Table economic justification of the technology. Feasibility study of the project, differences from the business plan

A significant part of the financial analysis with a special impact assessment form shows how to write a business case. An example of the use of such a form, tracing the process of changes in net financial flows that arise as a result of the implementation of measures, will be presented in this article. In such a plan, the assessment of cash flows in corporate programs should be aimed at positive changes in the socio-economic sphere.

Law

Russian legislative practice has clearly outlined how to write an economic justification, an example of which is presented in Article 105 (Rules of the State Duma of the Russian Federation), and it concerns financial feasibility when introducing bills that require certain material costs for implementation. The government reviews relevant materials before submitting the bill.

First of all, an explanatory note is prepared, which sets out the concept of the bill with all the subjects of legislative regulation. The second document demonstrates how to write a business case. This example is not universal, since it is designed for a specific project and respects the interests of a specific customer. Naturally, each case requires an individual approach - each time with different calculations and plans, since financial justifications are written everywhere and by everyone - from legislators of the State Duma to students in technology lessons in high school.

FEO

How to write a business case? You can see an example below. It all depends on the object to which it is dedicated: whether it is technical regulations, organizations with their own standards, or even a national economy looking for financial ways for economic recovery. Let's take, for example, technical regulation, which requires clearly defined financial justification for changing norms or technical regulations.

When implementing a project, the costs, benefits and risks of each state entity, enterprise or community will inevitably be redistributed. Not many people know how to write a business case. A pattern exists for every type of activity, but it cannot be called universal. The implementation of such a procedure is required at the initial stage - during design, which allows you to avoid many mistakes and gain a lot of opportunities.

Advantages of the business case

First of all, when writing a justification, changes in costs are predicted, risks and benefits of all economic entities are identified. This is due to an accurate assessment of the financial and economic effect in connection with changes in certain norms. Costs are optimized by adjusting the direction of economic development, and the development of new standards will help fulfill this task.

Concrete modeling of the ensured impact of these developed standards will tell you step by step how to write a business case. The sample hardly reflects the actual situation of a given enterprise, industry, or society. Only a person inside the situation can identify the winning and losing sides. The demands for change must be effectively harmonized with all systems subject to technical regulation, taking full advantage of the implementation of any project.

Bills

Regulatory legal acts also require material or financial costs, and therefore the legislator proposing a new project must write an economic justification, that is, provide specific financial calculations. These justifications, directly related to the introduction of a new norm or change in a legal act, must indicate the income and expenses of budgets at all levels, the costs of each economic entity, the costs of society (or third parties), tax revenues, and budget efficiency.

This is how all reforms in the state are made: management mechanisms are changed, self-regulatory organizations are introduced, the rules of trade and production are changed, and certain new services are provided by members of associations and associations. In truth, the effectiveness of the introduction of any bill can rarely be directly and accurately calculated, as society is now witnessing with its own eyes - many errors and inaccuracies accompany them. Apparently not all legislators know how to write an economic justification for ongoing operations. When carrying out reforms, the forecast of socio-economic consequences and effects is especially important.

How is it necessary?

The financial and economic assessment of any innovation should be as accurate as possible and identify political, administrative, economic and other effects and consequences in advance. The “young reformers” know best how to write an economic justification for the alienation of property from the state, but society is now overcoming the consequences of this knowledge - with great difficulty, pain and losses. But it was necessary to evaluate in monetary terms not only our acquisitions, but also our losses (this is from the section of the economic justification called “additional costs”). Has the impact of such changes on the finances of all stakeholders and budgets at all levels been identified? And this is an indispensable condition for the correct preparation of an economic justification.

No, nothing was revealed, it’s just that a huge number of the country’s citizens “didn’t fit into the market.” How to write a business case for a lack of wages that people have not seen for several months? It was necessary to conduct a thorough analysis of all changes in the structure of income, expenses and risks of economic entities, the entire society, that is, third parties, and this is an unshakable rule for drawing up economic justifications. A detailed analysis of everything related to changes in control mechanisms was needed. In this financial calculation, it was necessary to honestly evaluate (monetize!) the redistribution of benefits, and for absolutely all parties interested or affected by the changes.

About feasibility

It is an honest and impartial analysis of the situation even before the start of any changes that can help in assessing the feasibility of any project, primarily in monetary terms. Then recommendations are given on its compliance with this state of affairs. Economic justification procedures should be carried out at the very first stage, when the project is still in the development stage. Designing changes to legal regulations requires fairly strong justification, since only then can the risks, benefits and costs of a variety of economic entities be predicted. Only a business case can outline costs based on expected revenue increases or cost reductions. Money is spent in order to earn much more in the future or spend less.

Financial subtleties

How to write a business case for a bank to convince it to invest in a project? First, we need to understand some hard truths about borrowing. Does the written rationale take into account that money is generally worth more today than it will be in even the shortest time? After all, the bank will give them, of course, at interest. But even if there are personal available funds that can cover expenses, has the justification calculated the percentage on the deposit that will inevitably be lost when investing money in the project?

How to write an economic justification for an agreement with a bank so that it proves that all expenses will be effectively and more than repaid, that is, future income will pay off the interest on the loan or exceed the interest on the deposit? You need to find the most promising aspects of a given project and prove in a justification that all proposed expenses will actually bring savings or revenues equal to those planned. And you don’t need to look for ready-made forms and printed forms. It must be remembered that there are simply no hard and fast rules for documenting a financial or feasibility study.

The form of the economic justification should be the simplest and must indicate the reason that influenced the decision of the organization to carry out this project. But the discussion of the expected benefits should be very detailed, with the application of alternatives, which may be useful, and a detailed financial analysis that will determine the investment attractiveness of the project. In practice, usually no one knows how to write a feasibility study, especially for projects where significant risk is involved. Most often, it is drawn up as a separate document and serves as an annex to the exact form of initialization of this project. If, in fact, the project is small, then all the benefits can be listed directly in the initialization form.

Individual elements

Typically, the results of the project are determined and indicated in its material aspect, that is, all parameters are measurable: cost savings, increased capacity or productivity, increased market, increased income, and the like. Before writing a justification, it makes sense to talk with people interested in investing in the project, or with licensing authorities, about what exactly they want to see in the justification, what is most important to them.

And yet, some material elements must be kept in mind when writing justifications. And the more complex the project, the greater the number of such elements will be present in it: cost reduction, savings, the possibility of generating additional income, increasing the company’s market share, complete customer satisfaction, directions of cash flows. The latter is documented as a major part of the project's business case.

Cash flows

This analysis aims to help committees or individuals reviewing projects to select the most suitable ones for implementation. The measurable elements are already listed above, but the business case does not end with them. There are also intangible ones, and there are many of them. For example, the main ones include the transition period and its costs, operating costs, business process changes, personnel replacement, and the like.

It is necessary to give due credit to alternative solutions in the economic justification, listing all available methods for implementing the project in practice. For example, among thousands of suppliers with millions of identical products offered, almost no one has the same price.

How to make the acquisition profitable? The economic justification will have to answer many, often inconvenient or simply difficult questions. It is more profitable to buy a ready-made solution or find an alternative, your own option. Or you can partially buy and partially sell it yourself. There should be many such answers in the economic justification.

Guardianship

Depending on the culture of the organization, the business case is written by the trustee or the project manager himself. But in any case, the trustee, that is, the investor, is responsible for the project; it is he who is responsible for financial efficiency, while the manager plans, carries out and practically implements it. The leader is the form, and the guardian is the content, that is, the investment. And therefore, the main thing is to convey to the investor the exact amount of costs for the entire project, indicate the correct payback period and predict attractive results.

Therefore, issues related to analysis and marketing research are not discussed in it. The business case usually contains a detailed description of the technologies and equipment, as well as the reasons for their selection.

When drawing up a business case, it is necessary to comply with certain requirements. It starts with initial data, information about the market sector. Then the existing opportunities for business development, sources of raw materials, material resources for business expansion, the amount of capital expenditure required to achieve the goal, production plan, financial policy, and general information about the project are described.

Thus, the economic justification contains a description of the industry in which the enterprise operates, the type of products supplied, and the price level for it. The financial part of this document for attracting borrowed funds, sources of their coverage. Calculations are given in tables that reflect cash flows.

When drawing up an economic feasibility study, it is necessary to study the current position of the enterprise, its place in the market, the technologies and equipment used. In addition, it is necessary to determine ways to increase the profitability of the company and business development, predict the level of profitability that can be achieved when implementing the project, study the necessary technical data, and analyze the level of staff training. You will also need to draw up a project implementation plan, cost estimate and cash flow plan, as well as give a general economic assessment of the investment.

Justification stage project very important. During it, you can identify and, if possible, correct those moments that could lead to failure in the future. Focus on starting early and you will achieve better results.

Instructions

Define the goals and objectives of the justification project. You need to answer the main question: is the project necessary? Based on how well you develop the idea and convey the benefits that the new business can bring, a decision will be made whether to accept or not project.

Describe the essence project. Tell us what exactly you plan to do and what goals are being pursued. Explain how the need for a new business arose and why this particular path was chosen.

Convey to the reader or listener the main ideas and ways in which the result will be achieved. Convince him that the chosen methods are the most effective in this case.

Tell us how many employees will be needed to implement your project, and what qualifications they should have. Give reasons why the workforce should be exactly like this. Describe in detail the functions of each team member. If you already have candidates, voice their names. In addition, committee members or your management should know how participation in the project will affect the core work of these employees.

Establish a sequence of actions and announce deadlines project. Clearly list the main stages of its implementation. Then go into detail about each stage. There should be a visible logical relationship between actions so that it is clear why one point follows another. Talk about realistic deadlines; if this is problematic, do not just name the possible completion date project, it is better to indicate the maximum period. Explain what factors may affect task completion time.

Provide a calculation of the material resources that will be involved in the project. Show what each expense item consists of. Before the presentation, count everything again. Remember that if you make inaccurate calculations or leave out an important item, it may blur the impact of the rest of your case and result in your rejection. project.

Video on the topic

Before starting any type of construction or installation work, it is advisable to draw up a list of quantities for the planned scale of construction and repairs. Without taking into account the cost of materials and services for performing certain types of work, it is not possible to sign an agreement with a construction and installation organization or plan expenses. These instructions will help you in correctly drawing up an estimate.

Instructions

Any program for developing estimate documentation usually includes some kind of industry price guides. Most of them are tied to a specific type, others to the regional level of prices and costs. All additions to estimate programs are indicated by abbreviated links to price tables. Study the following standards first and decide what you will take as the basis for your future estimate:
- GSN – state estimate standards;

FSN – branded estimate standards;

ISN – individual estimate standards;

TSN - territorial estimate standards - the so-called TERRA - are used most often;

Include in the estimate of work on its preparation, and the necessary tariffs for the estimated overhead costs. Study the pricing procedure; to do this, read all the letters from the Federal Agency for Construction and Housing and Communal Services. Remember that you cannot include the same cost in the estimate for different types of work.

Enter the budgeting program. Activate the directories you need in it and, when creating a new document, set the necessary coefficients.

Enter all types of work item by item, and under each type of work indicate the volume of material and its cost.

Add coefficients for the entire estimate and add up the total. Then, print the document.

Video on the topic

Helpful advice

If you work in a construction company, when drawing up estimates, use the calculated percentage markups indicated in the project documentation, but recalculated into current prices. Take into account all costs; to do this, read the drawings, specifications, and purchase prices for materials. This way, you will know the price minimum (market value) and maximum (set in reference books).

A project feasibility study (abbreviated as feasibility study) is written for projects introducing new technologies, processes and equipment at an already existing, operating enterprise. The feasibility study provides information on the reasons for choosing the proposed technologies and processes and decisions adopted in the project, the results of their implementation and economic calculations of efficiency.

The description of economic efficiency is based on a comparison of the existing and implemented information system, technological processes (basic and design options), analysis of the costs required to perform all operations of the technological process of development and implementation. If a business process does not change the entire processing technology, but only some of its stages, it is necessary to compare the operations of these stages. It is necessary to calculate the costs of developing the project.

Conclusions about economic efficiency are made on the basis of calculated economic indicators.

Calculation of the economic efficiency of the project

Based on the analysis of economic literature, it is necessary to determine a methodology for calculating economic efficiency that can be used to evaluate this project. It is recommended to consider the following points:

1) for calculations, a system of general indicators and private indicators are used, reflecting the industry and functional specifics of the project;

2) for projects that have alternative solutions (bases for comparison), comparative effectiveness is calculated. This requires several options, including: one or more design options. One of them may be the existing option;

3) for projects that have no analogues, absolute efficiency is calculated, which is expressed in savings in the total costs of living and material labor, both in the sphere of production and in the sphere of operation. If absolute efficiency is negative, the project is excluded from further consideration.

Methods for calculating economic efficiency can be grouped into two areas. To the first group includes methods based on calculations of payback period indicators and profitability ratios. Methods second group are based on the use of the net present value (current) value of the project and the internal profitability ratios of projects.

If the project implementation or payback period is, as a first approximation, quite long (from six months or more), discounting should be taken into account in project cost calculations, because The value of money decreases over time, and a ruble spent today is worth more than a ruble returned. This is due to the processes of the global economy, inflation and the general development of the economy, competition and production.

This value is introduced into the calculations by the so-called discount rate.

There are different approaches to determining the discount rate for simple calculations:

    take the annual inflation rate in the country or the refinancing rate of the Central Bank as the discount rate.

    discount rate – the level of investment return expected by the investor, that is, the basic risk-free rate (for example, a bank deposit) + “risk premium”.

    since the investor always has at least two alternatives - either to invest in a bank at interest, or to invest in a more profitable project, the discount rate is taken as the largest of the values ​​of the profitability that the investor will receive (the interest at which money can be placed in the bank , or interest received from investments in another project).

It is possible to accept the annual inflation rate as a rate only in one case - if the company has an alternative use of available funds: investing in a project or leaving them in current accounts (that is, actually freezing funds).

It is advisable to present the results of the selection and justification of the methodology in tabular form, indicating the calculation formulas.

1) Cost calculation.

Costs can be either one-time (purchase of equipment, hiring specialists, costs of consultations, etc.) or permanent costs associated with the use of the project (operating costs for maintaining equipment, wage fund for workers operating the facility, costs for electricity consumption, etc.).

It is also necessary to take into account the taxes that will arise when creating an investment object (for example, property tax). At the same time, VAT, which is paid when purchasing equipment, raw materials, materials, will be returned only some time after payments are made, and when calculating discounted cash flows, the amount of VAT paid now will be greater than the same amount of VAT, which will be reimbursed by the state through some time due to the impact of inflation. In calculations of economic efficiency, as a rule, taxes are reflected indirectly, and they must be present in the cash flow budgets for the project.

2) Efficiency from project implementation.

In calculations, economic efficiency can be achieved both due to the additional profit generated and due to the resulting cost savings.

An increase in the efficiency of an enterprise's economic activity as a result of project implementation can manifest itself in various ways. The following components are often considered as possible factors:

    qualitative improvement of the processes of preparation and decision-making;

    reducing the labor intensity of data processing and use;

    saving semi-fixed costs due to the possible reduction of administrative and managerial personnel necessary to ensure the enterprise management process;

    reorientation of personnel freed from routine data processing tasks to more intellectual activities (for example, situational modeling of enterprise development options and data analysis);

    standardization of business processes in all departments of the enterprise;

    optimization of the enterprise's production program;

    reducing the turnover time of working capital;

    establishing the optimal level of inventories of material resources and volumes of work in progress;

    reducing dependence on specific individuals who are “holders” of information or data processing technologies.

The calculation must be carried out in accordance with the chosen method for calculating economic efficiency.

In case of multidirectional effects from the implementation of the project, an individual approach or expert assessment can be used.

EIS can be used as the main static indicator of economic efficiency annual economic effect (economic profit) :

E =E year - P E year – S – E * K, (1)

Where ∆E year– annual savings (profit) caused by EIS, excluding operating costs for EIS, rub./year;

WITH– operating costs for information systems, rub./year;

TO– one-time costs (capital investments) associated with the creation of IP, rub.;

E– rate of return on capital (normative profitability), 1/year;

P– annual reduced costs for EIS, rub./year.

P = C + E * K.

From the point of view of economic content, the value E consists of the rate of return on capital and the rate of entrepreneurial income. Magnitude E in market conditions should not be less than the annual bank interest rate.

So, if the Central Bank of the Russian Federation established, from September 13, 2012, the refinancing rate at 8.25%, the rate of return on capital must be set equal to 8.25%.

Capital costs (K)

Capital expenditure can be defined as any cost incurred in creating, acquiring, expanding or improving an asset for use by a company. The important point is that the benefits from such capital expenditure will flow over a number of accounting periods.

Examples of capital costs are:

    purchase of fixed assets

    significant improvement of existing fixed assets

    purchase for long-term lease.

Capital costs for AIS are one-time in nature. Those of them that are sent to the main means of information processing transfer their cost to products in parts through depreciation charges. They are called capital because they are not lost, but are reproduced.

Capital costs include:

    costs for technical support (computer equipment, office equipment, communications, security equipment, etc.);

    software costs, including functional and service;

    costs of furnishing premises, including employee workplaces;

    costs for the services of hired experts and consultants, etc.

Operating costs carried out synchronously with production. Operating costs comprise the cost of production (goods or services): costs of wages paid to main and auxiliary personnel; costs of operating computer equipment and other technical means; costs of operating premises and maintaining employee workplaces, etc.

These costs include all costs taken into account in accordance with the accepted procedure for calculating the cost of production (without taking into account depreciation charges for renovation). Moreover, in the early stages of the development and implementation of new technologies, when there is no specific (reporting and regulatory) information, aggregated calculation methods can be used to calculate the costs of producing services, in particular the method of specific indicators, methods of regression analysis, the method of structural analogy, the aggregate and point method and etc.

If cost calculation, as a rule, is not particularly difficult and is mainly of a purely technical nature, then difficulties may arise when assessing indicators of the economic effect (especially indirect ones). In this regard, to assess individual indicators that make up the overall economic effect, it is often necessary to use the method of expert assessments, in which, instead of calculating any of the components of the indicator, they resort to the opinion of specialists (experts) regarding its optimistic, pessimistic and most probable values.

The methodology for determining economic efficiency based on static indicators comes down to calculating the annual economic effect as the sum of direct and indirect effects.

1. Direct economic effect can be expressed in natural, cost and labor indicators, as well as in their combinations, when the introduction of new information technology: ensures an increase in labor productivity of management staff; allows you to expand the range of products (services) produced; leads to a reduction in costs associated with the production of products and services (materials, technical equipment, production and auxiliary areas, etc.).

In other words, the direct economic effect is the result of any changes in the nature of the implementation of the functional component of the management process, as a rule, directly related to the specifics of the subject area of ​​activity of the management object. At the same time, an increase in labor productivity can be achieved by reducing the volume of operations performed manually or by more quickly processing information using computing tools.

2. Indirect economic effect from the introduction of new information technology is the result of the influence of factors that, as a rule, are not directly related to the specifics of the subject area and are of a general social, ergonomic, environmental and other nature. The influence of these factors on the economic efficiency of the management system is carried out indirectly, and sometimes through a chain of various intermediate (secondary) factors, but always ultimately leads to an increase in the productivity of management personnel, an increase in the attractiveness of the company's products among potential clients and business partners, etc.

For the purposes of analysis and methodological convenience of calculation, it is advisable to define the annual economic effect as the sum of direct and indirect effects:

∆E year = E kosv + E straight , (2)

Let's consider the calculation direct economic effect, it boils down to this:

the difference in annual present costs based on the base one is determined ( P 0 ) and proposed ( P 1 ) EIS options:

E straight = P 0 - P 1 = WITH salary – ∑С – E * K, (3)

Where WITH salary– reduction of salaries of management personnel during the implementation of EIS;

∑WITH– total operating costs for EIS excluding salaries of management personnel.

If it is not intended to reduce employees’ salaries or fire them when implementing an EIS, then:

WITH salary = C 0 salary - WITH 1 salary =0,

Where WITH 0 salary– salaries of management personnel in the basic version;

WITH 1 salary– salaries of management personnel in the proposed option.

Let's consider the calculation indirect economic effect.

This calculation involves determining the following components:

E kosv = ΔA+ΔC yourself +ΔШ, (4)

Where ∆A– annual increase in revenue from sales of products, other sales or non-sales activities related to EIS; EIS does not directly affect the increase in product output; it helps reduce the risk of document loss and time spent on processing;

∆WITH yourself– annual savings on the cost of production of the management object;

∆Sh– reduction of fines and other unplanned losses for the year.

The composition of items for which savings on product costs due to IP are calculated is usually as follows:

C yourself = C salary + WITH seo + WITH uh + WITH To + WITH doc , (5)

Where ∆С salary– savings on employee salaries;

∆WITH seo– savings on the maintenance and operation of equipment;

∆WITH uh– saving on electricity for technological purposes;

∆WITH To– savings for business and operational needs (office);

∆WITH doc– reduction of document losses.

The annual economic effect is an absolute measure of efficiency. The system is considered effective if E>0.

Auxiliary indicators of economic efficiency are:

Estimated profitability (ROI):

Payback period:

(7)

A business case in its simplest form states the reason why the organization concerned intends to undertake a given project. The business case usually includes a discussion of the benefits that the organization can receive as a result of the successful implementation of a given project, possible alternatives, as well as a financial analysis to determine the investment attractiveness of the project.

In practice - especially in the case of large projects or projects that involve significant risk for the organization - the business case is often drawn up as a separate document and attached to the project initiation form. In the case of small and medium-sized projects (which are most common), the benefits include savings, cost reduction, the possibility of generating additional income, etc. can be listed directly in the project initialization form.

A business case is much like the analysis we perform when making a large purchase. For example, let's say you're about to buy a new convertible and you're willing to pay no more than $35,000 for it. First, you need to find out which automakers make convertibles that fit within your price range (with from a project management perspective, you are considering alternative options).

You then determine your desired vehicle specifications and negotiate the final price with the distributor (from a project management perspective, you determine the benefits of those specifications). You may also want to consider financial alternatives and decide what interest rate and payment type fits within your budget.

If you're primarily interested in the total price you'll pay for the car (including interest payments), then you should choose the payment option with the lowest interest rate you can find. But if the amount of monthly payments is important to you, then when searching for the same options with the lowest interest rate, you should give preference to those whose terms allow you to stretch payments over as long a period as possible. The business case considers similar factors.

Elements of the business case

There are no hard and fast rules for documenting the business case. Typically, you are trying to determine the tangible results of completing (or not completing) a given project. By tangible we mean “measurable” - cost savings, increased productivity or capacity, increased revenue, increased market share owned by the company, etc. By communicating with those interested in your project, you can find out what is most important to them.

The list below will give you some idea of ​​the types of physical elements that need to be kept in mind when determining the business case for a project. Not all of these elements need to be documented for every project; however, the more complex the project and the greater the risk it poses to your organization, the more of these elements you need to include in the business case:

  • saving;
  • cost reduction;
  • opportunities related to receiving additional income;
  • increasing the market share owned by the company;
  • customer satisfaction;
  • cash flow analysis.

The cash flow analysis is documented as part of the business case for the project involved. The purpose of this analysis is to assist the persons (or committees) reviewing requests to select projects suitable for implementation. We will look at several methods for analyzing cash flows in the article about “Project Selection Criteria”. In addition to the measurable elements, the business case should also include intangible elements, including possible, although unplanned, costs to the organization. The list below contains a number of examples of this type:

  • transition costs;
  • operating costs;
  • changes in business processes;
  • changes regarding personnel;
  • recurring benefits.

Other business case considerations

Along with costs, benefits and cash flow analysis, the business case must take into account alternative solutions or methods of practical implementation of the relevant project. For example, there are thousands of suppliers offering millions of products that do x, y and z, but each of them has a different price. Is, for example, an off-the-shelf solution offered for $2 million a better option than an alternative solution that is partly purchased externally and partly implemented in-house?

Questions of this kind very often have to be considered in economic justification. Each of the alternatives must include both the tangible and intangible elements listed in the previous section. The economic justification should end with certain conclusions and recommendations. If the business case is properly prepared and documented, it speaks for itself. However, in any case, it is a good idea to indicate which alternative is the best for your organization.

The business case can be prepared by the trustee or the project manager - this depends on the culture of the organization concerned. However, regardless of who prepares the business case for the project, it is the trustee who is responsible for its financial viability, while the manager is responsible for the successful planning, execution and practical implementation. Figuratively speaking, the manager monitors the correct implementation of the project form, but the guardian fills this form with content (investments), which ultimately determines the amount of profit provided by the final product (or result) of this project.

There is a common misconception that a feasibility study is nothing more than a condensed version of a business plan with a significantly reduced or missing marketing section. This is actually not true. What then is a feasibility study for a project? An example in this article.

The essence of the term

A feasibility study, or feasibility study, is a printed confirmation of the technical viability of a project and its feasibility from an economic point of view. This formulation seems logically complete and understandable. A feasibility study is an idea reflected on paper.

For clarity, the term “business plan” can also be defined. A business plan is a detailed document containing the following information: who will implement the project and with what tools, in what period of time and in what markets the goods or services will then be presented. At the same time, a feasibility study is a component of a business plan, since the implementation of any project is preceded by its technical and economic assessment. In other words, if a feasibility study is a document that contains a business plan, it is a step-by-step plan for its implementation.

When creating a feasibility study for the construction of an enterprise, it is necessary to take care of its maintenance. This will be the basis of the project. The content of a feasibility study usually includes the following items: name, project goals, basic information about the project, economic justification, additional data and applications. In this case, the economic justification is supported by subparagraphs, namely: the cost of the project, calculation of the expected profit, as well as economic efficiency indices.

The given content of the feasibility study for production 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 title should be short but informative. In addition, an attractively formulated title of the feasibility study of the project will help to hook the investor. Example - “Center for Precision Instrumentation”. The purpose of the project should also be stated concisely. The main goal of these two parts of the feasibility study sample is to make a good impression and interest the investor. Too much text can discourage you from reading the project.

Basic information. Project cost

A feasibility study of a project, an example of which includes the types of activities of the company, as well as a list of manufactured products, is considered successful. In addition, a description of production capabilities and planned production volumes must be included in the basic information. The section on the cost of implementation should contain a list of works that will be required to complete the project, as well as their cost.

Next, you should indicate the expected amount of income and expenses, provided that the project enterprise will operate at the planned load. Based on this data, profit is calculated. It should be noted here that depreciation deductions should be a separate item. Investors often regard this indicator as one of the sources of profit.

A feasibility study of a project, an example of which includes the main indicators of investment efficiency, is competent. These include the amount of investment, net profit for the year, internal rate of return (IRR), (NPV), payback period of the project and BEP for the year - break-even point.

Additional information and applications

The additional information section should include any materials that will help enhance the impression of the project and highlight its positive and beneficial aspects. In addition, such information should be aimed at revealing the main objectives of the project, as well as emphasizing its economic efficiency and benefits for the investor. Additional information, also appropriately formatted, will add weight and solidity to the project. In addition, these materials will not overload the main points of the feasibility study, as they are presented in a separate section. But at the same time, it should be emphasized that there is no place for unhelpful information here. Any information and data must be of value to the investor.

In conclusion, I would like to remind you that a good and competent example of a feasibility study is a document that is concise and specific. The main idea should be clearly understood from it. A feasibility study does not require a detailed description of the project implementation process itself, but is intended only to attract the attention of the investor. But after achieving this goal, you will need a business plan.