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PROJECT FEASIBILITY STUDY

A project is a temporary and one-time endeavour

undertaken to create a unique product or service,

which brings about beneficial change or added value.

Project planning refers to the plans of an undertakingto build up productive capacities or to diversify its

business or to extend its existing capacities.

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Project managementis the discipline of organizing

and managing resources (e.g. people) in a way that

the project is completed within defined scope,

quality, time and cost constraints

Generation of ideas

SWOT analysis Clear articulation of objectives

Cost reduction

Productivity improvement

Increase in capacity utilization

Improvement in contribution margin

Expansion into promising fields

Fostering a conducive climate

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Generation of ideas

Initial screening

Is the idea prima facie promising?

Plan feasibility analysis

Conduct market analysis Conduct technical analysis

Conduct financial analysis

Conduct Economic and Ecological analysis

Is the project worthwhile?

Prepare funding proposal Terminate

Terminate

Yes NO

NOYes

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Scouting for project ideas

Analyze the performance of existing industries

Examine the input and output of various industries

Review import and export

Study plan outlay and government guidelines Look at suggestion of financial institutions

Investigate local material and resources

Analyse economic and social trend Study new technological developments

Explore possibility of reviving sick units

Identify unfulfilled psychological needs

Attend trade fair

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Preliminary Screening

Compatibility with promoters

Consistency with government priorities

Availability of inputs

Adequacy of market

Reasonableness of cost

Acceptability of risk level

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MARKET & DEMAND ANALYSIS

Situational analysis and specification of objectives

Collection of secondary information

Conduct of market survey

Characterization of the market- effective demand in

the past and present, breakdown of demand, price,methods of distribution and sales promotion,

government policy

Demand forecasting

Uncertainty in demand forecasting

Market planning

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TECHNICAL ANALYSIS

Whether the preliminary tests & studies have been

done or provided for ?

Whether the availability of raw materials,power &

other inputs have been established?

Whether the selected scale of operation is optimal? Whether the production process chosen is suitable?

Whether the equipment & machines chosen are

appropriate?

Whether the auxiliary equipments & supplymentary

engineering works have been provided for?

Whether provision has been made for treatment of

effluents?

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TECHNICAL ANALYSIS .

Whether the proposed layout of site ,building &

plant is sound?

Whether work schedule has been realistically

drawn up?

Whether the technology proposed to be employedis appropriate from the social point of view?

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ENVIRONMENTAL ASPECT

What are the types of effluents and emissions

generated?

What needs to be done for proper disposal of

effluents and treatment of emissions?

Will the project be able to secure all environmentalclearance and comply with all statuary

requirements?

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FINANCIAL ANALYSIS

Investment outlay & cost ofproject

Means of Financing

Cost of Capital

Projected profitability

Break-Even Point

Cashflows of Project

Projected Financial position

Level of Risk

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ECOLOGICAL ANALYSIS

What is likely damaged caused by the project to the

environment?

What is the cost of restoration measures required

to ensure that the damage to the environment is

contained within acceptable limits?

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PROJECT REPORT

A Project can be undertaken only on the basis of

project report. Project report is pre-investment &comprehensive study of investment proposals of an

organization which encompasses a thorough

investigation relating to economic, technical, financial,

social, managerial & commercial aspects.

It seeks to evaluate the socio-economic & technical

viability of a project before it is undertaken.

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A project report deals with the various aspects of a new

project with reference to :

Location of a project

The size & capacity level. The technological aspects production process

,availability of raw material, requirements of labour &

machines

Management policies regarding organization &

control aspects of a project.

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ADVANTAGES OF A PROJECT REPORT

It lays down objectives in various spheres of

business. It evaluates the objectives in the right perspective.

It identifies constraints on resources Viz. manpower,equipment, financial & technological well in advance

to make remedial measures in due course of time.

It paves the way for management to seek financialaccommodation from financial institution & banks.They require a detailed project report to evaluate

project viability for raising funds from capital market. Successful implementation of a project depends upon

the line of action as suggested in the project report.Besides,comparision of results will depend upon the

projected profitability and cashflows ,production

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The foregoing discussion thus shows the

necessity of preparing a project report in

advance. It requires a team of specialized

and technical experts to cover different

aspects viz. financial, technical, commercial,socio-economic & government rules and

regulation and also to follow a multi-

disciplinary approach to analyse the followingfactors

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CONTENTS OF A PROJECT REPORT

Information about industry and its status in the

economy, present production and demand pattern,indicating licensed, installs capacities, Government

policies & export potential.

Broad market trend of the product and by productswithin & outside the states for 5 years

Raw material survey, giving specification and quality of

raw materials required & their sources of availability. Production process broad description of different

processes & their relative economies

Availability of technical know-how within & outside

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CONTENTS OF A PROJECT REPORT

Location of Plant , its advantages & justification.

Water requirement of water for process ,boiler feed,cooling etc. Sources of water available & making itusable for factory & to townships

Power total power requirements for the factoryspecification of power & choice between purchasedpower & generated power.

Fuel-its requirement for steam raising or processingsource and price at which it will be available forfactory including taxes & surcharge.

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COST OF PROJECT ..SPECIFY FOREIGN EXCHANGE COST ,IF ANY

Land inclusive of development expenditure to be

incurred on land. Building to be erected for housing the plant &

Machinery ,the administrative office, stores,services..Cost estimate to be included in the projectcost.

Plant & machinery including other equipments & theirestimated cost.

Offsite facilities, utilities & auxiliary facilities.

Preliminary expenses (Share issue, stamp duty, cost

of raising equity etc) Contingencies.

Cost of Spare, repairs & maintenance during trial run& commissioning period.

Pre-commissioning & commissioning period.

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