PROJECT PROPOSAL FOR THE

CONSTRUCTION OF MIXED USE

BUILDING

PROJECT TO BE IMPLEMENTED IN
BENISHANGUL GUMUZ REGION
ASSOSA TOWN

PROMOTER: - ZERIHUN MAGERSA

CONTACT: 0911808519

Area required: 2000 m2

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 AUGUST, 2022
Assosa, Ethiopia

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Contents
Executive Summary...........................................................................................................III
1. Introduction..................................................................................................................1
1.1. General Background.................................................................................................1
1.2. Objective of the project............................................................................................2
1.3. Project description........................................................................................................2
1.4. Project Rationale.......................................................................................................3
1.5. The significance of the project.................................................................................4
1.6. Project Location........................................................................................................5
2. The market Study.........................................................................................................6
2.1. Market Analysis........................................................................................................6
2.2. The Demand-Supply Gap.........................................................................................6
2.3. Current supply of mixed use building......................................................................7
2.4. Future market or Demand of commercial Building rental........................................8
2.5. Target customers.......................................................................................................9
2.6. Marketing promotion and strategy............................................................................9
2.7. Competition..............................................................................................................9
2.8. The project facilities and Services plan..................................................................10
3. Technical Study.........................................................................................................11
3.1. Description of the project Service/ Product mix.....................................................11
3.2. Land Use Plan.........................................................................................................11
3.3. Construction work and Technology........................................................................12
3.3.1. Construction schedule......................................................................................12
3.3.2. Architectural Design & Layout.......................................................................12
3.3.3. Structural design..............................................................................................13
3.3.4. Reinforced concrete.........................................................................................13
3.3.5. Foundation Design...........................................................................................13
3.3.6. Construction Plan and process.........................................................................14
3.4. Utilities...................................................................................................................15
3.5. Project implementation...........................................................................................15
4. Organizational Structure............................................................................................15

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 4.1. Organization and management...............................................................................15
4.2. Man Power..............................................................................................................16
4.3. organizational Structure..........................................................................................16
5. Financial Requirement and Analysis.........................................................................18
5.1. Fixed Investment....................................................................................................18
5.3. Financial analysis and Statements.......................................................................22
5.3.1. Underlying Assumption...............................................................................22
5.3.2. sources of Fund............................................................................................23
5.3.3. Bank loan Repayment Schedule..................................................................23
5.3.4. Depreciation Schedule.................................................................................24
5.4.1. Income loss/statement..................................................................................24
5.4.2. Cash flow Statement....................................................................................25
5.1. Profitability.............................................................................................................25
5.2. Pay-Back periods....................................................................................................26
6. Conclusion.................................................................................................................26

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Executive Summary
1. Project name: ZERIHUN MAGERSA Mixed use Building
2. project Type : Multipurpose service business building
3. Nationality: Ethiopian
4. Project Owner: ZERIHUN MAGERSA
5. Project location: BGRS Assosa City infront of Assosa University
6. Project composition: multipurpose Building (G+3) used for diverse business
centers like banking & insurance, super market, shopes, restaurant, café, beauty
salon, Pharmacy, bed rooms and offices.
7. Area Required: 2000 m2
8. Total investment Cost: 5,000,000 ETB is required from this amount 30% or
1,584,480.5 ETB from owner equity and the rest 70% from bank loan.
9. Employment opportunity: 26 individuals on permanent 80 on casual basis
10. Social and Economic Benefit: provide better Building service, employment
opportunities, generation of income and benefits for the local people.

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 1. Introduction
1.1. General Background
The current fast and dynamic economic growth of Ethiopia especially in urban area
necessitates equivalent growth of building and construction sector. The sector should
expand rapidly to support the overall economic development sustainable.
In the building sector of the economy, the multi- purpose in the one becoming rapidly
expanding in urban areas of the nation since dynamic economic development of urban
economy requires the construction of these buildings in towns to support the growing of
business service sectors like supermarkets, Beauty salon, shops, offices cinemas,
Computer Center, Cafeterias, restaurant, assembly hall, guest house and other activities.
In this regard, mixed used building expands in the all parts of the country.
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 percent over the last ten years and
population increase. The relatively good performance of the macro-economy (real growth
in GDP, low inflation rate and growth in investment and export sector) has stimulated
unprecedented investment growth in the property sector over the last five years. The
growth of investment in the property market over the last five years in consistent with the
global experience suggesting that investment in the residential and commercial property
(real estate) is greatly influenced by the performance of the macroeconomic conditions.
In general, a stable macroeconomic condition leads to economic and business growth and
develops investors’ confidence. This certainly spurs large demand in the property market
for office space, shopping malls, catering services, apartment and residential houses.
Following growing demand trends, and with the expectation of high return on their
investment capital, large number of land developers pooled their financial resources and
invested in the property market.

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To this effect, the owner of the envisioned Mixed Use Building ZERIHUN

MAGERSA who has been living for long time in this town, planned to construct in
Assosa City and undertaken this project study to check the market, technical and
financial feasibility of this project. The promoter is very ambitious and committed to
realize the project. Hence, she expects to get the necessary support from the city
administration to make the project to be operational.
Looking at the past trends and permits issues by the Government to the construction of
real estate properties including the mixed use building in the major urban areas of the
country especially in Addis Ababa one can easily conclude that the momentum is more
likely to continue.
Besides, the government polices and incentives for the private sector investment are very
promising that motivates the promoter to engaged in mixed use building business.

1.2. Objective of the project

The major goal of this project is to contribute towards the growth of the trade sector in
Assosa City. Its specific objectives include the following.
 To construct and develop modern shops, offices, and restaurant, bedroom & cafeteria
facilities that enable to provide standard services to visitors.
 To undertake trading and other refuted business activities that enable to generate a
reasonable to the invested capital.
 To develop modern business centre that would provide services of international
standard in order to attract foreign visitors and thereby contribute to wards the
generation of hard currency for the country.
 To create employment opportunities for the population in the town and
 Contribute towards the beautification of the town through the construction of modern
building infrastructure and facilities.
1.3. Project description
The long-term goal of the project is become the best choice in Assosa City and its
surrounding areas by creating a differentiated experience capitalizing on personal service.
The proposed project will have a total area of 2000m2, designed to reader a multipurpose

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giving business, which will in turn plays significant role towards solving shortage of
business center in Assosa Town.
The nature of the town as business unique location in one of the most attractive parts of
the country because of the city is capital City of the region and construction of the
Renaissance dam under the region. The owner plans the project to render banking and
insurance, shopping facility, bank and cafeteria services to create high quality class to
satisfy the interest of customers in the 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 restaurant and
café, national and international dish and various types of soft drinks.
1.4. Project Rationale
Internationally the economic growth this country is experiencing, the good governance
created and even if the town is in its nascent stage of development these project are the
first in kind in the town are feasible and would be a model development in promoting and
attracting different urban investments.
In order to respond to the created environment the town is in need of major, basic and
feasible urban projects to be developed.
The existing promising investment opportunities, the demands of service needs along
with relatively sound investment support made by the government in such kinds of
feasible projects, compelled the project promoter to initiate the multipurpose oriented
business project to be established. Despite the promising business opportunities of the
town, the trend on such kinds of investment found to minimal. Since there is no such kind
of modern tourist facilities and business station in the town to accommodate the existing
demand of these services in the town and the surrounding areas. The mismatch between
the demand for and supply of such kind of services in easily observed in the town.
Therefore, the existing shortage or absence in the supply of these services, along with its
commercial and administrative access, better location and infrastructure access,

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escalating trend of urbanization and business activities, thus it is with such reason that
this project is identified and proposed and assumed to be more profitable.
In general, the country’s decentralized state based economy, privatized and free market
economy; good governance creates a favorable environment for the development of
investment for private investors.

1.5. The significance of the project

The envisaged project deemed to add to the economic development of the nation in
general and zone and town in specific with following ways:
A. Source of Revenue
As public policy of any nation, the government collects different forms of taxes from
different business organizations and individuals. Among the different forms of taxes,
business income taxes, payroll income tax and VAT are collected from undertaking
business activities. Therefore, the building will serve as sources of revenue for the town
as well as for the region.
B. Employment opportunity
One of the problems that our country faced is unemployment. Therefore, the current
objective of the government is working on tackling the problem of unemployment and
fostering the development process either through creating self employment or
employment in other organization. Hence, this project will hire 26 individuals and more
than eighty individual during construction.
C. Sources of social service
In addition to serving as a source of employment and income for the region, the project
renders social services for different group of people. Hence, it Is also provide the
following services;
 Serve as a source of mental satisfaction for the different users,
 Since, the center encompasses different recreational areas; it will divert the attention
of the users from different evil deeds.
 It deemed to minimize the demand for shops and other bundles of services in the area.

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Furthermore, it serves as the pilot experience and ground for other investor to enter in to
such kinds of urban development. It also contributes on the efforts made on as a character
given building for physical development pattern of the townscape.

1.6. Project Location

As aforementioned on the introductory part the envisioned project is intended to be
located in Assosa Town which is capital City of BGRS at about 667 km from Addis
Ababa to the North West. The zone extends from 09 059’30’’ to 10o7’0’’ latitude and
34031’0’’ to 34o37’0’’ longitude. Most part of the Town has elevation of ranging from
1300 to over 2200m. ASOSA town is the administrative centre of the zone.
Assosa town is capital city of BGRS. The town has a longitude and latitude of 7 o21’N
38o42’E/7.35oN 38.7oE and an elevation of 2043 meters above sea level. The town is
selected because of geographical proximity of the town for Great Renaissan Dam.

Figure 1: location map of the project area

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 2. The market Study
2.1. 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 coffee processing industry in the town and
around the town has been inviting skilled and unskilled labor forces to the town; in
addition, the number of both government and non government offices has been
increasing. Above all the increase in the number of population of the town increases for
the provision of different services. Nowadays, most of the private business organizations
need their own small-medium offices in order to give their services and provide their
products, and they prefer the place that found in the center of the town or close to the
road.
As clearly indicated in the introductory part of this proposal Assosa Town is dynamically
growing town. Though the market demand gap for mixed use building in Assosa Town is
not clearly understand there is wider gap for such demand as many merchants,
organizations are flouring to the town every day. From prior business experiences, the
demand of mixed use building in Assosa Town is very high and hence the demand and
the supply gap is very wide.

2.2. The Demand-Supply Gap

Assosa town is capital city of BGRS in which Ethiopian constructing Great Renaissance
Dam. Assosa town is also a major business center and commercial route that attracts
thousands of business travelers. These are also the most important groups of potential
customers that include both the local and foreign tourists and the modern business
community who choose services that range from economic to high class standards. These
groups would also choose a healthy comfortable climate that combines a more traditional
type with that of modern shops, offices, bedrooms restaurants and cafeterias. Even
though when compared with similar zonal towns in the region Assosa Town seems to
have no developed mixed use building, the existing supply is far behind the growing
demand for standard service. Hence, the project will solve the serous demand problem in
the town.

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

2.3. Current supply of mixed use building

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

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

Table 1: Office Space Demand Forecast

Office space demand under base Office space demand under high case
case economic economic
Years Growth Growth
2022/2023 9,916,543 11,304,859
2023/2024 11,007,363 12,057,416
2024/2025 12,218,173 12,953,878
2025/2026 13,562,173 13,963,577
2026/2027 15,054,011 14,554,534
2027/2028 16,709,952 14,987,431
Source: G Two estimation based on GTP’s forecasted Ethiopian Economic Growth

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2.5. Target customers
The target customers of this envisaged project include:-
1. business Community
2. Nearby business organization
3. the government bureau
4. small accounts(SOHO) SME
5. Nongovernmental organizations

2.6. Marketing promotion and strategy

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

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

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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
Ethiopia which compete with it.

2.8. The project facilities and Services plan

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

Table 2: The plan is that the ground will be partitioned in to different rooms:
Building Description UOM Unit price in
Birr
Ground Supermarket, Pharmacy, Banking & Insurance M2
1st floor Beauty salon, shop, Computer Center, Cafeteria & M2
Restaurant
2nd floor Different governmental, NGO & other offices M2
3rd floor Bedrooms service M2
Parking Service Car
Total
Since the project will be engaged in mixed building the main sources of its annual
revenue would be from the rental of building spaces such as shops, offices, and banking,
café & restaurant bedrooms. Therefore, the sources of revenue have been classified in to
one category namely the rental of banking & supermarket, offices, shops, bedrooms
restaurant and café based on these classifications. Based on the market price of similar
mixed use building in the area, the envisioned buildings set the following fair price

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(Before VAT) for its service, hence when the building construction fully get operational
it is assumed to generate a yearly income of ETB 2,675,000.
3. Technical Study
3.1. Description of the project Service/ Product mix
The envisioned mixed purpose building will provide different rental services to the
different customer groups for different purpose. The building will have basement, ground
and eight floors. The purpose of the building explained as follows;
 the ground floor, first floor and second floor designed for different business
centers like banks, supermarket, beauty salon(man and women), Computer
center, pharmacy, internet café, boutiques, different shops and other business
activities,
 The third floor designed for bed room services.
Besides, the buildings will have enough parking facility for its customers and green area
in its compound.

3.2. Land Use Plan

The total land required for the envisioned project is estimated to be 2000m 2. The total area
for the construction of the building will be 800m2, as revealed below.
Table 3: land utilization Plan
SN Description Land M2
Ground 1st 2nd 3rd
floor floor Floor
1 Building (G+3)
1.1 Basement 800
1.2 Ground 800
1.3 First floor 800
1.4 Second Floor 800
1.5 Third Floor 800
Parking & Green area 1200
Total 2000

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3.3. Construction work and Technology
3.3.1. Construction schedule
The construction project is proposed to be started on January 2022, and is expected to be
finished on January 2023. as seen in the abbreviated construction schedule above, a
majority of the schedule’s time is made up of five major activities; Concrete, building
Enclosur, masonry, mechanical &HVAC and Electical install. Concrete activities include
processes such as placing foundations and slab on deck. The Building Enclosure Phase
includes erecting the scaffolding that will allow for exterior sheathing installation and
bricklaying.
Mechanical and Electrical install coincide with each other due to the need for
coordination between the two divisions. There are several periods of construction during
the schedule in which there are multiple construction activities occurring at the same
time.
The construction site must be organized accordingly as these processes take place. As
with any construction project, the goal of the schedule was to complete all construction
activities before the required Date of completion.
This date of completion is practical based on the time of year in which the building will
be completed. The team allowed a two week contingency for any setbacks. Typically,
winter construction tends to cause unforeseen delays that negatively impact a
construction project. These conditions can and will almost undoubtedly impact the
project schedule by causing unforeseen delays and project inefficiency.
3.3.2. Architectural Design & Layout
Although functional spaces for the project were laid out in significant detail, the
rest of the building had designated spaces but n set layouts. It was at the discretion of the
project promoter to devise typical layouts for the non-detailed commercial and office
spaces. To make sure that the 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 were congruent with the structural
frame and column locations.

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3.3.3. Structural design
One of principle deliverables of our project is the structural design of the building. The
structural bays were coordinated wit the layout of the building adjustments were made to
the bays if specific layouts are necessary. The frame was made up of a grid with
repeating standard structural bays. Included in the structural system are bay sizes, shape
and size of structural members, floor compositions and curtain walls. These elements
were established to resist gravity ad lateral loads as appropriate.
The gravity load design was completed for two frames; one of structural steel and one of
reinforced concrete. The structural steel frame was chosen for further design based on
cost per square foot, local availability of material and constructability considerations,
such as erection and fabrication. The steel system was then designed for lateral loading
with necessary adjustment being made to framing.
3.3.4. Reinforced concrete
The project group prepared hand structural design calculations for a typical bay of a
reinforced concrete frame. In all reinforced concrete bay designs, a superimposed dead
load of 7.5 pounds per square foot was assumed for mechanical equipment, floor
coverings and ceilings.
Similarly, the design of the typical bay accounted for the use of different commercial
space, in which a live load of 125 pounds per square was assumed. Loads were calculated
based on the requirements of the minimum Design loads for Buildings and other
Structures.
3.3.5. Foundation Design
The design of a superstructure may be accurate, have considered all possibilities and still
fail because the substructure is incapable of distributing the applied loads to the
supporting soil.
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.

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3.3.6. Construction Plan and process
The project team developed a coordinated project schedule and construction plans that
would reflect the expectations for an actual construction project. The project schedule
was developed using the preliminary designs given to the project team.
Additionally, the group considered typical construction activities and durations taken
from similar construction projects as well as realistic constraints on building
development. For instance, it is necessary for the structural frame to be completed before
concrete can be placed for the slab on deck. Hand drawn construction plans detailing site
entrances and storage areas were coordinated with the project schedule to give the reader
visualizations of the construction site set up through various periods of the construction
process.
The construction process for this project is normally a disjointed three mages
development by which the conceptualized need of the promoter of this project is
translated into a functional facility that will meet their needs in terms of time, cost and
quality.
Based on a general program of the project owners the consultant who is going to be hired
makes site studies, develops structural designs, prepares drawings and specifications,
determines quantities involved and estimated the resultants costs. All these activities will
be done in the first phase of the project which is the design stage after the document are
produced by the designers have been received, and the works secured the project is
supposed to enter the tendering stage. At this stage contractors study the project
document analyze and subsequently determine the construction methods, built up their
unit rates and submit their bids for the works. The promoter of this project intends to
compare the bids and award the contract for the lowest responsible bidder. This, is of
course, presupposes that the favorable proposal does not exceed the allocated budget.
After the award is made and the contract signed between this project owner and the
contractor, the project constructor is expected to prepare and submits a detailed
construction program which includes material schedule, manpower requirement and cash
flow forecast.
After the award is made and the contract signed between this project owner and the
contractor, the project constructor is expected to prepare and submits a detailed

14
construction program which includes material schedule, manpower requirement and cash
flow forecast.
3.4. Utilities
A number of utilities world be put in place in order to ensure smooth functioning of the
project. These utilities include:
 Water Supply,
 Supplementary Electricity supply.
 Telephone line Internet Broadband
 Fuel, Oil and lubricant
 Drainage Facility
3.5. Project implementation
The 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 the above
matured major activities is presented below:
Table 4: project Implementation schedule
SN Activities Date
1 Land request processing June – August, 2022
2 Land approval Sep, 2022
3 Bank loan processing Nov-Dec 2022
4 Site Development Jan-mar 2023
5 Building and construction work Apr, - June 2023
6 Preparation for service July, 2023
7 Service execution October, 2023

4. Organizational Structure
4.1. Organization and management
The organizational structure should be in a way that the company able to achieve its
objectives as well as the satisfaction of standard requirement. In addition to this, the
structure should fit the dynamics of all customers in the building ranging from small
business to large tenants.

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4.2. Man Power
The total manpower required for the building will be 26 persons. The manpower list and
the corresponding labor cost are shown in part five of this document.
4.3. Organizational Structure
The organizational structure of the project is designed by including all the necessary
personnel under the right division. At the top of the organizational structure, there will be
manager with the responsibility of supervising the overall activity of the building.
Depending up on the nature of the center and the amount of work to be performs; there
exist auxiliary units under the general manager.
Employees under each unit will be supervised by the department head that is accountable
for the general manager. General manager is appointed by owner.

Owner

General
Manager

Building Marketing Technical and

Admin maintenance
manager

HRM and
finance IT, Electricity
and plumper

Cashie Purch
r aser

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 Fig 2: organization structure of the Building
As clearly shown in the organizational structure, the center organization has one general
manager and three main sections. Under the general manager there are the, marketing
Department, maintenance and building administration department. Under building admin
dept there exist two sections i.e., HRM & finance and general service. Further sub
sections are also organized under technical and maintenance manager. The following
section deals with the duties and responsibilities of each department.
A. The General 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.

17
  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
5. 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 5,000,000 ETB is required. From this
30% 1,584,480.5 birr will be covered by the promoter of the project while the rest 70%
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 3,060,990.00
2 Site Development 25,200.00
3 Design and supervision 120,000.00
4 1st Year land lease & (10%) down payment 26,239.5
Total 3,232,429.50

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 B. Building Machineries and Equipments
SN Description Measure Qty Unit cost in Total cost in
ment Birr Birr.
1 Generator Unit 1 120,000.00 120,000.00
2 Carpentry tool box Set 1 17,000.00 17,000.00
3 Electrician tools box Set 1 18,500.00 18,500.00
4 Plumber tools kit Set 1 12,300.00 12,300.00
5 Fire extinguisher Unit 10 6,000.00 60,000.00
(Security Equipment)
6 Total 227,800.00

C. Vehicle
SN Description UOM Qty Unit Cost in Total cost in Remark
Fr. Birr
1 Mini-Bus Unit 1 300,000.00 300,000.00 Duty Free
Total 300,000.00

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

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10 Carpet and Curtain LS 1.00 23,000.00
Total 112,450.00

5.2. Working Capital

5.2.1. Operating Expense at full Capacity2
A. salary Expense
SN Position No Qualification Monthly Annual
salary in salary in
Birr Birr
1 General manager 1 BA in management 300 36,000
2 Building admin 1 BA in Acct/Mgt 2500 30,000
3 Secretary 1 10+2 in secretariat science 900 10,800
4 HRM Officer 1 10+2 in HRM/Management 950 11,400
5 Technical and maintenance 1 Diploma in building maintenance 1500 18,000
manager
6 Finance head 1 BA in Accounting 2500 30,000
7 IT Technician 1 Diploma in computer science/IT 1150 13,800
8 Marketer 1 Diploma in marketing 1150 13,800
9 Accountant 1 Diploma in accounting 1150 13,800
10 Guards/Security 4 Basic 500 24,000
11 General Service head 1 Diploma in Management 1500 18,000
12 Purchaser 1 Diploma in purchasing &Sup Mgt 1150 13,800
13 Electrician 1 10+2 in general electricity 1000 12,000
14 Plumber 1 10+2 in general mechanic 1000 12,000
15 Casher 2 10+1 in bookkeeping 850 20,400
16 Cleaner 5 Unskilled 450 27,000
17 Maintenance officer 1 10+2 in General mechanic 1000 12,000

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18 Driver 1 10 completed 850 10,200
Total 26 327,000
Benefit (20%) 65,400
Grand Total 392,400

5.2.2. Operating Expenses

SN List of Items Annual cost in birr Assumptions Used
1 Audit and legal fee 24,000.00 2000 br/per ,month
2 Stationery supplies 6,000.00 500 br/month
3 Promotional Cost 40,000.00 Lump sum annual cost
4 Property Insurance 84,009.00 1% of the building
5 Cleaning Supplies 10,800.00 900 br. Per month
6 Uniforms 1,670.00 180 per pes for 16 people
7 Water consumption 5,000.00 2500 m3 by 3.15 br
8 Electric consumption 6,000.00 20000KWH By Br.0.4736
9 Fuel 42,672.00 2032 lit per year by Br. 21
10 Oil & Iubricants 4,267.20 10% of fuel cost
11 Telephone & fax 18,000.00 1500 per month
12 Repair expense 72,018.00 2% of building cost
13 Miscellaneous costs 20,000.00 3000 per month
Total 334,436.20

5.2.3. Pre-service Expenses

SN Description Cost in birr
1 Project proposal 5,000.00
2 Licensing fee and others
Total 5,000.00

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 5.2.4. Summary of Total initial investment cost
SN Description Cost in Birr
1 Land, building & construction 3,232,429.50
2 Building machines & Equipments 227,800.00
3 Vehicle 300,000.00
4 Office Equipment 112,450.00
5 Total fixed investment cost 3,872,679.50
6 Salary expense 392,400.00
7 Operation Expense 334,436.20
8 Pre service Expense 5000.00
9 Total Working capital 731,836.00
10 Sub total 4,604,532.00
11 Contingency (10%) 460,453.20
Total initial investment capital 5,064,985.00

5.3. Financial analysis and Statements

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

A. construction and finance

Construction period 2 Years
Source of finance 30% equity and 70 loans
Bank interest rate 10%
B. depreciation
Building 10%
Building machinery and equipment 10%
Office Equipments 10%

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 5.3.2. sources of Fund
The source of fund to finance the project is planned to be from two sources. These are
promoter’s equity and bank loan. The loan is expected to be obtained from one of the
local lending institutions. Since the project is expected to take some times to repay all its
debts, the bank loan is assumed to obtain on long term credit basis. Taking the financial
position of the promoters into account, equity contribution and bank loan to finance the
total investment outlays of the project are assumed to be 30% and 70% respectively.
Accordingly, the total financial requirement from the two sources will be;
SN Description Percentage share Amount
Owners Share 30% 1519495.5
Bank Loan 70% 3480504.5
Total 100% 5,000,000.00

5.3.3. Bank loan Repayment Schedule

Year Principal Payment Interest (10%) Total annual Remaining
Payment in Balance
ETB
0 0 00 00 3545489.5
1 354548.95 354548.95 709097.9 3190940.55
2 354548.95 319094.005 673643.005 283691.6
3 354548.95 283639.16 63818.11 2481842.65
4 354548.95 248184.265 602733.215 2127293.7
5 354548.95 212729.37 567278.32 1772744.75
6 354548.95 177274.475 531823.425 1418195.8
7 354548.95 141819.58 496368.53 1063646.85
8 354548.95 106364.685 460913.635 709097.9
9 354548.95 70909.79 425458.74 354548.95
10 354548.95 35454.895 390003.845 0

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 5.3.4. Depreciation Schedule
SN Description Original Value Depreciation Depreciation per
in Birr rate in % year in Birr
1 Construction and Building 3,232,429.00 10 323,242.95
2 Bldg. machines & Equipments 227,800.00 10 22,780.00
3 Vehicle 300,000.00 5 60,000.00
4 Office Equipment 112,450.00 10 11,245.00
Total 3,872,679.00 417,267.95

5.4. Financial Statement

5.4.1. Income loss/statement
Project revenue and production costs are listed and compared to see whether the project
generate profits or not. Starting from first year of the project operation, the project will
generate a reasonable amount of net profit for the owners throughout its life period. Profit
and loss statement shows that the project will generate net profit of ETB 387842 in the
first year and increase to ETB 1147790 starting from the third year of the project life and
hence it is found to be profitable.
Mixed use Building profit/Loss Statement
Revenue Year 1 Year 2 Year 3 and after
Rental Income 1,785,000.00 2,380,000.00 2,975,000.00

Expenses
Salary Expense 235,440.00 313,920.00 392,400.00
Operating Expenses 200,661.06 267,548.08 334,436.20
Deprecation Building 323,242.95 323,242.95 323,242.95
Deprecation Bld. Machineries 22,780.00 22,780.00 22,780.00
and Equip.
Deprecation of Vehicle 60,000.00 60,000.00 60,000.00
Deprecation office Equip 11,245.00 11,245.00 11,245.00
Interest Expense3 354,548.95 319,094.055 177,274.475

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 Lease payment4 4,819.05 4,819.5 4,819.05
Total Expense 1,230,939.05 1,339,031.25 133,5298.65
Profit before Tax 554,061.00 1,040,968.75 1,639,701.35
Tax (30%) 166,218.03 312,290.625 491,910.405
Net profit 387,842.07 728,678.125 1,147,790.945

5.4.2. Cash flow Statement

Year Year 0 Year 1 Year 2 Year 3 and after
Equity Capital 1,519,495.5
Loan principal 3,545,489.5
Net sale 1,785,000 2,380,000 2,975,000
Total Cash in flow 5,064,985 1785000 2380000 2,975,000
Cash payment
Salary Expense 0 235,440 313920 392,400
Investment 3,872,679.50 0 0 0
Pre operating Expense 5,000 0 0 0
Operating Cost 0 200,661.6 267,548.8 334,436.20
Loan repayment3 0 709,097.9 673,643 531,823
Lease payment 0 4,819.5 4,819.5 4,819.5
Tax payment 0 166,218.0 312,290.625 491,910.405
Total payment 3,877,679.5 1316237.3 1,572,221.925 1,755,389.105
Cash surplus/ deficit 1,187,305.5 468762.7 807778.075 1219611
Cumulative cash flow -332190 136572.7 944350.775 3919350.775

5.5. Financial analysis

5.1. Profitability
According to the projected income statement, the building will start generating profit in
the 2nd year of operation. Important ration such as profit to total sales, net profit to equity

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(Return on equity) and net profit plus interest on total investment (return on total
investment) show as increasing trend during the lifetime of the project. The income
statement and the other indicators of profitability show that the project is viable.

5.2. Pay-Back periods

The investment cost and income statement projection are used to project the pay-back
period. The building’s total investment will be fully recovered at the 5.2 year of
operation.
6. Conclusion
The major goal of this project is to construct mixed use building in Assosa Town. The
project will contribute towards the growth of the trade sector.. The proposed project will
have a total area of 2000m2, designed to reader a multipurpose giving business, which
will in turn plays significant role towards solving shortage of business center in Assosa
Town.

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