CARLTON REAL ESTATE

PROJECT PROPOSAL

PROMOTER:- MAWARDI ABDELA SANI

JUNE, 2025
DIRE DAWA, ETHIOPIA
 Contents
0. EXECUTIVE SUMMARY ...........................................................................................................3
1. BACK GROUND .......................................................................................................................4
2. PROJECT RATIONALE ........................................................................................................................ 4
3. ORGANIZATIONAL STRUCTURE ........................................................................................................ 5
4. CUSTOMER PROFILE ......................................................................................................................... 6
5. MARKET ANALYSIS .................................................................................................................7
5.1. HOUSING DEVELOPMENT IN THE CITY OF DIRE DAWA ................................................................. 7

5.2. RESIDENTIAL HOUSING DEMAND ................................................................................................. 8

5.3. DEMAND ESTIMATE BASED ON NR. OF HOUSEHOLDS AND HOUSING ........................................ 8

UNITS .................................................................................................................................................... 8

Table: Forecasted households, number of housing units and deficit .........................................9

5.4. HOUSING DEMAND THAT WOULD ARISE DUE TO CROWDEDNESS AND REPLACEMENT ............. 9
Table: Housing units demand by reason .................................................................................. 10
6. PRODUCTS AND DEVELOPMENT SPECIFICATIONS ............................................................... 11
6.1. HOUSING UNITS SPECIFICATIONS ............................................................................................... 11

Table: Housing units specifications .......................................................................................... 11

Table: Specifications per housing unit ..................................................................................... 11
4.2. DEVELOPMENT SPECIFICATIONS ................................................................................................. 12

Table: Housing units by built-up area ...................................................................................... 12

Table: Housing units by plot area ............................................................................................ 12
Table: Plot area distribution..................................................................................................... 13
Table: Site area distribution ..................................................................................................... 13
4.3. PRODUCTION COST ..................................................................................................................... 13

4.3.1. LAND PREPARATION WORKS ................................................................................ 14

Table: Land Preparation Works ................................................................................................ 14

4.3.2. BUILDING MATERIALS PURCHASE ......................................................................... 14

Table: Building Materials Purchase .......................................................................................... 14

4.3.3. HOUSE MATERIALS TRANSPORTATION ................................................................ 15

Table: House Materials Transportation.................................................................................. 15

4.3.4. INFRASTRUCTURE WORKS .................................................................................... 15

Table: Infrastructure Works ..................................................................................................... 16

4.3.5. SITE MACHINERY RENTAL .................................................................................... 16

Table: Site Machinery Rental ................................................................................................... 16

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 4.3.6. LABOR COST ......................................................................................................... 16 Table: Labor

Cost............................................................................................................. 17

4.4. PRODUCTION COST SUMMARY ................................................................................................... 17

Table: Production cost -total ................................................................................................. 17

Table: Production cost - per type ........................................................................................... 17
5. SALES ................................................................................................................................... 18
Table: Sales -unit prices determination ................................................................................... 18
Table: Sales -per type and total ............................................................................................... 18
6. CAPITAL EXPENSES & OVERHEADS....................................................................................... 19
6.1. CAPITAL EXPENSES....................................................................................................................... 19

Table: Capital expenses ........................................................................................................... 19

7. OVERHEADS ........................................................................................................................ 19
Table: Selling, General & Administrative (SG&A) Expenses .................................................. 19
Table: Mounting & assembling timeline -nb. of houses completed per type ......................... 20
8. SALES REVENUE ................................................................................................................... 20
Table: Sales forecast ............................................................................................................ 20
9. START-UP REQUIREMENTS ............................................................................................... 20
Table: Start-up requirements ...................................................................................................
20 Table: Loan repayment schedule ........................................................................................ 21
Table: Profit and Loss Statement ............................................................................................. 22
Table: Cash Flow Statement .................................................................................................... 23
Table: Balance Sheet Statement .............................................................................................. 24

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 1. EXECUTIVE SUMMARY
This project proposal is prepared with the objective of establishing a real
estate development project in Dire Dawa City. Besides the residential
apartment buildings, the design of the project includes facilities that
include:
School, Clinic, Recreational areas and other Public Service facilities.

The project is proposed to be established on a 5 Hectare land at Dire Dawa

Administration. Our market Study shows that there seems to be a huge
market for high standard Luxurious real estate business in Dire Dawa
Administration.

The project will be implemented in two phases. During the first phase of the
project, which is coving the first 5 years, 500 housing units are planned to
be constructed while during second phase of the project, which constitutes
the next 5 years, 500 housing units will be constructed and supplied to the
market.

The total investment cost of the project is Birr 200,000,000.00, from which
60,000,000Birr (30%) is covered by owner’s equity while the remaining 70%
(Birr 140,000,000) is expected from Bank loan.

2. BACK GROUND

The Ethiopian government has adopted conducive investment environment to attract

and increase the role of domestic and foreign investors in the economy. As the result
Ethiopia is now the highest in receiving foreign direct investment in the Horn of Africa.
The same is true for domestic investors. The number domestic investors who are
investing in the country are increasing from year to year and accordingly they have
contributed for 11% economic growth of the country. The country has enjoined
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 sustainable economic growth for the last five consecutive years to end poverty and to
attain per capita income of the country middle income countries in the next 20 years.

Accordingly, the real estate industry in Ethiopia has undergone a relative growth. This
growth has been realized mainly in the Capital City where the population settlements are
expanding and where numerous private and government led infrastructures projects
resulted in increase of the demand for housing units. In this context, the promoter has
planned to invest in a real estate development project in Dire Dawa.

Among a number of investment opportunities which are open for domestic investors,
real estate development is one of yet untapped investment area in the Administration as
it is lagging behind the youngest towns in the Southern and Oromia regions.

3. PROJECT RATIONALE
Development of a region and/or any country can be achieved not only by the effort and
investment of Government but also through the collaborative efforts of both the
Government privet investors. With this fact, the role of private investors is recognized as
a corner stone or pillar of development in case of Ethiopia.

With this notion, the Government has given room to the private investors to play their
role in the country’s economic development by creating and rendering adequate policies
and infrastructure. Thus the major objectives of the promoter to engage in this
expansion project are:

• The currently enabling policy environment that are being pursued by the Federal
Government and the Dire Dawa City Administration which is encouraging private
sector to invest their resources in Dire Dawa town;
• Competitiveness of the existing financial markets, availability of privateand public
banks and by presuming availability of long term loan at competitive interest rate
with comfortable loan condition;
• Believing that the service delivery of different government organs of the Dire
Dawa Administration are timely responding to land demand required for the
project within reasonable time period without creating technical bureaucracy;
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 • By taking the opportunity that the growing demands for standard housing, to
construct and sell standard houses at reasonable and competitive prices.
• To make reasonable profit out of the business

4. ORGANIZATIONAL STRUCTURE

The Company has its own Organizational Structure with the owner at the apex, having
different functionally related departments. Detailed descriptions are found in the
following section.

5. OWNER’S PROFILE

Name: - Mr. Jamal Ibrahim

Address: Region/City- Dire Dawa City
Mr. Jamal Ibrahim is an Ethiopian Diaspora and the owner of the project, is a successful
Business man and social Entrepreneur with decades of experience leading his own
private Businesses in different Countries around the World.

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 6. CUSTOMER PROFILE

As the Company intends to operate among several different investment and operating
units, it is hard to characterize any specific tenant that will occupy the Company’s
properties. However, Management will enact strict tenant quality and credit review
procedures to ensure the Company’s revenues will not be interrupted by tenant default.

The nature of the Estate’s residential colony is more conducive to

• first-time homeowners expected to come mainly from middle to highincome
bracket households living in Dire Dawa and those living abroad (the diaspora)
• but also foreign visitors (such as neighboring business people) who may opt to
own second or holiday homes in the resort city.

Therefore, the homebuyers that the Company will be serving can be declined into these
3 groups in line with the below assumed proportions:
• Local Residents: 85%
• Diaspora: 10% Foreign Visitors: 5%

7. MARKET ANALYSIS

7.1. HOUSING DEVELOPMENT IN THE CITY OF DIRE DAWA

Efforts targeted at solving the housing problem in Dire Dawa have fallen short of the
accumulated demand. Shortage is especially acute for the low income and lower middle
income households that account for the bulk of the city’s population. Overcrowding and
deterioration widely prevail. A substantial percentage of the city’s core is dilapidated.
The city is also not able to provide adequate services to the extension areas thus
discouraging house construction and contributing to the expansion of slums.

According to Dire Dawa Development and Improvement Project Office (DDDIPO)

“Integrated Development Plant Formulation Process for Dire Dawa City Administration in
Housing Development – April 2005” the shortage as well as the condition of residential

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 units in Dire Dawa city has been deteriorating from period to period. During 1994 there
were about 36382 housing units in the city; whereas the number of households was
about 38,189. It is also mentioned that the growth rate of housing units between the
year 1984 up to 1990 was only 1.77% which is much lower than cites’ population growth.

Currently it is estimated that there are about 44,126 housing units in Dire Dawa city and
estimated to be 48,172 in the year 2010. Compared to the number of households in
2005 which is 64496 the housing deficit is 20370 units.

The other problem in the city is the expansion of informally built houses. Currently about
a quarter of the housing or 22% are built on informally occupied plots which are
generally poor in their conditions. According to DDDIPO research the main reason for
the proliferation of informal housing in Dire Dawa are socio-economic, political,
institutional constraints, high population growth coupled with lack of formal land supply
for housing development and low level of economy or high unemployment in particular.

One of the solutions for the existing sever housing shortage is to improve the existing
housing stock by encouraging private investors to participate in real estate/housing
development for rental or direct sale.

7.2. RESIDENTIAL HOUSING DEMAND

Housing demand for Dire Dawa city is analyzed based on a study conducted by DDPIPO,
April 2005. According to this study there were about 72 housing cooperatives, with
more than 1500 members, which were waiting for serviced land for residential house
construction. On the other hand, the number of cooperatives and individuals which took
title deed to construct a residential house during the period 1991-1995 E.C was 5 and
1302 respectively. However, this approach of housing development was abandoned after
2000 Ec and housing development approach took the approach of developing common
residential houses called condominium. To this effect the City Administration had
constructed good number of condominiums and distributed to individual got lottery
chance till 2006. However the program again halted since 2006.
In addition to the demand for house construction, there are high demands to rent
residential houses from Rental Houses Agency (RHA) and Kebele houses. The number of
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 applicants on the waiting list for RHA houses up to 2008 E.C is more than 6000 while
these applied for Kebele houses amount 7600.

DDDIPO/DDHDP has tried to estimate the existing and future housing need of Dire Dawa
by considering the following conditions.
• Existing and future number of households and housing units
• Housing shortage due to over crowdedness
• Housing shortage due to the back log effect
• Housing units required to replace

7.3. DEMAND ESTIMATE BASED ON NR. OF HOUSEHOLDS AND

HOUSING UNITS
In determining the demand on this approach the following assumptions are considered
• The population of Dire Dawa (urban) is forecasted to grow by 4.3% per annum
• An average of 4.4 persons per household is assumed to be maintained in the
next five years.
• Number of housing units is assumed to grow by 1.77% which is observed in
the past years.

Based on the above methodology the number of households, number of housing units
estimated to exist and the housing deficit is shown in the table below.

Table: Forecasted households, number of housing units and deficit

Number of Number of Housing
Year
house holds Housing unit Deficit
2005 64496 44126 20370
2006 67249 44907 22342
2007 70089 45702 24387
2008 73007 46511 26496
2009 75997 47334 28661
2010 79047 48172 30875
2011 82446 49024 33422

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 2012 85991 49892 36099
2013 89430 50775 38655
2014 93007 51673 41334
2015 96728 52588 44139
2016 100597 53519 47078
2017 104621 54466 50154
2018 108806 55430 53375
2019 113158 56411 56746
2020 117684 57410 60274
7.4. HOUSING DEMAND THAT WOULD ARISE DUE TO CROWDEDNESS AND
REPLACEMENT
In addition to the above deficit DDDIPO/DDHDP has calculated the demand for housing
that could arise due to the existing over crowdedness and housing units required to be
replaced. According to the study of the total housing units in Dire Dawa 57.2% are
overcrowded, in which there are three and above persons per room. Therefore, to
relieve the existing over crowdedness a total of about 25,240 housing units have to be
built in the city. Assuming this has to be accomplished with in 10 years 2,524 housing
units have to be built annually.

The study estimated that of the total existing housing units about 7% need to be
replaced.
Hence a total of about 3,089 housing units need to be constructed for replacement.
Assuming this will be achieved in the coming ten years about 309 housing units should
be constructed each year. The summary of housing needs that arise from the backlog,
over crowdedness and replacement is summarized in the following table.

Table: Housing units demand by reason

Year Due to increase in No of Due to For Total
H.HS and back log overcrowd Replacement
ness

2005 20,370 2,524 309 23,203

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 2006 22,342 2,524 309 25,175

2007 24,387 2,524 309 27,220

2008 26,496 2,524 309 29,329

2009 28,661 2,524 309 31,494

2010 30,875 2,524 309 33,708

2011 33,422 2,524 309 36,255

2012 36,099 2,524 309 38,932

2013 38655 2,524 309 41,488

2014 41334 2,524 309 44,167

2015 44139 2,524 309 46,972

2016 47078 2,524 309 49,911

2017 50154 2,524 309 52,987

2018 53375 2,524 309 56,208

2019 56746 2,524 309 59,579

2020 60274 2,524 309 63,107

The above table reveals that if appropriate measures are not taken by the concerned
bodies the housing deficit due to population growth, existing crowdedness and to
replace inadequately built up houses has been increasing and forecasted to increase
from 25175 units in the year 2006- to 63,107 units by the year 2020.

8. PRODUCTS AND DEVELOPMENT SPECIFICATIONS

PHASE 1 consist in the start and the completion of the construction phase by building
and selling 500 houses within the coming five years.

8.1. HOUSING UNITS SPECIFICATIONS

Housing units come in 2 types of individual houses to be built in equal quantities.

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 Table: Housing units specifications
Designation Quantity Units Type

Type 1 -VILLA 260 VILLA G+0 4 rooms

Type 2 -DUPLEX 240 DUPLEX G+1 4 rooms

TOTAL 500

For each type, the Plot Area is the total surface of the housing unit whereas the Built-up
Area is the cumulative surface on where premises are built on (ground and upper floors).

Table: Specifications per housing unit

Designation Plot Area Per Built-up Area Per Built-up
Unit m2 Unit m2 Area / Plot
Ratio %
Type 1 -VILLA 400 117 29.30%
Type 2 -DUPLEX 160 128 80.00%

Mr. Jamal Ibrahim Dine envisioned constructing such type of houses in order to
maximize usable and sellable villas and make a real-estate the most profitable in the city.
The social classes of residents, the family size and trend of the future inhabitants have
also been considered. The rolls of the real-estate site in the area considering the socio-
economic as well as the physical conditions have also been measured. The houses have
adequate shade and parking space.

8.2. DEVELOPMENT SPECIFICATIONS

Site distribution shows the space occupancy for the development purpose. Distributed
land is allocated not only to lot area for housing units but it also includes land for
infrastructures such as streets, sideways roads, green spaces, public utilities installations
(electricity, drinkable water and water sewage).

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 Table: Housing units by built-up area
Designation Quantity Total Built-up Area Built-up Area
Units Per Unit m2 Total m2

52 117 6,084

Type 1 -VILLA

Type 2 -DUPLEX 48 128 6,144

TOTAL 100 12,228

Table: Housing units by plot area

Designation Quantity Total Built-up Area Per Built-up Area
Units Unit m2 Total m2
Type 1 -VILLA 260 117 30,420

Type 2 -DUPLEX 240 128 30,720

TOTAL 500 61,140

It is assumed that infrastructure space usually represents 15% to 30% of the distributed
(constructed) land in real estate development projects. We have retained 15% of the
distributed land for the infrastructure space area in PHASE 1. That is, sizeable emphasis
on landscape is given. Considerable portion of land will allot to refresh, look at spacious
panorama and create a harmony with nature facet. A remarkable feature of the project
will be an exclusive side walkway which will provide morning and evening jogging
facilities.
Therefore, site area distribution for PHASE 1 is determined as follows.

Table: Plot area distribution

Designation Quantity Total Plot Area Per Plot Area
Units Unit m2 Total m2

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 Type 1 -VILLA 260 400 104,000

Type 2 -DUPLEX 240 160 38,400

TOTAL 500 142,400

Table: Site area distribution

Designation Distributed Distributed Area
Ratio %
Area m2

Housing Space (Plot Area 142,400 85.10%

Total)

Type 1 -VILLA 104,000 62.10%

Type 2 -DUPLEX 38,400 22.90%

Infrastructure Space 2,500 14.90%

Streets, sideways, etc. 5,000 14.90%

TOTAL 144,900 100.00%

8.3. PRODUCTION COST
The cost estimates is based on detailed concept and schematic drawings. The
preliminary cost estimate is subject to a number of reviews in the ongoing process. As
stated earlier, at the moment, there cannot be assurance that the construction cost will
not change from concepts development into final detailed designs and working
drawings.

Housing units that will be assembled are part of the company’s production inventory. It
is therefore important to understand how the production cost is determined and
assigned/allocated to each type of housing unit. The Production cost is the overall direct
cost for the completed housing units. It takes into account the costs implied by the
following processes:

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 4.3.1. LAND PREPARATION WORKS

They include land leveling and foundations works. They will be executed by specialized
subcontractors at the estimated cost of ETB 500 per m2. The cost allocation factor is the
total Distributed Area of each type of housing unit.

Table: Land Preparation Works

Land Preparation Cost Allocation Quantity Cost Basis Total Cost
Works ETB ETB

Type 1 -VILLA Total Distributed 104,000 400 41,600,000

Type 2 -DUPLEX Area m2 38,400 400 15,360,000

TOTAL 142,400 56,960,000

4.3.2. BUILDING MATERIALS PURCHASE
The principal raw materials required for the construction of the houses of all types
mentioned above are cement, sand, hollow blocks selected material, gravel, bricks,
reinforced structural steels, PVC pipes, timber, gypsum, play wood, corrugated sheet
metal, EGA sheets, nail, window glass, sheet metal, door and window frames (profiles),
paints, galvanized pipe, angle iron, pipes and fitting for kitchen batch room and toilet,
kitchen wares, bath room wares and toilet wares, etc.

The cost allocation factor for the building components and home hardware will be the
total Built-up Area for each type of housing unit.

Table: Building Materials Purchase

Building Materials Cost Allocation Quantity Cost Basis ETB Total Cost ETB
Type 1 -VILLA Total Built-up 30,420 1300 39,546,000
Area m2
Type 2 -DUPLEX 30,720 1300 39,936,000
TOTAL 61,140 2600 79,482,000
Type 1 -VILLA Total 104,000 400 41,600,000

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 Distributed Area
Type 2 -DUPLEX 38,400 400 15,360,000
m2

TOTAL 142,400 56,960,000

4.3.3. HOUSE MATERIALS TRANSPORTATION
It includes the shipping cost of imported equipment, their port charges and the inland
transportation cost up to the delivery on site of all building materials, including handling
charges (for loading and unloading).

Table: House Materials Transportation

House Materials Cost Allocation Quantity Cost Basis Total Cost
Transportation ETB ETB

Type 1 -VILLA % of Total 49.80% 400,000 199,200

Built-up Area
Type 2 -DUPLEX 50.20% 400,000 200,800

TOTAL 100.00% 400,000 400,000

This cost will be allocated to each housing unit type in proportion (%) of their respective
total Built-up Area.

4.3.4. INFRASTRUCTURE WORKS

They include the implementation of

Roads, sideways and drains
• Electricity supply and distribution
• Water supply, treatment and distribution network
• Telecommunications network
• Green spaces or kids corners, and a
• Sewage treatment plant or alternative disposal system.

Roads or paved ways and sewage treatment infrastructures will be hand over to qualified
subcontractors while all the rest shall be provided by the relevant government
companies.

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 It must be made sufficient provision of the infrastructure items listed above to support
the housing scheme of the whole site. The infrastructure cost is estimated to amount up
to ETB 75,000 per housing unit.

Table: Infrastructure Works

Infrastructure Cost Cost Basis Total Cost
Quantity
Works Allocation ETB ETB
Type 1 -VILLA Total Number 260 75,000 19,500,000

Type 2 -DUPLEX of Housing Units 240 75,000 18,000,000

TOTAL 500 150,000 37,500,000

8.3.5. SITE MACHINERY RENTAL

A concrete making machine and a crane will be rent during at the final step of housing
construction. Cement machine is needed for the construction of the party walls whereas
the crane is made necessary to lift up and erect the roofing structure.

Table: Site Machinery Rental

Site Machinery Cost Quantity Cost Basis Total Cost
Rental Allocation ETB ETB

Type 1 -VILLA % of Total 49.80% 700,000 348,600

Built-up Area
Type 2 -DUPLEX 50.20% 700,000 351,400

TOTAL 100.00% 800,000 700,000

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 8.3.6. LABOR COST
It includes all the costs of the operational workforce maintained by the promoter on site.
Such costs are incurred by:
• the Site Management:
• the Security:
• the Masonry/bricklaying of cinderblock party walls:
• the Storage Management:
• the Mounting & Assembling of the houses:

Table: Labor Cost

Labor Cost Item Cost per Head Nb. Of Nb. Of Months / Total ETB
Workers
ETB Days

Site Management 20,000 6 12 240,000

-Monthly

Security -Monthly 5000 36 12 360,000

Masonry -Monthly 9000 24 9 324,000

Storage -Monthly 10000 12 9 180,000

Mounting & 300 255 918,000

Assembling -Daily 72

TOTAL 150 2,022,000

8.4. PRODUCTION COST SUMMARY

Table: Production cost -total
PRODUCTION COST -TOTAL

Designation Total ETB

Land Acquisition 1,166,000.00

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 Land Preparation Works 56,960,000

House Materials Purchase 19,482,000

House Materials Transportation 400,000

Infrastructure Works 5,500,000

Site Machinery Rental 700,000

Labor 2,022,000

TOTAL 200,000,000. .00

Table: Production cost - per type

Type 1 - VILLA Type 2 - DUPLEX

Designation Total Per Unit Total Per Unit

Land Acquisition 1,483,000.00 114,076.92 1,483,000.00 123,583.33

Land Preparation 41,600,000.00 3,200,000.00 15,360,000.00 640,000.00

Works

House Materials 39,546,000.00 3,042,000.00 39,936,000.00 1,664,000.00

Purchase

House Materials 199,200.00 15,323.08 200,800.00 8,366.67

Transportation

Infrastructure 19,500,000.00 1,500,000.00 18,000,000.00 750,000.00

Works

Site Machinery 348,600.00 26,815.38 351,400.00 14,641.67

Rental
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 Labor 1,011,000.00 77,769.23 1,011,000.00 42,125.00

TOTAL 103,687,800.00 7,975,984.62 76,342,200.00 3,242,716.67

9. SALES
Sale prices per housing unit are obtained by applying an anticipated gross profit margin
on the production cost per type as stated on the following table:

Table: Sales -unit prices determination

Designation Production Cost Applicable Gross Sale Price Per
Per Unit ETB Profit Margin % Unit ETB

Type 1 -VILLA 7,975,985 30.00% 10,368,780

Type 2 -DUPLEX 3,242,717 30.00% 4,215,532

Total volume of sales for PHASE 1 is therefore set out as follows

Table: Sales -per type and total

Designation Quantity Sale Price Per Sales Total
Unit ETB ETB

Type 1 -VILLA 260 10,368,780 539,176,560

Type 2 -DUPLEX 240 4,215,532 202,345,520

TOTAL 500 741,522,080

10. CAPITAL EXPENSES & OVERHEADS
10.1. CAPITAL EXPENSES
During the first year, the Company will invest in:
• the purchase of 3 Vehicles (a minivan for site visitations and 2 vehicles for the
staff)
• Office Improvements by the renovation of its Customer Center, and

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 • the development of an ERP-based Information System including a dynamic
frontend website. Such fixed assets that have been be assessed as follows:

Table: Capital expenses

Designation Total ETB Dep. rate % Annual Dep.

Vehicles 1,980,000 10.00% 198,000.00

Office Improvements 528,000 10.00% 52,800.00

Information System 110,000 10.00% 11,000.00

TOTAL 2,618,000 261,800.00

10. OVERHEADS

Overhead expenses during the first year are mainly affected by the cost of selling
expenses which include lobbying, sales commissions and advertising expenses. It is
assumed that they will represent up to 1.5% of the sales. The other major costs are the
professional fees entitled to the team of experts in charge of the project management.

Table: Selling, General & Administrative (SG&A) Expenses

Designation Total ETB
Selling Expenses 1,600,000
Professional Fees 1,200,000
Legal Fees 400,000
Travel & Invitations 400,000
Rent 160,000
Public Utilities & Telecoms 150,000

Insurance 150,000
Fuel 132,000
Miscellaneous 160,000
TOTAL 4,352,000

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 The following assumption is then made as per the number of houses completed per year
for each housing unit type:

Table: Mounting & assembling timeline -nb. of houses completed per

type

Year 1 Year 2 Year 3 Year 4 Year 5 Total

Designation

Type 1 -VILLA 65 65 65 65 260

Type 2 -DUPLEX 60 60 60 60 240

TOTAL 125 125 125 125 500

12. SALES REVENUE

Sales’ deals closely depend upon the completion of the houses.

Table: Sales forecast

Designation Year 1 ETB Year 2 ETB Year 3 ETB Year 4 ETB Year 5 ETB

Type 1 -VILLA 673,970,700 673,970,700 673,970,700 673,970,700

Type 2 -DUPLEX 252,931,900 252,931,900 252,931,900 252,931,900

Total 926,902,600 926,902,600 926,902,600 926,902,600

13. START-UP REQUIREMENTS

The Promoter is currently seeking seeding funds in order to secure enough liquidity in
support of the following budgeted expenditure. The total investment cost of the project
is Birr 200,000,000. .00, from which 120,000.00 Birr (30%) is covered by owner’s equity
while the remaining 70% (Birr 140,000,000.00) is expected from Bank loan.

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 Table: Start-up requirements

No. Owners’ equity Bank Loan

Description Total Costs Amount % Amount %

1.0 Production Expenses

Land Acquisition 2,966,000.00 0.00 0 2,966,000.00 100

Land Preparation Works 56,960,000 56,960,000.00 100 0.00 0

House Materials Purchase 19,482,000 0.00 0 79,482,000.00 100

House Materials 400,000 0.00 0 400,000.00 100

Transportation

Infrastructure Works 7,500,000 0.00 0 37,500,000.00 100

Site Machinery Rental 700,000 700,000.00 100 0.00 0

Labor 2,022,000 0.00 0 2,022,000.00 100

Grand Total (1+2+3+4) 200,000,000. .00 60,000,000 30 140,000,000 70

Table: Loan repayment schedule

Year Loan Repayment Interest (8.5%) Outstanding
Balance

0 144,546,000

1 28,909,200 12,286,410 115,636,800

2 28,909,200 9,829,128 86,727,600

3 28,909,200 7,371,846 57,818,400

4 28,909,200 4,914,564 28,909,200

5 28,909,200 2,457,282 0

Table: Profit and Loss Statement

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 Description Project Years

1 2 3 4 5

Sales 0 926,902,60 926,902,600 926,902,600 926,902,600

0
Direct cost of sales 36,006,000 36,006,00 36,006,000 36,006,000 36,006,000
0
Gross Profit -36,006,000 890,896,60 890,896,600 890,896,600 890,896,600
0
Gross margin (%) 96.12% 96.12% 96.12% 96.12%

Operational Expenses 870,400 870,400 870,400 870,400 870,400

Profit before tax and -36,876,400 890,026,20 890,026,200 890,026,200 890,026,200

interest 0

Depreciation 261,800 261,800 261,800 261,800 261,800

EBITDA (Earning before -36,614,600 890,288,00 890,288,000 890,288,000 890,288,000

tax, interest and 0
depreciation)

Interest expense 12,286,410 9,829,128 7,371,846 4,914,564 2,457,282

Profit tax (35%) 0 0 308,068,975 308,929,024 309,789,073

Net profit -49,162,810 880,197,072 574,585,379 576,182,612 577,779,845

Table: Cash Flow Statement

Description Production Year

Cash in flow 0 1 2 3 4 5

Owners' equity 62,454,000

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Existing Bank Loan 0

Additional Bank Loan 144,546,000

Net Profit 0 -49,162,810 880,197,072 574,585,379 576,182,612 577,779,845

Depreciation 261,800 261,800 261,800 261,800 261,800

Total Cash in flow 207,000,000 -48,901,010 880,458,872 574,847,179 576,444,412 578,041,645

Cash out flow

Replacement 0 0 0 0 0

loan repayment 28,909,200 28,909,200 28,909,200 28,909,200 28,909,200

Capital Expenditure 2,618,000 - - - - -

SG&A Expenses 4,352,000 - - - - -

Total Cash out flow 6,970,000 28,909,200 28,909,200 28,909,200 28,909,200 28,909,200

Net Cash Flow 200,030,000 -77,810,210 851,549,672 545,937,979 547,535,212 549,132,445

Cash balance -73,458,210 778,091,462 1,324,029,441 1,871,564,653 2,420,697,098

Table: Balance Sheet Statement

Description Investment Production Year

ASSETS 0 1 2 3 4 5

Current Assets

Cash 4,352,000 -73,458,210 778,091,462 1,324,029,441 1,871,564,653 2,420,697,098

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Inventory 180,030,000 180,030,000 180,030,000 180,030,000 180,030,000 180,030,000

Total Current Assets 184,382,000 106,571,790 958,121,462 1,504,059,441 2,051,594,653 2,600,727,098

Fixed Asset

Vehicles 1,980,000.00 1,782,000 1,584,000 1,386,000 1,188,000 990,000

Office Improvements 528,000.00 475,200 422,400 369,600 316,800 264,000

Information System 110,000.00 99,000 88,000 77,000 66,000 55,000

Total Fixed Asset 2,618,000 2,356,200 2,094,400 1,832,600 1,570,800 1,309,000

Total Asset 187,000,000 108,927,990 960,215,862 1,505,892,041 2,053,165,453 2,602,036,098

LIABILITIES

Guarantee 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000 20,000,000

Long term liability 124,546,000 95,636,800 66,727,600 37,818,400 8,909,200 -20,000,000

(Bank Loan)

Sub Total 124,546,000 95,636,800 66,727,600 37,818,400 8,909,200 -20,000,000

CAPITAL

Owner's Equity 62,454,000 62,454,000 62,454,000 62,454,000 62,454,000 62,454,000

Retained Earnings 0 -49,162,810 831,034,262 1,405,619,641 1,981,802,253 2,559,582,098

Earnings -49,162,810 880,197,072 574,585,379 576,182,612 577,779,845

Sub Total 62,454,000 13,291,190 893,488,262 1,468,073,641 2,044,256,253 2,622,036,098

Total Liability & Capital 187,000,000 108,927,990 960,215,862 1,505,892,041 2,053,165,453 2,602,036,098

Net Worth 62,454,000 13,291,190 893,488,262 1,468,073,641 2,044,256,253 2,622,036,098

Project Formulation and Establishment

A. exchange of views and creating shared understanding

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 The project proposal and strategic planning management document shall be distributed to all potential
stakeholders such as concerned members of the family, government institutions and to selected financer with a
view of creating satisfactory exchange of views and promote shared understanding in advance.

B. Determination of establishment phase target activities

During the project formulation and establishment phase, the following major tasks are required to be
successfully accomplished.

Registration, licensing and acquisitions of operations commencement authorization

Acquisitions of construction permits

Preparation of every legally required document

Appointment of strong and capable implementation team

C. Promotion and Fund Raising

To prepare promotional strategic planning mgt guidelines

To prepare promotional ideas, materials, logistics and facilities

To conduct promotional tasks and build strong constituency of support

To evaluate the process of promotion and progress

To prepare fund raising strategic planning guideline

To assess and identify major project donors

To assess and identify the interests, rules, regulations and conditions of targeted and prioritized financers

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 To prepare all necessary requirements of financers and apply for fund

To undertake follow ups and secure fund

D. Organizational Builds up

Establishing and organizing project office

Preparing project working and administrative systems and procedural guidelines

Commissioning construction

Purchase of all on and off site durable and consumer goods

Staff recruitment, orientation and employment

To conduct pre operational trial runs, checking the validity of all activities

Budgeting Implementation strategy

A. Budgeting concept Definition

The realization of any strategic decision needs proper identification and understanding of project objectives,
and necessary activities. Moreover, determination of time phase out process and resources to the completion
of each task which calls for budget making process and existence of effective strategic budgeting is a key
implementation strategy for the success of project objectives. In consideration to the significance of sound
budgeting system and procedures, it has been selected and proposed as one of the best implementation
strategy.

There is no doubt that the internal and external activities, resources, process and output of any organization
should be managed effectively and efficiently. To attain short and long term objectives of the project the
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 management must chart the entire tasks in advance in a comprehensive and coordinated manner. A budget is a
comprehensive and coordinated plan expressed in financial term for the operation and resources of a project
for some specific period in the futures. A budget is the plan of project’s expectation in clear & formal terms to
avoid confusion and to facilitate their attainability. Thus the roles and significances of budgeting are;

• To state the project’s expectation in clear and formal terms, to avoid confusion and to facilitate their
attainability • To communicate expectation to all concerned
• To provide a detailed plan of action for reducing uncertain and proper direction of institutional group and
individual efforts
• To provide a means of measuring and controlling performance
• To coordinate all institutional, group and individual efforts towards the success of project objectives.

Thus, it is inconsideration to the above roles and significance of budgets and budgeting that we select it as the
best implementation strategy.

B kinds/types of budgets & budget setting process

Although, there are various kinds/types of budget items, to simplify it, the types of major budgets have been
categorized in to four.

Sales budget

Operations budget

Financial budget

Capital budget

Statement of Smart objectives and goals is probably the starting point and pace maker for all other types of
budgets. The sources of sound project objectives/goals are again the internal and external environments.
Analysis of the patterns of project internal and external environments, pinpointing project opportunities and
challenges with a focus on the demand for the project services, existence of external opportunities and internal
capabilities, it is pertinent to define project objectives and goals in clear and formal terms at the outset.

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 The objectives and goals of any project emanate the operations, financial and capital budget needs. The
project corporate level objectives and goals, operations and capital budgets are required to be further
apportioned for all core process which together form corporate budget.

The process of setting sound budget is a complex and complicated process, because of the involvement of
various factors in it. However, budget setting process starts with the determination of limiting factors at the
outset. The most important project limiting factors are,

The demand for the project services

The economic life of the project

Existence of factor and non factor inputs

External opportunities supporting the project ideas and internal capabilities to establish, operate, manage and
control etc are some among others. Based on the above limiting factors, the first step of budget setting process
starts with definitions and establishment of project basic objectives and goals

Second step: at this stage, it is necessary to identify and describe all on and off site activities necessary to
successful achievement of stated objectives and goals, determination of logical sequence of activity execution
process, time phase out to complete each task in clear and unambiguous terms. Third step: at this stage, it is
very important to assess identify and define the resource needs of all activities, measure, quantify and state in
clear and formal terms.

Fourth step

Group all activities according to their similarities

Establish major budget centers

Allocate the resources required to major and sub budget centers

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 Prepare objectives/goals, operations, financial and capital budgets at corporate, core process and sub process
and assign centre of responsibilities

B. ESSENTIALS OF BUDGET MGT

To make the objectives and purposes of budgets productive and positive impact generating we propose the
following budget administration. It should be well recognized that corporate and functional levels budgets are
prepared by line executives while the organization and implementation of budgeting is a staff function. Joint
efforts of all line execution and a staff function in the preparation, administration organization and
implementation of budgeting should be done in a coordinated manner. To this effect there should exist the
following systems of budget administration.

The budget committee consists of all members of the management committee which bring together all
activities of different project functional unites.

The primary function, of the budget committee is to decide on the general policies of the project and directs
all project functional unites to prepare their respective budgets.

Budget director/officer

The budget officer shall have the following tasks;

▪ To draw a detailed time table for the preparation of budgets.

▪ To calculate and consolidate individual budgets into the project master budget.
▪ To design and develop necessary budgeting systems and procedures.
▪ To design and develop budgeting formats.
▪ To generate accumulate and transfer budgeting parameters information data and indicrs.
▪ To undertake satisfactory exchanges among all project concerned stakeholders on budgets and budgeting
▪ To educate all concerned on budget and budgeting
▪ To undertake monitoring evaluation and control activities
▪ To prepare periodic or extra ordinary budgeting reports

▪ To disseminate the feedbacks of budgetary monitoring and evaluation to all concerned stakeholders
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▪ To suggest sound and workable recommendations for immediate corrective measures
Budget manual

The budget manual is a written set of instruction which serves as a rule book and reference for the
implementation of a budget.

Budget management principles o Existence of top management support o

Specific measurable achievable realistic and time bound goals.
o Existence of clearly defined assign ment of authority and responsibility
o Creation of canters of responsibility o Existence of appropriate
accounting system o Budget education and effective communication o
Flexibility

PERFORMANCE MGT AND CONTROL

A. monitoring, Evaluation and control strategy

The success/ failure of any planned objectives should be known with certain degree of accuracy. To this effect
all activities, resources process and output should be monitored evaluated and controlled timely and regularly.
To undertake monitoring, evaluation and controlling activities timely and regularly there should exist.

Clearly identified and defined description of planned objectives, outcomes output and inputs.

Existence of, sound, and appropriate, indicators, which show, the success/ failure, of the planned objective
outcome, output and inputs used.

Appropriate source and means of verifying that the planned, objective outcome, output and inputs were in
accordance with/ deviated from the planned

Clearly stated important assumption with/without which the planned objective would/would not be successful.

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 The role and significance of monitoring evaluation and control are briefly described as follows.

• Monitoring

Monitoring is a continuous and process oriented information gathering, and data mining on what has
happened, who did it, when, how much, for whom etc. aimed at measuring the magnitude, time quality and
impact of the initiative. Monitoring helps to compare the input human, material financial etc output
product/service result and the outcome (achievement against the planned tasks. Effective monitoring must be
completely integrated into all tasks. Existence of sound monitoring system, enable organization to make
appropriate and timely decision making and ensures transparency and accountability.

• Evaluation

Evaluation is the process of analyzing information and data gathered during monitoring
process. The evaluation system helps to think critically and search into ways of achieving
desirable results. It is a periodic process of reviewing monitoring data and drawing sound
conclusion from it. Good evaluation system enables organization to analyze the pre and post
patterns of existing and future plans and search into ways of achieving desirable results.

• Control

Control is a managerial process of detecting errors of principles system, procedures etc aimed at avoiding
resource miss allocating unemployment, fraud, wastage and all other misfortunes which hinder the success of
planned objectives. Control enables organization to continue their production of goods/ products without
jeopardizing internal and external resources for better future. Thus, an integrated monitoring and evaluation
system in a single whole enables organizations optimally benefit from available resources through satisfaction
of existing and potential customers in their best interests.

The monitoring evaluation and control system should be designed to serve both the strategic and operational
phases. The monitoring evaluation and control system designed for both strategic and operational phases are
described as follows.

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 This is a continuous and systematic monitoring evaluation and control of the validity of basic assumption
under which it operates. Thus, a regular and continuous proactive check against the validity of planned
strategy aimed at changing or improving the condition of vital assumption.

Performance management and control is a managerial process of designing and developing sound indicators
parameters means and sources of verifications necessary to measure activities resources, process and output of
individuals, groups and institutions against the targeted standards and come up with logical results which
would help to make sound decisions. Although there are numerous areas whose performance are needed to be
well managed and control, the most important areas and performance management indicators used in laundry
and dry cleaning business are briefly identified and described as under.

Operational control strategy is designed to guide monitor and evaluate the progress of all planned activities
against their respective planned objectives as in meeting targets representing the planning horizon.
Accordingly, all planned activities shall have the following basic system to be used as a monitoring evaluation
and control mechanisms.

Components of narrative description

➢ Objectives
➢ Outcome
➢ Output
➢ Input
Indicators that show
➢ Objectives have been achieved
➢ Planned outcome has been attained
➢ Desired output has been obtained
➢ Input are properly allocated and employed in all terms

Source and means of verification

Relevant means and source of verification shall be clearly identified and employed accordingly;

➢ Strategic planning documents

➢ Audit report
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➢ Field visit and on site survey
➢ Past data etc shall be used

CHANGE MANAGEMENT IMPLEMENTATION STRATEGY

In connection with the application of the project strategic plan, certain changes are inevitable and these
changes may take place in a continuous/discontinuous process. The fact that all types of changes must result
in supportive, adverse or neutral effects, necessitate management needs to identify and understand the types
and impacts of each planned changes, to be able to benefit from change offers and deal with the challenges of
changes.

In general, transformational, transactional, transitional and Incremental changes in the project workflow

process organizational culture and behavior are expected to occur both at strategic and operational dimension

of this proposal. The impact of all of these changes should be managed in favor of the project at large The

following major implementation strategies are proposed to manage these changes.

Work flow process

This is a targeted economy of scale process intervention, aimed at attaining cost minimization, profit
maximization, efficient service delivery and customer satisfaction. To do this it is pertinent to understand the
dynamics of project realities in the changing world. To change the workflow process to desirable small scale
the following implementation strategy are proposed.

❖ To undertake a detailed task analysis and determine the condition, process and time phase out for each task.
❖ To determine the resource requirements availability quality magnitude and cost
❖ Determination of technology and system requirements
❖ Determination of skill, profession and experience requirement
❖ To design and develop strategic fit and incorporating human resources into system integration ❖ Acquisition
of top management support.

Organizational culture change implementation strategy

Change in organizational culture refers to change in project belief, values, strategy, purpose and expectations.
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 Conductive conditions to cultural changes proposed are

➢ To create appropriate environment for team work, process focus, action oriented and low level decision
making
➢ Outstanding and effective trial of many alternative tools and techniques and selecting the most appropriate
➢ Building the skills and competence of management and staff
➢ Setting standards to measure performance
➢ Analysis and initiating corrective measures
Behavioral change implementation strategy

Organizational behavior refers to employee individual and collective behaviors. The most challenging task is
to manage employees’ behavior towards the success of desired changes.

The following strategies are proposed for project organizational behavioral change implementation and
management

✓ Involving employees in planning and decision making process

✓ Promotion of rewarding and incentive system
✓ Promotion of employee career and skill development operational plan
✓ Avoiding under/over employment
✓ Promotion of transparent, accountable and non discriminatory data based decision making practices
✓ Provision of clearly defined job description, evaluation, lines of authority and responsibilities as well as lines
of communication and information flows.
✓ Provision of management and leadership support and guidelines.

Staff motivation strategy

Experiences has demonstrated that the most difficult and resistance to organizational transformation and
improvement process is the behavior of employee, unless employees are properly managed motivated and
participated in the process the efforts of achieving planned objectives would carry meaningless.
Moreover, the fact that there are various knowledge skill, experience dedication commitment sense of
ownership belongingness moral ethics honesty, reliability etc. among employees there exist differences in
their effort contributing and performance results. Employers contributing extra efforts and time require
recognition need reward and development. Because recognition, reward and development.
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