The document discusses the technical feasibility study that should be conducted for a new business. It outlines key areas that must be addressed including selecting products/services, determining production needs, estimating costs, evaluating required equipment and technology, identifying suitable locations and facilities, sourcing raw materials, and calculating labor requirements. Conducting an thorough analysis of these areas is necessary to determine if the business has the technical expertise and resources to operate successfully.

1. TECHNICAL FEASIBILITY

2.  A business is considered technically and
operationally feasible if it has the necessary
expertise, infrastructure and capital to develop,
install, operate and maintain the proposed
system, and that by establishing such a system, the
business will be able to deliver goods or services
at a profit.
 When considering a new business, it is important to
consider if there is sufficient access to resources. One
of the primary reasons that new business fails is
under-capitalisation - not enough money to keep
the business going from startup until it starts to make
a profit. This can lead to a lack of resources.

3. WHAT SHOULD BE DONE?

4. 1. SELECT
 THE PRODUCT (S) &/OR SERVICE (S)
 THE MANUFACTURING/PRODUCTION PROCESS
 THE CAPACITY & DESIGN
 THE SUPPLIES
 THE LOCATION
 THE LAY OUT
 THE STRUCTURES SPECIFICATIONS
 THE RAW MATERIALS & THEIR SOURCES

5. 2. DETERMINE
 THE QUANTITY & QUALITY OF THE PRODUCT (S)
& SERVICE (S) TO BE PRODUCED
 THE LABOR NEEDED, BOTH SKILLED &
UNSKILLED
 THE UTILITIES REQUIRED
 THE WASTE DISPOSAL METHOD
 THE TRANSPORTATION NECESSARY

6. 3. PROVIDE
 ESTIMATES OF THE TOTAL PROJECT COST, &
ENUMERATE THE MAJOR ITEMS OF CAPITAL
COST

7. 4. LIST DOWN IN DETAIL
 THE ESTIMATED PRODUCTION & OVER HEAD
COSTS THAT WILL GO INTO OPERATING THE
PROPOSED PROJECT

8. 5. TAKE INTO CONSIDERATION
 THE MAJOR TECHNOLOGICAL DEVELOPMENT IN
THE INDUSTRY WHICH MAY AFFECT THE
COMMERCIAL OR TECHNICAL SOUNDNESS OF
THE PROJECT.

9. THE TECHNICAL STUDY IS PRESENTED BY
DESCRIBING & MAKING NECESSARY
CALCULATIONS FOR THE FOLLOWING:

10. A. THE PRODUCT(S)/SERVICE(S)
 THIS PORTION DESCRIBES THE PRODUCTS OR
SERVICES TO BE PRODUCED/PROVIDED & SOLD.
 WHICH SPECIFIES
 THE PRODUCTS’ PHYSICAL, MECHANICAL, &
CHEMICAL PROPERTIES
 THEIR VARIOUS USES, BOTH AS FINISHED GOODS
& INDUSTRIAL INPUTS.

11. B. MANUFACTURING/ PRODUCTION
PROCESS
 THE SELECTED MANUFACTURING/PRODUCTION
PROCESS MUST BE DESCRIBED SIMPLY & CLEARLY,
PREFERABLY WITH THE AID OF FLOW CHARTS AND
DIAGRAMS.
 THE ALTERNATIVE PROCESSES & THE WAY THEY
COMPARE WITH THE CHOSEN PROCESS MUST BE
MENTIONED.
 THE ANALYSIS SHOULD FURTHER TOUCH ON THE
MANUFACTURING/PRODUCTION PROCESSES USED IN
EXISTING BUSINESSES WITH THE SAME OR SIMILAR
ACTIVITY, BOTH DOMESTIC & FOREIGN.
 LICENSING AGREEMENTS & PATENTS SHOULD ALSO
BE REVIEWED.

12. C. SIZE OF THE BUSINESS & PRODUCTION
SCHEDULES
 MINIMUM & MAXIMUM RATED CAPACITY
 FIXED COSTS
 ACTUAL CAPACITY UTILIZATION
 THE NUMBER OF SHIFTS PER DAY
 NUMBER OF OPERATING DAYS PER YEAR

13. D.PRODUCTION SCHEDULES
 THE EXPECTED GROWTH IN MARKET SHARE
 THE AVAILABILITY OF FINANCING FOR POSSIBLE
EXPANSION
 THE AVAILABILITY OF MORE RAW MATERIALS
 THE LEVEL OF UTILIZATION OF PLANT CAPACITY

14. E. MACHINERY & EQUIPMENT
 IDENTIFIED & INDIVIDUALLY LISTED ACCDG TO
TYPE & USE
 SPECIFICATIONS, CAPACITIES & COSTS MUST BE
DESCRIBED IN DETAIL
 THE ORIGIN OF THE MACHINERY & EQUIPMENT,
WHETHER LOCAL OR IMPORTED
 THE MANNER OF & COST OF TRANSPORTING
THEM MUST BE INDICATED

15. E. MACHINERY & EQUIPMENT
 What type of equipment and technology will the business
need to produce its product/service?
 What costs are involved to purchase and set up the
equipment? What are the costs involved in the ongoing
running of the equipment?
 EQUIPMENT SUPPLIERS:
 Who are the potential suppliers of the equipment?
 Where are they located?
 What sort of service and warranties do they provide?
 How long will it take to acquire the equipment and begin
operations?

16. F. LOCATION
 A THOROUGH & COMPARATIVE ANALYSIS FOR EACH
POTENTIAL LOCATION SHOULD BE MADE TO DETERMINE
THE MOST IDEAL SITE.
 IT HAS TO CONSIDER THE FOLLOWING FACTORS:
 THE ACCESSIBILITY TO, & AVAILABILITY OF, RAW MATERIAL
SOURCES
 THE AVAILABILITY OF CHEAP OR MODERATELY-PRICED
UTILITIES SUCH AS POWER, WATER, OR FUEL
 THE COMBINED COST OF TRANSPORTING RAW MATERIALS &
FUEL TO THE SITE
 THE PROXIMITY TO DISTRIBUTING OUTLETS
 THE AVAILABILITY OF SKILLED & UNSKILLED LABOR
 MAPS & CHARTS OF THE PROPOSED SITE MUST BE
INCLUDED

17. G. LAYOUT
 THE LAYOUT SHOULD BE CLEARLY DEPICTED
THROUGH DIAGRAMS & DESCRIPTIONS.
 A GOOD LAYOUT IS CHARACTERIZED BY
 MINIMUM MATERIAL HANDLING
 EFFECTIVE SPACE UTILIZATION
 SMOOTH WORK FLOW
 SAFE & CONDUCIVE WORKING AREA FOR THE
WORKERS
 SAFETY AND SANITATION FACILITIES, &
 FLEXIBILITY OF ARRANGEMENTS

18. H. BUILDING & FACILITIES
 What are possible locations for the facility (office/manufacturing
plant)?
 What size facility is needed?
 What are the costs involved in the building? Do you need to fit it
out? How much will it cost to get all necessary utilities
connected?
 Does the proposed location have adequate access to
infrastructure and services such as highways, railway and
utilities?
 Will you need to build your own facility, or purchase an existing
one?
 Where will the facility be located in relation to your customers?
 Who will be responsibile for transport of goods between the
facility and the market? What are the costs involved?

19. H. BUILDING & FACILITIES
 THE SITE, TYPE, & COSTS OF THE BUILDING AND
LAND, AS ENVISIONED IN THE PROJECT, SHOULD
ACCURATELY BE PRESENTED.
 THE CONSTRUCTION COST OF THE BUILDING &
FACILITIES SHOULD BE PRESENTED AS ADAPTED
TO THE MACHINERY & EQUIPMENT THAT WILL
BE USED IN THE PROJECT.
 LAND IMPROVEMENTS SUCH AS ROADS,
DRAINAGE FACILITIES, ETC. & THEIR RESPECTIVE
COSTS SHOULD BE COMPUTED & INCLUDED.

20. I. RAW MATERIALS & SUPPLIES
 THE REQUIRED RAW MATERIALS SHOULD BE LISTED
DOWN AND THE BASIS FOR THEIR SELECTION MUST
PRESENTED.
 DESCRIPTIONS AND SPECIFICATIONS ON THEIR
PHYSICAL, MECHANICAL, AND CHEMICAL
PROPERTIES MUST ALSO BE GIVEN.
 CURRENT AND PROSPECTIVE COST OF RAW
MATERIALS, THE AVAILABILITY AND CONTINUITY OF
SUPPLY, AND THE CURRENT PROSPECTIVE SOURCES
SHOULD ALSO BE INCLUDED.
 THE VOLUME REQUIRED AT VARIOUS PHASES OF
OPERATIONS MUST BE CLEARLY PRESENTED.

21. J. UTILITIES
 THIS PORTION DESCRIBES THE AMOUNT, COST,
AND SOURCES OF ELECTRICITY, FUEL, WATER,
AND/OR STEAM REQUIRED.
 THIS MUST BE DETERMINED IN RELATION TO
THE PRODUCTION SCHEDULE AND CAPACITY
UTILIZATION DEFINED. ALTERNATIVE SOURCES
OF THESE UTILITIES AND THE FEASIBILITY OF
THEIR USE MUST ALSO BE DESCRIBED.

22. K. WASTE DISPOSAL
 A DESCRIPTION OF THE QUANTITY, MANNER OF
DISPOSAL, AND THE COST INVOLVED IN DOING
AWAY WITH EXPECTED WASTE FROM
PRODUCTION IS NECESSARY.
 THE ANALYSIS MUST BE EXPANDED TO
CONSIDER THE POSSIBILITIES OF FURTHER
USING THESE WASTES.

23. L. PRODUCTION COST
 THE MONETARY ASPECT OF ALL THE
PRODUCTION PLANS IS PUT INTO PERSPECTIVE.
 HOW MUCH DOES IT COST TO PRODUCE ONE
UNIT OF OUTPUT?
 TO ARRIVE AT THIS, THE FF MUST BE
DETERMINED:
 RAW MATERIAL COSTS
 LABOR COST
 OVERHEAD COST( FIXED COST), OPERATING COSTS
(VARIABLE COSTS)
 OTHER PERTINENT COSTS

24. M. LABOR REQUIREMENT
 THE VARIOUS JOBS AND FUNCTIONS NECESSARY FOR THE
OPERATIONAL STAGE MUST BE DESCRIBED.
 FOR COSTING, LABOR IS GENERALLY CLASSIFIED INTO
THREE TYPES:
 DIRECT
 INDIRECT
 ADMINISTRATIVE
 THE NUMBER OF WORKERS TO BE EMPLOYED FOR EACH
JOB CLASSIFICATION
 THE PAY SCALES
 EMPLOYEES DEVELOPMENT PROGRAMS
 THE ORGANIZATION SET-UP
 THE AGGREGATE LABOR COSTS

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