Guidelines for the Preparation of Project Feasibility Studies

These guidelines are required by the Board of Investment and also required by banks. (Guidelines for the Preparation of Project Feasibility Studies, Philippine Journal of Business and Finance, II, July 1968, 473-8)

1.    Summary of Project

1.1  Name of Firm

1.2  Location
1.2.1  Head Office
1.2.2  Plant Site

1.3  Brief Description of the Project
1.4  Highlights of major assumptions such as market projections, share and prices, investment costs, method of financing, etc.
1.5  Summary of findings and conclusions regarding the following:
1.5.1  Market feasibility
1.5.2  Technical feasibility
1.5.3  Financial feasibility

2.    General Information

2.1  Management of the project
2.1.1  Management during the pre-operating period (firms or persons involved or to  be involved in marketing, engineering and other studies)
2.1.2  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 devoted to the project, qualifications and compensation)
2.1.3  Labor (skills required; recruitment and training program, compensation, fringe benefits and facilities)
2.1.4  Professional firms or consultants to be hired, if any

2.2. Status and Timetable of the Project

2.3 Other information (pending, litigations, information regarding intangibles)

3.    Economic Aspects

3.1  Market Study

3.1.1  Demand
3.1.1.1  Consumption for the past ten years and statement of the major consumers of the project
3.1.1.2  Projected consumption for the next ten years and method used and factors stated in preparing the projections

3.1.2 Supply
3.1.2.1 Supply for the last ten years, broken down as to source whether imported or locally produced; specification as to the form in which the goods are imported, the country of origin and the brands indicated; Local companies with their production capabilities and brands used be specified

3.1.2.2  Projected supply for the next ten years

3.1.2.3  Factors affecting trends in past and future supply

3.1.2.4 Competitive position considering imported and/or substitute products

3.1.2.4.1  Selling Price
Prices to be adopted including tariff protection assumed or expected for the project; Products to be sold locally to include comparison of prevailing prices (both local and imported) and prices of substitute products, whether wholesale or retail, whichever is applicable in the light of the applicant firm’s marketing program; Products to be exported to specify comparative landed cost of goods from other countries and that of those goods at the prospective importing country with prevailing prices there, either wholesale or retail, whichever is applicable.

3.1.2.4.2    Competitiveness of the quality of the product

3.2  Marketing Program

3.2.1  Description of the present marketing practices of competitors

3.2.2 Proposed marketing program of the project describing selling organization, terms of sale channels of distribution, location of sales outlets, their corresponding costs

3.3.3  Promotion and advertising plan, including costs

3.3.4  Packaging

3.3  Projected Sales

3.3.1    Expected annual volume of sales for the next ten years considering the demand, supply, competitive position, and marketing program
3.3.2    Sales contracts, if any

3.4    Contributions to the Philippine Economy

3.4.1    Net annual amount of dollars earned or saved, after subtracting amortization of imported capital equipment; and any important of raw materials
3.4.2    Labor employed and taxes paid

4.    Technical Feasibility

4.1    Product(s)

4.1.1    Description of the product(s) including specifications relating to their physical, mechanical, and chemical properties.
4.1.2    Uses of the product/s

4.2    Manufacturing Process

4.2.1    Description of the process showing detailed flow charts indicating material and energy requirement at each step and the normal duration of the process
4.2.2    Licensing agreement, if any, including terms
4.2.3    Alternative processes and factors used in determining the process to be employed
4.2.4    Processes used in existing plants and in similar projects in the Philippines or abroad

4.3    Plant Size and Production Schedule

4.3.1    Rated annual and daily plant capacity at the given number of shits per day and number of operating days per year and factors used in determining plant size
4.3.2    Expected attainable annual production volume for the next ten years, considering start-up and technical factors

4.4    Machinery

4.4.1    Machinery layout showing the number, specifications, rated capacities and balancing of capacities of each major and auxiliary equipment and standby units
4.4.2    Availability of spare parts and repair service
4.4.3    Quotations from suppliers, machinery guarantees, delivery, terms of payments and other arrangements

4.5    Plant Location

4.5.1    Site plant

4.5.2    Desirability of location in terms of distance to sources of raw materials and markets, and other factors

4.6    Plant Layout

4.6.1    Description of the plant layout, layout chart
4.6.2    Effect of layout on materials flow, handling of materials, and storage
4.6.3    Provisions for expansion

4.7    Structures

4.7.1    Buildings and construction costs
4.7.2    Other structures and their respective costs
4.7.3    Land improvements such as roads, drainage facilities, etc. and their respective costs

4.8    Raw Materials

4.8.1    Description and specification relating to their physical, mechanical, and chemical properties
4.8.2    Alternative raw materials and factors used in selecting the raw materials
4.8.3    Material balance
4.8.4    Availability, continuity of supply and current and prospective sources
4.8.5    Current and prospective costs of raw materials

4.9    Utilities
Electricity, fuel steam and supplies, specifying the uses, quantity required, balance of utilities, availability, sources and alternative sources and costs

4.10      Waste Disposal

4.10.1    Description and quantity of the waste to be disposed of
4.10.2    Description of the waste disposal methods
4.10.3    Methods used in other plants
4.10.4    Cost of waste disposal
4.10.5    Clearance from proper authorities or compliance with legal requirements

5.    Financial Feasibility

5.1    Total Project Cost
5.2    Initial Capital Requirements
5.3    Sources of Financing
5.3.1    Sources selected or proposed for both long-term and short-term financing
5.3.2    Alternative sources considered
5.3.3    Amount and terms of financing for each source selected indicating the currency, security, repayment period, interests and other features
5.3.4    Status of financing from each source relating to actual releases already made, pending applications and applications still to be made
5.3.5    Financing of contingencies and seasonal peaks of working capital

5.4    Financial Statements
5.4.1    Projected income statement for ten years
5.4.2    Projected cash flow statement for ten years
5.4.3    Projected balance sheets for ten years

5.5    Financial Analysis

5.5.1    Unit cost estimates and detailed breakdowns of all cost factors from first year until normal operation is attained
5.5.2    Break-even point analysis
5.5.3    Capital recovery, and earning showing the cash pay-off period rate of return and discounted cash flow rate of return

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