REVOLUTION MIXED BUILDING

KOMBOLCHA, ETHIOPIA

DATE: 01/12/2016 E C

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Table of Contents
1. Executive Summary ...............................................................................................1
2. Introduction ............................................................................................................2
2.1 General Background .........................................................................................2
3. Project Objectives ..................................................................................................3
3.1 General Objective .............................................................................................3
3.1.1 Specific objective........................................................................................3
3.2 Project description ............................................................................................3
3.4 Project Rationale ...............................................................................................4
3.5 The significance of the project .........................................................................4
3.6 Project Location ................................................................................................5
4. The market Study ...................................................................................................5
4.1 Market Analysis ................................................................................................5
4.2 The Demand-Supply Gap .................................................................................6
4.3 Current supply of mixed use building ..............................................................6
4.4 Future market or Demand of commercial Building rental ...............................6
4.5 Target customers ...............................................................................................7
4.6 Marketing promotion and strategy....................................................................7
4.7 Competition.......................................................................................................8
4.8 The project facilities and Services plan ............................................................8
5. Technical Studies ...................................................................................................9
5.1 Description of the project Service ....................................................................9
5.1.1 Land Use Plan .............................................................................................9
5.2 Construction work and Technology................................................................10
5.2.1 Construction schedule...............................................................................10
5.2.2 Architectural Design & Layout ................................................................11
5.2.3 Structural design .......................................................................................11
5.2.4 Reinforced concrete ..................................................................................12
5.2.5 Foundation Design ....................................................................................12
5.2.6 Construction Plan and process ..................................................................12
5.3 Utilities ............................................................................................................13
6 Engineering and civil works .................................................................................14
6.1 Land, Building and Civil Works .....................................................................14
6.2 Manpower and training requirement ..............................................................15
6.2.1 Manpower requirement.............................................................................15
6.2.2 Labor Availability .....................................................................................16
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 6.3 Project implementation ...................................................................................16
6.4 Organizational Structure .................................................................................17
6.4.1 Organization and management ....................................................................17
6.6 Financial Requirement and Analysis ..............................................................20
6.1 Fixed Investment.............................................................................................21
7. Financial analysis .................................................................................................24
7.1 Repair and Maintenance Cost .........................................................................24
7.2 Depreciation and Amortization.......................................................................25
7.3 Total Revenue .................................................................................................25
7.4 . Payback Period .............................................................................................25
7.5 Cash flow ........................................................................................................25
7.6 Benefit cost ratio .............................................................................................26
7.7 Internal Rate of Return ...................................................................................26
7.8 Net present value ............................................................................................27
8. Conclusions and Recommendations ....................................................................27
Conclusion ............................................................................................................27
Recommendations .................................................................................................28

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List of table
Table 1: general information ……………………………………………………...…….1
Table 2: The plan is that the ground will be partitioned in to different rooms……. …..8
Table 3: land utilization Plan…………………………….………………………..…….9
Table 4: Utilities………………………………………………………..………………..12
Table 5: List of Building and Civil Works and Their Costs …………………................13
Table 6: Manpower Requirement and Annual Labor Cost…………………………..….14
Table 7: project Implementation schedule…………………………………………...….15
Table 8: Land, Building & Construction…………………………………………...……19
Table 9: Building Machineries and Equipment’s ………………………………….……19
Table 10: Vehicle ………………………………………………………………………..19
Table 11: Office Equipment’s ………………………………………..…………………20
Table 12: Summary of Total Initial Investment Cost ………………….……….……….21
Table 13: Repair and Maintenance Cost …………………………………..………..…..23
Tables 14: annex …………………………………..………………………………..…..24

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 GENARAL INFORMATION
PROJECT OWNER REVOLTION
PROJECT TITLE MIXED USE BUILDING/MOULE/
LAND REQUIREMENT 7,500 M2
PROJECT AREA KOMBOLCHA TOWN,BOREKENA S/
CITY
PRODUCTION CAPACITY 1 BASEMENT AND G+7
PRODUCTS TO BE MANUFACTURED RENTAL ROOMS

MARKET DOMESTIC AND INTERNATIONAL

EMPLOYMENT OPPORTUNITY 200 INDIVIDUALS ON PERMANENT
100 ON CASUAL BASIS
COST OF THE PROJECT 200,000,000 ETH. BIRR
OWNER EQUITY (20%) 40,000,000 EH.BIRR
BANK LOAN (80 %) 160,000,000 ETH.BIRR
PROJECT LIFE 5 YEARS
NUMBER OF WORKING DAYS 365 DAYS
FINANCIAL VIABILITY ( AT 10% DISCOUNT RATE )
NPV (NET PRESENT VALUE) 1,182,111,844.25 BIRR
IRR (INTERNAL RATE OF RETURN) 53.11%
PBP ( PAY BACK PERIOD) 3 YEAR
ANALYSIS RESULT
THE PROJECT IS TECHNICALLY FEASIBLE, FINANCIALLY AND
COMMERCIALLY VIABLE AS WELL AS SOCIALLY AND ECONOMICALLY
ACCEPTABLE. HENCE, THE PROJECT IS WORTH IMPLEMENTING.

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1. Executive Summary
The profile shows the establishment of a serviced mixed-use building. The construction is to be
established in Kombolcha City Administration Area. The project has been launched keeping in
view the overall encouraging favorable investment climate as well as the untouched broad
market environment for the service. Despite promising business opportunities in the city, the
trend of such investment has been low. As there are no such modern facilities and business
center to handle the existing service needs in the city and its surroundings. The imbalance
between the demand and supply of this type of service in the city is easily noticed. Therefore, the
lack or absence of these services, along with commercial and administrative access, better
location and access to infrastructure, urban expansion and business activity trends, is the reason
why this project has been identified and proposed. It is considered more profitable.

In the envisioned mixed-purpose building, different types of rental services will be provided to
different groups of customers in order to cater to their specific needs. The building will have a
basement, a ground floor, and seven floors. The purpose of the building is explained as follows:
the ground floor, first floor, second floor, and third floor are designed for different business
centers like banks, supermarkets, beauty salons (men and women), computer centers,
pharmacies, internet cafés, boutiques, different shops, and other business activities. There are
four floors for offices.

Owner of the project Quality project title Mixed use building, required land area 7,500 m2
project area kombolcha town, production capacity two basements and g+7 products to be
manufactured as rental rooms for domestic and international markets cost of the project capital
200.000.000 life of the project 5 years, Financial viability (at a 10% discount rate) NPV
1,183,228,988 birrs, The internal rate of return is 42.6%, the payback period is three years and
eight months according to the analysis, and the project is technically feasible, financially and
commercially viable, and socially and economically acceptable. Therefore, the project is worth
implementing.
2. Introduction
2.1 General Background
The current fast and dynamic economic growth of Ethiopia especially in Kombolcha 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 Kombolcha since dynamic economic development of urban economy requires the construction
of these buildings in the city to support the growing of business service sectors like
supermarkets, Beauty salon, shops, offices cinemas, Computer Center, Cafeterias, restaurant,
assembly hall, apartments and other activities. In this regard, mixed used building expands in the
all parts of the city. Investment and property development play an important role in any
emerging markets or economies. Property generally comprises commercial property (mainly
mixed us buildings) developed for rental business. The property investment market in kombolcha
town remained underdeveloped for several years.

As a consequence, office space, shopping malls, and catering services in the urban centers of the
town are disproportionately low to cope with the growing demand in the country spinning from
the average growth. This certainly spurs large demand in the property market for office space,
shopping malls, catering services, apartments, and residential houses. Following growing
demand trends, and with the expectation of a high return on their investment capital, a large
number of land developers pooled their financial resources and invested in the property market.

To this effect, the owner of the envisioned Revolution Mixed Use Building who has been living
for a long time in this city, planned to construct in kombolcha City Administration and undertook
this project study to check the market, technical and financial feasibility of this project, the
promoter is very ambitious and committed to realizing the project. Hence, they expect to get the
necessary support from the city administration to make the project to be operational. Besides, the
government policies and incentives for private sector investment are very promising that
motivate the promoter to engage in the mixed-use building business.

3. Project Objectives
3.1 General Objective
The major goal of this project is to contribute towards the growth of the trade sector in
Kombolcha. Its specific objectives include the following.

3.1.1 Specific objective

 To construct and develop modern different shops, offices, restaurant & cafeteria facilities
that enable to provide standard services to customers.
 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 full services on city standard.
 To create employment opportunities.
 Contribute towards the beautification of the city through the construction of modern
building infrastructure and facilities.
 To establish economically viable, socially acceptable and environmentally friend mixed
use Apartment.

3.2 Project description

The long-term goal of the project is become the best choice trade center in the city. The proposed
project will have a total area of 2.23m2, designed to reader a multipurpose giving business,
which will in turn plays significant role towards solving shortage of business center in
Kombolcha.

The owners plan the project to render banking and insurance, shopping facility, offices 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 apartments, restaurant and café.

3.4 Project Rationale

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 the city, the trend of such kinds of
investment was found to not be enough. The mismatch between the demand for and supply of
such kinds of services is easily observed in the city.

Therefore, the existing shortage or absence in the supply of these services, along with its
commercial and administrative access, better location and infrastructure access, and escalating
trend of urbanization and business activities, thus it is a such reason that this project is identified
and proposed and assumed to be more profitable.
In general, the country’s privatized and free market economy; good governance create a
favorable environment for the development of investment for private investors.

3.5 The significance of the project

The envisaged project deemed to add to the economic development of the city in general 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 city.
 B. Employment opportunity
One of the problems that our country faces is unemployment. Therefore, the current objective of
the government is to work on tackling the problem of unemployment and fostering the
development process either through creating self-employment or employment in other
organizations. Hence, this project will hire 164 individuals on a permanent and also hire more
than 100 individuals during construction.

3.6 Project Location

The license area is located in Kombolcha City Administration The total area of the project is
7,500 m2.

4. The market Study

4.1 Market Analysis
There are a number of factors that affects the demand for the standardized mixed-use building.
Of these factors, the most important to influence are population growth and the level of income.
The currently expanding service industry in Kombolcha and from every corner of the city has
been inviting skilled and unskilled labor forces to the center. Above all the increase in the
population increases the provision of different services. Nowadays, most private business
organizations need their own small-medium offices in order to give their services and provide
their products, and they prefer a place that is found in the center or close to the road.

Located in the Amhara National Regional State, Kombolcha is an economically important city as
it serves as the industrial hub of the country. Though the market demand gap for a mixed-use
building is not clearly understood there is a wider gap for such demand as many merchants, and
organizations are flouring to the city every day. From prior business experiences, the demand for
mixed-use buildings is very high and hence the demand and the supply gap is very wide.
4.2 The Demand-Supply Gap
There has been significant growth in the number of local and international trades across the
country. This increase is mainly associated with the stimulation of economic activism due to an
increase in the flow of local traders into the kombolcha. Since Kombolcha is an important
commercial center in addition there is a significant increase in business activities and the
industry hence increasing the number of traders. Even though there is a lack of quantitative
estimates that depict the actual demand and also the annual growth rate commercial facilities are
scarce in the city. As a result, there is a large gap between the developed and the supply of
modern 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.

4.3 Current supply of mixed use building

The commercial building/office sector has shown a dynamic change in the past few years. The
reason for this could be rapid economic growth and 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 Kombolcha in booming highly due to the recent rapid
growth experienced in Ethiopia. As a result, a good number of local and international
organizations are coming into place. Government offices which used to operate in limited spaces
all over the city are also concentrating on leasing new and modern buildings. Gradually
increased local and International organizations 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.

4.4 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 or
national economy.
Following our survey of office space users in several areas are mainly firms providing Mainly
banking organizations, offices (NGO`s and GOs), cinemas, cafeterias and restaurants,
supermarkets, computer center services, internet cafes, beauty salons (men and women),
boutiques, various shops and other commercial establishments, activities, pharmacies, meeting
hall, apartments and other activities. 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.

4.5 Target customers

The target customers of this envisaged project include:-
1. Business Community
2. Business organization
3. The government bureau
4. Non-governmental organizations

4.6 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.

4.7 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 to cope 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 rendering the service, their customer handling methods, and others. Generally, the
project has many other projects all over Kombolcha villages that compete with it.

4.8 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, offices, restaurant and café service as
well as modern business center that primarily serve its guests and major clients.

Table 2: The plan is that the ground will be partitioned in to different rooms:

Unit price in
Building Description Measure Total
Birr
Basement Parking Service Cars 5/per hour 5*330*365 = 616,500
Supermarket, Pharmacy,
Ground 1 and 2 M2 350 350*7,500*12*2 = 63,000,000
Banking & Insurance
1st floor -3rd Beauty salon, shop, M2 224 224*7,500*12 = 20,160,000
floor Computer Center,
Cafeteria and Restaurant
4th floor -7th Different governmental
M2 219 219*7,500*12 = 19,710,000
floor and other offices
Total 103,486500.00

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 and restaurant.
Therefore, the sources of revenue have been classified in to one category namely the rental of
banking and 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 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
103,486,500.

5. Technical Studies
5.1 Description of the project Service
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 twelve
floors. The purpose of the building explained as follows;

 The ground floor, first floor second floor and third 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,

 4-7 floors designed for Offices.

5.1.1 Land Use Plan

The total land required for the envisioned project is estimated to be 10,000m2. The total area for
the construction of the building will be 5,000m2, as revealed below.
 Table 3: land utilization Plan

Land M2
No Description
Basement Ground First floor- Greenery and
Ten floor parking area
1 Building (G+7)
1.1 Basement 4,500m2
1.2 Ground 4,500m2
1.3 First floor-Twelve floor 4,500m2
1.4 Greenery and parking 3,000m2
Total Land M2 7,500m2

5.2 Construction work and Technology

5.2.1 Construction schedule
The construction project is proposed to be started on 2017e,c and is expected to be finished on
July 2020 e.c. As seen in the abbreviated construction schedule above, a majority of the
schedule’s time is made up of five major activities; concrete, building Enclosure, masonry,
mechanical 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 will 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.

5.2.2 Architectural Design & Layout

Although functional spaces for the project were laid out in significant detail, the rest of the
building had designated spaces but 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
building’s layouts were practical, the project owner researched typical architectural layouts for
laboratory and executive office spaces. The walls and partitions throughout the floor will
congruent with the structural frame and column locations.

5.2.3 Structural design

One of principle deliverables of the project is the structural design of the building. The structural
bays were coordinated with the layout of the building adjustments will be made to the bays if
specific layouts are necessary. The frame will be 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 will completed for two frames; one of structural steel and one of
reinforced concrete. The structural steel frame will chose for further design based on cost per
square foot, local availability of material and constructability considerations, such as erection
and fabrication. The steel system will then designed for lateral loading with necessary adjustment
being made to framing.
5.2.4 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 9 pounds per
square foot will be 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 1000 pounds per square was assumed. Loads will be calculated based on the
requirements of the minimum Design loads for Buildings and other Structures.

5.2.5 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.

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.

5.2.6 Construction Plan and 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 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 owners 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.

5.3 Utilities
A number of utilities world be put in place in order to ensure smooth functioning of the project.
These utilities include:

Table 4: Utilities
No Description Qty. Unit cost Cost (Birr)
1 Electricity supply, kWh 100,000 2.70*100,000 270,000
2 Water Supply m3 33,600 10*33,600 336,000
Telephone and Internet
3 72,000
Broadband
4 Fuel, Oil and lubricant 5,000 72*5000 360,000
Total 1,038,000
6 Engineering and civil works
6.1 Land, Building and Civil Works
The Mixed use building has a total site area of 7,500 m2. The building floor area has covered
4,500m2 and the remaining 3,000 m2 is left for construction. The type of buildings and its
corresponding civil construction cost is given on Table 5.

Table 5: List of Building and Civil Works and Their Costs

No Description Total price
A. SUB-STRACTURE
1 excavation and earth works 2,644,689.23
2 concrete work 24,742,679.96
Sub total 27,387,369.19
B. SUPER STRACTURE 0
1 Concrete work 64,748,922.94
2 Block work 5,920,998.88
3 Roofing 1,754,998.76
4 Carpentry and joinery 2,889,649.41
5 Metal works 708,275.66
6 Finishing 17,668,989.88
7 Painting 2,909,989.87
8 Electrical installation 18,946,898.27
9 Sanitary installation 8,876,546.03
Subtotal 114,425,269.7
A+B 141,812,638.89
Vat (15%) 22,771,895.8335
Grand total 164,584,534.7235

As shown in Table 5, the total cost of building and civil work is estimated at Birr
174,584,534.7235.
6.2 Manpower and training requirement
6.2.1 Manpower requirement
The list of manpower and the annual cost of labor is indicated in Table 6.

Table 6: Manpower Requirement and Annual Labor Cost

Monthly Annual
S.N Position No Qualification Salary in Salary in
Birr Birr
1 General manager 2 BA in management 10,000 240,000
2 Building admin 5 BA in Acct/Mg`t 7,500 450,000
3 Secretary 4 10+2 in secretariat science 3,000 144,000
4 HRM Officer 3 10+2 in HRM/Management 4,000 144,000
Technical and
5 5 Diploma in building maintenance 7,000 420,000
maintenance manager
6 Finance head 5 BA in Accounting 6,000 360,000
7 IT Technician 3 Diploma in computer science/IT 6,000 216,000
8 Marketer 8 Diploma in marketing 5,000 480,000
9 Accountant 6 Diploma in accounting 4,000 288,000
10 Guards/Security 40 Basic 2,500 1,200,000
11 General Service head 5 Diploma in Management 6,000 360,000
12 Purchaser 4 Diploma in purchasing &Sup Mgt 3,500 168,000
13 Electrician 8 10+2 in general electricity 4,000 384,000
14 Plumber 9 10+2 in general mechanic 3,500 378,000
15 Casher 10 10+1 in bookkeeping 3,500 420,000
16 Cleaner 25 Unskilled 2,000 600,000
17 Maintenance officer 8 10+2 in General mechanic 3,438 330,048
18 Driver 4 10 completed 2,500 120,000
Total 164 85,000 6,702,000
Benefit (20%) 17,000 1,340,400
Grand Total 102,000 8,042,400,
6.2.2 Labor Availability
Workers for this type of plant are available throughout the year. No foreseeable problems are
expected as most of the work requires no previous skills.

6.3 Project implementation

The project’s implementation is expected to take 36 months. The major activities include Bank
loan processing construction of the building, cleaning the area around the building, Procurement
of equipment, and starting rendering services. The time schedule for major activities is presented
below:
Table 7: project Implementation schedule
SN Activities Date

1 Preparation Project Proposal 2017

2 Bank loan processing 2017

3 Site Development 2017

4 Building and construction work 2018 - 2020

5 Preparation for service 2020

6 Service execution 2021

6.4 Organizational Structure
6.4.1 Organization and management
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 the owners.

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 department 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 Manager’s 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

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 employee’s 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

 Works in collaboration with general service to make sure tenants are well served
 Figure 1.organizational structure

6.6 Financial Requirement and Analysis

The financial resource is a prime resource for undertaking any activities. Hence for
implementing this mixed use building a total of 200,000,000.00 Eth.Birr is required. From this
20% .00 birr will1 40,000,000.00 be covered by the promoter of the project while the rest 80%
(160,000,000.00) will be covered through loan from bank at the prevailing interest rate.

Therefore the said amount of finance is needed for undertaking the following.

6.1 Fixed Investment

A. Land, Building & Construction
Table 8
S.N Description of works Total Cost in birr
1 Building construction 164,584,534.7235
2 Site Development 2,300,000.00
3 Design and supervision 2,250,000.00
st
4 1 Year land lease 2,400,000.00
Total 171,584,534.7235

Building Machineries and Equipment’s

Table 9
Unit cost in Total cost in
SN Description Measurement Qty.
Birr Birr.
1 Generator Unit 1 1,000,000.00 1,000,000.00
2 Carpentry tool box Set 2 140,000.00 280,000.00
3 Electrician tools box Set 2 168,000.00 336,000.00
4 Plumber tools kit Set 2 145,000.00 290,000.00
Fire extinguisher
5 Unit 43 30,000.00 1,290,000.00
(Security Equipment)
6 Elevator Unit 1 11,750,000.00 11,750,000.00
Total 13,233,000.00 15,142,000.00
 .B .Vehicle
2. Table 10
Unit Cost in Total cost in
SN Description UOM Qty Remark
Fr. Birr

1 Mid-Bus Unit 1 2,500,000.00 2,500,000.00 Duty Free

Total 2,500,000.00

2. Office Equipment’s
Table 11
Total cost in
SN Description Measurement Qty. Unit cost in birr
Birr
1 Managerial tables Unit 1 20,500.00 20,500.00
2 Managerial chairs Unit 1 19,500.00 19,500.00
3 Office table with chair Unit 2 12,500.00 25,000.00
4 Secretarial table with chairs Unit 1 5,500.00 5,500.00
5 Computer with chairs Unit 1 20,000.00 20,000.00
6 Shelf Unit 1 800.00 800.00
7 Filing cabinets Unit 2 3,500.00 7,000.00
8 Guest chairs Unit 5 2000.00 10,000.00
9 Fax & Telephone machine Unit 3 2,300.00 6,900.00
10 Carpet and Curtain LS 3 12,000.00 36,000.00
Total 151,200.00

Working Capital
Operating Expenses
 Annual cost in
SN List of Items Assumptions Used
birr
1 Audit and legal fee 24,000 2,000 br./per, month
2 Stationery supplies 6,000 500 br./month
3 Promotional Cost 20,000 Lump sum annual cost
4 Property Insurance 900,000 1% of the building
5 Cleaning Supplies 7,200 600 br. Per month
6 Uniforms 12,000 12,000 br./per, annual
7 Water consumption 136,000 5600 m3
8 Electric consumption 170,000 100,000KWH
9 Fuel 120,000 1,000 lit. per year
11 Telephone & fax 12,000 1,000 per month
12 Repair expense 1,516,592 2% of building cost
13 Miscellaneous costs 18,000 1500 per month
Total 2,941,790.00
Pre-Service Expenses
SN Description Cost in birr
1 Project proposal
180,000.00
2 Licensing fee and others
Total 180,000.00

Summary of Total Initial Investment Cost

Table 12
SN Description Cost in Birr Percentage Share
1 Land, building & construction 171,584,534.7235 85.79%
2 Building machines & Equipment’s 15,142,000.00 7.57%
 3 Vehicle 2,500,000.00 1.25%
4 Office Equipment 151,200.00 0.07%
5 Total fixed investment cost 189,377,731.7235 94.68%
6 Salary expense 7,500,478.2765 3.75%
7 Operation Expense 2,941,790.00 1.4%
8 Pre service Expense 180,000.00 0.03%
9 Total Working capital 10,622,268.2765 5.3%
10 Sub total 200,000,000.00 100%
Total initial investment capital 200,000,000.00 100.0%

7. Financial analysis
The financial analysis of this mixed use project is based on the data presented in the previous
chapters and the following assumptions: -

Finishing period 5 years

Source of finance 20 % equity
Debt finance 80 % loan
Bank interest 13%
Discount cash flow 10%
Accounts receivable 30 days
Raw material (perishable) 3 days
Raw Material (non-perishable) 30 days
Cash in hand 5 days
Accounts payable 30 days
Repair and maintenance 5% of equipment cost
7.1 Repair and Maintenance Cost
The annual repair and maintenance cost of the plant is estimated based on the following rates.

Table 13: Repair and Maintenance Cost

Item Rate
Machinery and equipment 6% of the total cost or Book value
 Building and civil works 2.5% of the total cost or Book value
Utilities 6% of the total cost or Book value

7.2 Depreciation and Amortization

The following depreciation rates are applied to depreciate the assets of the project:
 Buildings and associated Civil works 6%, linear to scrap Value
 Machinery and Equipment’s 10%, linear to scrap Value
7.3 Total Revenue
Based on the projected profit and loss statement, the project will generate a profit throughout its
operation life. Annual net profit after tax increases from Birr 116,986,500 at the beginning of the
project to Birr 275,773,707. During the last year of operation year. The detail is presented in the
table below.

Income statement

The net profit after tax in the first operating year is 44,064,818.1. And the net profit after tax in
the last operating year is 154,305,193 birr.

7.4 . Payback Period

The payback period, also called pay–off period is defined as the period required recovering the
original investment outlay through the accumulated net cash flows earned by the project.
Accordingly, based on the projected cash flow it is estimated that the project’s initial
investment will be fully recovered within 3 year.

7.5 Cash flow

The projected cash flow of the envisaged project shows that the project would generate positive
net cash flows throughout the operation years. Cumulative cash flow generated by the project
towards the end of the first operation year will amount to Birr 84,455,799.18. At the end of the
project life, this amount will rise to Birr 191,122,381.78. The detail is presented in Annex.

7.6 Benefit cost ratio

The BCR is defined as the ratio of the sum of the project’s discounted benefits to the sum of its
discounted investment and operating costs.

When BCR > 1, accept the project

When BCR < 1, reject the project

When BCR = 1, be indifferent

n
Bt
 (1  r ) t
t 0
BCR  n
Ct
 (1  r ) t
t 0

BCR is 5 and positive this indicates this project would return 5 birr in benefits for each birr
spent.

Discounted Cash flow

7.7 Internal Rate of Return

The internal rate of return (IRR) is an indicator of the efficiency or quality of an investment. A
project is a good investment proposition if its IRR is greater than the rate of return that could be
earned by alternate investments or putting the money in a bank account. Accordingly, the IRR of
the project after tax is computed to be 46.2% indicating the viability of the project.
7.8 Net present value
Net present value (NPV) is defined as the total present (discounted) value of a time series of
cash flows. NPV aggregates cash flows that occur during different periods of time during the
life of a project into a common measuring unit i.e. present value. It is a standard method for
using the time value of money to asses’ long-term projects. NPV is an indicator of how much
value an investment or project adds to the capital invested. In principle a project is accepted if
the NPV is non-negative. Accordingly, the net present value of the project at 10% discount rate
is found to be Birr 1,182,111,844.25 birr which is acceptable.

8. Conclusions and Recommendations

Conclusion
The objective of this proposed feasibility study is primarily to facilitate the entrepreneur with the
investment information and provide an overview of the project. The proposed feasibility may
form the basis of an important investment decision and in order to serve this objective, the
document covers various aspects of Concept Development, Start-up, Production, Marketing,
Finance, and Business Management.

The feasibility is based on the information obtained from discussions with businessmen. For the
financial model, since the forecast/projections relate to future periods, actual results are likely to
differ because of the events and circumstances that don’t occur frequently as expected.

Whilst due care and attention have been taken in performing the exercise, no liability can be
inferred for any inaccuracy or omissions reported from the results thereof. It is essential that our
report be read in its entirety with the financial model in order to fully comprehend the impact of
key assumptions on the range of values determined.

The project is accessible and has the necessary infrastructure such as roads, telephones, water,
and electric power. The proposed project clearly identifies all the necessary equipment, inputs,
management of the company, and the required manpower. The highest authority in the project
will be vested in the hand of the owner. He will control the overall activities of the proposed
project. Demand projection divulges that there is high demand in the country.

The proposed project possesses a wide range of economic and social benefits such as increasing
the level of investment, tax revenue, and employment creation for both women and youths. It
will have also environmental concerns to protect it by planting trees around its working area and
by utilizing environmentally friendly raw materials. Generally, the project is technically feasible,
financially and commercially viable as well as socially and economically acceptable. Hence the
project is worth implementing.

Recommendations
Financial sensitivity analysis shows that the project is compassionate to a decrease in sales
revenue but relatively less sensitive to an increase in raw material and investment costs.
Different mechanisms should be selected and implemented to increase sales in this case. In
addition to this, the company should decrease its cost which lowers profitability. The project
must utilize modern promotional styles to capture the planned market share. To do so, it has to
design an effective strategy to achieve this plan.

Although due care and diligence have been taken to compile this document, the contained
information may vary due to any change in any of the concerned factors, and the actual results
may differ substantially from the presented information. In this case, any delay to implement the
project creates some problems with its profitability as there is always change like change in the
price of services and goods, cost of raw materials, customers' preference and purchasing power
etc.…. So, it is recommended that investors should implement the project as soon as possible
before any change occurs.
Annex 1: Total Net Working Capital Requirements (in Birr)

CONSTRUCTION SERVIES

Year 1 Year 2 1 2 3 4

Capacity Utilization (%) 0 0

1. Total Inventory 0 0

Raw Materials in Stock- Total 0 0 919,871 1,082,201 1,082,201 1,082,201

Raw Material-Local 0 0 919,871 1,082,201 1,082,201 1,082,201

2. Accounts Receivable 0 0 0 0 0 0

3. Cash in Hand 0 0 0 0 0 0

CURRENT ASSETS 0 0 189,377,731.7235 189,377,731.7235 189,377,731.7235 189,377,731.7235

4. Current Liabilities 0 0 1,640,979 1,930,564 1,930,564 1,930,564

Accounts Payable 0 0 1,640,979 1,930,564 1,930,564 1,930,564

TOTAL NET WORKING CAPITAL

REQUIREMENTS 0 0 10,622,268.2765 10,622,268.2765 10,622,268.2765 10,622,268.2765

INCREASE IN NET WORKING CAPITAL 0 0 1,759,463 310,493 0 0

Annex 2 Totals Revenue

 Project year
Description
1 2 3 4 5 6 7 8 9 10
Ground floor 63,000,00 69,300,00 76,320,00 111,600,0 122,760,0 135,000,00 148,500,0
83,880,000 92,160,000 101,520,000
Rent 0 0 0 00 00 0 00

Size
7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500
unit price 350 385 424 466 512 564 620 682 750 825
Rent for shop
20,160,00 22,140,00 24,390,00 35,730,00 39,330,00 47,520,00
and office 1-3 26,820,000 29,520,000 32,490,000 43,200,000
0 0 0 0 0 0
floor

Size
7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500
unit price 224 246 271 298 328 361 397 437 480 528
Rent for shop
19,710,00 21,690,00 23,850,00 34,920,00 38,430,00 46,440,00
and office 4-7 26,190,000 28,890,000 31,770,000 42,210,000
0 0 0 0 0 0
floor

Size
7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500
unit price 219 241 265 291 321 353 388 427 469 516
Rent for shop
13,500,00 14,850,00 16,380,00 23,940,00 26,280,00 31,860,00
and office 8-12 18,000,000 19,800,000 21,780,000 28,980,000
0 0 0 0 0 0
floor

Size
7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500
unit price 150 165 182 200 220 242 266 292 322 354
Parking 616,500 678,150 745,965 821,178 902,556 992,565 1,092,438 1,200,942 1,321,776 1,453,707

Size
7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500 7,500
unit price 5 5.5 6.05 6.66 7.32 8.05 8.86 9.74 10.72 11.79
116,986,5 128,658,1 141,685,9 207,282,4 228,000,9 250,711,77 275,773,7
Total Sale 155,711,178 171,272,556 188,552,565
00 50 65 38 42 6 07
ANNEX 3: NET I NCOMES STATMENT
ANNEX 4: Discounted Cash flow
ANNEX 5: UN DISCAUNTIG CASH FLOW
ANNEX 6:PAY BACK PERED

Number of Payment, Birr Principal, Birr Interest, Birr Balance, Birr

payments
1 5391032.32 3657698.99 1733333.33 156342301.01
2 5391032.32 3697324.06 1693708.26 152644976.95
3 5391032.32 3737378.40 1653653.92 148907598.55
4 5391032.32 3777866.67 1613165.65 145129731.88
5 5391032.32 3818793.56 1572238.76 141310938.32
6 5391032.32 3860163.82 1530868.50 137450774.50
7 5391032.32 3901982.26 1489050.06 133548792.24
8 5391032.32 3944253.74 1446778.58 129604538.50
9 5391032.32 3986983.15 1404049.17 125617555.34
10 5391032.32 4030175.47 1360856.85 121587379.87
11 5391032.32 4073835.71 1317196.62 117513544.17
12 5391032.32 4117968.93 1273063.40 113395575.24
13 5391032.32 4162580.26 1228452.07 109232994.99
14 5391032.32 4207674.87 1183357.45 105025320.11
15 5391032.32 4253258.02 1137774.30 100772062.09
16 5391032.32 4299334.98 1091697.34 96472727.11
17 5391032.32 4345911.11 1045121.21 92126816.00
18 5391032.32 4392991.81 998040.51 87733824.19
19 5391032.32 4440582.56 950449.76 83293241.63
20 5391032.32 4488688.87 902343.45 78804552.76
21 5391032.32 4537316.33 853715.99 74267236.43

22 5391032.32 4586470.59 804561.73 69680765.84

23 5391032.32 4636157.36 754874.96 65044608.48
24 5391032.32 4686382.40 704649.93 60358226.08
25 5391032.32 4737151.54 653880.78 55621074.55
26 5391032.32 4788470.68 602561.64 50832603.87
27 5391032.32 4840345.78 550686.54 45992258.09
28 5391032.32 4892782.86 498249.46 41099475.23
29 5391032.32 4945788.01 445244.31 36153687.22
30 5391032.32 4999367.38 391664.94 31154319.85
31 5391032.32 5053527.19 337505.13 26100792.66
32 5391032.32 5108273.73 282758.59 20992518.93
33 5391032.32 5163613.37 227418.96 15828905.56
34 5391032.32 5219552.51 171479.81 10609353.05
35 5391032.32 5276097.66 114934.66 5333255.39
36 5391032.32 5333255.39 57776.93 -0.00
ANNEX 7: CASH FLOWS
Annex 2: Cash Flow Statement (in Birr)

CONSTRUCTION SERVIES

Year 1 Year 2 1 2 3 4

TOTAL CASH INFLOW 2,898,788 4,968,744 16,683,289 17,986,420 17,696,835 17,696,835

1. Inflow Funds 2,898,788 4,968,744 1,640,979 289,585 0 0

Total Equity 1,159,515 1,987,498 0 0 0 0

Total Long Term Loan 1,739,273 2,981,246 0 0 0 0

Total Short Term Finances 0 0 1,640,979 289,585 0 0

2. Inflow Operation 0 0 15,042,310 17,696,835 17,696,835 17,696,835

Sales Revenue 0 0 15,042,310 17,696,835 17,696,835 17,696,835

Interest on Securities 0 0 0 0 0 0

3. Other Income 0 0 0 0 0 0

TOTAL CASH OUTFLOW 2,898,788 2,898,788 13,582,242 12,478,980 13,615,806 13,549,719

4. Increase In Fixed Assets 2,898,788 2,898,788 0 0 0 0

Fixed Investments 2,760,750 2,760,750 0 0 0 0

Pre-production Expenditures 138,038 138,038 0 0 0 0

5. Increase in Current Assets 0 0 3,400,442 600,078 0 0

6. Operating Costs 0 0 8,955,223 10,525,687 10,525,687 10,525,687

7. Corporate Tax Paid 0 0 0 0 1,831,314 1,859,638

8. Interest Paid 0 0 1,226,576 566,462 472,052 377,642

9.Loan Repayments 0 0 0 786,753 786,753 786,753

10.Dividends Paid 0 0 0 0 0 0

Surplus (Deficit) 0 2,069,957 3,101,048 5,507,439 4,081,029 4,147,116

Cumulative Cash Balance 0 2,069,957 5,171,004 10,678,443 14,759,472 18,906,588

Annex 2: Cash Flow Statement (in Birr): Continued

 SERVIES

5 6 7 8 9 10

TOTAL CASH INFLOW 17,696,835 17,696,835 17,696,835 17,696,835 17,696,835 17,696,835

1. Inflow Funds 0 0 0 0 0 0

Total Equity 0 0 0 0 0 0

Total Long Term Loan 0 0 0 0 0 0

Total Short Term Finances 0 0 0 0 0 0

2. Inflow Operation 17,696,835 17,696,835 17,696,835 17,696,835 17,696,835 17,696,835

Sales Revenue 17,696,835 17,696,835 17,696,835 17,696,835 17,696,835 17,696,835

Interest on Securities 0 0 0 0 0 0

3. Other Income 0 0 0 0 0 0

TOTAL CASH OUTFLOW 13,483,632 13,434,109 13,368,022 12,515,181 12,515,181 12,515,181

4. Increase In Fixed Assets 0 0 0 0 0 0

Fixed Investments 0 0 0 0 0 0

Pre-production Expenditures 0 0 0 0 0 0

5. Increase in Current Assets 0 0 0 0 0 0

6. Operating Costs 10,525,687 10,525,687 10,525,687 10,525,687 10,525,687 10,525,687

7. Corporate Tax Paid 1,887,961 1,932,848 1,961,171 1,989,494 1,989,494 1,989,494

8. Interest Paid 283,231 188,821 94,410 0 0 0

9. Loan Repayments 786,753 786,753 786,753 0 0 0

10.Dividends Paid 0 0 0 0 0 0

Surplus (Deficit) 4,213,203 4,262,726 4,328,813 5,181,654 5,181,654 5,181,654

Cumulative Cash Balance 23,119,791 27,382,517 31,711,331 36,892,985 42,074,638 47,256,292