PPME: Project Identification

& Feasibility Study

Sunanda Gundavajhala
Identify Potential Projects
Projects are identified by
Top management User departments
Steering committee Functional managers
Top-Down identification
Senior management or steering committee
Focus on global needs of organization (top
mgt)
Cross-functional focus (steering committee)
Bottom-up identification
User departments or functional managers
Dont reflect overall goals of the organization
Narrow on tactical focus
Classification Of Projects
Quantifiable and Non-Quantifiable Projects
I. Ex:- Industrial development, power generation, etc..,
II. Ex:- Health education, defence etc..,
Sectoral Projects
Agriculture and Allied Sector
Irrigation and Power Sector
Industry and Mining Sector
Transport and Communication Sector
Social Services Sector
Miscellaneous Sector
Techno-Economic Projects
a) Factor Intensity-Oriented Classification
b) Causation-Oriented Classification demand & raw material
based
c) Magnitude-Oriented Classification
 Project Identification
For establishing a successful venture, the search
for promising project idea is the first step.
Key to success lies in getting into right business at
right time.
For identifying opportunities in business, it
requires:
1) Imagination
2) Sensitivity
3) Environment Changes
4) Realistic Assessment
 Project Identification Process
Generation of Ideas:
Ideas with the help of which product or services made
have better quality and low price.

Monitoring the business environment:

1) Economic Sector
2) Government Sector
3) Technological Sector
4) Competition Sector
5) Supplier Sector
 Project Identification
Idea Generation
I. Knowledge of potential customer
needs.
II. Watching emerging trends in
demands for certain products.
III. Scope for producing substitute
product.
IV. Going through certain professional
magazines catering to specific
interests like electronics,
computers etc..,
V. Success stories of known
entrepreneurs or friends or
relatives.
VI. Making visits to trade fairs and
exhibitions displaying new
products and services.
VII. Meeting with the government
agencies.
VIII. Ideas given by the knowledgeable
persons.
IX. Knowledge about the government
policy, Concessions and incentives,
list of items reserved for exclusive
manufacture in small-scale sector,
and
X. A new product introduced by the
competitor .
 Project Identification
Corporate Appraisal:
Corporate strengths & weaknesses are essential for
identifying investment opportunity which can be
profitable.

Profit Potential of Industries / Michael Porter Model:

1) Rivalry among existing firm
2) Threat of new entrants
3) Threat of substitute products
4) Bargaining power of buyers
5) Bargaining power of suppliers
 Project Identification
Preliminary Screening : It involves
1) Availability of inputs
2) Adequacy of market
3) Cost
4) Risk level
5) Government policies
Project Rating Index :
All the proposals are given rating on rating scale.

Selection of best appropriate project :

Project that gets the highest rank is selected.
 Project Identification: Feasibility

Generation of Ideas
Initial Screening
Is the Idea Promising?
If Yes, plan feasibility analysis and If No, Terminate it.
Conduct Market Analysis
Conduct Technical Analysis
Conduct Financial Analysis
Conduct Economic & Ecological Analysis
Is Project Worthwhile?
If Yes, prepare funding proposal and If No, Terminate it.
 Feasibility Analysis and the System Proposal
Objectives

Identify feasibility checkpoints in the systems life cycle.

Identify alternative system solutions.
Define and describe six types of feasibility and their
respective criteria.
Perform various cost-benefit analyses using time-
adjusted costs and benefits.
Write suitable system proposal reports for different
audiences.
Plan for a formal presentation to system owners and
users.

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Feasibility Analysis
Feasibility the measure of how beneficial or practical a
project will be.
Feasibility is a study that aims at uncovering the
strengths and weaknesses of an existing business or a
proposed business venture. It takes into consideration
the opportunities offered by the environment, its
resources, and the subsequent success of the venture.

Feasibility analysis the process by which feasibility is

measured.
Viability study is assessment of risk in business and the
survival of the business in the face of uncommon and
unfavourable business environment.

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Six Tests For Feasibility
Operational feasibility a measure of how well a solution
meets the organization requirements.
Cultural (or political) feasibility - a measure of how well a
solution will be accepted in an organizational climate.
Technical feasibility a measure of the practicality of a
technical solution and the availability of technical resources
and expertise.
Schedule feasibility a measure of how reasonable the
project timetable is.
Economic feasibility - a measure of the cost-effectiveness of a
project or solution.
Legal feasibility - a measure of how well a solution can be
implemented within existing legal/contractual obligations.

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Operational Feasibility
How well proposed system solves the problems and takes
advantage of opportunities identified during the scope
definition and problem analysis phases
Is the problem still worth solving?

Technical feasibility
Is the proposed technology or solution practical?
Do we currently possess the necessary
technology?
Do we possess the necessary technical expertise?

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Cultural (or political) feasibility
Does management support the system?
How do end users feel about their role in the system?
What end users may resist or not use the system? How can
this be overcome?
How will the working environment change? Can users and
management adapt to the change?

Schedule feasibility
Are specified deadlines mandatory or desirable?
Are mandatory deadlines realistic for proposed
solution?

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Economic feasibility
During Scope Definition
Do the problems or opportunities warrant the cost of
a detailed study and analysis of the current system?
During Problem Analysis
After a detailed study of the current system
Better estimates of development costs and benefits
During Decision Analysis
Requirements now defined
Development costs can be better estimated

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Legal feasibility

Copyrights
Union contracts
Legal requirements for financial reporting
Antitrust laws
National data and work laws

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 Sample Feasibility Analysis Matrix
Wt Candidate 1 Candidate 2 Candidate 3
Economic 30%
feasibility

Cost to develop:
Approx. $350.000 Approx. $418.000 Approx. $400.000
Payback
(discounted):
Approx. 4.5 years Approx. 3.5 years Approx. 3.3 years
Net present
value: Approx. $210,000 Approx. $307,000 Approx. $325,000

Detailed
calculations:
See Attachment A See Attachment A See Attachment A

Score: 60 Score: 85 Score: 90

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 Sample Feasibility Analysis Matrix (cont.)

Wt Candidate 1 Candidate 2 Candidate 3

Schedule 10% Less than 3 months 9-12 months 9 months
feasibility

Score: 95 Score: 80 Score: 85

Legal feasibility 10% No foreseeable problems No foreseeable problems No foreseeable problems

Score: 100 Score: 100 Score: 100

Weighted score 100% 67 92.5 87.5

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 Case Study:
A Feasibility Study on the
Establishment of a Semi-
Commercial Hogs Farm in
Alfonso, Cavite
The E & J Farms
 Introduction
In the Philippines, pork is one of the basic foods
which Filipinos eat. It is one of the best sources of
protein needed by the body to be strong and healthy.
That is why a need for a farm arises.
 The E & Js Vision/Mission Statement
Vision

The E & J Farms envisions itself as a hog raising farm

promoting and maintaining environmental friendly identity to
its employees, customers and to to the community. E & J Farms
also envisions itself to be a naturally independent source of
BioGas which can be used as a substitute for LPG to be used in
the farm.

The E & J Farms also envisions for the expansion of hog

operation.
 Mission

The E & J Farms will create an environmentally friendly

identity through undertaking the proper and efficient way of
waste disposals to avoid harming and distorting others.

The E & J Farms will introduce its environmental friendly

BioGas facility through using the hogs waste, by converting
these waste into useful bio gas.
 Project Background
Name of the Proposed Business: E & J Farms

Nature of the business: Hogs Production

Type of business organization:

Sole Proprietorship

Location of the project:

Kaysuyo, Alfonso, Cavite
ORGANIZATION AND MANAGEMENT
FEASIBILITY
 Administration and Management Feasibility
With regard to the business operations, the proposed
business will have a total of four (4) persons including the
General Manager, Technical Operations Manager and two (2)
Farmhands.

Each of them must have knowledge about the production

processes of hogs.

They will be trained and oriented properly and will be given

some seminars regarding hog farming.
Organizational Chart
MARKETING FEASIBILITY
The primary data came from the results of the
conducted survey by the proponents.

Secondary data were gathered from several

government agencies and offices such as Provincial
Veterinary Office (PVO), Department of Environment
and Natural Resources (DENR), Bureau of Agricultural
Statistics (BAS), Department Of Agriculture (DA), and
Alfonso Municipal Office.
TARGET MARKET

The proposed business will be established at

Kaysuyo, Alfonso, Cavite.

The target market will be the public markets of

Alfonso, Tagaytay City, Mendez, Indang and Silang,
Cavite.

The selected five towns of Cavite has a total of

130 meat vendors operating in their respective
public markets.
 Table 1. Freaquency of Selling operation in Silang, Tagaytay City,
Indang, Alfonso and Mendez, Cavite

Six times Thrice a Twice a

Town/City Everyday a week week week Total

Silang 6 4 7 3 20

Tagaytay 12 3 11 19 45

Indang 5 4 7 4 20

Alfonso 5 3 11 6 25

Mendez 5 4 3 8 20

Total 33 18 39 40 130
 Table 2. Quantity of meats sold per selling operation

Town/Cit
y 1-20kg 21-40kg 41-60kg 61-80kg Total

Silang 3 4 5 8 20

Tagaytay 5 10 19 11 45

Indang 4 5 9 2 20

Alfonso 6 3 5 11 25

Mendez 3 5 4 8 20

Total 21 27 42 40 130
DEMAND
Historical Demand for pork in Selected Five Towns in Cavite (in
kilograms)

Year 2006 2007 2008 2009 2010

Pork 8,179,200 8,275,715 8,220,637 8,338,192 8,430,746

Projected Demand for Pork in Selected Five
Towns in Cavite (in kilograms)

Year 2012 2013 2014 2015 2016

Pork 8,540,924.33 8,679,836.72 8,842,279.25 9,028,251.92 9,237,754.73

 DEMAND SUPPLY ANALYSIS
2012 2013 2014 2015 2016

DEMAND 8, 540, 924.33 8, 679, 836.72 8, 824, 279.25 9, 028, 251.92 9, 237, 754.33

SUPPLY 8, 272, 667.17 8, 407, 217.15 8, 564, 558.41 8, 744, 690.95 8, 947, 614.77

GAP/DEFICI
268, 257.17 272, 619.57 259, 720.84 283, 560.97 290, 139.96
TOTAL

Proposed Marketing Program

The farm will be advertised through word-of-mouth
promotion, referrals and transit advertising. It will
also join CALIFPAI (Cavite Livestock Farming Poultry
Association Incorporated) to meet representatives of
various sectors including Department of Agriculture.
PRODUCTION/TECHNICAL FEASIBILITY
PRODUCTION PROCESS

1. Breed the sows.

2. Farrowing
3. Weaning of piglets
4. Piglets in the Nursery
5. Transfer to fattening section
6. Hogs at market weight
ALTERNATIVE PROCESS

Process 1
1. Purchase of Piglets. Process 2
2. Disinfection and
Quarantine. 1. Breed the sows.
3. Transfer of Purchased 2. Farrowing.
piglets to the nursery
pen. 3. Weaning of piglets.
4. Piglets in the nursery.
4. Transfer to the Fattening 5. Piglets at market weight.
Section.
5. Hogs at market weight.
 BUILDING AND FACILITIES

Building

The E&J Farms will construct three major buildings which would be
essential for the operation of the farm, the Dry pen building,
Farrowing pen and nursery pen building and the Fattener pen
building.
1. Dry Pen Building 6. Artificial Insemenation

2. Farrowing and Nursery Pen Laboratory

Building 7. Farm House

3. Fattener Pen Building

4. Holding Pen

5. Storage Room
FINANCIAL FEASIBILITY
CAPITAL REQUIREMENTS

CASH P 154,178.50

PROPERTY AND EQUIPMENT

Farming Tools And Equipment 50,080.00
Delivery Equipment 270,000.00
Office Equipment 18,200.00
Furniture And Fixtures 18,720.00

INVENTORIES
Farm Supplies P2,401,136.50
Office Supplies 485.00

Land 450,000.00
Pre-Operating Expense 17,200,00

TOTAL CAPITAL REQUIMENTS P4,600,000.00

OTHER FINANCIAL ASSUMPTIONS

1. Selling price is computed using statistical projection

method.
2. Sales are 100% of the yearly production.
3. Gas and oil expense, promotion and advertisement,
repair and maintenance are assumed to increase by 5%
annually.
4. Contingencies are 3% of net sales.
5. Expense is 20% of net income.
Pre-Operating Cash Flow

Cash Inflow
Capital Contribution P4,600,000.00

Cash Outflow
Farm Tools And Equipment 50,080.00
Delivery Equipment 270,000.00
Office Equipment 18,200.00
Furniture And Fixtures 18,720.00
Farm Supplies 2,401,136.50
Office Supplies 485.00
Land 450,000.00
Building And Facilities 1,222,000.00
Pre-Operating Expense 17,200.00

Net Cash Flow 154,178.50

SOCIO ECONOMIC FEASIBILITY
 GENERATION OF EMPLOYMENT

The proposed business will employ people who have

knowledge about agriculture preferably those who are living
within the adjacent area of the location of the proposed
business.

These employees will receive fair compensation according to

their qualifications and performance. Salaries are based on the
minimum wage set by the government.
RELATED STUDY

Increase in population will result in increase in demand

for food, which also means an increase in demand for pork
in the area.

With the continuous operation of the business, the

employees will be helped to uplift the standard of their
living.
LEGAL ASPECTS
In order for the business to operate legally, it must comply
with the government requirements as follows:

1. Mayors Permit, Business Permit, Certificate of Non-

Coverage and other Municipal Licenses.

2. Environmental Compliance Certificate

3. Registration with the SSS, Philhealth and PAG-IBIG.

4. Registration with Bureau of Internal Revenue.

OTHER BENEFITS

1. It will satisfy the customers need.

2. It will ensure the customers the of the Farms product.

CONCLUSION
 CONCLUSION

After studying the different aspects in establishing a Semi-

commercial Hogs Farm, proponets concluded that the study is
feasible and viable. The study shows the initial investment of
the proposed business will be P4,600,000 with a minimum
payback period of 2.54 years.

The increase in the demand for pork in Alfonso, Mendez, Indang,

Silang and Tagaytay City Cavite shows thatt there is still a need
for the proposed business. Thus, the business is profitable.
The System Proposal

System proposal a report or presentation

of a recommended solution.
Usually formal written report or oral presentation
Intended for system owners and users

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Length of the Written Report

To Executive-level managers - one or two pages

To Middle-level managers - three to five pages
To Supervisory-level managers - less than 10 pages
To clerk-level personnel - less than 50 pages.

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Formats for Written Reports
factual format - traditional and best suited to readers
interested in facts and details as well as conclusions.
administrative format - modern, result-oriented format
preferred by managers and executives.
Factual Format Administrative Format
I. Introduction I. Introduction
II. Methods and procedures II. Conclusions and recommendations
III. Facts and details III. Summary and discussion of facts
and details
IV. Discussion and analysis of IV. Methods and procedures
facts and details
V. Recommendations V. Final conclusion
VI. Conclusion VI. Appendixes with facts and details
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Typical Outline and Time Allocation for an Oral
Presentation
I. Introduction (one-sixth of total time available)
A. Problem statement
B. Work completed to date
II. Part of the presentation (two-thirds of total time available)
A. Summary of existing problems and limitations
B. Summary description of the proposed system
C. Feasibility analysis
D. Proposed schedule to complete project
III. Questions and concerns from the audience (time here is not to be included in the time
allotted for presentation and conclusion; it is determined by those asking the questions and
voicing their concerns)
IV. Conclusion (one-sixth of total time available)
A. Summary of proposal
B. Call to action (request for whatever authority you require to continue systems
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