As risks and uncertainties have increased, the dynamics of today’s business environment have changed rapidly. As a result, companies must outperform their competitors by providing value and efficiency to their customers. To succeed in this industry, you must first conduct thorough planning and analysis before entering it.
The best example of this type of analysis is the TEV study (Techno Economic Viability). The project’s historical context, project description, accounting statements, operational and management details, marketing policies, financial data, legal requirements, and tax obligations are all considered in the study.
At this stage, you evaluate the desired project by gathering technical and financial data using pre-defined procedures. You also know a lot about the country’s technological and economic environments. You decide whether to accept or reject the project after considering all of these factors.
STUDY OF TECHNOECONOMIC VIABILITY COMPONENTS
Even though the project will be run by promoters, credit evaluation of the promoter is critical. The personal and financial profiles of the promoters are required for the TEV study.
A personal profile assessment is required to understand the financial capacity and competence of promoters. This includes adaptability, prior trip record experience, financial stability and support, family history, stake in other companies/firms, and so on.
CHOOSE A STRONG MANAGEMENT TEAM
To ensure the success of your project, your management team must include disciplined experts from various industries. Every team member should have extensive experience in the following areas:
Finance for human resource development
Implementation of the project
The designated person should have the necessary skill and expertise in their respective discipline, depending on the size of the project. All of the elements, such as organizational structure (both existing and proposed) and key personal profiles, as well as their designation and experience in the specific field, are required for a meaningful Techno Economic Viability study.
This one necessitates extensive research into the most recent technology and project resources. You must also investigate the suitability and adequacy of the production process to achieve the projected output, as well as the adaptability of project location selection, project rationale, project implementation schedule, project status, and so on.
It is critical to assess the project’s future growth and prospects. You must have a future outlook in your industry to evaluate the demand and supply of the products used in the project. Keep an eye on whether your product supply covers market size factors such as competition, consumer trends, and so on.
IN-DEPTH INDUSTRY RESEARCH
To assess the current business environment, business owners and other individuals conduct industry analysis. It is beneficial to understand the various economic aspects of your industry and how they can be used to gain a competitive advantage. This is an important part of the Techno Economic Viability study, as it is in other businesses, because it compares various key parameters such as operations, products, services, and financial growth trends with your similar projects.
It also considers the geographical landscape of other industry leaders in the same field.
THE FINANCIAL VIABILITY OF THE PROJECT
Keep the following points in mind as you prepare one: This implies that the project should generate enough cash flow to provide a risk-adjusted return on investment. Your project should be able to pay off the debt and generate a profit. This is exactly what everyone desires.
This component evaluates the project’s ability to generate a desirable profit using realistic financial projections. You must consider factors such as ratio analysis, working capital requirements, term loan requirements, and so on to determine the project’s financial viability.
SENSITIVITY ANALYSIS AND SIMULATION
In this method, infinite calculations are performed to determine the possible outcomes and probabilities of any action. This financial model is commonly used to forecast the outcome of a decision using a set of variables. To determine the project’s financial viability, you examine the impact of changes in key assumptions such as selling and raw material prices.
An abbreviation for “Strengths, Weaknesses, Opportunities, and Threats” is SWOT (Strengths, Weaknesses, Opportunities, and Threats). It is a strategic planning tool that involves identifying internal and external factors as well as highlighting project objectives in order to find both positive and negative elements that will help you achieve your goal. These are some variables that you have some control over and can change to achieve the desired result.
ASSESSMENT OF RISK
Finally, and most importantly, risk assessment is required. It is accomplished through the identification of operational risk, market risk, financial risk, resource mobilization risk, project execution risk, regulatory risk, and political risk. The simple reason for including this study is to mitigate the identified risk and develop preventive measures to deal with future issues.
Erudite is a free organization of Contracted Architects/Valuers that gives plant and apparatus, land, and building confirmation/valuation administrations. Services of Advice. Among the services we provide are TEV studies, due diligence, compliance consulting, acquisition and merger advisory, and other financial and business-related issues. We provide corporations and individuals with a wide range of valuation and consulting services for the reporting and recognition of liabilities and assets in financial statements.
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