Entrepreneurship

1. TLE IC 9
FEASIBLITY
STUDY
Prepared by:
JASPHER M. OMBAO
JIZELLE H. TOGANO
x

2. x
OBJECTIVES:
 Describe what a feasibility study is and
its various dimensions
 Distinguish the importance of the
feasibility study prior to putting up a
business
 Assess the economic viability of the
proposed business

3. x
What is Feasibility Study?
A feasibility study is an assessment of
the practicality of a proposed plan or project.
A feasibility study analyzes the viability of a
project to determine whether the project or
venture is likely to succeed. The study is also
designed to identify potential issues &
problems that could arise while pursuing the
project.

4. x
What is Feasibility Study?
The study must also determine the return
on investment, whether this is measured as
financial gain or a benefit to society, as in the
case of nonprofit project. A risk management
must also be completed to determine the
return is enough to offset the risk of
undergoing the venture.

5. x
Benefits of a Feasibility Study
● Helping project managers discern the pros
& cons of undertaking a project before
investing a significant amount of time and
capital into it.
● Feasibility studies can also provide a
company’s management team with crucial
information that could prevent them from
entering into a risky business venture.

6. x
Benefits of a Feasibility Study
● Helps companies how will they grow. They
will know more about how they will operate,
what the potential obstacles are, who the
competition is, and what the market is
● Feasibility studies also help convince
investors and bankers that investing in a
particular project or business is a wise choice.

7. x
How to Conduct a Feasibility Study
The exact format of a feasibility study will
depend on the type of organization that
requires it. However, the same factors will be
involved even if their weighting varies.

8. x
Standard Format of Feasibility
Study
CHAPTER 1. EXECUTIVE SUMMARY
Name of the Firm
Location of the Firm
Brief Description of the Project
Major Assumptions

9. x
CHAPTER 2. MANAGEMENT ASPECT
Management of the Project Organizational Chart
Vision Personnel Chart
Mission Duties &
Responsibilities
Objective Company Policy &
Procedures
Name of the Project Health & Safety
Protocols
Name of the Business Compensation Plan
Logo of the Business Recruitment Program
Business Organization Recruitment Process

10. x
CHAPTER 2. MANAGEMENT ASPECT
Training Program
Benefits
Facilities
Status of Timetable
Legal Aspects
Articles of Partnership/Incorporation

11. x
CHAPTER 3. MARKRTING ASPECT
Market Study
Target Market
Market Demographics & Survey
SWOT Analysis
Competitor’s Profile & Analysis
Competitive Strategy

12. x
CHAPTER 3. MARKETING ASPECT
Marketing Strategy Digital Marketing
Strategy
Product Strategy Contribution to the
Phil.
Pricing Strategy
Economy
Distribution Strategy
Promotional Mix Strategy
Sales Promotion
Personal Selling

13. x
CHAPTER 4. TECHNICAL ASPECT
Products & Services Utilities
“New Normal” Procedure Waste Disposal
Business Schedule
Shop Location
Shop Size
Shop Floor Layout
Supplier of Raw Materials, Supplies, Equipment,
Furniture & Fixture Details
Uniform (must adopt the NEW NORMAL for
employee)

14. x
CHAPTER 5. FINANCIAL ASPECTS
Sources of Financing
Total Project Cost
Profit & Loss Statement
Cash Flow Statement
Balance Sheet
Statement of Partners’ Equity

15. x
DIMENSIONS OF FEASIBILITY
STUDY
● MARKET ANALYSIS
● TECHNICAL ANALYSIS
● FINANCIAL ANALYSIS
● ECONOMIC FEASIBILITY
● ECOLOGICAL ANALYSIS
● LEGAL AND ADMINISTRATIVE

16. x
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

17. x
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?

18. x
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

19. x
FINANCIAL ANALYSIS
● Break-even-point
● Cash flows of the project
● Investment worthwhileness judged in terms of
various
criteria of merit
● Projected financial position

20. x
INVESTMENT OUTLAY & COST OF
PROJECT
→ "INVESTMENT OUTLAY" refers to the financial resources committed
to an investment.
→ “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

21. x
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.

22. x
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

23. x
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.

24. x
PURPOSE OF TECHNICAL
ANALYSIS
● 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

25. x
TECHNICAL
ANALYSIS
FACTORS
x

26. x
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?

27. x
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 ● noise
● air quality ● archaeological/historical
significance
● seismology/geology ● public health
● erosion
● land quality
● fisheries
● forests

28. x
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.

29. x
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.

30. x
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

31. x
Economic Feasibility
→ 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.

32. x
Economic Feasibility – Project
Benefits
Tangible Benefits:
● Reduce & avoid cost
● Reduce error
● More flexible
● Faster activities
● Improve control &
planning
● New market niche &
increasing sales
opportunities
Intangible Benefits:
● Maintain Competitiveness
● Increase organizational
flexibility
● Raise Morale
● Faster activities
● Promote learning &
understanding
● Timely information

33. x
Economic Feasibility – Project Costs
Tangible Costs:
● System Development
● Hardware & Software
Procurement
● Users & Staff Training
● Site Preparation
● Data or System
Conversation
Intangible Costs:
● Maintenance & Support
● Increment Data Storage
Expense
● Incremental
Communications
● New Software & Hardware
Leases
● Consumables

34. x
How do we estimate Economical
benefits
Economical benefits are usually estimated
with:
● Historical information of similar projects
● Future taxation & inflation estimates
● Scale and scope of the project
● Anticipation of other competing projects

35. x
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.

36. x
ESSENTIAL QUESTIONS TO HELP IN
TESTING OPERATIONAL FEASIBILITY
● 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 &
development of the project?
● Will the proposed system really benefit the
organization?
● Does the overall response increase?
● Will accessibility of information be lost?

37. x
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.

38. x
ECOLOGICAL
ANALYSIS
→ 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.

39. x
● 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?
THE CONCERNS THAT ARE USUALLY
ADDRESSED INCLUDE THE
FOLLOWING:

40. x
● 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?
THE CONCERNS THAT ARE USUALLY
ADDRESSED INCLUDE THE
FOLLOWING:

41. x
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,

42. x
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

43. x
ADMINISTRATIVE
FEASIBILITY
→ 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.

44. x
ADMINISTRATIVE
FEASIBILITY
● 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?

45. x
ANY
QUESTIONS??
x

46. THANK YOU!!
Prepared by:
JASPHER M. OMBAO
JIZELLE H. TOGANO
x