Develops feasibility study. Economic effect from implementation. Mandatory data that must be indicated in the feasibility study

What is a Feasibility Study - Feasibility Study

Technical economic justification or Project feasibility study is, perhaps, one of the most important documents in the creation and development of any modern company. Most often, a project feasibility study (or feasibility study of the project) is necessary if a company or enterprise is going to implement some kind of new technology, receive any funds for the implementation of production goals.

Many entrepreneurs confuse the concepts of “Business Plan” and “Feasibility Study”, believing that developing a feasibility study is no different from writing a regular business plan. In fact, draw up a feasibility study and writing a business plan are slightly different things, the main difference is that drawing up a feasibility study is not as complex and detailed work as a business plan.

Feasibility study of the project(feasibility study of the project), as a rule, is devoted only to part general business company and, as a result, should not contain sections describing the entire business as a whole. That is, the feasibility study of a project includes only those data and calculations that will describe future changes in the company’s activities directly related to this project.

Feasibility study, unlike a business plan, does not contain details in the form of a marketing promotion strategy, description of goods or services, or risk analysis. A feasibility study is compiled precisely so that the results of innovations can be calculated and all possible problems of this process can be seen.

Why do you need a feasibility study?

In order to clearly see the situation developing at an enterprise after any changes in its work (no matter whether quantitative or qualitative), as a rule, a feasibility study (TES) of the project is developed. At drawing up a feasibility study project, a variety of factors that have a direct or indirect impact on the enterprise, as well as all changes in financial indicators, are carefully taken into account.

A well-drafted feasibility study allows you to see how effective investments are in the development of new or refinement of old activities of the enterprise, whether the enterprise needs mergers or acquisitions, and whether there is a need for lending. Also, a feasibility study of the project will help select necessary equipment, select and implement appropriate production technologies, properly organize the activities of the enterprise.

Feasibility study ( Feasibility study) is necessarily included in the package of documents that are submitted to the bank to obtain a loan. In this case, the feasibility study makes it possible to show the profitability of lending, an increase in the level of activity as a result of lending, as well as a guarantee of repayment of the loan to the bank.

How to draw up a feasibility study

When developing a competent feasibility study The feasibility study must include the following provisions:

1. Project Summary
2. Project idea. What is the idea of ​​a feasibility study for a project, and why is it needed? Project feasibility study plan with step-by-step explanation.
3. Rationale. Why exactly such solutions are proposed, the reason for choosing this particular material, type of activity or equipment. It is also necessary to include all possible calculated risks in the feasibility study calculation.
4. Calculations of production requirements (financial, raw materials, labor, energy). It is necessary to calculate how much money will be required to launch of this project. If you are preparing a feasibility study to obtain a loan, you should indicate all possible sources of income
5. Economic justification (calculations that show the result of the enterprise’s activities after changes)
6. Conclusions and proposals (summarizing, conclusion, evaluation)

At the same time, a feasibility study (feasibility study of the project) can further serve as the basis for drawing up a business plan, the main document that serves for making decisions regarding the introduction of new technologies or equipment into the enterprise’s production.

Sergey Pankratov
10/2011

A significant part of the financial analysis with a special impact assessment form shows how to write a business case. An example of the use of such a form, tracing the process of changes in net financial flows that arise as a result of the implementation of measures, will be presented in this article. Such a plan for assessing cash flows in corporate programs should be aimed at positive changes in the socio-economic sphere.

Law

Russian legislative practice has clearly outlined how to write an economic justification, an example of which is presented in Article 105 (Rules of the State Duma of the Russian Federation), and it concerns financial feasibility when introducing bills that require certain material costs for implementation. The government reviews relevant materials before submitting the bill.

First of all they prepare explanatory note, which sets out the concept of the bill with all the subjects of legislative regulation. The second document demonstrates how to write a business case. This example is not universal, since it is designed for a specific project and respects the interests of specific customer. Naturally, each case requires an individual approach - each time with different calculations and plans, since financial justifications are written everywhere and by everyone - from legislators of the State Duma to students in technology lessons in high school.

FEO

How to write a business case? You can see an example below. It all depends on the object to which it is dedicated: whether it is technical regulations, organizations with their own standards, or even National economy, looking for financial ways for economic recovery. Let's take, for example, technical regulation, which requires clearly defined financial justification for changing norms or technical regulations.

When implementing a project, the costs, benefits and risks of each state entity, enterprise or community will inevitably be redistributed. Not many people know how to write a business case. A pattern exists for every type of activity, but it cannot be called universal. The implementation of such a procedure is required at the initial stage - during design, which allows you to avoid many mistakes and gain a lot of opportunities.

Advantages of the business case

First of all, when writing a justification, changes in costs are predicted, risks and benefits of all economic entities are identified. This is due to an accurate assessment of the financial and economic effect in connection with changes in certain norms. Costs are optimized by adjusting the direction of economic development, and the development of new standards will help fulfill this task.

Concrete modeling of the ensured impact of these developed standards will tell you step by step how to write a business case. The sample is unlikely to reflect the actual situation of this enterprise, industry, society. Only a person inside the situation can identify the winning and losing sides. The demands for change must be effectively harmonized with all systems subject to technical regulation, taking full advantage of the implementation of any project.

Bills

Regulatory legal acts also require material or financial costs, and therefore the legislator proposing new project, must write a business case, that is, provide specific financial calculations. In these justifications directly related to the introduction of a new norm or change legal act, the income and expenses of budgets at all levels, the costs of each economic entity, the costs of society (or third parties), tax revenues, and budget efficiency must be indicated.

This is how all reforms in the state are made: management mechanisms are changed, self-regulatory organizations are introduced, the rules of trade and production are changed, and certain new services are provided by members of associations and associations. In truth, the effectiveness of the introduction of any bill can rarely be directly and accurately calculated, as society is now witnessing with its own eyes - many errors and inaccuracies accompany them. Apparently not all legislators know how to write an economic justification for ongoing operations. When carrying out reforms, the forecast of socio-economic consequences and effects is especially important.

How is it necessary?

The financial and economic assessment of any innovation should be as accurate as possible and identify political, administrative, economic and other effects and consequences in advance. The “young reformers” know best how to write an economic justification for the alienation of property from the state, but society is now overcoming the consequences of this knowledge - with great difficulty, pain and losses. But it was necessary to evaluate in monetary terms not only our acquisitions, but also our losses (this is from the section of the economic justification called “additional costs”). Has the impact of such changes on the finances of all stakeholders and budgets at all levels been identified? And this is an indispensable condition for the correct preparation of an economic justification.

No, nothing was revealed, it’s just that a huge number of the country’s citizens “didn’t fit into the market.” How to write a business case for a lack of wages that people have not seen for several months? It was necessary to conduct a thorough analysis of all changes in the structure of income, expenses and risks of economic entities, the entire society, that is, third parties, and this is an unshakable rule for drawing up economic justifications. A detailed analysis of everything related to changes in control mechanisms was needed. In this financial calculation, it was necessary to honestly evaluate (monetize!) the redistribution of benefits, and for absolutely all parties interested or affected by the changes.

About feasibility

It is an honest and impartial analysis of the situation even before the start of any changes that can help in assessing the feasibility of any project, primarily in monetary terms. Then recommendations are given on its compliance with this state of affairs. Economic justification procedures should be carried out at the very first stage, when the project is still in the development stage. Designing norm changes legal regulation requires fairly strong justification, since only then can the risks, benefits and costs of a variety of economic entities be predicted. Only a business case can outline costs based on expected revenue increases or cost reductions. Money is spent in order to earn much more in the future or spend less.

Financial subtleties

How to write a business case for a bank to convince it to invest in a project? First, we need to understand some hard truths about borrowing. Does the written justification take into account the fact that money today, as a rule, is worth more than in even the most a short time? After all, the bank will give them, of course, at interest. But even if there are personal available funds that can cover expenses, has the justification calculated the percentage on the deposit that will inevitably be lost when investing money in the project?

How to write an economic justification for an agreement with a bank so that it proves that all expenses will be effectively and more than repaid, that is, future income will pay off the interest on the loan or exceed the interest on the deposit? You need to find the most promising aspects of a given project and prove in a justification that all proposed expenses will actually bring savings or revenues equal to those planned. And you don’t need to look for ready-made forms and printed forms. It must be remembered that there are simply no hard and fast rules for documenting a financial or feasibility study.

The form of the economic justification should be the simplest and must indicate the reason that influenced the decision of the organization to carry out this project. But the discussion of the expected benefits should be very detailed, with the application of alternatives, which may be useful, and a detailed financial analysis that will determine the investment attractiveness of the project. In practice, usually no one knows how to write a feasibility study, especially for projects where significant risk is involved. Most often, it is drawn up as a separate document and serves as an annex to the exact form of initialization of this project. If, in fact, the project is small, then all the benefits can be listed directly in the initialization form.

Individual elements

Typically, the results of the project are determined and indicated in its material aspect, that is, all parameters are measurable: cost savings, increased capacity or productivity, increased market, increased income, and the like. Before writing a justification, it makes sense to talk with people interested in investing in the project, or with licensing authorities, about what exactly they want to see in the justification, what is most important to them.

And yet, some material elements must be kept in mind when writing justifications. And the more complex the project, the large quantity such elements will be present in it: cost reduction, savings, the possibility of generating additional income, increasing the company's market share, complete customer satisfaction, directions of cash flows. The latter is documented as main part economic feasibility study of the project.

Cash flows

This analysis aims to help committees or individuals reviewing projects to select the most suitable ones for implementation. The measurable elements are already listed above, but the business case does not end with them. There are also intangible ones, and there are many of them. For example, the main ones include the transition period and its costs, operating costs, business process changes, personnel replacement, and the like.

It is necessary to give due credit to alternative solutions in the economic justification, listing all available methods for implementing the project in practice. For example, among thousands of suppliers with millions of identical products offered, almost no one has the same price.

How to make the acquisition profitable? The economic justification will have to answer many, often inconvenient or simply difficult questions. It is more profitable to buy a ready-made solution or find an alternative one, own version. Or you can partially buy and partially sell it yourself. There should be many such answers in the economic justification.

Guardianship

Depending on the culture of the organization, the business case is written by the trustee or the project manager himself. But in any case, the trustee, that is, the investor, is responsible for the project; it is he who is responsible for financial efficiency, while the manager plans, carries out and practically implements it. The leader is the form, and the guardian is the content, that is, the investment. And therefore, the main thing is to convey to the investor the exact amount of costs for the entire project, indicate the correct payback period and predict attractive results.

undoubtedly an important and fundamental document on initial stages project initialization. The feasibility study is included in the package of documents, which project office provides the potential Customer with justification of the benefits and benefits of the implemented project. However, his correct spelling There are interestingly fewer articles and teaching materials devoted to, for example, writing Technical specifications(TK) And Technical project(TP). In today’s article we will try to fill this gap and talk in more detail about the feasibility study document itself and how to draw it up correctly.

Let's take a closer look at the document itself in detail.

Any project starts with processes initialization, with the formulation of goals for solving production problems.

Feasibility study is compiled to analyze the technical and economic feasibility of initializing a project project.

It is at the stage of formation and consideration of the feasibility study that the customer decides for himself whether he will continue to invest in the project or not.

Rice. 1. The decision-making process for starting a project

Main purpose of training feasibility study (TES) one is to justify the need and feasibility of creating/modernizing any system (hereinafter referred to as the Project). But the target audience for whom the feasibility study is intended may be different.

A feasibility study can be compiled both for internal use (for example, for coordination with Management and further development of the project), and for external use (for example, to confirm the investment attractiveness of the project to interested parties, creditors and investors). Second case is the most common and in demand. The development company prepares a package of documents, which also includes a feasibility study, and submits it in the form Commercial offer to a potential Customer.

Depending on for whom and for what purposes and tasks the feasibility study document is being prepared, the depth of elaboration of some sections may be different.

Here is a general summary table of the range of potential stakeholders when preparing a feasibility study:

After preparation, the feasibility study is agreed upon and approved by Management. Management makes one of the following possible decisions:

• Reject the project as inappropriate and economically unprofitable.
• Temporarily postpone the project with the need for additional clarification.
• Approve the feasibility study document with further submission for approval
• Approve the feasibility study document granting authority to implement the project.

If the project is agreed upon/approved, it is assigned a budget, and the Project Manager is given authority to implement the project. Next you canbegin further implementation processes.

1. First option, if the project is implemented within the company, the preparation of the feasibility study is carried out directly Functional customer

Functional customer is a representative of a business unit who oversees the further development of the project and is responsible for spending Money for this project.

2. Second option, when a feasibility study is prepared by a potential contractor planned to attract the implementation of a project. Third parties may also be involved in drawing up a feasibility study. consulting companies. It is generally accepted that the cost of developing a feasibility study should be no more than 5-10% from the cost of the entire project.

A feasibility study usually constitutes a separate document. However, it should be noted that in general outline A feasibility study is similar to a business plan.

But the main difference between a feasibility study and a Business plan is that a Business plan directly describes the ways to implement the strategy, goals and objectives of the organization in the context of projects necessary for implementation, and a feasibility study is more intended to justify specific project .

At the same time, a feasibility study can be formalized in different ways, in some companies it is short description on 1-2 pages in A4 format, and in some it is a complex of documents, on the preparation of which a group of dedicated specialists or even the entire department works.

There is an official structure of the Feasibility Study according to the Soviet GOST 24.202-80:

In practice, each company prepares a feasibility study in its own format, describing only the main sections of the feasibility study.

You can select main standard sections of the feasibility study, which are necessarily present in the feasibility study in one form or another:

• Project Summary
• Project idea. What is the idea of ​​a feasibility study for a project, and why is it needed? Project feasibility study plan with step-by-step explanation.
• Rationale. Why exactly such solutions are proposed, the reason for choosing this particular material, type of activity or equipment. It is also necessary to include all possible calculated risks in the feasibility study calculation.
• Requirements calculations for production (financial, raw materials, labor, energy). It is necessary to calculate how much money will be required to launch this project. If you are preparing a feasibility study to obtain a loan, you should indicate all possible sources of income
• Economic justification(calculations that show the result of the enterprise’s activities after changes)
• Conclusions and offers(summarizing, conclusion, evaluation)

If you will develop a feasibility study using your own structure and format, be sure to include standard mandatory sections in the document. The wording of sections may be different, but the semantic purpose of the sections must be reflected in final document.

The period for preparing a feasibility study depends on the level of detail in the description of the feasibility study; the volume of functionality planned for development and implementation; number of processes under consideration; readiness and relevance of current regulations and other internal documents describing the provisions for the operation of the processes under consideration; availability of ready infrastructure and dedicated personnel.

So the time frame for preparing a feasibility study, depending on the volume and complexity of the calculations, ranges from 3 days to several months.

For example, as a basis for the description, let’s take the structure of a feasibility study according to GOST 24.202-80, because it currently has the most extensive structure and is the official structure for developing a feasibility study.

Why exactly SWOT analysis? Firstly, it will most fully reflect the information that interests us to describe this section. Secondly, this tool is the most common among Managers, because... displays the current state with strengths and weaknesses and allows you to identify the direction in which you need to move further, using strengths to eliminate weak sides and minimize risks.

Section 3. Goals, criteria and limitations when implementing EDMS

These same indicators can be used in the future as key performance indicators (KPI, Key Performance Indicators).

KPI, Key Performance Indicators – these are performance indicators of a unit (enterprise) that help the organization achieve strategic and tactical (operational) goals.

Section 4. Functions and tasks of the implemented Project

Section 5. Expected technical and economic results of the Project implementation

The section provides a list of expected costs, economic efficiency, sequence and stages of implementation of the Project with the distribution of necessary resources. If the project is calculated for more than a year, then the indicators are calculated both as a total and for each year separately.

Index ROI must be calculated at the stages of: preparation of a feasibility study based on preliminary expert assessments; upon completion of implementation based on assessments taking into account process optimization; during the period of operation of the System based on actual indicators. Thus, the dynamics of changes and the actual effectiveness of implementation are monitored

Also included in the feasibility study are calculations NPV and financial and economic indicators EBIT, NOPLAT and others.

NPV, Net present value ) is the sum of discounted values ​​of the payment stream, reduced to today. Used materials:

1. UFC-Invest, Feasibility study
2. Laboratory of business ideas, How does a feasibility study differ from a business plan
3. Osnova.ru, We are developing a feasibility study for the implementation of EDMS (part 1)
4.Guidelines for the preparation of industrial feasibility studies

How to make a business case correctly? Recommendations with examples. (10+)

Economic justification. Example

The material is an explanation and addition to the article:
Rationale. Tips for writing
How to write, compose a justification? How to justify the proposed solution?

A business case justifies expenses based on expected increases in revenue or reductions in costs. That is, it is proposed to spend certain money in order to earn more or spend less in the future.

There are two subtleties in the economic justification. Firstly, you need to take into account the fact that money today is more valuable than money after some time. Often there is no free money, they have to be borrowed at interest. Even if there is free money, the alternative is to place it on deposit. When deciding to invest this money, we lose the interest that we could earn on the deposit. So we must prove that the effect of our proposed expenses will pay off the interest on the loan or exceed the interest on the deposit. Secondly, we need to prove that the expenses we propose will actually bring the planned income or savings.

I will give an example of an economic justification for automation with comments. All numbers are fictitious.

Economic justification

Project Description

In a cleaning company (a company that cleans clients’ premises), it is proposed to implement automatic system cleaning of premises based on a specialized robot. The capacity of one system module is 200 sq. m/hour, which corresponds to the work of two employees (employees work 40 hours a week, and the module can work 24 hours a day). Electricity consumption - 0.3 kW. It is proposed to introduce 10 such modules.

Initial Investment

The cost of the system is 300 thousand rubles. Financing is planned to be carried out through a loan at 12% per annum.

Current expenses

Operating 10 modules will require hiring one employee for administration, programming and system maintenance. The salary of such an employee will be 50 thousand rubles. Taking into account the unified social tax, payroll expenses will amount to about 65 thousand rubles. Interest on the loan will be 30 thousand rubles. Electricity costs will be (at a cost of kWh 5 rubles) about 11 thousand rubles.

Cost savings

The introduction of robotic modules will make it possible to reduce 9 employees involved in manual cleaning of premises. There are currently 10 employees. One must be left to perform delicate operations. Payroll costs for one such employee are 40 thousand rubles. Total savings of 360 thousand rubles.

Additional income

The implementation will double the capacity of the enterprise and attract additional space for maintenance. Taking into account the fact that the enterprise’s monthly income is 600 thousand rubles excluding VAT, the income after implementation will be 1.2 million rubles.

In addition, the risks associated with personnel difficulties, employee disability, and temporary downtime will be reduced. Temporary downtime may occur if one of the clients refuses before attracting a new one. The cost of idle time for a cleaning module is significantly lower than for an employee.

Conclusions. Draft decision

The net effect from the introduction of modules will be 1,454 thousand rubles. It is proposed to approve the decision to purchase and implement the system.

Applications

Technical documentation for cleaning modules. Preliminary agreement for a bank loan. Detailed economic calculations.

A business case in its simplest form states the reason why the organization concerned intends to undertake a given project. The business case usually includes a discussion of the benefits that the organization can receive from the successful completion of a given project, possible alternatives, and the financial analysis in order to determine the investment attractiveness of this project.

In practice - especially in the case of large projects or projects that involve significant risk for the organization - the business case is often drawn up as a separate document and attached to the project initiation form. In the case of small and medium-sized projects (which are most common), the benefits include savings, cost reduction, the possibility of generating additional income, etc. can be listed directly in the project initialization form.

A business case is much like the analysis we perform when making a large purchase. For example, you are about to buy new car convertible and are willing to pay no more than $35,000 for it. First, you must find out which automakers produce convertibles that fit into your price range (from a project management perspective, you are considering alternative options).

You then determine your desired vehicle specifications and negotiate the final price with the distributor (from a project management perspective, you determine the benefits of these technical characteristics). You may also want to consider financial alternatives and decide what interest rate and payment type fits within your budget.

If you are primarily interested in total amount, which you will have to pay for this car (including interest payments), then you should choose the payment option with the lowest interest rate that you can find. But if the amount of monthly payments is important to you, then when searching for the same options with the lowest interest rate, you should give preference to those whose terms allow you to stretch payments over as long a period as possible. The business case considers similar factors.

Elements of the business case

There are no hard and fast rules for documenting the business case. Typically, you are trying to determine the tangible results of completing (or not completing) a given project. By tangible we mean “measurable” - cost savings, increased productivity or capacity, increased revenue, increased market share owned by the company, etc. By communicating with those interested in your project, you can find out what is most important to them.

The list below will give you some idea of ​​the types of physical elements that need to be kept in mind when determining the business case for a project. Not all of these elements need to be documented for every project; however, the more complex the project and the greater the risk it poses to your organization, the more of these elements you need to include in the business case:

• saving;
• cost reduction;
• opportunities related to receiving additional income;
• increasing the market share owned by the company;
• customer satisfaction;
• cash flow analysis.

The cash flow analysis is documented as part of the business case for the project involved. The purpose of this analysis is to assist the persons (or committees) reviewing requests to select projects suitable for implementation. We will look at several methods for analyzing cash flows in the article about “Project Selection Criteria”. In addition to the measurable elements, the business case should also include intangible elements, including possible, although unplanned, costs to the organization. The list below contains a number of examples of this type:

• transition costs;
• operating costs;
• changes in business processes;
• changes regarding personnel;
• recurring benefits.

Other business case considerations

Along with costs, benefits and cash flow analysis, the business case must take into account alternative solutions or methods of practical implementation of the relevant project. For example, there are thousands of suppliers offering millions of products that do x, y and z, but each of them has a different price. Is, for example, a ready-made solution offered for $2 million a better option than an alternative solution that is partly purchased externally and partly implemented? on our own this organization?

Questions of this kind very often have to be considered in economic justification. Each of alternative options must include both the tangible and intangible elements listed in the previous section. The economic justification should end with certain conclusions and recommendations. If the business case is properly prepared and documented, it speaks for itself. However, in any case, it is a good idea to indicate which alternative is the best for your organization.

The business case can be prepared by the trustee or the project manager - this depends on the culture of the organization concerned. However, regardless of who prepares the business case for the project, it is the trustee who is responsible for its financial viability, while the manager is responsible for the successful planning, execution and practical implementation. Figuratively speaking, the manager monitors the correct implementation of the project form, but the guardian fills this form with content (investments), which ultimately determines the amount of profit provided by the final product (or result) of this project.

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