Project Proposal for the construction of

Resort

Project to be implemented in Oromia Region East Shoa

Zone, Metehara City

Owner: - Ato Teferi Ergosha

Dec 2, 2021
Metehara

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Executive Summary
1. Project name: Resort
2. project Type : Commercial Tourism Servis
3. Nationality: Ethiopian
4. Project Owner: Ato Teferi Ergosha
5. Project location: Oromia region East Shoa Zone Metehara City
6. Project composition:- multipurpose Buildings and Facilities used for diverse
tourism cervices like Hotel and Restaurants, bed rooms and Garden and Parks,
Swimming pools and entertainment services.
7. Premises Required: 3000m2
8. Total investment Cost: 10,000,000 ETB is required from this amount 10% or
1,000,000.00ETB from owner equity and the rest 90% from bank loan.
9. Employment opportunity: 32 individuals on permanent 80 on casual basis
10. Social and Economic Benefit: provide better Tourism and entertainment
service for local and foreigners, employment opportunities, generation of
income and benefits for the local people.

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 1. Introduction
1.1. Back Ground of Metehara and Fentalle woreda
1.2. General Background
The current fast and dynamic economic growth of Ethiopia especially in urban area
necessitates equivalent growth of building and construction sector. The sector should
expand rapidly to support the overall economic development sustainable.
In the building sector of the economy, the multi- purpose in the one becoming
rapidly expanding in urban areas of the nation since dynamic economic development
of urban economy requires the construction of these buildings in towns to support
the growing of business service sectors like supermarkets, Beauty salon, shops,
offices cinemas, Computer Center, Cafeterias, restaurant, assembly hall, guest house
and other activities. In this regard, reaort expands in the all parts of the country.
Investment and property development play an important role in any emerging
markets or economies. sbuTheoperty investment market in Ethiopia remained under
developed for several years. As a consequence, the supply of residential houses and
non-residential real estate that can be used for residence, office space, shopping
malls and catering services in the urban centers of the country is disproportionately
low to cope with the growing demand in the country spinning from the average
growth in GDP of 5.5 percent over the last ten years and population increase. The
relatively good performance of the macro-economy (real growth in GDP, low inflation
rate and growth in investment and export sector) has stimulated unprecedented
investment growth in the property sector over the last five years. The growth of
investment in the property market over the last five years in consistent with the
global experience suggesting that investment in the residential and commercial
property (real estate) is greatly influenced by the performance of the macroeconomic
conditions. In general, a stable macroeconomic condition leads to economic and
business growth and develops investors’’ confidence. This certainly spurs large
demand in the property market for office space, shopping malls, catering services,
apartment and residential houses. Following growing demand trends, and with the

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expectation of high return on their investment capital, large number of land
developers pooled their financial resources and invested in the property market.
To this effect, the owner of the envisioned Mixed Use Building Ato Bogale Ergosha
who has been living for long time in this town, planned to construct in Metehara
City and undertaken this project study to check the market, technical and financial
feasibility of this project. The promoter is very ambitious and committed to realize the
project. Hence, she expects to get the necessary support from the city administration
to make the project to be operational.
Looking at the past trends and permits issues by the Government to the construction
of real estate properties including the mixed use building in the major urban areas of
the country especially in Addis Ababa one can easily conclude that the momentum is
more likely to continue.
Besides, the government policies and incentives for the private sector investment are
very promising that motivates the promoter to engaged in mixed use building
business.

1.3. objective of the project

The major goal of this project is to contribute towards the growth of the trade sector
in Metehara City. Its specific objectives include the following.
 To construct and develop modern shops, offices, and restaurant, & cafeteria
facilities that enable to provide standard services to visitors.
 To undertake trading and other refuted business activities that enable to generate
a reasonable to the invested capital.
 To develop modern business center that would provide services of international
standard in order to attract foreign visitors and thereby contribute towards the
generation of hard currency for the country.
 To create employment opportunities for the population in the town and
 Contribute towards the beautification of the town through the construction of
modern building infrastructure and facilities.

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 1.4. Project description
The long-term goal of the project is become the best choice in Metehara and its
surrounding areas by creating a differentiated experience capitalizing on personal
service. The proposed project will have a total area of 300m2, designed to reader a
multipurpose giving business, which will in turn plays significant role towards
solving shortage of business center in Metehara City.
The historical nature of the town as business unique location in one of the most
attractive parts of the occurrence of the city along the along the Ethiopian Rift Valley
lakes laid a fertile ground for future promising growth of the town. The owner plans
the project to render banking and insurance, shopping facility, bank and cafeteria
services to create high quality class to satisfy the interest of customers in the city.
Based on environmental and other considerations, the entrepreneur has determined
the type and size of the building which is already determined by the site; conceptual
planning and preliminary analysis have been carried out by analysts.
In order to attract its clients to the service, the project will develop high standard
shop & banking rooms and office of best choices and will also save best quality
restaurant and café, national and international dish and various types of soft drinks.

1.5. Project Rationale

Internationally the economic growth this country is experiencing, the good
governance created and even if the town is in its nascent stage of development these
project are the first in kind in the town are feasible and would be a model
development in promoting and attracting different urban investments.
In order to respond to the created environment the town is in need of major, basic
and feasible urban projects to be developed.
The existing promising investment opportunities, the demands of service needs along
with relatively sound investment support made by the government in such kinds of
feasible projects, compelled the project promoter to initiate the multipurpose oriented
business project to be established. Despite the promising business opportunities of

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the town, the trend on such kinds of investment found to minimal. Since there is no
such kind of modern tourist facilities and business station in the town to
accommodate the existing demand of these services in the town and the surrounding
areas. The mismatch between the demand for and supply of such kind of services in
easily observed in the town.
Therefore, the existing shortage or absence in the supply of these services, along with
its commercial and administrative access, better location and infrastructure access,
escalating trend of urbanization and business activities, thus it is with such reason
that this project is identified and proposed and assumed to be more profitable.
In general, the country’s decentralized state based economy, privatized and free
market economy; good governance creates a favorable environment for the
development of investment for private investors.

1.6. the significance of the project

The envisaged project deemed to add to the economic development of the nation in
general and zone and town in specific with following ways:

A. Source of Revenue
As public policy of any nation, the government collects different forms of taxes from
different business organizations and individuals. Among the different forms of taxes,
business income taxes, payroll income tax and VAT are collected from undertaking
business activities. Therefore, the building will serve as sources of revenue for the
town as well as for the region.

B. Employment opportunity
One of the problems that our country faced is unemployment. Therefore, the current
objective of the government is working on tackling the problem of unemployment and
fostering the development process either through creating self-employment or

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employment in other organization. Hence, this project will hire 26 individuals and
more than eighty individual during construction/80.

C. Sources of social service

In addition to serving as a source of employment and income for the region, the
project renders social services for different group of people. Hence, it Is also provide
the following services;
 Serve as a source of mental satisfaction for the different users,
 Since, the center encompasses different recreational areas; it will divert the
attention of the users from different evil deeds.
 It deemed to minimize the demand for shops and other bundles of services in the
area.
Furthermore, it serves as the pilot experience and ground for other investor to enter
in to such kinds of urban development. It also contributes on the efforts made on as
a character given building for physical development pattern of the cityscape.

1.7. Project Location

As aforementioned on the introductory part the envisioned project is intended to be
located in East Shoa Zone Metehara City at about 200km from Addis Ababa to the
East. Metehara City is located approximately at a distance of 200 km from finfine. It
is located in the Rift Valley Region.
Metehara City is one of the East Shoa Zone political administrations. The town has a
longitude and latitude of 8o53’59.99”N’39o54’59.99” and an elevation of 947m
(3,107ft) meters above sea level. It is the administrative center of Fentalle Worewda
and Metehara City. The town is selected because of geographical proximity of the
town for Rift Valley Lake Beseka and Awash National Park. The town ’s economic
catchment extends beyond the woreda attracting peasant and Pastoralists from who
trade Fruits and Vigitables and cattle and seeds at the weekly market.

2. The market Study

2.1. market Analysis

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There are a number of factors which affects the demand of standardized mixed use
building. Of these factors, the most important to have influence is population growth
and the level of income. The currently expanding coffee processing industry in the
town like Ethio-Djibouti Rail Way Station and around the town has been inviting
skilled and unskilled labor forces to the town; in addition, the number of both
government and non-government offices has been increasing. Above all the increase
in the number of population of the town increases for the provision of different
services. Nowadays, most of the private business organizations need their own small-
medium offices in order to give their services and provide their products, and they
prefer the place that found in the center of the town or close to the road.
As clearly indicated in the introductory part of this proposal Metehara is in the
dynamically growing town of East Shoa zone. Though the market demand gap for
mixed use building in Metehara is not clearly understand there is wider gap for such
demand as many merchants, organizations are flouring to the town every day. From
prior business experiences, the demand of mixed use building in Metehara is very
high and hence the demand and the supply gap is very wide.

2.2. the Demand-Supply Gap

Metehara City is situated in very centre of Ethiopian meat production area which is
highly known for its special test. These days Mtehara Suger is brand name like
Holland Sugar. Metehara City is also a major business center and commercial route
that attracts thousands of business travelers from and to Djibouti. These are also the
most important groups of potential customers that include both the local and foreign
tourists and the modern business community who choose services that range from
economic to high class standards. These groups would also choose a healthy
comfortable climate that combines a more traditional type with that of modern shops,
offices, bedrooms restaurants and cafeterias. Even though when compared with
similar zonal towns in the region Metehara City seems to have no developed mixed
use building, the existing supply is far behind the growing demand for standard
service. Hence, the project will solve the serous demand problem in the town.

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Over the last decade, there has been a significant growth in the number of local and
international trades across the country. This increase is mainly associated with the
stimulation of economic activist and partly due to an increase in the flow of
international and local traders in to the city. Since Metehara is an important
commercial center of the woreda in addition there is a significant increase in
business activates and hence increasing the number of traders to the town. Even
though there is a lack of quantitative estimates that depict the actual demand and
also the annual growth rate Hotel facilities and urban commercial facilities are scarce
in the city. So far in the town there is no development of such kind standard building
and it is the first of its kind in the town and will promote other investors from the
town and the surrounding areas. They are mostly villa type premises modified as
show rooms and sailing posits. As a result there is a large gap between the developed
and that of the supply for Offices; Bank and cafeteria accommodation hence this
project would not face any problem of demand scarcity for it business center and it
would provide good service to customers.

2.3. Current supply of Mixed use building

Commercial building/office sector has shown a dynamic change in the past few
years. The reason for this could be rapid economic growth and a supporting public
infrastructural development. Other factors relevant in the specific case of commercial
buildings are the large increases in national and international businesses,
particularly firms in the services sector.
The business of multipurpose buildings in Metehara in booming highly due to the
recent rapid growth experienced in Ethiopia. As a result, a good number of local and
international organizational are coming in place. Government offices which used to
operate in limited spaces all over the city are also concentrating on leasing new and
modern buildings. Increasing numbers of international organization and NGOs which
in the past had typically converted residences into office space are now moving
towards renting whole floors or even multiple floors in modern city-center commercial
buildings.

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 2.4. Future market or Demand of commercial Building rental
The demand for office space is a derived demand because firms rent space as an
input to the production of services or goods they provide to businesses and
households in the local regional or national economy.
Following our survey of office space users in Metehara are mainly firms providing
banking, cafeteria and restaurants, bed room, supermarkets service, computer
Center Crevice. The different customers for commercial buildings also include shops
and offices that are currently renting out to provide their goods and services.
Future demand for office space is actually driven from growth in number of offices in
the city which in turn is influenced by the macro-economic growth in the country.
Following the government five year growth and transformation plan (GTP), the
Ethiopian economy is expected to increase by 11% for base case scenario and 14%
under the optimistic case scenario.
Assuming that demand for office space is directly related to the growth in the
economy, the forecast for office space demand is shown in the following table;

Table: Office Space Demand Forecast

Office space demand Office space demand under
under base case economic high case economic
Years Growth Growth
2010/2011 9,916,543 11,304,859
2011/2012 11,007,363 12,057,416
2012/2013 12,218,173 12,953,878
2013/2014 13,562,173 13,963,577
2014/2015 15,054,011 14,554,534
2015/2016 16,709,952 14,987,431
Source: G Two estimation based on GTP’s forecasted Ethiopian Economic
Growth(2016)

2.5. Target customers

The target customers of this envisaged project include:-
1. business Community

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 2. Nearby business organization
3. the government bureau
4. small accounts(SOHO) SME
5. Nongovernmental organizations

2.6. marketing promotion and strategy

In order to penetrate and gain considerable market share, one of the major marketing
strategies for the project is consistently rendering quality service to its tenants. Due
emphasis must be placed on improving quality of service and facilities. The major
marketing strategies to promote the project and gain considerable market share
include:
 Advertising through different means focusing on the existing service and
facilities
 Promote in association to the key location and nearby business
 Working on sustained promotional work.
 Working on public relations to reach and influence key personas and
organization with a capacity of making decision.
 Keeping the quality of its service/ facilities and consistently improving with
changing situations.
 Seasonal discount pricing different others customer centric marketing
strategies will be used by the company.

2.7. competition
There are different forms of competition that may face the envisaged mixed use
building. These are price and non-price based competition. Moreover, there are
different competitors that will compete with the project either directly or indirectly.
But the mixed use building under discussion has diversified marketing strategies
that could enable it cope up with the different competitors in the market. Moreover it
will frequently conduct competitors research which focuses on, the strength and the
weaknesses, the different competitors’ strategies, the techniques they use in

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rendering the service, their customer handling methods, and others. Generally the
project has many other projects all over Ethiopia which compete with it.

2.8. the project facilities and Services plan

In order to provide mixed use business center building services of a high standard, it
has been planned to construct and develop the infrastructure and facilities that
would viable to meet the requirements of an international standard business center.
Accordingly, various buildings and facilities will be constructed phase by phase
starting with the most needed ones that are essential to commence the operation of
its business activities. With the completion of construction, the building will provide
a combined service such as shops, bedroom, restaurant and café service as well as
modern business center that primarily serve its guests and major clients.

The plan is that the Site will be partitioned in to different Spaces:

N0. Description UOM Unit price in
Birr
1. Hotel & Restaurant Service M2
Ground Floor 300 M2 400/120,000
First Floor - -
Second Floor - -
2. Bed Room Services M 2

Ground Floor - -
First Floor 300 M 2
350/
Second Floor 300 M 2
350/
3. Garden, Parks and Swimming pools 2,100 M2 300/36,000
4. Parking Service 600M 2
-
Total 3,000M2 122,888
Since the project will be engaged in mixed building the main sources of its annual
revenue would be from the rental of building spaces such as shops, offices, and
banking, café & restaurant. Therefore, the sources of revenue have been classified in
to one category namely the rental of banking & supermarket, offices, shops,
bedrooms restaurant and café based on these classifications. Based on the market
price of similar mixed use building in the area, the envisioned buildings set the

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following fair price (Before VAT) for its service, hence when the building construction
fully get operational it is assumed to generate a yearly income of ETB 1,596,521.7.
3. Technical Study
3.1. description of the project Service/ Product mix
The envisioned mixed purpose building will provide different rental services to the
different customer groups for different purpose. The building will have basement,
ground and eight floors. The purpose of the building explained as follows;
 the ground floor, first floor and second floor designed for different business
centers like banks, supermarket, beauty salon(man and women), Computer
center, pharmacy, internet café, boutiques, different shops and other business
activities,
 The third floor designed for bed room services.
Besides, the buildings will have enough parking facility for its customers and green
area in its compound.

3.2. land Use Plan

The total land required for the envisioned project is estimated to be 300m 2. The total
area for the construction of the building will be 180m2, as revealed below.

Table land utilization Plan

SN Description Land M2
Ground 1st 2nd
floor floor
1 Building (G+2)
1.1 Ground 112
1.2 First floor 120
1.3 Second Floor 120
2 Parking & Green area 160
3 Garden, Parks and Swimming pools
Total 300

3.3. Construction work and Technology

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 3.3.1. Construction schedule
The construction project is proposed to be started on February 1 2021, and is
expected to be finished on July 1 2021. as seen in the abbreviated construction
schedule above, a majority of the schedules time is made up of five major activities;
Concrete, building Enclosure, masonry, mechanical &HVAC and Electrical install.
Concrete activities include processes such as placing foundations and slab on deck.
The Building Enclosure Phase includes erecting the scaffolding that will allow for
exterior sheathing installation and bricklaying.
Mechanical and Electrical install coincide with each other due to the need for
coordination between the two divisions. There are several periods of construction
during the schedule in which there are multiple construction activities occurring at
the same time.
The construction site must be organized accordingly as these processes take place.
As with any construction project, the goal of the schedule was to complete all
construction activities before the required Date of completion.
This date of completion is practical based on the time of year in which the building
will be completed. The team allowed a two week contingency for any setbacks.
Typically, winter construction tends to cause unforeseen delays that negatively
impact a construction project. These conditions can and will almost undoubtedly
impact the project schedule by causing unforeseen delays and project inefficiency.

3.3.2. Architectural Design & Layout

Although functional spaces for the project were laid out in significant detail,
the rest of the building had designated spaces but n set layouts. It was at the
discretion of the project promoter to devise typical layouts for the non-detailed
commercial and office spaces. To make sure that the buildings layouts were practical,
the project owner researched typical architectural layouts for laboratory and
executive office spaces.
The walls and partitions throughout the floor were congruent with the
structural frame and column locations.

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 3.3.3. Structural design
One of principle deliverables of our project is the structural design of the building.
The structural bays were coordinated with the layout of the building adjustments
were made to the bays if specific layouts are necessary. The frame was made up of a
grid with repeating standard structural bays. Included in the structural system are
bay sizes, shape and size of structural members, floor compositions and curtain
walls. These elements were established to resist gravity ad lateral loads as
appropriate.
The gravity load design was completed for two frames; one of structural steel and one
of reinforced concrete. The structural steel frame was chosen for further design based
on cost per square foot, local availability of material and constructability
considerations, such as erection and fabrication. The steel system was then designed
for lateral loading with necessary adjustment being made to framing.

3.3.4. Reinforced concrete

The project group prepared hand structural design calculations for a typical bay of a
reinforced concrete frame. In all reinforced concrete bay designs, a superimposed
dead load of 7.5 pounds per square foot was assumed for mechanical equipment,
floor coverings and ceilings.
Similarly, the design of the typical bay accounted for the use of different commercial
space, in which a live load of 125 pounds per square was assumed. Loads were
calculated based on the requirements of the minimum Design loads for Buildings and
other Structures.

3.3.5. Foundation Design

The design of a superstructure may be accurate, have considered all possibilities and
still fail because the substructure is incapable of distributing the applied loads to the
supporting soil.

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Foundation design takes more into consideration than merely the loading from the
columns. While the main part of the project focused on the structural frame and its
alternate designs, a preliminary foundation plan was designed based upon maximum
load carried from the superstructure through the columns. The foundation design
conducted by the project team consisted of the selection of foundation type,
determination of the bearing capacity and the design for typical interior and exterior
spread footings.

3.3.6. construction Plan and process

The project team developed a coordinated project schedule and construction plans
that would reflect the expectations for an actual construction project. The project
schedule was developed using the preliminary designs given to the project team.
Additionally, the group considered typical construction activities and durations taken
from similar construction projects as well as realistic constraints on building
development. For instance, it is necessary for the structural frame to be completed
before concrete can be placed for the slab on deck. Hand drawn construction plans
detailing site entrances and storage areas were coordinated with the project schedule
to give the reader visualizations of the construction site set up through various
periods of the construction process.
The construction process for this project is normally a disjointed three mages
development by which the conceptualized need of the promoter of this project is
translated into a functional facility that will meet their needs in terms of time, cost
and quality.
Based on a general program of the project owners the consultant who is going to be
hired makes site studies, develops structural designs, prepares drawings and
specifications, determines quantities involved and estimated the resultants costs. All
these activities will be done in the first phase of the project which is the design stage
after the document are produced by the designers have been received, and the works
secured the project is supposed to enter the tendering stage. At this stage contractors
study the project document analyze and subsequently determine the construction

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methods, built up their unit rates and submit their bids for the works. The promoter
of this project intends to compare the bids and award the contract for the lowest
responsible bidder. This, is of course, presupposes that the favorable proposal does
not exceed the allocated budget.
After the award is made and the contract signed between this project owner and the
contractor, the project constructor is expected to prepare and submits a detailed
construction program which includes material schedule, manpower requirement and
cash flow forecast.
After the award is made and the contract signed between this project owner and the
contractor, the project constructor is expected to prepare and submits a detailed
construction program which includes material schedule, manpower requirement and
cash flow forecast.

3.4. Utilities
A number of utilities world be put in place in order to ensure smooth functioning of
the project. These utilities include:
 Water Supply,
 Supplementary Electricity supply.
 Telephone line Internet Broadband
 Fuel, Oil and lubricant
 Drainage Facility

3.5. Project implementation

The projects implementation is expected to take 12 months. The major activities
include Bank loan processing construction of the building, cleaning the area around
the building, Procurement of equipment’s and start rendering services. The time
schedule for the above matured major activities is presented below:

Table: project Implementation schedule

SN Activities Date
1 Land request processing December,2020 - January, 2021

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2 Land approval January, 2021
3 Bank loan processing January-February 2021
4 Site Development March 2021
5 Building and construction work March, 2021-October 2021
6 Preparation for service November, 2021
7 Service execution December, 2021

4. Organizational Structure
4.1. Organization and management
The organizational structure should be in a way that the company able to achieve its
objectives as well as the satisfaction of standard requirement. In addition to this, the
structure should fit the dynamics of all customers in the building ranging from small
business to large tenants.
4.2. Man Power
The total manpower required for the building will be 26 persons. The manpower list
and the corresponding labor cost are shown in part five of this document.

4.3. organizational Structure

The organizational structure of the project is designed by including all the necessary
personnel under the right division. At the top of the organizational structure, there
will be manager with the responsibility of supervising the overall activity of the
building. Depending up on the nature of the center and the amount of work to be
performs; there exist auxiliary units under the general manager.
Employees under each unit will be supervised by the department head that is
accountable for the general manager. General manager is appointed by owner.

Owner

General
Manager

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 Building Marketing Technical and
Admin maintenance
manager

HRM and IT, Electricity

finance and plumper

Cashie Purch
r aser

Fig: organization structure of the Building

As clearly shown in the organizational structure, the center organization has one
general manager and three main sections. Under the general manager there are the,
marketing Department, maintenance and building administration department. Under
building admin dept there exist two sections i.e., HRM & finance and general service.
Further sub sections are also organized under technical and maintenance manager.
The following section deals with the duties and responsibilities of each department.
A. The General Managers Duties and Responsibilities
 He/she will plan, organize, direct and control the overall activities of the building.
 He/she will devise policies and strategies that will enable the center to be
profitable.
 He/she will incorporate modern technological innovation that will facilitate the
service delivery of the building to increase customer’s satisfaction.
 He/she will plan, organize, direct and control the human and non-human
resources of the building so as to achieve the short and long run objectives of the
organization.

B. Building Administration Department

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The building Administration Department of the multipurpose building has two main
sections (HRM and Finance and General Service section). It has responsible for
undertaking the following activities;
 Manage the human resources and control employees activity
 Well non-human resources of the project, which include; effective handling of
the different resources of the building, and devise strategies of controlling
against fraud and damage.
 Will provide the right material or inventory to the center with right price at the
right time.
 Will plan, organize direct and control the financial transaction of the building
by using all the necessary documents.
 Accountant and casher that will collect money from the customers.
 Will develop sound financial control system by developing modern financial
control systems.
 Will prepare the annual financial statements and prepare condensed reports
for both the General Manager and other concerned government body.
 Follow the overall status of the business and provide maintenance and repair
services
C. The marketing Department
 Will handle the overall marketing activities of the organization which include
planning, organizing, directing, and controlling.
 Will develop the marketing strategies for future multipurpose building
development
 Will develop effective customer handling strategies.
 Execute the promotion methods.
D. Technical and maintenance manager
 Will handle the overall physical maintenance and related issues
 Will make sure electricity and back up is organized.
 Follow up security issues and educate tenants

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  Works in collaboration with general service to make sure tenants are well
served

5. financial Requirement and Analysis

The financial resource is a prime resource for undertaking any activities. Hence for
implementing this resort building a total of 10,000,000 ETB is required. From this 10%
1,000,000.00 birr will be covered by the promoter of the project while the rest 90% will
be covered through loan from bank at the prevailing interest rate.
Therefore the said amount of finance is needed for undertaking the following.

5.1 fixed Investment

A. Land, Building & Construction
S.N Description of works Total Cost in birr
1 Building construction 7,795,213.80
2 Site Development 25,200.00
3 Design and supervision 80,000.00
4 1st Year land lease & (10%) down payment 36,500
Total 3,936,913.80

B. Building Machineries and Equipment

SN Description Measur Qty Unit cost Total cost in
ement in Birr Birr.
1 Generator Unit 1 80,000.00 80,000.00
2 Carpentry tool box Set 1 17,000.00 17,000.00
3 Electrician tools box Set 1 18,500.00 18,500.00
4 Plumber tools kit Set 1 12,300.00 12,300.00
5 Fire extinguisher Unit 5 6,000.00 30,000.00
(Security Equipment)
6 Total 157,800.00

C. Vehicle
SN Description UOM Qty Unit Cost Total cost in Remark
in Fr. Birr
1 Mini-Bus Unit 1 60,000.00 60,000.00 Duty Free
Total 60,000.00

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 D. Office Equipments
SN Description Measurement Qty Unit cost Total cost
in birr in Birr
1 Managerial tables Unit 5.00 2,600.00 13,000.00
2 Managerial chairs Unit 5.00 1,950.00 9,750.00
3 Office table with chair Unit 7.00 1,350.00 9,450.00
4 Secretarial table with chairs Unit 1.00 1,450.00 1,450.00
5 Computer with chairs Unit 3.00 15,000.00 45,000.00
6 Shelf Unit 3,500.00 3,500.00
7 Filing cabinets Unit 1.00 1,500.00 1,500.00
8 Guest chairs Unit 1.00 900.00 4,500.00
9 Fax & Telephone machine Unit 5.00 1,300.00 1,300.00
10 Carpet and Curtain LS 1.00 23,000.00
Total 112,450.00

5.2 Working Capital

5.2.1 Operating Expense at full Capacity2
a. salary Expense
SN Position N Qualification Monthly Annual
o salary in salary in
Birr Birr
1 General manager 1 BA in management 300 36,000
2 Building admin 1 BA in Acct/Mgt 2500 30,000
3 Secretary 1 10+2 in secretariat science 900 10,800
4 HRM Officer 1 10+2 in HRM/Management 950 11,400
5 Technical and 1 Diploma in building 1500 18,000
maintenance manager maintenance
6 Finance head 1 BA in Accounting 2500 30,000
7 IT Technician 1 Diploma in computer 1150 13,800
science/IT
8 Marketer 1 Diploma in marketing 1150 13,800
9 Accountant 1 Diploma in accounting 1150 13,800
10 Guards/Security 4 Basic 500 24,000
11 General Service head 1 Diploma in Management 1500 18,000
12 Purchaser 1 Diploma in purchasing 1150 13,800

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 &Sup Mgt
13 Electrician 1 10+2 in general electricity 1000 12,000
14 Plumber 1 10+2 in general mechanic 1000 12,000
15 Casher 2 10+1 in bookkeeping 850 20,400
16 Cleaner 5 Unskilled 450 27,000
17 Maintenance officer 1 10+2 in General mechanic 1000 12,000
18 Driver 1 10 completed 850 10,200
Total 26 327,000
Benefit (20%) 65,400
Grand Total 392,400
5.2.2 Operating Expenses
SN List of Items Annual cost in birr Assumptions Used
1 Audit and legal fee 24,000.00 2000 br/per ,month
2 Stationery supplies 6,000.00 500 br/month
3 Promotional Cost 40,000.00 Lump sum annual cost
4 Property Insurance 84,009.00 1% of the building
5 Cleaning Supplies 10,800.00 900 br. Per month
6 Uniforms 1,670.00 180 per pes for 16 people
7 Water consumption 5,000.00 2500 m3 by 3.15 br
8 Electric consumption 6,000.00 20000KWH By Br.0.4736
9 Fuel 42,672.00 2032 lit per year by Br. 21
10 Oil & Iubricants 4,267.20 10% of fuel cost
11 Telephone & fax 18,000.00 1500 per month
12 Repair expense 72,018.00 2% of building cost
13 Miscellaneous costs 20,000.00 3000 per month
Total 334,436.20

5.2.3 Pre-service Expenses

SN Description Cost in birr
1 Project proposal 6,000.00
2 Licensing fee and others
Total 6,000.00

Summary of Total initial investment cost

SN Description Cost in Birr
1 Land, building & construction 3,936,913.80
2 Building machines & Equipments 157,800.00
3 Vehicle 60,000.00

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4 Office Equipment 112,450.00
Total fixed investment cost 4,267,163.80
5 Salary expense 392,400
6 Operation Expense 334,436.20
7 Pre service Expense 6000.00
Total Working capital 732,836.20
Sub total 5,000,000.00
Total initial investment capital 5,000,000.00

5.3 Financial analysis and Statements

5.3.1 Underlying Assumption
The financial analysis of the mixed use building is based on the data provided in the
preceding sections and the following assumptions.

A. construction and finance

Construction period 1Years
Source of finance 10% equity and 90 loan
Bank interest rate 10%

B. depreciation
Building 10%
Building machinery and equipment 10%
Office Equipment’s 10%

5.3.2 sources of Fund

The source of fund to finance the project is planned to be from two sources. These
are promoter’s equity and bank loan. The loan is expected to be obtained from one of
the local lending institutions. Since the project is expected to take some times to
repay all its debts, the bank loan is assumed to obtain on long term credit basis.
Taking the financial position of the promoters into account, equity contribution and
bank loan to finance the total investment outlays of the project are assumed to be
10% and 90% respectively. Accordingly, the total financial requirement from the two
sources will be;

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SN Description Percentage share Amount
Owners Share 10% 450,000.00
Bank Loan 90% 4,500,000.00
Total 100% 5,000,000.00

5.3.3 Bank loan Repayment Schedule

Year Principal Payment Interest (12%) Total annual Remaining
Payment in ETB Balance
0 0 00 00 4,500,000
1 750,000 270000.00 1020000.00 3750000.00

2 354548.95 225000.00 975000.00 3000000.00

3 354548.95 180000.00 930000.00 2250000.00

4 354548.95 135000.00 885000.00 1500000.00

5 354548.95 90000.00 840000.00 750000.00

6 354548.95 45000.00 795000.00 0

5.3.4 Depreciation Schedule

SN Description Original Depreciatio Depreciation per
Value in n rate in % year in Birr
Birr
1 Construction and Building 3,936,913.8 10 393,691.38
0
2 Bldg. machines & Equipments 157,800.00 10 15,780.00
3 Vehicle 60,000.00 5 3,000.00
4 Office Equipment 112,450.00 10 11,245.00
Total 4,267,163. 423,716.38
80

5.4 Financial Statement

5.4.1 Income loss/statement

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Project revenue and production costs are listed and compared to see whether the
project generate profits or not. Starting from first year of the project operation, the
project will generate a reasonable amount of net profit for the owners throughout its
life period. Profit and loss statement shows that the project will generate net profit of
ETB 747,819.8 in the first year and increase to ETB 1,076,860.52 starting from the
third year of the project life and hence it is found to be profitable.
Mixed use Building profit/Loss Statement
Revenue Year 1 Year 2 Year 3 and
after
Rental Income 1,474,656 1,771,061.2 2,125,273.44

Expenses
Salary Expense 392,400 470,880 565,056
Operating Expenses 334,436.20 401,323.44 481,588.12
Deprecation Building 393,691.38 393,691.38 393,691.38
Deprecation Bld. 15,780.00 15,780.00 15,780.00
Machineries and Equip.
Deprecation of Vehicle 3,000.00 3,000.00 3,000.00
Deprecation office Equip 11,245.00 11,245.00 11,245.00
Lease payment4 4,819.05 4,819.5 4,819.05
Total Expense 1,155,371.63 1,386,445.95 1,663,735.14
Profit before Tax 747,819.8 897,383.76 1,076,860.51
Tax (30%) 224,345.94 269,215.12 323,058.15
Net profit 523,473.86 628,168.64 753,802.36

5.4.2 Cash flow Statement

Year Year 0 Year 1 Year 2 Year 3 and
after
Equity Capital 500,000
Loan principal 4,500,000
Net sale 1,903,191.43 2,283,829.71 2,740,595.65
Total Cash in flow 5,000,000 1,903,191.43 2,283,829.71 2,740,595.65

5.5 Financial analysis

i. Profitability

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According to the projected income statement, the building will start generating profit
in the 2nd year of operation. Important ration such as profit to total sales, net profit to
equity (Return on equity) and net profit plus interest on total investment (return on
total investment) show as increasing trend during the lifetime of the project. The
income statement and the other indicators of profitability show that the project is
viable.

ii. Pay-Back period

The investment cost and income statement projection are used to project the pay-
back period. The building’s total investment will be fully recovered at the 6 year of
operation.
6. Environmental impact of the project
The EIA of the project activities was determined by identifying the environmental
aspects and then undertaking an environmental risk assessment to determine the
significant environmental aspects. The environmental impact assessment has
included all phases of the project namely construction phase and operational phase.
The building has both positive and negative impact
Positive impact of the project

The positive impact of the project is:-

 Generation of employment opportunity
 Source income for the government through business income tax
 Income generation for the promoter
 Being exemplary for other investors who want to engage in the same business
line.
Negative impact of the project
The project has the following negative impacts:
1. noise and Dust emission during Construction
There are some noises during the construction due to the construction
operation and the company will use construct the construction during the day

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 time. Again there is the emission of dust which will be mitigated by sprinkling
water on the service.

2. problem on workers on construction

During construction there are some problems that will materialize on workers. These
are: damage on operation by using machines, construction materials and others. To
mitigate such impact the company will provide safety insurance and safety
equipment.
3. swages during operation
During operation there are some wastes emitting from the mixed use building. These
are wastes from the latrine and will be mitigated by using modern waste treatment
technology.

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