ADDIS ABABA UNIVERSITY,AAiT

Table of content page

Acknowledgement…………………………………………………………………………
Introduction…………………………………………………………………………………..

Part one

Executive summary……………………………………………………………………..

Part Two

Marketing and sell………………………………………………………………………

Part three

Production of HCB…………………………………………………………………….

Part Four

Organization and management…………………………………………………

Part Five

Finance…………………………………………………………………………………….

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Acknowledgement
First and foremost I would like to thank the Almighty God for giving me the
strength to carry on. Next I would like to heart felt gratitude for my instructor
Dr.Girmay for his insightful ideas.

I would like to acknowledge all peoples who gave me their hands by giving
me information on my project.

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INTRODUCTION

Hollow block concretes are made from cast concrete i.e.Portland cement and aggregate, usually
sand and lime graves for high density blocks. Lower density blocks may use industrial wastes as
an aggregate.

Hollow block technologyoffers a speedier, cost effective, environmentally sound alternative to

conventional walling materials. It is based on the principle of densification of a lean concrete
mix to make a regular shaped, uniform, high performance masonry unit. Concrete Block
Technology can be easily adapted to suit special needs of users by modifying design parameters
such as mix proportion, water/cement ratio and type of production system. It is an effective
means of utilizing wastes generated by stone crushers, quarrying and stone processing units.
The technology has high potential in areas where raw materials are easily available.

Acceptability of concrete blocks is very high in urban areas for all types of buildings. They are
very popular as a long lasting, low maintenance and investment for institutional and industrial
buildings. The permanence of a cement-based product is making concrete blocks a preferred
choice in rural areas as well.

PART ONE

EXCUTIVE SUMMARY

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1.0 Brief description of the project

A hollow block concrete is primarily used as a building material in the construction of walls. A
concrete block is one of several precast concrete products used in construction. The term
precast refers to the fact that the blocks are formed and hardened before they are brought to
the job site.

HCB are lighter than bricks, either to place and also center economics foundation cast and
consumption of cement. These blocks are made of cement, stone chips, stone dust and sand.
They have more tensile strength, the walls are constructed from these blocks act as thermal
insulators because of their hollowness.

These blocks find wind applicability and construction cast is largely reduced. It is also observed
that there is good demand for housing activity. In our country, as the construction activity is
growing day to day, there is high demand for hollow concrete block.

KM high quality HCB production enterprise is a private company owned by me and aimed at
filling the gap of HCB demand and supply in Addis Ababa and surrounding towns. In addition to
this, producing quality HCB which satisfies the required standard is the slope of the company.

1.1 Quality Control

The manufacture of HCB requires constant motoring to produce blocks that have the required
properties. The raw materials are weighed electronically before they are placed in the mixer.
The trapped water content in the sand and gravel may be measured with ultrasonic sensors,
and the amount of water to be added to the mix is automatically adjusted to compensate. The
weather of the area is not harsh. So these factors are not the case for our project.

Minimum Compressive Strength

The minimum compressive strength for HCB according to ESC D3.301 is indicated below and
will produce according to this standard.

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Average of 6 Units Individual Units

Class
Mpa Kg/cm2 Mpa Kg/cm2

A 4.2 42 3.8 38

B 3.5 35 3.2 32

C 2.0 20 1.8 18

PART TWO

SALES AND MARKETING

2.1 Product Description

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KM high quality HCB production enterprise produces three types of standard high quality
hollow concrete blocks. These are: type A HCB, type B HCB and type C HCB. There is no new
invention in this business; rather the company is aimed at producing the quality products so
that any customer will get the type of HCB he/she want at any time from our company. The size
of blocks is the same as the accepted standard, which is X the color is somewhatreddish due to
the type of sand we use. We have planned to produce about 10000 HCBs per day for now and
we have planned to increase our product depending on our future capital and demand from
our customers.

2.2 Our Competitors

I have made survey on HCB production in and around our capital Addis. I have noticed that the
number of producers is limited when compared to demand. Even some contractors are
enforced to produce by themselves at site. The reason is that firstly they want to save money;
lastly they don’t able to get the products when they want and the quality they want.

I have understood that, as I have good educational back ground about the construction
industry, I can produce high quality products by controlling every condition that affect the
quality. On another way, there is high demand as construction is highly developing in Addis. So,
I don’t have fear on my business viability.

2.3 Location

Location of KM high quality HCB production is at Tatek. Tatek is near Addis Ababa, on the
western direction of the country on the road from Addis to Ambo. There are many reasons that
made me to select this location. Some of them are

 Raw material availability

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I have planned to use cement from Mugor and Habesha. These factories are found on this way.
Mugar can provide us the cement if we make some agreement with them. Habesha cement
factory is under construction near Holeta which is also nearest factory to our company. So it will
provide us sufficient cement with optimum cost.

For sand, we have planned to use newly discovered sand from Ambo Senkele. This sand is quite
different from the normal one that we are using for construction. The differences are:

 Its origin:- the normal sand we are using is from river or lakes but the one we planned
to use is just by excavating from the ground.
 Its color:-the one we normally use is somewhat grey and that we planned to use for our
factory is reddish.
 Strength the strength of both sands are the same. We can get continuous sand resource
from this area as far as we do in corporation with sand producers.
 Labor
Tatek is near Addis and no doughty that there is high skilled and unskilled labor both from
rural and city. So this is one of the factors that made attractive the area for our business.
 Proximity to market and availability of enough area for industry. Our market is Addis
Ababa. The area is near Addis and our customers can come and buy our product without
difficulty. The following factors will make the area attractive in relative to market
 Availability of transport facilities
 Availability of wide area for industry
 Availability of water

2.4 Market Are And Customers

Our market area is Addis Ababa and nearby towns for the moment. Construction constructors
and Privates those want to build their own homes can use our products.

But we don’t mean that we are limited to this area. We can sell to any one from anywhere if
he/she comes to our site and interested in our product. Ourfear is that customers from distance

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may not come and buy our product because transportation cost is from them. As the distance
increase the cost of each HCB will increase due to transportation cost. Through time however,
we have planned to solve this problem by establishing HCB production factory at cities where
demand is high.

2.5 Selling Price And Sales Forecast

When we see the construction industry in Ethiopia,particularly in Addis, any normal thinker can
understand that it is highly expanding. Today is better than yesterday and tomorrow will be the
best. Now a day, the number of supply and that of demand in construction HCB is not balanced.
There is scarcity. So all of our products will be sold.

Selling price is according to the market, we have planned to win the market by producing
quality and standardized products. But if we get large market, we will discount by some
percentage so that we will get benefit from mass production.

2.6 Promotion Measures

Promotions are one of the most crucial of marketing the product. It helps to convince buyers to
select our product by identifying the unique characteristics of it.

In our case, we have planned to advertise our product by different techniques. These include:

o Using posters
o Taking samples to the contractors
o Using FM radio
o Telling buyers the uniqueness of our product so that they will it others

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2.7 Market Strategy

To hit our target, I know that the following are crucial

 Proper planning
 Pricing in proper way
 Proper promotion of the product
 Know promotion of the product
 Distribution strategy

For promotion some initial amount of money is required by the company. Through time,
however, the product will be familiarized and the company financial capacity will be increased
also.

PART THREE

PRODUCTION OF HCB

3.1 Production Process

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The constituents commonly used to make hollow block concrete is a mixture of powdered
Portland cement, water, sand and gravel. This produces a light gray block with a fine surface
fixture and a high compressive strength. This hollow block concrete weighs about 18kg.

Concrete blocks are usually produced using a semi-mechanized stationary type machine. The
other production systems are - manual molds that require hand tamping, a mobile semi-
mechanized egg-laying machine and fully mechanized system that combines compression and
vibration

Fig.produced HCB

Concrete blocks can be used like any other masonry unit to build foundations, walls, arches and
corbels, etc. A typical concrete block is equivalent to 4.5 bricks, thus construction is faster than
with other masonry units. The mortar used is also, less which results in cost saving. Concrete
blocks have been extensively used in combination with conventional roofing systems like RCC,

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RBC, GI sheets, ACC sheets etc. They are also compatible with other materials like fired bricks,
dressed stone and compressed earth blocks for composite wall construction.

The shapes and sizes of this hollow concreteshould bematched with the standard one to ensure
uniform building construction. The size is 20.3m deep and 40.6cm wide.

Generally, manufacturing process consists of four basic processes:

1. Mixing
2. Molding
3. Curing
4. Curbing

3.2 Size and Structure

Concrete blocks may be produced with hollow centers to reduce weights or improve insulation.
The use of block work allows structure to be built in the traditional masonry style with layers of
overlapping blocks. Blocks come in many sizes

20cm*20cm*41cm*or

In UK 44cm*21.5*10cm

Technical Specifications of Concrete Blocks for our production:

Parameter Description
Typical size 300 x 200 x 150 mm
Average compressive strength at 28 days 50-110 kg/sq.cm
Mix Proportion 1:12-14 (1 part cement : 12-14 parts sum

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graded aggregates)
Water absorption in 24 hours Less than 10% by weight of block

3.3 Equipment And Their Cost Estimation

For bringing raw materials from its source and for processing these raw materials and
transforming it to required product, the following are some of the essentialequipment.

a) Truck
Truck is very important for brining sand, aggregates and others from its site. For the
initial, we have proposed only one truck and its cost estimated to 600000 birr.

b) Fully automatic hollow concrete block making machine

This is used for producing quality HCB. It is the modern one and operates automatically.
The cost of fully automatic hollow concrete block concrete is estimated to $15000
(255000 birr)

c) Vibrator
Vibrator helps to increase the quality of HCB by removing air voids from inside concrete
and by allowing uniform distribution of aggregate. The cost is estimated to 15000 birr.
Generally the cost of machineries required to produce HCB is tablated as follow:

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d)mixer

Mixers are used for uniformly mixing of constituents.

Equipments and their cost estimates

Equipment/building Estimated cost in birr

Truck 600000
HCB producing machine 255000
Vibrator 15000
Store 100000
Fence 50000
Others 10000
Total 1070000

Man power and their cost estimate

Labor type no Salary Total cost

Truck driver 1 3500 3500
Driver helper 1 1900 1900
HCB machine 1 2100 2100
operator
Vibrator operator 1 2000 2000
Daily laborer 14 1200 16800
Guard 1 800 800
Total 15 11500 27100

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Raw material cost

Sand Unit Unit Amount used per month Total cost

rate
Cement qtl 175 6850 1198750
Sand M3 200 32 6400
Aggregate M3 200 32 6400
Total 580 1211550

3.4 Planned And Future Capacity

For now we have planned to produce about 10000 HCBs per day. As much as possible we will
produce high quality HCB with minimum own weight we will also produce three classes of HCB
so that our customers will get the products they want with optimum cost. Besides producing
these products we have planned to advertise our products so that contractors those use large
amount of HCB and other customers will be familiarizes with our products.

3.5 Raw Materials

i) Required raw material

Raw materials required for production of HCB is

 Sand
 Cement
 Aggregate
 Water

ii) Availability

 Sand-sand is highly available in Senkele near Ambo town

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 Cement-we can get from Muger, from Abesha cement or from Merkato market if we
want.
 Aggregate-we have planned to plant aggregate crusher in nearby area where quality
stone is found.
 Water – Water used for mix and curing should sufficiently be clean and free from
organic matter, acid, alkaline and substances in suspension or solution. The city water
supply water is suitable for this purpose and all other sources must be tested before
use. Water is available in the area and we can use it by connecting with line from
source.

These raw materials are available throughout the year. So, there would be no problem of
scarcity.

iii) Raw material cost

Raw material cost is estimated in the following table

Material Unit Unit rate in birr

Sand M3 200
Cement Qtl 172
Aggregate M3 200

3.5 Labor Availability and Productivity

For production of hollow block concrete, a number of direct and indirect workers are needed.
This includes educated or uneducated laborers. The number of workers varies with intensity of
work. When there is high demand of HCB, the number of workers will increase. When the
demand decreases, the number of workers will reduce. The payment for workers also vary with
their professionalism. Permanent and key workers will get more fee.

In Tatek area the availability of laborers doesn’t worry us because the area is near to Addis
Ababa and laborers of any type can be obtained at a right time, with a right cost and with a

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required number. The laborers do need shelter or other live facilities as there is high facility of
transportation that enables to go to their home every day of they want.

PART FOUR

ORGANIZATION AND MANAGEMENT

4.1Form Of Business

The form of business is private limited company. It is owned by me. I have planned to be
registered according to the law and regulations of our country Ethiopia and make it legal
business company. To be legal, I know that it is important to understand the relevant laws such
as taxation, liability etc. and forms has to be filled before operating the business.

4.2 Organization Structure

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To operate smoothly and efficiency, there must be good structure of authority and
responsibility, division of labor and definition of what each entry must do in the business.
Therefore, the business needs an organization structure. For our business company the
organizational structure has been discussed in the following.

The company has organizational structure which has manager at the top. The manager will
control and direct every activity. The manager is me and I will work all things that concerns me.
To facilitate good working environment, I will use every communication skills as possible and
motivate my workers.

4.3 Business Experience And Quality Of entrepreneur

It is clear that to ensure business survival and growth, the people who run the business must
have the proper qualification and suitable experience. The survival and growth of the business
depends on the competence and ability of management.

I am construction professional as I have graduated by civil engineering. I have also management

skill that I have gained in campus. So, can maximize the quality and quantity of production by
applying my skill and experience. This will help the company to grow through time. In short,
qualification and experience is not the problem that threatens the company.

4.4 Pre-Operating And Expenses

These all require expense and I have to pay for it. The estimate of money needed for this has
been expressed in section 3.2.

4.5 Office Equipment

Apart from the fixed capital needed to manufacture the HCB, the business needs other fixed
asset to the administrative aspect of the business. Theseequipment are:

o Desk top computer- 2 _cost 2*5000 = 10000

o Flat table- 2 1000*1 = 1000

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o Shelf – 1 1*1000 = 1000

o Printer 1 1*10000 =10000
o Phone 1 1*600 =600
TOTAL = 23200 BIRR

PART FIVE
FINANCIAL PLAN

5.1 Project Cost

Total capital requirement of the project is consists of three main items. These are;

1. Fixed assets capital

2. Pre-operating capital and
3. Working capital
1) Fixed asset- is the sum of all costs of land and improvements, building, machinery,
furniture, vehicle. This cost is summarized in the following table.

Item Cost
Land 10000
Fence 50000
Office 60000
Store 60000
Workshop 50000
HCB production machine 255000
Truck 600000
Vibration 15000
Others 50000
Total 1150000

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2) Pre-operating costs
Capital needed by the company for pre operating expenses are tabulated in the
following

Item Cost
Registration 5000
Cost of preparing the business plan 5000
Transporting machineries 15000
Total 25000

3) Working capital
The capital permanently needed in cash to keep the business operating which it is
wanting full payment for goods to customers include:
o Cost of maximum raw material - estimated to 1211550
o Labor cost - estimated to 16800
o The cost of finished goods kept in stock and a waiting distribution to
the customers - estimated to 50000
o The cost of a work in process – estimated 10000
o The cost of goods already distributed to customers but have not yet
been paid - estimated to 5000
o Office services 23200
o Total = 1316550
o Total cost=1150000+25000+1316550 = 2491550 birr

Hence,2491550birr is the total cost that I need to fulfill all equipment and produce my products
for the first month.

5.2 Security for Loan

Viability of the business has no doughty for the security of loan, I don’t have anything in my
hand to let the bankers to know but I have looked at other options. One of this is to deal with

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my uncle and convince him, I think his property can be estimated to about half a million
Ethiopian birr. If he agrees with my idea, I can loan and continue my business.

5.3 Loan Repayment Schedule

We planned to produce about 10000 pieces of HCB perday. Even if we reduce the net profit to
less than 10%. We are going to generate 10000 birr perday. Assuming that all products will not
be sold on time, and considering other factors. We can have net capital of about 100000 birr
per month. This can be paid every month to the bank. So we can pay all money back to the
bank with in the maximum of two years.

5.4 Feasibly of The project

As I have tried to discuss all the marketing, technical, organization and finance of the project,
the demand of HCB is very high in Addis Ababa. If the product has scarcity, it means that it has
high market. So, our product has high marketing and we can get more profit if we work hard
especially on quality production. As a result, we can pay all our loan and also generate more
profit from mass production.

To summarize, the project is very feasible even if we plan to get about 10% profit as we can sell
all of our product every day. Me being professional of construction will help the company more
in generating money by producing quality HCB, monitoring every units of work, advertising in a
proper manner.

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