Project Feasibility Study

Project Feasibility Study
Project Feasibility study
 Is the systematic investigation which ascertains whether a business

undertaking is viable and if so, the degree of its profitability
 Involves:
 Collection of data which are relevant and necessary to all aspects of
undertaking
 Evaluation and analysis of the data gathered
 Formulation of recommendation
Benefits
A. Proponents, promoters, organizers of new project
 It serves as a basis for ascertaining the practicability / workability of

proposed projects
B. Lending Institution
 To ascertain whether financial assistance should be extended or not

 To determine the terms and conditions should the loan be given
C. Shareholder
 To evaluate if an investment on a project or existing enterprise

should be made or not
 To decide to sell an existing company and if so, at what price
D. Management of existing firms
 To determine feasibility of an expansion programs

 To determine a reasonable price of an existing business it is
considering taking over
E. Government Agencies
 To determine if a project is entitled to government incentives and

level of such incentives
 To asses the social desirability of the project
 To determine whether provisions for environmental protection have
been made
F. National Economy as a whole
 Minimizing the risk of failure of business ventures thus wastage of

valuable resources is reduced, thereby accelerating economic
growth
Project Team
 One Industrial Economist

 One Market Analyst
 One or more technologist/engineer specialized in the appropriate
industry
 One Civil Engineer
 One industrial management expert
 One Accounting expert
Areas Covered in a Project Study
1. Organization and Management
 Covers the study of the type or form of business organization,

requirements as to control of Filipinos in the stockholdings of a
corporate form or organization and organization structure within the
enterprise
2. Marketing
 Involves the study of the present and future demand and supply for
the product, competition, selling prices and marketing plan for the
product
3. Technical
 Covers the study of the production process, plant capacity, plant

location and layout, structural specifications and other operating
requirements
4. Taxation
 This will involve the study of tax implications if the project,

possible tax-saving measures and all applicable taxes which should
be incorporated in the estimates of profit
5. Financing
 This will cover the determination of the financing requirements,

financing leverage as well as the possible sources of financing
6. Financial Projections
 This will cover the presentation of the expected profitability, cash

needs and cash sources based in the results of the study if the
marketing, technical and financing requirements
7. Profitability
 This will show the relationship between capital to be invested and

expected net profit known as the return on investment
8. Legal
 Various legal aspects are studied to determine if requirements are

met and possible incentives and protection are availed of.
9. Social Desirability
 This will cover the study of the benefits to be obtained from an

undertaking in terms of its contribution to the community, to other
business firms and to the national economy as a whole
 Increased taxes paid to the government
 Provision of employment opportunities
 Construction of roads, bridges and others
 Increased peso inflows to the country
FEASIBILITY STUDY GUIDELINE
A. Executive Summary
 Name of the Applicant
 Business Name
 Location
 Head Office
 Project Site
 Brief Description of the Project
 Highlights if Major assumptions and summary of findings and
conclusions
 Market Feasibility
 Technical Feasibility
 Social Economic desirability
 Financial Feasibility
B. Project Background and History
 Name and address of project promoter

 Project Orientation: market or raw material oriented
 Market Orientation: Domestic or export
 Economic and industrial policies supporting the project
C. Economic Aspect
1. General Market Description

 Market Description
 Demand
 Supply
 Competitive Position
2. Marketing Program
3. Projected Sales
4. Contribution to the Philippine Economy
D. Technological Feasibility
 1. Products
 2. Manufacturing Process
 Plant Size and Production Schedule
 Machinery and Equipment
 Plant Location
 Plat Layout
 Building and Facilities
 Raw Material
 Utilities
 Waste Disposal
 Production Cost
 Labor Requirements
E. Financial Feasibility
 For Existing Projects

 1. Audited FS
 2. Financial Projection for the next five years
 3. Supporting schedules to the financial projections
 4. Financial analysis to show the rate of return on investment, ROE, break-
even volume, and price analysis
E. Financial Feasibility - cont
 For New Projects

 1. Total project Cost (fixed and working capital)
 2. Initial capital requirements
 3. Pre operating cash flows relative to the project timetable
 4. Financial projections for the next five years
 5. Supporting Schedules
 6. Financial Analysis
F. Management
 Organization Layout
 Production
 Sales
 Administration
 Management
G. Manpower
 Estimated manpower requirements

 Estimated annual manpower costs
H. Social Desirability Aspect

Project Feasibility Study

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Project Feasibility Study

Project Feasibility study

 Is the systematic investigation which ascertains whether a business

 It serves as a basis for ascertaining the practicability / workability of

 To ascertain whether financial assistance should be extended or not

 To evaluate if an investment on a project or existing enterprise

 To determine feasibility of an expansion programs

 To determine if a project is entitled to government incentives and

 Minimizing the risk of failure of business ventures thus wastage of

 One Industrial Economist

 Covers the study of the type or form of business organization,

 Covers the study of the production process, plant capacity, plant

 This will involve the study of tax implications if the project,

 This will cover the determination of the financing requirements,

 This will cover the presentation of the expected profitability, cash

 This will show the relationship between capital to be invested and

 Various legal aspects are studied to determine if requirements are

 This will cover the study of the benefits to be obtained from an

 Name and address of project promoter

1. General Market Description

 For Existing Projects

 For New Projects

 Estimated manpower requirements

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