Project Proposal

AHMED ALI YUSUF:MULTI-PURPOSE BUSSINES

CENTER

Phone No:- 0935763339

Location:- Haramaya woreda
Auwmara Town.
Ethiopia, Haramaya
2016 E.C
CONTENTS
1. Executive Summary......................................................................................................1
2. Introduction...................................................................................................................1
3. BACKGROUND..........................................................................................................2
3.1. Historical Background...........................................................................................2
3.2. Physical Characteristics of Haramaya....................................................................3
3.3. Population..................................................................................................................4
3.4. Economic Activities..................................................................................................5
3.5. City Structure.............................................................................................................5
3.6. Infrastructure Development.......................................................................................5
4. Justification of the project.............................................................................................6
5. The Project....................................................................................................................6
5.1. Objectives...............................................................................................................6
5.2. The Amusement park and recreation center..............................................................7
5.3. Commercial Center Building.....................................................................................7
6. Market Assessment..........................................................................................................9
6.1. An Overview.................................................................................................................9
6.2. Demand Situation.........................................................................................................9
6.3. Estimation of Demand..................................................................................................9
4. Demand Projections.......................................................................................................11
5. Expected Revenue.........................................................................................................11
5.1. Commercial center Building.......................................................................................11
5.3. Guest House................................................................................................................11
5.4. Restaurant...................................................................................................................12
5.5. Total Revenue..........................................................................................................13
5.6. Organization and Manpower...................................................................................13
6. Financial Analysis.......................................................................................................14
6.1. Fixed Investment cost Estimates (birr).................................................................14
6.1.1. Commercial Center Building............................................................................14
6.2. Amusement Park......................................................................................................17
6.3. Annual Operating Cost Estimates (Birr).................................................................18
6.4. Repair and maintenance...........................................................................................18
6.5. Property Insurance...................................................................................................18
6.6. Utilities expense......................................................................................................18
6.7. Depreciation.............................................................................................................18
6.8. Administrative (house management Expenses).......................................................18
6.9. Uniforms..................................................................................................................18
6.10. Costs of the rooms................................................................................................18
6.11. Cost of food and beverage....................................................................................18
6.12. Cost of the amusement park.................................................................................19
6.13. Other Miscellaneous Expense..............................................................................19
7.1. Total Initial Project cost Components (Birr)...........................................................20
8. Financial Sources Plan................................................................................................20
8.1. Source Of Finance...................................................................................................20
8.2. Bank Loan Amortization Schedule (in Birr)...........................................................20
9. Forecasted income statement of the Project (in Birr).................................................21
10. Cash flow statement of the project (In Birr )...........................................................21
11. Conculsion...............................................................................................................22
 1. Executive Summary
This is a feasibility study of Ahmed Ali Yusuf Aliyi Ahmed Ali Magarsa Ahmad Alii LEnco
Ahmed Ali Malka Ahmad Ali Qubsisa Ahmed Ali a G+3 Commercial Building. The
location of the project 1s very attractive and ideal for runnng such business.
The proposed project will be managed by the owner and promoter of the project who
have accumulated experience in multi purpose building management. In addition to this,
hired employees will be handled the day to day activities of the project. It will also create
employment opportunities for about 20 ciizens.

The total investment cost of the project is estimated at 1,666,781 ut of the total 30%
which is equal to Br 500,034.2 will be raised by the owner's equity and the remaining
balance of 70% (=Br 1,166,747) will be expected from Bank in the form of long term
loan.

The investment under consideration is also prepared with the aim of establishing a
modern Mixed Use Building with modern commercial complex services at Awumera
town.

As the area under consideration is very far from the center of Capital City of the country,
Finfinne, its found on road from Gara mullata zone to finfinne. it has well share
development social and economical infrastructure. Such as, electric power, water,
telephone and other infrastructures. To generalize the project is ideally located for
purpose of fuel station. Like most business venture the project aims to maximize return
on 1nvested capital. In addition to this. in a process of attaining this basic new idea it also
benefit able the community by employment creation, revenue generation through the
taxation and soon. It is clear that Ethiopia follows the free market system and this in turn
needs the individual inject its potential in to the economy, so that the problems above
mentioned gradually climinated and the national economy also gradually become
develop. With this understanding this project to be planned by promoter, Ahmed Ali
Yusuf Aliyi Ahmed Ali Magarsa Ahmad Alii LEnco Ahmed Ali Malka Ahmad Ali
Qubsisa Ahmed Ali and this paper indicated that to briefly show the project's importance,
area advantages, planned activities, estimated project capital and other important aspects.

2. Introduction
Haramaya woreda is rapidly growing and becoming the investors centers but has no
adequate basic needs and recreational services. The town is equipped with modern
infrastructures which the modern town should have like telephone power and water
supply, highways and so on. As there are plenty of recreation centers in the town, there is
no such a recreation centers for all class and special class people to involve in.
Regardless of the level of their income, almost all residents of the present urban centers
are highly concerned for demand of commercial center, standard Evergreen Park,
recreation centers and all round sports station and city hall for different services (like
meeting, wedding ) for week enders, tourists, local and surround people more than any
thing else.

Based on detailed information mentioned above every remembers of any community

vitally needs different recreation centers and services to refresh themselves at least once a
week as a family and after work every day so that the existence of such recreation center
in a town plays great role in creating good mentality for the young's and all class people.
Because of this the promoting such investment is one of the major responsibilities of any
economy. It is an activity, which cannot be neglected even for a moment and helps the
indigenous people to consider and appreciate their culture.

Having this objective in mind, we are highly encouraged by the economic policy adopted
by Regional Government and attractive investment atmosphere Auwmara town
Municipality. Therefore, we decided to undertake a project of establishing commercial
center, standard Evergreen Park, recreation center and all round homes ports station and
town hall fir different services at Haramava District hoping that all the concerned
government bodies give a supporting hand for its realization.

3. BACKGROUND
3.1. Historical Background
The project is to be located in Haramaya district , Auwmara town. According to urban
reform proclamation 65/2003 Awumera towns standard New of Oromia towns.
Relatively town is located in Eastern Hararghe zone which is one of the zones in the
National Regional State of Oromiya, along the Finfinne/Addis Ababa-Harar and Jijiga
highway at about 500 km east of Finfinne/Addis Ababa and 48 km east of Dire Dawa
Administrative Council. The eastern and western rim of the town 1S contiguous with the
Eastern Hararghe zone capital i.e. Harar town, Harari National Regional State and
Haramaya town respectively.

According to the town elders, the present site of Aweday was originally covered with
dense forest and grass that was used for grazing of herds of the surrounding Oromo
people. But, in the course of time the site was changed to agricultural land. According to
informants, the people who had been living in the area were used to cultivate maize,
sorghum and other different types of fruits.
The construction of first house started in 1946 E.C had reached 18 houses in the year
1953 E.C. There were two basic factors in the growth and expansion of the town. The
first factor was, in 1957 B.C emperor Hailesilassie established a military camp at
Hammaressa. Because of this, chat trading activity that was taking place at Hammaressa
was prohibited and transferred to Haramaya & Awaday. This event created an
opportunity for the growth of Haramaya town. The second factor was that the price of
chat at Haramaya was much better than the price at Haramaya. This too pulled trade
activities of chat at Haramaya to Awaday and consequently, increased trade and human
transactions to Awaday town. During this time, haramaya became market places of chat
for all surrounding areas.

In 1967 E.C with proclamation No.47/67, Haramaya district for the first time had
become one of the three urban kebeles under the municipality of Haramaya. Until, 1991
E.C the town was administered under Haramaya municipality with the status of kebele
(Haramaya kebele 01). During this petod, there was no any public service delivering
government institutions in the town. After a long effort, the town obtained its own
municipality in 1991 E.C. In 2004 G.C and 2007 G.C to present the town obtained the
status of level 4D and level 2B respectively. After, 2004 E.C the town registered high
achievement in the provision of public services, infrastructure for the community, and
creating inves tment opportunities for investots.

3.2. Physical Characteristics of Haramaya

The major advantages the town gets due to its location are the highway radiated from
Finfinne/Addis Ababa that passes through many important towns in eastern Ethiopia and
finally reaches sea port in the Somaliland pass through haramaya town and it also located
at short distance to reach sea port in Dịibouti through Dire Dawa. The favorable climatic
and soil condition at and around the town contributes for huge production of chat-
commercial crop. As a result Haramaya town become the hub for exporting chat both for
domestic and neighboring countries. The chat market is functional throughout 24 hours in
the town.

A. Area

The existing built up area of the town that is developed for different urban land use was
394 hectares. The current new expansion increases the administrative boundary of the
town to 1,605 hectares of this area the planning boundary occupies 1,988 hectares. The
current expansion of the town gives opportunity to expand physically more than six times
of the existing area.
B. Shape

Shape of a town can be assessed using different compactness indices. Now Length-
Breadth ratio is used, expressed as L/B Length of long axis of an area (A-B)/ Length of
short axis of an area (C-D)], the solution for a circle is 1, which is the minimum value.
The greater the value of L/B, the shape gets less compact. For Haramaya (L-B) is roughly
9km/3km= 3 compactness ratio so this impies the town has an elongated shape this
requires attention while road network and other infrastructures are allotted in order to
minimize cost and time.

1.2. Topography

Haramaya District is situated on the south east highlands of Ethiopia. These are the high
lands of Hararghe consists of the higher parts that stretching from Garamullata to Jijiga
with the general elevations ranging between 1500-2000 meters although some mountain
peaks such as Gara Mullata and Jebel Tita rise as high 3,381 and 3,122 meters
respectively.

A. Altitude/Elevation

Most of the existing built up areas of the town lies on plateau landscape with different
features like steeper slopes, gorgers, dry streams, gulles and ridges with limited flat lands.
However, most of the proposed expansion areas

particularly on the right and left of the highway towards maya city and Awumera town
are characterized by gentle slopes and undulating plains. Altitude analysis in the town
indicates that elevation generally increases from south east towards north and north east
and it ranges roughly from 1,943 to 2,149 meters above sea level (m.a.s.). The high
altitude in the town contributes for controlling of elements of climate hence the town
acquires moderate type of climate that attracts human settlement free from tropical
diseases like malaria.

3.3. Population
Data on the population of Haramaya can traced as far back as The first, second and third
censuses carried out at national level in 1984 ,1994 and 2007; put the population size of
Haramaya town at 3,486 and 3,925, and 7,686 respectively. The Analytical statistical
report released by CSA in 2011 provides population size at 9,096. Based on the trend
observed in the past, and incorporating the population from the expansion area the current
(2012) population size of the town is reckoned to be close to 23,863 including the
population of expansion area.
 3.4. Economic Activities
Despite its status as a district capital for decades, Haramaya is physically larger than most
of zonal capitals in the country. Coupled with urban agriculture, the availability of
suitable flat land, infrastructure, abundant water resource, feed for animals etc. Based on
the ADLI strategy, industrial development strategy was formulated with the aim of
promoting the industry sector of the country. The guiding principles of the industrial
development strategy are stated as follows:

 The private sector is the main engine of the industrial development strategy in
such a way that capacity of the investors should be strengthened and
competitiveness should be maintained;
 Agricultural-led industrial development;
 Export-led industrial development;
 The priority is in the establishment of industries that are labor intensive in nature
including agro-processing and clothing;
 Integration of domestic and foreign investors in development of the country;
 Strong leadership of the government;
 Involvement of the society at large for the industrial development of the country.

3.5. City Structure

the industrial The Haramaya City is structured based on proclamation No. 65/1995 that
has established the urban local governments in Oromiya. The urban local government has
an elected mayor as the chief executive officer and city manager who reports to the
mayor. The municipal service function is supervised by the four-line department under
the professional city manager. With this arrangement, the members of the mayoral
committee supervise such functions like education, health, information, culture justice
and security etc. previously these were under the auspices of the executive organ of the
regional government but pursuant to proclamation No. 65/2003 they have currently
devolved to the urban local government.

3.6. Infrastructure Development

By way of infrastructure rehabilitation, the Haramaya District has undertaken various
forms and qualities of development schemes. Among these are roads. draining and flood
protection structures such as walls and check dams, new and rehabilitated market places,
water supply and sewerage developments with the city.
 4. Justification of the project
This 1s a project proposal prepared for the construction of recreation centers facility
building in Haramaya district in Awumera kabele which constitutes commerc1al centers,
standard evergreen parks, and recreation center and all round home sports station to serve
domestic and foreign investors, tourists, governmental and NGO employees the residents
around and in the town with recreation serves and basic facilities. I personally observe in
different occasion and commercial activities. Its proximity to Addis made the town
suitable for business. I also recognized that Haramaya district is one of the highly chosen
Auwmara towns of the rift valley by both foreign and domestic investors.

One of the gaps observed by the initiator of this project is that the evolving nature of the
demand of these mentioned services and the insufficient availability and valuing self
culture and cultural ethics of commercial complex building haramaya district Awumera
investors and business men want to have either their business Or representative's offices
in the town the construction of this center 1n town and the affordability of business
offices for those newly emerged businessmen in Addis Ababa,Haramaya is the natural
and fresh environment.

5. The Project
5.1. Objectives
The primary objective of the project is to establish a business center building in order to
cope up with the demand of Modern Commercial Complex .

Mainly the project has the following objectives:

 Create job opportunities for a number of employees during construction and its
full operation
 Generate reasonable return on planned inves tment
 To minimize acute shortage of Commercial center by constructing G+3 Building
and the first and standardized facility center in the town
 To create additional source of revenue for the municipality of the town,
 To Contribute to the over whole socio-economic development of the town and
region as well, and
 By constructing a Modern Commercial Complex, centre of attractive architectural
design contributes for the beauty of the town according to the master plan.

5.2. The Amusement park and recreation center

Park and recreation professionals and volunteers host hundreds of community events
each year and provide safe places for thousands of children to go after school. City
employees and volunteers take great pride to enrich the lives of others through quality
parks and programs designed and developed in excellent recreational opportunities.

Auwmara Town

There is always something to see and do in a the building cach and every day you will
find a program, an activity or a special place that brings you back again. We are just
around the corner, we have something for everyone, and the benefits are endless.

5.3. Commercial Center Building

One of the obvious consequences of urban development is increase demmand for urban
service and shelter. Mismatch between supply and demand of mixed- use building has
caused problems that could be reflected in the health. sanitation, environment and well
being of the community in general. Multi purpose building problem is seriously felt in
any urban centers of the country both quantitatively and qualitatively. As it is common to
Ethiopia towns, Haramaya city suffer from such problems as there is a large gap between
the demand on the one hand and the lack of supply and stock to services on the other
hand the increasing human population in Auwmara town the rate of urbanization there
will be substantial need to improve service giving institutions.

Almost half of the investment under consideration is also prepared with the aim of
establishing a modern G+3 Mixed Use Building with modern commercial complex
services like bank and Insurance, restaurant, Cafeteria shops and guest house at Auwmara
town.

Therefore this project is intended to solve such problems and to serve the ever increasing
number of residents of the town, travelers, weekenders mainly from Finfinne and other.

5.4. Site Location

The proposed site of the project is located at Haramaya District Awumera town, 500 km
away from Finfinne (Addis Ababa) to southeast. The main highway crossing the town is
considered to be the life line of the capital Finfnne as it connects to most important
business cities such Adama, Awasa, Diredawa, Harar, Asala and Maya City etc. It is also
the main gateway to the major parts. This indicates that the site selected for the
construction is suitable located. The site is expected to be located at adjacent to the main
asphalt road.
5.5. Land Utilization Plan

The project is planned to establish on a 256 m² area of land. The project has the
component of: standardized park which occupies 121 m² and the remaining 175m² of land
will be allocated for modern G+3 commercial center consisting of bank and Insurance,
restaurant, Cafeteria shops and guest house. All components of the project will be run
either by the promoter (the company) and/or lease out for other business firms on rental
basis. In general the planned project will respect cities rules and master plan instruction
and acts accordingly. And the over all land patern is described as follows: table 1:-
Building unit plan of the project.

SN Description Unit area (m3) Quantity Total area (m3)

1 Bank 100 1 100
2 Insurance 100 1 100
3 Restaurant 120 1 120
4 Cafeteria 150 1 150
5 Shops 16 10 160
6 Office 12 5 60
7 Guest house (rooms) 16 32 512
8 Store 20 2 40
Grand total 534 53

Since the planned business building is G+3 Building the total size is four times the total
built-up area mentioned above 135m2). On the assumption of this the business center will
have above 135m2 of floor size

6. Market Assessment

6.1. An Overview
Haramaya District , Awumera town which owes its birth and development in the early
20th century to the introduction of Addis Ababa & Dire Dawa – Harar -Gara Mullata zoe
trade line. has experienced different urban developmnent activates. Auwmara is a town
due to its closure to the three other towns(Maya City, Dire Dawa Haramaya and Harar)
and its pure environment has made it a recreational resort town. As a result Auwmara
town become the hub for exporting chat both for domestic and neighboring countries.
The chat mnarket is functional throughout 24 hours in the town
6.2. Demand Situation
The demand for commercial Centre buildings, improvement in business transactions, the
quality and way of life of the population, increase in

disposable income, urbanization etc Haramaya District and its surrounding environment
are among the major tourist attraction areas in the country. It accommodates quite a
number of governmental, non-governmental (NGOs) and private enterprises. The town's
population size has also shown a considerable increase over the decade from 1999 to
2007. These trends, in general, reflect the increase in demand form Commercial Centre
Buildings with other accommodation in the town.

6.3. Estimation of Demand

National and International tourists, Businessmen, Government officials, and local people
etc that constitute the dominant share of recreation centers users in a town like Haramaya
uses the road transport only because of the closeness and presence of state highway.

Therefore, this proposal considers the trend and magnitude of passengers arrivals and
passes through the town by the road transport for estimating and forecasting demand.

The following table presents the daily average number of vehicles that arrive and passed
through Haramaya excluding buses and intra-urban transportation.

Table 5: Daily Average Number of vehicles that arrive and passed through haramaya

Type of vehicles
Year Automobile Bajaj Trucks Truck with trailers
1 1,113 1105 1.607 440
2 1,164 4220 1,705 451
3 1,211 5171 1,748 478
4 1,272 6470 1,791 508
5 1,330 8107 1,835 539
Growth rate 4.56 5.21 2.45 6.12
percentage
Source: Ethiopian Road Authority

In the above table our demand Estimate Considered only the average number of
Automobiles that arrived or passed through Haramaya.

Based on the percentage growth rate, the average daily number of Automobiles that
arrives or passes through Haramaya in the year 20078 is 1,617. It is assumed that out of
the total number of automobiles about 30% required intermediate recreation centre
accommodation. The numbet of passengers in each Automobile is also considered as a
family and the estimated demand will be 15 per day. In addition to that, there is a daily
Flow of population from other towns to Haramaya by mini and midí-Buses. According to
the report on Master plan study of Haramaya in the year 1999 the daily population flows
between Haramaya and other towns is shown in the following table.

Table 6: Daily Population Flows between Haramaya and Other Towns

From To No.of oassengers/Day

Addis Abab Haramaya 5,362
West Hararge, Oborra and “ 3,178
Sorroundings
Dirre Dawa and Aweday “ 600
Harar Fadis,Jarso Kombolcha And “ 622
Somalia Region
Total 9762

Source; Report Haramaya development Plan(2003 E.C)

As Depicted above there are total of 9762 passengers that flow to the town as Haramaya
by mini and Midi-buses in the year 2003. Since, the growth rate based on the above data,
our assumption considers 5% growth rate to estimate the number as passengers in the
year 20089 will be 14,423 Passengers. We also considered only 58% of the total required
this commercial Centre Accommodation i.e. 721 persons per day.

4. Demand Projections
The demand for high grade and high commercial Centre accommodation in the town of
Haramaya for the year 2008 is estimated at 12,447 per annum. Taking in to account the
average growth rate of 3.5% the forecasted demand for intermediate recreation Centre
accommodation is displayed in the following table for five years.

5. Expected Revenue

5.1. Commercial center Building

The proposed project site is located at the part of the town where there is fast growth in
terms of commercial activities. There activities expected from the project are, opening
restaurant, Cafeteria and guest house service by the owner shops and offices. and renting
the other rooms for Banks, Insurances, Locations have a significant role on determining
the demand for rent and it is accessible to transportation and communication and other
infrastructures. The renting price for such type of building will have better price as
follows:
 S DescriptionMont Numb Built-up Tota Total Montl Annual
N hly er of Area/Roo l area y Rent)Bi
Rent( rooms m in (M2) Built availab Rent( rr)/Roo
birr)/ -up le for birr)/ m
m area rent Room
1 Bank 75 1 150 150 150 11250 135000
2 Insurance 50 1 100 100 100 5000 60000
3 Restaurant 50 1 120 120 120 6000 72000
4 Cafeteria 40 1 150 150 150 6000 72000
5 Shops 65 10 16 160 160 10400 124800
6 Office 45 5 12 60 60 2700 32400
7 Guest House 55/ 32 480 32 39600 475200
(Rooms Room rooms
Grand Total 51 1220 17800 971400

5.3. Guest House

The project includes guest house service and the expected revenue is as follows

Orice- Room Rent/Night= Birr 50

Assuming that 10% of the rooms are assupied every the rooms rented per year is
9x36x75%=328.5 nights. Therefore the expected income is Br 160,000.

5.4. Restaurant
The services given by the restaurant is food beverages and coffe and tea. It is assumed
that the cafeteria of the project serves and other customers so that the revenue Form food
and Beverage is considered only from the restaurant.

A. Food
 Room Occupants

Price of breakfast meal is taken at birr 8.00 while that of lunch or dinner at Birr 16.00
each per meal.

 40% of room occupants (40% of 8760=3504/annum) will dine in the Hotel.

 25% of those who dine will take full dish(Breakfast lunch and dinner) spending
birr 40.00, 50% take dinner and breakfast spending birr 24.00 and 30% breakfast
only Birr 8.00 Per day

Table:- Revenue of food from Occupant

S/N Year No. of Full Dish Dinner & B.F B.F only Total
 occupants Occupants Revenue Occupants Revenue Occupants Revenu revenue
who dine e
1 1 760 2,090 8760 175 4204 268 21,02 15,067
2 2 936 2,409 9360 1927 46252.8 2891 2312 16,739
3 3 10599.6 2,650 10,996 212 5088.8 318 2549 18,313
4 1159.56 915 16,596 232 5565.89 3498 2983 20,544

B. Beverages
Table:- Beverage sales at sull Capacity
Item Qty/Day Qty/Annum Unit Price Revenue
(Bottles (Bottle) (Birr
Soft Drinks 100 36,500 3 109,500
Minireal Water 40 14,600 3 43,800
Juce 5 1,825 20 36,500
Total - - 189,800
Table :- Beverage Sales at capacity rate
Year Capacity Rate(%) Revenue (Birr)
1 80 367,760
2 85 390,745
3 90 413,730
4& thereafter 95 436,715
C. Other revenue
 Includes revenues from juice, coffee, tea etc. it is assumed to be 15% of the
revenue from food.
Table:- Summary of revenue from restaurant
No Revenue type Project years

1 2 3 4& thereafter
1 Food sales 661,672 727,839 800,623 880,685
2 Beverages 367,760 390,745 413,730 436,715
3 Others 99,251 109,196 120,093 132,103
Total 0 1128684 1227782 1334449

5.5. Total Revenue

No Revenue type Project years

1 3 4& thereafter
2
1 Rent From Building 496,200 545,820 600,402 660,442
(Exculidng bed
Rooms)
2 Beverages Guest 8,000 390,745 9,980 12,978
House
3 Restaurant 1,128,683 8,800 1,334,447 1,449,503
Total 0 1632884 945365 1944832

5.6. Organization and Manpower

Both skilled and unskılled manpower 1s required to effect on implementation of the
proposed project. To make the project effective and efficient having competent
management practice and prompt decision making is essential. The planning,
coordinating, directing and supervision of the project will be the responsibility of the
promoter who is an educated and experienced person in different field of business.
Further workers that are mote technical like schematic designing of buildings, preparation
of building quantity and construction supervision activities will be delegated by building
engineer employed on contractual basis of one year. Relevant staff and workers will be
employed to assist the owner and the engineer. On permanent and casual terms, apart
from this different caliber building construction technicians like masonry, carpenter,
plumber and electricians will be employed as the project demands.
The construction of the project is fully given to legal contractor through legal bid and
supervised by the resident engineer who will be recruited by the investor. The
implementation of the project is fully managed by the investor himself or his legal
representative.
When its construction is fully completed and the center commence its service delivery, it
will have one project administrator who will follow up the day to day activities of the
project. The general manager will also prepare weekly/biweekly/monthly report on the
performance progress of the center and submits to the investor as required and demanded
by the investor.
The general manager will be responsible to monitor and control the overall financial flow
and responsible for monitoring and controlling of the service delivery and security of the
center properties.
The proposed project, therefore, will no face any management and organizational risks.
Besides its creation of vast employment opportunity during its construction phase face for
both daily laborers and professionals, the project will create permanent employment
opportunity for about 14 citizens, with the annual salary of 67200 Birr.

Table:- Salary and wages of the required manpower

No Position No Salary
Monthly/ Total Annual
Person Monthly
1. General Manager 1 2000 1500 18000
2. Accountant 1 1200 800 9600
 3. Purchaser 1 1400 700 8400
4. Store Keeper 1 700 700 8400
5. Cashier 1 700 700 8400
6. Messenger 1 230 220 2640
7. Cleaner 3 130 690 8280
8. Waiters 1 250 2500 30000
9. Guards 4 500 2000 30000
10. Live Savior 1 750 750 9000
11. Other Workers 20 300 6000 72000
Total 44 6650 8160 16560

6. Financial Analysis
6.1. Fixed Investment cost Estimates (birr)
6.1.1. Commercial Center Building
A. Construction Costs

The construction cost is the mnajor cost incurred in the establishment of the project. The
building has a ground floor and 4 floors that would cover the area of 158.5 mn² per floor.
The current prevailing market price of construction per m² is estimated at 160 m". The
construction cost is therefore: 158.5 m x birr 1600 x 5= 1,268,000.00. Water installation,
electric power installation fencing cost is totally estimated 5% of the construction which
equals to Birr 63,400.00 Therefore, the total construction cost of the building including
100 contingency is birr 126,800.00

The other main cost is the annual lease payment of Birr 75,000 assuming a rate of Birr
15/ mn². Therefore the total cost of construction is birr 126,800.00

B. Equipment and machineries

The building is also expected to be furnished during the project phase for the cafeteria,
restaurant guest houses and office and stores with equipment’s and furniture at a total
cost of birr 339, 028.

Table:- Equipment and furniture costs

No Items Qty b Unit price Total Cost

(Birr) (Birr)
I. Guest House
1. Beds (2.00x1.50cm) 32 2,000 64,000
2. Mattress (2.00x1.50cm) 32 900 28,800
3. Blankets, Bed sheets and covers 64 450 28,800
 4. Pollws 64 12 768
5. Carpet(2m2) 32 110 3520
6. Sofa Single 32 450 14400
7. Coffee table 32 250 8000
8. Chairs 32 120 3840
9. Tables 32 200 6400
10. Sub total 158528
II. Reception
1. Reception Shelves ( Set With 2,000 2,000
table and chairs
2. Calculator and other Equipment 1 850 850
Sub Total 2,850
III. Cafeteria
1. Balcony and shelve - 8,000 8,000
2. Cake machine 1 20000 20000
3. Table 20 500 10,000
4. Chairs 80 250 20,000
5. Coffee machine 1 18,000 18,000
6. Cashier balcony complete 1 3,000 3,000
7. Deep Freezer 1 9,500 9,500
8. Refrigerator 1 3,500 3,500
9. TV(29 in.) 1 7,200 7,200
10. CD Player 1 5,500 5,500
11. DVD 1 2,000 2,000
12. Satellite Dish 1 5,000 5,000
13. Juice Maker 2 550 1,100
14. Glasses, Service tray, ets and - 2,500 2,500
other cafeteria equipment
Sub total 115,300
IV. Restaurant
1. Table 15 450 6,750
2. Chairs 60 200 12,000
3. Gas and Electrical stove, 1 8,000 8,000
Kitchen shelf and cabinets
4. Kitchen equipment - 3,000 2,000
5. Deep Freezer 1 9,500 9,500
6. Refrigator 1 3,500 3,500
7. Cashier Balcony complete 1 3,000 3,000
8. Glasses , Service tray, etc and 3,500 3,500
other restaurant equipment’s
Sub total 48,250
V. Office and Store
 1. Office table 2 900 1,800
2. Office Chair 2 600 1200
3. Store Shelves, Table and chairs - 1,500 1500
4. Computers 1 5,000 5000
5. Printers 1 1,500 1500
6. Filling Cabinet 1 2,100 2100
7. Gust Chairs 4 250 1000
Sub total  - 14,100
Grand Total 669,230

6.2. Amusement Park

The Basic costs under this project are children paly facilities, gardening and construction
of the park.

N Items Qty Unit price Total cost(Birr )

o (birr)
1. Constructiop of 4 1500 60,000
shades
2. Construction of parks 500,000 500,000
3. Gardening 50,000 50,000
4. Other facilities 100,000 100,000
5. Equipment  400,000
6. Lease Payment 200 m2 15 30,000
Total 4

Table:- Total fixed Cost

No Cost item Amt. Unit Cost Total

Cost
1. Construction and civil works
1.1. Construction cost 256m3 1600 409,600.0
0
1.2. Water, Electric power   94,500
installation and fencing
 Sub total   504,100
Contingency (10%)   278,450.8
Total   782,550.8
0
2. Annual Lease Payment 5000m2 15 75,000
 3. Equipment’s and materials 669,230
4. Construction of the park 140,000
1,884,230
Grand Total (1+2+3+4) 1,666,780
.80

6.3. Annual Operating Cost Estimates (Birr)

AS we know any investment needs operating cost to start its work. operating cost
different from project to project. That means some of them not need high operating cost.
The project investigated estimate annual operating Cost mention as follows.

6.4. Repair and maintenance

Is assumed to cost about 1% of the fixed cost = birr 27649.78

6.5. Property Insurance

This premium is estimated to be about 0.5% of fixed cost, birr 13,824.89

6.6. Utilities expense

These include electric, water, postal and telecommunication service charges and other
office utilities, too. These are also estimated to cost about birr 1,000 per month =
12,000/year.

6.7. Depreciation
Depreciation expense of the building is expected to be 110,599.12 annually.

6.8. Administrative (house management Expenses)

These expenses include operating cost such as promotion of the building, salary of
renting and controlling staffs, gourds and cleaners with all utilities. These are also
estimated to cost about birr 850 per month = 10,200/year.

6.9. Uniforms
20 employees will put on uniforms costing Birr 100.00 per person twice a year. ie. Birr
4,000.00 per annum.

6.10. Costs of the rooms

The cost associated with the guest house is 10% of revenue.

6.11. Cost of food and beverage

The cost associated with food is 40% of revenue, and that of beverages is 50%.
 6.12. Cost of the amusement park
The costs associated with the park are
 Cost of the park service= 25% of the revenue.
 Cost of the snack provided for park visitors = 50% of the revenue

6.13. Other Miscellaneous Expense.

These may include expenses such as license such as license payment and other
unanticipated costs that are estimated to be about birr 5000;/Year

Table:- Summery of annual Operating Cost

No. Cost Type Project years

1 2 3 4
1. Repair and Maintenance 27,649.8 30,414.8 33,456.2 36,801.9
2. Property Insurance 13,824.9 15,207.4 16,728.1 18,400.9
3. Utility Expenses 12,000.00 13,200.00 14,520.00 15,972.00
4. Depreciation 110,599.1 110,599.1 110,599.1 110,599.1
5. Administrative 10,200.00 11,220.00 12,342.00 13,576.2
cost(House Management
Expenses)
6. Uniforms 4,000.00 4,400.00 4,840.00 5,324.00
7. Cost of bed 43,800.00 48,180.00 52,998.00 5.324.00
rooms(Running)
8. Cost food 264,668.8 291,135.7 320,249.2 352,274.2
9. Beverages 183,880.00 202,268.00 222,494.8 244,744.3
10. Cost of other restaurants 24,812.8 27,294.00 30,023.4 33,025.8
Services
11. Amusement parks 0 0 0 0
 Cost of park 228,125.00 250,937.5 276,031.3 303,634.4
Operation
 Cost of Snack 342,187.5 376,406.3 414,046.9 455,451.6
Service
12. Wages and salary 204,720.00 225,192.00 247,711.2 272,482.3
13. Others Miscellaneous 5,000.00 5,500.00 6,050.00 6,655.00
Total 780032.5 858035.8 943839.4 1,927,239.4
1038223.3
Initial Working Capital

Table:- Determination of initial working capital Requirement

No Cost Type Requirement initial workling Capital
% of annual Amount in Birr
1. Utility Expenses 25 3,000
2. Administrative cost 25 2,550
(House Management
Expenses)
3. Uniforms 100 4,000
4. Costs of Bed Rooms 16.67 7,300.10
(Running)
5. Cost food 25 66,167.20
6. Beverages 25 45,970.00
7. Cost of other restaurant 16.67 4,136.30
services
8. Amusement park
 Cost of park 25 57,031.30
Operation
 Cost of Snack 25 85,546.90
Service
9. Wages and salary 25 51,180
10. Other Miscellaneous 25 1,125
Total 628,131.76
Total Initial Project cost Components (Birr)
Finance Requirement is Composed of fixed investment cost and initial Operating Cost
Estimated to Br 1,666,780.80 Out of this total Capital Fixed Cost Accounts about Br
1,038,648 and initial Operating cost Estimated to be Br 628,132

8. Financial Sources Plan

8.1. Source Of Finance

As Stated above the total finance Required to Implement the project amounts Br
1,555,781. Out of the tota 30% which is equal to Br 500,034.2 is from owner equity and
the rest 70% (1,166,747) is covered by bank loan

 Promoters equity share(30%) = Br 500,034.2

 Expected bank load (70%) = 1,166,747
Total = Br. 1,666,781
Bank Loan repayment period is 7 years

8.2. Bank Loan Amortization Schedule (in Birr)

Years Principal Bank Interest Total Outstanding
(7.5%) Repayment Balance
0 - - - 3,902,723.8
1 296054.9 155428.8 451483.7 1,776,329
2 296054.9 133224.7 429279.5 1,480,274
3 296054.9 111020.6 407075.4 1,184,219
4 296054.9 88816.5 384871.3 888,165
5 296054.9 66612.3 362667.2 592,110
6 296054.9 44408.2 34046.1 296,055
7 296054.9 22204.1 318259.0 0

9. Forecasted income statement of the Project (in Birr)

Description Project Years
1 2 3 4
Gross Revenue 2,747,258 3,008,193 2,292,923 3,603,826
Less: Operating 1,475,468.80 1,611,956.70 1,762,093.30 1,927,239.40
System
Income from 1,271,789 1,396,236 1,530,830 1,676,587
Operation before
interest and tax
:Interest 1555428.8 1333224.7 111020.6 88816.5
Profit Before Tax 1,116,360 1,263,012 1,419,809 1,587,770
Less: Profit tax 279,090 315,753 354,952 396,943
NET Profit 837,270 947,259 1,064,857 1,190,828

10. Cash flow statement of the project (In Birr )

Description Project Years
0 1 2 3 4
Cash Inflow
Equity 120,726 - - - -
Bank loan 1,072,384 - - - -
Description - 110,599 110,599 110,599 110,599
Net profit - 837,270 947,259 1,064,857 1,190,828
Total Inflow 1,193,110 947,869 1,057, 1,175,456 1,301,427
 858
Cash out flow
Fixed Inv. 1,764,978
Initial W.Cap 328,132
Bank Repayment 296,055 296,055 296,055 296,055
Total Outflow 2,093,110 296,055 296,055 296,055 296,055
Balance 0 651,815 761,803 879,401 1,005,372

11. Conculsion
As shown in the above simple analysis, the project will pay back for itself in about six
years. Create a job opportunity for not less than 1 nationals.

Contribute to the government significant revenue in the form of income tax an VAT.
There fore the project is beneficiary both to the owner and to the government and is
recommended