Hotel & Restaurant Association of Baguio

September 10-12,2009
Baguio Country Club
Seminar Objectives:
Give the Hospitality Students an Overview on
How to Prepare and Develop Feasibility Studies
Learn the various parts of a basic project
feasibility study
Be Familiarized with the formats of a project
feasibility study
Lecture / Discussion
Presentation of Feasibility Study formats
Definition of Terms

“Feasible “ / “Feasibility”
capable of being done, effected, or accomplished: a
feasible plan.
probable; likely: a feasible theory.
suitable: a road feasible for travel.
Capable of being accomplished or brought about;
possible.
Used or dealt with successfully; suitable: feasible
new sources of energy.
Definition of Terms

Feasibility Study: defined in a business context

Is a thorough and systematic analysis of all factors
that affect the possibility of success of a proposed
undertaking
Data, facts and other findings presented in the
study then become the basis for deciding whether
a project is to be pursued, abandoned or revised
A synthesis of separate studies dealing with the
market, technical, financial, socio-economic and
management aspects of a project
Assumptions

Feasibility Study
Is not an antidote to failure
It’s purpose is to enhance the probability of success
of a specific undertaking
It is a result of the belief that a carefully planned
activity or project has better chances to succeed
than an activity without a previous plan
Who May Conduct a Feasibility Study?

An individual or group of individuals may conduct

a feasibility study
Experience in conducting feasibility studies
Fair and neutral with no prior opinion about
what decision should be made.
It is important that all necessary data are
collected and presented so that the best
decision can be made.
What shall you study?

New Business (Product or Service/Technology)

Old Business that Needs Tweaking or
Revitalization
A Proposed Innovation of Products/Services /
Structure
A New Process / Procedure (Implementation)
Location / Site Selections
Components :

Executive Summary or Project Summary

Should be included at the beginning of the report.
Provides the reader with an overview of the
feasibility study and will help them see the entire
picture before they read the details
In 2-3 pages, the main points of the feasibility study
are summarized for a quick review by busy
administrators and board members /officers. Thus,
the executive summary should be concise and
include the major findings of the study followed by
a recommendation.
Outlined Format

A. Name of the Enterprise / Organization

B. Location
C. Descriptive Definition of the Project
D. Project’s Long Range Objectives
E. Feasibility Criteria
F. Highlights of the Project
G. Major Assumptions and Summary of Findings
and Conclusion
A. Name of the Enterprise / Organization

Briefly describe the reason for such choice of

name
B. LOCATION

Pinpoint the location

• Head Office ? / Main Branch? / Production Site ?
Factors affecting the Choice of Location are :
• Sources of raw materials, labor, utilities
• City / Governmental Regulations
• Proximity to the market
• Nature of Available Transportation
• Cost of Land and Buildings / Rentals and Leases
• Choose a location where maximum efficiency can
be attained at the lowest possible cost
C. DESCRIPTIVE DEFINITION OF THE STUDY

• Related National Program (If Applicable)

• Is the Project in line with any government-
encouraged undertaking?
• Affinity to regional or sectoral studies
• Is the Project a result of encouraging findings in
certain regions or sectors of the country?
• Project Potential & Proponent
• Give a conceptual description of the project’s
potential worth and importance and the men
behind it
D. PROJECT'S SHORT TERM & LONG RANGE OBJECTIVES

What does the project expect to achieve in 1

year / 3 years / 5 years / 10 years in terms of
size, capacity, volume, worth, role in its industry
and in the economy?
E. FEASIBILITY CRITERIA

What were the most important guidelines used

to judge the feasibility of the project?
Profitability?
Impact on Socio-economic environment?
F. HIGHLIGHTS OF THE PROJECT/STUDY

1. History
How did the study/project come about?
2. Project Time Table and Status
How long will it take before the project goes into
operation?
3. Nature of the Industry
Briefly describe the:
Industry
Product Lines, Demand & Supply Situation, History,
Growth Patterns, Problems and Potentials, Role in the
Economy
F. HIGHLIGHTS OF THE PROJECT/STUDY

4. Mode of Financing
Sources of Funds
Financing Terms
Reasons for choosing such sources and terms
5. Investment Costs
How much funds are necessary to make the project
operational?
How are these funds allocated?
G. MAJOR ASSUMPTIONS, SUMMARY OF FINDINGS &
CONCLUSION ON THE FOLLOWING:
MARKET FEASIBILTIY
TECHNICAL FEASIBILITY
FINANCIAL FEASIBILITY
SOCIO-ECONOMIC FEASIBILITY
MANAGEMENT FEASIBILITY
G. MAJOR ASSUMPTIONS, SUMMARY OF FINDINGS &
CONCLUSION ON THE FOLLOWING:
MARKET FEASIBILTY
TECHNICAL FEASIBILITY
FINANCIAL FEASIBILITY
SOCIO-ECONOMIC FEASIBILITY
MANAGEMENT FEASIBILITY
 The Centerpiece of the Market Study is really
the answer to these basic questions:
1. Is there a demand for my product or service?
2. If So, can my marketing program effectively
meet this demand?
• A NEGATIVE response to either questions
prevents the project from materializing
Components of a Market Study
Size, Nature, and Growth of Total Demand for the
Product
Description and Price of the Product / Service to Be
Sold
Supply Situation and Nature of Competition
Factors affecting the Market of the Product /
Service
Appropriate Marketing Program for the Product /
Service
Components of a Technical Feasibility
Selecting the :
Production / Manufacturing Process
Machinery Capacity & Design
Machinery Supplies
Production / Plant Location
Production/Plant/Site Layout
Structure Specification
Raw Materials and their Sources
Components of a Technical Feasibility
Determining the :
Quantity and Quality of the Products /
Service
Labor Requirements
Utilities Required
Waste Disposal Method
Transportation Necessary (If Applicable)
Components of a Technical Feasibility
Estimates of the Total Project Cost and
Enumerating the Major Items of Capital cost
Detailed Estimated Production/Overhead Costs
that will go into operations
Take into consideration the Technical Development
in the industry which may affect the technical
soundness of the project
Components of a Financial Feasibility
Major Assumptions
Total Project Costs
Initial Working Capital Requirements
Alternative Source of Financing Considered if any
Sources of Financing the Project
Beginning the pro-forma financial statements
Financial Analyses
(You may obtain the services of a competent accountant
for this endeavor)
Components of a Financial Feasibility
Major Assumptions
Total Project Costs
Initial Working Capital Requirements
Alternative Source of Financing Considered if any
Sources of Financing the Project
Beginning the pro-forma financial statements
Financial Analyses
(You may obtain the services of a competent accountant
for this endeavor)
Components of a Socio-Economic Study
Employment and Income (Individual or
Families)
Taxes it will contribute to the Government
/ City
Supply of commodities
Demand for Materials, specifying the use
of local materials to aid local producers
Components of an Organization/Management
Study
Basic Considerations:
Marketing Organizations (Market Study)
Labor (Identified in the Technical Study)
Finance & Administration
Draft Organizational Chart
Qualifications & Functions Defined
Components of an Organization/Management
Study
Form of Ownership
Single Proprietorship
Partnership (General / Limited)
Cooperative Organization (Consumers,
Producers, Marketing or Financing)
Officers & Key Personnel
Project Schedule
Components of an Organization/Management
Study
Officers & Key Personnel
Project Schedule
Market Study
Is there a demand for my product or service?
Can My Marketing Program Meet this Demand??
A negative response to either question prevents
the project from materializing
Technical Study
Product / Service Quality – Can it compete with
existing competing ones?
Product / Service meets its intended use?
Distinction from others of the same category
Technical Study
Product / Service Quality – Can it compete with existing
competing ones?
Product / Service meets its intended use?
Distinction from others of the same category
Resource Availability & Accessibility
Focal Point: Most efficient way of allocating resources to
produce the desired product / service quality at the lowest
possible cost
Are they available in sufficient quantities and at reasonable
costs?
Financial Study
Financial Statements Preparation should boil down
to Long Term Profitability / Sustainability
Enough Sources for initial capital requirements?
Financing Arrangements and Terms Reasonable and
Viable?
Socio-Economic Study
A matter of determining whether the society and
the economy derive net positive gains from the
project
Effects of the Project on Environment, Morality &
Socio-Economic Growth
Organization & Management Study
Organizational Set Up Optimally Effective?
Recommended Officers/Management are
the best qualified under the circumstances?
Optimum effectiveness refers to the ability
of the organizational set up to carry out its
functions effectively while having the lowest
manpower level possible
Organization & Management Study
Clear and precise identification of duties &
responsibilities/flow of authority/manpower level
requirements
Fewest men possible shall be considered most
appropriate for the project
Examination of qualifications – suitability for
positions in terms of ability to meet demands
Evaluate the Project Study for its Overall Success
based on objectives.
“Focusing your life solely
on making a buck shows a
poverty of ambition. It
asks too little of
yourself. And it will
leave you unfulfilled.”
- US President Barack Obama
“Making your mark on the world is hard. If
it were easy, everybody would do it. But
it's not. It takes patience, it takes
commitment, and it comes with plenty of
failure along the way. The real test is not
whether you avoid this failure, because you
won't. it's whether you let it harden or
shame you into inaction, or whether you
learn from it; whether you choose to
persevere.”
- US President Barack Obama
PREPARED BY:

EVANGELINE PAYNO
Food & Beverage Outlets Manager
Baguio Country Club

For the Hotel and Restaurant Association of Baguio