It refers to the analysis of the cost-effectiveness of a project in order to determine whether the company should undertake the project on the basis of profitability or not. Will Smith, the project manager is tasked to perform an economic feasibility study about the project and submit a report.
Smith collected the following data about the project to conduct the feasibility analysis If NPV is positive then the project is feasible and the company can consider the project to be taken. The company incurs losses in its first year; therefore it is liable to pay zero taxes. Also, the company is allowed to adjust its losses for two subsequent years for tax purposes.
Hence profit before taxes PBT for second year will be reduced by losses of first year to i. Project Manager Will Smith after studying the costs and benefits associated with the project concluded that since NPV Net Present Value is positive and high, Tesla should accept the project on the basis of Economic Feasibility Analysis. However, if the NPV of the project comes out to be negative -ve and the final verdict of Mr.
Smith suggests to drop the project and should not produce the solar products, then the loss incurred by the company is limited to the salary of project manager and other basic costs. But the valuable resources and time are saved and the company can consider carrying some other profitable project. The problem or opportunity statement should be taken from the Statement of Requirement document.
This section provides pertinent details regarding the context for undertaking the proposed project. This information should be based on the Problem Definition Section of the Statement of Requirement document. The purpose of this section is to list the possible options for satisfying the client requirements and to document the results of the feasibility assessment of each of the options.
This may be done in a table format. Documentation will include the rationale to support viable options and to reject non-viable options. In table format, such as the sample table below, assess each option against common high-level criteria. There should be one table for each option.
Here, insights from previous knowledge and research are drawn upon to give perspective to the problems and opportunities raised. Also, policies and laws inhibiting the growth of the business are taken into account. To produce a good feasibility report, every possible detail should be included for analysis. Every requirement of the business, both present and absent are carefully analyzed to develop an all-encompassing growth strategy that will guide the business to profitability and sustainable growth.
To achieve the best results, using a detailed approach that streamlines the entire process is important. Work is reduced considerably, as experts can carefully examine the problems and opportunities presented by the business while developing the best response to them. When writing a feasibility report, this part is very crucial and should be taken with all the seriousness it requires.
Also, It eliminates every unwanted structure found within the business that works against the progress of the business. When writing a feasibility report, close attention is paid to this section. All the options are brought forward including the very good to the not-too-good.
These are selected according to the impacts helpful on the business. The unwanted ones are discarded. A good feasibility report includes a marketing plan. Under the marketing plan, all the strategies used should undergo scrutiny which is aimed at ensuring that those strategies with the least impact are fine-tuned or improved upon while those not making any meaningful impact are discarded.
After making carrying out a detailed analysis of the entire framework of the business, the entire process of the feasibility report boils down to proffering solutions to problems raised. When writing this section, it is recommended that the solutions to the problems raised should be such that the needs of the clients are taken into consideration, while using cost-effective measures that do not reduce the profit margin of the business.
After the entire process of writing a feasibility report for a restaurant or any other business, a recommendation which should contain the aim of the entire process should be given providing the best way the problems faced by the business should be tackled. In the same vein, there should be a detailed process that explains how to take advantage of the opportunities presented by the business venture.
The conclusion should contain a summary of the entire feasibility report, as anyone reading this section should be able to have a general idea of what the report is all about. To learn how to write a formal feasibility study on the proposed business, here are the key items to consider: The nature of the investment, Management and organization, team, Economic and financial planning, and analysis, small business marketing plans and strategies.
In conclusion, when writing a good feasibility report, you should do well to cover these nine core areas:.
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