PROJECT PROPOSAL FOR G+4 MIXED USE

BUILDING

PROJECTOWNER:-MR.SOLOMON ASEFFA

ADDRESS: -GINJO GUDURU KEBELE, JIMMA TOWN,OROMIA

REGIONAL STATE

May, 2022 G.C

Table of Contents
1 Executive Summary..................................................................................................................5
2 Introduction...............................................................................................................................6
2.1 General Background.......................................................................................................... 6
2 Project Objectives.....................................................................................................................8
2.1 General Objective.............................................................................................................. 8
2.1.1Specific objective......................................................................................................... 8
2.3 Project description............................................................................................................. 8
2.4 Project Rationale................................................................................................................9
2.5 The significance of the project.......................................................................................... 9
2.6 Project Location...............................................................................................................10
3 The market Study....................................................................................................................11
3.1 Market Analysis...............................................................................................................11
3.2 The Demand-Supply Gap................................................................................................ 11
3.3 Current supply of Mixed Use building............................................................................ 12
3.4 Future market or Demand of commercial Building rental...............................................12
3.5 Target customers..............................................................................................................13
3.6 Marketing promotion and strategy...................................................................................13
3.7 Competition..................................................................................................................... 13
3.8 The project facilities and Services plan........................................................................... 14
4 Technical Studies....................................................................................................................15
4.1 Description of the project Service................................................................................... 15
4.1.1 Land Use Plan...........................................................................................................15
4.2 Construction work and Technology.................................................................................16
4.2.1 Construction schedule...............................................................................................16
4.2.2 Architectural Design & Layout................................................................................ 16
4.2.3 Structural design....................................................................................................... 17
4.2.4 Reinforced concrete.................................................................................................. 17
4.2.5 Foundation Design....................................................................................................17
4.2.6 Construction Plan and process..................................................................................18
4.3 Utilities............................................................................................................................ 18
5 Engineering and civil works................................................................................................... 20

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 BUSINESS PLAN FOR G +4 MIXED USE BUILDING

5.1 Land, Building and Civil Works......................................................................................20

5.2 Manpower and training requirement............................................................................... 20
5.2.1 Manpower requirement.............................................................................................20
5.2.2 Labor Availability.....................................................................................................21
5.3 Project implementation....................................................................................................21
5.4 Organizational Structure..................................................................................................22
5.4.1 Organization and management..................................................................................... 22
6 Financial analysis....................................................................................................................28
6.1 Repair and Maintenance Cost..........................................................................................28
6.2 Depreciation and Amortization........................................................................................28
6.3 Total Revenue..................................................................................................................29
6.4 Discounted Payback Period............................................................................................. 29
6.5 Cash flow......................................................................................................................... 29
6.6 Benefit cost ratio..............................................................................................................29
6.7 Internal Rate of Return.................................................................................................... 30
6.8 Net present value............................................................................................................. 30
7 Conclusions and Recommendations....................................................................................... 31
Conclusion............................................................................................................................. 31
Recommendations..................................................................................................................32
References..................................................................................................................................33

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 BUSINESS PLAN FOR G +4 MIXED USE BUILDING

List of Table
Table 1 Office Space Demand Forecast.................................................................................................................... 12
Table 2 The plan is that the ground will be partitioned in to different rooms:......................................................... 14
Table 3 land utilization Plan......................................................................................................................................15
Table 4 Utilities......................................................................................................................................................... 18
Table 5 List of Building and Civil Works and Their Costs...................................................................................... 19
Table 6 Manpower Requirement and Annual Labor Cost........................................................................................ 20
Table 7 project Implementation schedule................................................................................................................ 21
Table 8 Repair and Maintenance Cost...................................................................................................................... 27
List of Annex
Annex 1 Sales Revenue............................................................................................................................................ 32
Annex 2 Revenue projection.....................................................................................................................................32
Annex 3 Cash Flow..................................................................................................................................................33
Annex 4Income statement.........................................................................................................................................33
Annex 5 Bank Repayment schudule......................................................................................................................... 34
Annex 6 discounted cash flow.................................................................................................................................. 34
Annex 7undiscounted cash flow............................................................................................................................... 35

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 BUSINESS PLAN FOR G +4 MIXED USE BUILDING

1 Executive Summary
KEY INFORMATION HIGHLIGHTS

PROJECT OWNER Mr Solomon Aseffa

PROJECT TITLE Mixed Use Building

LAND REQUIREMENT 1500 M2

PROJECT AREA Ginjo Guduru Kebele,Jimma town Oromia Regional state

PRODUCTION CAPATOWN G+ 4

PRODUCTS TO BE MANUFACTURED
Rental Rooms

MARKET Domestic and International

COST OF THE PROJECT a total of 40,046,509.52ETB is required. From this 30%

10,011,627.38 birr will be covered by the promoter of the
project while the rest 70% (40,046,509.52) will be
covered through loan from bank at the prevailing interest
rate.

PROJECT LIFE 10 YEARS

NUMBER OF WORKING DAYS 365 DAYS

FINANCIAL VIABILITY ( AT 10% DISCOUNT RATE )

ANALYSIS RESULT

THE PROJECT IS TECHNICALLY FEASIBLE, FINANCIALLY AND COMMERCIALLY VIABLE AS

WELL AS SOCIALLY AND ECONOMICALLY ACCEPTABLE. HENCE, THE PROJECT IS WORTH
IMPLEMENTING.

IV
2 Introduction

2.1 General Background

The current fast and dynamic economic growth of Ethiopia especially in Jimma town 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
Jimma town since dynamic economic development of urban economy requires the construction of these
buildings in the town 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 town.

Investment and property development play an important role in any emerging markets or economies.
Property generally comprises residential houses and commercial real estate property (mainly mixed us
building) developed for rental business and sale. The property investment market in Ethiopia remained
under developed for several years. As a consequence, the supply of residential houses and non-
residential real estate that can be used for residence, office space, shopping malls and catering services
in the urban centers of the country is disproportionately low to cope with the growing demand in the
country spinning from the average growth in GDP of 5.5% over the last ten years and population
increase. The relatively good performance of the macro-economy (real growth in GDP, low inflation
rate and growth in investment and export sector) has stimulated unprecedented investment growth in the
property sector over the last five years. The growth of investment in the property market over the last
five years in consistent with the global experience suggesting that investment in the residential and
commercial property is greatly influenced by the performance of the macroeconomic conditions. In
general, a stable macroeconomic condition leads to economic and business growth and develops
investors’ confidence. This certainly spurs large demand in the property market for office space,
shopping malls, catering services, apartment and residential houses. Following growing demand trends,
and with the expectation of high return on their investment capital, large number of land developers
pooled their financial resources and invested in the property market.

To this effect, the owner of the envisioned Mixed Use Building Mr.Solomon Aseffa who has been living
for long time abroad, planned to construct in Ginjo Guduru Kebele ,Jimma and undertaken this project

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study to check the market, technical and financial feasibility of this project. The promoter is very
ambitious and committed to realize the project. Hence, they expect to get the necessary support from the
town administration to make the project to be operational.

Besides, the government polices and incentives for the private sector investment are very promising that
motivates the promoter to engaged in Mixed Use building business.

2 Project Objectives

2.1 General Objective

The major goal of this project is to contribute towards the growth of the trade sector in Addis Ababa. Its
specific objectives include the following.

2.1.1Specific objective

 To construct and develop modern shops, offices, and 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 centre that would provide full services on town standard.
 To create employment opportunities.
 Contribute towards the beautification of the town through the construction of modern building
infrastructure and facilities.
 To establish economically viable, socially acceptable and environmentally friend Mixed Use
building.

2.3 Project description

The long-term goal of the project is become the best choice trade center in the town. The proposed
project will have a total area of 1500m2, designed to reader a multipurpose giving business, which will
in turn plays significant role towards solving shortage of business center in Jimma town.

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The historical nature of the town as business unique location in one of the most attractive center in
Ethiopian (100% urban center). 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 town. 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.

2.4 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 town, the trend on such kinds of investment found to not enough.
The mismatch between the demand for and supply of such kind of services in easily observed in the
town.

Therefore, the existing shortage or absence in the supply of these services, along with its commercial
and administrative access, better location and infrastructure access, escalating trend of urbanization and
business activities, thus it is with such reason that this project is identified and proposed and assumed to
be more profitable.

In general, the country’s privatized and free market economy; good governance creates a favorable
environment for the development of investment for private investors.

2.5 The significance of the project

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

A. Source of Revenue

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

B. Employment opportunity

One of the problems that our country faced is unemployment. Therefore, the current objective of the
government is working on tackling the problem of unemployment and fostering the development
process either through creating self employment or employment in other organization. Hence, this
project will hire 26 individuals and more than eighty individual during construction.

2.6 Project Location

The license area is located in Jimma town. The total area of the project is 1500 m2. .

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3 The market Study

3.1 Market Analysis

There are a number of factors which affects the demand of standardized Mixed Use building. Of these
factors, the most important to have influence is population growth and the level of income. The currently
expanding service industry in Jimma and from every corner of the country the town has been inviting
skilled and unskilled labor forces to the center; in addition, the number of both national and international
offices has been increasing. Above all the increase in the number of population increases for the
provision of different services. Nowadays, most of the private business organizations need their own
small-medium offices in order to give their services and provide their products, and they prefer the place
that found in the center or close to the road.

As clearly indicated in the introductory part of this proposal, Jimma town is the dynamically growing
urban center of Ethiopia. Though the market demand gap for Mixed Use building is not clearly
understand there is wider gap for such demand as many merchants, organizations are flouring to the
town every day. From prior business experiences, the demand of Mixed Use building is very high and
hence the demand and the supply gap is very wide.

3.2 The Demand-Supply Gap

There has been a significant growth in the number of local and international trades across the country.
This increase is mainly associated with the stimulation of economic activist and partly due to an increase
in the flow of international and local traders in to the town. Since Jimma town is an important
commercial center in addition there is a significant increase in business activates and 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 town. As a result there is a large
gap between the developed and that of the supply for modern Bank and cafeteria accommodation hence
this project would not face any problem of demand scartown for it business centre and it would provide
good service to customers.

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3.3 Current supply of Mixed Use building

Commercial building/office sector has shown a dynamic change in the past few years. The reason for
this could be rapid economic growth and a supporting public infrastructural development. Other factors
relevant in the specific case of commercial buildings are the large increases in national and international
businesses, particularly firms in the services sector.

The business of multipurpose buildings in Jimma town in booming highly due to the recent rapid growth
experienced in Ethiopia. As a result, a good number of local and international organizational are coming
in place. Government offices which used to operate in limited spaces all over the town are also
concentrating on leasing new and modern buildings. Increasing numbers of international organization
which in the past had typically converted residences into office space are now moving towards renting
whole floors or even multiple floors in mixed use buildings.

3.4 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 banking, offices,
cafeteria and restaurants, supermarkets, computer center service. Future demand for office space is
actually driven from growth in number of offices in the town which in turn is influenced by the macro-
economic growth in the country. Assuming that demand for office space is directly related to the growth
in the economy, the forecast for office space demand is shown in the following table;

Table 1 Office Space Demand Forecast

Office space demand under base Office space demand under high
case economic case economic
Years Growth Growth
2010/2011 9,916,543 11,304,859
2011/2012 11,007,363 12,057,416
2012/2013 12,218,173 12,953,878
2013/2014 13,562,173 13,963,577
2014/2015 15,054,011 14,554,534
2015/2016 16,709,952 14,987,431

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Source: estimation based on GTP’s forecasted Ethiopian Economic Growth

3.5 Target customers

The target customers of this envisaged project include:-

1. Business Community
2. Business organization
3. The government bureau

4. Non-governmental organizations

3.6 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
capatown 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.

3.7 Competition

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

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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 Adamavillages
which compete with it.

3.8 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
Building Description Measure Total
in Birr
Basement Parking Service Cars 5/per hour 20*40*365=175200
Supermarket, Pharmacy, Banking
Ground M2 250 250*1000*12=3000000
& Insurance
1st floor -2nd Beauty salon, shop, Computer
M2 180 180*1200*10*2=7776000
floor Center, Cafeteria and Restaurant
2th floor -4th Different governmental and other
M2 150 180*1000*12*2=5184000
floor offices
Total 12,679,200

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 3,849,912.72.

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4 Technical Studies

4.1 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,Orgaization and Pension service.

4.1.1 Land Use Plan

The total land required for the envisioned project is estimated to be 1500m2. The total area for the
construction of the building will be 1000m2, as revealed below.

Table 3 land utilization Plan

No Description Land M2
Basement Ground First floor-seventh
1 Building (G+10)
1.1 Basement 1000
1.2 Ground 1000
1.3 First floor-Tenth floor 1000
Total 1000

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4.2 Construction work and Technology

4.2.1 Construction schedule

The construction project is proposed to be started on July 2023, and is expected to be finished on July
2024. 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.

4.2.2 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.

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4.2.3 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 chosen for further design based on cost per square foot, local
availability of material and constructability considerations, such as erection and fabrication. The steel
system will then designed for lateral loading with necessary adjustment being made to framing.

4.2.4 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 8 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.

4.2.5 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 capatown and the design for typical interior and exterior spread
footings.

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4.2.6 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.

4.3 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 Electritown supply, kWh 500,000 1.50*10,000 75,000
2 Water Supplym3 50,000 12.5*500,000 62,500

3 Telephone and Internet Broadband 90000

4 Fuel, Oil and lubricant 2000 19*2000 59,000

Total 286,500

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5 Engineering and civil works

5.1 Land, Building and Civil Works

The Mixed Use building has a total site area of 1500m2. The building floor area has covered
1000 m2 and the remaining 500 m2 is left for greenery and open Space. 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 437,453.03
2 Stone Masonry work 286153.68
concrete work 3,463,861.20
Sub total 4,187,467.91
B. SUPER STRACTURE
1 Concrete work 8,354,479.13
2 Block work 1,866,315.72
3 Roofing 232,803.86
4 Carpentry and joinery 1,360,758.24
5 Metal works 7,281,082.00
6 Finishing 5,926,434.40
7 Painting 589,512.00
8 Electrical,sound and temprature installation 1730572.2
9 Sanitary installation 1,730,572.20
Subtotal 29,072,529.74
A+B 33,259,997.65
Vat (15%) 4,988,999.65
Grand total 38,248,997.29

As shown on Table 5, the total cost of building and civil work is estimated at Birr 38,248,997.29
and out of which the proponent has worked more than birr 29,072,529.74

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5.2 Manpower and training requirement

5.2.1 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

SN Position No Qualification Monthly salary Annual salary

in Birr in Birr
2 Building admin 1 BA in Acct/Mgt 8,000 96,000
3 Secretary 1 10+2 in secretariat science 3,000 36,000
10+2 in
4 HRM Officer 1 3,500 42,000
HRM/Management
Diploma in computer
7 IT Technician 1 4,000 48,000
science/IT
8 Marketer 1 Diploma in marketing 5,000 60,000
9 Accountant 1 Diploma in accounting 5,000 60,000
10 Guards/Security 2 Basic 1,500 36,000
Diploma in purchasing
12 Purchaser 1 3,500 42,000
&Sup Mgt
10+2 in general
13 Electrician 1 4,000 48,000
electritown
14 Plumber 1 10+2 in general mechanic 3,500 42,000
15 Casher 1 10+1 in bookkeeping 3,500 42,000
16 Cleaner 3 Unskilled 1,000 36,000
Maintenance
17 3 10+2 in General mechanic 3,500 126,000
officer
18 Driver 1 10 completed 2,500 30,000
Total 19 744,000
Benefit (20%) 148,800
Grand Total 892,800

5.2.2 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.

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5.3 Project implementation

The project’s implementation is expected to take 24 months. The major activities include Bank
loan processing construction of the building, cleaning the area around the building, Procurement
of equipments and start rendering services. The time schedule for major activities is presented
below:

Table 7 project Implementation schedule

SN Activities Date
1 Preparation Project Proposal April 2022
2 Bank loan processing May-June 2022
3 Site Development June 2012
4 Building and construction work July, 2022-July 2023
5 Preparation for service September, 2024
6 Service execution February, 2024

5.4 Organizational Structure

5.4.1 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 dept there exist two
sections i.e., HRM & finance and general service. Further sub sections are also organized under
technical and maintenance manager. The following section deals with the duties and
responsibilities of each department.
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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.

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 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 electritown and back up is organized.

 Follow up security issues and educate tenants

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

Owners

General Manager

Building Maintenance Marketing

administration Department Department

Personnel Promotion
Finance
&Property Officers

17
IT, Supervisors
Electricity
 BUSINESS PLAN FOR G +4 MIXED USE BUILDING

Figure 1 organizational structure

5.6 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 40,046,509.52ETB is required. From this 30%
10,011,627.38 birr will be covered by the promoter of the project while the rest 70%
(40,046,509.52) will be covered through loan from bank at the prevailing interest rate.

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

5.1 fixed Investment

A. Land, Building & Construction
S.N Description of works Total Cost in birr
1 Building construction 38,248,997.29
2 Site Development 50,000.00
3 Design and supervision 100,000.00
4 1st Year land lease & (10%) down payment 189000
Total 38,587,997.29

B. Building Machineries and Equipments

SN Description Measurement Qty Unit cost in Birr Total cost in Birr.
1 Generator Unit 1 300,000.00 300,000.00
2 Carpentry tool box Set 1 27,000.00 27,000.00
3 Electrician tools box Set 1 64,000.00 64,000.00
4 Plumber tools kit Set 1 24,600.00 24,600.00
Fire extinguisher Unit 2 32,000.00 64,000.00
5
(Security Equipment) unit 1 40,000.00 40,000.00
6 Elevator (8 person 7 floor) Unit 1 1,500,000 1,500,000
Survilliance Camera Unit 2 24,500.00 49,000.00
TOTAL 2,068,600.00

C. Vehicle
SN Description UOM Qty Unit Cost in Fr. Total cost in Birr Remark
1 Mini Bus Dolphin Unit 1 1,000,000.00 1,000,000.00 Duty Free
Total 1,0000,000.00

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 BUSINESS PLAN FOR G +4 MIXED USE BUILDING

D. Office Equipments
SN Description Measurement Qty Unit cost in birr Total cost in Birr
1 Managerial tables Unit 5 7,000.00 35,000.00
2 Managerial chairs Unit 5 5,000.00 25,000.00
3 Office table with chair Unit 7 4,000.00 28,000.00
4 Secretarial table with chairs Unit 1 4,000.00 4,000.00
5 Computer with chairs Unit 1 35,000.00 35,000.00
6 Shelf Unit 1 7,000.00 7,000.00
7 Filing cabinets Unit 1 6,000.00 6,000.00
8 Guest chairs Unit 1 4000 4,000.00
9 Wife & Telephone machine Unit 1 7,000.00 7,000.00
10 Carpet and Curtain LS 2 33000 66,000.00
Total 217,000.00

Working Capital

Operating Expenses
SN List of Items Annual cost in birr Assumptions Used
1 Audit and legal fee 12,000.00 1000 br/per ,month
2 Stationery supplies 12,000.00 1000 br/month
3 Promotional Cost 10,000.00 Lump sum annual cost
4 Property Insurance 764,979.95 2% of the building
5 Cleaning Supplies 12,000.00 1000 br. Per month
6 Uniforms 12,000.00
7 Water consumption 62,500.00 500000 m3 by 10 br
8 Electric consumption 75,000.00 100,000KWH By Br.1.50
9 Fuel 59,000.00 2000 lit per year by Br.19
11 Telephone and internet 90,000.00 750 *10 per month
12 Repair expense 764,979.95 2% of building cost
13 Administration and social cost 90,000.00 Lump sum annual cost
14 Tranportation,Friegth and inland tax 676,540.00 Lump sum annual cost
15 Miscellaneous costs 40,000.00 6000 per month
Total 2,680,999.89

Pre-service Expenses
SN Description Cost in birr
1 Project proposal 60,000.00
2 Licensing fee and others
Total 60,000.00

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 BUSINESS PLAN FOR G +4 MIXED USE BUILDING

Summary of Total initial investment cost

SN Description Cost in Birr

1 Land, building & construction 38,587,997.29
2 machines & Equipments 2,068,600.00
3 Vehicle 1,000,000.00
4 Office Equipment 217,000.00
Total fixed investment cost 41,873,597.29
6 Salary expense 892,800.00
7 Operation Expense 2,680,999.89
8 Pre service Expense 60,000.00
Total Working capital 3,633,799.89
Sub total 45,507,397.18
11 Contingency (10%) 4,550,739.72

6 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 2 years

Source of finance 30 % equity
Debt finance 70 % 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

6.1 Repair and Maintenance Cost

The annual repair and maintenance cost of the plant is estimated based on the following rates.

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 BUSINESS PLAN FOR G +4 MIXED USE BUILDING

Table 8 Repair and Maintenance Cost

Item Rate
Machinery and equipment 5% of the total cost or Book value
Building and civil works 2% of the total cost or Book value
Utilities 5% of the total cost or Book value

6.2 Depreciation and Amortization

The following depreciation rates are applied to depreciate the assets of the project:

 Buildings and associated Civil works 5%, linear to scrap Value

 Machinery and Equipment’s 10%, linear to scrap Value
SN Description Original Value in Depreciation rate Depreciation per year
Birr in % in Birr
1 Construction and 5 1,929,399.86
Building 38,587,997.29
2 Bldg. machines & 2,068,600.00 10 206,860.00
Equipments
3 Vehicle 1,000,000.00 20 200,000.00
4 Office Equipment 217,000.00 10 21,700.00
Total 41,873,597.29 2,357,959.86

6.3 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 3,858,712.76 at the beginning of
the project to Birr 3,690,941.05 during the fourth year of operation year. The detail is presented in
Annex.

6.4 Discounted 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 5 year 9 months.

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 BUSINESS PLAN FOR G +4 MIXED USE BUILDING

6.5 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 746,861.81. At the fourth of the
project life, this amount will rise to Birr 2,937,049.96 The detail is presented in Annex.

6.7 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 greater than 62.5 % indicating the viability of the project.

6.8 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 49,346,304.39 which is acceptable.

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 BUSINESS PLAN FOR G +4 MIXED USE BUILDING

7 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 about 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 various agricultural sources as well as
discussions with businessmen. For financial model, since the forecast/projections relate to the
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 has been taken in performing the exercise, no liability can be
inferred for any in-accuracy or omissions reported from the results thereof. It is essential that our
report be read in its entirety with 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 road, telephone, water and
electric power. The proposed project clearly identifies all the necessary equipment, inputs,
management of the company and the required man power. 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 for feed production in the country.
Accordingly, the planned project is set to provide quality products in the area.

The proposed project possesses 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 environmental 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.

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 BUSINESS PLAN FOR G +4 MIXED USE BUILDING

Recommendations

Financial sensitivity analysis shows that the project is highly sensitive to decrease in sales
revenue but relatively less sensitive to increase in raw material and investment costs. Therefore,
it is recommended that the company should give a great attention for the possible reasons for
sales reduction. In this case, different mechanisms should be selected and implemented to
increase sales. In addition to this, the company should decrease its cost that lowers profitability.
The project must utilize modern promotional styles to capture the planned market share. To do so,
it has to design effective strategy to achieve this plan.

Although, due care and diligence has 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 delaying to implement
the project creates some problem on its profitability as there is always change like change in
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 occurred.

References

Chandra, P; 2006.Projects Planning, Analysis, Selection, Financing, Implementation, and

Review, six edition. Tata McGraw-Hill publishing company Limited, New Delhi.

Eyob Deraro (2013) Project Proposal for the construction of Market CenterBuilding.

Wikipedia: The Free Encyclopedia. Retrieved December 10, 2006 from the World Wide Web
www.wikipedia.org.

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 BUSINESS PLAN FOR G +4 MIXED USE BUILDING

ANNEX
Annex 1 Sales Revenue
Description Project year
1 2 3 4 5 6 7 8 9 10
Ground floor Rent 3000000 3060000 3120000 3240000 3300000 3360000 3420000 3480000 3504000 3540000
Size 1000 1000 1000 1000 1000 1000 1000 1000 1000 1000
unit price 250 255 260 270 275 280 285 290 292 295
Rent for shop and office 1-3 floor 5184000 5328000 5414400 5472000 5587200 5702400 5760000 5904000 5990400 6048000
Size 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200
unit price 180 185 188 190 194 198 200 205 208 210
Rent for shop and office 2-4 floor 4320000 4406400 4464000 4636800 4694400 4752000 4838400 4896000 5040000 5184000
Size 1200 1200 1200 1200 1200 1200 1200 1200 1200 1200
unit price 150 153 155 161 163 165 168 170 175 180
Parking 175200 229950 246375 262800 273750 328500 341640 361350 381060 381060
Size 12 15 15 15 15 18 18 18 18 18
unit price 40 42 45 48 50 50 52 55 58 58
Total Sale 12679200 13024350 13244775 13611600 13855350 14142900 14360040 14641350 14915460 15153060
Annex 2 Revenue projection
Revenue Year 1 Year 2 Year 3 year 4 and after
Rental Income 12,679,200.00 13,024,350.00 13,244,775.00 13,611,600.00
Expenses
Salary Expense 892,800.00 892,800.00 892,800.00 892,800.00
Operating Expenses 2,680,999.89 2,680,999.89 2,680,999.89 2,680,999.89
Deprecation Bld. Machineries ,Equiq 0.00 2,357,959.86 2,357,959.86
& vehicle
Interest Expense3 3,403,953.31 3,063,557.98 2,723,162.65 2,382,767.32
Lease payment4 189,000.00 24,300.00 24,300.00 24,300.00
Total Expense 7,166,753.20 6,661,657.87 8,679,222.40 8,338,827.07
Profit before Tax 5,512,446.80 6,362,692.13 4,565,552.60 5,272,772.93
Tax (30%) 1,653,734.04 1,908,807.64 1,369,665.78 1581831.878
Net profit 3,858,712.76 4,453,884.49 3,195,886.82 3,690,941.05

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 BUSINESS PLAN FOR G +4 MIXED USE BUILDING

Annex 3 Cash Flow

Year Year 0 Year 1 Year 2 Year 3 year 4

Equity Capital 15017441.07
Loan principal 35040695.83
Net sale 0 12,679,200.00 13,024,350.00 13,244,775.00 13,611,600.00
Total Cash in flow 50,058,137 12,679,200.00 13,024,350.00 13,244,775.00 13,611,600.00
Cash payment
Salary Expense 0 892,800.00 892,800.00 892,800.00 892,800.00
Investment 41,873,597 0 0 0 0
Pre operating Expense 60,000 0 0 0 0
Operating Cost 0 2,680,999.89 2,680,999.89 2,680,999.89 2,680,999.89
Loan repayment 0 7,408,604.26 7,068,208.93 6,727,813.60 6,387,418.27
Lease payment 0 189,000.00 24,300.00 24,300.00 24,300.00
Tax payment 0 1,653,734.04 1,908,807.64 1,369,665.78 1,581,831.88
Total payment 41,933,597.29 11,932,338.19 11,682,316.46 10,802,779.27 10,674,550.04
Cash surplus/ deficit 8,124,539.61 746,861.81 1,342,033.54 2,441,995.73 2,937,049.96
Cumulative cash flow -6,892,901.46 746,861.81 1,342,033.54 2,441,995.73 2,937,049.96

Annex 4Income statement

Operating years of the project

Description 1 2 3 4 5 6 7 8 9 10
Sales Revenue 12,679,200 13,024,350 13,244,775 13,611,600 13,855,350 14,142,900 14,360,040 14,641,350 14,915,460 15,153,060
Less: Operating cost 2,889,260 2,889,260 2,889,260 2,889,260 2,889,260 2,889,260 2,889,260 2,889,260 2,889,260 2,889,260
Income before Depreciation 9,789,940 10,135,090 10,355,515 10,722,340 10,966,090 11,253,640 11,470,780 11,752,090 12,026,200 12,263,800
and interest
Less: interest 3,403,953.31 3,063,557.98 2,723,162.65 2,382,767.32 2,042,371.99 1,701,976.65 1,361,581.32 1,021,185.99 680,790.66 340395.3309
Income before Depreciation 6,385,987 7,071,532 7,632,352 8,339,573 8,923,718 9,551,663 10,109,199 10,730,904 11,345,409 11,923,405
Less: Depreciation 0 0 0 0 0 0 0 0 0 0
Profit /Loss Before Tax 6,385,987 7,071,532 7,632,352 8,339,573 8,923,718 9,551,663 10,109,199 10,730,904 11,345,409 11,923,405
Less: Tax (30%) 1,915,796.04 2,121,459.64 2,289,705.74 2,501,871.84 2,677,115.44 2,865,499.04 3,032,759.64 3,219,271.23 3,403,622.83 3,577,021.43
Net Profit or Loss After 4,470,190.76 4,950,072.49 5,342,646.72 5,837,700.95 6,246,602.69 6,686,164.42 7,076,439.15 7,511,632.88 7,941,786.61 8,346,383.34
Tax

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 BUSINESS PLAN FOR G +4 MIXED USE BUILDING

Annex 5 Bank Repayment schedule

Principal Total annual year ending

year payment intrest rate(8.5%) Payment in ETB balance
0 40046509.5
1 4004650.95 3403953.309 7408604.261 36041858.6
2 4004650.95 3063557.978 7068208.931 32037207.6
3 4004650.95 2723162.647 6727813.6 28032556.7
4 4004650.95 2382767.317 6387418.269 24027905.7
5 4004650.95 2042371.986 6047022.938 20023254.8
6 4004650.95 1701976.655 5706627.607 16018603.8
7 4004650.95 1361581.324 5366232.276 12013952.9
8 4004650.95 1021185.993 5025836.945 8009301.9
9 4004650.95 680790.6619 4685441.614 4004650.95
10 340395.3309 0

Annex 6 discounted cash flow

Investment
Year Project Life years
Description 0 1 2 3 4 5 6 7 8 9 10
INFLOW
Net sales
revenue 0 12,679,200 13,024,350 13,244,775 13,611,600 13,855,350 14,360,040 14,641,350 14,641,350 14,641,350 14,641,350
TOTAL
INFLOWS 0 12,679,200 13,024,350 13,244,775 13,611,600 13,855,350 14,360,040 14,641,350 14,641,350 14,641,350 14,641,350
OUTFLOWS
Investment
cost 41,873,597 - - - - - - - - - -
Operating
cost 0 2,889,260 2,889,260 2,889,260 2,889,260 2,889,260 2,889,260 2,889,260 2,889,260 2,889,260 2,889,260
Income tax 0 1,915,796 2,121,460 2,289,706 2,501,872 2,677,115 2,865,499 3,032,760 3,219,271 3,403,623 3,577,021
TOTAL
OUTFLOWS 41,873,597 4,805,056 5,010,720 5,178,966 5,391,132 5,566,375 5,754,759 5,922,020 6,108,531 6,292,883 6,466,281
NET CASH -
FLOW 1,261,180.00 7,874,144.07 8,013,630.47 8,065,809.37 8,220,468.27 8,288,974.67 8,605,281.07 8,719,330.47 8,532,818.87 8,348,467.27 8,175,068.68
NET PRESENT VALUE (NPV) 49,346,304.39
INTERNAL RATE OF RETURN (IRR) 62.5%

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 BUSINESS PLAN FOR G +4 MIXED USE BUILDING

Annex 7 undiscounted cash flow

Project Years
Investment
Year Operating years
Description 0 1 2 3 4 5 6 7 8 9 10
INFLFOWS
Inflow Funds
Own Equity 10,011,627
Long-term
Loan 40,046,510 0 0
Inflow
Operations 12,679,200 13,024,350 13,244,775 13,611,600 13,855,350 14,360,040 14,641,350 14,641,350 14,641,350 14,641,350
Sales revenue
0 12,679,200 13,024,350 13,244,775 13,611,600 13,855,350 14,360,040 14,641,350 14,641,350 14,641,350 14,641,350
TOTAL
INFLOWS 50,058,137 12,679,200 13,024,350 13,244,775 13,611,600 13,855,350 14,360,040 14,641,350 14,641,350 14,641,350 14,641,350
OUTFLOWS
Investment
cost 41,873,597 0 0 0 0 0 0 0 0 0 0
Operating cost
0 2,889,260 2,889,260 2,889,260 2,889,260 2,889,260 2,889,260 2,889,260 2,889,260 2,889,260 2,889,260
Financing Cost
· 4,004,651 4,004,651 4,004,651 4,004,651 4,004,651 4,004,651 4,004,651
Principal 0 0 0 0
·Interes 3,403,953 3,063,558 2,723,163 2,382,767 2,677,115 1,701,977 1,361,581 1,021,186 680,791 340,395
t 0
Income Tax 0 1,915,796 2,121,460 2,289,706 2,501,872 2,042,372 2,865,499 3,032,760 3,219,271 3,403,623 3,577,021
TOTAL
OUTFLOWS 41,873,597 8,209,009 8,074,278 7,902,128 11,778,550 11,613,398 11,461,387 11,288,252 11,134,368 10,978,324 10,811,328
NET CASH
FLOW 0 4,470,191 4,950,072 5,342,647 1,833,050 2,241,952 2,898,653 3,353,098 3,506,982 3,663,026 3,830,022
BEGINNING
CASH
BALANCE 0 0 4,470,191 9,420,263 14,762,910 16,595,960 18,837,912 21,736,565 25,089,663 28,596,645 32,259,671
ENDING
CASH
BALANCE 0 4,470,191 9,420,263 14,762,910 16,595,960 18,837,912 21,736,565 25,089,663 28,596,645 32,259,671 36,089,693

28