PROJECT PROPOSAL ON THE

MIXED USE BUILDING

THE PROJECT TO BE IMPLEMENTED IN OROMIA

REGIONAL STATE, AMBO TOWN

PROMOTER: TADASE FUFA SHARO

semp, 2022

FINFINNE, ETHIOPIA

1
Contents
EXECUTIVE SUMMARY.........................................................................................................................4
1. INTRODUCTION...............................................................................................................................5
1.2. General Background.........................................................................................................................5
1.2. Profile of the Promoter.....................................................................................................................6
1.3. Purpose of the Document..................................................................................................................6
1.4. Project Justification..........................................................................................................................7
1.5. Objective of the project....................................................................................................................8
1.6. Description of the Project.................................................................................................................8
1.7. Socio-Economic Advantage..............................................................................................................9
1.8. Location and Premises Required.....................................................................................................11
2. MARKET STUDY AND SERVICE CAPACITY................................................................................12
2.1. Market Analysis..............................................................................................................................12
2.2. Demand and Supply Gap................................................................................................................13
2.3. Demand factors for Commercial Complex.....................................................................................14
2.3.1. Fast Economy Growth..........................................................................................................14
2.3.2. Population and Population Growth (Demography)..................................................................15
2.3.3. Tourism....................................................................................................................................16
2.3.4. Geographical Significance of the Area....................................................................................16
2.4. Competitors...............................................................................................................................17
2.5. Target Customers.......................................................................................................................17
2.6. Marketing Promotion and strategy..................................................................................................17
2.7. Service Capacity and Service Delivery Program............................................................................17
2.8. Pricing............................................................................................................................................19
3. ORGANIZATION AND MANAGEMENT......................................................................................20
3.1. Organizational structure...............................................................................................................20
4.2. Man Power......................................................................................................................................23
4. FINANCIAL REQUIRMENT AND ANALYSIS................................................................................25
4.1. Fixed Investment............................................................................................................................26
Operating Expenses at Full Capacity.....................................................................................................29
4.3. Underlying Assumption..................................................................................................................32
4.4. Source of Capital............................................................................................................................32
4.5. Loan Repayment Schedule.............................................................................................................33

2
 4.6. Depreciation Schedule....................................................................................................................33
4.7. Projected Revenue Schedules.........................................................................................................34
4.8. Financial Analysis..........................................................................................................................35
4.9. Pay-Back Period.............................................................................................................................37
5. ECONOMIC, ENVIRONMENTAL AND SOCIAL APPRAISAL.......................................................37

3
 EXECUTIVE SUMMARY
1 Project Owner Tadase Fufa Sharo
2 Nationality Ethiopian
4 Project location Oromia regional state Ambo town.

5
Proposed project G+6 Mixed use

The project includes Bar and Restaurant, Cafe, Electronics

6 Project Assembly Hall and shop, Furniture shop, super Markets,
Composition Banking Service, Shops and Offices

7
Premises Required 5000 m2

The total project capital is 33,000,000 Birr from which 30% or

8 Total Initial 10,000,000 will be covered by the promoter and the rest 70% or
Investment Cost 20,000,000 birr will from financial institutions.
The total manpower required for the plant will be 80 employees
at full capacity.

 Permanent workers 40

9  Skilled 20
 Unskilled 20
 Temporary workers 40
Employment  Skilled 10
Opportunity  Unskilled 30

Benefits of the
10 project For The Provide better Bar and Restaurant service, Contribute to
region Country Economic development of the Town as well as of the region.

11 Applicable The promoter will utilize the modern and standardized

Technology service level and Urban Beautification and development.

4
1. INTRODUCTION
1.2. General Background

The present dynamic economic growth of Ethiopia demands the parallel development of tertiary
sectors. These sectors are mainly related to the development of the economy in general and
tourism sector in specific situation and able to provide strong backward and forward linkages for
other sectors of economy. Besides, the growth Commercial sector in Ethiopia has stimulated
increased tourism supply capacity and higher levels of investment in infrastructure, human capital
and technologies to manage and efficiently transact higher levels of Marketing activity .Hence,
investment activities in Commercial Complex include Bar and Restaurant, Banking Service,
raining centers, Cafeteria, Guest house can support and propel the sector, particularly in
developing countries (like Ethiopia) where domestic resources are limited

Moreover , the current investment flow and market in these areas are very promising that
imitates many investors to engaged in. Furthermore, the government of Ethiopia has conducive
investment polices and regulation that further attract the private sectors involvement in economic
development of the nation through the various investment and business activities.

In this regard, the promoter of the Commercial Complex Center Mr Tadase Fufa is planned to
establish commercials market of in Ambo Town. The result of the study is very sound and
promising for the owner to start the project in this town.

The promoter is very dedicated to commence the project. Hence, the company expects to get the
necessary support from the regional and local governments for the project implementation.

1.2. Profile of the Promoter

The owners of this envisaged project Mr. Tadase Fufa was set up in Oct. 1992 out of the
common desire of five Ethiopian professionals who were well known in the business community.
The company was formed with the objectives of providing offices, homes, hotels, hospitals,
education institution and the brew industry with imported office machines, domestic appliance
and other products. From inception the founders focused on the continuity of the enterprise by
5
dubbing its company of generations. Today, the company’s net assets exceed birr 250 million
and it owns a 12 storey hotel and business center. Based on its diversification strategy, the
company has others projects with in the pipeline.

The promoter’s has the business objective of the leading the sector with quality products,
adequation distribution channels and efficient after sales services. Thus, it is these experiences
which primarily motivated this investor to develop the inception of this project idea.

1.3. Purpose of the Document

The objective of this project study is primarily to facilitate potential entrepreneurships in project
identification for investment. The project study may form the basis of an important investment
decision and in order to serve this objective; the document/study covers various aspects of
project concept development, start-up, production, marketing, and finance and business
management. The document also provides pectoral information and brief on Government
policies and international scenario, which have some bearing on the project itself. This particular
project study is regarding the Commercial Building to be established in Ambo town.

1.4. Project Justification

Ethiopia is one of the ancient African counties with rich cultural diversity, heritage and natural
tourist attraction areas. Besides, it is the seat for head quarter of Africa union and other
international organizations that based in the capital, Addis Ababa

Currently, the overall Ethiopian economy has been witnessing substantive economic growth.
Since 2003/04 growth has been sustained, recording more than 11% average growth. This
growth is complemented by a strong performance in the Agriculture, Industry (construction and
manufacturing) and service sectors with an average growth rate of 10%, 10% and 13.2%,
respectively.

When there exist rapid economic growth, the demand for of tertiary/service sector is very high
that result from the change of people lifestyle, consumption pattern and income growth. Hence,
the development and market linkage of this sector with other sectors like agriculture and industry
is very vital. Furthermore, the Commercial growth has a potential to develop the sector more.

As one part of tertiary (service) sector, Commercial centers are generating most of their business
6
from domestic and local traders, business persons, business men, guests and leisure travelers etc.
The services given by these centers should be better quality and facilitates to their customers.
Beside, the development of Service sector further necessity the development of the recreation,
Hotel and Marketing. Nevertheless, the development of this sector is not enough compare with
the demand and potential of the Country.

In addition to the above facts, the following points taken by the promoters for the project
justifications.

 The government of Ethiopia promising the second five year growth and transformation
development plan (2014/15-2019/2020), that will bring prosperity to its citizens with
collaboration with private sector investment actions
 The regional government conducive investment packages for development and poverty
reduction

1.5. Objective of the project

The overall objective is to develop a chain of ecologically friendly Commercial world class
building with full fledged facilities to provide all the amenities required for the promotion of
each particular area or locality.

The specific objectives are to:

 Create new Commercial facilities for sustainable trade development

 Protect and conserve the ecology in the proposed project areas

 Attract tourists without affecting the natural resources
 Contribute to the national economy by generating additional foreign currency earnings and
alleviate the poverty of the local people
 Protect the remaining natural forest and work in close cooperation with the surrounding
communities to the mutual benefit of all involved.

With this project, ecologies would like to create a business that reaps benefits to itself. The
immediate culture and society surrounding the Hotel and to the country as a whole As such,

7
every aspect of this venture will be based on these criteria.

1.6. Description of the Project

Commercial Complex is a relatively not new concept in the Commercial industry. It sets out to
promote a more responsible type of tourism, which conserves the immediate environment and
eco-system and there by insures sustainable Economic development and growth. The
development of this type of Investment is not geared toward attracting visitors and maximizes
revenue only, but also in conserving to accomplish these objectives, the projects are designed to
be located in isolated areas where the foreign Investors will enjoy the natural beauty of the
particular region and its culture, history, flora, fauna, wildlife, etc.

The Project will be fully equipped with complete accommodation, catering services with fine
cuisine, a restaurant, environmentally friendly power generating systems, potable water and
communication. It is also in the project plan to protect and conserve the flora and fauna by
planting more tress and making the area environmentally attractive. Job opportunities for the
local community will be created. The company intends to recruit matured consultants in the
training of its staff in catering and commercial services.

The design, the services, and the management of the envisaged project will be built to specific
standards. The project will promote its brand internationally and shall be affiliated to
international organizations and associations for booking and interagency affiliations. The
promoter shall promote Ambo town through national advertising in newspapers, magazines,
posters, Postcards, books, web sites, presentations to target groups, as well as through other
media.

1.7. Socio-Economic Advantage

One of the most pressing issues of modern time is the deteriorating condition of our
environment. At present, more and more people are concerned about the continuing
pollution of the environment. In the past, the development of tourism was less concerned on
conservation of resources. It has therefore, contributed to the pollution of the environment
and the diluting of culture around the world.

8
In the last two decades, environmentally conscious tourism has increasingly become popular
by nature enthusiasts and conservationists. In fact, there is a strong movement ad vocation
against insensitive tourism that does not benefit surrounding communities. To satisfy this
demand nature friendly tourism is today being development even in the most advanced
tourism destinations around the world.

Upon completion, this project is expected to have the following benefits;

 Offer high quality service standard throughout its chain;

 Offer tourists a real life experience of the particular locality though the distinct
architecture displayed in the Hotel
 It offer the comforts and quality of services expected of a first class Huge
Commercial Mall;
 Attract tourists who seek environmentally responsible experiences;
 Conserve and ameliorate the eco-system of project area;
 Contribute to the national economy by generating additional foreign currency;

 And contribute to the region's economy by voluntarily pledging and sharing an officially
declared amount (percentage) from the proceeds of each site towards social project in
that particular locality;

 Create employment opportunities for the surrounding community, which in turn will
improve the quality of life within the host community;
 Transfer of know-how on efficient usage of energy, waste reduction and other
conservation practices;
 Serve as a prototype for future development of eco tourism throughout the country.

9
1.8. Location and Premises Required
A. Project Location
The envisioned Commercial building is planned to be constructed in Ambo town, which is

located approximately at a distance of 110 km from Capital City to the East direction. One of the

favorable condition of the project area in terms of the topographic aspect is its' flatness, which in

effect, make the construction process easier and cost effective.

Climate- Ethiopia is situated within the tropics and therefore is subject to comparatively small

seasonal variations in temperature, but experiences considerable during temperature fluctuation.

However, the project area shows great seasonal variation in rainfall and humidity. Most of the

annual rainfall occurs between late June and mid-September. The driest time of the year is

usually the months of November to May.

The main justifications behind the selection of this location are:

 Geographical proximity to Addis Ababa and the center for Oromia west region.
 Relatively advanced development in infrastructure (Power, Water, Telephone road etc.)
 Environmentally favorable for Commercial business.

B. Premises Required

For the proposed set up of the entire Commercial Mall Is, a total of5000 square meters is
required.

No Description Land Requirement in M2

The total Construction area Bar, Restaurant & 2500
1
other related)
2 Outdoor recreation area 500

10
7 Security room 500
8 Parking and green area 1500
Total 5000

11
2. MARKET STUDY AND SERVICE CAPACITY
2.1. Market Analysis

Ethiopia with its huge potential in the travel and tourism market is now gearing towards a point
where it can make a significant contribution to its economic development. "Ethiopia - 13 months
of sunshine" is the most popular tourism slogan that is being used to promote the sector, which
draws lots of tourists to the country every year, thereby, boosting the hospitality industry of the
country.

The beautiful attractions, warm people and the services have also been contributing in boosting
tourist flow to the country. The country's unique culture and history, diverse and exotic flora and
fauna as well as the magnificent scenery and archaeological sites are also among the major
tourist attractions which draw the attention of local and foreign tourists.

This nation has been seen as an important and real destination for a number of visitors. A rich
array of historical and ecological sites set it apart from most of its neighbors. It has combined
spectacular culture, history, ethnic diversity, nature and traditions dating back to 3000 years
which are major sources of attraction and income.

Both local and overseas tourists flocking every year to visit the tourist attractions of the country
indisputably deserve the standard services they require. This would have not only a momentous
role in attracting additional tourists to the sites every year but also boost the country's foreign
currency earnings gripping tourists to extend their stay.

Although there were only one thousand Hotel rooms in the whole nation two decades ago, a
remarkable improvement has been witnessed in the sector particularly over the past 15 years.
Currently, the number of Hotel rooms has reached above 7000 in Addis Ababa alone. According
to the Ministry of Culture and Tourism, this number would jump to 10,000.

Oromia is endowed with several natural and cultural tourist attraction resources. The region is
bounded with numerous lakes, mountain trekking, Natural Cave, Hot springs and others. In
addition to tourists and guests from other places, there are many residential and other potential

12
customers in the area Including government officials, and NGOs. This makes the area most
suitable site to develop Commercial Mall in order to provide service like, Hotel café, and
restaurant Guest House and other commercial Businesses. The services including, house hold
items bed/accommodation, wedding ceremony, hot drinks, soft drinks, juice and food services.
Also it is important to note that raw materials for cafe and restaurant services are readily
available in the area.

Nowadays, the lodge and recreation demand is very high in the country, the reasons that the
population number has been increasing and the people income level is also improving as well.
So, many people want recreation places and household items need are increasing day to day.

It is obvious; there are few competitors in the area particularly in Hotel service and Guest house
but which are unable to satisfy the increasing demand. So, this remains in the area where
anybody with some capital can start these services. The added advantage is that the land for such
services is available.

The market demand for commercial service starts with People wants to enjoy outdoor amenities
with their children. Adults want to take different physical exercises and their children want to
play with different playing materials. That is why there are many and large amusement and
recreation resort parks in all cities in developed countries.

2.2. Demand and Supply Gap

Ambo town is found at the border of special zone of Oromia and Other Oromian region. The
town is situated 130 Km from the capital Addis to the east direction. The town is also a major
business center and commercial route that attracts thousands of business travelers. These are also
the most important groups of potential customers that include both the local and foreign tourists
and the modern business community who choose services that range from economic to high class
standards. These groups would also choose a healthy comfortable climate that combines a more
traditional type with that of modern bedrooms restaurants and cafeterias. Even though when
compared with similar towns in the region. Ambo seems to have no developed huge
Commercial Complex buildings and the existing supply is far behind the growing demand for
standard service. Hence, the project will solve the serous demand problem in the town.

13
2.3. Demand factors for Commercial Complex

There exist many demand factors for modern Commercial complex or Marketing Mall in
Oromia as well as in Ambo town. The main factors are:

 Fast Economic Growth & economic growth/activity of the district

 Population growth and density,
 Tourism
 Geographical significance of the town

2.3.1. Fast Economy Growth

The Ethiopian economy has been experiencing dynamic and double digit growth that
experienced annual average growth of 11.4% in past 8 years. According to Ministry of Finance
and Economic Development (MoFED), the forecasted economic growth the economic growth
(GDP at constant basic price) for 2011/2012 is estimated to be 10.4 %. As per the estimates,
annual growth rates of the major sectors, i.e. Agriculture, industry and service were 7.6 %, 10.6
% and 13.0 %; respectively and their shares out of the total GDP were 42%, 13% and 45 %,
respectively. This continuous and a-two-digit high growth would place Ethiopia among the fast
growing countries in the world.

As sectors of the economy, the agriculture and construction sector also grows with double digit
with the average annual growth 10.31 % and 12% respectively in the past 8 years. As shown in
the table below the growth of the sectors directly related with the economy as parts of the
economy.

Major Economic Indicators Trends in Performance of the Economy: Growth Rates (%)
Item 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10
GDP in
1999/00                

14
 Item 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10
Prices -2.1 11.7 12.6 11.5 11.5 11.6 10 10.4
Agriculture -10.5 16.9 13.5 10.9 9.4 7.5 6.4 7.6
Industry 6.5 11.6 9.4 10.2 10.2 10.4    
O/w:
Manufacturing 0.8 6.6 12.8 10.6 8.3 7.1    
Construction 13.6 19.5 7.5 10.5 10.9 11.3 11.7 10.9
Services 6 6.3 12.8 13.3 14.3 17    
O/w: Banking
and Insurance 10.8 19.7 24.2 28.7 15.1 24.9 16.5 13.7
Distributive
services 5.5 6.4 14.7 14.2 16 15.2    
Other services
real GDP PER
CAPITA 6.5 6.1 10.9 12.5 13.1 14.2    
PER capita
GDP -4.6 10.7 9 8 7.5 7.6    

Inflation 15.1 8.6 6.1 10.6 15.8 25.3    

Source: MOFEO & NBE
This fast growth of these sectors resulted from different bodies like government, non government
and private activities in Ethiopia is growing in the fastest rate. Moreover, the current five years
Ethiopian Growth and transformation plan will expand the economic growth paramount level by
harnessing the resource and expanding industrialization.

2.3.2. Population and Population Growth (Demography)

The rate of urban population growth is increasing from year to year. The latest report of the
population estimation revealed that Ethiopia’s population has reached 100 million, which puts
Ethiopia as the second most populous country in Africa. According to the Central Statistics
Authority (CSA), current population growth is estimated to be 2.8% per annum, and the growth
rate is expected to remain above 2% for the next 20 years. Rural population is growing at about
3.0% while the urban population is growing at about 4.3%. Total population is projected to reach
129 million by 2030. In Ethiopia, of the total population, about 16.0% is estimated to reside in
the urban areas. The trend suggests that the size of urban population is likely to continue to grow
at a high speed in the future. The share of urban population will rise from 16.0% in 2005 to about
23% by 2030. Nearly 33 million of the total 129 million will live in cities and towns by 2030. In
this regard Addis Ababa has the largest population in the nation (which is estimated to be more
than 3.5 million).

15
In general having a huge population is a potential for business especially for Hotel business since
people naturally demands for cafe, restaurant, bar bed rooms and recreational center services.

2.3.3. Tourism

Ethiopia is a land of wonder and enchantment, a country with one of the richest histories on the
African continent, a land of contrasts and surprises, of remote and wild places, home to cultured
and friendly people who are descended from some of the world's oldest civilizations. The
country is endowed with unique combination of natural and cultural heritage, impressive
scenery, suitable climate, rich flora and fauna and recognized archaeological sites. There exists
many kinds of flora and wild life and more than 800 species of birds reside in Ethiopia of which
23 are endemic to the country.

There are more than 100 mammals species, of which seven of the big mammals are unique to
Ethiopia. Ethiopia's many national parks enable the visitor to enjoy the country's scenery and its
wildlife, conserved in natural habitats, and offer opportunities for travel adventure unparalleled
in Africa.

All these could be enough to make Ethiopia fascinating place to visit and travel through, but
Ethiopia has so much to offer. Generally speaking, the improved political, social and economic
climate observed in recent years has created favorable conditions for development of tourism in
the country. This can be evident from the trend that tourist arrived for different purposes has
shown an increment over recent years.

2.3.4. Geographical Significance of the Area

The project area has adjacent to Bishoftu and Harare town which encourages people to visit the
town in weekends and holidays that creates a demand for the envisioned Commercial Mall.

2.4. Competitors
The envisioned Marketing Mall will have a competition from few commercial centers and
recreational centers developed in the town. However, the project will have its own marketing
strategy and utilize its competitive advantages to be successful.

16
2.5. Target Customers
The target customers for the envisioned project will be new visitors travelling to the area local
or foreigner, local community, middle and upper income bracket, returning visitors to the area,
business needing to hold small overnight planning, strategy sessions, wedding parties/couples.

2.6. Marketing Promotion and strategy

To reach customers different marketing ways will be used. Among the different marketing
strategies and tools for promotion controlling the market:

 Printed and non printed forms of advertising, Electronic etc

 Sponsorship of key government activities and public support mechanism.
 Seasonal discount pricing for bed rooms and different other customer centric marketing
strategies will be used by the promoter.
The project under discussion will have diversified marketing strategies that could enable it
come up with the different competitors in the market. Moreover, best quality and customer
satisfaction will be the key marketing strategy of the project.

2.7. Service Capacity and Service Delivery Program

The program is scheduled based on the consideration that the envisaged Mall will give service
360 days that means the non-operational days are for maintenance only. During the first year of
operation the project will operate at 60 percent capacity and then it grows to 80 percent in the
2nd year.

17
Service capacity of the Mall at full capacity in third year of operation
SN Description Measurem Daily Monthly Annual
ent Service Service Services
Capacity Capacity
1.       Hotel Service        
1.1 Coffee & Sypris Cup 300 9000 108,000

1.2 Tea Cup Cup 350 10500

1.3 Milk Cup Cup 300 9000
1.4 Macchiato Cup 300 9000 108000
1.5 Soft Drink Bottle Bottle 400
1.6 Juices Cup Cup 200 6000
1.7 Cake No. No. 200 6000
1.8 Different Food Items No. 400 12000
1.9 Fast Food No. 300 9000
2 Bar Service
2.1 Beer & Beverage Bottle 600 18,000.00
2.2 Different Alcoholic Drink Bottle 20 2,000.00
3 Assembly Hall service
Assembly Hall service1
3.1 Day/Seat 1/2000 1/1000 1/1000
3.2 Assembly Hall service2 Day/Seat 1/1500 1/500 1/500
4 Gymnasium & Fitness center Person/ 100 100 100
month
5 Children Game Game 300 9000 108,000
Spa, Massage, Sauna &
6 Beauty Salon Person - 20 600 7200
7 Tennis or Basket court Game - 100 360

The capacity will grow to 100 percent starting from the 3 rd year that is the full capacity of the
Mall. This consideration is developed based on the assumption that market and logistics barriers
would be eliminated gradually within the first two years of operation.

18
2.8. Pricing

Based on the market price of similar project in Ambo town, the envisioned commercial set the
following fair price for its services as indicated below;
SN Description Measurement Unit Price in Br.
With VAT
1. Hotel Service
1.1 coffee Cup 20
1.2 Tea Cup 10
1.3 Milk Cup 20
1.4 Macchiato Cup 17
1.5 Soft Drink Bottle 20
1.6 Juices Cup 40
1.7 Cake No. 36
1.8 Different Food Items No. 140
1.9 Fast Food No. 50
2 Bar Service
2.1 Beer & Beverage Bottle 30
2.2 Different Alcoholic Drink Bottle 2100
3 Assembly Hall service
3.1 Assembly Hall 1 Day/Seat 5000
3.2 Assembly Hall 2 Day/Seat 1500
3.3 Assembly Hall 3 Day/Seat 2,200
4 Gymnasium ^ Fitness center Person /month 1,000
Children Game Game 20
Spa, Massage, Sauna & Beauty Salon Person 300
Swimming Service Person 50
Weeding Ceremony Wedding 2500

19
 3. ORGANIZATION AND MANAGEMENT
3.1. Organizational structure

An organization is an entity established to organize activities, resources and manpower so as to

achieve the intended objectives in a given time. Organizational structure is a tool designed to
allocate the planned activities, responsibilities and accountabilities to man power of the
organization based on their qualification and experiences. Hence the following organization
structure is designed for the proposed project management depending up on services in
Commercial and main section in Marketing industry.

General Manager

As General Manager

Room division Dep’t Supportive Dep’t Food & Beverage Dep’t

Front Office House Keeping Security Personnel Food & Beverage Food & Beverage
section section marketing production service
 Support Dept includes security, Marketing
section &sales, engineering & Hotel
Maintenance, finance and accounts, purchase and general store and personnel
sections

20
A. The General Manager's

Duties and Responsibilities

 He/she will plan, organize, direct and control the overall activities of the Hotel.
 He/she will devise policies and strategies that will enable the Hotel to be profitable.
 He/she will incorporate modern technological innovation that will facilitate the service
delivery of the restaurant and bars, bed rooms, assembly hall and gymnasium services that
will increase customer's satisfaction.
 He/she will plan, organize, direct and control the human and non-human resources of the
Hotel so as to achieve the short and long run objectives of the organization.

B .Assistant G. Manager

 He represents the General Manager.

 He leads the technical department.
 He leads supportive Department.
 He operates Additional work from G. Manager.
 Submit reports to G. manager.

c. Finance & accounts section manager

The Admin & Finance Department of the Hotel IS responsible for undertaking the following
activities:

 Will manage non human resources of the Mall, which include: effective handling of the
different inventories of the Hotel, 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 cashers 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

21
 General Manager and other concerned government body.

D. Food and beverages Service Manager

 Coordinate Food & beverage service sections (Bars, restaurants, banquets, room service,
garden or roof top restaurants).
 Evaluate and support food and beverage operation
 Plan & implement to bring superior customer service
 Submit operational report for Ass. General manager

E. Food and Beverage production section manager (Executive Chef)

 Coordinate food and beverage production sections

 Support and control food and beverage operation
 Plan and implement for quality operation of food & beverages
 Submit on time request about inputs for production
 Provide on job Training staffs for better performance

F. The Marketing and sales section manager

 Will handle the overall marketing activities of the organization which include planning,
organizing, directing, and controlling.
 Will develop the marketing strategies.
 Will develop effective customer handling strategies
 Plan and execute the promotion mix

G. House Keeping section Manager (Executive house keeper)

 Coordinate all housekeeping operation.

 Support and control on site housekeeping operation
 Plan and implement strategies for better housekeeping performance.
 Submit input request on time for housekeeping operation
 Submit report for top leader

22
4.2. Man Power
The total manpower required for the plant will be 80 employees at full capacity.

 Permanent workers 40
 Skilled 20
 Unskilled 20
 Temporary workers 40
 Skilled 10
 Unskilled 30

Sr. No of
Job Title Qualification Job Monthly salary Annual Salary
No
titles
A Permanent      
Employees
1 General Manager  
1 22,000 264,000
1.1 Secretary BA in secretary
Since/Office Mgt 1 3,000 36,000
2 As General Manager MA. In Marketing Mgt
1 18,000 216,000
3 Room division Dep’t BA/MA in marketing
Mgt 1 13,000 156,000
3.1 BA/MA in Bus. Mgt
Front Office section 6 10,000 720,000
3.2 House Keeping section BA/MA in Hotel Mgt
2 10,000 240,000
4 Supportive Dep’t BA/MA in Hotel Mgt
1 15,000 180,000
4.1 security Military science training
5 3,000 180,000
4.2 Marketing &sales BA. In Marketing
&sales Mgt 6 10,000 720,000
4.3 Engineering & Hotel BSC/MSC in Civil
Maintenance Engineering 4 15,000 720,000
4.3.1 Sanitary technician level III in sanitary
3 8,000 288,000
4.3.2 Electrician level III in electricity
3 8,000 288,000
4.3.3 carpentry level III in carpentry
3 8,000 288,000
4.3.4 construction technician level III in construction
2 8,000 192,000
4.4 finance and accounts BA/MA in finance and
accounting
4 10,000 480,000

23
 Sr. No of
Job Title Qualification Job Monthly salary Annual Salary
No
titles
4.5 purchase and general BA/MA in Supplies Mgt
store 4 10,000 480,000
4.6 personnel sections BA/MA in HRM
6 10,000 720,000
5 Food & Beverage BSC in Food &
Dep’t Beverage preparation
1 15,000 180,000
5.1 Food & Beverage level III in Food &
production Beverage preparation 8 10,000 960,000
5.2 Food & Beverage level III in Hotel service
service 18 10,000 2,160,000
     
B Casual Employees     -
Architecture BSC/MSC in
Architectural
7 Engineering 1 10,000 120,000
Civil Engineer BSC/MSC in Civil
8 Engineering 1 10,000 120,000
Construction BSC/MSC in
Management Construction
9 Management 1 10,000 120,000
Electrical Engineer BSC/MSC in Electrical
10 Engineering 1 10,000 120,000
Sanitary Engineer BSC/MSC in Sanitary
11 Engineering 2 12,000 288,000
Land Scape Engineer BSC/MSC in Land
12 Scape Engineering 2 12,000 288,000
laborers
13   32 3,000 1,152,000
  Grand Total   80   3,300,000
11,676,000

4. FINANCIAL REQUIRMENT AND ANALYSIS

The Financial analysis include insight to the total capital outlay required for the project which

24
would consist of total fixed investment cost, and pre- production costs; the source of finance for
the total planned initial investment cost requirement and other parameter of feasibility analysis
including projection of profit/loss statement, cash flow statement and payback analysis. Hence,
the total initial investment cost for implementing this project is estimated at ETB 33,000,000.
Out of the total budget of the project 30% or ETB 10,000,000 will be covered by the owner
equity; while the rest 70% Eth birr 20,000,000 will be covered by financial institutions.

Table Summary of Total initial Investment cost

No Description Cost  
1 Fixed Investment    
1.1 Land, Building and Construction 9,240,000 0.00
1.2 Machines and Equipment’s 7,260,000 0.00
1.3 Vehicles and Motors 990,000 0.00
1.4 Office Furniture and Equipment 660,000 0.00
Total Fixed Investment Cost 18,150,000 0.00
2 Operating Expense   0.00
2.1 Raw Materials Purchase and Products 6,600,000 0.00
2.2 Salary Expense 3,300,000 0.00
2.3 Other Operating Expense 990,000 0.00
2.4 Pre-operating Expense 660,000 0.00
Total Operating Expense 11,550,000 0.00
  Contingency (Lump sum) 10% 3,300,000  
Total Investment Cost 33,000,000 0.00

4.1. Fixed Investment

The fixed investment cost of the project consists of land acquisition and development,
construction costs of building and civil works, costs for purchase of plant machinery and
equipment, cost of purchase of vehicles, purchase of other fixed asset and other pre production
capital expenditure. Accordingly the fixed investment cost constitutes the resource required for
land acquisition, site preparation and development, design and engineering cost, building
construction cost, civil works (service facilities), purchase of Hotel machinery and equipment,
purchase of transportation vehicles, purchase of office furniture and equipment and capital costs
required for other fixed assets.

25
A. Building & Construction
N Description Land Total cost in
o1 Production Hall Requirement(M2) 1, br. 2,772,
2 Warehouse, raw material and 300 000 1,848,
3 input
Office Building, and finished 100 000 924,
productAccumulation area
4 Waste 30 000 184,
5 Green area, buffer and parking 20 800 277,
6 Shops & Showrooms  50 200 462,
7 Site Development   000 924,
8 Design and supervision   000 924,
9 Land lease initial   000 924,
000
  Total 1, 9,240,
500 000

B. Machinery and equipment’s

Unit Price Total Price in
SN Description Measurement Qty
in Br Br
  Hotel Service Machineries        
equipment
1 Laundry Machine with all No 5,00
100,000
accessories 5 0,000
2 Bar table No 2
5,000
50 50,000
3 Bar chare No 1 3
2,500
25 12,500
4 Dining Tables No 1 5
4,400
25 50,000
5 Dining Chairs No 1 2
2,230
25 78,750
6 Coffee Tables with chairs Set 2 5
2,500
00 00,000
7 Bed with all accessories for No 300,
30,000
Family Room 10 000
8 Bed with all accessories for No 250,
25,000
Double Room 10 000
9 Bed with all accessories for No 4
17,500
Suit Room 25 37,500
10 Beds with all accessories for No 7
15,000
Single room 50 50,000
11 Comfort Chair(sofa) for No
25,000
reception 3 62,500
12 LCD 32” TV for Bed room Unit 9
15,000
63 37,500
13 LCD 60” TV for Restaurant Unit 2
30,000
café and Bar 8 25,000

26
 14 Kitchen Equipments LS
   
-
15 Refrigerator No 2
20,500
13 56,250
16 Balcony & alcohol display Set 6
50,000
13 25,000
17 Satellite Dish No
9,250
5 46,250
18 Satellite Receiver No 1 2
2,500
Equipment /Decoder 00 5,000
19 Public addressing system of Unit 4
55,000
auditoria type 8 12,500
  Grand Total   7,240
   
,000

A. Vehicles
Total Price in
SN Description Qty Unit Price Remark
Br
2 Min Bus Van 1 990,00 990,000 Duty free
0
Total     990000,000  

E. Office Equipment
Unit cost in Total cost in
No Description Qty
Br. Br.
1 Managerial Tables 10 10,811 100,541
2 Secretarial chairs with table 10 5,405 60,270

27
 3 Managerial Chairs 10 3,243 40,162
3 Computer and Printer 50 2,162 170,324
4 Shelf 200 1,081 216,216
5 Filing Cabinets 300 541 162,162
6 Customer Chair 100 270 27,027
7 Television 15 1,622 24,324
8 Waiting Room with sofa   1,000,000 54,054
9 others related service   3,550,000 191,892
10 Assembly chair and table(set)   27,027
Total     660,000

4.2. Initial Working Capital

The initial working capital is estimated to be birr. 11,550,000.00

28
Operating Expenses at Full Capacity

1. Raw materials

Cost per Total Annual

SN Description Measurement
Month in Br cost Br.

Raw Materials for restaurant 20,000 240,000

1 and Cafe LS

2 Raw materials for Bar LS 15,000 180,000

20,000 240,000
3 Other raw materials & inputs LS

  Total   55,000 660,000

NB. The cost of raw material is revolving budget throughout the year. Thus we fill the monthly
and annual budget the same figure.

2. Salary Expense

Monthly Annual
No. Description No. Qualification Salary Salary in
in br br

General
1 1 BA in Business Management 10,000 120,000
manager

Production
2 1 BSC in Industrial Engineering 5,000 60,000
Head

Production
3 5 Degree in production technology 5,000 60,000
supervisor

Draftsman
4 1 Diploma in draft technology 5,000 60,000
Designer

Admin and
16 Finance 1 BA in Management/Accounting 5,000 60,000
Head

29
17 Accountant 5 Diploma in accounting 5,000 60,000

18 Electrician 2 10+2 in general electricity 3,500 42,000

19 Secretary 3 Diploma in secretariat science 3,500 42,000

20 Clerk 2 10 completed 3,500 42,000

21 Store keeper 2 10+2 in store and logistics management 3,500 42,000

22 Driver 3 10 completed 3,500 42,000

23 Cashier 3 10+2 in Bookkeeping 3,500 42,000

Office
24 3 10 completed 3,500 42,000
boy/girl
General
25 2 Diploma in management 3,500 42,000
service
26 Security 3 Unskilled 2,500 30,000
27 Gardener 3 Unskilled 2,500 30,000
28 Cleaner 5 Unskilled 2,500 30,000
Other
  35   2,454,000
workers
  Grand Total 80     3,300,000

3. Other Operating Expenses

Annual Cost br. Assumption Used
SN Description
1 Property Insurance 251,475 1 % of fixed Investment Cost

2 Audit & Legal Fee 135,000 3000 per month

3 Uniforms 150,000 200*300 br.

30
 4 Telephone, fax and postal 67,045 2000 per month

5 Cleaning goods supplies 150,000 5000 per month

6 Repair and maintenance 251,953 2 % of the Fixed Cost

7 Advertisement 250,000 % of sales

8 Stationery and supplies 45,000 1000 per month

9 Electricity 235,000 0.47 br*200,000KWh per year

10 Water 125,000 3*10,000 M3 per year

11 Fuel 250,000 14000 lit*18.4 br

12 Oil and lubricant 214,400 10% of fuel cost per year

13 Miscellaneous Expense 150,000 12,000 per month

  Total 990,000  

F. Pre – Service Expense

SN Description Cost in Br.

1 Project proposal 17,500

2 Licensing fee and others 125,000
3 Environmental Assessment Impact 125,000
4 Staff Capacity Building 262,500
5 Advertising 50,000
Total 580000

4.3. Underlying Assumption

The financial analysis of the envisioned Project is based on the data provided in the Preceding
sections and the following assumptions.

The total initial investment cost for implementing this project is estimated at ETB 33,000,000.
Out of the total budget of the project 30% or ETB 10,000,000 will be covered by the owner

31
equity; while the rest 70% Eth birr 20,000,000 will be covered by financial institutions.
A. Construction and Finance
Construction period 2 years

Source of finance 30% equity and 70% loan

Bank interest rate 10%

Operation Costs and raw materials increase by 5% after year 3

Salary and wages increase by 5% after year 3
Annual Sales revenue increased by 5% after year 3

B. Working Capital
Accounts receivable 30 days

Work in progress 5 days

Cash in hand 5 days
Account payable 30 days

4.4. Source of Capital

SN Description % share Amount (in Birr)

1 Owners Share 30 10,000,000

2 Bank Loan 70 20,000,000

Total 100 30,000,000

32
4.5. Loan Repayment Schedule
Yea Principal Interest Total Annual Remaining
r Payment (10%) Payment Balance
0 0 0 0 23,100,000
1 2,310,000 2,310,000 4,620,000 20,790,000
2 2,310,000 2,079,000 4,389,000 18,480,000
3 2,310,000 1,848,000 4,158,000 16,170,000
4 2,310,000 1,617,000 3,927,000 13,860,000
5 2,310,000 1,386,000 3,696,000 11,550,000
6 2,310,000 1,155,000 3,465,000 9,240,000
7 2,310,000 924,000 3,234,000 6,930,000
8 2,310,000 693,000 3,003,000 4,620,000
9 2,310,000 462,000 2,772,000 2,310,000
10 2,310,000 231,000 2,541,000 0

4.6. Depreciation Schedule

S Original Value In Depreciation rate Depreciation Per
Description
N Birr in % year
Construction and Civil
1 9,240,000 5 462,000
Work
Machines &
2 7,260,000 15 1,089,000
Equipment’s
3 Vehicles 990,000 20 198,000
4 Office Equipment 660,000 15 99,000
  Total 18,150,000   1,848,000

33
4.7. Projected Revenue Schedules

Based on the production capacity of the envisioned Commercial Complex center

indicated in previous chapter, the total revenue of the project is projected as indicated in
the table below;

Annual
Unit Price Total price
SN Description UOM Service
in Sr.
Capacity
in Sr.
1 Hotel Service        
1.1 Coffee Cup 10,800 25 270,000
1.2 Tea Cup 12,600 15 189,000
1.3 Milk Cup 10,800 25 270,000
1.4 Macchiato Cup 10,800 20 216,000
1.5 Soft Drink Bottle 14,400 30 432,000
1.6 Juices Cup 7,200 40 288,000
1.7 Cake No. 7,200 36 259,200
1.8 Food No. 14,400 200 2,880,000
1.9 Fast Food No. 10,800 50 540,000
  Sub Total       5,344,200
2 Bar Service        
2.1 Beer Bottle 1,800 50 90,000
  Beverage       -
2.2 Alcoholic Drink Bottle 200 2500 500,000
  Sub Total       590,000
3 Bed Service       -
3.1 Single Bed Bed 2,800 800 2240000
3.2 Double Bed Bed 1,800 1500 2700000
3.3 Suit Bed Bed 2,160 1000 2160000
3.4 Family Bed Bed 1,080 1500 1620000
  Sub Total       8,720,000
4 Assembly        
  service        
4.1 Assembly Hall 1 Day/Seat 360/100 5,00 500,000
4.2 Assembly Hall 2 Day/Seat 360/150 3,500 525,000
4.3 Assembly Hall 3 Day/Seat 1/500 2,200 330,000
  Sub Total       0 1,355,000
10 1,00
5 Gymnasium Person/mont 0 0 100,000
  Fitness center h      

34
 Annual Total price
Unit Price
SN Description UOM Service
in Sr.
Capacity
6 Weeding Wedding 360/52 2,50 900,000
  Ceremony       0  
  Total       5,320,000
Ground Total 21,329,200

According to the projected income statement, the Mall will start generating profit in the 1 st year
of operation. Important ratios such as profit to total sales, net profit to equity.
Return on equity) and net profit plus interest on total investment (return on total investment)
show an increasing trend during the lifetime of the project.

The income statement and the other indicators of profitability show that the project is viable.

4.8. Financial Analysis

A. Balance Sheet
Balance Sheet
Asset
Current Asset  
Cash 4,950,000
Inventory of raw materials and inputs 6,600,000
Total Current Asset 11,550,000
Fixed Asset  
Land, Building and Construction 9,240,000
Machineries and Equipment’s 7,260,000
Office Equipment 660,000
Vehicles 990,000
Total fixed Asset 18,150,000
Total Asset  
Liability  
Account payable 23,100,000
Owners Equity 9,900,000
Capital  
Total Liability & Owners’ Equity 33,000,000

B. Income Loss Statement

35
Revenue Year 1 Year 2 Year 3-10

36
Sales 21,329,200 22,390,000 22,390,000
Sales expenses (5%)* 1,066,460 1,119,500 1,119,500
Purchase of Raw Material 6,600,000 265,075,095 265,075,095
Gross profit 14,729,200 -242,685,095 -242,685,095
Expenses    
Salary Expense 3,300,000 3,465,000 3,638,250
Operating Expenses 990,000 1,039,500 1,091,475
Pre-operating Expense 660,000 693,000 727,650
Deprecation Building 462,000 462,000 462,000
Deprecation machine 1,089,000 1,089,000 1,089,000
Deprecation Vehicles 198,000 198,000 198,000
Deprecation office Equip 99,000 99,000 99,000
Lease Expense 1,000 1,000 1,000
Interest Expense 2,310,000 2,079,000 231,000
Total Expense  9,109,000 9,125,500 7,537,375
Profit Before Tax 21,329,200 22,390,000 22,390,000
Tax(30% ) 6,398,760 6,717,000 6,717,000
Net Profit 14,930,440 15,673,000 15,673,000

C. Cash Flow Statement

Particulars Year0 Year I Year II Year III-XI
A. Cash Inflow 0      
·  Own equity 9,900,000      
·  Bank loan 23,100,000      
·  Depreciation 0 1,848,000 1,848,000 1,848,000
·  Net profit 0 14,930,440 15,673,000 15,673,000
Total inflow 33,000,000 16,778,440 17,521,000 17,521,000
B.  Cash outflow 0      
·   Fixed capital 18,150,000      
·  Working capital 11,550,000      
. Contingency (Lump sum) 3,300,000    
10%  
·  Loan repayment   2,310,000 2,079,000 231,000
Total outflow 33,000,000 2,310,000 2,079,000 231,000
Net inflow (A-B) 0 14,468,440 15,442,000 17,290,000
Cumulative balance 0 14,468,440 15,442,000 17,290,000

37
4.9. Pay-Back Period

The investment cost and income statement projection are used to project the pay-back
period. The project's initial investment will be fully recovered within eight years after the
time of operation.
Every business undertakings be it large or small should have future development plan. It
is a plain fact that business activities are undertook in a dynamic business nature and
different environment. Therefore, the project will have an expansion phase to include
Cinema, and other additional services in the future.

5. ECONOMIC, ENVIRONMENTAL AND SOCIAL APPRAISAL

Economic: the potential source of revenue generated from commercial sector will appear
extremely attractive to local communities. It is hoped that the ecotourism project will
raise sufficient funds to convince local communities to protect the reserve and that the
funds will act as suitable compensation.
Environment: The project plays important roles in terms of the environmental service
that it provides. The conservation value and the area as enormous due to its ability to
stabilize the ecosystem, control soil erosion (by making terraces) and water dynamics and
provide vital resources. The owners will preserve the remaining natural plants and
provides refuge and breeding grounds for creatures that encourage seed dispersal,
pollination and control plant and animal. The control of local climate condition is another
important service that would be lost through the destruction of the ecosystem.
Social: the project will ensure social development though employment and job creation
which is about 80 individuals get hired. The training of workers and skill up grading
programs will enable the local people fit or efficient performance in their activities.
The Marketing Mall component is a new, exciting and potentially successful method of
generating funds for conservation and community development. The project will promote
the outstanding natural beauty of the area and encourage further investment in projects of
a similar nature around Oromia. The pilot phase will allow us to draw up clear guiding

38
principles for marketing business development which can be applied widely elsewhere in
order to take advantage of Ethiopia's in particular Oromia's enormous tourism potential.
Hence, the Commercial Complex center opens new ground in pioneering the
establishment of a fully environmentally friendly project in the area.

39