Project Proposal for The Construction of Hotel service Building

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1. Executive summary

1. Project name: Kabe Hotel service Building

2. project Type : Hotel service business building
3. Nationality: Ethiopian
4. Project Owner: Mr. Takele Chala
5. Project location: oromia region, West shewa zone, Jeldu Woreda, Gojo
town, Gindeberet Road
6. Project composition: Hotel Building (G+2) used for diverse businesses like
restaurant, bar, Cafeterias, guest room, Gymnasium, game zone offices and
parking for further Expansion of Kabe Hotel currently lies on 400m2.
7. Premises Required: 600 m2
8. Total investment Cost: 5,590,369.58 ETB is required from this amount 30%
or 1,677,110.87 ETB from owner equity and the rest 70% from bank loan.
9. Employment opportunity: 24 individuals on permanent 56 on casual basis.
10.Social and Economic Benefit: provide better Building service, employment
opportunities, generation of income and benefits for the local people.
Developing professional career and skills through a continuous, ever
evolving and ever expanding opportunity for personal as well as business
growth and development and contributing to the GDP of the country.

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1.1 General Background

Hotel is one of the most important things in human beings daily life by providing
different services such as food, bed, drinks, games, entertainment and so on. It is
also an essential part of tourism. The expansion of tourism is well inevitable
bringing out development of the hotel industry. The government has taken several
steps to boost hotel industry in recent years which have benefited the tourism
industry.

It is obvious that the most of above services are available in almost all Ethiopian
hotels open without good business plan. Our intent is to set realistic business
expectations, and eliminate any question about the profitability of this business
venture.

Entrepreneurs have the tendency to paint optimistic brush, highlighting strengths

and camouflaging the risks. As business owner we have a vested stake and
financial commitment in the success of this hotel. Our intent is to have a different
business, financial, and marketing plan that only serves our need for capital
financing, but is utilized as our daily business road map. All precautions have
taken to validate our business and financial model, focusing on realistic
projections.

This hotel business will have a plan to improve the life style of the members which
make them more independent with economic or self-sustaining behind to their
families, creating employment opportunities in all societies, developing the
professional career and skills through a continuous, ever evolving and ever

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expanding opportunity for personal as well as business growth and development

and contributing to the GDP of the country.

In particular, we set, develop and execute goals and strategies to bring the best
level of high performance to full services at all levels for serving the customers.
We are confident that this hotel business can greatly enhance an impressive
performance by working as part of a team. So that the combined experience of the
principal owners and other staffs upper office management skills will bring high
levels of customers’ services.

The current fast and dynamic economic growth of Ethiopia especially in urban and
semi-urban areas necessitates equivalent growth of building and construction
sector as well as the hotel industry. 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 urban areas of the nation since dynamic economic
development of urban economy requires the construction of these buildings in
towns to support the growing of business service sectors like restaurant, bar,
Cafeterias, guest room, Gymnasium, game zone, offices, shopping malls, parking
and other activities.

Investment and property development play an important role in any emerging

markets or economies. Property generally comprises reside vial houses and
commercial real estate property (mainly Hotel as 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 non-residential

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houses that can be used for hotels, cafeterias, Gymnasium, office space, shopping
malls and catering services in the Semi-urban areas like Gojo town is
disproportionately low to cope with the growing demand and population increase.

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 Hotels, restaurants, 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 hotel Use Building Mr. Takele Chala
who has been living for long time in this town, planned to construct and make a
significant expansion on Kabe Hotel in Jeldu district, Gojo town 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.
Hence, he expects to get the necessary support from the city administration to
make the project to be operational.
Besides, the government policies and incentives for the private sector investment
are very promising that motivates the promoter to engaged in mixed use building
for hotel and other businesses.

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1.2 The Back Ground of the Investor

The investor name Mr. Takele Chala was born in 1968 E.C oromia regional state
west show zone jeldu Woreda Gojo Kebele then live in Gojo town after there. He
lives and learned elementary and high school education right here in Jeldu Woreda,
Gojo town and was a public servant at different offices and was fulfilling his duties
and responsibilities with passion and loyalty for the past many years.
Mr. Mr. Takele Chala was now participated in family owned hotel business and,
and created job for 10 young jobless. Meanwhile, the investor highly eager and
articulates clear and specific short and long range goals for further Expansion of
Kabe Hotel currently lies on 400m2 to incorporate and provide a standardized new
services in the hotel such as bar, Cafeterias, guest room, Gymnasium, game zone,
offices, shopping malls, parking and other activities.

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2. Business description & vision

2.1 A mission statement

The mission of our hotel is to provide outstanding lodging facilities and services to
our guests. Our hotel focuses on individual business, local market and leisure
travel as well as travel associated with group meetings. We emphasize high quality
standards in our rooms, food, drinks, and fast foods in Cafeterias, guest room,
Gymnasium, game zone, offices and parking service.
We provide a fair return on investment for our owners and recognize that this
cannot be done without trained, motivated and enthusiastic employees.

2.2 Vision
 To be the first choice of guests, local market, business partners and To grow
as a leader company in the hotel sector and to increase its presence at the
national level, which sustained on the commitment with the customer,
quality, austerity, professionalism and prudent management, and
establishing a large business group involving in variable economic sectors.

2.3 objectives
The objective of this firm is to provide good quality services for society,
government, for new comer from other place to Gojo.

 To transform the company into a strong competitive firm at national and

international level.
 Contributing vital role to the development and GDP of the country.
 To share the burdens of the government and local industries in minimizing
the number of unemployment.

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 Contribute to improve competitiveness of the country and increase the well -

being and social stability in the medium and long term.
 To establish a model business which provide quality services for the
community and customers
 Building entrepreneurial legacy
 To enhance community development via increasing the supply of creative
and independent man power.
 Involving in various charity works and Helping others

2.4 Goals
The goals of the business are:

 To meet the projects’ goals as per the construction time limits, prearranged
costs and quality standards.
 To provide a substantial income.
 To establish and run a highly sustainable life style of the investor and the
employees
 To create a business and working environment where both the customer and
employee are treated with dignity and respect.
 Increase the hotel’s average occupancy level by 50% above the current.

2.5 Missions
We are committed to providing our customers with highest quality of services,
products and others such as:-

 Delivering quality marketing structure serves to the public and resulting in the
reasonable profit to the owner

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 Provide quality service to the society & ensuring continues improvement of the
company in all aspects
 Respect the costumer interest and service quality with the costumer needing
time. Hard work is our behavior
 Ever service as a business entity that is committed to the creation of the
excellent values that utility needs of customers.
 to make good quality of guest coming too my Hotel for full service of the need
of costumer

2.6 Nature of our business

 Requires big capital investment thus is highly affected by the economy of
the nation,
 Construction of the hotel building is a team output and requires motivated,
experienced and skilled workers,
 Unpredictable work load, difficulty in cost and time estimation
 Subject to Environmental Impact (rain, ground water, soil condition, land
slide)
2.7 Basic Criteria for Selection of the Business

 Is there sufficient demand? High population with good income

 Own capabilities? (technical and managerial Availability of qualified
personnel)
 Own sufficient financial resource? At least 30%?
 Are there many similar firms in the area? ( competitors are not on better
status)
 Availability of appropriate market? (good availability of raw

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3. Industry and market Analysis

3.1 Identity of the Business

The long-term goal of the project is become the best choice in Gojo Town and its
surrounding areas by creating a differentiated experience capitalizing on personal
service. The proposed project will have a total area of 600m2, designed to a hotel
giving good service of need of user, which will in turn plays significant role
towards solving shortage of a standard hotel in Gojo town.
The historical nature of the town as business unique location in one of the most
attractive parts of the occurrence of the town along the Ethiopian Woina dega
agro-climatic Zone a fertile ground for future promising growth of the town. The
owner plans the project to hotel service, cafeteria, guestroom, shopping facility,
gymnasium and parking services to create high quality class to satisfy the interest
of customers in the town. Based on environmental and other considerations, the
entrepreneur has determined the type and size of the building to be G+2 BDG
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
bed room & assembly hall, office, game zone, shops and parking service of
best choices and will also save best quality restaurant and café, national and
international dish and various types of soft drinks.

3.2 Project Location

As aforementioned on the introductory part the envisioned project is intended to be
located in West Show zone JeduWoreda town at about 127 km from Addis Ababa
to the west and 72km from capital city of zone. The zone extends from 9 0 15’
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43’’N latitude and 380 3’ 52’’longitudes E. It also shares common boundary with
Edensa Galena peasant association to the north, Chilanko peasant association to the
south,Tullu Bultuma peasant association Easter Bicho peasant association to the
west.

3.3 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 town, the trend on such kinds of investment found to
minimal. Since there is no such kind of modern tourist facilities and business
station in the town to accommodate the existing demand of these services in the
town and the surrounding areas. The mismatch between the demand for and supply
of such kind of services in easily observed in the town.

In order to respond to the created environment the town is in need of major, basic
and feasible urban projects to be developed.
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.

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3.4 The significance of the Business

The envisaged project deemed to add to the economic development of the nation in
general and zone and town 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 town as well as for the region.

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 80 individual during construction.

C. Sources of social service

In addition to serving as a source of employment and income for the region, the
project renders social services for different group of people. Hence, it is also
providing the following services;
 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.

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 It deemed to minimize the demand for bed room and other bundles of services
in the area.
 Serve the silliness and good condition of the any assemble of any government
and non-government.
Furthermore, it serves as the pilot experience and ground for other investor to enter
in to such kinds of urban development. It also contributes on the efforts made on as
a character given building for physical development pattern of the townscape.

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4. The market Study

 Customers
 Competitors
 Pricing
 Suppliers/Materials
 Advertising/marketing

4.1 Market Analysis

To illustrate with market available to the company, they will be divided according
to the 4Ps, i.e. its price, the communication they use, the distribution, and service
or product offered.
There are a number of factors which affects the demand of standardized Hotel
service building. Of these factors, the most important to have influence is
population growth and the level of income. The currently expanding economic
activities in the town and the construction of Ginchi- Gindeberet asphalt road has
been inviting many people, skilled and unskilled labor forces to the town; in
addition, the number of both government and non-government offices and
Educational institutions has been increasing. Above all the increase in the number
of population of the town 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 of the town or close to the road.
As clearly indicated in the introductory part of this proposal Gojo in the
dynamically growing town of West Show zone, Though the market demand gap
for Hotel service building in Gojo Town is not clearly understand there is wider

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gap for such demand as many merchants, organizations are flouring to the town
every day. From prior business experiences, the demand of Hotel service building
in Gojo Town is very high and hence the demand and the supply gap is very wide.

4.1.1 The Demand-Supply Gap

Gojo town is situated in very center of Ethiopian potato, teff and bahirzaf
production area which is highly known for its potato study center. Gojo town is
also a major business center and Hotel 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 shops, offices, bedrooms restaurants and
cafeterias.
Even though when compared with similar zonal towns in the region Gojo Town
seems to have no developed Hotel use building, the existing supply is far behind
the growing demand for standard service. Hence, the project will solve the serous
demand problem in the town.
Since Gojo is an important commercial center in addition there is a significant
increase in business activates and hence increasing the number of traders to the
town. Even though there is a lack of quantitative estimates that depict the actual
demand and also the annual growth rate Hotel facilities and urban commercial
facilities are scarce in the city. So far in the town there is no development of such
kind standard building and it is the first of its kind in the town and will promote
other investors from the town and the surrounding areas. They are mostly villa type

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premises modified as show rooms and sailing posits. As a result there is a large gap
between the developed and that of the supply for modern bed rooms; Bank and
cafeteria accommodation hence this project would not face any problem of demand
scarcity for it business center and it would provide good service to customers.

4.2 Customers

The company wants to establish varies customers’ base and will therefore
concentrate its business and marketing on local market and nationwide which will
be the dominant target market.
The company works with the commitment to successfully attend the needs of
quality and compliance of the customers, establishing favorable and long term
relationships with them. Also, it promotes a work environment which encourages
personal and professional development of its employees.

The target audiences which are directed is:

1. Gojo Town & nearby town Living Population
2. Nearby Business Organization
3. The Government Organizations
4. neighbor woreda residents crossing the town

4.3 Competitors

The size and complexity of a project determines if local contractors have the
capacity to execute the work. The larger and more intricate the proposed project is,

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the more it will potentially attract the attention of a broader number of prospective
Competitors. This is good for competition, but may increase service costs.

In the Hotel service there are price and non-price based competition that may faced
by the investors. Moreover, there are different competitors that will compete with
the project either directly or indirectly. But the hotel use building under discussion
has diversified marketing strategies that could enable it come 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, food quality and asses ability, bed room quality and
facility and others. Generally the project has many other projects all over Ethiopia
which compete with it.

4.3.1 Analysis of competition

It is shown how their forces are affecting the ability to gain a competitive
advantage over other companies, and help in projecting the most appropriate
strategies for the company.

Classification of competition

In this section, competitors are analyzed by levels of competition, as mentioned

above.

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Competition in product form:

This level refers to those companies that offer products that provide the same
service or satisfy the same need. In this case we must convince the consumer that
our products and services are the best alternative in the market.

Competition in product category:

This competition is based on companies that offer products similar attributes but
with a different presence. In this case we must persuade the consumer that the
attributes offered by our products are the best in its category.

Competition at the level of budget:

They belong at this level the companies with products fighting for the same
consumer budget. In hotel sector, in this case it would fight between getting their
customers, counting on specialized counseling in installation. Therefore, hotel
companies seeking to gain competitive advantages over other companies in the
sector in terms of quality, location, research, development and innovation, or
prices. Therefore, the possibility of threat of substitutes in the hotel industry is low.

4.3.2 Current supply of hotel use building

Hotel 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.

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4.3.3 Future market or Demand of hotel use building

Following our survey of hotel service building users in Gojo Town are mainly
firms providing cafeteria and restaurants, bed room, supermarkets service,
computer Center Crevice. The different customers for commercial buildings also
include shops and offices that are currently renting out to provide their goods and
services.
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.

4.4 Pricing
Referring to the method of pricing, the company usually sets its prices by an
objective method based on cost.
I. Pricing through adding a percentage of profits to the unit cost of
production.
If the unit cost matches the total cost of production, then the margin will
target profit, and also cover these fixed costs, administrative expenses,
commercial, financial and industrial gain. The use of this procedure is
that all sector companies offer similar prices, and thus, avoid situations of
price competition.
II. Pricing through competition or tender.
This is where companies present their offers to a particular project where
its basic characteristics are specified, and the contract to the company

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that suits and meeting the requirements set wins. The company decides
the price without knowing the competitors.
Having many years of experience in the sector plays an important role. The
company can establish a probability of success of winning the contract associated
with each price, so knowing the difference between revenues and costs, can
calculate their expected benefit from the past experience.

4.5 Market segmentation

Marketing a hotel company against long-standing, established competitors can be a

challenge. Finding the strength within your own company and team and
highlighting them in your promotions are key to establishing a solid reputation and
encouraging new and repeat business.

4.5.1 Analysis of the market situation

After analyzing the general environment and specific environment, the situation in
the hotel sector in Ethiopia will be analyzed.

The hotel sector is of key importance in all processes of development of the

economy of a country, and also promotes the efficiency of the remaining
productive activities and improving the welfare of society. The main objectives set
are to attract new customers, keep loyal customers satisfied, establish good relation
with them and keep staff training constantly recycling with respect to the
objectives of the trade relations.

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4.6 ADVERTISING/ MARKETING

Communication tools used to inform and promote the company are advertising and
personal selling.
Advertising: is used as a tool to communicate with customers through its own
official website, www.hikaguta.com and social media.
Personal selling: the company mainly uses the method to go in search of their
customers and offer their services. It is a face to face interaction, just to make them
known and attract customers.
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
 Specialty

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Focus on a service or project that your company does particularly well in your
advertising to bring customers on board in this area. This helps make your brand
memorable and sets you apart from the competition.

 Social Media

Post photos of past sites for customers to peruse, and encourage users to post their
own pictures of your construction jobs. This helps to more and more people access
information about the company.

 Use Advertising Bill Boards

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5. The project facilities and Services plan

In order to provide hotel service 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 national 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, bedroom, restaurant, café
and parking service as well as modern business center that primarily serve its
guests and major clients.

The plan is that the ground will be partitioned in to different rooms:

Building Description UOM Unit price in
Birr
Ground Hotel, bar, Game zone, Computer center and m2
shop
1st floor offices, Restaurant, Cafeteria, internet cafe m2
& Gymnasium
2nd floor Guest room and bedroom services m2
Parking Service Car
Total

Since the project will be engaged Hotel building the main sources of its annual
revenue would be from the hotel service and rental of building spaces such as bed
room, cinema, offices, and café & restaurant. Therefore, the sources of revenue

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have been classified in to one category namely the rental of cinema, offices,
assembly bedrooms restaurant and café based on these classifications. Based on the
market price of similar Hotel 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
380,000.

5.1 Technical Study

5.1.1 Description of the project Service/ Product mix

The envisioned Hotel purpose building will provide different services to the
different customer groups for different purpose. The building will have basement,
ground and two floors. The purpose of the building explained as follows;
 the ground floor, first floor and second floor designed for different hotel,
restaurant, cinema, Computer center, assembly, internet café and other
business activities,

5.2 Land Use Plan

The total land required for the envisioned project is estimated to be 600m 2. the total
area for the construction of the building will be 400m2, as revealed below.
Table land utilization Plan

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SN Description Land M2
Ground 1st floor 2nd floor
1 Building (G+2)
1.1 Ground 400
1.2 First floor 400
1.3 Second Floor 400
Parking & Green area 200
Total 600

5.3 Construction work and Technology

5.3.1 Construction schedule

The construction project is proposed to be started on November 2020, and is
expected to be finished on October 2021. 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 &HVAC 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 was to complete all
construction activities before the required Date of completion.
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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.

5.3.2 Architectural Design & Layout

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 were congruent with the structural
frame and column locations.

5.3.3 Structural design

The structural bays were coordinated with the layout of the building adjustments
were made to the bays if specific layouts are necessary. The frame was 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 structural steel frame was 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 was then designed for lateral loading
with necessary adjustment being made to framing.

5.3.4 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

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dead load of 7.5 pounds per square foot was 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 125 pounds per square was assumed.
Loads were calculated based on the requirements of the minimum Design loads for
Buildings and other Structures.

5.3.4 Foundation Design

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.

5.4 Construction Plan and process

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

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the lowest responsible bidder. This, is of course, presupposes that the favorable
proposal does not exceed the allocated budget.
The project team developed a coordinated project schedule and construction plans
that would reflect the expectations for an actual construction project. The project
schedule was developed using the preliminary designs given to the project team.
Additionally, the group considered typical construction activities and durations
taken from similar construction projects as well as realistic constraints on building
development. For instance, it is necessary for the structural frame to be completed
before concrete can be placed for the slab on deck. Hand drawn construction plans
detailing site entrances and storage areas were coordinated with the project
schedule to give the reader visualizations of the construction site set up through
various periods of the construction 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.

5.5 Utilities
A number of utilities world be put in place in order to ensure smooth functioning
of the project. These utilities include:
 Water Supply,
 Supplementary Electricity supply.
 Telephone line Internet Broadband
 Drainage Facility

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The project’s implementation is expected to take 14 months. The major activities

include Bank loan processing, construction of the building, cleaning the area
around the building; Procurement of equipment’s and starts rendering services. The
time schedule for the above matured major activities is presented below:

Table: project Implementation schedule

SN Activities Date
1 Land request processing September - October , 2020
2 Land approval October , 2020
3 Bank loan processing November –December 2020
4 Site Development November 2020
5 Building and construction work November 2020-October 2020
6 Preparation for service January, 2022
7 Service execution February, 2022

5.6 SWOT Analysis

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SWOT analysis is useful to identify what the favorable factors and critical tool for
the business are. In addition, this study will help establish appropriate objectives
and strategies to be followed by the company. To do this, the strengths and
weaknesses regarding the internal characteristics, and the threats and opportunities
regarding the external characteristics are studied.
SWOT analysis implies internal possibilities (strength and weakness) of a project
and its external environment (opportunities and threats) that might be faced during
project management.

Strength

 Strong motivation to achieve all our goals.

 Advanced project management
 Workforce stimulation increase workers’ wages and offered bonus
 Properly investigating the market
 Skilful work team, workers who had already worked on similar projects
 Good past business contact and current market demand and government
policies
Weakness

 Relying on one type of client, therefore should expand your horizon and
work with varies types of clients
 Inexperienced Workers, workers need to be trained at the beginning of the
project
 Lack of coordination, to coordinating the workers within the organization
 Has little experience in the sector.
 It must also rely on third parties on certain works.
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 It has a few delegations to the presence it has

 It has little experience in the sector and little national presence.
 Do not cover various sectors and depend on other project.

Opportunities

 Government supports the sector, contributing to this improvement and has

grown in recent years.
 Separate marketing department that is always working to find new clients;
Not to over burden the administration staff
 Expand your region to find new clients
 Good expense control

Threats

Some of the threats are:

 Uncertainty in the sector:

 Rivalry among competitors:
 Prices of raw materials:
 Financial support
 Initial investment
 Reaction from competitors

In addition, there is a disadvantage with regard to:-

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 Perception of market opportunities

 Dealing with bureaucrats
 Managing human relations within the firm
 Economic Recession
 Schedule Delay result in increase of expenses
 COVID-19, the construction companies won’t find new clients and
projects to work on.
5.7 Project Risk management

The major project risks are:

 Environmental conditions
 Bad planning
 Organizational disturbances
 Negligence in purchasing and supply of material
 Negligence in communication
 Payment not made on time
 Non-fulfillment of other contract responsibilities by the client
 Additional demands and project changes
 Difficulty in evaluation of expenses
 Fluctuation in the costs of construction materials and equipments

6. Organization & Management

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A. Organization

The company will be operated as a private limited company (PLC). The overall of
management will be the responsibility of the owner. Our company will be operated
as its profitability is getting 30% by annual.

The organizational structure should be in a way that the company able to achieve
its objectives as well as the satisfaction of standard requirement. In addition to this,
the structure should fit the dynamics of all customers in the building ranging from
small business to large tenants.

6.1 Man Power

The total manpower required for the building will be 26 persons. The manpower
list and the corresponding labor cost are shown in part five of this document.

6.2 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 owner.

Owner

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General
Manager

Technical and
Building Admin maintenance
manager

Reception Hotel Manager IT, Electricity

and plumper

Cleane Cashie Barma

r r n

Waiter
s

Fig: organization structure of the Building

As clearly shown in the organizational structure, the center organization has one
general manager and two main sections. Under the general manager there are the
maintenance and building administration department. Under building admin dept.
there exist two sections i.e. reception & Hotel manager. 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

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 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 (. Reception & Hotel managerial Service section). It has responsible
for undertaking the following activities;
 Manage the human resources and control employee’s activity
 Well non-human 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.

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 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
C. Hotel manager
 Will handle the overall hotel activities of the organization which include
planning, organizing, directing, and controlling.
 Will develop the hotel strategies for future multipurpose building
development
 Will develop effective customer handling strategies.
 Execute the promotion methods.
D. 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
 Works in collaboration with general service to make sure tenants are well
served

B. Management

The goal of management to have a competent & knowledgeable management staff

which functions as a team.

The objectives of the management are:

 Hire experienced, qualified persons.

 Conduct weekly management meetings
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 Ongoing training to include outside classes in service, management, etc.

 Performance incentives
 Encourage creativity.
 Sets personally meaningful and challenging goals/objectives
 Articulates clear and specific long range goals

# How to manage a Hotel company

 Hire a work crew and direct the workers on each detail of the job.
 Offer wages according to your budget and set salary pay scale of the
company.
 Let the workers know what their duties and what the project time frame is.
 Coordinate with other managers and make sure that everyone is sticking
with the budget and time frame.
 Get all the paperwork in order. The manager is responsible for getting all the
proper licenses and knowing all the regulations and safety codes.
 Budget carefully, and keep records of money spent on the project.
 Communicate with construction supervisors, owners, architects, other
managers and the working crew on a regular basis to determine what has
already been done and what needs to get done.

6.3 Financial analysis

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Financial Requirement and Analysis

The financial resource is a prime resource for undertaking any activities. Hence for
implementing this Hotel use building a total of 5,245,489.00 ETB is required from
this amount 30% or 1,573,646.75ETB from owner equity and the rest 70% from
bank loan at the prevailing interest rate. Fixed Investment

A. Land, Building & Construction

S.N Description of works Total Cost in birr
1 Building construction 4,782,975.00
2 Site Development 24,000.00
3 Design and supervision 135,000.00
4 1st Year land lease & (10%) down payment 22813.75
Total 4,964,788.75

B. Building Machineries and Equipment’s

SN Description Measur Qty Unit cost in Total cost in
ement Birr Birr.
1 Generator Unit 1 110,000.00 110,000.00
2 Carpentry tool box Set 1 19,000.00 18,600.00
3 Electrician tools box Set 1 20,000.00 20,000.00
4 Plumber tools kit Set 1 12,000.00 12,000.00
5 Fire extinguisher Unit 8 8,000.00 64,000.00
(Security Equipment)
6 Total 224,600.00

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C. Vehicle
SN Description UOM Qty Unit Cost Total cost in Remark
in Fr. Birr
1 truck Unit 1 450,000 450,000 Duty Free
Total 450,000

D. Office Equipment’s
SN Description Measurement Qty Unit cost Total cost
in birr in Birr
1 Managerial tables Unit 3.00 3000.00 9,000.00
2 Managerial chairs Unit 3.00 2000.00 6000.00
3 Office table with chair Unit 6.00 1,500.00 9,000.00
4 Secretarial table with Unit 1.00 1,500.00 1,500.00
chairs
5 Computer with chairs Unit 2.00 10,000.00 30,000.00
6 Shelf Unit 1.00 4,300.00 4,300.00
7 Filing cabinets Unit 1.00 1,500.00 1,500.00
8 Guest chairs Unit 6.00 1000.00 6,000.00
9 Fax & Telephone machine Unit 2.00 1,800.00 3,600.00
10 Carpet and Curtain LS 1.00 18,000.00
Total 88,900.00

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Working Capital

1.1 Operating Expense at full Capacity

1.1.1 Salary Expense

SN Position No Qualification Monthly Annual
salary in salary in
Birr Birr
1 General manager 1 BA in management 3,500 42,000
2 Building admin 1 BA in Acct/Mgt 3,000 36,000
3 Secretary 1 10+2 in secretariat science 1,000 12,000
4 HRM Officer 1 10+2 in 1,000 12,000
HRM/Management
5 Technical and 1 Diploma in building 1,500 18,000
maintenance manager maintenance
6 Finance head 1 BA in Accounting 3,000 36,000
7 IT Technician 1 Diploma in computer 1,500 18,000
science/IT
8 Marketer 1 Diploma in marketing 1,500 18,000
9 Accountant 1 Diploma in accounting 1,500 18,000
10 Guards/Security 3 Basic 700 25,200
11 General Service head 1 Diploma in Management 1500 18,000
12 Purchaser 1 Diploma in purchasing 1500 18,000
&Sup Mgt
13 Electrician 1 10+2 in general electricity 1200 14,400
14 Casher 1 10+1 in bookkeeping 1000 12,000

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15 Cleaner 3 Unskilled 450 16,200

16 Maintenance officer 1 10+2 in General mechanic 1000 12,000
17 Driver 1 10 completed 1,000 12,000
Total 21 337,800
Benefit (20%) 67,560
Grand Total 405,360

1.1.2 Operating Expenses

SN List of Items Annual cost in birr Assumptions Used
1 Audit and legal fee 24,000.00 2000 Br/per ,month
2 Stationery supplies 5,400.00 450 Br/month
3 Promotional Cost 25,000.00 Lump sum annual cost
4 Property Insurance 47,829.75 1% of the building
5 Cleaning Supplies 12,000.00 1000 br. Per month
6 Uniforms 3,200.00 200 per person for 16 people
7 Water consumption 8,190.00 2600 m3 by 3.15 br
8 Electric consumption 6,000.00 20000KWH By Br.0.4736
9 Fuel 42,000.00 2000 lit per year by Br. 21
10 Oil &Lubricants 4,200.00 10% of fuel cost
11 Telephone & fax 18,000.00 1500 per month
12 Repair expense 95,659.5 2% of building cost
13 Miscellaneous costs 36,000.00 3000 per month
Total 327,479.25

1.1.3 Pre-service Expenses

SN Description Cost in birr

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1 Project proposal 5,000.00

2 Licensing fee and others
Total 5,000.00

Summary of Total initial investment cost

SN Description Cost in Birr
1 Land, building & construction 4,964,788.75
2 Building machines &Equipment’s 224,600.00
3 Vehicle 450,000
4 Office Equipment 88,900.00
5 Total fixed investment cost 5,728,288.75
6 Salary expense 405,360
7 Operation Expense 327,479.25
8 Pre service Expense 5000.00
9 Total Working capital 483,233.00
10 Sub total 6,211,521.75
11 Contingency (10%) 621,152.17
Total initial investment capital 5,590,369.58

6.4 Financial analysis and Statements

I. Underlying Assumption
The financial analysis of the mixed use building is based on the data provided in
the preceding sections and the following assumptions.

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A. Construction and Finance

Construction period 14 months
Source of finance 30% equity and 70 loans
Bank interest rate 17%

B. Depreciation
Building 10%
Building machinery and equipment 10%
Office Equipment’s 10%

II. Sources of Fund

The source of fund to finance the project is planned to be from two sources. These
are promoter’s equity and bank loan. The loan is expected to be obtained from one
of the local lending institutions. Since the project is expected to take some times to
repay all its debts, the bank loan is assumed to obtain on long term credit basis.
Taking the financial position of the promoters into account, equity contribution and
bank loan to finance the total investment outlays of the project are assembled to be
30% and 70% respectively. Accordingly, the total financial requirement from the
two sources will be;
SN Description Percentage share Amount
Owners Share 30% 1,677,110.87
Bank Loan 70% 3,913,258.71
Total 100% 5,590,369.58

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1. Bank loan Repayment Schedule

Year Principal Payment Interest (10%) Total annual Remaining
Payment in Balance
ETB
0 0 00 00 3,913,258.71
1 391,325.87 3,913,258.71 665,253.98 3,521,932.84
2 391,325.87 3,521,932.84 619,860.17 3,130,606.97
3 391,325.87 3,130,606.97 574,466.36 2,739281.1
4 391,325.87 2,739281.1 529,072.55 2,347,955.23
5 391,325.87 2,347,955.23 483,678.74 1,956,629.38
6 391,325.87 1,956,629.38 438,284.93 1,565,303.45
7 391,325.87 1,565,303.45 392891.12 1,173,977.58
8 391,325.87 1,173,977.58 347,497.31 782,651.71
9 391,325.87 782,651.71 302,103.45 391,325.87
10 391,325.87 391,325.87 256,709.69 0

2. Depreciation Schedule
SN Description Original Value in Depreciation Depreciation per
Birr rate in % year in Birr
1 Construction and 4,964,788.75 10 296,478.87
Building
2 Bldg. machines 224,600.00 10 22,460.00
&Equipment’s
3 Vehicle 450,000.00 10 45,000.00
4 Office Equipment 88,900.00 10 8,890.00

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Total 5,728,288.75 572,828.87

6.5 Financial Statement

6.5.1 Income loss/statement

Project revenue and production costs are listed and compared to see whether the
project generate profits or not. Starting from first year of the project operation, the
project will generate a reasonable amount of net profit for the owners throughout
its life period. Profit and loss statement shows that the project will generate net
profit of ETB 332,674.52 in the first year and increase to ETB 917,969.72 starting
from the third year of the project life and hence it is found to be profitable.

Hotel service Building profit/Loss Statement

Revenue Year 1 Year 2 Year 3 and after
Working Income 1,829,000.00 2,140,000.00 2,932,000.00

Expenses
Salary Expense 405,360 526,968.00 606,013.00
Operating Expenses 327,479.25 409,349.01 450,283.96
Deprecation Building 296,478.87 296,478.87 296,478.87
Deprecation Bld. 22,460.00 22,460.00 22,460.00

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Machineries and Equip.

Deprecation of Vehicle 45,000.00 45,000.00 45,000.00
Deprecation office Equip 8,890.00 8,890.00 8,890.00
Interest Expense3 243,263.52 287,184.65 186,670.02
Lease payment4 4,819.05 4,819.5 4,819.05
Total Expense 1,353,750.69 1,601,149.58 1,620,614.9
Profit before Tax 475,249.31 598,850.42 1,311,385.31
Tax (30%) 162,574.79 179,655.13 393,315.60
Net profit 332,674.52 419,195.24 917,969.72

6.2 Cash flow Statement

Year Year 0 Year 1 Year 2 Year 3 and
after
Equity Capital 1,677,110.87
Loan principal 3,913,258.71
Net sale 1,829,000.00 2,140,000.00 2,932,000.00
Total Cash in flow 5,590,369.58 1,829,000.00 2,140,000.00 2,932,000.00
Cash payment
Salary Expense 0 405,360.00 526,968.00 606,013.00
Investment 5,728,288.75 0 0 0
Pre operating Expense 5,000 0 0 0
Operating Cost 0 327,479.25 409,349.01 450,283.96
Loan repayment3 0 665,253.98 619,860.17 574,466.36
Lease payment 0 4,819.5 4,819.5 4,819.5
Tax payment 0 162,574.79 179,655.13 393,315.60
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Total payment 3,873,288.75 1,565,487.52 1,740,651.81 2,028,898.42

Cash surplus/ deficit 1,717,080.83 263,512.48 399,348.12 903,101.58
Cumulative cash flow -39,969.96 223,542.52 622,890.64 1,525,992.22

6.6 Financial analysis

6.6.1 Profitability
According to the projected income statement, the building will start generating
profit in the 2nd year of operation. Important ration 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 as increasing trend during the lifetime of the
project. The income statement and the other indicators of profitability show that
the project is viable.

6.6.2 Pay-Back period

The investment cost and income statement projection are used to project the pay-
back period. The building’s total investment will be fully recovered at the 5.2 year
of operation.

6.7 Environmental impact of the project

The EIA of the project activities was determined by identifying the environmental
aspects and then undertaking an environmental risk assessment to determine the

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significant environmental aspects. The environmental impact assessment has

included all phases of the project namely construction phase and operational phase.
The building has both positive and negative impact.

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 impacts:
1. noise and Dust emission during Construction
There are some noises during the construction due to the construction
operation and the company will use construct the construction during the day
time. Again there is the emission of dust which will be mitigated by
sprinkling water on the service.
2. problem on workers on construction
During construction there are some problems that will materialize on workers.
These are: damage on operation by using machines, construction materials and
others. To mitigate such impact the company will provide safety insurance and
safety equipment’s.

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Conclusion and Recommendation

Conclusion
The construction of hotel use Building serve are one of the core to development
and the growth of one town B/C construction industry are back bone of the town.
Surrounding according construction of hotel use Building service is used to the rest
of guest coming to the Gojo pass this town. B/c of it unique to reducing
transporting cost the Gojo and neighbor town people who need to recreation rest
day and weeding day.

The feasibility study the company of market serves show that construction of hotel
use Building economical feasible necessity of the business company will necessary
to sport the market center of town.

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Recommendation
The Gojo Town is lake of infrastructure city like electricity, telle phone; road and
water supply are more danger to do some investment and the Gojo town
administration also not facilitate to the investor due to the land transfer to investor.
The construction project also not much acquired and used to local material such
mud housing. Other issue on the behavior of attraction of investor in the Gojo or
Jeldu Woreda duty facilitated the need investor

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