Project Proposal for commercial center

2023

Project Proposal for

Development of G+4
commercial Center Building
Located in C/E/P/R/S, Siltie Zone, Hulbarage Woreda, Shama Town.

Project Owner: - Kedir Mohammed

October, 2023

Kerate

Promoter: - Sultan Aliye and Kedir Mohammed

Table of Contents
1. EXECUTIVE SUMMARY......................................................................................................................1
2. INTRODUCTION....................................................................................................................................2
3. BRIEF DESCRIPTION THE PROJECT..................................................................................................2
3.1 Beneficiaries of the project...............................................................................................................2
3.2 MISSION STATEMENT.................................................................................................................3
3.3 OBJECTIVE OF THE PROJECT PROPOSAL...............................................................................3
3.4 Justification why these project is proposed.......................................................................................3
3.5 PROFILE OF PROMOTER.............................................................................................................4
3.6 Premises required.............................................................................................................................4
3.7 Total Cost of Initial Investment........................................................................................................4
3.8 Project location and its profile..........................................................................................................5
3.9 Justification why these business plan is proposed.............................................................................6
3.10 SERVICE DESECRIPTION............................................................................................................7
4. MARKET STUDY...................................................................................................................................8
4.1 AS SUPPLY AND DEMAND.........................................................................................................8
4.2 DEMAND AND SUPPLY ANALYSIS...........................................................................................8
4.3 MARKETING STRATEGES...........................................................................................................9
4.4 MARKET SEGMENTATION.........................................................................................................9
5. PROMOTION........................................................................................................................................10
5.1 PRICING AND DISTRIBUTION..................................................................................................11
5.2 SALES STRATEGY......................................................................................................................11
5.2.1 SALES STRATEGES............................................................................................................11
5.2.2 SALES FORCAST.................................................................................................................11
6. CAPACITY AND SERVICE PROGRAM.............................................................................................12
6.1 Plant Capacity.................................................................................................................................12
7 MATERIALS AND INPUTS.................................................................................................................13
a. Raw and Auxiliary Materials..............................................................................................................13
8 TECHNOLOGY AND ENGINERING..................................................................................................14
a) Building and Civil Works.....................................................................................................................14

i|Page
 Project Proposal for commercial center
2023

9 ORGANIZATION AND MAN POWER PLAN....................................................................................14

A. Organizational structure.....................................................................................................................14
B. Man Power Plan.................................................................................................................................15
10 FINANCIAL STUDY........................................................................................................................15
10.1 Fixed Investment cost.....................................................................................................................16
1. Building and civil works.................................................................................................................16
2. Office furniture and other equipment..............................................................................................16
3. Summary of fixed costs..................................................................................................................17
10.2 Production Costs.............................................................................................................................17
1) Raw and Auxiliary materials..........................................................................................................17
2) Salary Expense:..............................................................................................................................17
3) Utilities:..........................................................................................................................................17
4) Travel and Perdium........................................................................................................................17
5) Insurance:.......................................................................................................................................17
6) Miscellaneous Expense:..................................................................................................................17
7) Summary of production costs of five year......................................................................................18
11 FINANCIAL EVALUATION............................................................................................................22
12 PROJECT IMPLEMENTETION SCHEDULE..................................................................................23
13 ENVIRONMENT IMPACT ASSESSMENT.....................................................................................24
14 CONCLUSIONS AND RECOMMENDATION................................................................................24

Promoter: - Sultan Aliye and Kedir Mohammed

 1. EXECUTIVE SUMMARY
1 Project Type Project Proposal for Development of G+4 commercial Center Building

2 Project Owner Kedir Mohammed

3 Nationality Ethiopian

4 Project Location , Siltie Zone, Hulbarage Woreda. Shama Town

5 Project composition Diversified type of 12m2 wide 56 classes for different business, 40m2 wide
12 classes cafe and restaurant 120m2 wide 4 meeting hall and 40m 2 wide 1
classes in each floor for Muslim gusts.

6 Land Requirement 15,000m2

7 Construction period 2 years

8 Total initial capital The total investment capital of the project is estimated at birr 140,000,000
of which birr 139,219,009 (99.44%) is for fixed investment items while the
remaining balance of birr 780,991 (0.56%) will be initial working capital.
Out of the total investment cost of the project 30% equivalent to br.
42,000,000 financed by the owners’ equity and the rest 70% equivalent to
birr 98,000,000 financed through bank loan.

9 Employment creation The total manpower required for the plant will be 5 permanent employees at
full capacity and 115 individuals temporary during construction.

10 Capacity of plant This profile envisages the establishment of plant for the construction of G+4
commercial Center Building at full capacity. This consists 12m2 wide 56
classes for different business, 40m2 wide 12 classes cafe and restaurant
120m2 wide 4 meeting hall and 40m2 wide 1 classes in each floor for seat
equal amount in three phases at equal amount per annum. The envisaged
plant is assumed to start production at about 73 classes are constructed.
After and till next 5 years except construction other operations would
continue.

11 Project Action plane Land acquisition and civil construction… 1st 6 month, Mobilization…
second 6 month & 2nd year, production at full capacity…3rd year

12 Benefits of the project for Afford G+4 commercial center building, revenue, employment opportunity,
the region/country benefit for local community, and stimulate the local economy and
technology transfer.

1|Page
 Project Proposal for commercial center
2023

1. INTRODUCTION
The goal of owner of the project is to create the detailed business plan that will develop the basis for
a new start up development of G+4 commercial Center Building investment project proposals
which I seek to launch upon graduation. The project proposal will be modest, yet detailed. It is my
objective to create a small business to hold a portfolio of commercial building assets that I look to
acquire and manage in order to create a secondary source of income. This is to be accomplished
over the next 10-15 years, while I maintain my current full time employment. The goal is to
purchase undervalued commercial properties and hold them as a long term investment asset. The
objective of acquiring commercial properties is to generate positive monthly cash flow income, as
well as to fully capitalize on the market value appreciation over the long term. This project proposal
plan the instrument that I will use to communicate my plans, strategies’ and tactics to investors and
lenders. It will clearly identify my goal of being able to launch and manage the this company, while
maintaining my current employment. The goal is to slowly build a real estate portfolio over the next
10-15 years that would generate additional income to supplement, or become an integral component
of larger retirement portfolio. Additionally as the portfolio of assets grows to sufficient size, there
will be the opportunity for me to retire from my current position and focus my time on managing
these and other retirement assets. The business plan will identify the business model, proposed
financing, marketing studies, operation and implementation plans and risk assessment. It will
project initial start-up costs and include three year financial projections as well as preform of a
sample investment property. I have completed research and interviewed business professionals in
various disciplines to provide insight and counsel necessary to create and implement a solid
business plan and strategies necessary to execute this project proposals goal.

2. BRIEF DESCRIPTION THE PROJECT

2.1 Beneficiaries of the project

The project is intended to achieve multiple benefits to multi-stakeholders. Primarily the project will
benefit the promoter, employees, their families and the government from revenues that will be
obtained from the proceeds. However, the project further benefits the community at large by being a
point of reference for new technology, management information and experience.

2|Page
 Project Proposal for commercial center
2023

This development of G+4 commercial Center Building planned to sale its products with reasonable
and affordable prices. The products of our project will be sold to the local community. The project
also rented its product on the basis of customers demand throughout the town. This development of
G+4 commercial Center Building planned to create5 permanent employees at full capacity and 115
individuals temporary during construction.

2.2 MISSION STATEMENT

Based on, the present conductive investment policy of the country the promoter of the project seeks
to contribute to the economic development of the nation, encourage and support the commercial
sector and the individual and users to attain their business objectives and satisfy their needs
respectively by providing efficient and states of the quality class in different size at fair price while
by meeting customers’ expectations and demand.

2.3 OBJECTIVE OF THE PROJECT PROPOSAL

The objective of this project is Development of G+4 commercial Center Building at full capacity,
of which 12m2 wide 56 classes for different business, 40m 2 wide 12 classes cafe and restaurant
120m2 wide 4 meeting hall and 40m2 wide 4 classes in each floor for seat equal amount per annum.
In line with general objective, the following specific objectives are determined:-
 Become a best commercial center building for different purpose in construction industry.
 To generate attractive return for the investors
 To reach the point of sustainable profitability
 To benefit the local community by providing quality products
 To stimulate the local community by meeting the demand of housing.
 To enjoy work while making a good business.
 To create employment opportunities services and contribute to the national economy.
 To promote the transfer of the technical knowhow in the individual to improve their
capabilities to earn additional income. /establishing, maintaining and enhancing the long
term customer relationship.

2.4 Justification why these project is proposed

The purpose of this project proposal is to establish modern development of G+4 commercial
Center Building.

3|Page
 Project Proposal for commercial center
2023

This Development of G+4 commercial Center Building programmed to establishment plants

with capacity construction of 12m2 wide 56 classes for different business, 40m2 wide 12 classes
cafe and restaurant 120m2 wide 4 meeting hall and 40m2 wide 4 classes. Based on the market
study, the demand of commercial center building in Shama grows time to time.

2.5 PROFILE OF PROMOTER

The promoter of the project is kedir Mohammed . The promoter has finance and Marketing
capacity and necessary experience for the business.
The promoter has an initial vision, readiness and deep assessment of the situation to implement
the project, the purposes of this business plan is to obtain required land and investment
certificate for the realization of the project objective.

2.6 Premises required

For the proposed G+4 commercial Center Building a total of 10,000 m 2 land is required. The
total land required will be for construction of 12m2 wide 56 classes for different business, 40m2
wide 12 classes cafe and restaurant 120m2 wide 4 meeting hall and 40m2 wide 1 classes in the
ground, green area and parking utilization plan is as follow.
Table 1:- project Land requirement

No. Description Quantity Land requirement (in m2)

1 G+4 commercial Center Building 1 3,000

2 Meeting hall 4 2,500

3 Green area and parking 4,500

Total 10,000

2.7 Total Cost of Initial Investment

The total investment capital of the project is estimated at birr 140,000,000 of which birr
139,219,009 (99.44%) is for fixed investment items while the remaining balance of birr 780,991
(0.56%) will be initial working capital. Out of the total investment cost of the project 30%

4|Page
 Project Proposal for commercial center
2023

equivalent to br. 42,000,000 financed by the owners’ equity and the rest 70% equivalent to birr
98,000,000 financed through bank loan.

2.8 Project location and its profile

The project is planned to be established in C/E/P/R/S, SIltie Zone, Hulbarag Woreda at Shama
town. Siltie Zone is in the C/E/P/R/S and named for the Siltie people, whose homeland lies in the
zone. Siltie is bordered on the south by Alaba Zone, on the southwest by Hadiya zone on the north
by Gurage Zone, and on the east by the Oromia Region. It has a total area of 2537.5 sq.km and lies
between 7.43-8.10 latitude and 37.86 to 38.53 longitudes, with an elevation managing 1501-3500
meter above sea level.

The zone has 10 woredas & 3 Town Administrator. Based on the 2008 census conducted by the
Central Statistics Agency of Ethiopia (CSA) this Zone has a total population of 840,598 of whom
407,690(48.5%) are mal 432,908(51.5%) women, 47,097(6.28%) are urban inhabitants. The
largest ethnic group reported in Siltie was the Siltie people (97.35%), all other ethnic group made
up 2.65% of the population. Siltie is spoken as a fires language by 96.95% of the population and
1.48% spoken Amharic, the remaining 1.57% spoken all other primary languages reported. It is
worth mentioning that 12 km lst grade asphalt road which is between Addis Ababa and hosaena is
the basic fact for the economic development so for reached among others 39.13 km dry season road
17.23 km winter season road 4.06 km coble stone road 80% coverage of clean water supply 26.5
km main waterline installation 13.5 km door water line installation and last but not least 24 hours
day in day out electric supply are the major economic development.

Even though the infrastructure development is fast it is not accordance with the growth of the
population and land holding that in turn calls for the due concern of the Zone Administration and
regional government for the invitation and intervention of private investors.
Hulbarag Woreda is location is 140 km North West of the town Hawassa and 164 km south west of
Addis Ababa at the extreme edge of east African rift valley and south east dalocha woreda on the
east and alicho woreda on the west. According to the sample study conducted 0 2008 E.C the total
population is 70,060 settled in 2,631 Hector of land regarding is environment, it is between 2,080
and 2,100 meter above sea level 2,100 mm annual rain fall with 22.2 and 15.3 degree Celsius higher
and lower respectively that Makes attractive for the potential investors. Effective 1993 E.C Where
in the town is assigned as the capital of the zone by the coordinated effort of the government native
5|Page
 Project Proposal for commercial center
2023

native nationals and development ally’s fruitful development is registered in the areas of education
Health and various infrastructure.
The main justifications behind the selection of this location are fluffiness of infrastructure. Also
there is availability of enough labor force, Conductive investment policy and governance.

The proposal presented for this project requires the consideration not only of technical commercial
and finance factors only but also of social & environmental following factors must be considered
infrastructure service existing industrial infrastructure economic and social infrastructure&
intuitional frame work urbanization Ecological and environmental impact of the project.

2.9 Justification why these business plan is proposed

Using the favorable and conductive investment policy of the number and capital of investment
projects have grown steadily for the last three years investments on manufacturing electricity and
water supply real estate agriculture construction and restaurants appeared to dominate in terms of
approved investment comitial.

Such a rapid expansion and growth of the investment especially manufacturing real estate
construction and hotel and restaurants show the need of the market to enter in the business

Socio economic indicators: - Ethiopia is a country which a high population number with a high
growth rate and will result the following with respect to our business.

 Abundance of skilled and unskilled labor supply

 Additional demand creation mainly through the urbanization process

The additional demand created though urbanization process mainly creates high demand for
commercial centers.

Resultant entrances to the commercial center building business in turn call for the competition of
investors to deliver high Quality and well differentiated building services the company is
committed to enter in to business by differentiating building services the company is committed to
enter in to the business by differencing the building standard through quality packages.

Political environment;- the political stability an improvement of the discounted image of the
country has contributed its own share for the growth of the economy in addition the celebration of

6|Page
 Project Proposal for commercial center
2023

Ethiopian millennium is directly counting its share for the growth of the country through prompting
the commercial centers sectored.

2.10 SERVICE DESECRIPTION

This Development of G+4 commercial Center Building at full capacity, of which 12m 2 wide 56
classes for different business, 40m2 wide 12 classes cafe and restaurant 120m 2 wide 4 meeting hall
and 40m2 wide 1 classes in each floor for sales and rental service. It is a type of commercial real
estate which specifically utilizes the open environment and associated natural and social for
business purpose of its customer’s.

In this project proposal 72 classes are considered in each floor to provide local and outside
Hulbarage Woreda, at Shama Town customers. These are 12m 2 wide 56 classes for different
business, 40m2 wide 12 classes cafe and restaurant 120m 2 wide 4 meeting hall and 40m2 wide 1
classes in each floor for sales equal amount in three phases at equal amount per annum.

This Development of G+4 commercial Center Building is affixed asset investment operating
company and will provide property acquisition, financing, asset management, and disposition
service. The company will manage all acquisitions. It will seek commercial investment
opportunities that will produce a long term return between 8%-15%. The principal will meet with
commercial real estate community to secure opportunities that will meet the return requirements.
Pro form as will be prepared for each property acquisition seriously being considered. Meeting with
contractors and third party companies will be performed as necessary to complete each due
diligence.

This project will seek to diversify the risk to the portfolio by acquiring properties in areas of
Frederick that may attract tenants from different employers and establish different timing of cash
flows.

During the early years of being in business, the owner will perform the necessary property
management. This activity will continue until which point the tasks becomes overwhelming in
managing multiple properties or if at some point it make more financial sense to outsource such
services. The principals will inspect properties regularly and meet with tenants periodically to
ensure that overall satisfaction is being met; the promoter will coordinate all repairs or
improvements to the properties with third parties and tenants as necessary.
7|Page
 Project Proposal for commercial center
2023

3. MARKET STUDY
Ethiopian is investing the modernization and expansion of major infrastructures. As a result, the
stock of houses in Ethiopia has increased sharply over the last few years. While urbanization is
available as the major attraction, improvement as well as new construction is taking place.

Overall growth of population and the continued progress of urbanization are focused to construct
commercial real estate. Increasing the supply of quality, commercial real estate accommodation
through house construction is necessary for improved competitiveness and the economic success of
the sector.

1.1 AS SUPPLY AND DEMAND

If is generally believed that currently there is an acute shortage of standard house in major
cosmopolitan cities of the country including hulbarag Woreda,Shama Town.. In order to minimize,
if not eliminate the prevailing wide demand supply gap: the government is undertaking a number of
courageous measures. This includes issuing of plots of land to individual and accompanied with
attractive investment incentives for the construction of commercial real estates.

1.2 DEMAND AND SUPPLY ANALYSIS

In order to project demands of house in to Ethiopia, the past trend in commercial is considered.
During the period 1994-2011, as Ethiopian calendar, the total demands in the country have
registered a 20% average growth rate. Accordingly, assuming that this growth rate will continue in
the future and taking year 2014 figure (80,700,572) as a base, demand of house in forecasted. The
projected demands of house required, which is calculated by taking the projected demands and
multiplying it by average house number.

This shows that the demand and supply gap for house need is high and forecasted to be continued
since based on the assumption that the sector growth is continued as of the past experience of the
sector.

1.3 MARKETING STRATEGES

Our basic marketing strategy is to work with customers on a one-to-one basis to ensure their supply
needs are being met and help develop unique marketing programs for each of them. We intend to
prioritize customer service and make it key component of our marketing programs. We believe that

8|Page
 Project Proposal for commercial center
2023

providing our customers with what they want, when and how they want it, is the key to repeat
business and positive word-of-mouth advertising. Because we want to develop close working
relationships with our customers, we want to establish accounts in as personable a way as possible.
It is for this reason that we will overwhelmingly emphasize in-person sales calls to build accounts.
To support our marketing initiatives and product knowledge, we will attend as many area
conventions and trade shows as possible to ensure we are offering the most up-to-date market trend
information.

It is for this reason that we will overwhelmingly emphasize in-Person sales calls to build accounts.
To support our marketing initiatives and product knowledge, we will attend as many area
conventions and trade shows as possible to ensure we are offering the most up-to date market trend
information.

1.4 MARKET SEGMENTATION

The market segmentation for the hotel is tourists travel to the area, and travel to the south and
South Omo part of the country in which there were a number of tourist attraction places and others
pass through the town and stay there for business or other purposes who can afford the price, and
conferences and meetings held there by zone Administration.

As indicated in the supply and demand analysis, the service rendering companies in the town are
small comparing to the population and the ever rising demand for the service. Besides these, the
envisage project has its market strategy to differentiate its service from the competitors. The
strategies categorized the customer as follows.

Prospects (those who call or email to express interest), will, when appropriate, be offered smaller
rooms at the lower end of the price spectrum so that they feel lesser commitment when they come
to stay. Customers (those who have visited the hotel once) will be offered package deals for
multiple night stays, such as one night free after a three night stay.

Premium customers (those who have stayed at the hotel more than once) will be offered access to
the penthouse suite, an option that cannot be purchased by those who have only stayed at the hotel
once.

9|Page
 Project Proposal for commercial center
2023

Champions (those who have stayed at the hotel more than twice) well be invited for a free
weekend if they take part in a focus group session to discuss the hotel.

Beyond the room offerings, a wide range of additional services and amenities will be offered, some
with extra charge and some free with room rental. These include:

 In room dining
 Complementary gourmet continental breakfast and coffee
 Valet parking
 Wireless internet (free throughout the hotel)
 Restaurant and lounge

All of these services and amenities are available to all visitors at the hotel.

2. PROMOTION
The center will send news releases to local media and press, as well as trade magazines to try gate
product and company feature coverage in front of the eyes of our customers as well as the end
consumer. We will also produce a few generic press releases about the products we offer for our
customers to use toward publicity coverage for their businesses in local publications.

The marketing and sales officer works with an outside advertising (marketing and promotion)
companies and other service providers as needed to implement all marketing activities. The sales
man will spend at least one hour a day on the marketing “theme” of the month to ensure that these
major systems are reviewed every year.

The marketing and sales persons will also track marketing results on a weekly basis to judge key
metrics against actual outcomes.

2.1 PRICING AND DISTRIBUTION

The pricing of house depends considerably on the quality of houses available for sale. It is vary
accordingly its usage, quality and its location. The relatively charge price of houses in Shama
town, which range birr 442,500 for 12m 2 wide classes, birr 854,000for 40m2 wide classes, and birr
17,000-17,500 for 120m2 classes for commercial purpose, in general the project an average price
of birr 442,450, 853,950, and 17,450 respectively.
10 | P a g e
 Project Proposal for commercial center
2023

The rental service pricing of classes also depends considerably on the quality of house available
for rental service varies accordingly on its quality and its location.

2.2 SALES STRATEGY

2.2.1 SALES STRATEGES

The sales strategy will be based on generating long-term relationships with customers. To facilitate
and provide superior customer service, all sales agents will be trained to provide friendly,
knowledgeable customer service. By keeping to these simple, yet effective, businesses practices,
we expect that our customers will make our services and products their exclusive source for
standard hotel service and medication, so establishing long-term relationships will ensure a large,
loyal customer base.

The management team will be responsible for providing full service and delivery of the services to
customers, but also make sales contact for potential new business. Sales or Reservation orders for
the services can be placed in a number of ways to help facilitate the process:

 Phoned Orders: Customers can easily phone orders into our office.
 Faxed Orders: Customers can fax in a completed service
 Tel-Sell: Customers may choose to have a representative from the office call them the day
prior to their scheduled delivery to check the services availability and assist them in placing
their order.

2.2.2 SALES FORCAST

The sales are forecast based on the following assumptions;

 The selling price for each class room and rental service are increased by 10% in each year
of the forecasted period
 The capacity utilization of the G+4 mixed use building at full capacity, which is consisting
of 12m2 wide 56 classes for different business, 40m 2 wide 12 classes cafe and restaurant
120m2 wide 4 meeting hall and 40m 2 wide 1 classes in each floor for sales equal amount
per annum.

11 | P a g e
 Project Proposal for commercial center
2023

 The average monthly sales is taken in to account for the forecast of the total sales of each
classes and rental services based on the beginning year monthly average sales assumptions
to the total forecasted years.
 Cost of house sold were 5% of the revenue,
 Costs of rented class service were forecasted as 4% of the service sales.

3. CAPACITY AND SERVICE PROGRAM

3.1 Plant Capacity

The proposed project build and development of G+4 mixed use building at full capacity, which
is consisting of 12m2 wide 56 classes for different business, 40m2 wide 12 classes cafe and
restaurant 120m2 wide 4 meeting hall and 40m 2 wide 1 classes in each floor for sales equal
amount per annum.

4.1 Production Program

Plant will start operation at 33.33% of its installed capacity during the first year, and will increase
production to 66.66% in the second year, and then it will increase to 100% in the third year. The
proposed production programmed is given in table 4.6

Table 4.6:- production programmed at different capacity utilization rate

S.NO Descriptions of services Year 1 Year 2 Year 3

Capacity utilization 33.33% 66.66% 100%

1 12m2 wide classes for different 56 56 56

business
12 | P a g e
 Project Proposal for commercial center
2023

2 40m2 wide class rooms for cafe and 12 12 12

restaurant
3 120m2 wide class room for meeting 4 4 4
hall
4 40m2 wide class rooms for common 4 4 4
use
Total 76 76 76

7 MATERIALS AND INPUTS

a. Raw and Auxiliary Materials

The principal raw material for development of G +4 commercial center building is construction
material which is fulfilled by contractor.

Utilities:- a number of utilities would be put in place in order to ensure smooth functioning of the
project. These utilities include

 Water supply
 Electricity power
 Telephone service

Table 5.1 annual utilities required estimated cost

NO description Unit measurement Quantity Unit cost in birr Total cost in birr
1 Water supply M3 11,000 9 99,000
2 Electricity KW 15,000 6.335 95,025
3 telephone Month 12 2500 30,000
Total 224,025

8 TECHNOLOGY AND ENGINERING

a) Building and Civil Works

This profile envisages the establishment of a plant for the development of G+4 commercial center
building is a building usually providing 12m2 wide 56 classes for different business, 40m2 wide 12
classes cafe and restaurant 120m2 wide 4 meeting hall and 40m2 wide 1 classes in each floor in four
13 | P a g e
 Project Proposal for commercial center
2023

phases at equal amount per annum. After and till next 5 year except construction other operations
would continue. Construction cost of first year is estimated at birr 138,533,500

Table 6.1 list of building and civil works and their costs

NO Description Building area in Unit cost Total construction cost

m2 per m2
1 Building of ground 3,000 8,830 000,094,62
2 Building of 1st floor 3,000 7,840 000,025,32
3 Building of 2nd floor 3,000 7,990 000,079,32
4 Building of 3rd floor 3,000 7,217 000,156,12
5 Building of 4th floor 3,000 7,800 000,004,32
6 Building of meeting 2,500 7,801 005,205,91
hall
Total 138,533,500
Land lease 607,509

9 ORGANIZATION AND MAN POWER PLAN

A. Organizational structure
The organizational structure of the business was designed based on the functions of the overall
business towards the achievements of the setting objectives and selecting the best way of managing
the organizations resources (human resource, capital, information and technology) effectively and
efficiently. In addition to the above mentioned bases of the organization structure design, the
intentions of the business and the external economic situations of the area taken in to account. By
considering all of the above, the skeleton of the organizational structure is shown in Fig 8 below.

Fig 5:- Organizational Structure

14 | P a g e
 Project Proposal for commercial center
2023
General Manager

Secretory

Operation and Customer service head Finance and Administration

B. Man Power Plan

The project plan to create job opportunities for 6 permanent employees and 115 temporary
laborers during construction time. The total manpower requirement of the plan will be 121 and
the annual cost is estimated to be about birr 342,000. The proposed man power requirement of
the center is depicted in the following table.
Table 7.1:- MANAPOWER REQUIREMENT

No. of Monthly
S.N Job title qualification Yearly Salary
Post Salary
1 General Manager 1 8,000 96,000
2 Project manager 1 7,500 90,000
Administration &
3 1 5,500 66,000
Finance
4 Personnel 1 3,000 000,63
5 Sales man 1 2,500 000,03
6 Secretary 1 2,000 24,000
Total 6 342,000

10 FINANCIAL STUDY
The main components of the project activities consist of building and civil works, machinery and
equipment, Vehicles, office furniture and other equipment, land lease &installation of equipment
etc. all these activities constitute fixed investment. Other components including purchase of Row
material inputs, utilities and other costs of recurrent activities constitute production cost of the
project.

15 | P a g e
 Project Proposal for commercial center
2023

10.1Fixed Investment cost

1. Building and civil works

The cost of building and construction is one of the major cost components of fixed costs. The
construction cost of building is not based on actual specifications and engineering cost estimate (bill
of quantities). Considering the prevailing local contractors average unit cost of the project area
building and construction cost is estimated Birr 138,533,500. The detail is shown above in Table
6.1:

2. Office furniture and other equipment

Office furniture and equipment to be purchased includes office tables, chairs, shelf, filing cabinet,
computers with accessories, cash safe and other miscellaneous equipment’s. Description and cost
estimate is birr 119,500 shown in table below.

Table 8.1. : cost of office furniture and equipments

Cost of
Type of Equipment Quantity Unit Price Equipment
Executive Tables 1 25,000 25,000
Executive Chairs 1 7,500 7,500
File Cupboards 1 8,000 8,000
Office Tables 2 8,500 17,000
Visitors Chairs 4 2,500 10,000
Computers 1 22,000 22,000
Printers 1 15,000 15,000
Telephone line 1 15,000 15,000
Total 119,500

3. Summary of fixed costs

Table 8.1.e Summary of fixed costs

S/n Description Cost estimate(Birr)

1 Land lease, 139,141,009
16 | P a g e
 Project Proposal for commercial center
2023

Building &
constructions
2 Office furniture and 119,500
other equipment
Total 905,062,931

10.2Production Costs
Production cost of the project includes direct production costs and administrative costs. The major
cost items under this include cost of goods/ service sold, salary of employee, utilities, fuel and oil
and lubricants, repair and maintenance, office supplies and others miscellaneous expenses are
estimated birr 874,671.

1) Raw and Auxiliary materials

The principal raw material for the developments of commercial center is construction material,
which is fulfilled by selected contractor. As a result no cost charged.

2) Salary Expense:
The annual salary expense for 42 permanent employees including benefits are calculated to be birr
342,000 per year.

3) Utilities:
A number of utilities would be put in place in order to ensure smooth functioning of the project.
These utilities including water supply electricity power and telephone service. Annual cost of
utilities at full capacity is birr 224,025 shown in table: 5.1

4) Travel and Perdium

It is each assumed to be 10% of annual salary expense birr 318,000 of birr 31,800

5) Insurance:
It is assumed to be 0.75% of fixed investment cost (117,178,000) = is birr 878,835/year
6) Miscellaneous Expense:
It includes cost of postage, audit, legal and license fees, and other miscellaneous expenses. The total
annual cost of these cost components is estimated at birr 5,500 birr/year
7) Summary of production costs of five year
Table 8.2.8: Summary of production costs of five year estimate

S/N Cost Item Annual cost in birr

17 | P a g e
 Project Proposal for commercial center
2023

Direct cost of
A 1 2 3 4 5
production
0 0 0 0
1 Raw material 0

0 0 0 0
2 Annual wage 0
Subtotal of direct cost
Overhead cost
1 Salary 318,000 333,900 350,595 368,125 386,531
224,025
2 Utilities 235,226 246,988 259,337 272,304
3 Travel and perduim 31,800 33,390 35,060 36,812 38,653
0 0 0 0
4 Repair and maintenance 0

186,666 186,666 186,666 186,666

5 Interest expense 186,666
6 Office supplies 15,000 15,750 16,538 17,364 18,233
Miscellaneous expense 5,500 5,775 6,064 6,367 6,685
Subtotal/B/ 780,991 810,707 841,910 874,671 909,072
780,991 810,707 841,910 874,671 909,072
Total/A+B/

a) Initial Working capital

Table 8.2.9: Determination of initial working capital

18 | P a g e
 Project Proposal for commercial center
2023

S/N Cost Item Annual cost in birr Period Initial working

capital

1 Raw material 0 0 0

2 Annual wage 0 0 0

3 Salary 318,000 1 year 318,000

4 Utilities 224,025 1 year 224,025

5 Travel and perduim 31,800 1 year 31,800

6 Repair and maintenance 0 1 year 0

7 Interest expense 186,666 1 year 186,666

8 Office supplies 15,000 1 year 15,000

9 Miscellaneous expense 5,500 1 year 5,500

Sub total 780,991 0 780,991

Total 780,991 780,991

b) Project capital and financing

The total investment capital of the project is estimated at birr 140,000,000 of which birr
139,219,009 (99.44%) is for fixed investment items while the remaining balance of birr 780,991
(0.56%) will be initial working capital. Out of the total investment cost of the project 30%
equivalent to br. 42,000,000 financed by the owners’ equity and the rest 70% equivalent to birr
98,000,000 financed through bank loan.

8.1 Depreciation of fixed investment items:

The straight line method has been used to depreciate/amortize all fixed items of the project. The
deprecation cost estimated birr 7,002,650.

Table 23: fixed asset depreciation schedule.

Depre.Expense
s/n Description Total cost Depr.rate

19 | P a g e
 Project Proposal for commercial center
2023

1 Building & 139,141,009 5% 6,987,050

constructions
2 Office furniture 78,000 20% 15,600
and other
equipment
Total 139,219,009 7,002,650

8.2 Revenue projection

As indicated at previous sections the company will compare its prices with the other competitors in
the competitive market as a the bases of the revenue estimate the prevailing average price and the
revenue from sales of services is estimated as follows the sales are forecast based on the following

Assumptions:

 The price for each services and items are increased by 10% in each year of the forecasted
period
 The capacity utilization of the will be 60% 80% and 100% for the first to third years of the
forecasted period.

Table 8.3: projected project revenue in birr

20 | P a g e
 Project Proposal for commercial center
2023

Projection year
S.N Service Unit
Year-1 Year-2 Year-3 Year-4 Year-5
O Description measure
Capacity 100 100
1 In % 36 85 100
utilization
12m2 wide’s
class rooms
for different
no 56 112 168 224 224
business
available for
rental service
2
Unit price per
birr 15,000 15,750 16,537.5 17,364.375 18232.59
house
Revenue from
sale of rental
Birr 10,080,000 21,168,000 33,339,600 46,675,440 49,009,212
service of villa
house
40m2 wide’s 12 24 36 48 48
class room for
café
Birr
restaurant
available for
3 rental service
Unit price per 22,000 23,100 24,255 25,467.75 26741.1375
Liter
house
Revenue from
sale of middle Birr 3,168,000 6,652,800 10,478,160 14,669,424 5,402,895.2
class house
120m2 wide’s
classes rooms
for meeting
Birr 4 8 12 16 16
hall available
for rental
4 service
Unit price per
Birr 146,000 153,300 160,965 169,013.25 177,463.91
house
Revenue from
sale of lower Birr 7,008,000 14,716,800 23,178,960 32,450,544 34,073,071.2
class house
Revenue from
5 Birr 20,256,000 42,537,600 66,996,720 93,795,408 98,485,178.4
total sales

21 | P a g e
 Project Proposal for commercial center
2023

11 FINANCIAL EVALUATION
A. PROFITABILITY

According to the projected income statement /see table 8.3/, the project will generate profit
beginning from the first year of 0peration. Important ratios such as the percentage of net profit
to total sales, net profit to equity are optimistic in the first and gradual rise with period of
operation/return on equity/ and net profit and interest on total investment(return on total
investment) are positive and gradually at rising. The income statement and other profitability
indicators show that the project is viable.

Table 9.A: The project projected profit/loss statement in birr

Description Project year

1 2 3 4 5
Gross sales 202056000 42537600 66996720 93795408 98485178.4
Less
production 780991 810707 841910 874671 909072
costs
Less interest
8299689 7469720 6639752 5809783 4979814
expense
Gross
11175320 34257173 59515058 87110954 92596292
income
Less: 7002650 7002650 7002650 7002650 7002650
Depreciation
Profit before 530470 28386573 53644458 81240354 86725692
tax
Less: income 1591416 8515971.9 16093337.4 24372106.2 26017707.7
tax (30%)
Net profit 3713304 19870601 37551121 56868248 60707985

B. Break-even point: - the breakeven point of the project is estimated by using income
statement projection. The project will breakeven at 44.59 % of capital utilization.
C. PAY BACK PERIOD

The pay –back period also called pay off period is defined as the period required for recovering the
original investment outlay through the accumulated bet cash flows earned by the project

22 | P a g e
 Project Proposal for commercial center
2023

accordingly based on the projected cash flaw if estimated that project initial investment will be
fully recovered with in 4consecutive years.

D. INTERNAL RATE OF RETURN AND NET PERSENT VALUE

Based on the cash flow statement the calculated IRR of the project is 44.98% and the bet present

Valve at 15% discount rate is birring 14347286.

12 PROJECT IMPLEMENTETION SCHEDULE

The successful implementation of any project proposal depends on the planning of core activities to
be performed during the project phase and meeting the desired result by close follow up And due
attention,

Therefore, considering that the basic assumption will be realized, the pre operation activities to be
undertaken with their corresponding time table set for the implementation of the project are
presented here under.

Table 10:- Project implementation schedule

No Item Description Month (starts from Apr 2023)

1 2 3 4 8 10 12 14 16 20 22 24

1 Applying & getting, land, the bank loan

2 Contacting fur & Equip suppliers

3 Construction of civil works

4 Plant & machinery erection

5 Man power requirement

23 | P a g e
 Project Proposal for commercial center
2023

6 Purchase of fixed assets & raw for the

service materials

7 Final preparation

13 ENVIRONMENT IMPACT ASSESSMENT

Most projects have environmental impact that creates serious or irreparable pollution and damages
that results the close down of the project. The proposal presented for this project has given due
emphasis and consideration for the environmental impact the project might encounter. This is done
by implementing comprehensive and exhaustive criterion during technology and machinery
selection that could overcome the problem. Therefore, the potential risk related with the negative
environmental impacts of this project are seriously considered and it is risk free.

14 CONCLUSIONS AND RECOMMENDATION

CONCLUSION

Therefore this project feasibility study is compiled and submitted based on the facts and figures by
summarizing the need and the call by the existing potential market to create opportunity for a better
supply of the envisaged product moreover depending on the acceptability and achievement of the
product in it first phase additional marketable related product may be introduced in the future.

RECOMMENDATIONS

The profitability of this business is out of question as clearly demonstrated by the financial
projection, which projections are actually very conservative with regard to the assumptions on
operating cost of sales and selling price this was done deliberately so that the bank can see the
profitability of the operation even under the mosey conservations. The project is found to be
profitable throughout its life with sufficing capacity to repay the requested bank loan (principal
plus interest) and operational costs the financial analysis shown that this project is financial viable
bankable and worth investing and therefore implementation of the project entails no financial risk

24 | P a g e