000,000

GRAND TOTAL 31,756,200


RS
FINANCING PLAN
LONG TERM LOAN 20,000,000.
EQUITY CONTRBUTION 8,000,000

TOTAL 28,000,000
CAPITAL ITEMS IN YEAR 0

ASSETS RS
Land 2,550,000
School Building 15,800,000
Plants And Machinery 1,187,200
Furnitures And Fittings 2,290,000
Motor Vehicle (School Bus) 1,500,000

TOTAL 23,327,200
ITEMS YEARS 1 2 3 4 5 TOTAL

LAND 0 0 0 0 0 0 0

BUILDING 0 790,000 790,000 790,000 790,000 790,000 3,950,000

5%

PLANTS & 0 118,720 118,720 118,720 118,720 118,720 593,600

MACHINERY 100%

FURNITURE AND
FITTINGS 10% 0 229,000 229,000 229,000 229,000 229,000 1,145,000

MOTOR
VEHICLE 15% 0 225,000 225,000 225,000 225,000 225,000 1,125,000

6,813,600
TOTAL 1,362,720 1,362,720 1,362,720 1,362,720 1,362,720 1,362,720
DETAILS YEAR 0 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

INFLOWS RS RS RS RS RS RS

BAL B/F 0 (327,200) 9,987,584 21,357,091.2 40,562,144.96 58,990,004.77

EQUITY 8,000,000 0 0 0 0 0

LOAN 20,000,000 0 0 0 0 0

SCHOOL FEES 0 38,400,000 42,240,000 46,464,000 52,039,680 58,284,442

TOTAL INFLOW 28,000,000 38,072,800 52,227,584 67,821,091 92,601,825 117,274,447


DETAILS YEAR 0 YEAR 1 YEAR 2 YEAR 3 YEAR 4 YEAR 5

OUTFLOW
CAPITAL

LAND 2,550,000 0 0 0 0 0

BUILDING 15,800,000 0 0 0 0 0

P&M 1,187,200 0 0 0 0 0

F&F 2,290,000 0 0 0 0 0

MOTOR
VEHICAL 1,500,000 0 0 0 0 0

SUB-TOTAL (A) 23,327,200 0 0 0 0 0


OPERATING
EXPENSE

SALARIES 0 6,816,000 7,497,600 8,247,360 9,072,096 9,979,306

DEPRECIATION 0 1,362,720 1,362,720 1,362,720 1,362,720 1,362,720

ADVERTISEMENT 0 113,000 124,300 136,730 150,403 165,443.3

INSURANCE 0 2,000,000 2,200,000 2,420,000 2,662,000 2,928,200

MAINTENANCE 0 3000,000 3,300,000 3,630,000 3,993,000 4,392,300

STATIONERY 0 500,000 550,000 605,000 665,500 732,050


REGISTRATION
COST
500,000 0 0 0 0 0
INTEREST ON
LOAN 3,000,000 1,500,000 0 0 0 0

LOAN REPAYMENT 0 10,000,000 10,000,000 0 0 0


FUEL & DIESEL 0 500,000 550,000 605,000 665,500 732,050

MISCELLEOUS 1,500,000 1,500,000 1,650,000 1,815,000 1,996,500 2,196,150

SUB-TOTAL( B) 5,000,000 27,291,720 27,234,620 18,821,810 20,567,719 22,488,219

TOTAL 28,327,200 27,291,720 27,234,620 18,821,810 20,567,719 22,488,219

OUTFLOW(A + B)
PROFIT/(LOSS) 0 10,781,080 24,992,964 48,999,281 72,034,106 94,786,228

BEFORE TAX

Deduct TAX 20% 0 2,156,216 4,998,592.8 9,799,856 14,406,821 18,957,245

.8

PROFIT
AFTER TAX 0 8,624,864 19,994,371 39,199,425 57,627,285 75,828,982

ADD 0 1,362,720 1,362,720 1,362,720 1,362,720 1,362,720

DEPRECIATION

NET CASH 21,357,09 40,562,14 58,990,00 77,191,70


FLOW (327,200) 9,987,584 1 5 5 2
YEAR INFLOW OUTFLOW NETFLOW

0 - 28,327,200 (28,327,200)
1 38,072,800 27,291,720 10,781,080
2 52,227,584 27,234,620 24,992,964
3 67,821,091.2 18,821,810 48,999,281.2
4 92,601,824.96 20,567,719 72,034,105.96
5 117,274,446.8 22,488,219 94,786,227.8

367,997,747 144,731,288

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