Before starting any project, it is necessary to calculate its economic feasibility. It shows that the selected production methods, the necessary equipment, production facilities and other factors have an economic justification. It is important to determine whether their use will be cost-effective.
Typically, the business case for a project includes some technical calculations. It has a certain structure. It includes, first of all, general provisions or criteria. This is the name of the project, its goals and organizers. This also includes a description of the products that are supposed to be released, the market, the technology that will be used, the necessary equipment, production facilities and their locations. It also describes the deadlines and approximate economic indicators that are expected to be received. All these data are given in the form of a brief overview and familiarization with the project.
Further, the business case includes a more complete market overview for product sales. Here is an assessment of the market, its condition, the availability of identical goods that will compete with the products. The product itself and its advantages are also described, that is, its competitiveness in this market is evaluated. They focus in more detail on the special qualities of the product, its technological characteristics. When assessing the market, the demand for these products, fluctuations in the cost of similar goods and pricing are also taken into account.
The next item, which has an economic justification, is a description of the technological equipment that is supposed to be used in the project. Here, the necessary technical resources and their quantity are described in more detail. The focus is on the specifics of production, on which the choice of equipment depends. Possible suppliers with whom it is supposed to work are also considered. Much attention is paid to production technology.
The following is a description of the required production facilities. Here, more attention is paid to the territories and their features. The necessary infrastructure and utilities are also reviewed and described. Climatic conditions and, if necessary, the presence of geological developments are also important.
The justification of the economic efficiency of the project necessarily includes, as the main point, the production program itself and its scope. To calculate the possible indicators that can be obtained as a result of the project, you need to know its power.
Naturally, the project also includes the need for procurement and supply of raw materials. Be sure to enter their list, an approximate price level and methods of transportation. Deliveries should be calculated several years in advance. A scheme for the delivery of raw materials to the place of production is also provided.
Important are the personnel necessary for the implementation of the project and the production process, as well as their training. The following is a project development schedule. We should not forget about compliance with environmental standards and environmental protection. Important are relations with the public and authorities.
In the conclusion, the calculations of costs and investments are indicated. This includes all the funds that need to be spent on the purchase of materials, equipment, rental of production space, remuneration, advertising, taxes, insurance and other possible costs.
The economic feasibility of the project must necessarily contain sources of financing for the project, its conditions and schedule. After drawing up such a detailed plan, you can proceed to its immediate implementation if it has a positive economic assessment.