photocopier feasibility study 56

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Politehnica University of BucharestFaculty of Engineering in Foreign Languages

Eugen Andreiadis & Andrei IancuProject Feasibility Study


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Project Feasibility Study

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Outline.

1. Background 32. Project Definition 4

2.1. Project Brief 4

2.2. Objectives 42.3. Requirements 52.3.1. Company 52.3.2. Headquarters 52.3.3. Equipment 82.3.4. Services 112.3.5. Labour force 132.3.6. Financials 13

2.4. Analyses 152.4.1. Market Analysis 15

A. SWOT analysis 15B. Promotion 16C. Clients 16D. Competition 17E. Conclusions 18

2.4.2. Risk Analysis 18A. Technical risks 19B. Financial Risks 19C. Legal Risks 20D. Staff related risks 20E. Other risks 20

2.4.3. Financial Analysis 21A. Preliminaries 21B. Indexes 21

3. Project Planning 223.1. PERT Analysis 223.2. Gantt Chart 233.3. Future Development 23

4. Conclusions 26


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1.Background.The aim of this project is to create a commercial centre offering students andother possible clients various paper services, such as copying and printing. Theproject arisen as a direct consequence of the lack of similar copy centres in thevicinity of two major universities. Such a situation is not new. Many locationsaround the city suffer from the absence of a performance copy centre (universitycampuses, financial, legal or administrative offices, a.s.o.), and such market

opportunity is addressed by this project.

The location of the centre was chosen in order to correspond to our spacerequirements and renting capabilities, and also to be situated in the proximity ofthe universities, in a high visibility area.

As any other projects, the constraints affecting us regard the financial, timeand quality aspects of the project. Since the time factor is of little importance, andwe are prepared to accept a somewhat lower quality (many pieces of equipmentwill be purchased second hand), the major constraint was the budget, as wedecided (based on the securities we could offer and the possibility ofreimbursement) to keep it at a maximum of 10.000 euros.

The activity will be targeted towards the student clientele and accordinglywe expect a high demand for services such as copying, printing, binding andscanning. As a consequence, the charges will be very low for these services, butgiven the high workload, we assume a good profit. We also expect clients fromother social categories, for services such as digital photo scanning and printing,identity services or text editing. For such orders the price will be higher, but stillunder the market average charge.

The competition in the region is quite low and we expect no majorhindrance in attracting customers, as the services we will offer are of higherquality and at a lower price. The productivity and the overall level ofprofessionalism are also emphasized.


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2. Project Definition.

2.1. Project Brief

Project title: NEXTPRINT Keywords: copy centre, paper services, imaging services, identity services. Overall objective: establishing a commercial centre offering copy, print and

binding services, mainly targeted towards students, along moreprofessional services such as photo editing and identity services.

Leaders and sponsors: Eugen Andreiadis, Andrei Iancu. Main sponsor: BERDthrough BCR

Duration: Total duration: 2.5 monthsProposed start date: 1 February 2005Required end date: 17 May 2005

Motivation: the addressing of a strong market opportunity in the lack of acopy centre at the specified location, coupled with a keen interest in officeequipment and technology.

Deliverables: reports, payment documents. Beneficiaries: targeted clients, NEXTPRINT company.

Strategy: keeping a very low price for the services offered and in the sametime maintaining a constant quality

Estimated cost: Initial estimated cost: 300.000.000 ROLMonthly operation costs: 55.500.000 ROL

Social and economical impact: the centre will not have significant influenceon the environment or the local community.

2.2. Objectives

The overall objective of the project is the establishment of a commercial centreoffering copy, print, binding and other related services to a student targetedclientele, along with more professional services such as photo editing or identityproducts for other clients, including . The objective will be reached by locating thecentre in the vicinity of two universities and a student campus, in a heavy trafficarea with a high visibility, and by fulfilling some other intermediary objectives,such as:

Keeping a very low price for student services, but at the same time Maintaining constant quality outputs and Maximising the equipment usage.

The end objective is the obtaining of profit, which will allow for:

Covering monthly expenses and


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Extending the equipment line and services.All these objectives can be synthesised in an organigram as shown in Figure 1.

2.3. Requirements

2.3.1. Company

This project implies the existence of the S.C. NEXTPRINT S.R.L. firm, having asobject of activity various paper and photo services, such as copying, printing and

scanning. The directors of the firm are Eugen Andreiadis and Andrei Iancu. Thiscompany will be further quoted as NEXTPRINT and is the legal entity throughwhich the activities, described in the present project, are run.

2.3.2. Headquarters

This subsection will discuss the details of the location (description, specifications,selection, principles of selection, local conditions, infrastructure, social-economicenvironment).

Considering the profile of the offered services, the location was selectedbased on the proximity of two universities (Dimitrie Cantemir Christian Universityand Nicolae Titulescu University). Next to the location there is also the Timpuri Noi

Figure 1. Organigram


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subway station and the intersection of four major avenues (Sincai Blvd., CaleaVacaresti, Splaiul Independentei and Nerva Traian Blvd.), providing heavy trafficand a high visibility.

Besides the fact that the centre is located in a residential area, an university

campus is also being built in the vicinity, which will provide additional labourforce and clientele.

The topography of the headquarters is illustrated in Fig. 2. The surface of thecentre will be of 20 square meters at a price of 10 euros/square meter monthlyrent. The total rent expense will be 200 euros/month.

Figure 2. Topography of the neighbouring area

The shops interior design style will be concentrated on functionality,productivity and efficiency, as shown in Figure 3. The costs for this operation areestimated at only 35.000.000 ROL, as we intend to purchase the furniture itemssecond hand. A detailed description of the furniture and its price is given in Table 1.


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Table 1. Workspace elements

Code Item Qty. Price (ROL/piece) Observations

A Chairs 2 1.500.000 For staff

B Chairs 2 1.000.000 For clients

C PC curvedworkbenches

2 6.500.000 For PCs.

D Counters 2 3.000.000 Storage and equipment suchas scanner and printer.

E Bookcases 2 1.000.000 For paper storage.

F Counter 1 4.000.000 For storage with lock. Thetop side is for clients: sorting.

G Curved counter 1 5.000.000 For supplies storage andequipment such as laminator,

trimmer etc.

H Tap 1 - For staff. Already installed.

Other expenses will cover the acquisition of various necessities such as lightbulbs, cleaning items (mop, bucket etc.), small carpets etc. (estimated cost:1.000.000 ROL).

Facilities such as sanitation (running water) and power (220V/50Hz) are also

provided.

Figure 3. Interior layout


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Social-economic environment is not important for this type of business, asthe services are quite affordable, appeal to a variety of persons and are notdiscriminatory in any circumstances. The centre will not have significant influenceon the environment and on the local community.

The area has a medium to low criminality. Nonetheless, for protection andsafety of the equipment, metal blinds will be installed (estimated price: 5.000.000ROL). The headquarters will also be protected by a police monitored alarm system.

The total cost of furnishing and other auxiliary items is approximated at41.000.000 ROL.

2.3.3. Equipment

Given the profile of the business, the equipment will consist of copiers, printers,PCs and other related equipment, which are described in Table 2.

Table 2. Technical Equipment

Equipment Model Technical Specifications Cost (ROL) Observations

Copier Minolta EP8010

81 ppm, A3/A4, sorter,duplex, large paper tray.

53.000.000 This professional copier isintended for the heavyduty workloads as can beseen from the technicalspecifications. Purchased

second hand.Copier MinoltaCF900

Digital, colour, A3/A4, 8ppm colour, 30 ppmcolour, PC interface.

60.000.000 This digital copier hasmultiple roles such ascolour printing, colourcopying and scanning (A3and A4). Purchasedsecond hand.

LaserPrinter

Minolta PP1300W

A4 monochrome,1200x1200, 16 ppm, 8 MBmemory, USB + parallel,48 MHz processor, 15.000pages/month, 150 pagefeeder.

7.000.000 The laser printer is anauxiliary piece ofequipment for printingmedium workloads, fromdigital medium.

InkjetPrinter

HPPhotoSmart7660

A4, photo, thermal inkjet,4800x1200 dpi, 12 ppmmonochrome, 15 ppmcolour, 16 MB, PCL3, USB +card reader (11 types),colour display, PhotoRETIV, 6 colours, 3000pages/month

6.400.000 The HP PhotoSmart isused for high qualitycolour prints from digitalcameras or other digitalmedia (CD-ROM, memorycards, scanned film etc.)as part of the digitalphoto service.

FilmScanner

UMAXPowerLook180

CCD, 1800 dpi, 42bit, USB,Adobe Photoshop LE

13.000.000 This device is used forscanning 35 mmnegatives and slides, aspart of the digital photo

service.Flatbedscanner

UMAXAstra 6700

CCD, A4, 2400 dpi, 48bit,USB 2.0, OCR

8.000.000 The flatbed scanner isused for scanning prints


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and text, as part of thedigital photo and textediting services.

PC Best Pentium 4, 2.4 GHz, 512DDR-RAM, 80 GB WesternDigital, CDRW Asus,

DVDROM Asus, mouse,keyboard, graphic tablet.

25.000.000 Because of the powerfulconfiguration, this PC isused for photo editing

and identity services.

PC SiemensScenic 600

Pentium III, 700 MHz, 512MB, 40 GB, CDRW, mouse,keyboard.

10.000.000 This PC is mainly used fortext editing, printing andtext and photo scanning.Purchased second hand.

Display SonyTrinitron

19, 1600x1200@70Hz, 0.24dot pitch, TCO 99

2 x4.000.000

This equipment is used inconfiguration with one ofthe PCs.

BindingMachine

Dahle75030

Capacity: 150 sheets,paper guide, built-inmargin control.

11.500.000 Heavy duty model withstraightforward effortlessoperation. Used for

bindings.ThermalBindingMachine

Attalus 200 200 pages capacity, built-in cover size guide,cooling tray.

5.000.000 Professional model usedfor thermal bindingdocuments with specialcovers.

Laminator AttalusNovo A3

A3 size, speed: 325mm/min, protectionagainst moisture, dirt,tear, cold lamination alsopossible.

4.000.000 Hot roller system used forprotecting documentswith the aid of pouches.

Trimmer GBC 3530 Cutting length 35 cm,capacity 3,5 mm (35sheets), automatic clampand security cover.

5.000.000 Apparatus used forstraight trimming.

RollTrimmer

GBC 360 A4, capacity 1 mm (10sheets).

2.000.000 Apparatus used forvarious shaped trimming.

SurgeProtection

InfosecPFS6Master TFR

Voltage 250V, intensity10A, power 2350W, peakvoltage 5000V, noisefilter, phone lineprotection.

2 x1.400.000

Devices used forprotecting the equipmentagainst power surges.

CashRegister

Rohnson Thermal printing. 9.000.000 Used for fiscal operations.

AlarmSystem

Viper 3000 Motion sensors, heatsensors, dual power: AC

and DC. Calls up to 5numbers.

10.000.000 Used for protection ofthe location.

Stationery - Stapler, perforator,dispenser etc.

2.000.000 Necessary officeequipment.

The projected cost for the equipment detailed in the above table is around243.000.000 ROL. Besides this equipment, we also take into account an initialstock of consumables, estimated to last more than a month, which are listed inTable 3.


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Table 3. Initial stock of consumables

Consumable good Price (ROL)

Copy paper A4 (500 sheets/pack) 50 x 100.000

Copy paper A3 (500 sheets/pack) 2 x 200.000

Cardboard (various thicknesses, colours, textures) 1.000.000

Transparent sheets A4 750.000

Laminator pouches 500.000

Thick paper A4 750.000

Special paper (photo, coloured, glossy) 1.000.000

Thermal binding covers (various thicknesses, formats) 500.000

Envelopes (personalized with company id) 500.000

Other necessities (paper clips, adhesive tape, staples etc.) 600.000

Ink and toner (various types) 4.000.000

The estimated cost of the consumables totals to 15.000.000 ROL.

Stock Management

Due to the intrinsic activity in the company, the stocks are classified according the

their importance (i.e., the rate of consumption) and not according to their value.Indeed, the less expensive items (standard copier paper) are also the mostimportant. Accordingly, the stock is divided into:

High consumption items (e.g., A4 copier paper) Medium consumption items (e.g., cardboards, transparent foils, bindings

etc.)

Low consumption items (e.g., photo paper, A3 copier paper, thermalbinding etc.)

The consumption rate varies proportionally to the demand for that item, andthus the accessibility is essential for the high consumption supplies. For example, alarge stock of copier paper will be located in the bookcases E near the copiers (seefor reference Figure 2). The bookcases are also useful for holding variousunfinished orders and other necessary items, such as cardboards, transparentsheets, coloured paper and A3 format paper.

Near the PC workbenches, in counter D, will be stored another stock ofsupplies useful for the specific activities run there (e.g., A4 paper, transparentfoils, cardboards, photo paper etc.), On the top of the curved counter G will beplaced the trimmer, binding machine and the laminator, and so the counter will

store the necessary consumables, such as cardboards, bindings, thermal bindingcases a.s.o. The major part of the supplies stock will be kept locked in counter F


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and will be available only to the executive staff. In this way we can prevent theexcessive use of supplies and maintain a necessary level of security. Otherexpensive items such as ink cartridges, copier toner and drums are also keptlocked in the same counter.

The initial stock of consumables is expected to last for about one week (inthe case of the high and medium consumption supplies) and about one month forthe rest. Depending on the specific demands, the stock will be replenished whennecessary.

The supplies are to be bought directly from producers or importers (whenpossible), of from major wholesalers, trying to obtain discounts for high orders.Attention will be given to the exact specifications for each type of consumable.

2.3.4. Services

The company offers a broad range of services, meant to suit a wide variety ofnecessities and needs in the domain that we operate. The services provided arepresented below:

Copying services: black and white / colour, A3 / A4, paper / cardboard /transparent sheets / stickers / thermal transfer paper;

Printing services: black and white / colour, inkjet / laser, various media(including CD printing), photo paper printing;

Photo services: film scanning (35 mm slide / negative), photo printing,photo editing and repair;

Binding: plastic / metal bindings, thermal binding; Laminating services: A3/A4; Scanning services: text (OCR) / photo / transparencies (35 mm film and

slide);

Cartridge refill: laser / inkjet, various models; Identity services: flyers / brochures / cards / id tags / logos / presentations /

catalogues / personalized sheets / product labels;

Text editing services: text editing / layout / translations; Promotional offers: various discounts for large orders / important orders

are delivered in an envelope with the NEXTPRINT logo;

Additional services: CDR / CDRW burning.

A detailed account of the services offered, their charged price and the netprofit in each case is given in the table below:


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Table 4. Services

Serviceclass

Service Price (ROL) Net profit(ROL)

A4 black and white 400 150A4 colour 8.000 5.000

A3 black and white 800 350

A3 colour 16.000 10.000

A4 Cardboard + 5.000 + 1.500

Copying

A4 Transparent sheets + 15.000 + 5.000

A4 black and white / laser 1.000 750

A4 colour / laser 8.000 5.000

A3 black and white / laser 2.000 1.500

A3 colour / laser 16.000 10.000

A4 Cardboard + 3.500 + 1.500

Printing

A4 Transparent sheets + 15.000 + 5.000

Film scanning (per 1 frame) 15.000 15.000

A4 Photo scanning 10.000 10.000

A4 Photo printing photo paper 25.000 15.000

Photo

Photo editing and repair (per hour) 180.000 180.000

Plastic bindings (diam. 6 51 mm) 12.000 35.000

10.000 30.000

Binding

A4 Thermal binding 50.000 25.000

Laminating A4 pouches 10.000 5.000

A3 pouches 20.000 10.000

A4 Text scanning 8.000 8.000

A3 Text scanning 16.000 16.000

A4 Colour scanning 12.000 12.000

A3 Colour scanning 24.000 24.000

Scanning

OCR (per sheet) + 10.000 + 10.000

Identity Per hour of work 230.000 230.000

Textediting

Per sheet 75.000 75.000

CDR/CDRW burning (per CD) 7.500 7.500Additional

CDR burning (CD included, per CD) 20.000 9.500


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2.3.5. Labour force

The major source of labour force for the centre will be provided by the near-byuniversities. Additional labour force will be available from the local residents.

The qualifications required from the employees will be mainly PC skills(Windows, Microsoft Office, Adobe Photoshop, Adobe Illustrator, Corel Draw) andcreativity. Preferably the employee should have the know-how for copiermaintenance. As the main target as employees will be students, college degreewill not be required.

Minimal training will be required for the new employees on using thecopiers, scanners and other specific equipment (laminator, binders). Additionaltraining will be provided for better understanding of extended functions of

equipment and specific internal procedures.

The employee selection will be made considering the persons social traitssuch as: teamwork, presence, tact.

For the beginning, besides the firm directors (2, which also work in thepremises), there will be permanently hired another employee for copier duty. Inthe exams period, when we expect heavier workloads, we will temporarily employa second person to handle the supplementary clientele.

The predicted wages will be:

Directors: 7.000.000 ROL (each) Employee: 5.500.000 ROL

The working hours will start at 8.00 am and end at 7.00 pm during workdays, and will start at 9.00 am and end at 3.00 pm on Saturdays. The centre will beclosed on Sundays and national holidays. In case the workload exceeds theallocated time, the centre will work overtime until the completion of the orders.The employees will be paid for working overtime.

2.3.6. Financials

As detailed in the sections above, the total initial costs for this project include:

- Equipment acquisition costs, estimated at 243.000.000 ROL. Includes the costsfor main equipments such as copiers, PCs, printers and scanners and alsoadditional equipment such as binding machine, trimmer, cash register andalarm system.

- Initial stock of supplies, approximated at 15.000.000 ROL. The highconsumption items are estimated to last a month, while the rest of the supplies

will have a higher life time.


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- Office facilities, estimated at 41.000.000 ROL. Include furnishing costs,purchase of other necessary items and the installing of metal blinds forprotection.

All this totals to an initial cost of 300.000.000 ROL, or the equivalent of

7.300 euros.

We analysed the option of opening a credit line of 10.000 euros, which willcover all the initial costs and the first months costs, allowing also for the existenceof a reserve fund in case of necessity (impact of major risks, a.s.o.). Theprogramme chosen is founded by the European Bank for Reconstruction andDevelopment through the Romanian Commercial Bank and is intended specificallyto Small and Medium Enterprises. The eligibility conditions are fully met. The loanperiod is of 4 years with an yearly interest rate of 8%. The bank commissions totalto 2%. A maximum grace period of 6 months is granted, depending on the type

of project.

Under these specific conditions, the monthly reimbursement adds up to9.200.000 ROL.

The monthly costs take into account the following:

- Location rent (20 square meters at a price of 10 euros/sqm), estimated at10.000.000 ROL.

- Stock replenishment, estimated at 7.000.000 ROL.- Equipments spare parts, 1.000.000 ROL.- Technical assistance, 200.000 ROL.- Promotional expenses, 300.000 ROL.- Electrical bill, 2.000.000 ROL.- Mobile phone bill, 1.000.000 ROL.- Wages, estimated at 19.500.000 ROL.- Accounting services, 5.000.000 ROL.- Bank loan payments of 9.200.000 ROL.

All the above costs total to a monthly expense of 55.500.000 ROL.

The budget expenses for the next two years are detailed in the table below:

Table 5. Budget Forecast

Total(First and second year)

Estimations (ROL)

First yearEstimation

(ROL)

Second yearEstimation

(ROL)

A. Direct expenses - total 789.600.000 394.800.000 394.800.000

A1. Personnel expenses 468.000.000 234.000.000 234.000.000

A.1.1. Permanent personnel wages 468.000.000 234.000.000 234.000.000

A.1.2. Additional personnel wages 0 0 0

A.1.3. Other expenses 0 0 0

A.2.1. Equipment expenses 192.000.000 96.000.000 96.000.000

a). Equipments 24.000.000 12.000.000 12.000.000


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b). Consumables 168.000.000 84.000.000 84.000.000

A.2.2.Third-party services 129.600.000 64.800.000 64.800.000

a). Legal services 120.000.000 60.000.000 60.000.000

b). Promotion expenses 7.200.000 3.600.000 3.600.000

c). Interior design 2.000.000 1.000.000 1.000.000

e). Technical assistance 400.000 200.000 200.000

B. Indirect expenses - total 532.800.000 266.400.000 266.400.000B.1. Rent 240.000.000 120.000.000 120.000.000

B.2. Facilities 48.000.000 24.000.000 24.000.000

B.3. Loan reimbursement 220.800.000 110.400.000 110.400.000

B.4. Phone bill 24.000.000 12.000.000 12.000.000

C. Acquisitions 299.000.000 299.000.000 0

C.1. Furniture, equipments, officeutilities

221.600.000 221.600.000 0

C.2. PC equipment and peripherals 77.400.000 77.400.000 0

TOTAL (A+B+C) 4.331.400.000 2.315.200.000 2.016.200.000

2.4. Analyses

2.4.1. Market Analysis

A. SWOT analysisBy analyzing the market of the paper and photo services in the targeted area, wehave come to the following SWOT analysis:

Strengths:

The location near two private universities, a subway station and theintersection of four major avenues providing heavy traffic and highvisibility.

Fast delivery, high quality and low price of services, along with the personalinvolvement of the staff.

Extended work hours depending on orders, ability to meet deadlines.

Weaknesses:

Because the company is small and newly created, there are insufficientfunds for a proper advertising strategy and campaign, thus the consumerawareness is low.

The profit is variable, due to the cyclic nature of the activity; the maximumpeak is before and during the exams period.

Low budget available for development. The requirement to reimburse a loan.

Opportunities:

Near the location of the centre, a student campus is being built, which willdrastically increase the number of clients.


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Fast growth possibility due to the traffic generated by the near-byuniversities and subway station.

Threats:

Other market competitors, as described in Section D.

B. Promotion

The promotion will be limited by the initial budget only to distribution of flyers inhigh traffic areas, around the universities and student campus, advertisementsand notices posted inside the student campus and the universities, on highvisibility public areas, in local newspapers and on the Internet.

The company will also be present on the Internet with a functional website.

The company logo is presented below, in Fig. 4.

Figure 4. The company logo

For large orders there will be available promotional offers, in the form ofdiscounts and delivery in envelopes with the NEXTPRINT identity.

C. Clients

The copy and print services are targeted towards students, and are priced belowthe market minimum price. The professional services (photo editing, identityservices) are targeted towards a more demanding clientele, and have somewhathigher prices, but still under the market average charge. Along the regularclientele, the professional services are expected to appeal to corporate clientelealso.

Estimations of the service demand and the expected monthly profit are

represented in Table 6.

Table 6. Service demand and the profit per month

Serviceclass

Service Sold qty. Net profit peritem (ROL)

Net profit perservice (ROL)

A4 black and white 25.000 150 3.750.000

A4 colour 500 5.000 2.500.000

A3 black and white 300 350 105.000

A3 colour 50 10.000 500.000

Copying

A4 Cardboard 100 + 1.500 150.000


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A4 Transparent sheets 100 + 5.000 500.000

A4 black and white / laser 5.000 750 3.750.000

A4 colour / laser 500 5.000 2.500.000

A3 black and white / laser 100 1.500 150.000

A3 colour / laser 25 10.000 250.000

A4 Cardboard 250 + 1.500 375.000

Printing

A4 Transparent sheets 100 + 5.000 500.000

Film scanning (per 1 frame) 150 15.000 2.250.000

A4 Photo scanning 100 10.000 1.000.000

A4 Photo printing photo paper 300 15.000 4.500.000

Photo

Photo editing and repair (per hour) 6 180.000 1.080.000

Plastic bindings (diam. 6 51 mm) 375 10.000 30.000

7.500.000Binding

A4 Thermal binding 50 25.000 125.000

Laminating A4 pouches 100 5.000 500.000

A3 pouches 10 10.000 100.000

A4 Text scanning 50 8.000 400.000

A3 Text scanning 5 16.000 80.000

A4 Colour scanning 50 12.000 600.000

A3 Colour scanning 5 24.000 120.000

Scanning

OCR (per sheet) 40 + 10.000 400.000

Identity Per hour of work 75 230.000 17.250.000

Textediting

Per sheet 50 75.000 3.750.000

CDR/CDRW burning (per CD) 50 7.500 375.000Additional

CDR burning (CD included, per CD) 50 9.500 475.000

The monthly revenue is estimated around 56.250.000 ROL, considering theprojections presented in the above table.

D. Competition

The market competition can be divided in two, according to the geographicalpositioning of the respective players.

a) Market players in the vicinity of the centre:

one copy centre inside the university. Low threat, their services areexpensive.


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one copy stand located inside the subway station. Low threat, it offers onlycopying services at a moderate price.

b) Other similar copy centres, offering related or more complex services, located inother areas than the immediate vicinity:

OCE: their main services revolve around plotting, they have a very wellestablished clientele among the students at the Architecture Institute. Theyalso offer printing, copying and scanning services, but at a higher price.

Copy & Print Center: this centre represents the true competition in thismarket niche, as it offers quite similar services and is located centrally, inthe vicinity of the Economic Studies Academy. It has a very well establishedposition among the students at ESA. Medium threat, their location is toofar away from NEXTPRINTs to exert a strong influence.

E. Conclusions

Considering the low competition, the high demand of this type of service in thearea and the adequate location, NEXTPRINT shall be able to establish a fair shareof the market in a short period of time, even if lacking a more intensivemarketing campaign.

2.4.2. Risk Analysis

The risk assessment was done taking into account as many factors as possible thatcould influence the project and prevent its completion and further development.Each risk was ranked according to its probability of occurrence (on a scale of 1 to9, where 9 stands for a high probability) and impact on the project (high, mediumand low).

High Significant effects on the project schedule and costs.Must be monitored regularly and carefully.

Medium Less serious effect on the schedule.

Some effect on costs.Monitored regularly.Low Not expected to have any serious effect on the project.

Reviewed regularly for ranking and monitoring.

The risks are classified into technical, financial, legal, staff related and otherrisks. A detailed analysis is presented below.


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A. Technical risksDescription Ranking Consequences Strategy

The equipmentdoes not meet

the requiredperformanceand qualitystandards.

Probability:2

Impact:High

- Test failure on run-up- Breakdowns

- Not enough capacity- Low utilization factor- Overall performance

decrease- Quality decrease

- thorough equipment control onacquisition

- purchasing quality new andsecond hand equipment

Equipmentfailure(accidentally oras a result ofwear)

Probability:4Impact:High

- partial / total cease ofactivity

- schedule delays oforders

- products with warranty (evensecond hand)

- hiring of person with properknow-how on equipmentmaintenance and repair (copiers,PCs, printers) in case of minordefects.

- continuous monitoring ofequipment- protection against power surges

using adequate devices- the acquisition of equipment is

preceded by a rigorous analysisof the market offers and benefits

- (in case of accidental or staffnegligence failure): ensuringthorough training of staff

Destruction /deterioration ofclients

materials

Probability:3Impact:

Medium

- payment ofcompensation to theclient

- ensuring that the staff is trained- the compensation of the client is

deducted from the responsible

employees wageDepletion ofconsumablesstock

Probability:3Impact:Low

- total / partialcessation of activity

- schedule delays

- efficient stock management andmonitoring

Inadequateconsumablesspecifications

Probability:1Impact:Medium

- poor quality outputs- equipment damaging- delays

- careful purchase of supplies- running a specifications check

B. Financial Risks

Description Ranking Consequences Strategy

Impossibility offinding financing


- projectcompromising

- assuming a low budget,resulting in a low creditrequirement

- exploring of all financingpossibilities

- creation of a economicallyviable project, which couldattract investors

Impossibility of

bank loanpayment

Probability:

3Impact:High

- bankruptcy - assuming a low budget,

resulting in low payments- efficient marketing, resulting in

profits


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- finding co-financers to back theproject

Under or over -evaluated costestimations


- budget over-run- insufficient resources

- thorough cost and profitanalysis and correct estimation

- efficient cost management andmarketing

C. Legal Risks


Unlicensed PCsoftware


- fines- imprisonment

- gradual license acquiring for theimportant PC software

D. Staff related risks


Lack of tact andprofessionalism


- client loss- damaging of

company image

- careful hiring of qualifiedpersonnel, adapted to thecompany requirements.

Insufficientqualification,incompetence,lack of experience

and training


- client loss- equipment and

materials damaging- work related

accidents- damaging of

company image


Un-effectiveteamwork


- conflicts betweenemployees


Equipment andsupplies stealing


- shortage of suppliesand equipment

- motivating wage- various benefits and incentives- rigorous control of supplies- equipment protection

E. Other risks


Schedule delays Probability:6Impact:Medium

- clients loss- damaging of

company image

- rearranging the workload inorder to fulfil an order

- put more effort and additionalresource into the job

- lower the scope and/or qualityof the results demanded (notrecommended)

Theft / damagingof equipment;headquarters

Probability:5Impact:

- temporary cessationof activity

- supplementary

- securing the headquarters(metal blinds, police monitoredalarm system)


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21

destruction High expenses for repairs /acquisitions

- protection of valuableequipment and supplies

- theft insurance

Fire Probability:3Impact:

High

- temporary /permanent cessationof activity

- high expenses forrepairs / acquisitions

- respecting the safetyregulations

- presence of fire extinguishers

- fire insurance

Natural risks:earthquakes,floods etc.


- temporary /permanent cessationof activity

- high expenses forrepairs / acquisitions

- ignored

2.4.3. Financial Analysis

A. Preliminaries

As detailed in Section 2.3.6. the initial costs for this project are of 300.000.000ROL, and the monthly expenses add up to 55.500.000 ROL. The monthly revenuesare of 56.250.000 ROL, as was estimated in Section 2.4.1. Paragraph C. The netprofit per month is of 750.000 ROL, and is predicted to remain at a low value forthe next 4 years, until the bank loan reimbursement is completed. A budgetforecast for the next two years is also presented in Section 2.3.6.

B.

Indexes

A few financial indexes are computed below.

VNA (actualised net revenue) computed for the first two years (millionsROL):

6801501

00000096

1501

00000096000000300

1501

000000675

1501

000000675

2121=

++

+

+

++

+=

).(

..

).(

....

).(

..

).(

..VNA

Interpretation: VNA > 0 so the project can be accepted.

RS (Long Debt to Equity) per one year:

420000000675000000300

000000410.

....

..RS =

+=

MP (Profit Margin On Sales)

720100000500103

000750.*

..

.MP ==

Res (Retum on Equity / Net Worth)

00250000000300

000750 ...

.sRe ==


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22

3. Project Planning.

3.1. PERT Analysis

The tasks required for the execution of the project are as follows:

Table 7. Tasks List

ID Task Name Duration Start Finish Pred

1 Business plan definition 16 days Tue 01.02.05 Tue 22.02.05

2 Market Analysis 13 days Tue 01.02.05 Thu 17.02.05

3 Define the opportunity addressed 1 day Tue 01.02.05 Tue 01.02.054 Describe the market and the new business 1 day Wed 02.02.05 Wed 02.02.05 3

5 Create market analysis plan 1 day Thu 03.02.05 Thu 03.02.05 4

6 Interview owners of similar businesses 5 days Fri 04.02.05 Thu 10.02.05 5

7 Assess market size and stability 2 days Fri 11.02.05 Mon 14.02.05 6

8 Identify competition 2 days Tue 15.02.05 Wed 16.02.05 7

9 Identify target market niche 1 day Thu 17.02.05 Thu 17.02.05 8

10 Identify Needed Materials and Supplies 3 days Fri 18.02.05 Tue 22.02.05

11 Identify required equipments 1 day Fri 18.02.05 Fri 18.02.05 9

12 Identify needed consumables 1 day Mon 21.02.05 Mon 21.02.05 11

13 Estimate the equipment costs 1 day Tue 22.02.05 Tue 22.02.05 12

14 Assess the risks 1 day Tue 22.02.05 Tue 22.02.05 12

15 Business Plan Development 12 days Tue 22.02.05 Wed 09.03.05

16 Describe the objectives 1 day Tue 22.02.05 Tue 22.02.05 12

17 List assumptions 1 day Wed 23.02.05 Wed 23.02.05 16

18 Make SWOT analysis 1 day Thu 24.02.05 Thu 24.02.05 17

19 Estimate sales volume 1 day Fri 25.02.05 Fri 25.02.05 18

20 Forecast operating costs 1 day Mon 28.02.05 Mon 28.02.05 19

21 Establish pricing strategy 1 day Tue 01.03.05 Tue 01.03.05 20

22 Forecast revenue 1 day Wed 02.03.05 Wed 02.03.05 21

23 Develop startup plan 2 days Thu 03.03.05 Fri 04.03.05 22

24 Develop sales and marketing strategy 1 day Mon 07.03.05 Mon 07.03.05 23

25 Reassess the risks 2 days Tue 08.03.05 Wed 09.03.05 24

26 Business Plan Execution 63 days Fri 18.02.05 Tue 17.05.0527 Choose a location 1 day Thu 10.03.05 Thu 10.03.05 11;25

28 Establish Business Structure 40 days Fri 18.02.05 Thu 14.04.05

29 Choose a name and identify implications 1 day Fri 18.02.05 Fri 18.02.05 9

30 Choose a Bank 5 days Fri 11.03.05 Thu 17.03.05

31 Establish accounts 4 days Fri 11.03.05 Wed 16.03.05 27;29

32 Establish line of credit 1 day Thu 17.03.05 Thu 17.03.05 31

33 Choose legal representation 1 day Thu 17.03.05 Thu 17.03.05 31

34 Solving Administrative Aspects 20 days Fri 18.03.05 Thu 14.04.05

35 Set up the accounting system 2 days Fri 18.03.05 Mon 21.03.05 33

36 Obtain the licenses and authorizations 12 days Tue 22.03.05 Wed 06.04.05 35

37 Obtain needed insurance 4 days Thu 07.04.05 Tue 12.04.05 36

38 Establish security plan 2 days Wed 13.04.05 Thu 14.04.05 3739 Develop Marketing Program 4 days Fri 18.03.05 Wed 23.03.05

40 Establish an advertising program 2 days Fri 18.03.05 Mon 21.03.05 32


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23

41 Develop a logo 1 day Tue 22.03.05 Tue 22.03.05 40

42 Develop promotional materials 1 day Wed 23.03.05 Wed 23.03.05 41

43 Provide Physical Facilities 15 days Fri 15.04.05 Thu 05.05.05

44 Location renting 2 days Fri 15.04.05 Mon 18.04.05 38;41

45 Provide furniture and equipment 5 days Tue 19.04.05 Mon 25.04.05 44

46 Equipment installing 1 day Tue 26.04.05 Tue 26.04.05 45

47 Select computer hardware 1 day Wed 27.04.05 Wed 27.04.05 46

48 Install computer software 1 day Thu 28.04.05 Thu 28.04.05 47

49 Testing the equipment 1 day Fri 29.04.05 Fri 29.04.05 48

50 Acquiring other utilities 3 days Mon 02.05.05 Wed 04.05.05 49

51 Move in 1 day Thu 05.05.05 Thu 05.05.05 50

52 Provide Staffing 8 days Fri 06.05.05 Tue 17.05.05

53 Interview and test candidates 5 days Fri 06.05.05 Thu 12.05.05 51

54 Hire staff 1 day Fri 13.05.05 Fri 13.05.05 53

55 Train staff 2 days Mon 16.05.05 Tue 17.05.05 54

56 Start up the business 0 days Tue 17.05.05 Tue 17.05.05 55

These tasks can be organized in a logical diagram according to their dependenciesas shown in the PERT diagram (Figure 5).

3.2. Gantt Chart

The project is due to start on the 1 st February 2005 and its duration is estimated at2.5 months. The expected end date is on the 17th May 2005 which will coincidewith the start of the exam period generating a heavy workload. The details of the

plan are presented in the Gantt Chart (Figure 6).

3.3. Future Development

The future plans and their expected consequences and effects are discussed inTable 8.

Table 8. Future Actions

Action EffectPurchase of another heavy dutycopier (second hand, such as aCanon MP 6050 at a cost of45.000.000 ROL)

Extending the centre copying capacity Faster delivery of services Backup copier (in case of other equipment failure

Acquisition of software licenses Minimization of legal risks

Installing an air conditioningunit

Increase in comfort of clients and staff

Renting additional space Expanding the usable workspace Possibility of increasing the number of massive

equipments used (copiers, laser printers)

Purchase of new equipment fordocument binding andmanipulation

Extending the range of provided services


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4

5

6

7

8

9

11

12

13 14 16

17

18

19

20

21

22

23

24

25

27

29

31

32 33

35

36

37

38

40

41

42

44

45

46

47

48

49

50

51

53

54

55

56

3

Figure 6. PERT Diagram 24


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ID

TaskName

Duration

1

Businessplandefinit

ion

16days

2

MarketAnalysis

13days

3

Definetheopportunityaddressed

1day

4

Describethem

arketandthenewbusiness

1day

5

Createmarketanalysisplan

1day

6

Interviewowne

rsofsimilarbusinesses

5days

7

Assessmarket

sizeandstability

2days

8

Identifycompetition

2days

9

Identifytargetm

arketniche

1day

10

IdentifyNeededM

aterialsandSupplies

3days

11

Identifyrequiredequipments

1day

12

Identifyneeded

consumables

1day

13

Estimatetheeq

uipmentcosts

1day

14

Assesstherisks

1day

15

BusinessPlanDevelo

pment

12days

16

Describetheobjectives

1day

17

Listassumptions

1day

18

MakeSWOTanaly

sis

1day

19

Estimatesalesvolu

me

1day

20

Forecastoperating

costs

1day

21

Establishpricingstrategy

1day

22

Forecastrevenue

1day

23

Developstartuppla

n

2days

24

Developsalesand

marketingstrategy

1day

25

Reassesstherisks

2days

26

BusinessPlanExecu

tion

63days

27

Choosealocation

1day

28

EstablishBusines

sStructure

40days

29

Chooseanameandidentifyimplications

1day

30

ChooseaBan

k

5days

31

Establishaccounts

4days

32

Establishlineofcredit

1day

33

Chooselegalrepresentation

1day

34

Solvingadmin

istrativeaspects

20days

35

Setuptheaccountingsystem

2days

36

Obtainthelicensesandauthorisations

12days

37

Obtainneededinsurance

4days

38

Establishsecurityplan

2days

39

DevelopMarketingProgram

4days

40

Establishanadvertisingprogram

2days

41

Developalogo

1day

42

Developpromotionalmaterials

1day

43

ProvidePhysicalFacilities

15days

44

Locationrenting

2days

45

Providefurnitureandequipment

5days

46

Equipmentinstalling

1day

47

Selectcompute

rhardware

1day

48

Installcompute

rsoftware

1day

49

Testingtheequ

ipment

1day

50

Acquiringother

utilities

3days

51

Movein

1day

52

ProvideStaffing

8days

53

Interviewandtestcandidates

5days

54

Hirestaff

1day

55

Trainstaff

2days

56

Startupthebusine

ss

0days

M

TW

T

F

S

S

M

TW

T

F

S

S

M

T

W

T

F

S

S

M

T

W

T

F

S

S

M

T

W

T

F

S

S

M

TW

T

F

S

S

M

TW

T

F

S

S

M

T

W

T

F

S

S

M

TW

T

F

SS

M

TW

T

F

S

S

M

TW

T

F

S

S

M

T

W

T

F

S

S

M

T

W

TF

S

S

M

T

W

T

F

S

S

M

TW

T

F

S

S

M

TW

31Jan'05

07Feb

'05

14Feb'05

21Feb'05

28Feb'05

07

Mar'05

14Mar'05

21Mar'05

28Mar'05

04Apr'05

11Apr'05

18Apr'05

25Apr'05

02May'05

09May'05

16May'

Task

CriticalTask

Progress

Milestone

Summary

RolledUpTask

RolledUp

CriticalTask

RolledUp

Milestone

RolledUpProgress

Split

ExternalTasks

ProjectSummary

GroupBySummary

Deadline

Figure 7. Gantt Chart


26/27


26

4. Conclusions.

The aim of this project is to establish a commercial centre offering paper andidentity services to students and other more professional clients. The project isfinanced by a bank loan which must be reimbursed in four years, covering all theequipment costs and other expenses. The monthly revenues are sufficient to coverall the expenses allowing for a small profit. The duration of the project is of 2.5months with an expect end date of the 15th of May 2005. The analyses concludethat the project is viable and that the market can accept this type of business.


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This document was prepared as a project for the Project Management Course.

Submission Date: May 2004Contact Information: [email protected]; [email protected]

Documents

photocopier feasibility study 56