Feasibility Study Course–

How to Write a Technical Feasibility Study

What is a Technical Feasibility Study?

The Technical Feasibility Study assesses the details of how you will deliver a product or service (i.e.,
materials, labor, transportation, where your business will be located, technology needed, etc.). Think
of the technical feasibility study as the logistical or tactical plan of how your business will produce,
store, deliver, and track its products or services.

A technical feasibility study is an excellent tool for trouble-shooting and long-term planning. In some
regards it serves as a flow chart of how your products and services evolve and move through your
business to physically reach your market.

The Technical Feasibility Study Must Support Your Financial Information

Do not make the mistake of trying to entice investors with your staggering growth projections and
potential returns on their investment that only includes income (revenue) to the business. With any
increase in revenue there is always an increase in expenses. Expenses for technical requirements (i.e.,
materials and labor) should be noted in the technical feasibility study.

You should also not strictly rely on feasibility study conclusions to impress an investor. An experienced
investor or lending institution will read your entire report and come to their own conclusions.
Therefore, it is critical that the technical and financial data in your study reconcile. If other parts of
your feasibility study shows growth, you will also have to project labor and other costs and the
technical ability to support that growth.

The technical component serves as the written explanation of financial data because if offers you a
place to include detailed information about why an expense has been projected high or low, or why it
is even necessary. It demonstrates to potential investors and lenders (and in some cases, potential
clients) that you have thought about the long-term needs your business will have as it grows.

Preparing an Outline for Writing Your Technical Feasibility Study

The order that you present technical information is not as important as making sure you have all the
components to show how you can run your business.

You do not have to include specific financial information in the technical portion of your feasibility
study, but all information in this component must support your financial data represented elsewhere.
Basic things that most businesses need to include in their technical feasibility study include:

 Materials
 Labor
 Transportation or Shipping
 Physical Location
 Technology

Calculating Material Requirements

 In this section you list the materials you need to produce a product or service, and where you will get
those materials. Include information such as if volume discounts will be available as your business
grows, or if you ever plan to manufacture your own parts at some point in time.

Things to include in your list of materials:

 Parts needed to produce a product,

 Supplies (glue, nails, etc.), and
 Other materials that are involved in producing or manufacturing your product.

You do not need to include actual financial data in this portion of the study but financial data
supporting your narrative assessment should be included in a separate spreadsheet as an attachment.

Technical Aspect Feasibility Study for Snack Stand

June 13, 2010, 11:35 pm

The technical aspect helps to determine the capacity of the project.  The technical study will
provide information in service activity and the raw materials to be used in providing activity this
product as well as their resources.  It is also determine the utilities and equipment to be acquired
in showing the location and layout of the project.

Objectives

1.    To know the business should be located.

2.    To find how to improve more in the business and also in the product.
3.    To know how to use properly the equipment and machinery.

Plant Lay out

The plant lay out show the size of a firm.  Lay out shows the different angel of the firm and the
lay out is the guide for the worker who made a difficult firm.

Plant Location

The business will be situated at Common Terminal at Barangay Ibayo, Balanga City, Bataan
beside the Isaac and Catalina medical center.  The common terminal is a very busy place where a
great number of people come to go  The GF Snack Stand is situated on the second floor of the
terminal.

The business was agreed to be situated at the said location because of its suitability for the
targeted market.  Researchers suggested that the kind of business is very much profitable in the
said place.  The partnership believes that the business can serve more customers in the area
compared to other places.  The said location is very much accessible to students, employees,
office workers, businessmen and common terminal passengers and also for those who are
roaming around the three (3) malls.

Excerpt from Management Project by Arde R. Reyes

System Feasibility Study

April 16, 2010, 8:54 am

In the field of computer and technology, there always an option to automate things likes payroll
system, inventory system, lighting system, and sales system.  But of course, before the
automation of any system, a feasibility study should be conducted in order to see the benefits of
automation over manual system as well as other alternatives.

At first, you should study the organizational systems such as the users, policies, functions and
objectives. Consider also the problems existing over the present systems like redundancies,
inconsistencies and slow services. Also, know the constraints such as the nonfunctional
requirement.

After analyzing the present or current system, possible alternatives should be presented.  Sticking
to the current or present system is always an alternative. Different types of automation or
computerization and business processes are considered to solve the existing problems.
Advantages and disadvantages of each alternative should be discussed.

In addition, the computation of payback analysis, net present value analysis, and return on
investment analysis should be included in your feasibility study.

If there is a feasibility study, the best alternative is to be preferred by the management because
there a chance of comparing alternative. Feasibility study will determine the best solution to the
problems.  After all, feasibility study is written to assess each alternative and come out of the
best alternative that will benefit the intended users.

What to Include in your Feasibility Study

March 30, 2010, 3:32 am

In starting a new business venture, it is important to conduct a feasibility study to ensure that
your business will be successful.  Some things to be included are plan, cost, and sources of
funding, manpower and personnel requirements, market and profitability.

In the plan section of your feasibility study, State clearly the objectives and description of the
project. Duration to complete the project is also included. It is usually answers the questions
what, why and how about the project.

Indicate the cost of equipment and facilities needed for the project.  The proponents should
undertake reliable canvassing using at least two or three supplier and be particulars to models
and capacities of equipment as well as the availability of materials.
Also, it is important if there is budget for the project.  If there is no sufficient budget for the
project, a bank loan may be considered.  In this case, the loan amount and its interest must be
factored into the financial documents of the study.  Realistic income targets from the venture
should be projected.

As per personnel or manpower, it is important to determine the size and particulars of manpower
as well as personnel’s job description, job titles and credential standards.  Also, salary rates and
allowance should be noted.

In addition, the stability of the market determines the viability of the project.  A survey should be
conducted to know if there are sufficient clients or customers and to whom the commercial
venture will cater.

Of course, project should know if it is profitable. A ten or twenty percent return of investment
(ROI) is usually regarded as profitable enough.

Vital Parts of Feasibility Study

December 19, 2009, 5:59 am

A.    Summary of Project

1. Name of Firm
2. Location – head office and plant site
3. Brief description of the product
4. Highlights of major assumptions such as market projections, share and prices, investment costs,
method of funding
5. Summary of findings and conclusions on the following

a.    Market feasibility

b.    Technical feasibility
c.    Financial feasibility

B.    General Information – Describe the pre-operating period, during the operating period,
labor, and professional firms or consultants to be hired, if any. Also, includes status of timetable
of the project and other information such as pending litigations, information regarding
intangibles, etc.

C.    Competitive position considering imported and/or substitute products.

D.    Marketing Program – description of the present marketing practices of competitors in the
exports and domestic market. Projected export and proposed marketing program of the project. 
It includes the contribution to the economy, plant layout, structure, raw materials, utilities, and
waste disposal.

E.    Financial Feasibility – Total project cost, initial capital requirements, sources of financing,
financial statements,  and financial analysis.
F.    Social Desirability – specific project contributions to the economy and society and social
rate return.

Some Feasibility Study Mistakes

March 25, 2009, 1:53 pm

It is imperative to show your idea is feasible to attract investor and fund the project.  No matter
what is your offering whether a product or service, you need to convince other people to finance
your ideas.

I provide some feasibility mistakes which serve as guidelines to your feasibility study.

 Doing feasibility study without doing research. It is a wasting of time and money without
preliminary research on validity of the idea.   It is necessary to conduct initial research or pre-
feasibility study before the start on of a full feasibility study.

 Incorrect data interpretation.  Sometimes, the writer overestimates the market size as well as
the opportunity for the new venture. For example, you will observe that the product has a large
market place, but not realized the strengths of competitors and their customer’s loyalty.

 Incorrect cost estimation. Make sure to detailed the cost to avoid over-estimation or under
estimation.  Also, cost estimates should be studied carefully.

 Overlook indirect competitors.  Make sure to investigate all products and services that deal to
customers’ need.

 Surveys dependence. Don’t over rely to survey because people tend to answer “yes” for new
product but when it comes to purchasing, they say “no”.

 Without expert Assistance.  It is important to get expert views regarding the product, idea or
services.

What to include in your Technical Feasibility

February 12, 2009, 1:02 am

Product

 Description of product
 Economic uses of the product

Manufacturing Process

 Detailed Flow Chart of the Manufacturing Process including the material and energy
requirement at each step and normal duration of the process
 Other processes and factors considered to determine the process to be adopted
 Processes used in existing plants and in similar projects
Plant Size and Production Schedule

 Daily and annual production capacity of the plant

 Days per year the project operate
 Factors used in determining plant size
 Expected attainable annual production volume for the next five years considering start-up and
technical factors.

Machinery

 Machinery layout such as the number of specifications, rated capacities of major machineries,
prices of equipment, and balancing of capacities of each major and auxiliary equipment and
standby units
 Spare parts and repair service available
 Quotations from suppliers, machinery guarantees, delivery, terms of payments and other
arrangements

Plant Location and Layout

 Location map of the plant

 Plant Layout

Suggested Outline for Feasibility Study

February 5, 2009, 1:51 am

One of the important steps in business development is a feasibility study.  Feasibility study is
used to determine the potential for success of a proposed business venture.

The sample outline below can be used to help you make your study. However, not all feasibility
studies are alike because it depends to the type of business venture analyzed and the market. The
success of a feasibility study is based on the careful identification and evaluation of all of the
important aspects for business success.

Description of the Project. Identify the list of product(s) or services(s) to be marketed and the
general business model such as how the business will make money. Include the technical
processes, size, location and kind of inputs. Also know the economic and social impact on local
communities as well as environmental impact on the surrounding area.

Market Feasibility. Determine the industry description, industry competitiveness, market

potential, sale projection and the access to market outlets.

Technical Feasibility. Find out the facility needs, suitability of production technology,
availability and suitability of site, raw materials and others such as labor availability and
qualified management personnel.
Financial Feasibility. Include the estimation of total capital requirements, equity and credit
needs, budget expected costs and returns of various alternatives

Management Feasibility. Identify the business structure and business founders.

Conclusion. Include information that will be used for decision making whether to proceed the
proposed business ventures.

Rules in Preparing a Good Project Feasibility Study

January 29, 2009, 6:00 am

A project study or feasibility study contains several chapters.  The proposed project must be
financially, economically, technically and socially feasible.

A consultant or researcher must possess not only the technical expertise on the project involved,
but also the right analytical, interpretative and writing skills to be able to produce the desired
studies.  He must know all banking, institutional, and governmental rules and regulations on the
particular projects he is to work on.

Rules in Preparing a Good Project Feasibility Study

1. Know the nature of the proposed project well. If you are not familiar with the topic or project,
you must obtain the technical expertise from qualified experts to help you in researching the
basic required technology and other sensitive aspects of the project.
2. Research well. Explore all resource related to your study.  Your project study must be included
with statistics, data documents, and all information needed from all available resources.
3. Must be a good analyst. You must know how to analyze, evaluate, interpret, use and discard
unnecessary data.
4. Data must be accurate. Your estimates and projections must be close to realities.  Avoid making
guesses and statistical improbabilities.
5. Organize study. You must know how to put in order your study.
6. Write it well. You must know how to write it properly.

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Sample of Management Study

January 8, 2009, 8:48 am

Excerpt from the proposed telephone industry business.

Management study includes the planning, organizing, staffing and directing of the project.  Also
it includes the external activities in starting the business.  The means and procedure are
undertaken before the operation of the business.  The form of management is indicated
identifying each of management and each personnel.  The role and duties of each personnel is
clearly defined, as well as practice and develop skills learned from this project
Management Analysis

Our business covers a system of services that can be determined in large scales.  A corporation
owns the ETHECOM.  This kind of business has a very large management.  The management
and operation of the business are determined and constructed by the joint-forces and capabilities
of the corporate members and staffs.

Organization Chart

ETHELCOM provides its organizational line chart, compose of personnel deployed within the
business.

Registration of business

The registration of business is an act that is provided by the constitution.  It is very important and
must be implemented in order for the business to be legal and to perform well and freely.

The following are the steps for registering a business in the Philippines.

1. Prepare the article of partnership/corporation.

2. Registration of the business name with the Bureau of Domestic Trade and Industry.
3. Apply the registration of the partnership with the Securities and Exchange Commission.
4. Get the necessary permit from the office of the mayor and license to operate from the treasure
of the city of municipality where the business will be located.
5. Secure a tax identification from the Bureau of Internal Revenue and a file VAT or Not-VAT
permit.

Hiring Personnel

The following are the qualification for the interested job seekers.

Electronics and Communication Engineer

-    Preferably Male, 22-30 yrs. old
-    Licensed
-    At least 5 years of experience
Technician
-    Preferably Male, 22-30 yrs. Old
-    BSECE or Electronics/ Electrical graduate
-    At least 3 years of experience in the related field

Sales
-    Male or Female, 21-30 yrs. old
-    High School Graduate
-    With pleasing personality

Job Description and Responsibilities

President
-    Responsible in making final decision for every undertaking the business may encounter.
-    Administer over all activities and for sees projects, forecast, and solve problems.

Manager (Stockholders)
-    To assist the President and his duties and responsibilities.
-    Must be responsible in assigning different task of each personnel.
-    Responsible for preparing financial statement of the business.

Purchasing Personnel
-    Responsible for good quality of purchased products
-    Responsible for purchasing low cost of product
-    Responsible for scheduling of purchased product

Technicians
-    Responsible for repairing, servicing and installation

Sales Personnel
-    Responsible for the sales of product, operational reliability of services and provides customer
care.

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Some Questionnaire Guide in Feasibility Study Preparations

January 4, 2009, 3:29 pm

1. What is the name of the firm?

2. Where is the location of head office and plant site?
3. Give a brief description of the project.
4. What are the assumptions being made including market projections, share and prices,
investment costs, and method of financing?
5. Mention the summary of findings and conclusions regarding the market feasibility, technical
feasibility and financial feasibility.
6. How shall the project be managed during the pre-operating period such as the firms or persons
involved or to be involved in studying the different aspects of the project?
7. How shall the project be managed during the operating period including the type of business
organization, organizational chart and function of each unit management personnel, duties and
time to be devoted to the project, qualification and compensation?
8. What skills and corresponding numbers of labor are required such as qualifications, recruitment
and training program, compensation, fringe benefits and facilities?
9. Include the time table of the project.
10. Indicate the annual volume of the domestic demand for the past 10 year?
11. Who are the major consumers of the product?
12. What is the projected annual volume of the domestic demand for the next 5 years? Also indicate
the method used and factors considered in preparing the projection.
13. Who are the current and potential buyers of the product and where are they located?
14. What is the annual volume of the domestic supply for the past 10 years?
15. Who are the major producers of the product?
16. What are the prevailing prices of the product?
17. What are the present marketing strategies and practices of competitors?
18. What shall be adopted in the project as to the selling organization, terms of sales, channels of
distribution, location of the sales outlets, transportation and storing facilities?