FEASIBILITY STUDY

I. SUMMARY OF THE PROJECT

A. Name of Firm

B. Location
1. Head Office
2. Plant Site

C. Brief Description of the Project

1. History of the business
2. Nature or kind of industry
3. Type of organization
4. Officers of the business and their qualifications

D. Highlights of major assumptions such as market projections, share and prices,

investment costs, method of financing, etc.

E. Summary of findings and conclusions regarding the following:

1. Market feasibility
2. Technical feasibility
3. Financial feasibility

II. GENERAL INFORMATION

A. Management of the Project

1. Management during the construction of the project

2. Management during the pre-operating period (firms or persons involved or to be

involved in marketing, engineering, and other studies)

3. Management during the operating period (type of business organization;

organization chart and functions of each unit; management personnel specifying the
duties and time to be developed to the project, qualifications and compensation)

4. Labor (skills required; recruitment and training program; compensation, fringe

benefits and facilities)
a. Prevailing rate
b. Legal rate
c. Rate intended for the project, starting and annual increases.

5. Professional firms or consultants to be hired; if any.

B. Status and Timetable of the Project

1. General project planning

2. Engineering specification preparation
3. Building construction
 4. Equipment suppliers selection
5. Equipment installation
6. Trial run
7. Start of normal production
8. Start of selling operation

C. Other information (e.g., pending litigation, information regarding intangibles, etc.)

ECONOMIC ASPECTS

D. Market Study

1. Demand

a. Consumption for the past ten (10) years. Also state the major consumers of the
product.
b. Projected consumption for the next ten (10) years. Indicate method used and
factors considered in preparing the projections.
c. Consumer preferences

2. Supply

a. Supply for the last ten (10) years, broken down as to source; whether imported or
locally produced.

For imports, specifications should be made as to the form in which the goods are
imported, the country of origin and the brands.

For locally produced goods, the companies producing them, their production
capabilities and the brands used shall be specified.

b. Projected supply for the next ten (10) years

c. Factors affecting trends in past and future supply

3. Competitive position considering imported and/or substitute products

a. Price

1. Cost of importation
2. Cost of production of existing firms
3. Project production cost of the product
4. Importers selling prices
5. Local selling prices

b. Selling prices prices to be adopted including tariff protection assumed or

expected for the project.

For product to be sold locally, comparison with prevailing prices (both local
and imported) and with the prices of substitute products; either wholesale or retail
whichever is applicable in the light of the application firms marketing program.
 For products to be exported, comparison with landed cost of goods from other
countries particularly the prospective importing country, and with prevailing prices
thereat; either wholesale or retail whichever is applicable.

c. Competitiveness of the quality of the product

E. Marketing Program

1. Description of the present marketing practices of competitors

2. Proposed marketing program of the project describing the

a. Selling organization
b. Terms of sales
c. Channels of distribution
d. Location of sales outlets
e. Transportation and warehousing arrangements and their corresponding costs

3. Promotion and advertising plans, including costs

4. Packaging

F. Projected Sales (Graph the demand and use standard deviation)

1. Expected annual volume of sales for the next ten (10) years considering the demand,
supply, competitive position and marketing program.
2. Sales contracts, if any

G. Contribution to the Countrys Economy

1. Net annual amount of dollars earned or saved; amortization of imported capital

equipment; and any importation of new materials.
2. Labor employed and taxes paid.

III. Technical Feasibility

A. Product (s)

1. Description of the product(s) including specifications relating to their physical,

mechanical and chemical properties.
2. Uses of the products
3. Tests for quality

B. Manufacturing Process

1. Description of the process showing detailed flow charts indicating materials and
energy requirements of each step; and the normal duration of the process
2. Licensing agreement, if any, including terms, reliability of licensor
3. Alternative processes considered and factors used in determining the process to be
employed
4. Processes used in existing plants and in similar projects in the country or abroad.
C. Plant Size and Production Schedule

1. Rated annual and daily plant capacity at a given number of shifts per day and
number of operating days per year and factors used in determining plant size.
2. Desirability of selected capacity
3. Alternative plant rated capacities considered
4. Minimum economic plant size
5. Factors used in determining plant size
6. Provision for expansion
7. Expected production volume for the next five years considering start-up and
technical factors

D. Machinery and equipment

1. Machinery and equipment layout, showing the number of specifications, rated

capacities, and balancing of capacities of each major auxiliary equipment and
standby units.
2. Quotations from suppliers, machinery guarantees, delivery terms of payments and
other arrangements.
3. Comparative analysis of alternative machinery and equipment in terms of cost,
reliability, performance and availability of spare parts.

E. Plant Location

1. Location map showing plant location

2. Desirability of locations in terms of distance to source of raw materials and markets,
and other factors.
3. Alternative location considered

F. Plant layout

1. Description of the plant layout; layout chart

2. Effect of layout on materials flow and treatment of materials handling and storage
3. Provisions for expansion.

G. Structure

1. Building and costs erection

2. Other structures and their respective costs
3. Land improvements such as roads, drainage, facilities, and their respective costs, etc.

H. Raw Materials

1. Description and specifications relating to their physical, mechanical, and chemical

properties.
2. Alternative raw materials considered and factors used in selecting the raw materials
3. Proof of reliability and superiority of the materials selected
4. Material balance and quantity required every year
5. Supplier reliability and arrangements as to delivery and payments
 6. Availability, continuity of supply and current and prospective sources
7. Current and prospective costs of raw materials; terms of any long-term contracts

I. Utilities

1. Electricity, fuel, water, steam and supplies specifying the following:

a. Uses
b. Quantity required
c. Balance of utilities
d. Availability
e. Sources and alternative source, and
f. Cost

J. Waste Disposal

1. Description and quantity of the waste to be disposed of

2. Description of the waste disposal methods
3. Methods used in other plants
4. Cost of waste disposal
5. Clearance from proper authorities or compliance with legal requirements

K. Production Cost

Detailed breakdown of production costs, indicating the elements of cost per unit output

L. Labor requirements

Detailed breakdown of the direct and indirect labor and supervision required for the
manufacture of the product(s), indicating compensation including fringe benefits

IV. Financial Feasibility

A. Total Project Cost All items considered and assumptions made

B. Initial Capital Requirements all items considered and assumptions made

C. Sources of Financing

1. Sources selected or proposed for both long-term and short-term financing

2. Alternative sources considered
3. Amount and terms of financing for each source selected indicating the currency,
security, repayment period, interests and other features
4. Status of financing from each source relating to actual release already made,
applications already approved, applications pending and applications still to be
made
5. Financing of contingencies and seasonal peaks in working capital

D. Financial Statements

1. For existing projects

 a. Audited financial statements (balance sheets, income statements, cash flow)
for past three years to reflect the following:

1. Aging of receivable
2. Schedule of fixed assets showing the capital cost, estimated useful life, and
depreciation method used
3. Schedule of liabilities, tax assessments, and other pending claims or
litigations
4. Financial trends and ration analysis.
Elements of production, selling, administrative, and financial expenses

b. Financial projections for the next five years (income statement, cash flow,
balance sheets)

c. Supporting schedules to the financial projections, stating assumptions used:

1. Collection of periods of sales
2. Inventory levels
3. Payment period of purchases and expenses
4. Elements of production cost, selling, administrative, and financial
expenses

2. For new projects

a. Total project costs (fixed and working capital)

b. Initial capital requirements
c. Pre-operating cash flows relative to the project timetable
d. Financial projections for ten years operation including balance sheets, income
statements, cash flows
e. Supporting schedule to the financial production schedule
1. Collection of sales
2. Inventory levels
3. Payment period for purchases and expenses
4. Elements of production cost, selling, administrative, and financial
expenses
f. Financial analysis showing return on investment, return on equity, break-even
volume, and price analysis