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How to Write Feasibility Report and Project Appraisal Report

A high caliber Investment Professional with an experience amounting over 30 years, majorly across various facets of Investment.

Feasibility Report

Feasibility Report

Feasibility Report

Detail Project Report

Table of Contents

I- Executive Summary

A. Legal Structure

B. License, Permits, and Insurance Policies

C. External Support

III- Organization Summary

A. Company Organizational Structure

B. National Hiring

C. Founders’ Profiles

D. Management

E. Operating Team’s Profile

IV- Physical Location

V- Products/Services

A. Portfolio Composition

B. Production/Service Delivery/Operation Process

C. Environmental Impact

VI- Market Analysis

A. Market Overview and Sizing

B. Sector Trends

C. Target Market Segmentation

D. Competition

E. Customers

F. Suppliers

G. Timing of Market Entry

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VII- SWOT Analysis

A. Strengths

B. Weaknesses

C. Opportunities

D. Threats

VIII- Strategy

A. Action Plan

B. Marketing Strategy

C. Sales Strategy

D. Pricing Strategy

IX- Financial Plan

A. Funding Requirements

B. Financial information

References

CVs

Financial Statements

A. Income Statement

B. Balance Sheet

C. Cash Flow Statement

Project Ideas

Entrepreneurship

Entrepreneurship

Project Ideas

Project Feasibility report is key to the success of the Project.


Project Feasibility Report

Feasibility report is first step in successful project. We determine if Project can be successful. What is the profitability. What is investment. We determine how much time is required to recover money.

One Project may be successful in one environment, location, but may not be feasible in another location. We determine Project Feasibility Report based on local conditions.

Once we are ready with Feasibility Report, we define Business Model and Business Strategy. The third step is Business Plan.

Business Plan is Road map on how to implement or bring Feasibility Report into reality.

There are different types and formats for Feasibility Report.

Depending Upon its requirement or who we need to submit, we build feasibility report.

Banks usually has their own formats. So are other institutions.

Feasibility Report for Startup is usually very different and difficult, when Idea is new and business model is innovative.

We Ecommerce business, Online Business and Digital Business do not use same feasibility method and valuation methods as used by Brick and Mortal System.

Digital world is totally different world. When it comes to valuation or business plan and business model, it is completely new and innovative.

The Entrepreneur and their Consultant must be able to defend their numbers and convince the investors, this is what new economic reality it.

Europe

Aging Europe

Aging Europe

Project Appraisal Report


Feasibility Report and Project Appraisal


1) General Information
2) Promoters Details
3)Market Feasibility Report
a) Segments
b) Competition
c) Pricing
d) SWOT Analysis
e) Marketing and Selling Arrangements

4) Particulars of the Project
a) Product and Capacity
b) Plant and Machinery
c) Raw Material
d) Utilities

5) Technical Feasibility Report
a) Technology
b) Alternatives
c) New Developments
d) Competing Technologies
e) SWOT Analysis of technology
f) Technical Arrangement

6) Production Process

7) Environmental Aspects

8) Schedule of Implementation

9) Financial Feasibility


i) Projected Income Statement
ii) Projected Balance Sheet
iii) Projected Cash Flow Statement
iv) Coverage Ratio’s
v) Break Even Analysis

10) Economic Consideration

11) Appendices

a) Depreciation Schedule
b) Repayment, interest schedule of term loan and bank finance
c) Working Capital and margin money for working capital schedule
d) Tax Computation
e) Details of Plant and Machinery
f) Requirement of skilled and unskilled labor
g) Cost of Project Details


Aspects of Project Appraisal


Market Appraisal.
Technical Appraisal.
Financial Appraisal.
Economic Appraisal.

Market Appraisal.

The market appraisal is attempted to answer two important questions.

(i) What is the size of the total market for the proposed product or service?
(ii) What is the product's share of total market?


Market Appraisal.


Two answer the questions market analyst complies and analysis the date relating to the following aspect.

(a) Past & present trends.
(b) Present and prospective supply position.
(c) Level of imports and exports.
(d) Structure of competition.
(e) Price and cross elasticity of demand
(f) Consumer requirements.
(g) Production constraints.


Technical Appraisal.


(i) Availability of the required quality and quantity of raw material.
(ii) Availability of utilities like power and water etc.
(iii) Appropriateness of the plant designs and layout.
(iv) The proposed technology vis a vis alternative technologies available.
(v) Optimal of scale of operations.
(vi) The technical specifications of plant and machinery in relation to the proposed technology.
(vii) Assembly line balancing.


Financial Appraisal.


(i) Cost of project
(ii) Means of financing.
(iii) Projected Revenue and cost.
(iv) Pay back period.
(v) NPV
(vi) Rate of return.
(vii) Internal Rate of Return.

Economic Appraisal.

Assessing project feasibility – Market.

(i) Selecting target market.
(ii) Measuring selected market.

Measurement of target market

(i) Demand
(ii) Supply

(iii) Distribution.

(iv) Prices.

(v) Government Policies.
Assessing Project Feasibility – Technical

(i) Selection of technology.

(ii) Manufacturing process.

(iii) Estimation of Inventory requirement.

(a) Raw Material Survey.

(iv) Selection of equipment.

(v) Plant Layout.

(vi) Plant Capacity

(vii) Utilities – Availability.


Implementation Schedule.

4. Assessing Project Feasibility. Financial Projections

(i) Cost of Project.

Land and site development.
Building and civil works.
Plant and machinery.

(a) Promotional expenses.
(b) Organizational and training cost.
(c) Rent, Rates, taxes.
(d) Traveling expenses.
(e) Postage, telegrams and telephone expenses.
(f) Printing and stationery expenses.
(g) Advertisement expenses.
(h) Guarantee commission.


(viii) Technical know how fees.
(ix) Margin money for working capital.

(x) Means of finance.

(a) Equity capital
(b) Performance capital.
(c) Debenture capital.
(d) Term loan.
(e) Deferred credit.
(f) Unsecured loans and deposits.
(g) Capital subsidy and development loans.



(xii) Sales Estimation

(a) Cost of production

(b) Product mix

(c) Installed capacity

(d) Capacity utilization.

(xiii) Elements of cost of production.

(a) Raw materials

(b) Chemicals.

(c) Components.

(d) Consumables.

(e) Total raw material cost (a)+(b)+(c)+(d)

(f) Utilities

(g) Power

(h) Water

(i) Fuel

(ii) Total utilities (e)+(f)+(g)+(h)

(j) Wages

(k) Factory supervision and salaries.

(m) Bonus and PF

(iii) Total Labour (i)+(j)+(k)

(o) Repairs & maintenance

(p) Light

(q) Rent & taxes on factory.

(r) Insurance on factory assets.

(s) Packing material.

(t) Miscellaneous factory overheads.

(u) Contingency at 5%.

(iv) Total factory overheads ( o to u)

(v) Cost of manufacturing/operating cost (i) + (ii) + (iii) + (iv)

(vi) Total Administrative expenses.

(vii) Total sales expenses.

(viii) Royalty and know how payable.

(ix) Total cost of production (v) + (vi) + (vii) + (viii).

4. Assessing Project Feasibility - Financial Appraisal.


(i) Cost & benefits are measured in terms of cash flow i.e. cash in flow and cash outflow.

(ii) Evaluating projects in terms of costs and benefits is based on marginal or incremental cash flows. The marginal or incremental cash flows. The marginal cash flow is the change in total firm cash flow from adopting that investment.

(iii) As already mentioned n (i) above cash flows are always measured in post tax terms as that represents net flow from the firm point of view.

(iv) Focus should be on long term funds.

Evaluation Techniques.

(i) Present value.

(ii) Internal rate of return (simply rate of return).

(iii) Payback period.

(iv) Accounting rate of return.

(v) Debt service coverage ratio.

(vi) Benefit cost ratio.

Present Value.

The present value of a cash flow is, flow what it worth in today.

It states that an investment should be adopted only if the present value of the cash it generates in future exceeds its cost.

NPV = Present value of cash flow – Initial cost.

PAY BACK PERIOD :

The pay back period measures the length of time required to recover the initial investment on a project.

ACCOUNTING RATE OF RETURN –

The accounting rate of return (ARR) equal the average annual after tax accounting profit generated by the investment divided by the average investment.



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Comments

Habeeb on January 02, 2018:

Sir, i need help on feasibility report/project appraisal under satellite

Zia Ahmed (author) from Kuwait on June 04, 2012:

@Navin - Thanks a Lot, if you need anything more just write to me.

J K Navin on June 03, 2012:

Dear Zia Ahmed Khan, Good morning, Hope u are fine. Thanks for the information you have provided in the MARKET FEASIBILITY REPORT, which i have submit to my company. I will do my best as per the points to include. Very informative and you have enlightened my knowledge, Thank you Sir, Allah Kareem!!!my mail id: jk_navin@yahoo.com

Zia Ahmed (author) from Kuwait on April 11, 2012:

@Tahir Khan - Thanks a lot.

Tahira Khan on April 11, 2012:

Gud information

Sam on January 08, 2012:

These are good points on writing a good feasibility report. I also found this link helpful:http://www.entrepreneurshipsecret.com/how-to-prepa...

Zia Ahmed (author) from Kuwait on December 06, 2011:

@Himmat Bhai and Others, Please write to me for DPR, I have posted many on Docstoc in free and paid categories.

Himatbhai Parmar on December 06, 2011:

Dear Sir,We are running an NGO. Pl.send us a detailed feasibility study project report for study purpose on any product/process.Thanks.

Himatbhai Parmar on December 06, 2011:

We are running an NGO.Pl.send us a feasibility report/study to manufacture plastic bottles. We also offer you any computerization of priject finance work free of cost for your free delivery to self employment programmes / NGOs all over the world.Thanks.

MWElahi on October 08, 2011:

It was good to come through such a knowledgeable article .. made life easier for me.

Bello jamiu on August 23, 2011:

Iam very happy to come across something educative like this online.if u think education is expensive pls try ignorant.iam pleased with the content and the mode it was analysed.pls keep it up may God be with u.

Zia Ahmed (author) from Kuwait on July 21, 2011:

@susantha, this is sole purpose of my writing. People should benefit from my knowledge.

Susantha on July 20, 2011:

I'm on an assignment work. your hub made my life structured as I came across.

Thanks

dorenthapa on July 08, 2011:

It is quite pleasure to be informed with various knowledgeable thinks.

Thanks lot to hubpage.

Zia Ahmed (author) from Kuwait on May 18, 2011:

connect with me on hubpage

sana fatima on May 18, 2011:

this is execellent

mamu on May 09, 2011:

definitely good

Bamidele Lukman Olalekan on February 17, 2011:

I so much apreciate this...because it reduces my stress.

Prashanth on September 09, 2010:

this is very useful info thank you hub, please keep this spirit growing. Cheers

projfinances on March 29, 2010:

Project feasibility...just thinking about it makes my head aches. Good I come across to this article. Great hub...very helpful! Thanks Zla Ahmed Khan...

krismontez3 on March 28, 2010:

Great post here...Very informative hub. Project feasibility report is a tough task, thanks for the tips and infos.

Zia Ahmed (author) from Kuwait on February 09, 2010:

Thanks for comment

ateenyi from Chicago on February 09, 2010:

Great Hub!!!!!!

The hub is explicitly dedicated to project feasibility report. The hub is focused towards decreasing the ratio or rich and poor. The hub contains excellent information regarding budding entrepreneurs. I await your future hub with great curiosity.

Keep on Hubbing

syed athar ali on January 13, 2010:

assalaamalaikum,

Very good information for budding entrepreuners,

THANKS and best regards,

Athar

hafeezrm from Pakistan on January 13, 2010:

Good hub giving outlines for project feasibility report.

For mega project, social appraisal is the main document.

Unfortunately, social appraisal is not as objective as financial appraisal. Therefore, there are certain guidelines to gauge impact of project in reduction of rich:poor gap: Are the sponsors new, is the location an underdevelopment area, number of people employed, number of people benefitted indrectly? Is raw material local, Is machinery locally manufactured. Is product new or traditional.

A yes to all such questions reflects favorably on poverty reduction.

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