DEPARTMENT OF CHEMICAL ENGINEERING

COLLEGE OF ENGINEERING AND AGRO-INDUSTRIAL TECHNOLOGY

UNIVERSITY OF THE PHILIPPINES LOS BAÑOS
College, Laguna 4031 Philippines Tel. No. (049) 536-2315
PROF. REX B.DEMAFELIS. PhD, FPIChE
Professor-in-Charge

GUIDELINES FOR THE PREPARATION

of
PROJECT FEASIBILITY STUDIES
(The Board of Investments will require project feasibility studies from applicant
enterprises wishing to register new projects.)

A. Project Summary
1. Brief description of the project
2. Summary of the finding and status
a) Project time table and status
b) Management aspect
c) Marketing aspect
d) Technical aspect
e) Taxation aspect
f) Financing aspect
g) Financial aspect
h) Social aspect

B. Project Time Table

Actual target date of period for:
a) General project planning
b) Incorporation
c) Preparation of engineering specification
d) Building construction
e) Selection of machinery supplier
f) Arrival of machinery
g) Trial run
h) Start of normal production
i) Start of selling operation
C. Management Aspect
1. Management During the Pre-operation Period
a) Project originator
b) Project promoter, manager
c) Firm or person involved or to be involved in marketing, engineering and other
studies
d) Management during the construction period
2. Management During the Operating Period
a) Type of business organization (corporation, partnership) and reason for the
choice.
b) Internal organization
i) Statement of function of each unit
ii) Organization chart
c) Owners-citizenship of owner and percentage of their respective holding
d) Management personnel form the member of the board of director to the
department or section manager
i) Duties and time to be devoted to the project
ii) Requirement
iii) Recruitment
iv) Compensation
v) Staffing - qualification (curriculum vitae)
e) Labor
i) Skills required
ii) Number required for each skill
iii) Sources of labor force for each type of skill
iv) Recruitment program
v) Labor training program
vi) Compensation

1. Prevailing rate
2. Legal rate
3. Rate intended for the project
Starting rate and provision for annual increase
f) General Manager, if any arrangement, and fees
g) Professional Firm to be Hired, Law, Accounting, Engineering, etc.

D. Marketing Aspect
I. Demand
a) Consumption for the past year
b) Projected consumption for the next 5 years
 1. Quantity, broken down into:

1.1 Regional market

1.2 Types of consumers
1.3 Types of market
1.4 Major firm user
2. Method used and factor considered in preparing the above offices
3. Comparison of the projection with that of:

3.1 Government offices

3.2 Trade association
3.3 Internal organization- as the U.P.
3.4 Other private parties

II. Supply

a) Supply for the last 5 years – quantity broken down as to source:

1. Imported
1.1 Form I which the goods are imported
1.2 Country of origin
1.3 Firm inspector
1.4 Brand
2. Locally produced
2.1 Province or region
2.2 Firm producer
2.3 Brand
b) Projected supply for the next 5 years (quantity broken down as shown above)
c) Factor affecting trends in past and future supply
1. Regarding competing product
1.1 Development of new competing product
1.2 Improvement in quality or decrease in cost and in price

2. Regarding production
2.1 Local production capacities (past, present, expansion plan,
new project, modernization plan)
 2.2 Percentage utilization of the capacities (based on a given
number of shifts a day for a given number of working day a year)

III. Prices
a) Comparison of the following:
1. Cost of importation
2. Cost of production of existing firm
3. Projected cost of production of the project
4. Importer’s and local producer’s selling price
5. Distributor’s wholesaler’s and retailer’s price
b) Tariff protection assumed or expected for the project
c) Domestic transportation cost
d) Effect of the flag law
e) Price to be adopted by the project, and explanation for any difference between
this price and the expected future prevailing price in industry
IV. Marketing Program
a) Present and expected marketing practice of competitors
b) Proposed marketing program for the project
c) Explanation for any material deviation; covering
1. Term of sale (cash, 30 days, etc.)
2. Channels of distribution, regional location of sale outlets
3. Promotion
4. Packaging

V. Projected Sales Quantity

a) Expected annual volume (quantity) of sale for the project considering the
demand, supply, prices, and marketing program

b) Sales contract if any

E. Technical Aspect
1. Product
a) Description and specification of the product, including weight, size, any physical
and chemical properties.
b) Principal uses
c) Test for the product (Prototype)
d) Assurance that the product will be of the expected quality and quantity.
2. Manufacturing process
a) Description of the process, flow chart, and normal duration of the process.
b) Proof of reliability and superiority of the process alternative process
considered and factor used in determining the process to be employed.
c) Licensing agreement, if any including term; reliability of licensor.
d) Processes used in existing plan and other new project in the Philippines
e) Processes being developed

3. Plant Size and Production Schedule

a) Rated annual and daily plant capacity.

b) Pairability of the selected capacity, alternative plant rated capacities,
considered.
c) Provision made in the location, layout machinery design and structure for
expansion.
d) Expected annual production volume for the next 5 years.

4. Machinery

a) Specification and function

b) Availability of spare parts and repair service
c) Selection of supplier, including bidding procedure and evaluation of bids
d) Quotation from supplier
e) Reliability of other supplier and machinery guarantees
f) Delivery, payment and other arrangement with the supplier

5. Plant Location

a) Plan location, location map

b) Desirability of the location, in term of distance to sources of raw
materials and market. Tie-in with transportation facilities and utilities,
weight-bearing capacity of the site and other factor.
c) Alternative location considered, and factor used in determining the
location.
6. Plant layout
a) Description of the plant layout, layout map
b) Effect of the layout on the material flow
c) Treatment on the material handling and storage in the layout
d) Tie-in with the transportation as piers
e) Provision for expansion
7. Structures

a) Building-area, specification, and built-in utilities as material handling and air

conditioning facilities
b) Other structures as piers
c) Land improvement – road within the compound

8. Raw Materials

a) Specification and description (physical and chemical)

b) Proof reliability and superiority of the raw material selected
c) Alternative raw material considered, factor used in selecting of the raw
material and test made
d) Raw material used in other plant in the Philippines and other countries
e) Quantity required every year; material balance
f) Availability, continuity of supply, current and prospective sources and
transportation facilities
g) Supplier- reliability and arrangement as to delivery and payment
h) Mineral reserve – adequacy of technical studies on the extent of deposit, and
quality
i) Current and prospective accost of raw materials term of any long-term
contract
9. Utilities
a) Electricity, fuel, water, steam and supplies
1. Uses
2. Quantity required
3. Utility balance
4. Availability
5. Sources
6. Reason for the choice of sources
7. Reliability of sources
8. Alternative sources considered
9. Cost
b) Electricity
1. Maximum of peak power demand in kilowatt
c) Fuel – Average consumption per hour
d) Water
1. Quality period
2. Average consumption per hour of raw and softened water for
process, cooling, sanitary and general utilities
 3. Water treatment
4. Storage and distribution
e) Steam
1. Maximum steam demand – lb/hr at specified pressure and
temperature
2. Average steam consumption – lb/hr

10. Waste Disposal

a) Description and quantity of the waste to be disposed of

b) Description of the waste disposal method
c) Cost of waste disposal
d) Clearance from the proper authorities

F. Taxation Aspect

1. Taxes affecting the project

2. Project design used so that the project will fall under a low or alternative tax rate
3. Tax exemption to be availed of by the project

G. Financing Aspect

1. Sources of financing for the project

1.1 Sources selected, for both long-term and short-term financing

1.2 Alternative sources considered, and factor used in determining the selected
sources

2. Amount and term of financing for cash source selected

2.1 Type of financing (capital stock, loan, etc.)

2.2 Use of proceeds (as for machinery, land, etc.)
2.3 Currency of financing (peso, dollar, etc.)
2.4 Amount
2.5 Security (collateral or guarantee)
2.6 Interest, or dividend
2.7 Other features
H. Financial Aspect
1. Project time table 6. Income tax rate
2. Sales volume 7. Tariff rate
3. Plant capacity 8. Tax exemption to be enjoyed by the project
4. Plant location 9. Foreign exchange rate
5. Raw material to be used 10. General price level

2. Financial Statement

Projected financial statement, with supporting computation and subsidiary

assumption:
2.1 Projected income statement
2.2 Projected cash flow statement
2.3 Projected balance sheet
3. Financial Analyses
a) Break-even point
1. Profit break-even point – volume and selling price
2. Cash break-even point – volume and selling price
3. Debt service sales volume
b) Capital, recovery, and earning
I. Social Desirability of the Project
1. Government revenue
1.1 Gross increase in government revenues, in term of taxes and duties to be paid by the
project
1.2 Decreases in government revenues due to setting-up of the project
2. Related industries – development of related industries
3. Consumers – possible decrease in the retail price of consumers
4. Employees
4.1 Number pf person to be employed, broken down into local and foreign, and to
the various skill required
4.2 Total wage bill (including fringe benefit)
4.3 Training of worker
5. Social rate of return – discounted cash flow basis
6. Foreign exchange reserves
6.1 Gross increase in the international reserves in terms of the dollar earnings or
dollar savings capability of the project
6.2 Decrease in the international reserves, due to the dollar cost of the project, as
salaries of foreign technicians, cost of imported raw materials, royalties, cost of
imported machinery and fees to engineering consultants.