There is a widespread misconception that a feasibility study is nothing more than a condensed version of a business plan with a significantly reduced or absent marketing section. In fact, this is not true. What then is the feasibility study for the project? An example in this article.
The essence of the term
The feasibility study, or feasibility study, is a printed confirmation of the technical viability of the project and its feasibility from an economic point of view. Such a formulation seems logically complete and understandable. A feasibility study is an idea reflected on paper.
For clarity, the term “business plan” can also be cited. A business plan is a detailed document containing the following information: who and with what tools will implement the project, in what period of time and in which markets will the goods or services be presented. At the same time, the feasibility study is a component of the business plan, since the implementation of any project is preceded by its technical and economic evaluation. In other words, if the feasibility study is the document that contains the idea of the project, then the business plan is a step-by-step plan for its implementation.
Feasibility Study
Creating a feasibility study for the construction of the enterprise, it is necessary to take care of its content. This will be the basis of the project. The contents of the feasibility study, as a rule, include the following items: name, design goals, basic information about the project, business case, additional data and applications. At the same time, the economic justification is supported by subparagraphs, namely: the cost of the project, the calculation of expected profits, as well as economic performance indices.
The content of the feasibility study is indicative and includes only the main sections. If they are not enough, then you can use other additional ones that will help in the implementation of the project.
Title and Goals
The name should be short, but informative. In addition, the attractively formulated name of the feasibility study for the project will help to hook the investor. An example is the Center for Precision Instrumentation. The purpose of the project should also be succinctly stated. The main objective of these two parts of the feasibility study model is to make a good impression and interest the investor. Too much text can discourage reading a project.
Basic information. Project cost
A feasibility study for a project is considered successful, an example of which includes the types of activities of the company, as well as a list of manufactured products. In addition, a description of production capabilities and planned production volumes should be included in the basic information. In the section devoted to the cost of implementation, there should be a list of works that will be required to implement the project, as well as their cost.
Next, indicate the expected amount of income and expenses, provided that the project company will work with the planned load. Based on these data, profit is calculated. It should be noted here that depreciation charges should go as a separate item. Often, this indicator is regarded by investors as one of the sources of profit.
Competent is the feasibility study of the project, an example of which includes the main indicators of investment efficiency. These include the amount of investment, net profit for the year, internal rate of return (IRR), net present value (NPV), payback period of the project and BEP for the year - the break-even point.
