Feasibility Report Preparation and Evaluative Criteria

Feasibility Report Preparation and Evaluative Criteria

1. General Information

The feasibility report should include an analysis of the industry to which the project belongs. It should deal with the past performance of the industry. The description of the type of industry should also be given (i.e) the priority of the industry, increase in production, role of the public sector, allocation of investment funds, choice of technique etc. This should contain information about the enterprise submitting the feasibility report.

2. Preliminary Analysis of Alternatives

This should contain present data on the gap between demand and supply for the outputs

which are to be produced, date on the capacity that would be available from projects that are in production or under implementation at the time the report is prepared.

All opinions are technically feasible should be considered at this preliminary stage. An account of the foreign exchange requirement should be taken. The profitability of di erent opinions should also be looked into an account of the foreign exchange requirement should be taken.

3. Project Description

The feasibility report should provide a brief description of the technology chosen for the project. Information relevant for determining the optimality of the location chosen should also be included.

To assist on the assessment of the environmental e ects of the project very feasibility report must present the information on specificpoint (i.e) population, water, land air, e ects raising out of the project pollution, other environmental disruption etc.

Report should contain a list of important items of capital equipment and also the list of the operational requirements of the plant, requirement of water, power, personnel, organizational structure envisaged, transport cost and factors a ecting it.

4. Marketing Plan

It should contain the following items/ data on the marketing plan. Demand and prospective supply in each of the area to be served.

The method and the data used for making estimates of domestic supply and selection of the market area should be presented.

Estimates of the degree of price sensitivity should be presented. It should contain an analysis of past trends in prices.

5. Capital Requirement and Cost

The estimates should be reasonably complete and properly estimated information on all items of costs should be carefully collected and presented.

6. Operating Requirements and Cost

Operating cost are essentially those cost which are included after the commencement of commercial production.

Information about all items of operating cost should be collected. Operating cost relate to

cost of raw materials and intermediaries, fuels, utilities, labour, repair and maintenance, selling and other expenses.

7. Financial Analysis

The purpose of this analysis is to present measures to assess the nancial viability of the project. A performance balance sheet for the project data should be presented.

Depreciation should be allowed on the basis specifiedby the Bureau of public enterprises. Foreign exchange requirements should be cleared by the department of economic a airs.

The feasibility report should take into account income tax rebates for priority industries, incentives for backward areas, accelerated depreciation etc.

The sensitivity analysis should also be presented. The report must analyse the sensitivity of the rate on the level and pattern of product prise.

8. Economic Analysis

Social profitability analysis need some adjustments in the data relating to the cost and return to the enterprises. One important type of adjustment involves a correction in input and cost to react the true value of foreign exchange, labour and capital.

The enterprise should try to access the impact of its operation on foreign trade. Indirect cost and benefits should be included. If they cannot be quantified they should be analyzed.