FEASIBILITY FACTORS & APPRAISAL TESTS FOR PROJECT IDEAS & BUSINESS

VENTURES
Some major points to e !ept in min" #or $ritin% PROJECT C&ARTER' BUSINESS CASE
JUSTIFICATION' PROJECT FRA(E)OR*+,
Start with the written presentation of your own bad idea
Support the bad idea with the set of pre-conditions, presumptions & constraints considered
Convert your own bad idea into Business Opportunity
Support the conversion with the help of conducting appraisal tests & factorial analysis under the
Feasibility Study Model ! Schematic "iagram
Can highlight the integrities of the pro#ect with the help of S$O%, &'S%, S%&, '%O& !nalysis etc(
!lso re)uired to frame &*s of Mar+eting, &romotional Strategies & %arget !udience
Additional efforts would be definitely credited
Fa-ets o# Proje-t Ana./sis 0PROJECT APPRAISAL TESTS1
!( Mar+et !nalysis ,M!-.'% !&&-!/S!0 %'S%1
B( %echnical !nalysis ,%'C23/C!04%'C23O0O5/C!0 !&&-!/S!0 %'S%1
C( Financial !nalysis ,F/3!3C/!0 !&&-!/S!0 %'S%1
"( 'conomic !nalysis ,'CO3OM/C !&&-!/S!0 %'S%, basically SCB!1
'( 'cological !nalysis ,'CO0O5/C!04'36/-O3M'3%!045'O5-!&2/C!0 !&&-!/S!0 %'S%1
Fa-toria. Ana./sis 0OT&ER FACTORS INTER)OVEN IN PROJECT APPRAISAL TESTS1
7( 0egal factors
8( Cultural factors
9( 'thical factors
:( &olitical factors
;( 2uman aspects & 3on-human aspects ,-esource matri<4 input-output transactional matri<1
A. (ar!et Ana./sis- Mar+et !nalysis is concerned primarily with two )uestions
7( $hat would be the aggregate demand for the proposed product4service in the future=
1
8( $hat would be the mar+et share of the pro#ect under appraisal=
%o answer the above )uestions, the mar+et analyst re)uires a wide variety of information and appropriate
forecasting methods( %he +inds of information re)uired are
Consumption trends in the past and the present consumption level
&ast and present supply position
&roduction possibilities and constraints
/mports and e<ports
Structure of competition
Cost structure
'lasticity of demand
Consumer behaviour, intentions, motivations, attitudes, preferences, and re)uirements
"istribution channels and mar+eting policies in use
!dministrative, technical, and legal constraints
A2 Te-3ni-a. Ana./sis- !nalysis of the technical and engineering aspects of a pro#ect needs to be done
continually when a pro#ect is formulated( %echnical analysis see+s to determine whether the
prere)uisites for the successful commissioning of the pro#ect have been considered and reasonably
good choices have been made with respect to location, si>e, process, etc( %he important )uestions
raised in technical analysis are
$hether the preliminary tests and studies have been done or provided for=
$hether the availability of raw materials, power, and other inputs has been established=
$hether the selected scale of operation is optimal=
$hether the production process chosen is suitable=
$hether the e)uipment and machines chosen are appropriate=
$hether the au<iliary e)uipments and supplementary engineering wor+s have been provided for=
$hether provision has been made for the treatment of effluents=
$hether the proposed layout of the site, buildings, and plant is sound=
$hether wor+ schedules have been realistically drawn up=
$hether the technology proposed to be employed is appropriate from the social point of view=
B2 Finan-ia. Ana./sis ? Financial !nalysis see+s to ascertain whether the proposed pro#ect will be
financially viable in the sense of being able to meet the burden of servicing debt and whether the
proposed pro#ect will satisfy the return e<pectations of those who provide the capital( %he aspects
which have to be loo+ed into while conducting financial analysis
/nvestment outlay and cost of pro#ect
Means of financing
Cost of capital
&ro#ected profitability
Brea+-even point
/nvestment worthiness #udged in terms of various criteria of merit
&ro#ected financial position
0evel of ris+
2
C2 E-onomi- Ana./sis- 'conomic !nalysis, also referred to as social cost benefit analysis ,SCB!1, is
concerned with #udging a pro#ect from the larger social point of view( /n such an evaluation the focus
is on the social costs and benefits of a pro#ect which may often be different from monetary costs and
benefits( %he )uestions sought to be answered in social cost benefit analysis are
$hat are the direct economic benefits and costs of the pro#ect when measured in terms of shadow
,efficiency1 prices and not in terms of mar+et prices=
$hat would be the impact of the pro#ect on the distribution of income in the society=
$hat would be the impact of the pro#ect on the level of savings and investment in the society=
$hat would be the contribution of the pro#ect towards the fulfillment of certain merit wants li+e self-
sufficiency, employment, and social order=
D2 E-o.o%i-a. Ana./sis- /n recent years, environmental concerns have assumed a great deal of
significance- and rightly so( 'cological analysis should be done particularly for ma#or pro#ects which
have significant ecological implications ,li+e power plants and irrigation schemes1 and environment-
polluting industries ,li+e bul+ drugs, chemicals, and leather processing1( %he +ey )uestions raised in
ecological analysis are
$hat is the li+ely damage caused by the pro#ect to the environment=
$hat is the cost of restoration measures re)uired to ensure that the damage to the environment is
contained within acceptable limits=
*e/ Iss4es in Proje-t Ana./sis
(ar!et Ana./sis
Te-3ni-a. Ana./sis
Finan-ia. Ana./sis
E-onomi- Ana./sis
E-o.o%i-a. Ana./sis
Feasii.it/ St4"/+ A S-3emati- Dia%ram
3
Potential
market
Sensible
Choices
Technical
Viability
Benefts and Costs in
Shadow Prices
Other
Impacts
Return
Risk
Enironmental
dama!e
Restoration
"easures
"arket
Share
$e have e<amined the +ey facets of pro#ect analysis( %he feasibility study is concerned with planning,
analysis, selection ,evaluation1, and financing, and involves mar+et, technical, financial, economic, and
ecological analysis( %he schematic diagram of the feasibility study is shown under
(Prof. Sheena Manchanda)
4
5eneration o# I"eas
Initia. S-reenin%
Is t3e I"ea Prima Fa-ie Promisin%6
P.an Feasii.it/ Ana./sis
Con"4-t (ar!et
Ana./sis
Con"4-t Te-3ni-a.
Ana./sis
Con"4-t Finan-ia. Ana./sis
Con"4-t E-onomi- an" E-o.o%i-a. Ana./sis
Is t3e Proje-t )ort3$3i.e6
Prepare F4n"in% Proposa.
Terminate
Terminate
#es
#es
$o
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