APRIL 2010
EXECUTIVE SUMMARY This is a project project proposal proposal for the construction construction of a middle middle class Hotel on a parcel parcel of land situated at Nairobi CBD. The project has has been conceived, conceived, designed and will be be implemented by www.a4architect.com www.a4architect.com for Mr. I.O
The estimated development development cost for for the project project is KES 355,500,000[USD 355,500,000[USD 4,443,750].
The project completion completion period period shall take 12 12 months from ground ground breaking breaking to hand over.
Return on Investment shall be in a period of 1 year. Total gross anticipated income income per annum annum including food food and beverage beverage sales =388,800,000.00[4,860,000.00]
WWW.A4ARCHITECT.COM A4architect is a dynamic property consulting company specializing in providing a one-stop service for the management and development of a variety of property development projects. It provides its clients, who may be property owners, developers or tenants, with the expertise to guide a project through the complex development process from concept through to building completion. Depending on the requirements of their client, A4architect can provide a full or partial consulting service. The company’s involvement can vary from sourcing suitable sites, arranging local authority approvals, managing the professional team or providing a complete project management service. The principals principals behind the the firm have several several years experience experience in designing designing and managing to completion several projects of various natures as part of design and implementation teams for leading Project Management firms in Kenya as well as the Government of the Republic of Kenya.
THE PROJECT The project comprises the construction of hotel at Nairobi CBD, Nairobi on a subdivision measuring just about 0.25 acres. The overall theme of the development would be one of maximizing on the plot use whilst maintaining reasonable individual privacy for occupants. The selection of the type and size of units to be erected as well as their layout has been done with the foregoing being foremost -A scenario where the property is developed to target the middle income bracket.
PHASED CONSTRUCTION In order to ease the impact of the overall cost of the development it is proposed to carry out the construction in phases to be jointly agreed on with the client. The project can be phased in terms of vertical floor levels per floor as agreed with the client. In order to enable planning of major infrastructural requirements such as water storage and soil water disposal right from the outset, a master plan of the entire development shall be evolved. Thus the capacity of some of the facilities may initially exceed the needs of the accommodation provided, but this would be done with the full knowledge that the development will grow to fully utilize the facilities provided. Auxiliary features would include paved driveways and parking, extra water storage and planted landscaped gardens. The country ambience would further be enhanced by having strategically planted trees which would serve the added role of acting as wind breaks.
DEVELOPMENT BUDGET The development budget is as follows:
80 No. self-contained accommodation rooms per floor for 5 no. Floors=400 No. Accommodation rooms. Cost of construction per room fully furnished=KES 40,000 per square meter. Area for each unit =16m2.
Total cost of construction for 400units = KES 256,000,000[USD 3,200,000] Cost of construction for Restaurant, Kitchen, Laundry and Offices= Restaurant-60m2 Kitchen=30m2 Offices-20m2 Laundry-20m2 Store-30m2 Total =160m2. Total estimated cost of construction = KES 355,500,000[USD 4,443,750]
1.00 Building details 1.10 Type of unit :middle class hotel units. 1.11 Number of floors :5 1.12 Number of units in each floor :40 1.13 Gross floor area per Unit m2: 16 1.14 Building Cost per m2-fully furnished :40,000 1.15 Building cost per unit :KES 640,000 [USD 8,000]
1.16 Overall building cost: KES 260,000,000[USD 3,250,000] 2.00 Construction cost 2.10 Preliminaries 6,500,000.00 [USD 81,250] 2.5% of item 1.16 2.11 Building works KES 260,000,000[USD 3,250,000] 2.12 Infrastructure 39,000,000.00 [USD 487,500] 15.00% of item 1.16
2.13 Subtotal – Construction cost 305,500,000.00 [USD 3,818,750] 3.00 Incidental costs
3.10 Professional fees 26,000,000.00 [USD 325,000] 10.00% of items 1.16
3.12 Land Cost- [0.25 acres] KES 50,000,000.00 [USD 625,000] OVERALL PROJECT COST 305,500,000.00 + 50,000,000= KES 355,500,000[USD 4,443,750] INCOME PROJECTIONS 1.10 Accommodation Units 1.11 Projected price/unit per day KES 2,500 [USD 31.25] Occupancy rate-90% 1.12 Overall room sales revenue per month=KES 27,000,000[USD 337,500] 1.13 Gross anticipated income per annum [room sales] =KES 324,000,000[USD 4,050,000] TOTAL GROSS ANTICIPATED INCOME PER ANNUM INCLUDING FOOD AND BEVERAGE SALES =388,800,000.00[4,860,000.00] 1.14 Return on Investment/Repayment period= Approx. 1 year.
LOCATION This is a new extension of Nairobi CBD and is situated within Nairobi’s Central Business District . The Nairobi CBD is served by an all-weather road with the site of the proposed construction being found 15 kilometers from the Jomo Kenyatta International Airport. Nairobi CBD is connected to the mains water supply from the Nairobi City Council and also has easily connected electricity supply. The immediate locality consists of subdivisions each measuring an eighth an acre. Developments in this area are commercial in nature. The majority of the buildings here are well constructed and maintained.
MARKET DESCRIPTION Given the proximity of the site to Nairobi’s CBD as well as the good communication available, the site would realize good returns on a hotel development.
The site is located 15 km from an International airport and is opposite the largest bus park in East Africa. The planned development intends to maximize this potential by creating accommodation that is spacious whilst at the same time making optimum use of the space available. Currently, most Hotels in Nairobi CBD experience a near 100% occupancy rate on a daily basis. The planned development would thus meet an existing need.
COMPETITION In the locality of the planned development, there are no hotels which cater for the middle class. The closest competition perhaps comes from the low cost hotels in Gikomba area. These are however not impressive in terms of the room sizes and quality of service offered.
SALES PROJECTIONS It is planned to start marketing the development even as the construction begins. The room sale price for each unit has been set at KES 2,500[31.25USD]. This is the average charged by comparable hotels such as Kahama hotel in Ngara and Blue Hut hotel along Park road. The price is justified by the upgraded quality of the planned development in terms of finishes, design, and quality of service. EXECUTION OF THE PROJECT A4architect will in this provide the client with a full design/build service. This shall include 1. Design and specification Architectural, structural, mechanical and electrical drawings shall be prepared and necessary approvals sought. During the various stages of the design, the client shall be kept fully informed and client approval sought prior to proceeding to the next stage. The engineering design shall be done by registered engineers under the guidance of A4architect. Detailed specifications shall be developed with close consultation with the client. 2. Project estimates Subsequent to completion of the design, a firm estimate shall be done for the project
3. Preparation of tender and contract documents After final design has been done and client approval obtained, tender documents shall be drawn up for the general and specialist contractors. The specialist contract documents shall be prepared with guidance from the relevant engineers. 4. Tendering Selected contractors shall be invited to tender for the various work packages. We shall then analyze the tenders returned and forward our recommendation to the client.
5. Contract documentation With the contractors have been selected, we shall draw up the required contract documents and enter into contract with the contractors on the client’s behalf. 6. Project management Subsequent to the contracts being signed and mobilization to the site, we shall provide superintendence and project management. This will entail ensuring that the project is brought in on time and under budget by constant monitoring of operations on site and remedying any issues that may prevent timely completion or cause expenditure to exceed the budget. 7. Contract administration We shall handle all matters relating to the various contracts including but not limited to stage payments, performance bonds, extensions of time and relationships between the various traded involved in the project’s execution. 8. Sales and marketing In conjunction with an estate agency approved by the client, we shall produce a presentation package to be used in the sales and marketing of the units. PROJECT TIMELINES a) Design to Tender The design to tender process will take a total of 2 months. This will include commissioning of all engineering design, preparation of bills of quantities and obtaining of all relevant approvals for the development. b) Construction Construction of the entire project is estimated to take a maximum of 10 months.
MARKETING AND SALES Marketing of the properties is planned to start even before ground is broken for the start of the construction. This will serve the dual purpose of creating awareness of the availability of quality hotel service and to confirm the validity of the market intelligence. A4architect will undertake marketing through the mass media and especially through the internet using a virtual presentation kit that will include a walk through movie of the development.
FEES STRUCTURE Overall fees charged shall be 10% of the final contract sum. The fees shall be spread over the various stages as follows: Fees Due A Inception Inception and client brief Physical survey and information review Sketch design and basic project proposal 5% of fees. B Design and design development Final design and presentation with budget estimates Final specifications Engagement of consultants and preparation of electrical, structural and mechanical services drawings Development approvals 30% of fees. C
Pre-tender process Preparation of tender documents for general and specialist contractors Identification of suppliers for client supplied items to be fixed by contractors Shortlisting of general and specialist contractors 10% of fees. D Tender process Tendering for general and specialist contractors Tender analysis Contract award by client on advice of Project Manager 15% of fees. E Project Administration Co-ordination meetings conducted by Project Manager Close control of work schedule Monitoring of quality of works and ensuring compliance with specifications 15% of fees. F Project Accounting Budget control Certification of stage/progress payments 10% of fees.
G Project closeout Completion inspection with client
Preparation of final account in conjunction with general and specialist contractors Preparation of schedule of making good defects 10% of fees.
H Post contract administration Final inspection after elapse of defects liability period Confirmation of making good defects after retention period is over 5% of fees. Total 100% of fees.
Notes on fees structure 1. Negotiations and any other work arising from the submission of application to the Local Authority or the submission of application to the local authority of the statutory bodies constitutes additional services to be charged for on a time basis. 2. Normalization of contract will be by the signing of both copies of a document mutually agreeable to both parties. 3. Fee notes which will be issued on completion of stage B, C & D respectively. Fee notes for stage (A), & (B) will be based on Project Estimates at those stages. 4. The payment from stages E to H will be based on the final project costs. These will be paid on a pro-rata basis as the project progresses and will be submitted immediately following the issue of certification of contractor stage payments. 5. In the event that the client selects a phased implementation of the project, fee notes for stages A, B and C shall be based on the estimated cost for the entire project while fee notes for subsequent phases shall be pro-rated to the value of the phase being implemented. 6. All fee notes will be processed, authorized and paid within ten calendar days of the fee note date.
7. Reports or opinions requiring formal client approval are to be discussed and approved within five working days of receipt of the request from the project managers by the client. 8. Disbursements resulting from the execution of the consultant’s duties including reproduction of drawings and documents, fax messages, traveling and food and accommodation expenses outside Nairobi etc. do not form part of this agreement and will be charged at cost.
Prepared By Frank Gichuhi www.a4architect.com +254 721 410684 A4architect.
