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FEASIBILITY STUDY
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
1
WELCOME TO OUR PRESENTATION
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
2
PENTAGON
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
3
GROUP MEMBERS
NAME ID
Rejvi Ahmed 13307132
Md. Mahadi Hassan 12307016
Md. Mehedi Hasan 15107001
Md. Kudrat-E-Khuda 13207109
Md. Zahidul Islam 12307061
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
4
CONTENTS
WHAT IS FEASIBILITY STUDY?
WHY DO FEASIBILITY STUDIES?
DIMENSIONS OF FEASIBILITY STUDY
MARKETING ANALYSIS
TECHNICAL ANALYSIS
FINANCIAL ANALYSIS
ECONOMIC ANALYSIS
ECOLOGICAL ANALYSIS
 LEGAL AND ADMINISTRATIVE
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
5
FEASIBILITY STUDY
Feasibility study-
• is an analysis of the viability of an idea.
• is an analysis of all possible solutions to a problem and a recommendation
on the best solution to use.
• is a formal study to decide what type of system can be developed, which
best the needs of the organization.
• A feasibility study is essentially a process for determining the viability of a
proposed initiative or service and providing a framework and direction for
its development and delivery
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
6
WHY DO FEASIBILITY STUDIES?
• To find a solution that is cost effective from a business perspective.
• To Find a solution that is well recognized
• To find out the probable market for the products
• To find out the opportunities and threats as presented by
environment
• To determine the probable income of operating the project
• To show the contributions the project can offer to the society, among
others
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
7
BENEFITS OF CONDUCTING A FEASIBILITY STUDY
• Narrows the business alternatives.
• Gives project teams more focus and provides an alternative outline.
• Identifies a valid reason to undertake the project.
• Enhances the success rate by evaluating multiple parameters.
• Aids decision-making on the project
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
8
STAGES OF FEASIBILITY STUDIES
A PREFEASIBILITY STUDY
A FEASIBILITY STUDY
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
9
DIMENSIONS OF FEASIBILITY STUDY
MARKET ANALYSIS
TECHNICAL ANALYSIS
FINANCIAL ANALYSIS
ECONOMIC ANALYSIS
ECOLOGICAL ANALYSIS
LEGAL AND ADMINISTRATIVE
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
10
MARKET ANALYSIS
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
11
MARKET ANALYSIS
Market research is the systematic gathering, recording and analysing
of data about problems relating to the marketing of goods and
services.
Market research is the means by which those who provide goods and
services keep themselves in touch with the needs and wants of those
who buy these goods and services.
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
12
MARKETING QUESTIONS
What is the market?
Who are the competitors?
Who is the target audience?
What do customers want?
What do competitors offer?
What is your USP?
What do customers think you offer them?
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
13
METHODS OF MARKET RESEARCH
Field research
Desk Research
FIELD RESEARCH
• Personal interview
• Telephone interview
• Postal surveys
• Purchase survey
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
14
DESK RESEARCH
• Internal Sources
o sales figures
o accounting records
o customers’ comments and complaints
o sales representatives’ reports
• Online Research
o Search Engines
o Newspapers
o University has many useful databases online
• Printed Research
o Business Directories
o Business Statistics
o Industrial Market Research Reports
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
15
FINANCIAL ANALYSIS
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
16
FINANCIAL ANALYSIS
Financial analysis seeks to ascertain whether the proposed project will be
financially viable in the sense of being able to meet the burden of servicing debt
and whether the proposed project will satisfy the return expectations of those who
provide the capital. The aspects which have to be looked into while conducting
financial appraisal are:
 Investment outlay & cost of project.
 Means of financing
 Project profitability
 Break-even-point
 Cash flows of the project
 Investment worthwhileness judged in terms of various criteria of merit
 Projected financial position
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
17
"Investment outlay" refers to the financial resources committed to an investment.
The “cost of project” represents the total of all items of outlay associated with a project which are
supported by long-term funds. The major cost elements of a project are the following:
 Land and site development
 Buildings and civil works
 Plant and machinery
 Technical know-how and engineering fees
 Fixed assets
 Preliminary and capital issue expenses
 Margin money for working capital
 Initial cash losses
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
18
INVESTMENT OUTLAY & COST OF PROJECT
MEANS OF FINANCING
Means by which a budget deficit is financed or a surplus is used. Means of financing are not included in the budget
totals. The primary means of financing is borrowing from the public. In general, the cumulative amount borrowed
from the public (debt held by the public) will increase if there is a deficit and decrease if there is a surplus, although
other factors can affect the amount that the government must borrow. Those factors, known as other means of
financing, include reductions (or increases) in the government's cash balances, changes in outstanding checks,
changes in accrued interest costs included in the budget but not yet paid, and cash flows reflected in credit
financing accounts.
To meet the cost of project the following means of finance are available:
 Share capital
 Term loans
 Debenture capital
 Deferred credit
 Incentive sources
 Miscellaneous sources REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
19
PROJECT PROFITABILITY
The Project Profitability report is used to monitor the planned and
real cost related to a project.
• Project Profitability is the state or condition of a project to describe the
yielding of a financial profit or gain from that project. It is a measure of
project operational efficiency in terms of financial benefits. As a rule, it
is calculated by the cost-income ratio.
• Estimation is the major activity that ensures project profitability. Through
estimating project parameters (such as cost, performance and time) it is
possible to determine how the project is changed and to explore current
status of project benefits.
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
20
BREAK EVEN POINT
• Definition At this point the income of the business exactly equals its expenditure. If
production is enhanced beyond this level, profit shall accrue to the business and if it
is decreased from this level, loss shall be suffered by the business.
The break even point is :-
 The point where the gains equal the losses.
 The point defines when an investment will generate a positive return.
 The point where sales or revenues equal expenses.
 The point where total costs equal total revenues.
 There is no profit made or loss incurred at the break even point.
 It is the lower limit of profit when prices are set and margins are determined.
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
21
• Formula
Break even point
= (Fixed cost) / (Contribution per unit)
Where,
Contribution = Selling cost – Variable cost
Fixed Cost = Contribution - profit
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
22
CASH FLOWS OF THE PROJECT
When beginning capital-budgeting analysis, it is important to determine a
project's cash flows. These cash flows can be segmented as follows:
1. Initial Investment Outlay
These are the costs that are needed to start the project, such as new
equipment, installation, etc.
2. Operating Cash Flow over a Project's Life
This is the additional cash flow a new project generates.
3. Terminal-Year Cash Flow
This is the final cash flow, both the inflows and outflows, at the end of the
project's life; For example, potential salvage value at the end of a
machine's life.
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
23
PROJECTED FINANCIAL POSITION
• Projected Financial Statements is summary of various
component projections of revenues and expenses for the
budget period. They indicate the expected net income for
the period.
• Projected Financial Statements are an important tool in
determining the overall performance of a company. They
include the balance sheet, income statement and cash
flow statements to indicate the company performance.
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
24
TECHNICAL ANALYSIS
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
25
TECHNICAL ANALYSIS
The technical analysis of a project idea can be scrutinized in
detail to evaluate its technical feasibility. Technical analysis
distinct from commercial, financial, economic and
managerial feasibility .Technical feasibility is one of the first
studies that must be conducted after a project has been
identified. In large engineering projects consulting agencies
that have large staffs of engineers and technicians conduct
technical studies dealing with the projects.
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
26
PURPOSE
• To ensure that the project is technically feasible in the sense that all the
inputs required to set up the project are available.
• To facilitate the most optimal formulation of the project in terms of
technology, size, location and so on.
• Choose best alternative
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
27
TECHNICALANALYSIS FACTORS
Location and site
Plant size
Layout
Machinery & Equipment
Environment impact assessment
Inputs
Infrastructural facilities
Manpower
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
28
LOCATION AND SITE
A thorough & comparative analysis for each potential location
should be made to determine the most ideal side.
It has to consider to following factors:
The accessibility to, & availability of, raw material sources.
The availability of cheap or moderately priced utilities such as
power, water or fuel.
The combine cost of transporting raw materials & fuel to the site.
The proximity to distributing outlets.
The availability of skilled & unskilled labor.
Maps & charts of the proposed site must be included.
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
29
PLANT SIZE
Determination of an optimum plant size is critical to the success
of a project.
A plant represents sunk costs and any under utilisation of its
capacity means either reduced profits or, for levels below the
Break-Even Point, losses.
It is therefore normally better to build a plant having a capacity
that is likely to be fully utilized quickly, rather than to go in for a
large capacity in the fond hope of a growing share of the market.
 The best possible size of plant is recommended after analysing
the availability, economics, and practicability of different size
options REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
30
TECHNOLOGY
Technology is a critical aspect of technical analysis of
any project. So it must be analyze effectively.
For example, a technology which has proven itself in
cold climates may fail in tropical climate.
Technology’s Cost of acquisition, installation, repairs
and maintenance should be analysed properly.
A technology is considered appropriate only if it is
assessed to be satisfactory and relevant
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
31
LAYOUT
The layout should be clearly depicted through diagrams &
descriptions.
 A good layout is characterized by:
Minimum material handling.
Effective space utilization.
 Smooth work flow.
Safe & conductive working area for the workers.
 Safety and sanitation facilities &
Flexibility of arrangements.
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
32
MACHINERY & EQUIPMENT
What type of equipment and technology will the business need to
produce its product/service?
What costs are involved to purchase and set up the equipment?
What are the costs involved in the ongoing running of the
equipment?
EQUIPMENT SUPPLIERS:
Who are the potential suppliers of the equipment?
Where are they located?
What sort of service and warranties do they provide?
How long will it take to acquire the equipment and begin
operations?
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
33
ENVIRONMENTAL IMPACT ASSESSMENT
This study - identifies the environment in which a project is to be
implemented, assesses the short and long-term impacts.
surface water quality
air quality
seismology/geology
erosion
land quality
fisheries
forests
terrestrial wildlife
noise
archaeological/historical significance
public health REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
34
INPUTS
These relate to the operation phase of the project, but need to
be identified at this stage of the technical study to examine the
technical feasibility of the proposed system.
Classification of the inputs :
Raw materials
Processed materials
Water & steam
 Gas, fuels and electricity.
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
35
INFRASTRUCTURAL FACILITIES
Availability and characteristics of roads, bridges, railway facilities
(like station, yards), air transportation, waterways, ports, etc
depending upon their relevance to the assessed requirements of the
project at both implementation and operation stages need to be
studied
A large part of the land area is normally required to be reserved for
service roads, storm water mains, railways, over-ground or
overhead gas, steam, and air pipelines, water reservoirs, and even
harbours for certain large-scale industrial projects.
A detailed study of all such requirements, and of their implications
in terms of time, resources, and approximate costs is necessary to
avoid surprises later on.
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
36
MANPOWER
The availability in needed numbers, of manpower of
requisite skills where and when required, has to be studied.
manpower covers both the project implementation and the
operation (& maintenance) phases.
In case imparting of training is also involved, timely
availability, and costs, of the training facilities have also to
be assessed.
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
37
ECONOMIC FEASIBILITY
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
38
Economic feasibility is
where Analysis of a
project's costs and
revenues in an effort to
determine whether or
not it is logical and
possible to complete.
Economic feasibility
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
39
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
40
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
41
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
42
OPERATIONAL FEASIBILITY
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
43
OPERATIONAL FEASIBILITY
• Operational feasibility determines if the human resources are available to
operate the system once it has been installed
• Users that do not want a new system may prevent it from becoming operationally
feasible
• Is a measure of how well a proposed system solves the problems, and takes
advantages of the opportunities identified during scope definition and how it
satisfies the requirements identified in the requirements analysis phase of system
development.
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
44
THE ESSENTIAL QUESTIONS TO HELP IN TESTING
THE OPERATIONAL FEASIBILITY OF A SYSTEM
• Does management support the project?
• Are the users not happy with current business practices?
• Will it reduce the time (operation) considerably
• Have the users been involved in the planning and development of the
project?
• Will the proposed system really benefit the organization?
• Does the overall response increase?
• Will accessibility of information be lost?
• Will the system effect the customers in considerable way?
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
45
ECOLOGICAL ANALYSIS
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
46
ECOLOGICAL ANALYSIS
• ecological - characterized by the interdependence of living organisms
in an environment; "an ecological Anything ecological relates to the
science of ecology, which is the study of how living things and the
environment do their thing.
• issues like preserving rain forests, saving endangered species, and
keeping drinking water safe, you're interested in ecological issues.
Ecological things have to do with how plants and animals relate to
each other, in good and bad ways, in specific environments — from
the impact of floods on river insects to how smog harms humans. Just
about anything people do has an ecological impact — for better or
worse.
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
47
THE CONCERNS THAT ARE USUALLY ADDRESSED
INCLUDE THE FOLLOWING:
• What is the likely damage 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?
• What are the likely environmental impacts from undertaking project ?
• What is the cost of reducing the negative impact
• Evaluation of the environmental impacts and risks with and without
technical measures are taken to reduce these impacts?
• Are there alternative ways of supplying the good or service of project
without incurring these environmental costs? What are the costs of these
alternatives?
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
48
LEGAL FEASIBILITY
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
49
LEGAL FEASIBILITY
• a measure of how well a solution can be implemented within existing
legal/contractual obligations.
• It includes study concerning contracts, liability, violations, and legal other traps
frequently unknown to the technical staff
• Determines whether the proposed system conflicts with legal requirements,
• e.g. a data processing system must comply with the local Data Protection Acts.
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
50
STUDY OF LEGAL ISSUES RELATED TO THE PROJECT
• Copyrights or patent laws
• Legal requirements for financial reporting
• Antitrust laws
• Labor relations and regulations
• Safety regulation
• Union contracts
• National data and work laws
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
51
ADMINISTRATIVE ANALYSIS
Administrative relating to the management of a company, school, or other
organization. or has held a position with significant secretarial or clerical
duties. Ad Someone who has administrative experience either holds
administrative experience comes in a variety of forms but broadly relates
to skills in communication, organization, research, scheduling and office
support
• What are managerial needs of the project?
• Does organization have the ability to get the managerial skills needed?
• Is timing of project consistent with quantity and quality of management?
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
52
ANY QUESTION?
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
53
THANK YOU
REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical
Engineering. IUBAT
54

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Pentagon Feasibility Study Analysis

  • 1. FEASIBILITY STUDY REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 1
  • 2. WELCOME TO OUR PRESENTATION REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 2
  • 3. PENTAGON REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 3
  • 4. GROUP MEMBERS NAME ID Rejvi Ahmed 13307132 Md. Mahadi Hassan 12307016 Md. Mehedi Hasan 15107001 Md. Kudrat-E-Khuda 13207109 Md. Zahidul Islam 12307061 REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 4
  • 5. CONTENTS WHAT IS FEASIBILITY STUDY? WHY DO FEASIBILITY STUDIES? DIMENSIONS OF FEASIBILITY STUDY MARKETING ANALYSIS TECHNICAL ANALYSIS FINANCIAL ANALYSIS ECONOMIC ANALYSIS ECOLOGICAL ANALYSIS  LEGAL AND ADMINISTRATIVE REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 5
  • 6. FEASIBILITY STUDY Feasibility study- • is an analysis of the viability of an idea. • is an analysis of all possible solutions to a problem and a recommendation on the best solution to use. • is a formal study to decide what type of system can be developed, which best the needs of the organization. • A feasibility study is essentially a process for determining the viability of a proposed initiative or service and providing a framework and direction for its development and delivery REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 6
  • 7. WHY DO FEASIBILITY STUDIES? • To find a solution that is cost effective from a business perspective. • To Find a solution that is well recognized • To find out the probable market for the products • To find out the opportunities and threats as presented by environment • To determine the probable income of operating the project • To show the contributions the project can offer to the society, among others REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 7
  • 8. BENEFITS OF CONDUCTING A FEASIBILITY STUDY • Narrows the business alternatives. • Gives project teams more focus and provides an alternative outline. • Identifies a valid reason to undertake the project. • Enhances the success rate by evaluating multiple parameters. • Aids decision-making on the project REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 8
  • 9. STAGES OF FEASIBILITY STUDIES A PREFEASIBILITY STUDY A FEASIBILITY STUDY REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 9
  • 10. DIMENSIONS OF FEASIBILITY STUDY MARKET ANALYSIS TECHNICAL ANALYSIS FINANCIAL ANALYSIS ECONOMIC ANALYSIS ECOLOGICAL ANALYSIS LEGAL AND ADMINISTRATIVE REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 10
  • 11. MARKET ANALYSIS REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 11
  • 12. MARKET ANALYSIS Market research is the systematic gathering, recording and analysing of data about problems relating to the marketing of goods and services. Market research is the means by which those who provide goods and services keep themselves in touch with the needs and wants of those who buy these goods and services. REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 12
  • 13. MARKETING QUESTIONS What is the market? Who are the competitors? Who is the target audience? What do customers want? What do competitors offer? What is your USP? What do customers think you offer them? REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 13
  • 14. METHODS OF MARKET RESEARCH Field research Desk Research FIELD RESEARCH • Personal interview • Telephone interview • Postal surveys • Purchase survey REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 14
  • 15. DESK RESEARCH • Internal Sources o sales figures o accounting records o customers’ comments and complaints o sales representatives’ reports • Online Research o Search Engines o Newspapers o University has many useful databases online • Printed Research o Business Directories o Business Statistics o Industrial Market Research Reports REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 15
  • 16. FINANCIAL ANALYSIS REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 16
  • 17. FINANCIAL ANALYSIS Financial analysis seeks to ascertain whether the proposed project will be financially viable in the sense of being able to meet the burden of servicing debt and whether the proposed project will satisfy the return expectations of those who provide the capital. The aspects which have to be looked into while conducting financial appraisal are:  Investment outlay & cost of project.  Means of financing  Project profitability  Break-even-point  Cash flows of the project  Investment worthwhileness judged in terms of various criteria of merit  Projected financial position REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 17
  • 18. "Investment outlay" refers to the financial resources committed to an investment. The “cost of project” represents the total of all items of outlay associated with a project which are supported by long-term funds. The major cost elements of a project are the following:  Land and site development  Buildings and civil works  Plant and machinery  Technical know-how and engineering fees  Fixed assets  Preliminary and capital issue expenses  Margin money for working capital  Initial cash losses REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 18 INVESTMENT OUTLAY & COST OF PROJECT
  • 19. MEANS OF FINANCING Means by which a budget deficit is financed or a surplus is used. Means of financing are not included in the budget totals. The primary means of financing is borrowing from the public. In general, the cumulative amount borrowed from the public (debt held by the public) will increase if there is a deficit and decrease if there is a surplus, although other factors can affect the amount that the government must borrow. Those factors, known as other means of financing, include reductions (or increases) in the government's cash balances, changes in outstanding checks, changes in accrued interest costs included in the budget but not yet paid, and cash flows reflected in credit financing accounts. To meet the cost of project the following means of finance are available:  Share capital  Term loans  Debenture capital  Deferred credit  Incentive sources  Miscellaneous sources REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 19
  • 20. PROJECT PROFITABILITY The Project Profitability report is used to monitor the planned and real cost related to a project. • Project Profitability is the state or condition of a project to describe the yielding of a financial profit or gain from that project. It is a measure of project operational efficiency in terms of financial benefits. As a rule, it is calculated by the cost-income ratio. • Estimation is the major activity that ensures project profitability. Through estimating project parameters (such as cost, performance and time) it is possible to determine how the project is changed and to explore current status of project benefits. REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 20
  • 21. BREAK EVEN POINT • Definition At this point the income of the business exactly equals its expenditure. If production is enhanced beyond this level, profit shall accrue to the business and if it is decreased from this level, loss shall be suffered by the business. The break even point is :-  The point where the gains equal the losses.  The point defines when an investment will generate a positive return.  The point where sales or revenues equal expenses.  The point where total costs equal total revenues.  There is no profit made or loss incurred at the break even point.  It is the lower limit of profit when prices are set and margins are determined. REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 21
  • 22. • Formula Break even point = (Fixed cost) / (Contribution per unit) Where, Contribution = Selling cost – Variable cost Fixed Cost = Contribution - profit REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 22
  • 23. CASH FLOWS OF THE PROJECT When beginning capital-budgeting analysis, it is important to determine a project's cash flows. These cash flows can be segmented as follows: 1. Initial Investment Outlay These are the costs that are needed to start the project, such as new equipment, installation, etc. 2. Operating Cash Flow over a Project's Life This is the additional cash flow a new project generates. 3. Terminal-Year Cash Flow This is the final cash flow, both the inflows and outflows, at the end of the project's life; For example, potential salvage value at the end of a machine's life. REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 23
  • 24. PROJECTED FINANCIAL POSITION • Projected Financial Statements is summary of various component projections of revenues and expenses for the budget period. They indicate the expected net income for the period. • Projected Financial Statements are an important tool in determining the overall performance of a company. They include the balance sheet, income statement and cash flow statements to indicate the company performance. REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 24
  • 25. TECHNICAL ANALYSIS REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 25
  • 26. TECHNICAL ANALYSIS The technical analysis of a project idea can be scrutinized in detail to evaluate its technical feasibility. Technical analysis distinct from commercial, financial, economic and managerial feasibility .Technical feasibility is one of the first studies that must be conducted after a project has been identified. In large engineering projects consulting agencies that have large staffs of engineers and technicians conduct technical studies dealing with the projects. REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 26
  • 27. PURPOSE • To ensure that the project is technically feasible in the sense that all the inputs required to set up the project are available. • To facilitate the most optimal formulation of the project in terms of technology, size, location and so on. • Choose best alternative REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 27
  • 28. TECHNICALANALYSIS FACTORS Location and site Plant size Layout Machinery & Equipment Environment impact assessment Inputs Infrastructural facilities Manpower REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 28
  • 29. LOCATION AND SITE A thorough & comparative analysis for each potential location should be made to determine the most ideal side. It has to consider to following factors: The accessibility to, & availability of, raw material sources. The availability of cheap or moderately priced utilities such as power, water or fuel. The combine cost of transporting raw materials & fuel to the site. The proximity to distributing outlets. The availability of skilled & unskilled labor. Maps & charts of the proposed site must be included. REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 29
  • 30. PLANT SIZE Determination of an optimum plant size is critical to the success of a project. A plant represents sunk costs and any under utilisation of its capacity means either reduced profits or, for levels below the Break-Even Point, losses. It is therefore normally better to build a plant having a capacity that is likely to be fully utilized quickly, rather than to go in for a large capacity in the fond hope of a growing share of the market.  The best possible size of plant is recommended after analysing the availability, economics, and practicability of different size options REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 30
  • 31. TECHNOLOGY Technology is a critical aspect of technical analysis of any project. So it must be analyze effectively. For example, a technology which has proven itself in cold climates may fail in tropical climate. Technology’s Cost of acquisition, installation, repairs and maintenance should be analysed properly. A technology is considered appropriate only if it is assessed to be satisfactory and relevant REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 31
  • 32. LAYOUT The layout should be clearly depicted through diagrams & descriptions.  A good layout is characterized by: Minimum material handling. Effective space utilization.  Smooth work flow. Safe & conductive working area for the workers.  Safety and sanitation facilities & Flexibility of arrangements. REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 32
  • 33. MACHINERY & EQUIPMENT What type of equipment and technology will the business need to produce its product/service? What costs are involved to purchase and set up the equipment? What are the costs involved in the ongoing running of the equipment? EQUIPMENT SUPPLIERS: Who are the potential suppliers of the equipment? Where are they located? What sort of service and warranties do they provide? How long will it take to acquire the equipment and begin operations? REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 33
  • 34. ENVIRONMENTAL IMPACT ASSESSMENT This study - identifies the environment in which a project is to be implemented, assesses the short and long-term impacts. surface water quality air quality seismology/geology erosion land quality fisheries forests terrestrial wildlife noise archaeological/historical significance public health REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 34
  • 35. INPUTS These relate to the operation phase of the project, but need to be identified at this stage of the technical study to examine the technical feasibility of the proposed system. Classification of the inputs : Raw materials Processed materials Water & steam  Gas, fuels and electricity. REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 35
  • 36. INFRASTRUCTURAL FACILITIES Availability and characteristics of roads, bridges, railway facilities (like station, yards), air transportation, waterways, ports, etc depending upon their relevance to the assessed requirements of the project at both implementation and operation stages need to be studied A large part of the land area is normally required to be reserved for service roads, storm water mains, railways, over-ground or overhead gas, steam, and air pipelines, water reservoirs, and even harbours for certain large-scale industrial projects. A detailed study of all such requirements, and of their implications in terms of time, resources, and approximate costs is necessary to avoid surprises later on. REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 36
  • 37. MANPOWER The availability in needed numbers, of manpower of requisite skills where and when required, has to be studied. manpower covers both the project implementation and the operation (& maintenance) phases. In case imparting of training is also involved, timely availability, and costs, of the training facilities have also to be assessed. REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 37
  • 38. ECONOMIC FEASIBILITY REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 38
  • 39. Economic feasibility is where Analysis of a project's costs and revenues in an effort to determine whether or not it is logical and possible to complete. Economic feasibility REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 39
  • 40. REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 40
  • 41. REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 41
  • 42. REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 42
  • 43. OPERATIONAL FEASIBILITY REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 43
  • 44. OPERATIONAL FEASIBILITY • Operational feasibility determines if the human resources are available to operate the system once it has been installed • Users that do not want a new system may prevent it from becoming operationally feasible • Is a measure of how well a proposed system solves the problems, and takes advantages of the opportunities identified during scope definition and how it satisfies the requirements identified in the requirements analysis phase of system development. REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 44
  • 45. THE ESSENTIAL QUESTIONS TO HELP IN TESTING THE OPERATIONAL FEASIBILITY OF A SYSTEM • Does management support the project? • Are the users not happy with current business practices? • Will it reduce the time (operation) considerably • Have the users been involved in the planning and development of the project? • Will the proposed system really benefit the organization? • Does the overall response increase? • Will accessibility of information be lost? • Will the system effect the customers in considerable way? REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 45
  • 46. ECOLOGICAL ANALYSIS REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 46
  • 47. ECOLOGICAL ANALYSIS • ecological - characterized by the interdependence of living organisms in an environment; "an ecological Anything ecological relates to the science of ecology, which is the study of how living things and the environment do their thing. • issues like preserving rain forests, saving endangered species, and keeping drinking water safe, you're interested in ecological issues. Ecological things have to do with how plants and animals relate to each other, in good and bad ways, in specific environments — from the impact of floods on river insects to how smog harms humans. Just about anything people do has an ecological impact — for better or worse. REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 47
  • 48. THE CONCERNS THAT ARE USUALLY ADDRESSED INCLUDE THE FOLLOWING: • What is the likely damage 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? • What are the likely environmental impacts from undertaking project ? • What is the cost of reducing the negative impact • Evaluation of the environmental impacts and risks with and without technical measures are taken to reduce these impacts? • Are there alternative ways of supplying the good or service of project without incurring these environmental costs? What are the costs of these alternatives? REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 48
  • 49. LEGAL FEASIBILITY REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 49
  • 50. LEGAL FEASIBILITY • a measure of how well a solution can be implemented within existing legal/contractual obligations. • It includes study concerning contracts, liability, violations, and legal other traps frequently unknown to the technical staff • Determines whether the proposed system conflicts with legal requirements, • e.g. a data processing system must comply with the local Data Protection Acts. REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 50
  • 51. STUDY OF LEGAL ISSUES RELATED TO THE PROJECT • Copyrights or patent laws • Legal requirements for financial reporting • Antitrust laws • Labor relations and regulations • Safety regulation • Union contracts • National data and work laws REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 51
  • 52. ADMINISTRATIVE ANALYSIS Administrative relating to the management of a company, school, or other organization. or has held a position with significant secretarial or clerical duties. Ad Someone who has administrative experience either holds administrative experience comes in a variety of forms but broadly relates to skills in communication, organization, research, scheduling and office support • What are managerial needs of the project? • Does organization have the ability to get the managerial skills needed? • Is timing of project consistent with quantity and quality of management? REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 52
  • 53. ANY QUESTION? REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 53
  • 54. THANK YOU REJVI AHMED, Feasibility Study, Pentagon, Dept. of Mechanical Engineering. IUBAT 54