MGMT 145

PROJECT FEASIBILITY
STUDY
The Technical Aspect
Learning Outcomes
1. Construct graphical representation of how inputs
are transformed into outputs.
2. Participate in estimating fixed assets and materials
and supplies requirements.
3. Forecast annual production volume based on
market demand and plant capacity.
4. Create the technical study write-up.
The Technical Aspect

The technical aspect provided details as to how

the products will be produced or how the services
will be delivered. It is a written explanation of the
whole manufacturing process, and serves as the
technical plan as to how the business will
produce, store and deliver the product to end
users (Aduana, 2015).
The Technical Aspect
Describe in detail the operational aspects and
procedures on how to produce the product or deliver the
service
 Inputs/raw materials
 Cost of inputs
 Plant design
 Required machineries and equipment
 Building
 Production/process flow
 A. The Product
B. Production Method/Process Flow
C. Plant Size and Location
D. Plant Layout
Components E. Land and Building Requirements
of the F. Tools, Machineries and Equipment
Requirements
Technical G. Raw Materials and Supplies
Study Requirement
H. Utilities Requirement
I. Waste Disposal
J. Direct Labor Requirement
K. Expected Production Level
L. Operational Scenarios
A. The Product
• A product or service is what the business provides to the consumers. It is
the final output of all the processes in the technical study. This study
should give preferential attention to the proposed product/service since
the image of the company will depend on the type of goods that it will
produce. Consumers judge a business enterprise the quality of goods it
produce.
• The following technical presentation must be presented:
 detailed description of the proposed products: its dimensions,
compositions & quality specification. For agribusiness projects
(common and scientific names, breed, color, size, weight etc. For
service projects, state the specific service you intend to do.
 state its benefits or value proposition
 show picture or drawing of your product
B. Production Process/Method
Conversion takes
place in
manufacturing
where the inputs
(raw materials) are
transformed into
finished products
or goods. But this
will not happen in
the merchandising
or service –oriented
venture. Transforming raw materials into finish products.
B. Production Process/Method

• production process
discusses how the
products will be produced,
specifying each step and
time that will be involved

• The said steps will be

shown in a process flow
chart
C. Plant Size and Location
• Plant Size/Capacity - refers to the maximum level of production
that a machine may actually produce during a particular period.
The size and capacity of the plant are influenced largely by the
size of the demand and the expected market share of the
proposed product.

• In this section, the following information must be presented:

 describe the factors that will affect your plant’s production
capacity
 state all possible alternatives including minimum normal and
maximum limits of your proposed plant.
 describe the most favorable choice for your plant’s capacity.
C. Plant Size and Location

• In selecting the location of the processing plant, the following

factors should be given high consideration:
Distance of sources of raw materials
Proximity to the market
Availability of labor or skilled workers
Transportation facilities
Infrastructure facilities including roads, airports and shipping
dock
C. Plant Size and Location

• The type of product also must be given important

consideration in the selection of the plant location.

• For example: highly perishable goods that do not emit an

unpleasant odor and do not cause heavy pollution (air and
water) can be processed in plant near residential area.
However, cement manufacturing plant or agribusiness
projects (livestock production) should be located in areas far
away from residential houses.
C. Plant Size and Location

• The following information should be described in this section:

 Describe distance of the proposed project from its
competitors as well as its supply of raw materials,
public markets, roads, communication facilities
 Gather maps in order to show where the proposed
project will be located
 Comparative analysis for each potential location should be
made to determine the most ideal site
C. Plant Size and Location
 Location rating factor
 Center of gravity
 Load distance technique
C. Plant Size and Location
Location rating factor
 Identify important factors
 Weight factors (0.00 - 1.00)
 Subjectively score each factor (0 - 100)
 Sum weighted scores
C. Plant Size and Location

Center of Gravity Technique

 Locate facility at center of geographic area
 Based on weight and distance traveled
 Used coordinates
C. Plant Size and Location
Center of Gravity Technique
C. Plant Size and Location
Load-Distance Technique
 Compute (Load x Distance) for each site
 Choose site with lowest (Load x Distance)
C. Plant Size and Location
Load-Distance Technique
C. Plant Size and Location
Load-Distance Technique
D. Plant Lay-out

• Plant layout refers to the physical arrangement or configuration of

machines, furniture, equipment and tools used in producing goods.

• The principal objective of the lay-out is to maximize production

operation at the lower cost without sacrificing the quality of the
product.

• Good lay-out is characterized by:

 Minimum material handling
 Effective smooth workflow
 Safe and conducive area for the workers
 Safety and sanitation facilities
 Flexibility of arrangements
D. Plant Lay-out

• presents the drawings

including dimensions
so that readers could
easily visualize how
the proposed venture
will be.
E. Land and Building Requirements

Annual Depreciation = Purchase Value-Scrap value/ Life span [Straight Line Method]

• Type and cost of building and land, as envisioned in the project should be presented
• For buildings, state purpose and justification computation for the cost of the building.
This includes the determination of the life of the building as well as the depreciation
method to be used.
• For rent a building, determine the historical and the current rent to project the rentals
F. Tools, Machineries and Equipment

Businesses should consider buying a machine

that will complete and maximize the expected
output within the time schedule at the lowest
possible cost

• The list should include the description, the

specification, and the prices of the tools,
machineries and equipment used
• Consider quantity
• Discuss the usefulness of the equipment
(major equipment only)
G. Raw Materials and Supplies Requirement

• List down all the raw materials used to produce the product (direct materials)
• Discuss sourcing of these materials
• Relate to the production method
G. Raw Materials and Supplies Requirement

• Discuss source, usage

and purpose
H. Utilities Requirement

• describes the amount, cost, and sources of utilities fuel, water, and electricity.
I. Direct Labor Requirement

• What specific direct labor requirements are needed to produce the goods or
deliver the service?
• Are there enough direct laborers to produce the goods?
• How long it will take, in terms of number of hours, to produce the good?
• How much is the minimum daily wage of every worker per day or per hour in the
community?
J. Expected Production Level

Discuss projections of the annual

production capacity/volume for the next
five years…how?
 Review potential market demand
(quantity)
 Target production level (___% of
the PMD?)
 Assume 5% increase in the
production per year
K. Operational Scenarios

This section illustrates the operational scenario or the schedule of the

proposed project. The project schedule defines the time of the pre-
operating phase of the proposed project and the different activities carried
out within the time frame. It identifies activities or task to be accomplished
at the start until the end or completion of the project (Aduana, 2015).

A. Operational Scenarios

Table ___. Schedule of Activities Prior to Commercialization of (Name of Product)

Month
Activities
1 2 3 4 5 6 7 8 9 10 11
(name all the
activities)
K. Operational Scenarios

Sample activities:
Feasibility study
Accumulate funds
Process license for operation
Acquisition of land and building of plant
Acquire machineries
Hiring of employees
Purchase raw materials
L. Waste Disposal

• What type of waste disposal system should be adopted?

• What is the practice of the community in disposing waste or trash?
• Where to dispose the production waste (if any)
• What are those waste?
• Is the industrial waste produced by the business recyclable?
Thank you for listening….
References:

Calayag, EH & Valenzuela, EE. 2019. Feasibility Study Guidelines for Undergraduate Courses. Great
Books Publishing. Quezon City, Philippines.
Aduana, Nick L.2015. Writing Project Feasibility Study. C&E Publishing Inc. Quezon City, Philippines.
Cuyugan, Jorge H. 2001. A Business Planning Manual: A Project Feasibility Study Guidebook for
Filipino Students and Entrepreneurs.
Kotler, P & Keller, KL. 2012. Marketing Management. Pearson Education, Inc., publishing as Prentice Hall,
One Lake Street, Upper Saddle River, New Jersey 07458
Teves, Joviel. Feasibility Study Handbook (unpublished). Dept. of Business Management, Visayas State
University. Baybay City, Leyte.
WORKSHOP 4 – Technical Study
Supply the following aspects in relation to the project/product/service you are working on.
• The Product
• Production Method
• Plant Size and Location
• Plant Layout
• Land and Building Requirements
• Tools, Machineries and Equipment Requirements
• Raw Materials and Supplies Requirement
• Utilities Requirement
• Direct Labor Requirement
• Expected Production Level
• Production Cost
• Operational Scenarios
• Waste Disposal