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Feasibility Study, Chapter 3 ..

The document discusses the technical feasibility analysis portion of a feasibility study. It addresses questions like availability of materials, equipment, and labor. It also covers initial investment costs, manufacturing costs, and the level of analysis required based on project size and complexity. Technical feasibility analysis examines material sources, site location, engineering and technology needs, human resources, and answers questions about production requirements and costs.

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Mahmoud Tonopy
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588 views6 pages

Feasibility Study, Chapter 3 ..

The document discusses the technical feasibility analysis portion of a feasibility study. It addresses questions like availability of materials, equipment, and labor. It also covers initial investment costs, manufacturing costs, and the level of analysis required based on project size and complexity. Technical feasibility analysis examines material sources, site location, engineering and technology needs, human resources, and answers questions about production requirements and costs.

Uploaded by

Mahmoud Tonopy
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Feasibility Study Chapter (3)

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Feasibility Study Chapter (3)
Technical analysis answer the following question
Is the project applicable from the technical prospective?
It provides estimations for the project cost drivers
1- initial investment: land, buildings, machines …..etc.
2- manufacturing cost: materials, direct labour, indirect cost
3- starting work cost: learning cost, preparing,….etc.

The depth of technical analysis depends on:


• Project size
• Product or service technology available
• Product complexity
• Number of the technical alternatives
• The required accuracy degree

Technical feasibility study :

Material and supplies

Location , site and environment

Engineering and technology

Human resources

Technical feasibility study answers the following questions

 Are enough material available of correct quality when needed for year round production ?
 Is the cost of raw material satisfactory ?
 Is the correct size and type of equi[ment available for the expected production level and
at a reasonable cost ?
 Are maintenance and repair costs affordable ?
 Are distribution procedures to retailer s or other sellers established ?
 Is a suitable building available and what modifications are needed ?
 Are services ( fuel , water , electricity ) available ?
 Are trained workers available and are their salaries available ?

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Feasibility Study Chapter (3)
1-Characteristics of raw material and factory supplies :

Specify list sources of material and inputs , classified into material

Processed industrial material , components , auxiliary material , factory supplies & utilities

2-supply program , you have to study the following :

Location , site and Environment

Includes the following

Re-selection , including if appropriate . an estimate of the cost of land

Preliminary environment impact assessment

Location:

Site :

Local conditions

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Feasibility Study Chapter (3)
Engineering and Technology

Technology and Equipment include the following

1-technology and processes that can be adopted


2-technology and description and forecast
3-Environmental impacts of technology
4-Rough estimate of costs of local and foreign technology
5-rough layout of proposed equipment ( major components )
- Production Equipment
- Auxiliary Equipment
- Service Equipment
- Spare parts , wear and tear parts , tools

Technology :

Equipment

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Feasibility Study Chapter (3)
Civil Engineering works include the following

Human Resources :

Estimated Human Resources requirements


Estimal annual human resources costs
Labor :
List and describe labor force
Describe skills and availability
State annual cost of labor at nominal feasible capacity , subdivide into production labor
(variable) and non production labor (fixed
Staff :
List and describe staff , show structure on manning tables
State annual staff cost
Capital Expenditures (CAPEX)

Are expenditures creating future benefits .

Is incurred when a business spends money either to buy fixed assets or to add value of an
existing fixed asset with a useful life extending beyond the taxable year

Includes :

- Acquiring fixed and some cases , intangible assets


- Repairing an existing asset so as to improve useful life
- Upgrading an existing asset
- Preparing an asset to be used in business
- Starting or acquiring a new business

Operational Expenditures (OPEX)

Ongoing cost for running a product , business or system


Includes the following
-license fees -maintenance and repairs -advertising
-supplies -office expenses - legal fees
- utilities - insurance -property tax
-travel and vehicle expenses

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Feasibility Study Chapter (3)
Example :
Suppose you have the following data related to chairs production project

Estimate the working capital according to monthly cash flow cycle ?


Solution

The required cash for working capital is the highest value which is 150

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