The project feasibility study report

The project feasibility analysis report, also known as the project feasibility study report and re-searchable report, is a kind of business document which is in a relatively fixed format and is used to make project declaration to the national project audit department (such as the development and reform commission). mainly used to explain the feasibility and necessity of the project at all levels, for the project audit and approval, access to financial support, clear the direction of the project, planning anti-risk strategy has a very important role.

Overview of investment decision analysis edit

As an essential key link before investment decision-making, the project feasibility analysis report is based on the approval and approval of the project proposal in the previous stage.  

 

Mainly on the project market, technology, finance, engineering, economic and environmental aspects of accurate system, complete analysis, including market and sales, scale and products, site, raw material supply, process technology, equipment selection, personnel organization, implementation plan, investment and cost, efficiency and risk calculation, demonstration and evaluation. 

 

Select the best option, and then give conclusive advice on whether or not to invest in the development of the project and how to invest, or whether to terminate the investment or continue to invest in the development. 

 

So as to provide a scientific basis for investment decision-making and serve as a basis for further work.

The purpose of the report edit voice

1. For enterprise financing, foreign investment cooperation feasibility analysis report. such studies typically require accurate market analysis, sound investment options, and practical operational solutions such as competitive analysis, marketing plans, management programs, and technology development.
2. Feasibility analysis report for the project of the national development and reform commission (formerly the planning commission). This document is based on the administrative licensing law of the people's republic of china and the decision of the state council on the establishment of administrative permits for administrative approval projects that really need to be retained, and is the basic document for the establishment of large-scale infrastructure projects, and the ndrc approves, records or approves a project on the basis of a feasibility study report to determine whether or not a project is implemented. in addition, pharmaceutical companies are required to prepare feasibility studies when applying for relevant certificates.
3. For bank loans feasibility research and analysis commercial banks in the loan before the risk assessment, the project needs to issue a detailed feasibility study report, for the china development bank and other domestic banks, the report issued by the class a qualification unit, usually do not need to organize expert review, some banks loan feasibility study report does not need qualifications, but to find a reasonable financing plan, analysis is correct, comprehensive information. in addition, when applying for relevant national policy support funds, business registration often also need to prepare feasibility study report, this document is similar to the researchable report for bank loans.
4. Used to apply for imported equipment duty-free feasibility research and analysis report, which is mainly used for duty-free import equipment, and the project that applies for the confirmation of sino-foreign joint venture and domestic enterprise project needs to provide the project feasibility study report.
5. For overseas investment projects approved feasibility analysis report

Enterprises in the implementation of the "going out strategy" to foreign mineral resources and other industries investment, need to prepare feasibility analysis report to the national development and reform commission or the provincial development and reform commission, need to apply for the export-import bank of china overseas investment key projects credit support, also need feasibility study report.

Among the five types of research available above, the highest entry threshold is (2) (4) (5), and the author needs to have engineering consulting qualification, which is issued by the national development and reform commission and is divided into three levels: class a, class b and class c.

• Prepare the main pointsedit voice relevant national development planning and planning documents. including the relevant provisions on encouragement, concessions, restrictions and prohibitions for the industry;
• the approval to be requested by the project department in charge of the project construction;
• project approval documents;
• a contract or agreement entrusted by the project contractor for a detailed feasibility analysis;
• the preliminary selection report of the enterprise;
• technical information on major processes and installations;
• information on the current state of the environment in the proposed area;
• agreement between the project contractor and the relevant parties, such as preliminary agreements on investment, raw material supply, construction land, transportation, etc.;
• laws and regulations of countries and regions on industrial construction. such as "three waste" emission standards, land regulations, labor protection regulations;
• relevant economic regulations and regulations of the state. such as sino-foreign joint venture law, taxation, foreign investment, loans and other provisions;

In the process of preparing the project feasibility analysis report, especially when making financial and economic evaluation of the project, we also need to refer to the following relevant documents:


1. accounting law of the people's republic of china, no. 24 of the presidential decree, effective january 1, 2000;
2. accounting standards for enterprises, no. 5 of the ministry of finance order, effective january 1, 2007;
3. regulations on the implementation of the enterprise income tax law of the people's republic of china, decree no. 512 of the state council, effective january 1, 2008;
4. regulations on the implementation of the provisional regulations of the people's republic of china on value added tax, which came into effect on january 1, 2009 under order no. 50 of the ministry of finance and the state administration of taxation;
5, "construction project economic evaluation methods and parameters (third edition)", the national development and reform commission in 2006 audit and approval;
6, the project must comply with other domestic and foreign industrial and commercial tax legal documents.

The report template edit voice

Take the project feasibility analysis report template as an example

The general theory of the project

As the first part of the feasibility analysis report, the main problems and conclusions of the various parts of the study report should be comprehensively described, and the feasibility of the project should be put forward to make final recommendations, which can facilitate the approval of the feasibility analysis.


First, the project overview


(1) the name of the project
(2) introduction of the project contractor
(3) introduction of the undertaking unit for the feasibility analysis of the project
(4) introduction by the competent department of the project
(5) the content, scale and objectives of the project construction
(5) the construction site of the project


Second, the main conclusions of the project feasibility analysis


In the feasibility analysis, the project's product sales, raw material supply, policy guarantee, technical programs, total funding and financing, the financial benefits of the project and national economy, social benefits and other major issues, should be drawn clear conclusions, including:

(1) the market prospects of the project products
(2) the supply of raw materials for the project
(iii) the issue of project policy protection
(iv) project funding security
(5) the issue of project organization and security
(6) the technical support of the project
(7) the issue of project manpower security
(7) project risk control issues
(8) conclusions on the financial benefits of the project
(ix) conclusions on the social benefits of the project
(10) comprehensive evaluation of the feasibility of the project


Third, the main technical and economic indicators table

In the general section, the main technical and economic indicators of each part of the study can be summarized, the main technical and economic indicators table can be listed, so that the approval and decision makers have a complete picture of the project.
fourth, there are problems and suggestions
explain the main issues of the project raised in the feasibility analysis and make recommendations for resolution.

The project background

This part should mainly explain the background of the project launch, the necessity of investment, the reasons for investment and the supporting conditions of the project, etc.

First, the project construction background

(1) china's luxury goods industry is developing rapidly
(2) the reason for the initiation of the project sponsor
(iii) the demand for jadeite is strong


Second, the necessity of project construction


(1) to meet the consumer's consumption needs
(2) to optimize the industrial structure of the region
(3) to promote the employment of residents of the region
(iv) ...

Third, the feasibility of project construction

(1) economic viability
(ii) policy feasibility
(iii) technical feasibility
(iv) model feasibility
(v) organizational and human resources feasibility

Market analysis

The important position of market analysis in feasibility analysis is that any project, the determination of production scale, technology selection, investment estimation and even site selection, must have a full understanding of market demand before it can be decided. and the results of market analysis can also determine the price of products, sales revenue, and ultimately affect the profitability and feasibility of the project. in the feasibility analysis report, we should study the current market situation in detail, as the basis for later decision-making.

First, project product market research

(1) product international market survey
(2) investigation of the domestic market of the product
(3) product price survey
(4) market investigation of upstream raw materials for products
(5) product downstream consumer market survey
(vi) product market competition survey


Second, product market forecast

Market forecast is the continuation of market research in time and space, is the use of market research information, according to the conclusions of the market information analysis report, the future market demand and related factors of quantitative and qualitative judgment and analysis. in the feasibility analysis work, the conclusion of the market forecast is to formulate the product plan and determine the necessary basis for the scale of the project construction.

(1) product international market forecast
(2) forecast of the domestic market of the product
(3) product price forecast
(4) the upstream raw material market forecast of the product
(5) the downstream consumer market forecast of the product
(6) summary of the development prospects of processing projects

Plan your plan

First, the project product capacity planning program

Second, the project product process planning program

(1) process equipment selection
(2) process description
(3) the process


Third, the project product marketing planning program

(1) marketing strategic planning
(2) marketing model

In the commodity economy environment, enterprises should develop qualified sales model according to market conditions, strive to expand market share, stabilize sales prices, improve product competitiveness. therefore, in the feasibility analysis, the marketing model should be studied.

1, investors divided
2, self-marketing enterprises
3, the country part of the acquisition
4, distributor sales and sales agent situation analysis


(3) promotional strategies

General rules for civil construction

First, the project construction site

(1) the geographical location of the project construction site
(2) the natural conditions of the project construction site
(3) the resources of the construction site of the project
(4) the economic situation of the project construction site
(5) the population situation of the land where the project is built

Second, the general rules of civil construction of the project

(1) project site and plant construction
1, the site
2, plant construction content
3, plant construction cost

(2) the master plan of civil planning


(3) on-site and off-site transportation

1, off-site transport volume and mode of transport
2, on-site transport volume and mode of transport
3, on-site transportation facilities and equipment

(4) civil and supporting works of the project

1, the project occupies land
2, the project civil construction and supporting engineering content

(5) the cost of civil and supporting works of the project
(6) other ancillary works of the project


1, water supply projects
2, power supply engineering
3, heating works
4, communications engineering
5, other


Security scenarios


In the construction of the project, we must implement the national regulations and laws on environmental protection, energy conservation and occupational safety and health, the short-term and long-term impact of the project on the environment, the factors affecting the health and safety of workers should be analyzed in the feasibility analysis stage, put forward prevention and control measures, and evaluate it, recommend the best solution that is technically feasible, economical, and has a reasonable layout with less harmful effects on the environment. according to the current regulations of the state, all construction projects with environmental impact must implement the approval system of environmental impact reports, and in the feasibility analysis report, environmental protection and labor safety should be specifically discussed.


First. project environmental protection program

(1) the basis for the environmental protection design of the project
(2) environmental protection measures for the project
(3) evaluation of environmental protection of the project

Second, project resource utilization and energy consumption analysis

(1) project resource utilization and energy consumption standards
(2) project resource utilization and energy consumption analysis


Third, the project energy-saving program

(1) the basis for the energy-saving design of the project
(2) project energy conservation analysis


Fourth, the project fire protection program

(1) the basis for the fire protection design of the project
(2) fire protection measures for the project
(3) fire alarm system
(4) fire extinguishing system
(5) fire knowledge education

Project labor safety and health program

(1) the basis for the design of labor safety of the project
(2) the labor safety protection measures of the project

Staffing arrangements

In the feasibility analysis report, according to the project size, project composition and process, the corresponding enterprise organization, the total number of labor officers and labor sources and the corresponding personnel training plan are proposed.

First, the project organization plan

(1) form of organization
(2) the work system

Second, the project labor officers and personnel training

(1) labor clerks
(2) estimation of the total annual salary and the average annual wage of the employees
(3) personnel training and cost estimates schedule


The schedule of the project implementation period is also an important component of the feasibility analysis report. 

 

So-called project implementation period can also be called investment time, refers to from the formal identification of construction projects to the project to reach normal production period. this period includes project implementation preparation, fund raising arrangements, survey design and equipment ordering, construction preparation, construction and production preparation, commissioning until completion acceptance and delivery use and other work stages. 

 

The investment activities and work links at these stages are some of which are mutually reinforcing, closely linked, and some of which are carried out simultaneously and cross-cutting. therefore, in the feasibility analysis stage, it is necessary to make a unified plan, comprehensive balance and reasonable and practical arrangements for all the work links in each stage of the project implementation period.


First, the various stages of project implementation

(1) establish a project implementation management agency
(2) fund raising arrangements
(3) acquisition and transfer of technology
(4) survey design and equipment orders
(5) construction preparations
(6) construction and production preparation
(7) completion acceptance


Second, the project implementation schedule

Third, the project implementation costs

(1) management fees for construction units
(2) production preparation costs
(3) training fees for production workers
(4) the cost of the purchase of office and living furniture
(v) other expenses payable source
(ii) project financing programmes


Third, the project investment and use plan

(1) investment and use plan
(2) borrowing repayment plan

Fourth, the project financial evaluation description and financial calculation assumptions

(1) the basis for calculation and the relevant instructions
(2) the basic setting of project calculation

Five, estimation of total cost of the project

The total cost estimate model for the project

(1) direct costs
(2) wages and benefits
(iii) depreciation and amortization
(4) wages and benefits
(5) repair costs
(6) financial expenses
(7) other expenses
(8) financial expenses
(9) total cost

Sales revenue, sales tax and additional and value-added tax estimates

(1) sales revenue
(2) sales tax and surcharges
(3) vat
(4) sales revenue, sales tax and additional and value-added tax estimates

Project investment cash flow estimation model

7. profit and loss and profit distribution estimate 8, cash flow estimate

(1) estimation of cash flow from project investment
(ii) project capital cash flow estimates

Project analysis

Most of the data used in the evaluation of construction projects are derived from projections and estimates. due to the limited information and information, the actual situation in the future may differ, which poses risks to project investment decisions. to avoid or minimize risk, the impact of uncertainty factors on the project economic evaluation indicators is analyzed to determine the reliability of the project, which is the uncertainty analysis.

Depending on the content and focus of the analysis, uncertainty analysis can be divided into breakeven analysis, sensitivity analysis and probability analysis. in feasibility analysis, breakeven analysis, sensitivity allocation and probability analysis are generally carried out, depending on the project situation.

(1) breakeven analysis
(ii) sensitivity analysis

Project benefits

After the technical route of the construction project is determined, the financial and economic benefits of the different schemes must be evaluated to determine whether the project is economically feasible and better than the selection of excellent solutions. 

The evaluation conclusion of this part is one of the main bases for the proposed options, and also an important basis for investment decision-making on construction projects. this section provides a summary of the main contents of the evaluation of financial, economic and social benefits in the feasibility analysis report

First, financial evaluation

The financial evaluation is to examine the financial situation of profitability, debt repayment ability and foreign exchange balance ability after the completion of the project, in order to judge the financial feasibility of the construction project. 

 

The financial evaluation is carried out in a dynamic-oriented manner, combining static analysis with dynamic analysis. the financial evaluation index is compared with the corresponding benchmark parameters - financial benchmark yield, industry average investment payback period, average investment profit margin, investment profit tax rate, to determine whether the project is financially feasible.


(I) net present value of finance

Financial calculation

The financial npv refers to the sum of the present value of each year of the project calculation period, converted to the present value at the beginning of the construction period (the beginning of the first year of the project calculation period) according to a set standard discount rate (base rate of return). 

The npv of finance is the main dynamic evaluation index to examine the profitability of the project during its calculation period. if the project's npv is equal to or greater than zero, the project's profitability is at or above the required level of profitability, and the project is financially viable.

(II) FINANCIAL IRR (FIRR)

• The financial irr is the discount rate at which the sum of the present value of the project's financial net cash flows for each year of the calculation period is equal to zero, i.e. the discount rate at which the project's net financial present value is equal to zero.
• the financial irr is a dynamic indicator that reflects the actual rate of return of the project, and the larger the indicator, the better.
• in general, the project is feasible when the irr is greater than or equal to the base rate of return.

Financial accounting

Return on investment

The payback period can be divided into a static payback period and a dynamic payback period according to whether the time value of funds is taken into account. take the dynamic payback period, for example:

(l) the formula is calculated

The calculation of dynamic payback period is calculated in practical application according to the project's cash flow statement, using the following approximate formula:

(Cumulative net cash flow present value positive number of years -1) plus the present value of the accumulated net cash flow present value of the previous year / the present value of the positive year net cash flow

(2) Evaluation criteria

1) When Pt ≤ Pc (base payback period), it is feasible to indicate that the project (or scheme) can recover the investment within the required time;
2) When Pt > a Pc, the item (or scenario) is not feasible and should be rejected.

(3) Project RoI return on investment


Project Return on Investment refers to the annual EBIT ratio to total project investment (TI) for the normal year after the project reaches design capability or the average EBIT over the operating period. The total investment rate of return is higher than the yield reference value of the same industry, indicating that the profitability expressed in the total investment rate of return meets the requirements.

When ROI ≥ sector (industry) average investment margin (or benchmark investment margin), the project is financially acceptable.

(4) project investment interest tax rate
 

The project investment profit tax rate refers to the ratio of the total annual profit or average annual profit of the project to the sales tax and the additional and total project investment in a normal production year after the project reaches the design production capacity, calculated as:
investment profit tax rate - total annual profits tax or total annual average profits tax / total investment × 100% when the investment interest rate ≥ the average investment interest rate (or benchmark investment interest rate) of the sector (industry), the project may be considered for acceptance financially.

(5) Project Capital Net Profit Margin (ROE)

Project capital Net profit margin refers to the ratio of annual net profit (NP) to project capital (EC) for the normal year after the project reaches design capacity or during the operating period.
the net profit margin of project capital is higher than the reference value of net profit rate of the same industry, which indicates that the profitability expressed in the net profit margin of project capital meets the requirements.

Evaluation of the national economy

National economic evaluation is the core part of project economic evaluation and an important basis for decision-making departments to consider project trade-offs. 

 

The national economic evaluation of construction projects uses the method of cost and benefit analysis, and uses parameters such as shadow price, shadow exchange rate, shadow wage and social discount rate to calculate the net contribution of the project to the national economy and evaluate the economic rationality of the project.

The national economic evaluation uses the national economic profitability analysis and foreign exchange effect analysis, with the internal economic rate of return (EIRR) as the main evaluation index. 

 

According to the specific characteristics and actual needs of the project, the economic net present value (ENPV) index can also be calculated, involving the export of products to create foreign exchange or replace imports of foreign exchange projects, to calculate the economic foreign exchange net present value (ENPV), economic exchange costs or economic foreign exchange costs.

Analysis of social benefits and social impacts

In the feasibility analysis, in addition to calculating and analyzing the above indicators, the social benefits and social impact of the project should be analyzed, that is, qualitative description of the benefit impact that cannot be quantified.


Risk prevention and control

1. first, construction risk analysis and prevention and control measures
2. second, legal policy risks and prevention and control measures
3. third, market risk and prevention and control measures
4. fourth, fund-raising risks and prevention and control measures

 

Other related risks and prevention and control measures

Conclusions and recommendations

According to the results of the research and analysis of the preceding sections, the project is evaluated in a comprehensive way, the construction plan is summarized, and the conclusions and suggestions are put forward. the main contents are:



The proposed construction conditions, product programs, process technology, economic benefits, social benefits, environmental impact of the concluding comments
Main comparison program to explain

Propose solutions and suggestions to the main problems that have not been solved in the feasibility analysis

Corresponding to the main issues of the amendment to explain, put forward amendments
For unworkable projects, put forward the main problems that are not feasible and deal with the views
Conclusions on the main contentious issues in the feasibility analysis

Accessories

Documents that fall within the scope of the project feasibility analysis but are other than the study report shall be listed as annexes to the feasibility analysis report, and the annexes listed shall be named, date and numbered.

Project proposal (preliminary feasibility report)

• Project approval
• Site selection report
• Resource exploration report
• Loan letter of intent
• Environmental impact report
• Feasibility analysis report of individual or supporting projects that need to be analyzed separately
• Need for market forecast report
• Introduction of technical project inspection report
• The introduction of foreign investment in the name of the agreement document
• Other major comparative program description
• Other

Drawings

• Site terrain or location map
• The total floor plan (with elevation)
• The process flowchart
• The main workshop cloth

Analysis of qualifications edit voice

At present, the feasibility analysis qualification of domestic projects from high to low is the national a, national b, national c. consulting qualification is not necessary for the project feasibility analysis per se, but depending on the size of the project investment and the requirements of the reviewer, the project manager may be required to include a certain level of consulting qualification (official seal) in the final documented feasibility study report.