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 , 8 1 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 o f i 6 7 8 . 1 t 3 2 8 7 , 8 4 2 . 0 7 7 2 8 , 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 0 0 0 0 0 T o t a l o w 5 , 0 0 0 f l 3 8 8 0 5 , 0 0 0 2 , C a s h 0 6 4 , , 9 7 2 3 9 5 8 0 , i n 8 5 1 7 , 0 0 0 s a 0 2 8 5 l , e 9 0 7 0 5 0 , 2 Cash paymentS a l a r y E x p e n s e 0 2 3 5 , 4 4 2 , 4 0 0 Investment 3,872,679.50000P o p e r a t i n g 0 3 1 3 9 r 2 0 0 0 0 0 O p e r a t i 7 , 5 4 8 . 8 0 0 , 6 6 1 . 6 . 2 0 Loan repayment 9 Expense5 0 2 3 e , 0 0 6 2 6 n g 3 3 C 4 , o s 4 3 3 0 7 0 9 , 0 9 7 . 9 6 7 , 6 4 3 5 3 1 , 8 2 3 L e a s e 0 4 , . 5 4 , 8 p a y m e n 8 1 9 . 5 4 , 1 9 . 5 3 t 8 1 9 t 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.