Technical Study

Frances Lawrence Denosta

Charmaine Degracia
Jenie Cuevas
Jee Pee Anaclito
Noly Condez
Ruel Calampiano
Shyrene Casipong
Erwen Thuco
What is Technical Feasibility Study?
• The Technical Feasibility Study assesses the
details of how you will deliver a product or a
service (i.e., materials, labor, transportation,
where your business will be located,
technology needed, etc.). Think of the
technical feasibility study as the logistical or
tactical plan of how your business will
produce, store, deliver and track its product or
services.
• Technical study is use to scheme the overall
process in production. This stage deals with the
allocation of the resources that will be needed
in order to satisfy the market. The technical
soundness analysis will be considered complete
if all pertinent technical aspect of the project
have been taken into account in the analysis
and if the planned construction or procurement
conforms to accepted standard and practices.
This study also draws to get rid into doubts in
the present and future operations.
• 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 undercapitalization not enough
money to keep business going from
start up until it starts to make a profit.
This can lead to lack of resources.
 What should be done?
1. Select
2. Determine
3. Provide
4. List down in Detail
5. Take into Consideration
 SELECT
• The Product or Service
• Manufacturing or
Production Process
• Capacity and Design
• Supplies
• Location
• Lay Out
• Structures Specification
• Raw Materials & their
sources
Determine
• The Quantity & Quality
of the product
• Labor needed, both
skilled and unskilled
• Utilities required
• Waste disposal method
• The transportation
necessary
 Provide
• Estimates of the total
project cost and
enumerate the major
items of capital cost

List down in Detail

• The estimated production and over
head costs that will go into
operating the proposed project.
 Take into Consideration
• The major technology development in the
industry which may affect the commercial or
technical soundness of the project.
The Technical Study is presented
by Describing & making necessary
calculations for the following:
The Products or Services

• This portion describes

the products or services
to be produced or
provided and sold

• Which Specifies
– The products physical, mechanical
and chemical properties
– Their various uses, both as
finished good and industrial inputs
 Manufacturing or Production Process

• The selected manufacturing or

production process must be
describe simply and clearly,
preferably with the aid of flow
charts and diagrams.

The Alternate processes

and the way they compare
with the chosen process
must be mentioned
• The analysis should further touch on
the manufacturing or production
process used in existing business
with the same or similar activity,
both domestic and foreign
• Licensing agreements and patents
should also be reviewed
 Size of the Business and
Production Schedule
• Minimum and Maximum Rated Capacity
• Fixed Cost
• Actual Capacity Utilization
• The Number of Shifts per day
• Number of Operating days per year
 D. Production schedules

• The Expected growth in Market Share

• The Availability of Financing for Possible Expansion
• The Availability for more Raw Materials
• The Level of Utilization of Plant Capacity
 e. Machinery and equipment

• Identified and Individually listed according to type

and use
• Specifications, Capacities and Costs must be
described in detail
• The Origin of the Machinery and Equipment,
whether Local or Imported
• The Manner of and Cost of Transporting them must
be Indicated
 E. Machinery and equipment

• What type of equipment and technology will

the business need to produce its product or
service?
• What cost 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?
 F. Location

• A through and 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 and fuel
– The combined cost of transporting raw
materials and fuel to the site
– The proximity to distributing outlets
– The availability of skilled and unskilled labor

o Maps and Charts of the Proposed site must

be included
 G. layout

• The Layout should be clearly depicted through

diagrams and descriptions
• A good Layout is characterized by
– Minimum Material Handling
– Effective Space Utilization
– Smooth Work Flow
– Safe and Conductive Working Area for the workers
– Safety and Sanitation Facilities
– Flexibility of Arrangements
 H. Building and facilities
• What are possible locations for the facility?
• What size facility is needed?
• What are the cost involved in the building? Do you need to
fit it out? How 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 responsible for transport of goods between the
facility and the market? What are the costs involved?
 H. BUILDING AND FACIITIES

• The site, type and cost of the building and land, as

envisioned in the project, should accurately be
presented.
• The construction cost of the building and facilities
should be presented as adapted to the machinery
and equipment that will be used in the project
• Land improvements such as roads, drainage facilities,
etc. and their respective costs should be computed
and included
 I.RAW MATERIALS AND SUPPLIES
• The required raw materials should be listed down and
the basis for there selection must be presented.
• Descriptions and specifications on their physical,
mechanical, and chemical properties must also be
given.
• Current and prospective cost of raw materials, and
availability and continuity of supply, and the current
prospective sources should also be included.
• The volume required and various phases of operations
must be clearly presented.
 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.
 K. Waste disposal
• A description of the quantity, manner of
disposal, and the cost involved in doing away
with expected waste from the production is
necessary.
• The analysis must be expanded to consider
the possibilities of further using these wastes.
 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 materials costs
•Labor cost
•Overhead cost(Fixed cost), operating
costs(variable costs)
•Other pertinent costs
 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