PROJECT TITLE: FEASIBLITY STUDY FOR

MIXED USE BUILDING.

PROJECT OWNER:- TARGET DEVELOPMENT PLC

ADDRESS: -Addis Ababa, Bole Sub-city:
PROJECT AREA:-ADDIS ABABA

JUNE,2024 G.C
Contents
1. Introduction ............................................................................................................ 6
1.1 General Background ............................................................................................... 6
1.2. Project Objectives ........................................................................................... 7
1.2.1 General Objective ....................................................................................... 7
1.2.2 Specific objective .......................................................................................... 7
1.3 Project description ........................................................................................... 7
1.4 Project Rationale ............................................................................................. 8
2.5 The significance of the project ........................................................................... 8
2.6 Project Location............................................................................................... 9
3 The market Study ................................................................................................. 9
3.1 Market Analysis ............................................................................................... 9
3.2 The Demand-Supply Gap ................................................................................ 10
3.3 Current supply of Mixed use building ................................................................. 10
3.4 Future market or Demand of commercial Building rental ...................................... 10
3.5 Target customers........................................................................................... 11
3.6 Marketing promotion and strategy .................................................................... 11
3.7 Competition .................................................................................................. 12
3.8 The project facilities and Services plan .............................................................. 12
4 Technical Studies ................................................................................................ 13
4.1 Description of the project Service ..................................................................... 13
4.1.1 Land Use Plan .......................................................................................... 13
4.2 Construction work and Technology ................................................................... 14
4.2.1 Construction schedule ............................................................................... 14
4.2.2 Architectural Design & Layout..................................................................... 14
4.2.3 Structural design ...................................................................................... 15
4.2.4 Reinforced concrete .................................................................................. 15
4.2.5 Foundation Design .................................................................................... 15
4.2.6 Construction Plan and process .................................................................... 15
4.3 Utilities ........................................................................................................ 16
5 Engineering and civil works................................................................................... 16
5.1 Land, Building and Civil Works ......................................................................... 16
5.2 Manpower and training requirement ................................................................. 17
5.2.1 Manpower requirement ............................................................................. 17
5.4 Organizational Structure ................................................................................. 18
5.4.1 Organization and management ................................................................... 18
 5.6 Financial Requirement and Analysis .................................................................. 20
1. Financial Requirement and Analysis ........................................................................ 20
5.1 fixed Investment A. Land, Building & Construction .............................................. 20
3. Operating Expenses Table ................................................................................... 21
4. Pre-service Expenses .......................................................................................... 21
5. Summary of Total Initial Investment Cost .............................................................. 21
6. Cash Flow ......................................................................................................... 22
7. Net Present Value (NPV)...................................................................................... 22
8. Repair and Maintenance Cost ............................................................................... 22
6.2 Depreciation and Amortization ......................................................................... 22
6.3 Total Revenue ............................................................................................... 22
6.4 Discounted Payback Period .............................................................................. 22
6.5 Cash flow ..................................................................................................... 23
6.6 Benefit cost ratio ........................................................................................... 23
6.7 Internal Rate of Return ................................................................................... 23
6.8 Net present value .......................................................................................... 23
7. Conclusions and Recommendations ....................................................................... 24
Adjusted Annex 3: Income Statement .......................................................................... 25
Adjusted Annex 4: Loan Disturbance Table ................................................................... 25
Annex 3: Income Statement ..................................................................................... 27
Annex 4: Discounted Cash Flow ................................................................................ 27
Annex 5: Undiscounted Cash Flow ............................................................................. 28
Total Revenue, Cash Flow, Net Present Value ................................................................ 28
List of table
Table 1: Office Space Demand Forecast………………………………………………………………..12
Table 2: Ground will be partitioned in to different rooms……………………………………………...14
Table 3: land utilization Plan……………………………………………………………………….…..16
Table 4:Utilities………………………………………………………………………………………...20
Table 5: List of Building and Civil Works and Their Costs…………………………………………...21
Table 6: Manpower Requirement and Annual Labor Cost………………………………………….....22
Table 7: project Implementation schedule………………………………………………………….….23
Table 8: Repair and Maintenance Cost………………………………………………………………...31
Executive Summary

KEY PROJECT HIGHLIGHTS

PROJECT OWNER TARGET DEVELOPMENT PLC

PROJECT TITLE B+G+10 Mixed use Building
LAND REQUIREMENT 5000 M2
PROJECT AREA Addis Ababa city
PRODUCTION CAPACITY Basement and G+10
PRODUCTS TO BE MANUFACTURED Commercial and Apartment house
COST OF THE PROJECT 200,000,000 ETB
MARKET Domestic and International
PROJECT LIFE 10 YEARS
NUMBER OF WORKING DAYS 365 DAYS
FINANCIAL VIABILITY ( AT 10% DISCOUNT RATE )
NPV (NET PRESENT VALUE) 54,439,417 BIRR
IRR (INTERNAL RATE OF RETURN) 34.13%
PBP ( PAY BACK PERIOD) 5 years
ANALYSIS RESULT
THE PROJECT IS TECHNICALLY FEASIBLE, FINANCIALLY AND
COMMERCIALLY VIABLE AS WELL AS SOCIALLY AND ECONOMICALLY
ACCEPTABLE. HENCE, THE PROJECT IS WORTH IMPLEMENTING
1. Introduction
1.1 General Background
The current fast and dynamic economic growth of Ethiopia especially in Addis Ababa 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 Addis Ababa since dynamic economic development of urban economy
requires the construction of these buildings in the city to support the growing of business service sectors
like supermarkets, Beauty salon, shops, offices cinemas, Computer Center, Cafeterias, restaurant, assembly
hall, apartments and other activities. In this regard, mixed used building expands in the all parts of the city.
Investment and property development play an important role in any emerging markets or economies.
Property generally comprises residential houses and commercial real estate property (mainly mixed us
building) developed for rental business and sale.

The property investment market in Ethiopia remained under developed for several years. As a
consequence, the supply of residential houses and non-residential real estate that can be used for residence,
office space, shopping malls and catering services in the urban centers of the country is disproportionately
low to cope with the growing demand in the country spinning from the average growth in GDP of 5.5%
over the last ten years and population increase. The relatively good performance of the macro-economy
(real growth in GDP, low inflation rate and growth in investment and export sector) has stimulated
unprecedented investment growth in the property sector over the last five years. The growth of investment
in the property market over the last five years in consistent with the global experience suggesting that
investment in the residential and commercial property is greatly influenced by the performance of the
macroeconomic conditions.

In general, a stable macroeconomic condition leads to economic and business growth and develops
investors’ confidence. This certainly spurs large demand in the property market for office space, shopping
malls, catering services, apartment and residential houses. Following growing demand trends, and with the
expectation of high return on their investment capital, large number of land developers pooled their
financial resources and invested in the property market. To this effect, the owner of the envisioned Mixed
Use Building Target Development Plc has been living for long time in this city, planned to construct in
Nifas S/Lafto sub-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.

1.2. Project Objectives

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

1.2.2 Specific objective

To construct and develop modern shops, offices, and restaurant & cafeteria facilities that enable to
provide standard services to customers.
To undertake trading and other refuted business activities that enable to generate a reasonable to the
invested capital.
To develop modern business centre that would provide full services on city standard.
To create employment opportunities.
Contribute towards the beautification of the city through the construction of modern building
infrastructure and facilities.
To establish economically viable, socially acceptable and environmentally friend mixed use
Apartment.

1.3 Project description

The long-term goal of the project is become the best choice trade center in the city. The proposed project
will have a total area of 5000 m2, designed to reader a multipurpose giving business, which will in turn
plays significant role towards solving shortage of business center in Addis Ababa. The historical nature of
the city as business unique location in one of the most attractive center in Ethiopian (100% urban center).
The owners plan the project to render banking and insurance, shopping facility, offices and cafeteria
services to create high quality class to satisfy the interest of customers in the city. Based on environmental
and other considerations, the entrepreneur has determined the type and size of the building which is already
determined by the site; conceptual planning and preliminary analysis have been carried out by analysts. In
order to attract its clients to the service, the project will develop high standard shop & banking rooms and
office of best choices and will also save best quality apartments, restaurant and café.
1.4 Project Rationale

The existing promising investment opportunities, the demands of service needs along with relatively sound
investment support made by the government in such kinds of feasible projects, compelled the project
promoter to initiate the multipurpose oriented business project to be established. Despite the promising
business opportunities of the city, the trend on such kinds of investment found to not enough. The
mismatch between the demand for and supply of such kind of services in easily observed in the city.
Therefore, the existing shortage or absence in the supply of these services, along with its commercial and
administrative access, better location and infrastructure access, escalating trend of urbanization and
business activities, thus it is with such reason that this project is identified and proposed and assumed to be
more profitable. In general, the country’s privatized and free market economy; good governance creates a
favorable environment for the development of investment for private investors .

2.5 The significance of the project

The envisaged project deemed to add to the economic development of the city in general in
specific with following ways:
A. Source of Revenue
As public policy of any nation, the government collects different forms of taxes from
different business organizations and individuals. Among the different forms of taxes,
business income taxes, payroll income tax and VAT are collected from undertaking
business activities. Therefore, the building will serve as sources of revenue for the city. B.
Employment opportunity
One of the problems that our country faced is unemployment. Therefore, the current
objective of the government is working on tackling the problem of unemployment and
fostering the development process either through creating self-employment or employment
in other organization. Hence, this project will hire 26 individuals and more than eighty
individual during construction.
2.6 Project Location
The license area is located in Addis Ababa City Administration, Bole sub-city, locally
named as" ---------- . The total area of the project is 5000 m2. It is surrounded 2. by main
asphalt and cobble stone road at Front side, Rear side Cobble and Condominium house
resident.

3 The market Study

3.1 Market Analysis
There are a number of factors which affects the demand of standardized mixed use building. Of these
factors, the most important to have influence is population growth and the level of income. The currently
expanding service industry in Addis

Ababa and from every corner of the country the city has been inviting skilled and unskilled labor forces to
the center; in addition, the number of both national and international offices has been increasing. Above all
the increase in the number of population increases for the provision of different services. Nowadays, most
of the private business organizations need their own small-medium offices in order to give their services
and provide their products, and they prefer the place that found in the center or close to the road.

As clearly indicated in the introductory part of this proposal, Addis Ababa is the dynamically growing
urban center of Ethiopia. Though the market demand gap for mixed use building is not clearly understand
there is wider gap for such demand as many merchants, organizations are flouring to the city every day.
From prior business experiences, the demand of mixed use building is very high and hence the demand and
the supply gap is very wide.
3.2 The Demand-Supply Gap

There has been a significant growth in the number of local and international trades across the country. This
increase is mainly associated with the stimulation of economic activist and partly due to an increase in the
flow of international and local traders in to the Addis Ababa. Since Addis Ababa is an important
commercial center in addition there is a significant increase in business activates and hence increasing the
number of traders. Even though there is a lack of quantitative estimates that depict the actual demand and
also the annual growth rate commercial facilities are scarce in the city. As a result there is a large gap
between the developed and that of the supply for modern Bank and cafeteria accommodation hence this
project would not face any problem of demand scarcity for it business centre and it would provide good
service to customers.

3.3 Current supply of Mixed use building

Commercial building/office sector has shown a dynamic change in the past few years. The reason for this
could be rapid economic growth and a supporting public infrastructural development. Other factors
relevant in the specific case of commercial buildings are the large increases in national and international
businesses, particularly firms in the services sector. The business of multipurpose buildings in Addis Ababa
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 which in the past had typically converted residences into
office space are now moving towards renting whole floors or even multiple floors in modern city-center
commercial buildings.

3.4 Future market or Demand of commercial Building rental

The demand for office space is a derived demand because firms rent space as an input to the production of
services or goods they provide to businesses and households in the local or national economy. Following
our survey of office space users in several areas are mainly firms providing banking, offices, cafeteria and
restaurants, supermarkets, computer center service. Future demand for office space is actually driven from
growth in number of offices in the city which in turn is influenced by the macro-economic growth in the
country. Assuming that demand for office space is directly related to the growth in the economy, the
forecast for office space demand is shown in the following table;
Table 1: Office Space Demand Forecast
Years Office space demand under base Office space demand under high
case economic (Growth) case economic (Growth)
2010/2011 9,916,543 11,304,859
2011/2012 11,007,363 12,057,416
2012/2013 12,218,173 12,953,878
2013/2014 13,562,173 13,963,577
2014/2015 15,054,011 14,554,534
2015/2016 16,709,952 14,987,431
Source: estimation based on GTP’s forecasted Ethiopian Economic Growth 1

3.5 Target customers

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

3.6 Marketing promotion and strategy

In order to penetrate and gain considerable market share, one of the major marketing strategies for the
project is consistently rendering quality service to its tenants. Due emphasis must be placed on improving
quality of service and facilities. The major marketing strategies to promote the project and gain
considerable market share include:
Advertising through different means focusing on the existing service and facilities
Promote in association to the key location and nearby business
Working on sustained promotional work.
Working on public relations to reach and influence key personas and organization with a 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.
 3.7 Competition
There are different forms of competition that may face the envisaged mixed use building. These are price
and non-price based competition. Moreover, there are different competitors that will compete with the
project either directly or in 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
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 Addis Ababa villages which compete
with it.

3.8 The project facilities and Services plan

In order to provide mixed use business center building services of a high standard, it has been planned to
construct and develop the infrastructure and facilities that would viable to meet the requirements of an
international standard business center. Accordingly, various buildings and facilities will be constructed
phase by phase starting with the most needed ones that are essential to commence the operation of its
business activities. With the completion of construction, the building will provide a combined service such
as shops, offices, restaurant and café service as well as modern business center that primarily serve its
guests and major clients.
Table 2: The plan is that the ground will be partitioned in to different rooms:
Building Description Measure UnitPrice Total
ETB
1st Basement Parking service Car 10/Hr 10*50*365=180,000
G+ 1&2 Supermarket, M2 500 500*1100*12*2=13,200,000
Pharmacy, Banking
& Insurance
G+ 3&4 Beauty salon, shop, Computer M2 350 350*1100*12*2=9,240,000
Center, Cafeteria and Restaurant
G+5&6 Different governmental and M2 300 300*1100*12*2=7,920,000
other offices
G+7,8,9&10 Apartment M2 200 200*1100*12*4=10,560,000
Total 40,920,000

Since the project will be engaged in mixed building the main sources of its annual revenue would be from
the rental of building spaces such as shops, offices, and banking, café and restaurant. Therefore, the sources
of revenue have been classified in to one category namely the rental of banking and supermarket, offices,
shops, bedrooms restaurant and café based on these classifications. Based on the market price of similar
mixed use building in the area, the envisioned buildings set the following fair price (Before VAT) for its
service, hence when the building construction fully get operational it is assumed to generate a yearly
income of ETB 34,782,000.

4 Technical Studies
4.1 Description of the project Service
The envisioned mixed purpose building will provide different rental services to the different customer
groups for different purpose. The building will have basement, ground and twelve floors. The purpose of
the building explained as follows;
The ground floor, first floor second floor and third floor designed for different business centers like
banks, supermarket, beauty salon(man and women),
Computer center, pharmacy, internet café, boutiques, different shops and other business activities,
4-6 floors designed for Offices.
7-10 floors designed for Apartments.

4.1.1 Land Use Plan

The total land required for the envisioned project is estimated to be 1174m2. The total area for the
construction of the building will be 1100m2, as revealed below.
No Description Land M2

Basement Ground First First floor-Ten floor

1 G+10
1.1 Basement 1100
1.2 Ground 1100

1.3 1st floor-10 1100

Total 5000
4.2 Construction work and Technology
4.2.1 Construction schedule

The construction project is proposed to be started on July 2024, and is expected to be finished on July
2026. As seen in the abbreviated construction schedule above, a majority of the schedule’s time is made up
of five major activities; concrete, building Enclosure, masonry, mechanical and Electrical install. Concrete
activities include processes such as placing foundations and slab on deck. The Building Enclosure Phase
includes erecting the scaffolding that will allow for exterior sheathing installation and bricklaying.

Mechanical and Electrical install coincide with each other due to the need for coordination between the two
divisions. There are several periods of construction during the schedule in which there are multiple
construction activities occurring at the same time. The construction site must be organized accordingly as
these processes take place.
As with any construction project, the goal of the schedule will to complete all construction activities before
the required Date of completion. This date of completion is practical based on the time of year in which the
building will be completed. The team allowed a two week contingency for any setbacks. Typically, winter
construction tends to cause unforeseen delays that negatively impact a construction project. These
conditions can and will almost undoubtedly impact the project schedule by causing unforeseen delays and
project inefficiency.

4.2.2 Architectural Design & Layout

Although functional spaces for the project were laid out in significant detail, the rest of the building had
designated spaces but set layouts. It was at the discretion of the project promoter to devise typical layouts
for the non-detailed commercial and office spaces. To make sure that the building’s layouts were practical,
the project owner researched typical architectural layouts for laboratory and executive office spaces. The
walls and partitions throughout the floor will congruent with the structural frame and column locations.
4.2.3 Structural design
One of principle deliverables of the project is the structural design of the building. The structural bays were
coordinated with the layout of the building adjustments will be made to the bays if specific layouts are
necessary. The frame will be made up of a grid with repeating standard structural bays. Included in the
structural system are bay sizes, shape and size of structural members, floor compositions and curtain walls.
These elements were established to resist gravity ad lateral loads as appropriate. The gravity load design
will completed for two frames; one of structural steel and one of reinforced concrete. The structural steel
frame will chosen for further design based on cost per square foot, local availability of material and
constructability considerations, such as erection and fabrication. The steel system will then designed for
lateral loading with necessary adjustment being made to framing.

4.2.4 Reinforced concrete

The project group prepared hand structural design calculations for a typical bay of a reinforced concrete
frame. In all reinforced concrete bay designs, a superimposed dead load of 8 pounds per square foot will be
assumed for mechanical equipment, floor coverings and ceilings. Similarly, the design of the typical bay
accounted for the use of different commercial space, in which a live load of 1000 pounds per square was
assumed. Loads will be calculated based on the requirements of the minimum Design loads for Buildings
and other Structures.

4.2.5 Foundation Design

The design of a superstructure may be accurate, have considered all possibilities and still fail because the
substructure is incapable of distributing the applied loads to the supporting soil. Foundation design takes
more into consideration than merely the loading from the columns. While the main part of the project
focused on the structural frame and its alternate designs, a preliminary foundation plan was designed based
upon maximum load carried from the superstructure through the columns. The foundation design
conducted by the project team consisted of the selection of foundation type, determination of the bearing
capacity and the design for typical interior and exterior spread footings.

4.2.6 Construction Plan and process

The construction process for this project is normally a disjointed three mages development by which the
conceptualized need of the promoter of this project is translated into a functional facility that will meet
their needs in terms of time, cost and quality. Based on a general program of the project owners the
consultant who is going to be hired makes site studies, develops structural designs, prepares drawings and
specifications, determines quantities involved and estimated the resultants costs.
All these activities will be done in the first phase of the project which is the design stage after the document
are produced by the designers have been received, and the works secured the project is supposed to enter
the tendering stage. At this stage contractors study the project document analyze and subsequently
determine the construction methods, built up their unit rates and submit their bids for the works. The
promoter of this project intends to compare the bids and award the contract for the lowest responsible
bidder. This, is of course, presupposes that the favorable proposal does not exceed the allocated budget.

After the award is made and the contract signed between this project owners and the contractor, the project
constructor is expected to prepare and submits a detailed construction program which includes material
schedule, manpower requirement and cash flow forecast. After the award is made and the contract signed
between this project owner and the contractor, the project constructor is expected to prepare and submits a
detailed construction program which includes material schedule, manpower requirement and cash flow
forecast.

4.3 Utilities
A number of utilities world be put in place in order to ensure smooth functioning of the project. These
utilities include:
No Description Qty Unit cost Cost (Birr)
1 Electricity supply, kWh 100,000 1.30*10,0 00 130,000
2 Water Supply m3 50,000 10*500,0 00 500,000
3 Telephone and Internet Broadband 20,000

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

Total 1,188,000

5 Engineering and civil works

5.1 Land, Building and Civil Works
The Mixed use building has a total site area of 1174 M 2 The building floor area has covered 74 2 M 2 and
2
the remaining 1100 M is left for construction. The type of buildings and its 2 corresponding civil
construction cost is given on Table 5
Table 5: List of Building and Civil Works and Their Costs
No Description Total price

A.SUBSTRUCTURE
1 excavation aearth works 279,570.6 7
2 concrete work 1,936,546. 34
Sub total 2,216,117. 01
B. SUPER STRACTURE
1 Concrete work 7,753,358. 45
2 Block work 551,534.4 0
3 Roofing 171,108.0 0
4 Carpentry and joinery 323,760.0 0
5 Metal works 820,860.0 0
6 Finishing 3,111,379. 44
7 Painting 275,798.8 8
8 Electrical installation 7,236,330. 00
9 Sanitary installation 1,151,022.
Subtotal 21,395,15 1.17

A+B 23,611,26 8.18

Vat (15%) 3,541,690. 2
Grand total 27,152,95 8.40
As shown on Table 5, the total cost of building and civil work is estimated at Birr 27,152,958.40 and out of which
the proponent has worked more than birr 23.6 million.

5.2 Manpower and training requirement

5.2.1 Manpower requirement
The list of manpower and the annual cost of labor is indicated in Table 6.
No Position Quantity Salary (ETB) Total (ETB)
1 Manager 1 9,000 108,000
2 Secretary 1 4,000 48,000
3 Accountant 2 5,500 132,000
4 Clerk 2 4,500 108,000
5 Guard/Security 4 2,000 96,000
6 General Service head 1 4,500 54,000
7 Purchaser 1 2,500 30,000
8 Electrician 1 3,000 36,000
9 Plumber 1 2,500 30,000
10 Cashier 1 2,500 30,000
11 Cleaner 5 2,000 120,000
12 Maintenance Officer 1 2,500 30,000
13 Driver 1 2,000 24,000
14 Miscellaneous - - 75,000
Total 22 921,000
5.4 Organizational Structure
5.4.1 Organization and management
Organizational Structure
The organizational structure of the project is designed by including all the necessary personnel under the
right division. At the top of the organizational structure, there will be manager with the responsibility of
supervising the overall activity of the building. Depending up on the nature of the center and the amount of
work to be performs; there exist auxiliary units under the general manager. Employees under each unit will
be supervised by the department head that is accountable for the general manager. General Manager is
appointed by the owners As clearly shown in the organizational structure, the center organization has one
general manager and three main sections. Under the general manager there are the, Marketing Department,
Maintenance and Building administration department. Under building admin dept there exist two sections
i.e., HRM & finance and general service. Further sub sections are also organized under technical and
maintenance manager. The following section deals with the duties and responsibilities of each department.
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 nonhuman resources of the project, which include; effective handling of the different
resources of the building, and devise strategies of controlling against fraud and damage.
Will provide the right material or inventory to the center with right price at the right time.
Will plan, organize direct and control the financial transaction of the building by using all
the necessary documents.
Accountant and casher that will collect money from the customers.
Will develop sound financial control system by developing modern financial control
 systems.
Will prepare the annual financial statements and prepare condensed reports for both the
General Manager and other concerned government body.
Follow the overall status of the business and provide maintenance and repair services
B. 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.
C. 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

Figure 1.organizational structure

G/Manager

Building Admin Maintenance Dept Marketing Dpt

Personal & Finance IT &

property Supervisors Strategy & promotion
Electricity
5.6 Financial Requirement and Analysis
The financial resource is a prime resource for undertaking any activities. Hence for implementing this
mixed use building a total of 200,000,000 ETB is required. From this 30% 60,000,000 ETB will be covered
by the promoter of the project while the rest 70% (140,000,000) will be covered through loan from bank at
the prevailing interest rate. Therefore the said amount of finance is needed for undertaking the following.

1. Financial Requirement and Analysis

Description Amount (ETB)

Land 20,000,000
Building 100,000,000
Machinery & Equipment 50,000,000
Pre-operational Expenditure 10,000,000
Working Capital 20,000,000
Total Investment Cost 200,000,000

5.1 fixed Investment A. Land, Building & Construction

A. Land, Building & Construction

Description Original Cost (ETB) Adjusted Cost (ETB)

Land Lease 60,000,000 40,000,000
Construction 192,000,000 120,000,000
Utility connection 15,000,000 10,000,000
Equipment 25,000,000 20,000,000
Total 320,000,000 200,000,000

B. Building Machineries and Equipment

Description Measurement Qty Unit cost in Birr Total cost in Birr

Generator Unit 1 187,500.00 187,500.00
Carpentry tool box Set 1 16,875.00 16,875.00
Electrician tools box Set 1 11,562.50 11,562.50
Plumber tools kit Set 1 7,687.50 7,687.50
Fire extinguisher Unit 12 10,000.00 120,000.00
Elevator Unit 1 468,750.00 468,750.00
Total 812,375.00

C. Vehicle

Description UOM Qty Unit Cost in Birr Total cost in Birr Remark
Mini-Bus Unit 1 187,500.00 187,500.00 Duty Free
D. Office Equipment

Description Measurement Qty Unit cost in Birr Total cost in Birr

Managerial tables Unit 1 7,875.00 7,875.00
Managerial chairs Unit 1 12,187.50 12,187.50
Office table with chair Unit 7 7,500.00 52,500.00
Secretarial table/chairs Unit 1 5,312.50 5,312.50
Computer with chairs Unit 1 9,375.00 9,375.00
Shelf Unit 2,187.50 2,187.50
Filing cabinets Unit 1 937.50 937.50
Guest chairs Unit 1 3,062.50 3,062.50
Fax & Telephone machine Unit 1 812.50 812.50
Carpet and Curtain LS 1 14,375.00 14,375.00
Total 63,625.00
Operating Expenses Table
Assuming operating expenses remain proportional to the total investment:

3. Operating Expenses Table

No Description Amount (ETB)
1 Salaries 5,000,000
2 Utilities 3,000,000
3 Maintenance 2,000,000
4 Other Costs 1,000,000
Total 11,000,000

4. Pre-service Expenses
No Description Amount (ETB)
1 Feasibility Study 3,000,000
2 Legal Fees 2,000,000
3 Permits 2,000,000
4 Marketing 3,000,000
Total 10,000,000

5. Summary of Total Initial Investment Cost

No Description Amount (ETB)
1 Land 20,000,000
2 Building 100,000,000
3 Machinery & Equipment 50,000,000
4 Pre-operational Expenditure 10,000,000
5 Working Capital 20,000,000
Total Investment Cost 200,000,000
6. Cash Flow
Year Inflows (ETB) Outflows (ETB) Net Cash Flow (ETB)
1 50,000,000 30,000,000 20,000,000
2 55,000,000 32,000,000 23,000,000
3 60,000,000 34,000,000 26,000,000
4 65,000,000 36,000,000 29,000,000
5 70,000,000 38,000,000 32,000,000

7. Net Present Value (NPV)

Year Cash Flow (ETB) Discount Factor Present Value (ETB)
1 20,000,000 0.9091 18,182,000
2 23,000,000 0.8264 19,007,200
3 26,000,000 0.7513 19,533,800
4 29,000,000 0.6830 19,807,000
5 32,000,000 0.6209 19,868,800

8. Repair and Maintenance Cost

The annual repair and maintenance cost of the plant is estimated based on the following rates. Table 8: Repair and
Maintenance Cost
Item Rate
Machinery and equipment 5% Of total cost or Book value
Building and civil works 2% of the total cost or Book value

6.2 Depreciation and Amortization

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

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

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

6.3 Total Revenue

Based on the projected profit and loss statement, the project will generate a profit throughout its operation
life. Annual net profit after tax increases from Birr 8,810,480 at the beginning of the project to Birr
22,502,429 during the last year of operation year. The detail is presented in Annex.

6.4 Discounted Payback Period

The payback period, also called pay–off period is defined as the period required recovering the original
investment outlay through the accumulated net cash flows earned by the project. Accordingly, based on the
projected cash flow it is estimated that the project’s initial investment will be fully recovered within 3 year
9 months.
6.5 Cash flow
The projected cash flow of the envisaged project shows that the project would generate positive net cash flows
throughout the operation years. Cumulative cash flow generated by the project towards the end of the first operation
year will amount to Birr 9,259,139. At the end of the project life, this amount will rise to Birr 23,618,548. The detail
is presented in Annex.

6.6 Benefit cost ratio

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

When BCR > 1, accept the project

When BCR < 1, reject the project

When BCR = 1, be indifferent

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

6.7 Internal Rate of Return

The internal rate of return (IRR) is an indicator of the efficiency or quality of an investment. A project is a
good investment proposition if its IRR is greater than the rate of return that could be earned by alternate
investments or putting the money in a bank account. Accordingly, the IRR of the project after tax is
computed to be 34.13% indicating the viability of the project.

6.8 Net present value

Net present value (NPV) is defined as the total present (discounted) value of a time series of cash flows.
NPV aggregates cash flows that occur during different periods of time during the life of a project into a
common measuring unit i.e. present value. It is a standard method for using the time value of money to
asses’ long-term projects. NPV is an indicator of how much value an investment or project adds to the
capital invested. In principle a project is accepted if the NPV is non-negative. Accordingly, the net present
value of the project at 10% discount rate is found to be Birr 54,439,417 which is acceptable.
7. Conclusions and Recommendations

Conclusion The objective of this proposed feasibility study is primarily to facilitate the entrepreneur with
the investment information and provide an overview about project. The proposed feasibility may form the
basis of an important investment decision and in order to serve this objective, the document covers various
aspects of Concept Development, Start-up, Production, Marketing, Finance and Business Management.
The feasibility is based on the information obtained from various agricultural sources as well as discussions
with businessmen. For financial model, since the forecast/projections relate to the future periods, actual
results are likely to differ because of the events and circumstances that don’t occur frequently as expected.
Whilst due care and attention has been taken in performing the exercise, no liability can be inferred for any
in-accuracy or omissions reported from the results thereof.

It is essential that our report be read in its entirety with financial model in order to fully comprehend the
impact of key assumptions on the range of values determined. The project is accessible and has the
necessary infrastructure such as road, telephone, water and electric power. The proposed project clearly
identifies all the necessary equipment, inputs, management of the company and the required man power.
The highest authority in the project will be vested in the hand of the owner. He will control the overall
activities of the proposed project. Demand projection divulges that there is high demand for feed
production in the country. Accordingly, the planned project is set to provide quality products in the area.

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

Recommendations Financial sensitivity analysis shows that the project is highly sensitive to decrease in
sales revenue but relatively less sensitive to increase in raw material and investment costs. Therefore, it is
recommended that the company should give a great attention for the possible reasons for sales reduction. In
this case, different mechanisms should be selected and implemented to increase sales. In addition to this,
the company should decrease its cost that lowers profitability.
The project must utilize modern promotional styles to capture the planned market share. To do so, it has to
design effective strategy to achieve this plan. Although, due care and diligence has been taken to compile
this document, the contained information may vary due to any change in any of the concerned factors, and
the actual results may differ substantially from the presented information. In this case, any delaying to
implement the project creates some problem on its profitability as there is always change like change in
price of services and goods, cost of raw materials, customers preference and purchasing power etc.….So, it
is recommended that investors should implement the project as soon as possible before any change
occurred.

Adjusted Annex 3: Income Statement

Year Revenue (ETB) Operating Cost (ETB) Gross Profit (ETB) Tax (ETB) Net Profit (ETB)
1 10,724,282 2,574,274 8,150,008 2,361,269 5,788,739
2 11,820,959 2,664,521 9,156,438 2,663,198 6,493,240
3 13,091,837 2,755,868 10,335,969 2,891,967 7,443,002
4 14,302,006 2,849,456 11,452,550 3,226,942 8,225,608
5 15,803,603 2,947,184 12,856,419 3,648,103 9,208,316
6 17,079,396 3,048,217 14,031,179 4,000,531 10,030,648
7 18,750,735 3,152,595 15,598,140 4,470,619 11,127,521
8 20,284,318 3,259,444 17,024,874 4,898,639 12,126,235
9 22,198,750 3,368,843 18,829,907 5,440,149 13,389,758
10 24,113,232 3,480,874 20,632,358 5,980,884 14,651,474

Adjusted Annex 4: Loan Disturbance Table

Year Loan (ETB) Repayment (ETB) Interest (ETB) Balance (ETB)

1 16,052,352 1,605,235 279,112 14,447,117
2 0 1,605,235 279,112 12,841,882
3 0 1,605,235 279,112 11,236,647
4 0 1,605,235 279,112 9,631,412
5 0 1,605,235 279,112 8,026,177
6 0 1,605,235 279,112 6,420,942
7 0 1,605,235 279,112 4,815,707
8 0 1,605,235 279,112 3,210,472
9 0 1,605,235 279,112 1,605,237
10 0 1,605,235 279,112 0
5. Man Power Table

Description Number Total Cost (ETB)

Management 5 2,000,000
Technical Staff 10 5,000,000
Administrative 15 3,000,000
Support Staff 20 4,000,000
Total 50 14,000,000

6. Discounted Cash Flow Table

Description Investment Year Operating Years

Year 0 1
INFLOWS
Net Sales Revenue 0 10,724,282
Loan 16,052,352 0
Total Inflows 16,052,352 10,724,282
Operating Costs 0 2,574,274
Interest Payment 0 279,112
Tax Payment 0 2,361,269
Depreciation 0 0
Total Outflows 0 5,214,655
Net Cash Flows 16,052,352 5,509,627

Undiscounted Cash Flow Table

Description Investment Year Operating Years

Year 0 1
INFLOWS
Net Sales Revenue 0 10,724,282
Loan 16,052,352 0
Total Inflows 16,052,352 10,724,282
Operating Costs 0 2,574,274
Interest Payment 0 279,112
Tax Payment 0 2,361,269
Depreciation 0 0
Total Outflows 0 5,214,655
Net Cash Flows 16,052,352 5,509,627
 Annex 3: Income Statement

Year 1 2 3 4 5 6 7 8 9 10
Net Sales 10,724,282 11,820,959 13,091,837 14,302,006 15,803,603 17,079,396 18,750,735 20,284,318 22,198,750 24,113,2
32
Operating 2,574,274 2,664,521 2,755,868 2,849,456 2,947,184 3,048,217 3,152,595 3,259,444 3,368,843 3,480,87
4
Gross 8,150,008 9,156,438 10,335,969 11,452,550 12,856,419 14,031,179 15,598,140 17,024,874 18,829,907 20,632,
Profit 358
Admini 1,072,428 1,182,096 1,309,184 1,430,201 1,580,360 1,707,940 1,875,074 2,028,432 2,219,875 2,411,3
Costs 23
Depreciati 5,357,143 5,357,143 5,357,143 5,357,143 5,357,143 5,357,143 5,357,143 5,357,143 5,357,143 5,357,1
on 43
EBIT 1,720,437 2,617,199 3,669,642 4,665,206 5,918,916 6,966,096 8,365,923 9,639,299 11,252,889 12,863,
892
Interest 279,112 279,112 279,112 279,112 279,112 279,112 279,112 279,112 279,112 279,112
Expense
EBT 1,441,325 2,338,087 3,390,530 4,386,094 5,639,804 6,686,984 8,086,811 9,360,187 10,973,777 12,584,
780
Tax (30%) 432,398 701,426 1,017,159 1,315,828 1,691,941 2,006,095 2,426,043 2,808,056 3,292,133 3,775,4
34
Net Profit 1,008,928 1,636,661 2,373,371 3,070,266 3,947,863 4,680,889 5,660,768 6,552,131 7,681,644 8,809,3
46

Annex 4: Discounted Cash Flow

Year 0 1 2 3 4 5 6 7 8 9 10
Net 0 10,724, 11,820, 13,091, 14,302, 15,803, 17,079, 18,750, 20,284, 22,198, 24,113,
Sales 282 959 837 006 603 396 735 318 750 232
Revenue
Loan 16,052, 0 0 0 0 0 0 0 0 0 0
352
Total 16,052, 10,724, 11,820, 13,091, 14,302, 15,803, 17,079, 18,750, 20,284, 22,198, 24,113,
Inflows 352 282 959 837 006 603 396 735 318 750 232
Operatin 0 2,574,2 2,664,5 2,755,8 2,849,4 2,947,1 3,048,2 3,152,5 3,259,4 3,368,8 3,480,8
g Costs 74 21 68 56 84 17 95 44 43 74
Interest 0 279,112 279,112 279,112 279,112 279,112 279,112 279,112 279,112 279,112 279,112
Payment
Tax 0 2,361,2 2,663,1 2,891,9 3,226,9 3,648,1 4,000,5 4,470,6 4,898,6 5,440,1 5,980,8
Payment 69 98 67 42 03 31 19 39 49 84
Deprecia 0 0 0 416,965 416,965 416,965 416,965 416,965 416,965 416,965 416,965
tion
Total 0 5,214,6 5,606,8 6,343,9 6,772,4 7,291,3 7,744,8 8,319,2 8,853,1 9,505,0 10,157,
Outflows 55 31 12 76 64 25 91 60 68 835
Net Cash 16,052, 5,509,6 6,214,1 6,747,9 7,529,5 8,512,2 9,334,5 10,431, 11,430, 12,693, 13,955,
Flows 352 27 28 24 30 39 70 444 158 681 397
 Annex 5: Undiscounted Cash Flow

Year 0 1 2 3 4 5 6 7 8 9 10
Net Sales 0 10,724, 11,820, 13,091, 14,302, 15,803, 17,079, 18,750, 20,284, 22,198, 24,113,
Revenue 282 959 837 006 603 396 735 318 750 232
Loan 16,052, 0 0 0 0 0 0 0 0 0 0
352
Total 16,052, 10,724, 11,820, 13,091, 14,302, 15,803, 17,079, 18,750, 20,284, 22,198, 24,113,
Inflows 352 282 959 837 006 603 396 735 318 750 232
Operating 0 2,574,2 2,664,5 2,755,8 2,849,4 2,947,1 3,048,2 3,152,5 3,259,4 3,368,8 3,480,8
Costs 74 21 68 56 84 17 95 44 43 74
Administr 0 1,072,4 1,182,0 1,309,1 1,430,2 1,580,3 1,707,9 1,875,0 2,028,4 2,219,8 2,411,3
ative 28 96 84 01 60 40 74 32 75 23
Costs
Depreciat 0 5,357,1 5,357,1 5,357,1 5,357,1 5,357,1 5,357,1 5,357,1 5,357,1 5,357,1 5,357,1
ion 43 43 43 43 43 43 43 43 43 43
Total 0 9,003,8 9,203,7 9,422,1 9,636,8 9,884,6 10,113, 10,384, 10,645, 10,945, 11,249,
Outflows 45 60 95 00 87 300 812 019 861 340
Net Cash 16,052, 1,720,4 2,617,1 3,669,6 4,665,2 5,918,9 6,966,0 8,365,9 9,639,2 11,252, 12,863,
Flows 352 37 99 42 06 16 96 23 99 889 892

Total Revenue, Cash Flow, Net Present Value

Using proportional adjustments based on the new investment cost:

Description Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10
Net Sales 10,724,282 11,820,959 13,091,837 14,302,006 15,803,603 17,079,396 18,750,735 20,284,318 22,198,750 24,113,232
Revenue
Loan 16,052,352 0 0 0 0 0 0 0 0 0
Total 16,052,352 10,724,282 11,820,959 13,091,837 14,302,006 15,803,603 17,079,396 18,750,735 20,284,318 22,198,750
Inflows
Operating 2,574,274 2,664,521 2,755,868 2,849,456 2,947,184 3,048,217 3,152,595 3,259,444 3,368,843 3,480,874
Costs
Interest 279,112 279,112 279,112 279,112 279,112 279,112 279,112 279,112 279,112 279,112
Payment
Tax Payment 2,361,269 2,663,198 2,891,967 3,226,942 3,648,103 4,000,531 4,470,619 4,898,639 5,440,149 5,980,884
Depreciation 0 0 416,965 416,965 416,965 416,965 416,965 416,965 416,965 416,965
Total 5,214,655 5,606,831 6,343,912 6,772,476 7,291,364 7,744,825 8,319,291 8,853,160 9,505,068 10,157,835
Outflows
Net Cash 5,509,627 6,214,128 6,747,924 7,529,530 8,512,239 9,334,570 10,431,444 11,430,158 12,693,681 13,955,397
Flows
Civil Work Table

No Description Quantity Unit Rate (ETB) Total Cost

1 Earth Work 1000 m3 m3 150 150,000
2 Concrete Work 500 m3 m3 3000 1,500,000
3 Reinforcement Work 100 tons ton 4000 400,000
4 Form Work 2000 m2 m2 100 200,000
5 Masonry Work 3000 m2 m2 200 600,000
6 Plaster Work 4000 m2 m2 100 400,000
7 Paint Work 5000 m2 m2 50 250,000
8 Floor Finish 6000 m2 m2 150 900,000
9 Roof Work 7000 m2 m2 200 1,400,000
10 Electrical Work Lump sum Lump 1,000,000 1,000,000
11 Plumbing Work Lump sum Lump 800,000 800,000
Total - - - 7,600,000