Feasibility study plays a very important role in project management as an important basis for investment decision and project construction.
In developed western economies, both investors and financial institutions attach great importance to the preliminary management of the project, and spend a lot of manpower, financial and material resources on the preliminary analysis and demonstration of the project. After the reform and opening up, the Chinese government has successively
A series of laws and regulations on construction projects have been promulgated, clarifying the procedures for investment decision-making, and stipulating that capital construction projects must go through feasibility studies and follow the construction procedure of "assessment first and then decision-making", otherwise the construction cannot be started.
About Feasibility Study
Feasibility Study, also known as Feasibility Analysis, refers to the scientific method of obtaining the best economic effect with the smallest investment through the technical and economic analysis of the proposed project. It is an extremely important basic work in project management. The thinking frame and analysis mode provided by the research process are the main contents of the project management in the early stage. Specifically, the feasibility study is to find the inherent, essential and inevitable connection among the factors and their specific laws through the analysis, identification, evaluation and estimation of the relevant factors of the project, so as to determine the influence of each factor on the investment decision and its future effect. influence. The task of the feasibility study is to demonstrate the economic effects of various implementation schemes for a proposed project to be built or renovated (expanded), and to study its technical and economic feasibility, so as to select the technologically advanced projects. It is the best solution that is economical, reasonable in economy, safe and reliable in operation, and provides a scientific and reliable basis for the investment decision of the project.
Feasibility studies of different construction projects have different emphases, and the nature, use and scale of the projects determine the difference in the depth of research. Usually, the main contents of the feasibility study for the proposed project include: ① technical feasibility; ② economic rationality; ③ financial profitability; ④ the amount of funds required for the project; ⑤ project construction ⑥ The method and channel of raising construction funds; ⑦ The cycle of the project construction; ⑧ The manpower, material resources, resources and power required for the project construction and after completion; ⑨ Social acceptability, such as the project’s impact on the environment, Whether the social distribution of project operating benefits conforms to national laws, regulations, policies and other aspects.
Here, the technical feasibility of the project involves the site selection of the proposed project, production scale, process technology solutions, product specifications and quantities, and the selection of required machinery and equipment, as well as the consideration of factors such as raw materials, power transportation, etc.; The feasibility of the project involves forecasting and estimation of the supply and demand of products or labor services, product price strategies and sales channels, the organizational structure and schedule of project construction and operation, and forecasting the profitability, debt repayment, production growth, and commitment of project operations. The degree of risk, etc., in addition, it is necessary to formulate the best plan for the use of project funds; and social acceptability aims at the maximum national welfare, and comprehensively considers the influence of social life, social structure, social environment and other factors.
The main work process of feasibility study can generally be divided into four stages: opportunity study, preliminary feasibility study, detailed feasibility study and project evaluation. form appears.
The Position and Function of Feasibility Study in Project Management
Project feasibility study is the basis for decision-making to determine whether to invest in a construction project, and its research report is the decision-making document of the project construction unit. The reform of the investment system of the socialist market economy has transformed the original system of unified allocation of investment by government finances into a diversified investment pattern by the state, local governments, enterprises and individuals. The investment owner will determine whether and how to invest in a certain project based on the evaluation results provided by the feasibility study, and the approval authority needs to decide whether to approve the project.
The approved feasibility study report is an important basis for the project construction unit to raise funds. According to the relevant state regulations, any project that lends to banks or applies for state funding must submit a project feasibility study report. Banks or relevant state departments will only approve loans or provide funding after reviewing the feasibility study report and confirming that the project is indeed feasible. The feasibility study report has thus become the basis for cooperation with other investors.
The feasibility study report is the basis for the preparation of the preliminary design of the project. The preliminary design is to plan the construction blueprint of the project to be constructed according to the feasibility study. Specifically, it is to plan the scale of the project, product plan, general layout, technological process, equipment selection, labor quota, three waste treatment, construction period in detail. , investment estimates, technical and economic indicators, etc. And put forward a specific operation plan for the next project design. The preliminary design shall not violate the principles already demonstrated in the feasibility study report.
The feasibility study report is also an important basis for the relevant state departments to regulate and manage the investment in fixed assets, formulate development plans, investment in fixed assets, and investment in technological transformation. Because construction projects, especially large and medium-sized projects, take many factors into consideration, involve a wide range and invest a large amount of funds, they may have a profound impact on the overall situation and local near- and long-term economic life. Therefore, the feasibility study content of these projects More details.
The feasibility study report is also the basis for the project construction unit to formulate the supply and demand procurement plan for the development of new technologies and new equipment. In recent years, the state has implemented the project legal person responsibility system. The project legal person and the project management department can sign the raw materials, energy resources, transportation, engineering facilities, project contracting required by the project with domestic or foreign relevant organizations and production owners according to the approved feasibility study report. , water and electricity supply and financing agreements.
The approved feasibility study report serves as the basis for the project construction unit to apply to the land development and land management department for construction land, and is a basic document for the relevant departments to specifically review the land use plan and go through the land use procedures according to the feasibility study. In addition, the feasibility study is also the main basis for the environmental protection department to conduct environmental assessment of the project, study environmental governance measures, and issue the project construction permit document.
An example of the operation method of project feasibility study
As mentioned earlier, the results of feasibility study work are generally reflected in project proposals, feasibility study reports and project evaluation reports. In order to vividly and concretely illustrate the basic requirements for the feasibility study of the preliminary work of the project, this paper takes the feasibility analysis process of the project of Dongfang Industrial Co., Ltd. The method is briefly introduced.
1. During the Opportunity Research phase, submit a project proposal
Thailand TC company plans to build a quarry with an annual output of 1.2 million tons in L province, Thailand, but lacks the ability to independently complete the overall design and implement production and technical management, so it has been looking for partners that can cooperate. During an inspection by the chairman of Thailand TC Co., Ltd. to D city, M province, my country, he showed that our differential extrusion blasting technology and supporting crushing equipment can improve the mining capacity and reduce the rate of large blocks of stone. With great interest, he offered to cooperate with China. We believe that this project provides an excellent opportunity for the export of technology and complete sets of equipment in M province. To this end, the Chinese side has shown great interest in recommending the matching crushing equipment in D-city Dongfang, which has been looking for investment opportunities, and offered to cooperate with the Chinese side. We believe that this project provides an excellent opportunity for the export of technology and complete sets of equipment in M province. To this end, the Chinese side recommended D City Dongfang Industrial Company (hereinafter referred to as Dongshi Company), which has been looking for investment opportunities, to sign a memorandum of understanding on the joint venture between China and Thailand to build a stone crushing plant in Thailand.
. Through preliminary analysis and demonstration, Dongshi Company submitted the project proposal of "Joint Venture to Build a Stone Plant in Thailand". , scope, operation period, location, number of workers to be employed, investment methods and sources of funds, products and their production and enterprise conditions, etc.), preliminary technical and economic benefits analysis and project schedule, etc. In this way, opportunities and directions for investment projects are initially identified. Afterwards, with the approval of relevant departments, the general manager of Dongshi Company led a delegation to Thailand, and signed a letter of intent and a memorandum after further investigation and demonstration.
2. Conduct preliminary and detailed feasibility studies and prepare feasibility study reports
On the basis of the project proposal, Dongshi Company organized a special force to conduct a preliminary and detailed feasibility study on the project, and prepared a feasibility study report in accordance with the requirements of scientificity, objectivity and impartiality. The report covers several aspects including general introduction, situation of all parties involved in the joint venture, market forecast and construction scale, construction conditions and site selection, technical solutions and environmental protection and labor safety, management organization and labor quota, investment estimation and recent financing, economic benefits and evaluation conclusions, etc. The economic benefits and feasibility of the specific operation of the project are demonstrated in detail. Below is an outline of the report.
(1) Background and significance of the project investment. Through on-the-spot investigation and detailed analysis of relevant data, the report first confirms the background and significance of investing in this project. It is believed that the construction industry is a major industry with rapid development in Thailand, with a good momentum. The background is that, out of consideration for resources and environmental protection, the Thai government has concentrated the production of stone materials in the country in the Saraburi area in the north, 100 kilometers away from the capital Bangkok, and the Huayun area in the south, 400 kilometers away from Bangkok. The Salaburi area is the largest stone mining area in Thailand, with abundant limestone resources and convenient transportation. The expressway leads directly to Bangkok. There are currently about 30 crushing plants with an annual production capacity of more than 1 million tons, and the crushed stone produced has been selling well. The equipment produced in Thailand is of poor quality, and most of the crushing equipment in these crushing plants is purchased from the United States, Japan and other countries. TC Co., Ltd. is located in Napura, which is 15 kilometers away from Salaburi, Thailand. The company's original gravel plant is about 500 meters away from the highway, and the quarry plant is more than 1,000 meters away from the highway. The stone crushing plant was built with an investment of more than 30 million baht three years ago, with a designed production capacity of 1.2 million tons, and a total profit of more than 50 million baht (including basic depreciation deposits) in the past two years. However, since the limestone mining in this mining area adopts the method of hanging holes and blasting, the production technology is backward, the supply of ore raw materials is not enough, and the actual output is only 800,000 to 1 million tons per year, which is inefficient. Therefore, the Thai side can improve the mining capacity and reduce the There has been great interest in the differential extrusion blasting technology with the function of stone bulk rate and Chinese-made crushing equipment. After many on-site inspections and negotiations, the two parties agreed in principle that within the existing land and mine land of Thai TC Co., Ltd., the Thai side will use its 85 rai (2.6 mu per rai) of land, external facilities, auxiliary equipment, and part of the funds. As input, the Chinese side will use mining equipment, crushing plant equipment, production technology and management knowledge as investment to build a crushed stone quarry with a production capacity of 1.2 million tons per year.
The project has a good investment environment, mature and reliable technology, and high economic benefits. It is of great significance for my country's M province to enter South Asia and develop political and economic relations with South Asian countries.
(2) The purpose, scope and basis of the preparation of the feasibility study report. The main basis for the preparation of the feasibility study report for this case includes the letter of entrustment from Dongshi Company for the feasibility study of the Sino-Thai joint venture to build a stone crushing plant, the "Project Proposal on the Sino-Thai Joint Venture for the Construction of a Stone Plant in Thailand", the Dongshi Company and the The letter of intent signed by the two parties of Thailand TC Co., Ltd., (my country's M Province Dongshi Company) to Thailand on the "Investigation Report on the Joint Venture Construction of a Stone Crushing Plant Project", and the basic information, basic data and relevant economic analysis provided by Dongshi Company. Information, data, policies and related regulations, etc.
The purpose, scope and specific details of the joint venture parties of this report will not be repeated here.
(3) Analysis and forecast of the market. In the analysis and research on the market and material and technical conditions of the project, market forecasting becomes the primary content. According to the analysis of the report, with the development of Thailand's economy, the construction industry, highway transportation and water conservancy construction have developed greatly, and the demand for stone materials is relatively urgent, and the production and sales of stone materials are booming. Because the stone materials required by cities in Thailand must be supplied by the Salaburi area and Huayun area, and Salaburi is the largest stone mining area in Thailand. There are more than 30 crushing plants in the region with an annual production capacity of more than 1 million tons, with a total output of less than 30 million tons, while the annual demand for crushed stone in the Salaburi area alone is about 30 to 50 million tons. If another 1.2 million-ton crushing plant is built, the output of crushed stone will only reach more than 31.2 million tons, and there is still a big gap. In addition, in addition to supplying local users, the stone products in this area are also sold to Bangkok and major cities, so the demand for stone materials is even greater. The demand for crushed stone will only increase unabated, and the market prospect of crushed stone production is very promising. Through the analysis of the mining method of the project, the site of the crushing plant, the production scale and product plan, and the comprehensive technical and economic indicators, four basic research conclusions are drawn: First, the mine resources are reliable, which can ensure that the joint venture period is sufficient. The second is that the construction conditions are good, and the external power supply, water supply, transportation and communication facilities in the mining area are basically equipped, which provides a good environmental support for the construction and production of the mine and the crushing plant, so the investment is low and the effect is quick; The third is the product There is a good sales prospect. In the expected time, all grades of crushed stone are popular products. Fourth, the economic benefits are good. According to the existing data, both the joint venture and the joint venture parties can obtain better economic benefits.
(4) Analysis of technical conditions. In this part, the feasibility study clarifies the content of the specific mining process, the specific plan for the construction of the crushing plant, etc. Among them, the mining process includes the general situation of the mining area, mining technical conditions, open-pit mining method, production scale, service life, mine work system, mining and stripping process and equipment selection, infrastructure engineering and schedule plan, labor quota and stope environment, drainage and main Process equipment and auxiliary equipment modeling (such as the selection and calculation of main process equipment and auxiliary equipment, auxiliary facilities and material consumption, capital construction volume, safety technology and environmental protection measures), etc.; the construction plan of the crushing plant includes ore characteristics, production capacity and Product plan, work system, basic situation of the original crushing and screening plant, and crushing and screening plan, etc. There are also arrangements for the transportation of the general plan, including the natural conditions and general layout of the mining area, transportation and the estimation of the annual incoming cargo volume, etc.; Safety and hygiene instructions, etc.
As for the management organization and labor quota, the report mainly expounds the management organization, organizational structure and labor quota, employee wages and training, labor productivity, etc.
(5) Joint venture situation. The report proposes that the joint venture is jointly invested and built by Thailand TC Co., Ltd. and Dongshi Company. The registered capital ratio of the enterprise is based on 100% of the infrastructure investment, and the shareholding ratio of the registered capital is 51% to 49% from the Thai side to the Chinese side. The key point here is to explain the situation of the Thai joint venturer (Party A) and the name, nature, address and business scope of the company, capital and credit, investment environment, the Thai party's registration certificate number, the Thai party's assets and liabilities, etc. .
(6) Investment basis and fundraising. The investment estimates in the report are based on the intentional negotiation opinions provided by the joint venture parties, so as to obtain the total project investment and infrastructure investment estimates and the specific amount of working capital; according to the joint venture between Thailand and China The principle is that the registered capital is 100% of the infrastructure investment; the shareholding ratio is 51% to 49% for the Thai party to the Chinese party; all the working capital during the production period is borrowed by the joint venture company in Thailand, and the loan procedures are set by The Thai side is responsible for handling the loan, and the annual interest rate of the loan is ×%. The specific plan is: the construction period is considered as 0.5 years, and the Chinese side will use mining equipment (mining equipment), crushing plant equipment and technology, and management knowledge as investment funds; Ownership, mining vehicles, gravel plant, construction and shopping, water supply and power supply facilities in the boundary area, and labor are used as investment funds, and the insufficient part is made up in cash.
(7) Economic analysis of the project. In the description of the report, it includes the estimation of cost and profit (including estimation basis, production cost, product sales price, tax, company retained profit × %, distribution ratio and the actual income of both parties of the joint venture) and the enterprise financial evaluation of the project and the national economy. evaluate.
First, determine the economic benefits indicators (such as cash flow including the cumulative net cash flow of the enterprise ××× million baht, internal investment rate of return ×%, the investment return period is 3 years; the Thai joint venture’s cumulative net cash flow ××× million yuan , the internal investment rate of return ×%, the investment return period is 4.1 years; the investment profit rate includes the enterprise investment profit rate, the enterprise investment profit and tax rate, the rate of return of the Thai partner, and the rate of return of the Chinese partner).
Secondly, it analyzes and explains the uncertainty and risk of project operation. Including the analysis of the break-even point, since the annual production capacity of the enterprise reaches ××% after the implementation of the project, that is, the enterprise can not make a loss or make a profit when the annual output reaches ×× 10,000 tons, so the production capacity coefficient of the break-even point of the enterprise is ××% , break-even production volume ××10,000 tons/a; the sensitivity and risk factors that affect the economic benefits of the enterprise are mainly crushed stone price and crushed stone cost. Therefore, after the sensitivity analysis of the above two factors, we can see that the The project has certain anti-risk ability in terms of production capacity and price conditions.
Finally, the impact of investment and construction projects on local society and national economy is also considered (the specific content is omitted here).
After a series of detailed analysis and evaluation above, the basic economic conclusion of the report is that the project of Dongshi Company's joint venture to build a stone crushing plant in Thailand has good economic benefits. In the case of needing to invest ××× ten thousand yuan, the income of ××× ten thousand yuan can be obtained within the 10-year joint venture period (after deducting the remittance tax and the amount distributed to TC company), the investment rate of return is ××%, The investment repayment period is 4.1 years (excluding the infrastructure construction period of half a year), and the loan repayment period is 3.5 to 4.5 years. Therefore, it is worthwhile for this project to enter the Thai market as M province to further expand the South Asian market and create conditions.
3. Carry out project evaluation
In this case, after further evaluation and estimation of the above feasibility study report, the relevant evaluation agency came to a positive conclusion that the investment can be made. The basic contents of the specific assessment are:
On ××××year×month××, relevant experts in M province were organized to review the feasibility study report of the "Zhongtai HT Industrial Co., Ltd. Quarry and Crushed Stone Plant" project. Market and sales forecasts, production scale, process technology and equipment, investment risks, economic benefits, as well as the situation of the project undertaking unit and the credit standing of partners have been comprehensively analyzed and reviewed, and the following opinions have been formed: the project is in line with my country's The policy of opening to the outside world is also in line with the direction of M Province to accelerate technological and economic cooperation with neighboring countries. Thailand is a developing country with rapid economic development. The construction industry, highway transportation and water conservancy construction have a large demand for stone materials, and the product market prospect is good. With an annual output of 1.2 million tons of crushed stone, from mining to processing, its process technology and equipment are mature and reliable conventional technologies in my country. Province M has accumulated rich production experience in this area and is capable of undertaking it; in the feasibility report The proposed technological solution is also feasible. In addition, judging from the economic analysis and evaluation in the feasibility report, the project has good economic benefits and a certain ability to resist risks. In short, the investment direction of the project is correct, the market prospect is good, the raw materials are guaranteed, the technology is mature and reliable, the technology is feasible, and the economy is reasonable. In addition, the undertaking unit has done a lot of preparations, and the necessary conditions for investment and the possible conditions for realizing investment have been met. . However, since this project is the first attempt of M province to invest in overseas non-trade, further calculation should be made on the selection of process equipment, so as to be practical and reliable; and the approval documents should be improved according to the relevant procedures and reported as soon as possible, so as to obtain timely approval and organize the implementation.
It should be noted that, in the standard written report format, the main technical and economic indicators, total investment, financing and sensitivity analysis involved in the research and analysis process are often given in the form of a list, and the process The program flow is represented in the form of a (box) diagram, and at the end of the report, reference materials such as related documents and attachments are listed as appendix I.