Project Proposal for the construction of Mixed use BuildingP r o j e c t t o B e
i m p l e m e n t e d i n O r o m i a R e g i o n w e s t A r s i Z o n e A r s i negele
townPromoter:- wr/ _________________________ May 27, 2013Addis Ababa
Executive Summary1 . P r o j e c t n a m e : M i x e d u s e B u i l d i n g 2.project Type :
Multipurpose service business building3 . N a t i o n a l i t y: E t h i o p i a n 4 . P r o j e c t
O w n e r : w r / _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ 5.Project location: oromia region West Arsi
zone Arsi negele town6 . P r o j e c t c o m p o s i t i o n : m u l t i p u r p o s e
B u i l d i n g ( G + 3 ) u s e d f o r diverse business centers like banking & insurance, super
market,s h o p e s , r e s t a u r a n t , c a f é , b e a u t y s a l o n , P h a r m a c y, b e d r o o m s and
offices.7 . P r i m e s e s R e q u i r e d : 3 6 0 m 2 8 . T o t a l i n v e s t m e n t C o s t :
5 , 0 0 0 , 0 0 0 E T B i s r e q u i r e d f r o m t h i s amount 30% or 1,584,480.5 ETB from
owner equity and the rest70% from bank loan.9 . E m p l o y m e n t o p p o r t u n i t y : 2 6
i n d i v i d u a l s o n p e r m a n e n t 8 0 o n casual basis1 0 . S o c i a l
E c o n o m i c
B e n e f i t :
p r o v i d e
a n d
b e t t e r
B u i l d i n g service, employment opportunities, generation of income and benefits
for the local people.
1 . I n t r o d u c t i o n 1 . 1 . G e n e r a l B a c k g r o u n d The current fast and dynamic
economic growth of Ethiopia especially inurban area necessitates equivalent growth of building
and constructions e c t o r . T h e s e c t o r s h o u l d e x p a n d r a p i d l y t o
s u p p o r t t h e o v e r a l l economic development sustainable.In the building sector of
the economy, the multi- purpose in the oneb e c o m i n g r a p i d l y e x p a n d i n g
i n u r b a n a r e a s o f t h e n a t i o n s i n c e dynamic economic
d e v e l o p m e n t o f u r b a n e c o n o m y r e q u i r e s t h e construction of these
buildings in towns to support the gr owing of b u s i n e s s s e r v i c e s e c t o r s
l i k e s u p e r m a r k e t s , B e a u t y s a l o n , s h o p s , offices cinemas, Computer
Center, Cafeterias, restaurant, assemblyh a l l , g u e s t h o u s e a n d o t h e r
a c t i v i t i e s . I n t h i s r e g a r d , m i x e d u s e d building expands in the all parts of the
country.Investment and property development play an important role in
anye m e r g i n g m a r k e t s o r e c o n o m i e s . P r o p e r t y g e n e r a l l y
c o m p r i s e s residervial houses and commercial real estate property (mainly mixedu s
b u i l d i n g ) d e v e l o p e d f o r r e n t a l b u s i n e s s a n d s a l e . T h e p r o p e r t y investment
market in Ethiopia remained under developed for several y e a r s . A s a
consequence, the supply of residential houses and non -residential real
estate that can be used for residence, office space, s h o p p i n g m a l l s a n d
c a t e r i n g s e r v i c e s i n t h e u r b a n c e n t e r s o f t h e country is
disproportionately low to cope with the growing demand inthe country spinning
from the average growth in GDP of 5.5 percentover the last ten years and
population increase. The relatively goodperformance of the macro -economy (real
growth in GDP, low inflationr a t e a n d g r o w t h i n i n v e s t m e n t a n d e x p o r t
s e c t o r ) h a s s t i m u l a t e d unprecedented investment growth in the property sector over the
lastfive years. The growth of investment in the property market over the last five years
in consistent with the global experience suggesting that
Serve as a source of mental satisfaction for the different users,
Since, the center encompasses different recreational areas; it will divert the attention of
the users from different evil deeds.
It deemed to minimize the demand for shops and other bundles of services in the
area.F u r t h e r m o r e , i t s e r v e s a s t h e p i l o t e x p e r i e n c e a n d g r o u n d f o r
otheri n v e s t o r t o e n t e r i n t o s u c h k i n d s o f u r b a n
d e v e l o p m e n t . I t a l s o contributes on the efforts made on as a character give n
building forphysical development pattern of the townscape.1 . 6 . P r o j e c t
L o c a t i o n As aforementioned on the introductory part the envisioned project
isintended to be located in West Arsi zone Arsi Negele town at about 225k m f r o m
Addis Ababa to the south. West Arsi zone is
l o c a t e d approximately at a distance of 250 km from finfine. It is located in theR i f t
Valley Region. The zone extends from 6
0
12’29’’ to 7
o
42’55’’latitude and 38
0
04’04’’ to 39
0
56’08’’ longitude. It shares boundary linewith East shewa zone to north, SNNPRS to the
west, Arsi zone to thenortheast, guji to the south and bale Zone to the East. Most part of
thezone has elevation of ranging from 1500 to over 2300m. shashemenetown is the
administrative centre of the zone.Arsi Negelle town is one of the west Arsi zone political
administrations. The town has a longitude and latitude of 7
o
21’N 38
o
42’E/7.35
o
N 38.7
o
Ea n d a n e l e v a t i o n o f 2 0 4 3 m e t e r s a b o v e s e a l e v e l .
It
i s t h e administrative center of Arsi Negele woreda. The town is
s e l e c t e d because of geographical proximity of the town for rift valley lakes
likelangano, shala and Abijata. Nagele Arsi has had electrical power sincethe 1950s, as well as
telephone and posta service by 1967. The town’seconomic catchment extends beyond the
woreda attracting peasants
f r o m k o f e l e , s h a s h e m e n e a n d K o r e w o r e d a s w h o t r a d e c e r e a l a n d potatoes for
cattle and seeds at the weekly market.2 . T h e m a r k e t S t u d y 2 . 1 . m a r k e t
A n a l y s i s There are a number of factors which affects the demand of standardized mixed
use building. Of these factors, the most importantto have influence is population growth
and the level of income. Thecurrently expanding coffee processing industry in the town and
aroundt h e t o w n h a s b e e n i n v i t i n g s k i l l e d a n d u n s k i l l e d l a b o r f o r c e s t o
thet o w n ;
in
government
addition, the number of both
a n d n o n government offices has been increasing. Above all
the increase in then u m b e r o f p o p u l a t i o n o f t h e t o w n i n c r e a s e s f o r
the provision of d i f f e r e n t
of the private
services.
Nowadays,
most
b u s i n e s s organizations need their own small-
medium offices in order to givetheir services and provide their products,
a n d t h e y p r e f e r t h e p l a c e that found in the center of the town or close to the road.A s
clearly indicated in the introductory part of this proposal.
A r s i negele in the dynamically growing town of West Arsi zone. Though themarket demand
gap for mixed use building in Arsi negele is not clearlyunderstand there is wider gap for
such demand as many merchants,organizations are flouring to the town every day.
From prior businessexperiences, the demand of mixed use building in arsi negele is
veryhigh and hence the demand and the supply gap is very wide.
2.2.the Demand-Supply GapArsi negele town is situated in
v e r y c e n t r e o f E t h i o p i a n A r e k e production area which is highly
k n o w n f o r i t s a l c o h o l i c c o n t e n t a n d special flavor. These days Arsi negele
Areke is brand name like SouthA f r i c a n w i n e . A r s i n e g e l e t o w n i s a l s o a m a j o r
b u s i n e s s c e n t e r a n d commercial route that attracts thousands of business travelers. Theseare
also the most important groups of potential customers that includeb o t h t h e l o c a l
a n d f o r e i g n t o u r i s t s a n d t h e m o d e r n b u s i n e s s community
who choose services that range from economic to high c l a s s
standards. These groups would also
choose a
h e a l t h y comfortable climate that combines a more traditional type with that of m o d e r n
shops, offices, bedrooms restaurants and cafeterias. Eventhough when
c o m p a r e d w i t h s i m i l a r z o n a l t o w n s i n t h e r e g i o n A r s i Negele seems to have
no developed mixed use building, the existingsupply is far behind t he growing
demand for standard service. Hence,the project will solve the serous demand problem in the
town.O v e r t h e l a s t d e c a d e , t h e r e h a s b e e n a s i g n i f i c a n t g r o w t h i n
thenumber of local and international trades across the country.
T h i s increase is mainly associated with the stimulation of economic activista n d p a r t l y d u e
t o a n i n c r e a s e i n t h e f l o w o f i n t e r n a t i o n a l a n d l o c a l traders in to the town.
Since Arsi negele is an important commercialcenter in addition there is a significant
increase in business activatesand hence increasing the number of traders to the
town. Even thoughthere is a lack of quantitative estimates that number of traders to thetown.
Even though there is a lack of quantitative estimates that depictthe actual demand and also the
annual growth rate Hotel facilities andurban commercial facilities are scarce in the city.
So far in the townthere is no development of such kind standard building and it is
thefirst of its kind in the town and will promote other investors from thetown and
the surrounding areas. They are mostly villa type premisesmodified as show rooms
and sailing posits. As a result there is a large
as erection and fabrication. The steel system was then designed for lateral loading with
necessary adjustment being made to framing.3.3.4.Reinforced concrete The project group
prepared hand structural design calculations for atypical bay of a reinforced concrete
frame. In all reinforced concretebay designs, a superimposed dead load of 7.5
pounds per square footwas assumed for mechanical equipment, floor coverings and
ceilings.S i m i l a r l y , t h e d e s i g n o f t h e t y p i c a l b a y a c c o u n t e d f o r t h e
u s e o f different commercial space, in which a live load of 125 pounds
pers q u a r e w a s a s s u m e d . L o a d s w e r e c a l c u l a t e d
b a s e d o n t h e requirements of the minimum Des ign loads for
B u i l d i n g s a n d o t h e r Structures.3.3.5.Foundation Design The design of a superstructure may
be accurate, have considered allp o s s i b i l i t i e s a n d s t i l l f a i l b e c a u s e t h e
s u b s t r u c t u r e i s i n c a p a b l e o f distributing the applied loads to the supporting
soil.F o u n d a t i o n d e s i g n t a k e s m o r e i n t o c o n s i d e r a t i o n t h a n m e r e l y t h e loading
from the columns. While the main part of the project focused o n t h e s t r u c t u r a l
f r a m e a n d i t s a l t e r n a t e d e s i g n s , a p r e l i m i n a r y foundation plan was designed
based upon maximum load carried fromt h e s u p e r s t r u c t u r e t h r o u g h t h e
c o l u m n s . T h e f o u n d a t i o n d e s i g n conducted by the project team consisted of the
selection of foundationtype, determination of the bearing capacity and the design for
typicalinterior and exterior spread footings.3.3.6.construction Plan and process The project team
developed a coordinated project schedule andc o n s t r u c t i o n p l a n s t h a t w o u l d r e f l e c t
the expectations for an actual
constructuoin project. The project schedule was d eveloped using thepreliminary
designs given to the project team.Additionally, the group considered typical construction
activities anddurations taken from similar construction projects as well as
realisticconstraints on building development. For instance, it is necessary forthe
structural frame to be completed before concrete can be placed fort h e s l a b o n d e c k .
Hand drawn construction plans detailing siteentrances and
s t o r a g e a r e a s w e r e c o o r d i n a t e d w i t h t h e p r o j e c t schedule to give
the reader visualizations of the construction site setup through various periods of the
construction process. The construction process for this project is normally a disjointed
threemages development by which the conceptualized need of the promoterof this project is
translated into a functional facility that will meet theirneeds in terms of time, cost and
quality.Based on a general program of the project owners the consultant whois going to be
hired makes site studies, develops structural designs,prepares drawings and
specifications, determines quantities involvedand estimated the resultants costs. All
these activities will be done int h e f i r s t p h a s e o f t h e p r o j e c t w h i c h i s t h e
d e s i g n s t a g e a f t e r t h e document are produced by the designers have been received, and
theworks secured the project is supposed to enter the tendering stage. Att h i s s t a g e
contractors study the project document analyze
a n d subsequently determine the construction methods, built up their unit rates and
submit their bids for the works. The promoter of this projecti n t e n d s t o c o m p a r e t h e b i d s
a n d a w a r d t h e c o n t r a c t f o r t h e l o w e s t responsible bidder. This, is of course,
presupposes that the favorableproposal does not exceed the allocated budget.After the
award is made and the contract signed between this project o w n e r a n d t h e
c o n t r a c t o r , t h e p r o j e c t c o n s t r u c t o r i s e x p e c t e d t o 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 o w n e r a n d
t h e c o n t r a c t o r , t h e p r o j e c t c o n s t r u c t o r i s e x p e c t e d t o prepare and
submits a detailed construction program which includes material schedule, manpower
requirement and cash flow forecast.3 . 4 . U t i l i t i e s A number of utilities world
be put in place in order to ensure smoothfunctioning of the project. These utilities include:
Water Supply,
Supplementary Electricity supply.
Telephone line Internet Broadband
Fuel, Oil and lubricant
Drainage Facility3 . 5 . P r o j e c t i m p l e m e n t a t i o n The project’s implementation is
expected to take 24 months. Them a j o r a c t i v i t i e s i n c l u d e B a n k l o a n
processing construction of thebuilding, cleaning the area around
t h e b u i l d i n g , P r o c u r e m e n t o f equipments and start rendering services. The
time schedule for theabove matured major activities is presented below: Table: project
Implementation scheduleSN Activities Date1 L a n d r e q u e s t p r o c e s s i n g
March – April, 20142 L a n d
a p p r o v a l
M a y ,
2 0 1 4 3Bank loan processing June -July 20144 S i t e
D e v e l o p m e n t
J u l y
2 0 1 4 5Building and construction
work August, 2014-December 20156 P r e p a r a t i o n f o r s e r v i c e
January, 20167 S er vi ce ex ecu tio n Feb ruar y,
2016
afterR e n t a l I n c o m e 1 , 7 8 5 , 0 0 0 . 0 0 2 , 3 8 0 , 0 0 0 . 0 02,975,000.00
Expenses
S a l a r y
E x p e n s e
2 3 5 , 4 4 0 . 0 0 3 1 3 , 9 2 0 . 0 0 3 9 2 , 4 0 0 . 0 0 O p e r a t i n
g
E x p e n s e s
2 0 0 , 6 6 1 . 0 6 2 6 7 , 5 4 8 . 0 8 3 3 4 , 4 3 6 . 2 0 D e p r e c a t i
o n
B u i l d i n g
3 2 3 , 2 4 2 . 9 5 3 2 3 , 2 4 2 . 9 5 3 2 3 , 2 4 2 . 9 5 Deprecation
Bld.Machineries and
Equip.2
2
,
7
8
0
.
0
0
2
2
,
7
8
0
.
0
0
2
2
,
7
8
0
.
0
0
D e p r e c a t i o n
o f
V e h i c l e
6 0 , 0 0 0 . 0 0 6 0 , 0 0 0 . 0 0 6 0 , 0 0 0 . 0 0 D e p r e c a
t i o n
o f f i c e
E q u i p
1 1 , 2 4 5 . 0 0 1 1 , 2 4 5 . 0 0 1 1 , 2 4 5 . 0 0 Interest Expense
3
3 5 4 , 5 4 8 . 9 5 3 1 9 , 0 9 4 . 0 5 5 1 7 7 , 2 7 4 . 4 7 5 Lease payment
4
4
,
8
1
9
.
0
5
4
,
8
,
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9
.
0
5
Total Expense
1
9
.
5
4
1,230,939.051,339,031.25133,5298.65P r o f i t b e f o r e T a x
5 5 4 , 0 6 1 . 0 0 1 , 0 4 0 , 9 6 8 . 7 51,639,701.35 Tax (30%) 166,218.03312,290.625491,910.405
N
e
t
p
r
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i
6
7
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.
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t
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,
51,147,790.945
5.4.2Cash flow Statement
YearYear 0Year 1Year 2Year 3 andafter
Equity Capital 1,519,495.5Loan principal 3,545,489.5N
e
t
1
,
7
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Cash paymentS
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Investment 3,872,679.50000P
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Tax payment 0166,218.0312,290.625491,910.405
T o t a l
p a y m e n t 3 , 8 7 7 , 6 7 9 . 51316237.31,572,221.9251,755,389.105
C a s h
s u r p l u s /
d e f i c i t
1 , 1 8 7 , 3 0 5 . 5 4 6 8 7 6 2 . 7 8 0 7 7 7 8 . 0 7 5
1 2 1 9 6 1 1 C u m u l a t i v e
c a s h
f l o w
-
3 3 2 1 9 0 1 3 6 5 7 2 . 7 9 4 4 3 5 0 . 7 7 5 3 9 1 9 3 5 0 . 7 7 5
5.5Financial
a n a l y s i s i . P r o f i t a b i l i t y According to the projected
income statement, the building will start generating profit in the 2
nd
year of operation. Important ration such asp r o f i t t o t o t a l s a l e s , n e t p r o f i t t o e q u i t y
( R e t u r n o n e q u i t y) a n d n e t profit plus interest on total investment (return on total
investment)show as increasing trend during the lifetime of the project. The incomestatement
and the other indicators of profitability show that the projectis viable.i i . P a y B a c k
p e r i o s
The investment cost and income statement projection are used
top r o j e c t t h e p a y - b a c k p e r i o d . T h e b u i l d i n g ’ s t o t a l i n v e s t m e n t w i l l b e fully
recovered at the 5.2 year of operation.6.Environmental impact of the project The EIA of
the project activities was determined by identifying thee n v i r o n m e n t a l a s p e c t s a n d t h e n
u n d e r t a k i n g a n e n v i r o n m e n t a l r i s k assessment to determine the significant
environmental aspects. Thee n v i r o n m e n t a l i m p a c t a s s e s s m e n t h a s
i n c l u d e d a l l p h a s e s o f t h e project namely construction phase and operational
phase. The building has both positive and negative impactPositive impact of the project The
positive impact of the project is:-
Generation of employment opportunity
Source income for the government through business income tax
Income generation for the promoter
Being exemplary for other investors who want to engage in the same business
line.Negative impact of the project The project has the following negative imacts:1.noise and
Dust emission during Construction There are some noises during the construction due to
theconstruction operation and the company will use construct theconstruction during
the day time. Again there is the emission of dust which will be mitigated by sprinkling
water on the service.2 . p r o b l e m o n w o r k e r s o n c o n s t r u c t i o n During construction
there are some problems that will materialize on w o r k e r s . T h e s e a r e :
d a m a g e o n o p e r a t i o n b y u s i n g m a c h i n e s , construction materials
a n d o t h e r s . T o m i t i g a t e s u c h i m p a c t t h e company will provide safety insurance
and safety equipments.3 . s w a g e s d u r i n g o p e r a t i o n During operation there are some
wastes emitting from the mixed usebuilding. These are wastes from the latrine and
will be mitigated byusing modern waste treatment technology.4.7.8.