Anja Mix-use Building Investment Project Proposal

2025

ANJA MIXED USE BUILDING

INVESTMENT PROJECT PROPOSAL

PROJECT LOCATION: - SE, Gamo Zone,

Chencha Town

PROMOTER: Mr. ANJA KOTE

MOBILE: 09-13-35-09-90

Jun, 2025
Chencha, Ethiopia
 Anja Mix-use Building Investment Project Proposal 2025

Table of Contents
1. EXECUTIVE SUMMARY.................................................................................................................1
2. INTRODUCTION...................................................................................................................................3
2.1. General Background.........................................................................................................................3
3.1. General Objective.............................................................................................................................6
2.1.1Specific objective........................................................................................................................6
2.3 Project description.............................................................................................................................6
2.4 Project Rationale...............................................................................................................................7
2.6. The significance of the project..........................................................................................................8
2.6. Project Location................................................................................................................................9
4. THE MARKET STUDY.........................................................................................................................9
4.1 Market Analysis.................................................................................................................................9
3.2 The Demand-Supply Gap................................................................................................................10
3.3 Current supply of mixed use building..............................................................................................10
3.4 Future market or Demand of commercial Building rental................................................................11
3.5 Prospective customers...................................................................................................................11
3.6. Marketing promotion and strategy..................................................................................................11
3.7. Competition....................................................................................................................................12
5. TECHNICAL STUDIES.......................................................................................................................15
5.1. Description of the project Service...................................................................................................15
5.1.1 Land Use Plan...........................................................................................................................15
5.2. Construction work and Technology................................................................................................16
5.2.1 Construction schedule...............................................................................................................16
5.2.2 Architectural Layout & Design..............................................................................................16
5.2.3 Structural design.......................................................................................................................17
5.2.4 Reinforced concrete..................................................................................................................17
5.2.5 Foundation Design....................................................................................................................17
5.2.6 Construction Plan and process..................................................................................................18
5.3 Utilities............................................................................................................................................18
6. ENGINEERING AND CIVIL WORKS...............................................................................................20
6.1. Land, Building and Civil Works.....................................................................................................20
6.2. IMPLEMENTATION SCHEDULE AND MIXED USE BUILDING OPERATION........22

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7. ORGANIZATIONAL STRUCTURE HUMAN POWER.............................................................23

7.2.1. Labor Availability....................................................................................................................26
8. FINANCIAL REQUIREMENT AND ANALYSIS.......................................................................27
9. FINANCIAL ANALYSIS.................................................................................................................31
9.1. Repair and Maintenance Cost.........................................................................................................32
9.2. Depreciation and Amortization..................................................................................................32
9.3. Total Revenue............................................................................................................................32
7.4. Discounted Payback Period............................................................................................................35
[Link] flow.........................................................................................................................................35
[Link] cost ratio..............................................................................................................................36
7.7. Internal Rate of Return...................................................................................................................36
[Link] present value.............................................................................................................................37
10. CONCLUSIONS AND RECOMMENDATIONS..............................................................................37
10.1. Conclusion...................................................................................................................................37
8.2. Recommendations..........................................................................................................................38
9. MONITORING, REPORTING AND EVOLUTION............................................................................39
9.1. Monitoring......................................................................................................................................39
9.2. Reporting........................................................................................................................................39
9.3. Evaluation.......................................................................................................................................39

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1. GENERAL SUMMARY OF THE PROJECT
 Name of project:- Anja Mixed-use Building
 Project promoter:- Mr. Anja Kote
 Citizen of the members:- Ethiopian
 General manager:- Mr. Anja Kote
Tel: +251-09-13-35-09-90
 Type of ownership:- sole proprietorship
 Type of project:- Service rendering(multi-purpose building)
 Project status:- New
 Registering Agency: Gamo Zone investment Department
 Location of the project :-
 Region SER(South Ethiopia Region)
 Zone Gamo
 City Chencha
 Land required 3,000 m3
 Height of the building G+4
 Total project capital 78,291,450
 Source of found :-
 Equity (30%) 23,487,435
 Loan (70%) 54,804,015
 Loan period Ten years
 Interest rate 15%
 Project construction period 2018-2022 E.C
 Project operation start On 2023 E.C
 Loan payment start On 2025 E.C
 Products to be sold:- Rental Rooms for shops, Banks, cafeteria & restaurant and super
market

 Social and Economic Benefit: provide better Building service,

employment opportunities, generation of income and benefits for the local
people.
 Anja Mix-use Building Investment Project Proposal 2025

 Job opportunity:- 15 permanent and more than 50 during construction phase

 Market :- Domestic
 Number of working days:- 365 days
FINANCIAL VIABILITY (AT 15% DISCOUNT RATE)
 NPV (Net Present Value) 54,439,417 Birr
 IRR (Internal Rate Of Return) 34.13%
 Pay Back Period) 3year And 9month
 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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2. INTRODUCTION

2.1. GENERAL BACKGROUND

The current fast and dynamic economic growth of Ethiopia, especially in Chencha, necessitates
equivalent growth in the building and construction sector. To support overall economic
development, the sector should grow rapidly.

In the building sector of the economy, the multi-purpose one is rapidly expanding in Chencha
since the dynamic economic development of the urban economy requires the construction of
these buildings in the city to support the growth of business service sectors like supermarkets,
beauty salons, shops, offices, cinemas, computer centers, cafeterias, restaurants, assembly halls,
apartments and other activities. In this regard, mixed-use buildings expand in all parts of the city .

Investment and property development play an important role in any emerging market or
economy. Property generally comprises residential houses and commercial real estate property
(mainly mixed-use buildings) developed for rental business and sale. The property investment
market in Ethiopia has remained underdeveloped for several years. As a consequence, the supply
of residential houses and non-residential real estate that can be used for residences, 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
sectors) 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 is consistent with
global experience suggesting that investment in residential and commercial property is greatly
influenced by the performance of 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, apartments and residential houses. Following growing demand trends

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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 mixed use building, Mr. Anja Kote who was born and
has been living in Ethiopia, planned to invest in and construct a modern mixed-use commercial
center in Chencha town, and has undertaken 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 operational.

Besides, the government policies and incentives for the private sector investment are very
promising that motivates the promoter to engaged in mixed use building business.

It is crucial issue to bring sustainable economic development, improving the living standard of
citizen and fulfilling the increasing public demand. To do these, it needs huge capita, trained
human power, technology, so that the private investment is very important to fill the gap where
there is government failure. Considering this government formulate rules and regulations to
support private investment.

In addition to this, government working intensifying and developing urban through urbanization
strategy to transfer technologies to urban and to access social services in the urban. Chencha city
administration is one of the city urbanization is taking place.

Astronomically, Chencha is an administrative and business center of Chencha Woreda, located

450 kilometers from Addis Abeba and 50 kilometers from Arbaminch, which was founded in
1955 E.C. Chencha lies between 600 5"north, latitude and 37 038 "east, longitude. It is elevated
between 1300 and 1500 meters above sea level and has an altitude of 1000 meters above sea
level. The town experiences a low land climate type with bi-modal rainfall, having two distinct
rainy seasons (Belg and keremt) which bring rain. The town gets summer (keremt) rainfall that is
caused by the equatorial westerly (Guinea monsoon and south-easterly) winds. The months of
the rainy season are June, July, and August, which is the summer season. The annual average
temperature and rain fall level are 900 ml and 240 c respectively.

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The revised urban plan implies that the town has a total area of 55.57 square kilometers.
According to the 2006 census of CSA, the total population size of the town is estimated at
74,879 with an annual growth rate of 4.8%. Based on this growth rate, the estimated current
population size is 125,410. At the end of 2018, Chencha has a total road length of more than
167.88 km, out of which 45.63 km is asphalt and the remaining 36.897km is gravel and 48km is
cobble stone road. Furthermore, there is an international airport with a daily flight to Addis
Ababa.

To fill the existing gap, the company is planning to establish a mixed-use/multipurpose building

on 3000 meter square land in the Chencha City Administration centre of the town. It is expected

to have G+2 floors with 22 (twenty-two) furnished single bedrooms, 10(ten) are different shops

and supermarkets, and 2(two) for bank or insurance service purposes

3. PROJECT OBJECTIVES

3.1. General Objective

The major goal of this project is to contribute towards the growth of the trade sector in Chencha.
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 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.

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 To establish economically viable, socially acceptable and environmentally friend mixed

use Apartment.

2.3 Project description

The long-term goal of the project is to become the best-choice trade center in the city. The
proposed project will have a total area of 3000 m2, designed to be a multipurpose giving
business, which will in turn play a significant role towards solving the shortage of business
centers in Chencha.

The historical nature of the city as a business location is in one of the most attractive centers in
Ethiopia (100% urban center). The owners plan the project to render banking and insurance,
shopping facilities, offices, and cafeteria services to create a high-quality class to satisfy the
interests 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.

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 city, the trend of such kinds of
investment is found to be not 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

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trend of urbanization and business activities, thus it is with such a reason that this project is
identified and proposed and assumed to be more profitable.

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

Diversified sources of income and livelihood options are of paramount importance for the
development of any country. For these reasons, the growth of mixed-use businesses is vital for
the economic development and betterment of people in a given nation. Smokeless security
services are a mixed-use business. One of the preconditions for the growth of the modern market
sector is the availability and expansion of standardized and modern market places. Mixed
business boosts and improves the service delivery of any nation.

2.5. Technical Feasibility/ Reason for Selecting the Area

The project area (Chencha) is:-

 Fast growing truism center

 Center of fruit production area
 A major business center and commercial root that attracts thousands of business travelers
 Healthy comfortable climate
 Huge natural Resource,

 Hospitable people and excess human resource

 Asphalt road is constructing Gircha – Wacha – Chano connection to Addis Ababa

 Has excellent access of Roads to connect neighboring zones and woredas,

 market and cultural assets

 Reliable peace & stability in the town for free mobility,

 Demand for social services has not yet been fulfilled as the size of the population is so
large and the supply is so small

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2.6. The significance of the project

The envisaged project is deemed to contribute to the economic development of the city in
general and in particular in the following ways:

1. Source of Revenue

As a matter of public policy in 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 taxes, and VAT are collected from undertaking business activities.
Therefore, the building will serve as a source of revenue for the city.

2. 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 fifteen individuals and more than fifty individuals
during construction.

2.6. Project Location

The project is located in Gamo Zone, Chencha City Administration, and 02 Kebele. This make
the project accessibility visibility and the surrounding area characteristics contribute to a
favorable and scenic environment for the business as a whole.

Land Requirement for the project is 3000 square meters to facilities quality services.
Implementation of the project has been envisaged in one phases within two years of period.

2.7. Project Inputs

The implementation of the project requires man power, material, and financial inputs.

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A) Personnel: - The project’s needed mew personnel will be employed in the project.
This includes manager, professional and supportive stuff, technical workers and daily
laborers.
B) Material Inputs: - These inputs are construction materials, equipment, tools
machineries. Generators, furniture, office equipment, fuel,
C) Financial Inputs: - Financial resources are required to cover both personnel and
material needs of the project. It is the back bone of the overall activities of the project.

4. THE MARKET STUDY

4.1 Market Analysis

There are a number of factors which affect the demand for standardized mixed-use buildings.
The most important of these factors to consider are population growth and income levels. The
currently expanding service Mixed use building in Chencha and from every corner of the
country, the city 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 people increases the need for the provision of different services. Nowadays, most
private business organizations need their own small-medium offices in order to provide their
services and provide their products, and they prefer the places that are found in the center or
close to the road.

As clearly indicated in the introductory part of this proposal, Chencha is the dynamically
growing urban center of Ethiopia. Though the market demand gap for mixed use buildings is not
clearly understood, there is a wider gap for such demand as many merchants and organizations
are flocking to the city every day. From prior business experiences, the demand for mixed-use
buildings is very high, and hence the demand and supply gap are very wide.

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3.2 The Demand-Supply Gap

There has been a significant growth in the number of local trades across the country. This
increase is mainly associated with the stimulation of economic activism and partly due to an
increase in the flow of local traders into the Chencha. Because Chenchan is a major commercial
center, there has been a significant increase in business activities and, as a result, an increase in
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 demand and that of the supply for modern bank and cafeteria
accommodation. Hence, this project would not face any problem of demand scarcity for its
business center and it would provide good service to customers.

3.3 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 public infrastructure 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 Chencha is booming 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. Increasing numbers of
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.

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.

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Following our survey of office space users in several areas, they are mainly firms providing
banking, offices, cafeterias, restaurants, supermarkets, and computer center services. Future
demand for office space is actually driven by the growth in the number of offices in the city,
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,

3.5 Prospective customers

The target customers of this envisaged project include:

1. Business Community
2. business organizations
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 the 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 services and facilities,

 Promote in association with the key location and nearby businesses

 Working on sustained promotional work.

 Working on public relations to reach and influence key personas and organizations with
the capacity to make decisions.

 maintaining the quality of its services and facilities and consistently improving in
response to changing circumstances

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 Seasonal discount pricing and other 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. This is
price-based 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 keep up with the different
competitors in the market. Moreover, it will frequently conduct competitor research which
focuses on the strengths and weaknesses of 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 Chencha villages 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 make it 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 a modern business center that primarily serves its guests and major
clients.

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Table 1: The plan is that the ground will be partitioned in to different rooms:

Building Description Meas Unit price Total Remark

ure in Birr

Basement Parking Service Cars - - Cost will be

determined during
design period.

Ground Supermarket, Pharmacy, M2 - - Cost will be

Banking & Insurance determined during
design period.

1st floor - Beauty salon, shop, M2 - - Cost will be

Computer Center, determined during
Cafeteria and Restaurant design period.

2ndfloor Conference hall and M2 - - Cost will be

other offices determined during
design period.

Total 3000 - 30,917,063.61

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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, cafés, and
restaurants. Therefore, the sources of revenue have been classified into one category, namely the
rental of banking and supermarkets, offices, shops, bedrooms, restaurants, and cafés based on
these classifications. Based on the market price of similar mixed-use buildings in the area, the
envisioned buildings set the following fair price (before VAT) for their services. Hence, when
the building construction is fully operational, it is assumed to generate a yearly income of ETB

12,538,850.

5. TECHNICAL STUDIES

5.1. Description of the project Service

The envisioned multi-purpose building will provide different rental services to the different
customer groups for different purposes. The building will have a basement, ground floor, and
twelve floors. The purpose of the building is explained as follows:

 The ground floor is for different business centers like banks, supermarkets, beauty salons
(for men and women), computers, pharmacies, internet cafés, boutiques, different shops,
and other business activities.
 1-2 floors are designed for offices.

5.1.1 Land Use Plan

The total land required for the envisioned project is estimated to be 3000 m2.

Table2: land utilization Plan

No Description Land M2

Basement Ground First floor-Twelve floor

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1 Building (G+2)

1.1 Ground 3000

1.3 First floor-second floor 3000

Total 3000

5.2. Construction work and Technology

5.2.1 Construction schedule

The construction project is scheduled to begin in 2022 and be completed in [Link] is

made up of five major activities: concrete, building enclosure, masonry, mechanical and
electrical installation. Concrete activities include processes such as placing foundations and slabs
on deck. The Building Enclosure Phase includes erecting the scaffolding that will allow for
exterior sheathing installation and bricklaying.

Mechanical and electrical installations 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 is 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 certainly impact the project schedule by causing
unforeseen delays and project inefficiency.

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5.2.2 Architectural Layout & Design

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 be
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 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.

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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.

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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 3: Utilities

No Description Qty. Unit cost Cost (Birr)

1 Electricity supply, kWh 100,000 1.30*10,000 13,600

2 Water Supply m3 50,000 10*500 5,000

3 Telephone and Internet Broadband 20,000

4 Fuel, Oil and lubricant 2000 19*2000 38,000

Total 76,600

The source of finance will be equity capital and long-term loans. It is assumed that the mixed-use
building will be capitalized by its owner in an amount equivalent to 30 percent of the total initial
investment amounting to birr 10,002,111.9 and the remaining balance of birr 23,380,261.9 or 70
percent of the total investment through a long-term loan.

It is also assumed that the long-term loan will have a 15% annual interest rate and will be repaid
in 10 (ten) years. Bank loan repayment and disbursement schedule of the proposed Mix Use
business center

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Table [Link] loan repayment schedule

Project Principal Interest 15% Total Outstanding

year payment repayment balance

0 1 54,804,031

1 5,480,403.1 8,220,604.65 13,71,007.75 49,323,627.9

2 5,480,403.1 7,398,544.19 12,878,947.29 43,843,224.8

3 5,480,403.1 6,576,483.72 12,058,886.82 38,362,821.7

4 5,480,403.1 5,754,423.26 11,234,826.36 32,882,418.6

5 5,480,403.1 4,932,362.79 10,412,765.89 27,42,015.5

6 5,480,403.1 4,110,302.33 9,590,705.43 21,821,612.4

7 5,480,403.1 3,288,241.86 8,768,644.96 16,441,209.3

8 5,480,403.1 2,466,181.4 7,946,584.5 10,960,806.2

9 5,480,403.1 1,644,120.93 7,124,524.03 5,480,403.1

10 5,480,403.1 822,060,465 6,302,463.57 0

6. ENGINEERING AND CIVIL WORKS

6.1. Land, Building and Civil Works

The Mixed use building has a total site area of 3000 m2. The building floor area has covered

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2050 m2 and the remaining 50 m2 is left for working 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 Estimated total
price

A. SUB-STRACTURE

1 excavation and earth works 250,570.67

2 concrete work 3,950,546.34

Sub total 4,201,117.01

B. SUPER STRACTURE

1 Concrete work 4,750,500.45

2 Block work 2,551,534.40

3 Roofing 3,100,000.00

4 Carpentry and joinery 2,000,000.00

5 Metal works 2,250,860.00

6 Finishing 4,500,379.44

7 Painting 750,798.88

8 Electrical installation 1,236,330.00

9 Sanitary installation 2,151,022.00

Subtotal 23,291,425.17

A+B 19,492,542.27

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Contingency (15%) 2,923,881.34

Grand total 30,917,063.61

6.2. IMPLEMENTATION SCHEDULE AND MIXED USE BUILDING

OPERATION

Based on the expectation of the company owners, the support of government to allot the required
land for the purpose is very critical. Then after, the company investment activities which include
the land development, construction of additional necessary buildings, procurement of machinery
and routine Mixed use building operation will most presumably complete within 18 months of
period. The detail investment activity towards fulfilling and beginning of production of intended
product is illustrated here in below:-

Table 6 Implementation program of the mixed use building

No Activity Project years

2025 2025 2026 2026 2027 2028&

above

1 Project business plan study and X

submission

2 Land re arrangement x

3 Land development x x x

4 Construction of houses and x x

functional facilities water
resource development (water
for use and irrigation)

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5 Purchase of additional x x x x x
machinery, vehicle, equipment
and facilities

6 Bank loan arrangement and x x x x

repayment

7 Procurement of Mixed use x x x x x

building machinery transport
equipment and facilities

8 Purchase of annual Mixed use x x x x x x

building input and production

9 Harvesting and processing of x x x x

by product

10 Maintenance x x x x

11 Human resource development x x x x x

12 Product disposal and marketing x x x x

7. ORGANIZATIONAL STRUCTURE HUMAN POWER

7.1. 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

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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.

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.

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 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

Owners/Manager

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Figure [Link] structure

7.2. Manpower Requirement and Annual Labor Cost

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7.2.1. 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.

Table 7: Manpower Requirement and Annual Labor Cost

No Position Number of Salary ETB Monthly Annual total

1 Manager 1personnel 5,000 5,000
total salary 60,000
salary

2 Human resource 1 3,000 3,000 36,000

3 Finance & Store 2 3,500 7,000 84,000

control

4 Receptionist 2 2,500 5,000 60,000

5 House keeping 5 1,000 5,000 60,000

6 Security 2 1,500 3,000 36,000

7 Janitor 2 2,000 4,000 48,000

8 Laundry worker 2 2,500 5,000 60,000

Total 17 36,000 444,000

8. FINANCIAL REQUIREMENT AND ANALYSIS

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The financial resource is a prime resource for undertaking any activities. Hence for
implementing this mixed use building a total of 34,924,515 is required. From this 30%
10,477,354.5 birr will be covered by the promoter of the project while the rest 70%
24,447,160 .7 will be covered through loan from bank at the prevailing interest rate.

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

8.1. fixed Investment

A. Table 8. Land, Building & Construction
S.N Description of works Total Cost in birr

1 Building construction 50,917,063.61

2 Site Development 50,000.00

3 Design and supervision 300,000.00

4 1st Year land lease 150,640

Total 30,917,063.61

B. Table 9. Building Machineries and Equipment

SN Description Measure Qty Unit cost in Total cost in
ment Birr Birr.

1 Generator Unit 1 350,000.00 350,000.00

2 Network installation 200,000.00

3 Electric installation 150,500.00

4 Plumber 50,300.00

5 Fire extinguisher Unit 12 16,000.00 192,000.00

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(Security Equipment)

6 Elevator Unit 1 750,000 750,000

Total 1,692,800.00

Table 10. Office Equipment

SN Description Measurement Qty Unit cost in birr Total cost in Birr

1 Managerial tables Unit 1 12,600.00 12,600.00

2 Managerial chairs Unit 1 19,500.00 19,500.00

3 Office table with chair Unit 7 12,000.00 12,000.00

4 Secretarial table with chairs Unit 1 8,500.00 8,500.00

5 Computer with chairs Unit 1 15,000.00 15,000.00

6 Shelf Unit 3,500.00 3,500.00

7 Filing cabinets Unit 1 1,500.00 1,500.00

8 Guest chairs Unit 1 4900 4900

9 Fax & Telephone machine Unit 1 1,300.00 1,300.00

10 Carpet and Curtain LS 1 23,000.00

Total 150,800.00

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Table 11 Operating Expenses

SN List of Items Annual cost in birr Assumptions Used

1 Audit and legal fee 48,000.00 4000 br/per ,month

2 Stationery supplies 12,000.00 1000 br/month

3 Promotional Cost 40,000.00 Lump sum annual cost

4 Property Insurance 84,009.00 1% of the building

5 Cleaning Supplies 12,000.00 1000 br. Per month

6 Uniforms 12,000.00

7 Water consumption 5,000.00 2500 m3 by 3.15 br

8 Electric consumption 130,000.00 100,000KWH By Br.1.30

9 Fuel 38,000.00 2000 lit per year by Br.19

11 Telephone & fax 20,000.00 1800 per month

12 Repair expense 31,305.00 2% of building cost

13 Miscellaneous costs 40,000.00 6000 per month

Total 513,027.00

Table [Link]-service Expenses

SN Description Cost in birr

1 Project proposal 100,000.00

2 Licensing fee and others

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Total 100,000.00

Table [Link] of Total initial investment cost

SN Description Cost in Birr Percentage

Share

1 Land, building & construction 50,917,063.61

2 machines & Equipment 2,692,800.00

3 Office Equipment 1,150,800.00

4 Salary expense 432,000.00

5 Operation Expense 1,513,027

6 Pre service Expense 100,000.00

7 Total Working capital 8,626,372.86

8 Contingency capital of total cost 5,492,451.53

(10%)

Total initial investment capital 78.804,031

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9. FINANCIAL ANALYSIS

The financial analysis of thismixed 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 15%
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

9.1. Repair and Maintenance Cost

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

Table14: 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

9.2. Depreciation and Amortization

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

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

 Machinery and Equipment’s 10%, linear to scrap Value

9.3. Total Revenue

Revenue estimate of the Mix Use building

Project annual revenue from sales is estimate on sales of 22 well furnished with hot shower guest
rooms and sales of other rooms (4 rooms for shops and 1 room for cafeteria/bar). The sales
revenue schedule is shown below.

Table 15 estimated revenue from bed room sale

Description Year 1 Year 2 Year 3 Year 4 Year 5

Number of rooms 22 22 22 22 22

Designed Annual 8,030 8,030 8,030 8,030 8,030

Capacity

Occupancy % 60 70 80 90 100

Total sale room 4,818 5,621 6,428 7,227 8,030

night

price 300 300 300 300 300

Room revenue 1,445,400 1,686,300 1,928,400 2,168,100 2,409,000

Table 16estimated revenue from shop room rent

Description Year 1 Year 2 Year 3 Year 4 Year 5

Number of rooms 10 10 10 10 10

Designed Annual 120 120 120 120 120

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Capacity/month

Occupancy % 100 100 100 100 100

Total sale room/year 120 120 120 120 120

Price/month 5,000 5,000 5,000 5,000 5,000

Room revenue 600,000 600,000 600,000 600,000 600,000

Table 17estimated revenue from other room/for Bank

Description Year 1 Year 2 Year 3 Year 4 Year 5

Number of rooms 2 2 2 2 2

Occupancy % 100 100 100 100 100

Total sale room/year 2 2 2 2 2

Price/month 20,000 20,000 20,000 20,000 20,000

Room revenue 480,000 480,000 480,000 480,000 480,000

The conference hall holding capacity is 1,000 people at a time. The annual revenue from the
conference hall is 200,000. Because the iterance fee per person is 200 ETB Birr.

Table 18 summary of projected revenue of the Mix Use Building

Description Year 1 Year 2 Year 3 Year 4 Year 5

bed room rent 1,445,400 1,686,300 1,928,400 2,168,100 2,409,000

shops rent 600,000 600,000 600,000 600,000 600,000

Other room rent/for bank 480,000 480,000 480,000 480,000 480,000

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Conference hall 200,000 200,000 200,000 200,000 200,000

Total annual estimated 2,725,400 2,966,300 3,208,400 3,448,100 3,689,000

revenue

7.4. 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 3 year 9 months.

7.5. Cash flow

. Projected financial statement

Project is based on a number of assumptions (based on this assumption a complete set of

financial project are provide in this section. These projections include profit/loss statement and
financial statement. The project is prepared on an annual basis.

The envisioned Multipurpose build will generate birr 2,725,400 during its first year of operation
when it operates as 60% percent and birr 3,689,000 when its full operation of guest rooms,
generate birr 2,409,000 from shops rent when it’s full operation and generate birr 480,000 from
rent of other room/rent for bank occupancy rate when it’s full operation.

The costs of sales are also projected will be birr 455,600 birr in the first year of operation and
489,000 in the fifth year

The project will pay approximately birr 3,360,000 in interest on the long term loan during the
first year and birr 2,016,000 during the fifth year of operation.

Finally the Mix Use Building will generate a net profit that grows from birr 1,475,370 in the first
years to birr 8,881,340 during the fifth year of operation.

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Table [Link] and loss statement of the Mix Use Building

Description Year 1 Year 2 Year 3 Year 4 Year 5

Gross revenue 2,725,40 2,966,300 3,208,400 3,448,100 3,689,000

Cost of sales 455,600 471,000 479,000 479,000 489,000

Profit before tax 2,269,80 2,495,300 2,729,400 2,969,100 3,200,000

Profit tax 35% 794,430 873,355 955,290 1,039,185 1,120,000

1,475,37 1,621,945 1,774,110 1,929,915 2,080,000

CUM Net profit 1,475,37 3,097,315 4,871,425 6,801,340 8,881,340

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

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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.

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 34.13% 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 Birr33, 361,948.43 which is acceptable.

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10. CONCLUSIONS AND RECOMMENDATIONS

10.1. 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,

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financially and commercially viable as well as socially and economically acceptable. Hence the
project is worth implementing.

8.2. 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.

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9. MONITORING, REPORTING AND EVOLUTION

Monitoring and evolution will be an integral part of the process implementation periodic
monitoring will be conducted by the project. Periodic monitoring focuses on follow up of the day
–to-day activities of each activities project evaluation on the other hand focuses on the impacts
based on its achieving will be processed on participatory with its stakeholders

9.1. Monitoring
Monitoring activities include measuring the physical performance and quantity of the work done,
correlation of the work done with set plan and timetable.

9.2. Reporting
The project will report major accomplishment of the months to respective government bodies
ever six month. The report will be submitted to Gamo zone investment office.

9.3. Evaluation
Evaluation will be conducted three times during the project life years. At the beginning, in
meddle and at the end of project life years. The evaluation based on the overall goal and purpose.
The scope of the evaluation will be:

 The extent to which purpose the project have be fulfilled

 The expected profit will be maximized
 Impact contribute to socio economic development of countries
 Resource to achieve a better occupancy.

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