03 Project Analysis Studies

• Market Research

  • which aims to determine the potential demand for goods or services to produce

• Location Study

  • determine the place or places where it becomes viable and with overall lower cost for project implementation

• Engineering Technicians Studies

  • aims to find the best technical solution for the project

• Dimension studies (capacity)

  • determine the optimal capacity for the project (in technical and economic terms)

• Legal framework studies

  • determine the most appropriate legal regime for the project implementation

• Economic and Financial Profitability studies

  • assess the expected return on capital investment and make comparison with alternative investments

• Financial framework studies

  • find funding solutions for the project

• Environmental Impact Studies,

  • aims to determine the project effect or effects on the environment

1. Purpose:

   • Evaluates demand and external conditions to guide strategic decisions.

2. Factors to Consider:

   • Analyze economic, social, competitive, and infrastructural aspects in relevant regions.

3. Product Life Cycle Management:

   • Phases: Introduction, Growth, Maturity, Decline.

   • Each phase impacts buyers, competition, and profitability differently.

4. Stages of Market Research:

   • Quantitative Data: Consumption trends, regional income, pricing, and logistics costs.

   • Qualitative Data: Consumer preferences, product differentiation, legal factors, and market dynamics.

   • Demand Forecasting: Combines data to estimate demand, market share, and marketing plans.

5. Data Collection Methods:

   • Interviews, surveys, questionnaires, and input from market agents.

6. Final Integration:

   • Use research insights to shape strategies and predict demand.

• Competition

• Prices

• Life Cycle "product"

• Incomes

• Populations Habits

• Institutions

• Infrastructure

I) - Analysis of locational forces

• Availability and cost of factors

• Transportation costs

• Conditioning factors (climate, network communications, taxation, etc ....)

II) - location near the source of raw materials

• Raw materials and high weight or volume

• Quickly perishable raw materials

• Difficult or dangerous transportation of raw materials

III) - location near the market

• Lightweight and low volume materials with high added value

• High-grade materials that can be found anywhere

• Quickly perishable products

• Difficult or dangerous goods transportation

• Identification and characterization of technology

• Characterization of the production resources (machines and products)

• The needs of the means of production resources

Capacity concepts:

I) - Technical concept

• maximal possible production for a certain given equipment

II) - Economic Concept

• production level that minimizes unit costs or lead to maximum profit

III) - Economically profitable Minimum

• production level that allows the income outweigh the costs and ensure the return on invested capital

IV) - Critical point

• production level where revenues equal costs without profit or prejudice

• Investment Plan

• Exploration Plan

• Financing Plan

1. The investment plan outlines the allocation of economic resources to projects expected to generate sufficient future returns.

2. It includes details of investments in fixed assets, working capital, and other necessary resources.

• Investment in Fixed Assets:

  • Intangible assets (e.g., technical studies, formation costs).

  • Tangible assets (e.g., land, buildings, machinery).

• Working Capital Needs:

  • Cyclical Needs: Stocks, customer loans, other short-term credits.

  • Cyclical Resources: Supplier credits, state contributions.

• Residual Value:

  • Recovery of asset value at the end of the project duration.

1. Investment Description: Comprehensive list of elements, their nature, and size.

2. Map of Investments: Overview of the value of each investment component.

3. Implementation Schedule: Coordination and monitoring plan for investments with timelines and priorities.

4. Payment Plan: Schedule of investment-related payments to manage financing needs effectively.

1. Calculate annual depreciation of fixed assets based on their economic and technical lifespan.

2. Assess residual book value at the end of the asset’s useful life.

1. Financial Projections:

   • Investment plans integrate financial schedules, including forecasts of operating income and expenses, cash flows, and the recovery of residual asset values.

2. Cash Flow Management:

   • Combine operating cash flow, investment cash flow, and working capital cash flow to develop a comprehensive investment cash flow map.

Description and time scheduling of income and estimated annual costs in order to establish and calculate the different synthesis maps, taking into account the assumptions of the project:

• Assumptions of the calculation of expected income and expenses

• Technical studies of engineering

• Market share forecasts

• Information and price forecasts

With all the above assumptions will elaborate:

• Estimated Exploitation/Operational Account (annual)

• Income by Nature (Revenues, subsidies, etc.)

• Costs for Nature (Expenses, depreciation, etc.)

With the Investment Cash Flow map in Fixed Capital

+

The Operating Cash Flow Map

+

Working Capital Needs Cash Flow Map

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Investment Cash Flow Map

includes a description and the time schedule of the planned financing, in order to establish and calculate:

• Treasury Budget [Kassenbestand]

• Working Capital Fund (current short-term financing)

• Medium- and long-term financing program (s)

• Balance Sheet

1-Receipt of funds

- operating

- loans

- capital increases

2- Payments

- operational

- of investments

- repayment of loans

- payment of dividends

(1-2) - Treasury and Financial Balance

Invested Capital

• In fixed capital or fixed assets (corporeal and intangible)

• Working Capital

• Residual value

• Useful economic life (duration)

Project Cash - Flow

• difference between the income and expenses of a project, without deduction of amortizations and financing costs