Feasibility Studies

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Definition A process where, prior to the execution of

any given project, all aspects of the said project

Marketing Technical Financial

are assessed and evaluated under the prevailing conditions of the local economy where the project is to be executed.

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Contents A feasibility study report should include:

1. Index.2. Introduction. 3. Executive summary.4. Marketing report.5. Technical report.6. Financial report.7. Appendixes.

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Index (Table of contents)

Serves as an easy reference to various topics in the feasibility report.

Format:Main title page no. Subtitle page no.

It’s important to write the accurate page no. in front of each title.

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Introduction (Preface)

A short & precise description of the project.

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Executive summary

It summarizes the significant results of each part of the feasibility study (i.e. marketing, technical & financial)

It should be short & precise containing all the important results of the study, in order to enable executives to make an initial decision.

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Marketing Report

Product Description Product Identification. Technical Specification.Applied Standards.Targeted Customers.

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Marketing Report Market Survey

Market Size Historical Demand (5 years Min). Future Demand( Specify Projection Method). Market Gap.

Identification of competitive brands. Prices. Market Share. Producers. Agents.

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Marketing Report Market Survey

Local Production List of local producing Plants (Name, Licensed

Capacity, and Actual Capacity) List of Plants under Construction.

Local Import Quantity. Value. Source of Import.

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Marketing Report Results

Proposed production Capacity.Projected Market Share.Recommended Marketing Strategies.

Targeted Market Segment. Competitive Edge. Projected Selling Prices. Promotion Plans. Sales Strategies (i.e. Targeted Markets,

Distribution Channels, and Points of Sales).

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Technical Report

Production Process: Process Description. Process Flow Chart.

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Process Flow Chart (Phase I)

RAW MATERIALS

LEAD ORE

PHASE II

SCRAP BATTERIES OTHER LEAD SCRAPB.PLATES / DROSS / OXIDE / PASTE ETC

BATTERY BREAKING SYSTEM

METALLIC LEADLEAD PASTEPOLY PROPYLENECHIPS

WASHING&DRYINGSold To Third party

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Process Flow Chart (Phase II)

SMELTING SECTION

HEAVY SLAG / /METALLIC

PHASE III

FLUE DUST C WITH CHEMICALS

POLUTION CONTROL/EXHAUST SYSTEM

CRUDE LEAD

FURNACE

SLAG SEGRAGATION

SAMPLE FOR TESTLIGHT SLAG

DISPOSAL

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Process Flow Chart (Phase III)REFINING SECTION

SAMPLE ANALYSIS

STORES

CHARGING / MELTING

MOULDING

KETTLES

REFINING PROCESS

BLENDING & ALLOYING

LEAD ALLOYSPURE LEAD – 99.97(MIN)

SOFTENING

ANALYSIS AT EVERY STAGE

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Technical Report

Production Capacity: Capacity at full

Production. Yearly Targeted

Production.

Year 1 Year 2 Year 3 Year 4 Year 5Quantity % Quantity % Quantity % Quantity % Quantity %

5,000 50 6,000 60 7,000 70 8,000 80 10,000 100

Full Production Capacity 10,000 MT/year

Yearly Production Schedule

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Technical Report Land and location:

Proposed location (Justification). Total Area Required. Land Value or Annual Rent.

Buildings: Production Building. Stores and Warehouses. Administration Offices. Total Buildup Area. Landscape. Specification Analysis of Offers.

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No. Building type Area (m2)Cost /m2

(S.R)Total cost

(S.R)

1 Production bldg. 2500 600 1,500,000

2 Offices 500 1000 500,000

3 Raw material warehouse 2000 300 600,000

4 Finished goods store 1000 400 400,000

Total Build up area 6000 3,000,000

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Technical Report

Machinery and Equipments:Production Lines.Auxiliary Equipments. Lap Equipments. Installation and Commissioning SchedulesAnalysis of Offers (Technical and Cost

Analysis).Cost of Selected Machinery and Equipments.

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No. Equipment type

Unit cost

No. of Units

Total cost

Utilities requirement

1 Rotary Furness 20,000 1 20,000 100 2 0.5 20

Equipments & machineries analysis :

Electricity

(Kwh)

Water

(m3)

Fuel

(l)

Air

(m3)

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Technical Report

Raw Materials:Production raw materials.Packaging materials.

List By : Type – Source – Quantity per unit of production - Unit Price - Yearly Requirement – Total Cost

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No. Item Source Cost / U

(S.R)Q / U of

production

Cost / U of production

(S.R)

1 Scrap batteries Local 200/mt 1.8mt/mt 360

2 Soda ash Imported 1000/mt 0.1mt/mt 100

3 Iron chips Local 1000/mt 0.04mt/mt 40

4 Wooden palettes Local 160 each 0.5/mt 80

5 Straps Local 5/lm 4lm/mt 20

Total cost of raw material for each ton of finished product S.R 600

Raw material cost / Unit :

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year 1 2 3 4 5

Targeted production 5,000 6,000 7,000 8,000 10,000

Unit cost 600 600 600 600 600

Total cost 3,000,000 3,600,000 4,200,000 4,800,000 6,000,000

Yearly total cost of Raw material :

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Technical Report Transportation Equipments:

Forklift. Trucks and Vans. Buses. Cars.

Furniture: Office Equipments Office Furniture. Accommodation Furniture.

Utilities: Electrical Power. Water. Fuel.

List yearly Requirements and cost.

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Technical Report Manpower Requirements:

Management Staff. Technical Staff:

Production. Maintenance. Lab.

Supporting Staff: Labors. Drivers. Security.

Proposed Salary Scale. Proposed yearly total manpower cost (Salaries & benefits) Proposed Organization chart.

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Yearly manpower requirements :

No. Position Year 1 Year 2 Year 3 Year 4 Year 5

1 G. Manager 1 1 1 1 1

2 P. Manager 1 1 1 2 2

3 M. Manager 1 1 1 2 2

4 Operator 10 12 14 16 20

5 Labor 10 12 14 16 20

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Proposed salary scale :

No. Position Basic salary/ month benefits Total monthly

package Annual cost

1 G. Manager 10,000 5,000 15,000 180,000

2 P. Manager 8,000 4,000 12,000 144,000

3 M. Manager 6,000 3,000 9,000 108,000

4 Operator 1,500 500 2,000 24,000

5 Labor 900 300 1,200 14,400

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Organization ChartOrganization Chart Executive General Manager

Marketing Manager

Accounts Supervisor

Accountant

Secretary

Financial Manager

Cashier

Warehouse

Human Resources Manager

Administration

Supervisor

shifts supervisor

operating Supervisor

Government Affairs

Personnel Supervisor

Production Manager

Lab Supervisor

Salesman

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Financial Report Total Investment:

Fixed Capital: Fixed Assets.

Land. Buildings. Machinery and Equipments. Vehicles. Furniture.

Pre-operating Expenses. Cost of Feasibility Studies. Cost of Engineering Drawings. Licenses and Registrations. Recruitment cost. Pre-operating Salary.

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Financial Report Total Investment:

Working Capital: Months of 1st operational year Total Operating Cost.( Based on business

nature ) Salaries and benefits. Row materials. Utilities. Maintenance Cost. Consumables. Marketing Expenses. Transportation cost. Rent. Other Acquired Services:

Legal. CPA.

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Financial Report

Sources of Funds: Paid up capital. Loans.

Governmental loans.

Commercial loans.

Partners loan.

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Financial Report

Financial Statements: In order to prepare the financial statements, the

following schedules have to be prepared: Loan’s repayment schedule.

Yearly income statement.

Depreciation & Amortization schedule.

Annual Maintenance table.

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Financial Report

Financial Statements: Profit & loss statement.

Cash flow statement.

Balance sheet.

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Financial Report

Financial Indicators: ROI : Net Profit before tax / total investment. ROE : Net Income / Owners Equity. IRR: the discount rate that makes estimated NPV of an

investment = 0 Break even point : Fixed cost/(Selling Price – Variable cost)

Payback period : length of time until the sum of cash flow = Initial Investment

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Financial Report

Sensitivity analysis: Decrease income by 10% & fix operating costs.

Fix income & increase operating costs by 10%.

Decrease income by 10% & increase operating

costs by 10%.

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Financial Report

S.W.O.T Analysis:

Strengths

Weaknesses

Opportunities

Threats

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Appendix

Classified files of all working documents

organized in alphabetical order for easy

reference.

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General Tips

Use simple English language. Avoid using long paragraphs. Use appropriate charts to

represent data.

21%

29%27%

23%

1st Qtr2nd Qtr3rd Qtr4th Qtr

Line Chart

Pie Chart

0102030405060708090

1st Qtr 2nd Qtr 3rd Qtr 4th Qtr

EastWestNorth

Bar ChartSometimes called a frequency polygon

showing trends through time. Sometimes called a histogram showing comparisons through certain time.

Shows percentages of division of the whole or parts of the whole

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General Tips Use facts & not assumptions. Indicate your source of information. Review the study for any contradictions in figures or information or any

illogical sequences. Be always in touch with your clients through:

Progress reports. Draft reports of various parts of the feasibility study. Submit draft of F.S for remarks and approval.

Be honest. Always remember a great presentation leaves good impression on your

client.