diff --git a/package-lock.json b/package-lock.json
index 27a6ef8d..0021f0a4 100644
--- a/package-lock.json
+++ b/package-lock.json
@@ -1,6 +1,6 @@
 {
   "name": "@aeternity/aeproject",
-  "version": "4.0.0-alpha.4",
+  "version": "4.0.0-alpha.5",
   "lockfileVersion": 1,
   "requires": true,
   "dependencies": {
diff --git a/package.json b/package.json
index 7ab6ef3d..8720a67e 100644
--- a/package.json
+++ b/package.json
@@ -1,6 +1,6 @@
 {
   "name": "@aeternity/aeproject",
-  "version": "4.0.0-alpha.4",
+  "version": "4.0.0-alpha.5",
   "description": "aeternity smart contract testing tool",
   "main": "src/lib/index.js",
   "bin": {
diff --git a/src/cli/commands.js b/src/cli/commands.js
index c5beb3fd..23ea95b1 100644
--- a/src/cli/commands.js
+++ b/src/cli/commands.js
@@ -2,6 +2,7 @@ const init = require('../init/init');
 const testConfig = require('../test/test');
 const env = require('../env/env');
 const config = require('../config/node-config.json');
+const constants = require('../init/constants.json');
 
 const nodeConfig = config.nodeConfiguration;
 const compilerConfig = config.compilerConfiguration;
@@ -10,9 +11,10 @@ const addInitOption = (program) => {
   program
     .command('init')
     .description('Initialize AEproject')
-    .option('--update [update]', 'Update project files')
-    .action(async (option) => {
-      await init.run(option.update);
+    .argument('[folder]', 'project name for folder to be created', constants.artifactsDest)
+    .option('--update', 'update project files')
+    .action(async (folder, option) => {
+      await init.run(folder, option.update);
     });
 };
 
diff --git a/src/init/artifacts/package.json b/src/init/artifacts/package.json
index 60c3747d..de143d72 100644
--- a/src/init/artifacts/package.json
+++ b/src/init/artifacts/package.json
@@ -9,7 +9,7 @@
     "@aeternity/aepp-sdk": "^10.0.0"
   },
   "devDependencies": {
-    "@aeternity/aeproject": "^4.0.0-alpha.4",
+    "@aeternity/aeproject": "^4.0.0-alpha.5",
     "chai": "^4.3.4",
     "mocha": "^9.1.3"
   }
diff --git a/src/init/constants.json b/src/init/constants.json
index 28a07e58..111f4820 100644
--- a/src/init/constants.json
+++ b/src/init/constants.json
@@ -6,7 +6,7 @@
         "@aeternity/aepp-sdk@10"
     ],
     "devDependencies": [
-        "@aeternity/aeproject@4.0.0-alpha.4",
+        "@aeternity/aeproject@4.0.0-alpha.5",
         "chai@4",
         "mocha@9"
     ],
diff --git a/src/init/init.js b/src/init/init.js
index e75b7da0..56f0831c 100644
--- a/src/init/init.js
+++ b/src/init/init.js
@@ -1,17 +1,21 @@
+const fs = require('fs');
+const path = require('path');
+
 const { exec } = require('promisify-child-process');
 
 const constants = require('./constants.json');
 const { print } = require('../utils/utils');
 
-const { copyFolderRecursiveSync, fileExists, deleteWithPrompt } = require('../utils/fs-utils');
+const { copyFolderRecursiveSync, deleteWithPrompt } = require('../utils/fs-utils');
 
-async function run(update) {
+async function run(folder, update) {
   checkNodeVersion();
+  createFolder(folder);
 
   if (update) {
-    await updateAEprojectProjectLibraries(update);
+    await updateAEprojectProjectLibraries(folder, update);
   } else {
-    await createAEprojectProjectStructure();
+    await createAEprojectProjectStructure(folder);
   }
 }
 
@@ -22,28 +26,35 @@ const checkNodeVersion = () => {
   }
 };
 
-const createAEprojectProjectStructure = async () => {
+const createFolder = (folder) => {
+  if (folder !== constants.artifactsDest) {
+    print(`creating project folder ${folder}`);
+    fs.mkdirSync(folder);
+  }
+};
+
+const createAEprojectProjectStructure = async (folder) => {
   print('===== initializing aeproject =====');
 
-  await setupArtifacts();
-  await installDependencies();
+  await setupArtifacts(folder);
+  await installDependencies(folder);
 
   print('===== aeproject successfully initialized =====');
   print('test/exampleTest.js and contract/ExampleContract.aes have been added as example how to use aeproject');
 };
 
-const updateAEprojectProjectLibraries = async (update) => {
+const updateAEprojectProjectLibraries = async (folder, update) => {
   print('===== updating aeproject =====');
 
-  await updateArtifacts();
-  await installDependencies(update);
+  await updateArtifacts(folder);
+  await installDependencies(folder, update);
 
   print('===== aeproject sucessfully initalized =====');
   print('test/exampleTest.js and contract/ExampleContract.aes have been added as example how to use aeproject');
 };
 
-const installDependencies = async (update = false) => {
-  if (fileExists('./package.json')) {
+const installDependencies = async (folder, update = false) => {
+  if (fs.existsSync(path.join(process.cwd(), folder, 'package.json'))) {
     print('===== installing dependencies =====');
     const npm = /^win/.test(process.platform) ? 'npm.cmd' : 'npm';
     const installPromises = [`${npm} install`];
@@ -58,23 +69,22 @@ const installDependencies = async (update = false) => {
     await installPromises.reduce(async (promiseAcc, command) => {
       await promiseAcc;
       print(command);
-      await exec(command);
+      await exec(command, { cwd: path.join(process.cwd(), folder) });
     }, Promise.resolve());
   }
 };
 
-const setupArtifacts = async () => {
+const setupArtifacts = async (folder) => {
   print('===== creating project file and directory structure =====');
 
-  await copyFolderRecursiveSync(`${__dirname}${constants.updateArtifactsDir}`, constants.artifactsDest);
-  await copyFolderRecursiveSync(`${__dirname}${constants.artifactsDir}`, constants.artifactsDest);
+  await copyFolderRecursiveSync(`${__dirname}${constants.updateArtifactsDir}`, path.join(constants.artifactsDest, folder));
+  await copyFolderRecursiveSync(`${__dirname}${constants.artifactsDir}`, path.join(constants.artifactsDest, folder));
 };
 
-const updateArtifacts = async () => {
+const updateArtifacts = async (folder) => {
   print('===== updating project file and directory structure =====');
 
   const fileSource = `${__dirname}${constants.updateArtifactsDir}`;
-  const destination = constants.artifactsDest;
 
   await constants.deleteArtifacts
     .reduce(async (promiseAcc, artifact) => {
@@ -82,7 +92,7 @@ const updateArtifacts = async () => {
       await deleteWithPrompt(artifact);
     }, Promise.resolve());
 
-  await copyFolderRecursiveSync(fileSource, destination);
+  await copyFolderRecursiveSync(fileSource, folder);
 };
 
 module.exports = {
diff --git a/src/utils/fs-utils.js b/src/utils/fs-utils.js
index cbfe583f..3958dd49 100644
--- a/src/utils/fs-utils.js
+++ b/src/utils/fs-utils.js
@@ -45,10 +45,7 @@ async function deleteWithPrompt(target) {
   }
 }
 
-const fileExists = (relativePath) => fs.existsSync(path.resolve(process.cwd(), relativePath));
-
 module.exports = {
-  fileExists,
   copyFolderRecursiveSync,
   deleteWithPrompt,
 };