TECHNICAL STUDY

Feasibility study
 CAN YOU WRITE A
TECHNICAL STUDY?
LET’S SEE.
TECHNICAL STUDY
• A business is considered technically and operationally feasible if
it has the necessary expertise, infrastructure and capital to
develop, install, operate and maintain the proposed system,
and that by establishing such a system, the business will be able to
deliver goods or services at a profit.
• When considering a new project/business, it is important to consider
if there is sufficient access to resources. One of the main reasons that
a new business fails is under-capitalisation - not enough funding to
keep the business going from startup until it starts to make a profit.
• Hence, there is a need to conduct a technical study to ensure the
technical stability of a project/business.
WHAT SHOULD BE DONE?
1. SELECT
 THE PRODUCT &/OR SERVICE
 THE MANUFACTURING/PRODUCTION PROCESS
 THE CAPACITY & DESIGN
 THE SUPPLIES
 THE LOCATION
 THE LAYOUT
 THE STRUCTURE’S SPECIFICATIONS
 THE RAW MATERIALS & THEIR SOURCES
2. DETERMINE
 THE QUANTITY & QUALITY OF THE PRODUCTS & SERVICES
TO BE PRODUCED OR RENDERED
 THE LABOR NEEDED, BOTH SKILLED & UNSKILLED
 THE UTILITIES REQUIRED
 THE WASTE DISPOSAL METHOD
 THE TRANSPORTATION NECESSARY

3. PROVIDE
 ESTIMATES OF THE TOTAL PROJECT COST, & ENUMERATE THE
MAJOR ITEMS OF CAPITAL COST
4. LIST DOWN IN DETAIL
 THE ESTIMATED PRODUCTION & OVER HEAD COSTS THAT
WILL GO INTO OPERATING THE PROPOSED PROJECT

5. TAKE INTO CONSIDERATION

 THE MAJOR TECHNOLOGICAL DEVELOPMENT IN THE
INDUSTRY WHICH MAY AFFECT THE COMMERCIAL OR
TECHNICAL SOUNDNESS OF THE PROJECT.
THE TECHNICAL STUDY COMPOSED OF THE FOLLOWING ITEMS WHICH
SHOULD BE PRESENTED BY DESCRIBING IN DETAIL AND WITH COSTING.
A. THE PRODUCTS / SERVICES
B. MATERIALS & SUPPLIES (RAW AND PROCESSED)
C. MACHINERY & EQUIPMENT
D.MANUFACTURING/ PRODUCTION PROCESS
E. SIZE OF THE BUSINESS & PRODUCTION SCHEDULES
F. LOCATION
G.BUILDING PLAN & SITE LAYOUT
H.FACILITIES & UTILITIES
I. LABOR / MANPOWER REQUIREMENTS
J. LOGISTICS / TRANSPORTATION /DELIVERY REQUIREMENTS
K. WASTE DISPOSAL / ENVIRONMENTAL IMPACT
L. PRODUCTION COST
PRODUCT OR SERVICE
• DESCRIBES THE PRODUCTS TO BE PRODUCED
OR SOLD OR THE SERVICES TO BE PROVIDED.
• THE PRODUCTS’ PHYSICAL, MECHANICAL, & CHEMICAL
PROPERTIES
• THE NATURE OF THE SERVICE
• THEIR VARIOUS USES, BOTH AS FINISHED GOODS &
INDUSTRIAL INPUTS.
• WHAT IT WILL BE CALLED (PRODUCT or SERVICE NAME)

• GIVES THE READER A PRECISE IDEA OF THE

PRODUCT OR SERVICE.
• MUST INCLUDE PICTURES, DIAGRAMS AND
SPECIFICATIONS AND RATIONALE.
MACHINERY & EQUIPMENT

• MACHINERY AND EQUIPMENT TO BE USED

MUST BE IDENTIFIED & INDIVIDUALLY
LISTED ACCORDING TO TYPE & USE
• SPECIFICATIONS, CAPACITIES & COSTS
MUST BE DESCRIBED IN DETAIL
• THE ORIGIN OF THE MACHINERY &
EQUIPMENT, WHETHER LOCAL OR
IMPORTED AND THE AFTERMARKET
SUPPORT MUST BE SPECIFIED
• THE MANNER OF & COST OF TRANSPORTING
THEM MUST BE INDICATED (BIG MACHINES)
MANUFACTURING/ PRODUCTION PROCESS
• THE MANUFACTURING/PRODUCTION PROCESS
MUST BE DESCRIBED SIMPLY & CLEARLY,
PREFERABLY WITH THE AID OF FLOW CHARTS AND
DIAGRAMS.
• THE ALTERNATIVE PROCESSES & THE WAY THEY
COMPARE WITH THE CHOSEN PROCESS MUST BE
MENTIONED.
• THE MANUFACTURING/PRODUCTION PROCESSES
USED IN EXISTING BUSINESSES WITH THE SAME OR
SIMILAR ACTIVITY, BOTH DOMESTIC & FOREIGN THE
SHOULD BE MENTIONED AND ANALYSED.
• LICENSING AGREEMENTS & PATENTS SHOULD
ALSO BE REVIEWED.
SIZE OF THE BUSINESS & PRODUCTION SCHEDULES
SIZE OF THE BUSINESS
• MINIMUM & MAXIMUM RATED CAPACITY
• FIXED COSTS
• ACTUAL CAPACITY UTILIZATION
• THE NUMBER OF SHIFTS PER DAY
• NUMBER OF OPERATING DAYS PERYEAR
PRODUCTION SCHEDULE
• THE EXPECTED GROWTH IN MARKET SHARE
• THE AVAILABILITY OF FINANCING FOR
POSSIBLE EXPANSION
• THE AVAILABILITY OF MORE RAW
MATERIALS
• THE LEVEL OF UTILIZATION OF PLANT
CAPACITY
LOCATION
• A THOROUGH & COMPARATIVE ANALYSIS FOR
EACH POTENTIAL LOCATION SHOULD BE
MADE TO DETERMINE THE MOST IDEAL SITE.

• THE ACCESSIBILITY TO, & AVAILABILITY OF, RAW

MATERIAL SOURCES
• THE AVAILABILITY OF CHEAP OR MODERATELY-PRICED
UTILITIES SUCH AS POWER, WATER, OR FUEL
• THE COMBINED COST OF TRANSPORTING RAW
MATERIALS & FUEL TO THE SITE
• THE PROXIMITY TO DISTRIBUTING OUTLETS
• THE AVAILABILITY OF SKILLED & UNSKILLED LABOR IN
THE AREA

• MAPS & CHARTS OF THE PROPOSED SITE

MUST BE INCLUDED
BUILDING PLANS/ SITE LAYOUT
• THE SITE, TYPE, & COSTS OF THE BUILDING
AND LAND, AS ENVISIONED IN THE PROJECT,
SHOULD ACCURATELY BE PRESENTED.
• THE CONSTRUCTION COST OF THE BUILDING
& FACILITIES SHOULD BE PRESENTED AS
ADAPTED TO THE MACHINERY & EQUIPMENT
THAT WILL BE USED IN THE PROJECT.
• LAND IMPROVEMENTS SUCH AS ROADS,
DRAINAGE FACILITIES, ETC. & THEIR
RESPECTIVE COSTS SHOULD BE COMPUTED &
INCLUDED.
• THE LAYOUT SHOULD BE CLEARLY DEPICTED
THROUGH DIAGRAMS & DESCRIPTIONS.
• SAFETY REQUIREMENTS MUST BE DEFINED
FACILITIES AND UTILITIES

• THIS PORTION DESCRIBES THE AMOUNT, COST,

AND SOURCES OF ELECTRICITY, FUEL, WATER, AND
CONNECTIVITY REQUIRED.
• THIS MUST BE DETERMINED IN RELATION TO THE
PRODUCTION SCHEDULE AND CAPACITY
UTILIZATION DEFINED.
• ALTERNATIVE SOURCES OF THESE UTILITIES AND
THE FEASIBILITY OF THEIR USE MUST ALSO BE
DESCRIBED.
LABOR AND MANPOWER
• THE VARIOUS JOBS AND FUNCTIONS NECESSARY
FOR THE OPERATIONAL STAGE MUST BE DESCRIBED.
• FOR COSTING, LABOR IS GENERALLY CLASSIFIED
INTO THREE TYPES:
• DIRECT
• INDIRECT
• ADMINISTRATIVE

• THE NUMBER OF WORKERS TO BE EMPLOYED FOR

EACH JOB CLASSIFICATION
• THE PAY SCALES
• THE AGGREGATE LABOR COSTS
LOGISTICS / TRANSPORTATION /DELIVERY REQUIREMENTS

• LOGISTICS SOLUTIONS MUST BE IDENTIFIED

AND FACTORED-IN.
• LOGISTICS INCLUDE:
• TRANSPORTATION
• DELIVERY
• WAREHOUSING

• LOGISTICS MAY BE OWNED, CONTRACTED,

LEASED OR RENTED
• COSTING FOR LOGISTIC SOLUTIONS MUST BE
CLEARLY DEFINED.
WASTE MANAGEMENT AND WASTE DISPOSAL

• A DESCRIPTION OF THE QUANTITY,

MANNER OF DISPOSAL, AND THE COST
INVOLVED IN DISPOSAL OF EXPECTED
WASTE FROM PRODUCTION IS NECESSARY.
• THE ANALYSIS MUST BE EXPANDED TO
CONSIDER THE POSSIBILITIES OF FURTHER
USING THESE WASTES.
• ENVIRONMENTAL AND SANITARY PERMITS
AND REQUIREMENTS
PRODUCTION COST

• FINALLY, THE COST TO MAKE A PRODUCT OR

PROVIDE A SERVICE MUST BE COMPUTED.
• THE FINAL OUTPUT COST MUST BE ANALYSED
IN ORDER TO PRICE THE PRODUCT OF SERVICE.
• MORE THAN ONE FINAL PRODUCT PRICE MAY
BE OFFERED BUT EACH HAS TO BE JUSTIFIED.
• PROJECTIONS IN INCOME CAN BE MADE IN
RELATION TO PLANT AND PRODUCTION
CAPACITY ONCE THE FINAL PRODUCT
COSTING HAS BEEN ESTABLISHED
NOW, ARE YOU READY
TO WRITE YOUR
TECHNICAL STUDY?
THANKS FOR LISTENING.