TECHNICAL UNIVERSITY OF KENYA

SCHOOL OF CONSTRUCTION AND PROPERTY STUDIES

DEPARTMENT OF CONSTRUCTION ECONOMICS AND MANAGEMENT
BACHELOR OF THE BUILT ENVIRONMENT IN
CONSTRUCTION MANAGEMENT

UNIT
EACR 4197 (2 UNITS – 96HRS)

NAME: DUNCAN OTIENO OGENDO

REG NO: EABQ/03458P/2020

PROJECT BRIEF: PART 2

PROPOSED RECREATIONAL COMPLEX FACILITY FEASIBILITY STUDY FOR

TECHNICAL UNIVERSITY OF KENYA TO BE BUILT ON PLOT LR. NO. 195/236/13 IN
THE CITY OF NAIROBI IN SOUTH C.

SUPERVISED BY:
QS. MICHAEL ACHIENG.
DR. LAWRENCE MBUGUA.
MR. EDWARD MBUGUA.

1
TABLE OF CONTENTS

CHAPTER ONE ..............................................................................................................................

9
INTRODUCTION ...........................................................................................................................
9
CLIENT’S BRIEF ...........................................................................................................................
9
SITE DESCRIPTION ..............................................................................................................10-11
SITE ANALYSIS ...........................................................................................................................
12
Neighbourhood and Views ............................................................................................................
12
Akiba Bellevue Estate...................................................................................................................... 12
CID Residence .................................................................................................................................
12
Toyota Kenya Academy .................................................................................................................. 13
Infrastructure .................................................................................................................................
13
Main Access Roads.....................................................................................................................13-14
Electricity Powerline........................................................................................................................
15
Drainage………...............................................................................................................................
16
Street Lights ................................................................................................................................16-
17
Topography and Noise pollution .................................................................................................. 17
Soil Typology ..................................................................................................................................
18
Vegetation ..................................................................................................................................18-
19
Climate Analysis.............................................................................................................................
19
Solar Radiation............................................................................................................................19-20
Rainfall / Precipitation .....................................................................................................................
20
2
Temperature ................................................................................................................................20-
21
Wind Direction.................................................................................................................................
21
Existing Facilities ...........................................................................................................................
Professional Fees .............................................................................................................................
28
Statutory Fees................................................................................................................................... 29
FINANCIAL APPRAISALS......................................................................................................... 29
Net Present Value ............................................................................................................................
30
Payback Period............................................................................................................................30-32
Internal Rate of Return................................................................................................................32-33
Profitability Index .......................................................................................................................33-34
Modified Internal Rate of Return.....................................................................................................
34
Annualized Net Present Value .........................................................................................................
35
METHODS OF APPROXIMATE APPROXIMATION ........................................................... 35
Option1: High-Cost Private Hospital .........................................................................................36-38
Option 2: Private High-Cost Academy .......................................................................................38-40
Option 3: 5-Star Hotel.................................................................................................................40-42
Option 4: Recreational Complex.................................................................................................42-46
Conclusion .......................................................................................................................................
46
CHAPTER TWO ...........................................................................................................................
47
FEASIBILITY STUDY .................................................................................................................
47
METHODOLOGY ........................................................................................................................
47
FEASIBILITY ANALYSIS ..........................................................................................................
48
Technical Feasibility ...................................................................................................................... 48
Soil conditions ...................................................................................................................... 48
Topography ........................................................................................................................... 48
Drainage ................................................................................................................................
48 Resource and Service availability
......................................................................................... 48
Population ............................................................................................................................. 48
3
Market Feasibility.......................................................................................................................... 49
Option 1: Proposed Recreational Complex........................................................................... 49
MARKETING STRATEGY .....................................................................................................49-50
Legal Feasibility ........................................................................................................................50-51
 Social-Economic Feasibility .......................................................................................................... 53
Positive Impacts of the Project ............................................................................................. 53
Environmental Feasibility ............................................................................................................. 53
Negative effects that result from the construction stage ..................................................54-57
Negative environmental impacts during operation stage...................................................... 58
CONCLUSION ............................................................................................................................... 59

4
 LIST OF FIGURES

Fig 1. Map showing Kenya and the Capital City. Source: IEBC ……………………….….…...

…...10 Fig 2. Map showing Nairobi City County. Highlighting Sub-Counties. Source:

IEBC…………….....10 Fig 3. Map showing Nairobi City County. Highlighting Langata

Constituency. Source: IEBC……....11 Fig 4. Satellite Image of TUK Ground, also showing access to

the site. Source: Google Map…….….11 Fig 5. Image showing Akiba Bellevue estate to the south of

TUK grounds ……….…………………12 Fig 6. Image showing CID Residence to the north of

TUK grounds ………………….……....…...…12 Fig 7. Image showing Toyota Kenya Academy to

the east of TUK grounds ……………...……...….13 Fig 8. Satellite Image showing 15.0m wide

access road to the site. Source: Google Map…………….13 Fig 9. Image showing 15.0m wide cabro

paved access road on the southern side to the site……......14 Fig 10. Image showing 15.0m wide

cabro paved access road on the western side to the site ......…….14 Fig 11. Image showing existing

Electricity Powerline……………… …………………………...….15 Fig 12. Image showing

drainage along access to the site …………………………………….…...….16 Fig 13. Image

showing drainage channel along access point on the western side to the site …….…...16 Fig 14.

Image showing street lights along access point on the western side to the site ...……….….…17 Fig

15. Image showing the topography of the site ……………………………………………...……17

Fig 16. Image showing soil typology at the site ………………………………………….

………......18 Fig 17. Image showing indigenous tree along the site 5
boundary

………………………………......…18 Fig 18. Image showing cynodon dactylon grass species and

scattered shrubs at the site……….…..…19

Fig 19. Image showing Radiation vs Month for Nairobi city. …………………………………….
….19

Fig 20. Image showing Average Temperature and Precipitation in Nairobi………………...

………...20 Fig 21. Image showing Average Temperature in Nairobi.

…………………………………….….….21

Fig 22. Image showing Guard House at the main entry gate to the proposed site ………………....…

21 Fig 23. Image showing 2.2m high boundary wall on the western side of the site

…………………….22 Fig 24. Image showing 2.2m high boundary wall at the site

………………………………...……….22 Fig 25. Image showing Ablution block at the site

……………………………..…………………….23 Fig 26. Image showing temporary structure at

the site ………………………...…………………….23 Fig 27. Image showing main entry gate and

pedestrian gate at the site ………..…………………….24 Fig 28. Plate showing zoning regulations.

Source: Nairobi County ………..………………….…….25

6
LIST OF ABBREVIATIONS AND ACRONYMS USED

CBD Central Business District

CM Construction Manager

FIG Figure

KEBS Kenya Bureau of Standards

VAT Value Added Tax

REF Reference

SQM Square Meters

PM Project Manager

C.I.D Criminal Investigation Department

I.R.R Internal Rate of Return

E.I.A Environmental Impact Assessment

P.V Present Value

P. I Profitability Index

I.Q.S.K Institute of Quantity Surveyors of Kenya

QS Quantity Surveyor

7
ABSTRACT

The need for infrastructure and other amenities has for long remained insatiable. The growing
population is constantly requiring services such as schools, recreation facilities, rental
apartments, hotels among others. Most significantly, the needs will be adequately met through
development which shouldalso be carried out in a sustainable manner. Institutions can undertake
investment options to address the various societal needs, and at the same time, generate revenue
to meet its needs andrequirements.

Below is the main objective of this study: -

 Establish the viability of the project in terms of SWOT analysis method.

 Reassure the client that the project is financially viable.

 Ascertain the client on how to achieve the project goals.

 Enhances the probability of success by addressing and mitigating factors early on that
could affect the project;

 Provide quality information for decision making.

 Analyzing the technical, economic, administrative/managerial aspects in the

implementation of the project, environmental, social/political and financial factors that
influence the implementation of the project.

8
CHAPTER ONE

INTRODUCTION

Infrastructure refers to basic fundamental structures needed by a nation or entity for the
growing population that constantly require the services. They include services such as hotels,
rental apartment, hospitals, commercial car park, schools, recreation facilities, among many
others. These infrastructure services are critical to a nation or entity performance and
survival. Institutions can undertake investment options to address the various societal needs, and
at the same time, generate revenue to meet its needs andrequirements.

CLIENT’S BRIEF

The Technical University of Kenya has been having perennial financial problems. The
University has been receiving less capitation from the exchequer (Kenya government), which has
made the running of operations as well as paying the human resources a challenge. Therefore,
the university has been considering a variety of investment options, which can aid in enabling it
meet its financial obligations.

The Management at the University has been considering strategies to counter persistentfinancial
problems. Below options were suggested as investment options:

 Rental Apartments.
 Recreational Complex.

9
 SITE DESCRIPTION

The Proposed site is located in the southern part of Nairobi County in South C, opposite KEBS
and adjacent to Toyota Kenya Academy. It is off Mombasa Road along Popo Road. The site is
approximately 7km from Nairobi CBD. The piece of land is nine (9) acres and approximately
200m long by 250m wide (50. 00SQ.M)

Fig 1. Map showing Kenya and the Capital City. Source:

IEBC

Fig 2. Map showing Nairobi City County. Highlighting Sub-Counties. Source: 10

IEBC
Fig 3. Map showing Nairobi City County. Highlighting Langata Constituency. Source:
IEBC

Fig 4. Satellite Image of TUK South C Ground, also showing access to the site. Source: Google
Map

11
 SITE ANALYSIS

Neighbourhood and Views

A) Akiba Bellevue Estate

Akiba Bellevue estate is a controlled residential estate composed of 3 and 4 bedrooms town
houses located on the south of TUK grounds. Below is an image showing the view of the estate.

Fig 5. Image showing Akiba Bellevue estate to the south of TUK grounds.

B) CID Residence
Criminal Investigation Department (C.I.D) Training School of the Kenya is a national body in
charge of law enforcement in Kenya. It is subordinate to National Police Service which is headed
by Inspector General of Police. It is located to the North of TUK grounds. Below is the view of
CID residence.

Fig 6. Image showing CID Residence to the north of TUK

grounds.
12
 C) Toyota Kenya Academy

Toyota Kenya Academy is a human resource development center with the aim of not only
supporting Toyota Staff but also implement human resource training for local communities. This
Center is in line with the Governments Vision 2030 Social Pillar aims to invest in the people of
Kenya in order to improve the quality of life through education and training. It is located to the
East of TUK grounds. Below is the view of the Toyota Kenya Academy.

Fig 7. Image showing Toyota Kenya Academy to the east of TUK grounds.

Infrastructure

A) Main Access Roads

The site is bordered by two roads. On the southern side is a 15.0m wide cabro paved service lane
linking both TUK grounds and Toyota Kenya Academy and on the west is also 15.0m wide
existing cabro paved access road to the proposed site.

Fig 8. Satellite Image showing highlighted 15.0m wide access road to the site. Source: Google
Map 13
Fig 9. Image showing 15.0m wide cabro paved access road on the southern side to the
site.

Fig 10. Image showing 15.0m wide cabro paved access road on the western side to the
site.

Recommendations

 The access points will be directly linked to the parking area

 The pedestrian path and vehicular path will be well defined to the site.

14
 B) Electricity Powerline

The site is currently not served by electricity, but there is an existing electricity powerline
(Three-phase) from the Kenya power and lighting company.

Fig 11. Image showing existing Electricity Powerline from Kenya Power and Lighting Company.

Recommendations

Since there is an existing electricity powerline to the proposed recreational facility at the site.
Below will be the requirements to be availed by the client (TUK) for connection from Kenya
power and lighting company.

 A soft copy of Certificate of Registration.

 A soft copy of route sketch leading to premises where supply is required.
 Copy of the PIN Certificate
 A Scaled site plan for the proposed Recreational Facility.
 Consent from the owner of the property
 Supply contract form (signed)
 Wiring Certificates (signed)

15
 C) Drainage

I noted presence of drainage channels along the two main access points to the proposed site.

Fig 12. Image showing drainage channel along access point on the southern side to the
site.

Fig 13. Image showing drainage channel along access point on the western side to the site.

Recommendations

 Widening the existing storm drainage channels during construction will be quite
necessary so as to prevent soil erosion and the collection of excess surface water.

D) Street Lights

I also noted presence of existing street lights, which are not in good working condition along the
15.0m wide main access on the western side of the site. Below is an image supporting above
statement.

16
Fig 14. Image showing street lights along access point on the western side to the site.

Recommendations

 Solar-powered technology street lights along the two main 15.0m wide access roads and
along the paths within the proposed recreation facility will be adopted or be catered for
emergency of electricity supply systems in case of power rationing and blackouts.

Topography and Noise pollution

Currently the site is relatively flat used partially as a sports utility area and with less vehicular
noise from both main access point, therefore less noise impact to the proposed site.

Fig 15. Image showing the topography of the site.

Recommendations

 Plant trees along the boundaries to act as noise buffers.

 Spaces can be arranged so that those that require less noise can be further away from the
access points.
 Since the land is relatively flat there will be need for proper storm drainage systems, to
prevent surface water logging during rainy seasons.
 There will be need for cut and fill to be able to direct storm drainage systems and flatten
some areas for purposes of landscaping.
17
Soil Typology

The site is characterized by black cotton soil, which shows large volume changes with respect to
variation of seasonal moisture content.

Fig 16. Image showing soil typology at the site.

Recommendations

 Since the soil is not structurally sound, it is recommended to excavate the top soil to
reach a stable ground before laying the foundation.
 Bottom and sides of the excavations must be well treated with an approved insecticides
before foundation walls and ground slabs placements to prevent the insects approach the
building in future.
 During landscaping there will be need to replace the top soil to achieve better result.

Vegetation

The site is characterized by short indigenous trees which grow naturally with no human
intervention. Other vegetation consists of scattered shrubs, and cynodon dactylon (Bermuda
grass) grass species.
Below are images supporting above vegetations types.

Fig 17. Image showing indigenous tree along the site

18
boundary.
Fig 18. Image showing cynodon dactylon grass species and scattered shrubs at the site.

Recommendations

 Vegetation can be used in the definition of space and in directing the vies towards the
entrances, e.g. Through creating avenues, circular outdoor spaces.
 Planting other trees apart from the existing natural indigenous ones will enhance the
landscape and increases the aesthetic value of the site, as well as proving shading.

Climatic Analysis

A) Solar Radiation

The amount of solar radiation is on its peak between the month of January to the start of March,
which causes high temperatures and day time discomfort. Find below image representing
estimation of mean monthly solar radiation using sunshine hours for Nairobi city.

Fig 19. Image showing Radiation vs Month for Nairobi city. Source: Journal of Renewable and
Sustainable Energy 7, 053105 (2015); https//doi.org/10.1063/1.4930530

19
Recommendations

 Window openings that will be affected by direct that will be affected by direct sunlight
will be treated with sun shading devices such as vertical and horizontal fins.
 Installation of photovoltaic cells for solar energy harnessing. For interior use of energy
bulbs and street lights along main access entrance and along pedestrian and vehicular
paths.

B) Rainfall / Precipitation

Nairobi county receives just over 610 mm of rainfall a year occurring primarily in two rainfall
seasons. The long rains from March and May, which generally records around 310 mm, and the
short rains during November and December, where around 200 mm is recorded.

Fig 20. Image showing Average Temperature and Precipitation in Nairobi. Source: Climate–Data
2016

Recommendations

 Rain water harvesting by providing rain water down pipe to channel rain water to
underground water storage tanks for water closet flushing and for use in external
landscaped areas.
 Provide wide storm water drainages to prevent soil erosion and the collection of excess
surface water.

C) Temperature
In Nairobi, the average temperature of the coldest month (July) is of 20.6 °C (69.0 °F), that of
the warmest month (March) is of 25.6 °C (78.0 °F). Here are the average temperatures.

20
. Fig 21. Image showing Average Temperature in Nairobi. Source: Kenya Forecast

Recommendations

 To minimize solid enclosure during design, therefore this will increase thermal comfort
to the users of the space.

D) Wind Direction

Prevailing winds throughout the year is characterized by 50 percent of the total wind flowing
from North East to South West.

Recommendations

 The shape and orientation of the building to be in the direction of the prevailing wind
direction and openings placed to utilize those pressure difference.

Existing Facilities

A) Guard House

Presence of a guard house built purposely to shelter the security personnel safeguarding the
property. It is located at the main entry of a 15.0m wide access on the southern side of the site.
See below plate for the guard house.

Fig 22. Image showing Guard House at the main entry gate to the proposed 21
site.
Recommendations

 To carefully demolish and store safely the materials, to be reused in the construction of a
modern security guard house with security equipment’s.

B) Boundary Fence with Razor Wire and Barbed Wire Fence.

Presence of a 2.2m high boundary wall fence (built with dressed masonry wall) secured with a
razor wire above it on the western side and partly southern side of the site. Also noted barbed
wire fence on northern side of the site. See below plates.

Fig 23. Image showing 2.2m high boundary wall on the western side of the
site.

Fig 24. Image showing 2.2m high boundary wall and barbed wire on the southern side of the site.

Recommendations

 Boundary walls will match the same finishes as the proposed recreational facility to
maintain aesthetic consistency.

22
 C) Ablution Block.

Noted the presence of existing permanent ablution block with changing rooms for both genders,
which was constructed by TUK to be used by students undertaking variety of sport games.

Fig 25. Image showing Ablution block at the site.

Recommendations

 It will be carefully demolished and some of the materials used during construction be
reused in the construction of the main project.
 The water tank above will still retain its purpose for water storage.

D) Temporary Residence Structure.

The temporary residence structures at the site is currently occupied by the caretaker safeguarding
the property, who is an employee of TUK. See below plate showing the temporary structure.

Fig 26. Image showing temporary structure at the 23

site.
Recommendations

 They will be well repaired and painted to be temporary storage units for different
materials during construction of the main project.

E) Main Entry Gate.

The main entry gate is 6.0m wide and 1.5m wide pedestrian gate on the southern side of the
proposed site. They are both made of standard mild steel, fixed to 3No. 300mm by 300mm
reinforced concrete columns with hooks.

Fig 27. Image showing main entry gate and pedestrian gate at the site.

Recommendations

 The main vehicular entry and size will be retained, but sliding gate proposed with Bol
overed security features installed.
 To introduce both entry and exit points for pedestrians with metal detectors.

24
CURRENT LAND USE

Currently, the land is being utilized as a sports ground for the Technical University of Kenya. A
variety of games are undertaken by various teams within the school set up.

ZONING

Fig 28. Plate showing zoning regulations. Source: Nairobi County.

According to the zoning regulation shown above, the site is located in zone 10, which allows for
the High-Density ResidentialDevelopment, Mixed Residential Development such as:

 Flats.
 Maisonettes.
 Bungalows.

Ground coverage = 35%

Plot ratio =75%
Department reference map: CP/FP/XX
Ref: A guide of Nairobi City Development Ordinance and ZonesFR NO: 100/72
PLOT NO: 195/236/13
The usable area will be 35% of the 9 acres of land in south C, which is around 12729 SQ.M 25
Although it is meant to be an agricultural land, therefore change of user is required and MUST
be prepared by a licensed Physical Planner and approved by the relevant authority, before
building any of the eight (8) investment options proposed by TUK.

Procedure of Obtaining Change of Use of Property in Kenya.

The power to control land use and development in Kenya is vested in the County Governments
and therefore the owner or the legal entity of any property, who intends to develop his/her land
for any purpose other than that earmarked in the approved Master Plan, will make an application,
along with relevant documents, to the respective County Governments’ Department of Physical
Planning for consideration through a registered physical planner.

PROCEDURE

 Placing an advertisement and getting recommendations from members of thepublic and

ministries, which are obtained by the County Government. The application is often
combined with one for a construction permit.

 The investor, through a registered physical planner will make application for thechange
of user through filling in PPA 1 form, which must be duly signed by the physical planner.

 The planner and the investor will then publish public notices regarding the proposed
change of user in two daily newspapers, inviting objections from the public within a
period of not less than fourteen (14) days. A site notice will also be placed on the site
indicating intention to change its use within the same duration.

 Planning brief/report for the site is prepared by the physical planner. The process of
preparing and implementing a planning brief/report provides a framework for collecting
information about a site, and investigating and evaluating different interests in it. The
brief will explain why the change of use is in line with the policy and why it will not have
any negative effects on the land and the neighboring properties. The process could take
from one day to 7days depending on the scale of the project.

 The requisite fee will be paid to the respective County Governments and the receipt
annexed to the planning brief/report prepared by the physical planner.The brief will then
be submitted to the County Government's Department of Physical Planning for approval.

 The County Government then receives submissions from the general public on any
opposition to the change of use. This process could take up to 14 working days. 26
  The County Government will then review the Change of Use proposal/brief with the
public objections received if any and will pass a resolution, recording reasons, regarding
its consideration or non-consideration for the change. This process takes a minimum of
20 days and could extend depending on the requirements the County Government wants
fulfilled.

 The authority shall, if it finds that the changes sought are relevant to planningprinciples
and are in public interest and are not in contravention to any other statute, give
permission for the same by issuing a PPA2 form.

REQUIREMENTS

In summary, below are the requirements for application for a change of user.

 Two dully filled P.P.A 1 forms in triplicate submitted and signed by a registered physical
Planner

 Planning Brief prepared by a Registered Physical Planner (signed accordingly)

 Ownership documents (Title Deeds)

 Comprehensive Location Plan

 Advertisement of proposal on: 1) Two local dailies, 2) On site

 Application fee receipt.

 Latest Rates payment receipts.

27
PROFESSIONAL AND STATUTORY FEES

Professional Fees.

PROFESSIONAL FEES

Construction Manager 3% of the total construction cost + 16% V.A.T

Architect 6% of the total construction cost +16% V.A.T

Quantity Surveyor 3.5% of the total construction cost + 16%

V.A.T
Structural Engineer 3% of the total construction cost + 16% V.A.T

E.I.A Expert (Lead Expert) 1% of the total construction cost + 16% V.A.T

Mechanical Engineer 2% of the total construction cost +16% V.A.T

Electrical Engineer 2% of the total construction cost +16% V.A.T

Physical Planner (Change of User) 1% of the total construction cost +16% V.A.T

Landscape Architect 2% of the total construction cost +16% V.A.T

Total 24%

28
Statutory Plans Submission Fees.

APPROVALS FEES IN KSH

Building Plans Approvals Plinth Area x 28,000 x 0.5%

Fire Department 10,000

Temporary Site Toilet 20,000

Occupation Certificate 20,000

Site Construction Sign Board 25,000

Building Inspection 10,000

FINANCIAL APPRAISALS

The purpose of the financial appraisal is to determine whether the project is worthwhile,
comparing its costs with its expected benefits. It stands as a key element for deciding whether or
not to proceed with a construction project and any project in general. Also, it stands as a key
element for choosing between alternative construction projects. Financial appraisal addresses not
only the adequacy of funds, but also the financial viability of the project, estimating in the end if
and when the project returns a profit or not.
There are several financial appraisal methods that can be used to check the project viability
including the following;

 Net present value method

 Internal rate of return

 Payback period

 Market analysis

 Discounted cash flow

29
The process of project appraisal is of utmost importance not only to the client, but also the
developer who forms a critical role of advising on the best viable options. To the client, it
ensures that the right investment options are undertaken. According to Hutchinson, (1993), the
choice of appraisal method for a project is dependent on the nature of the developer, value
realization as well as the circumstances of project cost incurrence.

For this scenario, three appraisal methods are used to inform the client on the best choice
between the available proposed options. They include the: -

 Net Present Value

 Payback Period

 Internal Rate of Return

Net Present Value.

Net present value (NPV) is the difference between the present value of cash inflows and present
value of cash outflows over a period of time thus of utmost importance in capital budgeting and
investment planning to analyze the profitability of a projected investment.
The net present value is a method of appraisal that evaluates a capital investment through the
process of discounting the future cash flows to the present values and subtracting the value of the
initial investment from their sum.
This can be explained further as follows;

NPV= PV (inflow)-PV (outflow) NPV=FV/ (1+R) n

Discount rate factor=1/ (1+R) n

According to the Net Present Value method, investments should be made in projects with the
highest positive NPV.

Payback Period.
The payback period (PBP) is the amount of time that is expected before an investment will be
returned in the form of income. When comparing two or more investments, developers and
investors will typically compare the projects to see which one has the shorter PBP. Projects with
longer PBP are usually associated with higher risk and therefore, less attractive to the developers
30

and clients.
Fisher, Martin, Mosbaugh, & Mueller, (1991) puts the definition of payback period as the
number of years required for cumulative income from an investment to equal the amount initially
invested.
However, the payback period does not consider the time value of money and, therefore,
insufficient to use as an appraisal method on its own.
The formula can be expressed as follows;

Advantages of Payback Period Method

 Easy to understand and calculate.

 Less time consuming, decision can be made quickly

 Investment risk can be assessed through payback method

 Incurs low cost in evaluating projects

 The calculation process is quicker than and simple than any other appraisal techniques

 The method uses cash flows instead of accounting profits

31
Disadvantages of Payback Period Method

 It ignores the timing of cash inflows within the payback period

 It ignores the cash flow produced after the payback period.

 It ignores the time value of money (interest)

 It influences for excessive investment in short term projects.

Internal Rate of Return.

The Internal Rate of Return (IRR) is the discount rate that makes the net present value (NPV) of
a project zero (Corporate finance institute, 2019). When calculating IRR, expected cash flows for
a project or investment are given and the NPV equals zero. Put another way, the initial cash
investment for the beginning period will be equal to the present value of the future cash flows of
that investment.
(Cost paid = present value of future cash flows, and hence, the net present value = 0)

Once the internal rate of return is determined, it is typically compared to a company’s hurdle rate
or cost of capital. If the IRR is greater than or equal to the cost of capital, the company would
accept the project as a good investment. If the IRR is lower than the hurdle rate, then it would be
rejected.
Check the formula is presented as follows;

32
Advantages of Internal Rate of Return

 Takes account of profits earned over the entire life of the project

 Simple to use and understand

 Hurdle rate not required

Disadvantages of Internal Rate of Return

 Ignores Size of Project

 Ignores Future Costs
 Ignores Reinvestment Rates

Profitability Index.
Profitability index is the ratio of present value of cash inflows to present value of cash outflows.
It discounts cash inflows and cash outflow to obtain net present values. Cost of finance or
interest rate is used to discount inflows and outflows. It is also known as Benefit-Cost Ratio.

If P.I is greater than 1 you invest and if less than 1 do not invest.

Advantages of Profitability Index Method

 It is an investment tool that is easy to understand.

 It considers the risks which are involved with future cash flows.

 It will take the time value of money into consideration in the calculation.

 It will give you information about ranking projects while still rationing capital.

 It will take into consideration all cash flows from a project

 It provides you with information about how an investment changes the value of a firm.

33
Disadvantages of Profitability Index Method

 Information generated is based on estimates instead of facts.

 May not provide correct decision-making criteria for certain projects.

 Can be difficult to estimate opportunity costs.

Modified Internal Rate of Return

The modified internal rate of return (MIRR) assumes that positive cash flows are reinvested at
the firm's cost of capital and that the initial outlays are financed at the firm's financing cost. By
contrast, the traditional internal rate of return (IRR) assumes the cash flows from a project are
reinvested at the IRR itself.
The MIRR, therefore accurately reflects the cost and profitability of a project.

Advantages of MIRR

 MIRR overcomes 2 major drawbacks of IRR including the elimination of multiple IRRs
in case of investments with unusual timing of cash flows and secondly the re-investment
problem.

 Helps in the measurement of sensitivity of an investment towards variation in the cost of

capital.

Disadvantages of MIRR

 MIRR may lead to sub-optimal decision making when multiple investment options are
being considered.

 MIRR can be hard to understand for people belonging from a non-financial background.
The theoretical basis for MIRR is also disputed among academics
34
Annualized Net Present Value.
An approach to evaluating unequal-lived projects that converts the net present value of unequal-
lived, mutually exclusive projects into an equivalent (in NPV terms) annual amount. The
calculation of the ANPV involves the following steps:

 Calculation the NPV of the project using the given project life.

 Division of the project’s NPV by the present value annuity factor over the project life.
This gives you the annual annuity value – the ANPV.

 Comparison of the ANPVs of the projects. The project with the highest ANPV is
preferred.

Methods of Approximate Approximation.

Before the detailed construction drawings are produced, the client may be advised on the cost of
construction based on several approaches. The approximate quantities cost plan is a development
of the elemental cost plan. Unlike the elemental cost plan in which the cost of elements is broken
down from the overall construction cost, based on the experience of the cost consultant and
known costs of similar completed projects, the approximate quantities cost plan is a first attempt
to measure defined quantities from drawings. The methods are approximate since they are
dependent on the functional uses, areas, without considering other factors. According to Seeley,
(1996), the methods used in appropriate estimating includes the following.

 Functional/ unit evaluation method

 Cube method/cubic method

 Superficial/floor area method

 Story enclosure method

 Approximate quantities method

The approximate method of approximation that will be used in this project is the floor area or the
superficial method.

35
METHODS OF APPROXIMATE APPROXIMATION.
Option 1: High-Cost Private Hospital
Case Study: Meridian Medical Hospital located in Buruburu – Nairobi County
According to Institute of Quantity Surveyors of Kenya (IQSK) High-Cost Private Hospital rates
are KShs 81,860 per SQ.M

SPACE BUILT UP AREA IQSK RATE COST

Pharmacy 150 81,860 12,279,000

Reception 200 81,860 14,325,500

Waiting Area 175 81,860 24,558,000

Casualties 200 81,860 16,372,000

Inpatient 200 81,860 16,372,000

Outpatient 100 81,860 8,186,000

HDU 200 81,860 16,372,000

Consultation Rooms 350 81,860 28,651,000

Laboratories 400 81,860 32,744,000

ICU 200 81,860 16,372,000

Washrooms 250 81,860 20,465,000

Mortuary 400 81,860 32,744,000

Storage Rooms 250 81,860 20,465,000

X-Ray Unit 30 81,860 2,455,800

Physiotherapy and 300 81,860 24,558,000

Orthopedic Wing

Kitchen 150 81,860 12,279,000

Labor Wards 1,000 81,860 81,860,000

Delivery Rooms 300 81,860 24,558,000

Staff Lounge 75 81,860 6,139,500

Examination Rooms 250 81,860 20,465,000 36

Emergency Room 300 81,860 24,558,000

Operating Room 160 81,860 13,097,600

Wards 1,600 81,860 130,976,000

Oncology Centre 225 81,860 18,418,500

Theater 100 81,860 8,186,000

Ultrasound 180 81,860 14,734,800

Private Wards 500 81,860 40,930,000

1,038,066,660

ADD

15% For External Works 155,709,999

15% Professional Fees 155,709,999

2% Price Fluctuation 20,761,333.2

0.15% Drawing Approvals 1,557,099.99

0.1% Maintenance Costs 1,038,066.66

0.02% Marketing Costs 207,613.33

TOTALS 1,373,050,771

Total Cost for Construction = 1,373,050,771

Assumptions
Capacity of 50 persons at a cost of 15,000 daily
50 x 15,000 x 365 = 273,750,000 Annually

Less 20% of Expenses = 54,750,000

Yearly Net Income = 273,750,000-54,750,000
= 219,000,000
Payback Period = Total project cost / (Total
income raised - Maintenance costs)
= 1,373,050,771 /
219,000,000 37

= 6.3 years
Net Present Value
Discounting period 4 years and discounted rate 14%
YEAR CASH FLOW P.V FACTOR CASH FLOW P.V

0 -1,373,050,771 1.000 -1,373,050,771

1 240,500,000 0.877 208,400,800.70

2 250,900,500 0.769 230,800,100.70

3 275,605,400 0.675 171,200.600.20

4 285,700,000 0.592 165,200,600.20

TOTALS -148,524,750

Option 2: Private High-Cost Academy

Case Study: Brook house School located in Langata
According to Institute of Quantity Surveyors of Kenya (IQSK) Private High-Cost Academy rates
are shown below per SQ.M

SPACE BUILT UP AREA IQSK RATE COST

Music Room 1,000 41,230 41,230,000

Reception 60 35,000 2,100,000

Classrooms 3,000 45,000 135,000,000

Clubs Rooms 500 35,000 17,500,000

Dormitories 1,800 39,180 70,524,000

Swimming Pool 50 31,800 1,590,000

Health Center 100 32,000 3,200,000

Offices 1,500 42,000 63,000,000

Indoor Games 400 15,000 6,000,000

Societies Rooms 450 35,000 15,750,000

Dining Hall 900 32,000 28,800,000 38

Kitchen 150 37,500 5,625,000

Wash Rooms 400 35,000 14,000,000

404,319,000

ADD

15% For External Works 60,647,850

15% Professional Fees 60,647,850

15% Developers Costs 60,647,850

2% Price Fluctuation 8,086,380

0.15% Drawing Approvals 606,478.5

0.02% Marketing Costs 80,863.8

TOTALS 595,036,272.30

Total Cost for Construction = 595,036,272.30

Assumptions
Capacity of 150 students at a cost of 550,000 daily
150 x 550,000 = 82,500,000
Expenses
40 Teachers paid each KShs 110,000 monthly
– 40 x 110,000 = 4,400,000
Maintenance expenses 10% of Expected Income -
Food Expenses 15%
0.1 x 82,500,000 of Expected Income
= 8,250,000 - 0.15 x 82,500,000 = 12,375,000
Utility Expenses 2% of Expected Income - 0.02 x 82,500,000 = 1,650,000
Total Expenses = 26,675,000

Yearly Net Income = 82,500,000-26,675,000 = 55,825,000.00

Payback Period = Total project cost / (Total income raised - Maintenance costs)
= 595,036,272.30 / 55,825,000
= 10.7 years
39
Net Present Value
Discounting period 4 years and discounted rate 14%
YEAR CASH FLOW P.V FACTOR CASH FLOW P.V

0 -492,696.171 1.000 -492,696.171

1 140,500,987 0.877 110,297,037.3

2 156,906,573 0.769 99,318,656

3 173,605,456 0.675 90,231,264

4 177,000,000 0.592 97,144,750

TOTALS -510,236,800

Option 3: Five Star Hotel

Case Study: Hotel Rio located in Nairobi West – Nairobi County
According to Institute of Quantity Surveyors of Kenya (IQSK) Five Star Hotel rates are KShs
100,300 per SQ.M

SPACE BUILT UP AREA IQSK RATE COST

Outdoor Dining Area 400 100,300 40,120,000

Reception 140 100,300 14,042,000

King Executive Rooms 5,250 100,300 526,575,000

King Deluxe Rooms 3,000 100,300 300,900,000

Twin Guest Rooms 2,400 100,300 240,720,000

Twin Executive Rooms 2,500 100,300 250,750,000

Laundry 3,000 100,300 300,900,000

Dining Lounge 300 100,300 30,090,000

Washrooms 1,000 100,300 100,300,000

Outdoor Bar 600 100,300 60,180,000

Maintenance Room 200 100,300 20,060,000

Gazebos 350 100,300 35,105,000 40

Swimming pool 250 100,300 25,075,000

Indoor Bar Section 600 100,300 60,180,000

Jacuzzi Room 1,200 100,300 120,360,000

Kitchen 1,000 100,300 100,300,000

Steam Room 2,000 100,300 200,600,000

Spa 200 100,300 20,060,000

Conference Rooms 1,000 100,300 100,300,000

Offices 350 100,300 35,105,000

Totals 2,661,962,000

ADD

15% For External Works 399,294,300

15% Professional Fees 399,294,300

2% Price Fluctuation 53,239,240

0.15% Drawing Approvals 3,992,943

0.02% Marketing Costs 532,392.4

TOTALS 3,518,315,175.4

Total Cost for Construction = 3,518,315,175.4

Assumptions
Occupancy assumption 85%
Income generated = 116,250,000.00
Less 20% of Expenses = 23,250,000
Net Income = 115,000,000
Payback Period = Total project
cost / (Total income raised -
Maintenance costs)
=
3,518,315,175.4 / 41
115,000,000
= 30.5 years
Net Present Value
Discounting period 8 years and discounted rate 14%
YEAR CASH FLOW P.V FACTOR CASH FLOW P.V

0 -3,518,315,175 1.000 -3,518,315,175

1 200,006,000 0.877 192,276,860.70

2 228,906,573 0.769 186,030,000.60

3 325,600,456 0.675 226,205,037.30

4 342,768,000 0.592 200,918,606

5 360,006,000 0.519 192,004,264

6 380,010,000 0.456 170,000,260

7 390,700,000 0.400 182,004,000

8 490,678,788 0.351 177,785,264

TOTALS -553,994,000

Option 4: Recreation Complex

Case Study: Sports Club located in South C – Nairobi County
According to Institute of Quantity Surveyors of Kenya (IQSK) Recreation Facilities rates are
KShs 38,000 per SQ.M

SPACE BUILT UP AREA IQSK RATE COST

Swimming Pool 250 38,000 9,500,000

Outdoor Bar 350 38,000 13,300,000

Outdoor Dining Lounge 400 38,000 15,200,000

Outdoor restaurant 350 38,000 13,300,000

Poolside Bar 600 38,000 22,800,000

Steam Room 2,000 38,000 250,750,000

Laundry 3,000 38,000 76,000,000

Dining Lounge 600 38,000 22,800,000 42

Washrooms 1,000 38,000 38,000,000

Janitors Room 200 38,000 7,600,000

Spa 200 38,000 7,600,000

Indoor Bar 600 38,000 22,800,000

Presidential Class Suites 2,400 38,000 91,200,000

Modern Suites 3,000 38,000 114,000,000

Middle Class Suites 2,500 38,000 95,000,000

Reception 140 38,000 5,320,000

Conference Rooms 3,500 38,000 133,000,000

Restaurant 1,000 38,000 38,000,000

Meeting Rooms 5,200 38,000 197,600,000

Jacuzzi Room 1,200 38,000 45,600,000

1,092,120,000

ADD

15% For External Works 163,818,000

18% Professional Fees 196,581,600

0.15% Drawing Approvals 1,638,180

0.02% Marketing Costs 218,424

TOTALS 1,454,376,204

Total Cost for Construction = 1,454,376,204

Assumptions
Occupancy assumption 85%
Income generated = 150,000,000
Less 20% of Expenses = 25,000,000
43
Net Income = 125,000,000
Payback Period = Total project cost / (Total income raised - Maintenance costs)
= 1,454,376,204 / 275,000,000
= 5.2 years

Net Present Value

Discounting period 5 years and discounted rate 14%
YEAR CASH FLOW P.V FACTOR CASH FLOW P.V

0 -808,960,428 1.000 -808,960,428

1 166,645,456 0.877 192,856,000

2 178,768,000 0.769 186,030,000.60

3 192,856,000 0.675 207,200,000

4 200,050,000 0.592 192,856,000

5 230,050,000

TOTALS +405,169,093

44
INTERNAL RATE OF RETURN
Recreational Complex
DISCOUNTING PERIOD – 10 YEARS
DISCOUNTING RATE - 10%

YEAR OCCUPANCY FUTURE VALUE PVF PRESENT VALUE

0 -9601481134 -960148134

1 70% 82264000 0.909091 74785455

2 70% 82264000 0.826446 67986777

3 75% 88140000 0.751315 66220887

4 75% 88140000 0.683013 60200806

5 75% 88140000 0.620921 654728005

6 80% 94016000 0.564474 53069581

7 80% 94016000 0.513158 48245074

8 85% 99892000 0.466507 46600355

9 85% 99892000 0.424098 42363959

10 90% 105768000 0.385543 40778143

554979041

NPV 405169093

IRR 18%

45
GRAND SUMMARY

INVESTMENT OPTIONS PAYBACK PERIOD NPV

High-Cost Private Hospital 6.3 years -148,524,720

Private High-Cost Academy 10.7 years -510,284,800

Five Star Hotel 30.5 years -553,994,000

Recreational Complex 5.2 years +405,169,093

CONCLUSION
According to the study and financial appraisal a Recreational Complex has a payback of 5.2
years, which is short compared to other investment options. After 5.2 years TUK should be out
from the financial crisis it is in.

46
CHAPTER ONE

FEASIBILITY STUDY

Feasibility studies look into the practicability as well as viability of various investmentoptions,
which can be construction project, as an example. According to Fercher, (2006), a feasibility
study covers the aspects of necessity, practicability as well as the justifiability of an investment
option.
The following is a feasibility study report for a project to construct Recreational Complex at
TUK grounds in South C. The aim of the study was to:-

 Establish the viability of the project in terms of SWOT analysis method.

 Reassure the client that the project is financially viable.

 Ascertain the client on how to achieve the project goals.

 Enhances the probability of success by addressing and mitigating factors early on that
could affect the project;

 Provides quality information for decision making.

 Provides documentation that the business venture was thoroughly investigated.

 Analyzing the technical, economic, administrative/managerial aspects in the

implementation of the project, environmental, social/political and financial factors that
influence the implementation of the project.

METHODOLOGY

Information to support this study was obtained through an evaluation site visit method. Further
information was obtained qualitatively through in interviews with key relevant people including
the school vice chancellor, local people from the estate, local business persons and my
counterparts.
The data is further analyzed by textual description of the observations and the feasibility
implications indicated.

47
FEASIBILITY ANALYSIS

To analyze the technical, economic, administrative/managerial, environmental, social/political

and financial issues as concerns the proposed recreational complex development and offers the
consequent implications.
Technical Feasibility

A technical feasibility assessment will therefore focus on establishing if a given project is

doable, given a certain capability. A technical feasibility assessment should also address the
practicality of the proposed project by addressing potential constraints such as available
timeframe, risks to implementation, and governance.

Soil conditions

Soil type at the site is black cotton soil. Construction of a good drainage system should be
factored into during the carrying out ofexternal works.
Topography

The proposed project site is relatively flat

Drainage

The nearest tributary from the river is kilometers away from the project site and there is no
potential direct impact of the project on the river. However, the waste from construction and
chemicals from the building should not just be left laying aimlessly.

Resource and Service availability

The area has access to water, electricity and sewerage systems making it possible for the project
to commence without so many constraints.
However, water has to be brought to site using the county council trucks to ensure a continuous
uninterrupted supply of water
Population

The area is surrounded by residential Buildings an indicator of a number of people living around.
This means that the project has to observe the regulations stipulated in the EMCA act concerning
the level of noise and the periods for working. 48
MARKET FEASIBILITY
Option 4: Proposed Recreational Complex

South C area is located in Nairobi County just approximately 7.2kilometers south of Nairobi
which is about an 18 minutes’ drive from the CBD. The estate is part of the Nairobi Metropolitan
Area.
South C is growing constantly with buildings coming up and people moving in to capitalize on
the property boom in the area. In the last five years, property prices in South C have steadily
been going up, and there is no sign of a slow down any time soon.
South C has experienced an upsurge in the development of bungalows and villas in gated
communities for outright sale to those seeking accommodation in well-established and secure
areas. The demand is mainly fueled by the rising middle class due to improved economy; also, a
cultural belief among Kenyans that makes sense to own property not only in the rural area where
one resides, but also in other towns where people spend most of their working lives and for
investment purposes. In addition to this, the South C vicinity borders the Wilson Airport and
furthermore, a few kilometers from the Jomo Kenyatta International Airport, which are avenues
of international arrivals. Therefore, recreation facility in South C will conveniently accommodate
the locals as well as foreign sports visitors coming into the country for training and other
purposes.

MARKETING STRATEGY

A marketing strategy refers to a business's overall game plan for reaching prospective consumers
and turning them into customers of the products or services the business provides. A marketing
strategy contains the company’s value proposition, key brand messaging, data on target customer
demographics, and other high-level elements.
Increased competition in every sector of the Kenyan economy has necessitated for intensified
marketing strategies. Recreational facilities for that matter, is doing well and therefore modern
facilities are required. The proposed development of recreational facility need come up with a
differentiated plan as well as a different strategy that will attract people from around the city,
country and the world at large.

49
Below describes the proposed marketing strategies;
Advertisement
Adverts can be sponsored to the local and international newspapers, as well as billboards. Most
significantly, the adverts are crucial to creating an impression of the services that the recreation
facility offers to the potential customers.

Social Media Marketing

Social media marketing is the use of social media platforms to connect with your audience to
build your brand, increase sales, and drive website traffic. This involves publishing great content
on your social media profiles, listening to and engaging your followers, analyzing your results,
and running social media advertisements. The major social media platforms (at the moment) are
Facebook, Instagram, Twitter, LinkedIn, Pinterest, YouTube, and Snapchat. Proposed
recreational development can be marketed through sponsored ads to the viable customers.

High End Website with SEO Optimization

Recreational facilities have established websites that showcase their services to the potential
customers. A website is a great marketing tool. It represents the business on the Internet and it’s
one of the most important digital marketing channels can be used to get more traffic or reach out
to wider audiences. Website marketing is the process of promoting a website on the Internet. It is
one of the online marketing channels can be used as part of the overall digital marketing strategy.
The main goal of a website marketing campaign is to get more visits to your website. The
website should be SEO optimized, which is the process of increasing your website’s visibility in
search engines such as google.

Legal Feasibility

Legal feasibility is the study to know if the proposed project conforms the legal and ethical
requirements. It is important that the project is following the requirements needed to start a
business or a project including business licenses, certificates, copyrights, business insurance, tax
number, health and safety measures, and many more.

Legislation relating to land

The Technical University of Kenya is the legitimate owner of the plot in South C. The site in on
plot LR. No. 195/236/13 the deed held by the Technical University of Kenya. 50
Zoning
According to the Nairobi City development ordinances and zones guide it is under Nairobi’szone
ten whose ground coverage ratio is said to be 35% and plot ratio at 150%.
The types of development allowed in that zone are high density residential development, mixed
residential development, flats, mansionettes and bungalows, the height being restricted by the
plot ratio.
This means that there will be need to change the user by following the said procedures.

Statutory approvals for buildings

The main statutory approval that will be required on the building project is building regulations
approval. Which ensures the health and safety of people in and around buildings

Financial Feasibility

Financial feasibility focuses specifically on the financial aspects of the study. It assesses the
economic viability of a proposed venture by evaluating the startup costs, operating expenses,
cash flow and making a forecast of future performance. A cost benefit analysis is used to
evaluate the total anticipated cost of a project compared to the total expected benefit in order to
determine whether the proposed implementation is viable for a company or project team.
The preparation of a financial feasibility study has three parts:
 Determining the startup costs.

 Preparing a profit plan and making cash flow projections.

 Assessing the return on invested capital.

The recreational development is highly feasible and thus, financially feasible.

51
Political Feasibility

A political feasibility study involves evaluating the status of the political climate that may affect
the viability of the project. Depending on the size of the project and its social and political
implications, the project may gain widespread support from the government or its opposition.
This means that there are unanticipated challenges that will come with this, on the other hand,
the government itself may be against the project because it differs with its political standing. This
makes political feasibility an important factor especially for large projects.

Managerial/Administrative Feasibility

Managerial feasibility establishes the kind of project management structure to be implemented to

ensure that all aspects of the project are completed according the design and within the specified
time. It assesses the human capital input in the implementation of a project.
The project will be effectively delivered under the stewardship of a construction project manager,
who will be in a position to coordinate the functions of other professionals, including linking
them to the client.

Schedule Feasibility

A schedule feasibility tends to ask questions such as:-

 When is the project due?

 Are there legal obligations related to the schedule?

 Within what time is the project or product viable?

 Are the deadlines attainable?

The proposed recreational development is expected to be completed as soon as possible, which
would the allow faster repayment of the cost of construction. The project duration should not
exceed 6 years of time.

The proposed timeline will be represented in a timeline in the form of a Gantt chart. The
representation will be in a position to factor in the critical path, which would indicate the critical
activities as far as the completion of the project is concerned.
52
Social-Economic Feasibility

Social and economic feasibility of a project serve to identify the extent to which a project is
socially and economically beneficial. In addition, it identifies the positive and negative
consequences of the project from a social as well as an economic perspective
Positive Impacts of the Project

Creation of Employment
During the project life cycle, employment will be created to both skilled, semiskilled as well as
unskilled labour. For instance, the pre-construction phase of the project will involve
professionals such as project managers and designers, who will gain meaningful employment.
The construction phase will offer employment to other parties such as masons, welders,
electricians, plumbers, among others. Similarly, the operational phase of the project will involve
the property managers, who will in turn create employment for parties such as cleaners, security
personnel, caretakers among others.

The project will make use of locally manufactured construction materials

During the construction phase, the project will consume a lot of building materials sourced from
local and international manufacturers. The utilization of local resources is a major stir to the local
economy and overall, it will have a positive impact towards the economic status of the supplies
and to the national economy.

Boost local economy

A construction project will have indirect effects to the local economy. For instance, the project
will create employment for local suppliers, hotels and restaurants where workers will buy food
from among other ways.

Environmental Feasibility

Environmental Impact Assessment is a process of evaluating the likely environmental impacts of

a proposed project or development, taking into account inter-related socio-economic, cultural
and human-health impacts, both beneficial and adverse

53
Negative effects that result from the construction stage

LIKELY IMPACT MITIGATION MEASURES MITIGATION COSTS

Architectural  Harmonize building scale with  KShs 100,000
incompatibility existing development in
neighborhood.
 Harmonize detail, material and
finishes for roofs and walls with
existing development in the
neighborhood.

Noise and Excessive  Machinery and equipment in use to  KShs 100,000

Vibration be serviced regularly to ensure that
they are in good condition to
minimize excessive noise.
 Notify the public of any activities
that may be perceived of as
noisy and intrusive prior to
starting.
 Establish means for the public to
contact the engineers-in-charge and
methods to handle complaints.
 The use of hearing protection gears
by workers when exposed to noise
levels above 85 dB
 Ensure that noise & excessive
vibration from construction activities
are within permissible levels as per
the provision of the Environmental
Management and Coordination
 Use piling system with lowest sound
54
 generation;

 Construction work should strictly be

undertaken between permissible time
periods as stipulated in the second
Schedule
 Care when selecting equipment to
avoid use of time worn or damaged
machinery with high level of noise
emissions that would have a negative
impact in the environment.

Airborne emissions  The project area will be cordoned off  KShs 100,000
to minimize dust migration to
nearby facilities by wind.
 Speed controls by temporary speed
bumps on diversions where
necessary within the construction
site
 Staff working in dust generating
activities e.g. site preparation,
excavation, concrete mixing, stone
dressing should be provided with
personal protective equipment the
use of PPE shall be enforced.
 Avoiding open burning of solid
wastes;
 Construction equipment will be
maintained in good operating
condition to reduce exhaust
emissions;

55
  Haulage trucks must be covered or
the aggregates sprayed with water
before loading the haulage trucks;
 All diesel fuel in use should be ultra-
low Sulphur diesel

Soil and  All machinery and equipment be  KShs 100,000

water
regularly maintained and serviced to
pollution
avoid leak oils
 Maintenance and servicing of
vehicle, machinery and equipment
must be carried out in a designated
 Oil products and materials should be
stored in site stores or in the
contractor’s yard. They should be
handled appropriately to avoid spills
and leak;
 There should be no flooding within
the site at all to prevent seepage of
contaminated water into
underground water sources
 All applicable national laws,
regulations and standards for the safe
use, handling, storage and disposal
of hazardous waste to be followed
 Once the exact areas where spillage
shall occur are identified, subsurface
investigations of the areas to be
disturbed should be conducted. The

56
 investigations should involve the
collection of subsurface soil and
groundwater samples for laboratory
analysis;
 Areas dedicated for hazardous
material storage shall provide spill
containment and facilitate clean up
through measures such as dedicated
spill response equipment.
 Open stockpiles of construction
materials on site should be covered
with tarpaulin or similar fabric
during rainy season.
 Measures should be taken to prevent
the washing away of construction
materials, soil, silt or debris into any
drainage system.

Increased generation  Waste, including excavated soil and  KShs 100,000

of solid waste
debris should be properly disposed
of by backfilling and landscaping.
 Construction waste should be
recycled or reused to ensure that
materials that would otherwise be
disposed of as waste are diverted for
productive uses.
 Contracted waste handlers should be
licensed to transport and dispose
waste at approved dumpsites only.
incineration or land-filling

57
Negative environmental impacts during operation stage

LIKELY IMPACT MITIGATION MEASURES MITIGATION

Increased solid  Practice waste minimization segregation KShs 100,000

and liquid waste and proper disposal according to
Regulations, 2006 and theNairobi County
Government by – laws.

 Pre- treatment of operation process water

before flushing into the sewagesystem

Increased EffluentWaste  Ensure that sewerage discharge pipes are  KShs 100,000
and SurfaceRunoff
Generation not blocked or damaged since this can lead
to release of the effluent, resulting in land
and water contamination.
 Ensure that no surface wastewater is
directed into the sewer system to avoid
overloading the sewerage system;
 Monitor effluent quality regularly to
ensure that the stipulated discharge rules
and standards are not violated.
 Harvest rainwater from roof for non-
portable uses e.g. cleaning and watering
plants.

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REFERENCES

Fisher, J. D., Martin, R. S., Mosbaugh, P., & Mueller, P. (1991). The Language of Real
EstateAppraisal. La Crosse, WI: Dearborn Real Estate.

Dayananda, D., Irons, R., Harrison, S., Herbohn, J., & Rowland, P. (2002). Capital
Budgeting: Financial Appraisal of Investment Projects. Cambridge, England: Cambridge
UniversityPress.

CAP.525. http://kenyalaw.org

Hutchinson, K. (1993). Building Project Appraisal: Analysis of value and cost. London,
UnitedKingdom: Macmillan International Higher Education.

Corporate finance institute. (2019, January 17). Internal Rate of Return (IRR) - A Guide for
Financial Analysts

IQSK Hand book

Practical Financial Management: A guide to budgets, balance sheets and business finance (7
Edition) London, UK; Kogan Page.

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