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´The feasibility study is a general examination of the potential of an idea to
be converted into a business.µ

´ Planning, organizing and managing resources to bring about the

successful completion of specific project goals and objectivesµ

´The feasibility study is a optimization process, justifying the assumption

made and the solution selected along with scope of the project.µ
O ccurately forecast investment and production cost
O ll activities :

O Plant site - Storage of input, output, transport, offsite, etc

O ncillary activities- Housing, Education, training and recreational
activities |
O
unctional
acilities - Production Sheds, dministrative Building,
Storage Building
O uxiliary
acilities ² Water, gas, electricity, sewage system,
telephone, internet connection, roads etc.
°alling for tenders
rices for similar project
‡ Unit cost parameters
‡ °ost of equipments and functional project parts

nnual Inflation rate

°hange in foreign exchange rate
Local °onditions
Laws and regulations
ccessibility of construction site
 Type of
Skills of
Production Work technology Quality of
Labour and
Programme Programme and Staff Input
equipments
Ä The preparation of a feasibility study is often made

difficulty by the number of available alternatives and

assumptions on which the decision making process has to

be based.
Ä °osts - represent the total amount of expenditure on product or services.

Ä Income- are an inflow of cash in given period.

Ä Revenues- correspond with costs and services irrespective of the period of

the actual cash flow.

Ä The difference between the costs, income and revenue become clearer if the
utilization of values for a product within a specified period are compared.

Ä
or the equipment costs and expenditures is taken by depreciation charge.


ixed Evaluation of
Working
Investment
Investment °apital Expenditure

Pre Production
Land nd Site
capital
Preparation expenditure

Technology °ivil Works

Ä Production °ost Estimates

easible Normal °apacity
°apacity which is available under normal working
conditions taking into account the capacity of installed
equipment and technical conditions of plant.

Nominal Maximum °apacity

°apacity which is technically feasible or sometimes taken as
installed capacity as guaranteed by the supplier of the plant.
Material Input(Variable)
Manpower(Variable)

actory Overhead(
ixed)

unds in local mostly non-convertible, currency are required for local
purchases.

oreign funds, mostly convertible, currency are required for imports

and foreign service.

Many foreign investors or bankers prefer to read and analyze financial

data expressed in widely known as ·governing· currencies.

When financial show an interest in taking part of project then, the

local costs should be converted into an agreed governing currency.
Ä There are no established norms which governs the costs of pre-
investment studies.
Ä They differ from project to project and from study to study.
Ä Depends on such factors as magnitude and nature of project, the type,
scope and depth of pre-investment study.
Ä °osts per man-months should be calculated in each individual and cover
salaries.
Ä It is preferable to indicate the order of magnitude of costs when taken
by outside agencies.
When we consult outside agencies costs may vary for the following
reasons:

Ä The experience of the consultant.

Ä The scope of work to be covered.

Ä The complexity of industrial subsector.

Ä °ost conditions in the consultants country.

Ä The consultant·s interest in further work on the project.