What to Include in your Feasibility Study

In starting a new business venture, it is important to conduct a feasibility study to ensure that your business will be successful.  Some things to be included are plan, cost, and sources of funding, manpower and personnel requirements, market and profitability.

In the plan section of your feasibility study, State clearly the objectives and description of the project. Duration to complete the project is also included. It is usually answers the questions what, why and how about the project.

Indicate the cost of equipment and facilities needed for the project.  The proponents should undertake reliable canvassing using at least two or three supplier and be particulars to models and capacities of equipment as well as the availability of materials.

Also, it is important if there is budget for the project.  If there is no sufficient budget for the project, a bank loan may be considered.  In this case, the loan amount and its interest must be factored into the financial documents of the study.  Realistic income targets from the venture should be projected.

As per personnel or manpower, it is important to determine the size and particulars of manpower as well as personnel’s job description, job titles and credential standards.  Also, salary rates and allowance should be noted.

In addition, the stability of the market determines the viability of the project.  A survey should be conducted to know if there are sufficient clients or customers and to whom the commercial venture will cater.

Of course, project should know if it is profitable. A ten or twenty percent return of investment (ROI) is usually regarded as profitable enough.

Project Proposal Methodology

Below is an example of Project Methodology excerpt from the Proposal for the Mechanical Engineering Design for PAL Fuel Tank Farm in Batangas City
By: Jose I. Hizon Jr., Carlos E. Zapanta and Melvin Panganiban


Implementation of Approach and Methodology

DOZON’s general approach to the Detailed Engineering Design of the Proposed Philippine Airlines Fuel Tank Farm project in Pinamucan, Batangas City will be basically anchored on the concept that all the project features shall adopt new and progressive technologies.  These within the domain of both international and local acceptable standard practices relating to bulk fuel storage that would encompass an effective plan formulation, detailed design and environmentally friendly construction methodology.

The proposed scope of work consists mainly of detailed mechanical engineering design and engineering support during construction.  An important start-up activity is to conduct site investigation.  A review of as built plan of the existing plant facilities and selection of appropriate construction methods and design standards shall be considered prior to the detailed engineering in order to save further on probable costs and construction time.

DOZON will conduct further detailed preliminary engineering work for the existing utilities at the site.

For this purpose, DOZON will have to use its experience in order to define the said functional requirements for the preliminary design phase.

For the next step, DOZON will define the engineering design criteria.  These criteria will be reported in the Conceptual Design Stage.  Based on DOZON’s experience, some alternative designs for each item will be studied and adapted to the existing site condition  Subsequently, the alternatives will be compared on the basis of efficiency, construction cost and maintenance requirements.

DOZON will use applicable and generally acceptable standards for design, investigation and tendering of materials, etc.  The following standards will be used in sequence of priority: Philippines, USA, Britain, Japan and other Asian countries.

The general approach to planning and technical detailing of the proposed Philippine Airlines Fuel Tank Farm Project in Pinamucan, Batangas City is to obtain pertinent information on the design standards and guidelines / practices of the governing agencies or related international aviation fuel storage.

Proposal Contractual Conditions

Chapter 3 – Contractual Conditions

3.1 General

This proposal is subject to the conclusion of a mutually satisfactory agreement defining the rights and obligations of the parties.

3.2 Responsibilities

To ensure the completion of the SERVICES within the given performance period, the CLIENT shall, immediately upon DOZON’s receipt of the Notice to Proceed with the work from the CLIENT, be responsible for the following:

  1. Providing DOZON with full information and data as to the project requirements.
  2. Providing DOZON with all available documents of the PROJECT and pertinent data, drawings/plans, reports, maps and other relevant information required for the performance of the SERVICES.
  3. Furnishing to the personnel of DOZON concerned with the PROJECT the necessary letters of authorization, clearances, permits, passes and other papers to enable them to have free access within the jurisdiction of the PROJECT.
  4. Designating the representative of the CLIENT duly authorized to deal with DOZON with respect to the PROJECT and the SERVICES.

3.3. Changes

Should the CLIENT make changes in the SERVICES to be performed, or in the basic data requirements furnished, and if such changes cause an increase or decrease in the costs, an equitable cost adjustment shall be made and DOZON shall be compensated accordingly.  Any delay or change in the schedule of the PROJECT having an impact on the cost and/or performance period of the SERVICES shall be deemed changed and shall be subject for separate compensation.

3.4   Responsibilities of DOZON

DOZON warrants that the SERVICES shall be performed by qualified personnel with skill, care and diligence and in compliance with the rules of engineering practice.  In the event that the SERVICES do not meet the terms of compliance set above, DOZON shall, at no cost to the CLIENT, rectify the deficient part of the SERVICES, if feasible, or otherwise indemnify the CLIENT for resulting damages  DOZON’s liability in this consequence shall be limited damages up to the amount received as compensation for the SERVICES directly related to this Agreement, and in all respects exclude any such liabilities relating to consequential damages, force majeure, and acts beyond DOZON’s direct control.

3.5    Termination

The AGREEMENT to be concluded between the parties may be terminated before completion of the SERVICES by either party with or without cause, but prior written notice of such termination shall be given to the other party thirty (30) days in advance.  Should such a termination be necessary, DOZON shall be fully compensated for the part of the SERVICES already performed.

In the event that after the start of the PROJECT, the CLIENT decides to terminate, abandon or shelve the PROJECT or its construction for an undetermined time, DOZON will be compensated for the SERVICES rendered from the start of the contract until pertinent papers and/or construction documents have been accomplished and turned over to the CLIENT which will take two (2) months after DOZON is informed of the termination of such PROJECT activities.

In case of any legal suit under the AGREEMENT, venue shall be at the proper courts of Manila, to the exclusion of all other venues.

3.6    Liability

DOZON shall not have any liability for loss of anticipated profits, loss of reason of PROJECT shutdown, increased expense of operation, claims by the customers of the CLIENT or by other third parties, loss of use of capital or revenue, damage to property, or for any consequential loss or damages.

The total liability of DOZON shall not exceed the contract value of the part of the SERVICES which gives rise to the claim(s).

3.7    Statement of Probable Construction Cost

Any statement of probable construction cost or any preliminary cost estimates, submitted by DOZON are accurate only up to a certain degree.  DOZON has no control over the fluctuating costs of labor and materials, or the many factors that go into competitive bidding, and DOZON shall neither guarantee nor be responsible for the resulting final project construction cost.

3.8    Measurements

Weights, measurements and dimensions shall be recorded in SI units.

3.9    Language

The official project language will be the English language.

Excerpt from the Proposal for the Mechanical Engineering Design for PAL Fuel Tank Farm in Batangas City
By: Jose I. Hizon Jr., Carlos E. Zapanta and Melvin Panganiban

Management Proposal

NCRFW Institutional Strengthening Project (NCRFW ISP) Phase II

Project Description:

The NCRFW ISP II is the second phase of partnership between CIDA and NCRFW.  The second phase of the project was re-oriented to focus on achieving an “institutionalized enabling environment in NCRFW and selected partners for gender responsive policy, planning, budgeting, implementation, monitoring and evaluation”.  Simply put, this means transforming government and its major processes to systematically respond to women’s needs and gender concerns.  In the long-term, government programs should reach and benefit women equally with men and improve their lives.  The strategy is called gender mainstreaming.

The project supports NCRFW itself and its work with a wide range of partners.  These include agencies and broad responsibilities throughout government (four oversight agencies, three statistical agencies and the legislature) and selected other agencies (four line agencies, seven sub-national government units and training partners).

The project was scheduled to conclude by June 2001. Given that it took longer than anticipated to develop effective working relationships and good project proposals with partners, NCRFW has been granted two extensions, the first one up to March 2002 and a second extension up to March 2004

Project Goal:

To support the full participation and integration of women in all aspects of Philippine national development by enhancing the planning and implementation capacity of NCRFW and all other key units tasked to carry out gender mainstreaming in government.

Project Purpose:

To build leadership, systems, capacity and skills in NCRFW and its partners to lead and guide the operationalization of existing government policy on gender equality;

To mainstream gender in the structures, functions, processes and systems of key government institutions, priority line agencies, selected local government units and resource networks.

Financial Proposal

Chapter 1- Compensation

DOZON shall be compensated for the performance of the services by a lump sum fee amounting to PESOS:  ONE MILLION EIGHT HUNDRED NINETY ONE THOUSAND THREE HUNDRED & 00/00 (Pph 1,891,300.00) only with the following breakdown:

-    Design of Fuel Tank, Pumping and Piping – Php 774,300.00
-    Design of Fire Protection Systems – Php 816,800.00
-    Design of Ventilation and Air Conditioning Systems – Php 300,200.00

Total – Php 1,891,300.00

Please note that all fees presented herewith are inclusive of the 10% Value Added Tax (VAT).

Chapter 2- Commercial Provisions

2.1 Terms of Payment

Payment for the services shall be made under normal existing and acceptable practice detailed as follows:

2.1.2 Detailed Mechanical Engineering Design Services
Four (4) Months Performance Period  including Conceptual Design Stage

40% of the total cost of services as acceptance fee upon receipt by DOZON of a written Notice to Proceed with the work from the client – Php 756,520.00

40% of the total cost of services upon submission of the preliminary design and plans – Php 756,520.00

20% of the total cost of services upon submission of the final design and plans, technical specifications, bill of quantities, and design computations – Php 378,260.00

Method of Invoicing and Payment

DOZON will submit invoices in accordance with this payment schedule.  The client will arrange for payments in respect of all fees due to DOZON within fifteen (15) days after submission of invoices.

2.3 Services and Expenses Covered

The price quoted in the Financial Proposal covers the cost for the services and related expenses in connection with the implementation of the scope of services within the specified project schedule as outlined in the Technical Proposal

2.4 Price Escalation

All quotations on this Financial Proposal do not include a provision for escalation beyond this date.

From: Proposal for the Mechanical Engineering Design for PAL Fuel Tank Farm in Batangas City
By: Jose I. Hizon Jr., Carlos E. Zapanta and Melvin Panganiban

Sample Proposal for MRT Project to Link Bulacan Edsa

Estimated Project Cost: $1.2 Billion

Timetable:  Targetted for completion by 2005

Proponents:

  • A consortium of big local and foreign investors.
  • The Manila-based development group EL International Holdings which is part of the EL group of Companies of HongKong, which has teamed up with local groups EEI Corp. of the Yuchengco family and TCGI Engineers.
  • Other partners are the Tyco International group of the United States, the world’s largest manufacturer of electrical and electronic components and global infrastructure giant Alstom of France, which are participating through respective units Earth Tech and Alstom Phils.

Objectives:

  • Make the transportation system more efficient.
  • Decongest Metro Manila of heavy traffic because of provincial buses.
  • Educate the riding public on how to deal with intermodal public transport they way it is dealt with in most major cities in the world.
  • Promote into modal transport in the subject transport zone and accelerate/ease the movement of people, goods and services, specifically: cut travel by 50-80% or more, attain efficiencies in economic and social transactions in the areas of Bulacan and between Bulacan and Metro Manila.

Medium-to-long-term objectives: to spur the development in the subject areas; partially help ease the traffic and population problems in Metro Manila, among others.

Highlights:

  • A mass railway system to link Marilao in Bulacan to Edsa-Quezon Avenue through a build-operate-transfer (BOT) project with the government.
  • One of its main features will be a bus terminal facility north of Manila in Bulacan so that provincial buses will be encouraged to drop off the passengers there and they can, then proceed to the MRT.
  • The proposed 20-kilometer MRT will begin its route from Marilao, passing through the La Mesa Dam reservoir, Fairview, Batasan, U.P. in Diliman, Philcoa and Edsa-Quezon Avenue.

* An excerpt from proposal for MRT Project

Methodology for the Proposed Services

Proposal for the Mechanical Engineering Design for PAL Fuel Tank Farm in Batangas City
By: Jose I. Hizon Jr., Carlos E. Zapanta and Melvin Panganiban

Approach and Methodology in Undertaking the Proposed Services

Scope of Works

DOZON’s first priority is to evaluate the existing condition.  This will comprise of assigning a reconnaissance team who will be responsible for the collection of all data and pertinent information relevant to the project.  This will also include verification of any existing and/or proposed development in the vicinity of the area to determine the availability of power and water supply, telecommunications and drainage system and other facilities.

General

  1. Ensure the designs are in accordance with applicable codes, regulations and ordinances.
  2. Finalize the Basis of Design and brief to enable the preparation of full design drawings.
  3. Finalize the design drawings for the works, taking due consideration of the requirements of each design discipline.
  4. Prepare technical specifications for the works, based upon sound engineering practice and cognizance of local requirements and methods.
  5. Prepare and submit final construction drawings and technical specifications.
  6. Prepare Bill of Quantities based on the final design suitable for procuring of materials.
  7. Attend design meeting/presentations as requested by the CLIENT.

Design of fuel tank

This includes determination of the optimum numbers, capacities, dimensions, spacing and layout of fuel tanks and auxiliary piping.  Design shall be done in accordance with he latest applicable local codes and internationally recognized standards.  Several schemes shall be considered, studied and evaluated to arrive at the optimum system design.

Design of fuel loading and unloading piping facility

Upon completion fuel tank design and upon finalization of site development and marine berth, design of associated fuel loading/unloading piping between marine berth, fuel tank farm and truck loading shed shall then be made.  Design shall be done in accordance with the latest applicable local codes and internationally recognized standards.

Design of fire protection system for the fuel tank farm and marine berth

Upon owner’s approval of the fuel tank and pipe layouts and upon finalization of site development plan and marine berth, design of fire protection system shall be made  This includes design of fire hydrant system for entire facility, design of foam system for fuel tank farm and marine dock, design of water spray for fuel tanks exposure protection.  Likewise, design shall be done in accordance with the latest applicable local codes and internationally recognized standards.

Design of fire protection, ventilation and/or air conditioning system for ancillary structures

Upon owner’s approval of the architectural concept of the administration building, laboratory, employees’ quarters and other ancillary structure, design of fire protection, ventilation and/or air conditioning system for these structures shall then be made based on the latest applicable building codes.

Deliverables

1.    Major Service Requirements

a.    Study of existing site facilities and utilities
b.    Coordination with the architects and other engineering consultants
c.    Space allocation for fuel tank farm, equipment rooms, and fire storage tank
d.    Equipment layout
e.    Equipment selection including pumps, air conditioning units, etc.

2.    Cost estimate: review concept against budget for conformity
3.    Outline design criteria
4.    Finalized electrical site distribution routing and sub-station design
5.    Finalized air conditioning, ventilation, fuel piping, and fire protection plan, tank farm layout, equipment layout, equipment schedule, schematic line diagrams for ducting and piping

Engineering Support During Construction

  1. Coordinate closely with the CLIENT and other disciplines involved in the construction to ensure strict compliance of the construction with the design plans and specifications.
  2. Assist the CLIENT and the contractor in the interpretation of the design plans and specifications.
  3. Organize and lead job site meetings and others which may be required by the CLIENT.
  4. Review and approve all shop drawings, catalogues, and samples prepared by the contractors to ensure compatibility with design and specification requirements.

Sample Technical Proposal

Proposal for the Mechanical Engineering Design for PAL Fuel Tank Farm in Batangas City
By: Jose I. Hizon Jr., Carlos E. Zapanta and Melvin Panganiban

Part 1 Technical Proposal

Chapter 1 – Project Understanding

1.1    The Project

Philippine Airlines intends to develop the remaining part of the 60 hectare land located at Pinamucan, Batanga City, Province of Batangas.  The first part was develop as Himmel Industries, a chemical storage farm.  From the site inspection conducted last September 24, 2001 and the subsequent technical meeting with Philippines Airlines representatives led by Mr. Elvis Yao, it is anticipated that the Proposed Philippine Airline Aviation Fuel Tank Farm shall be provided with the following amenities features:

  • tanks with a total capacity of sixty (60) million liters of aviation fuel oil.
  • support facilities such as administration building, workshop, laboratory, substation and emergency generator set, elevated water tank, pump house, foam house, dormitory, recreation building, outdoor basketball and lawn tennis courts, guardhouse and helipad
  • four (4) loading truck sheds
  • outdoor and covered parking areas for visitors and employees
  • slop tank for initial discharge prior to storage to the fuel tanks
  • deep well water supply
  • lighting for the site
  • oil separator prior to discharge of oil waste
  • loading arm for the connection of vessel
  • new marine berth for the loading and unloading of fuel oil from the fuel tankers to the slop tank if the existing berth is not capable of accommodating the fuel tankers.

As envisioned to supply its own aircraft aviation fuel requirement, including that of Air Philippines, a Philippine Airlines has invited Trans-Asia (Philippines), Inc. to submit a Technical and Financial Proposal for the Detailed Architectural and Engineering Design and Project Construction Management Services for the above mentioned project.  Trans-Asia invited their mechanical designer, DOZON Engineering and Construction Services to submit proposal for the detailed mechanical engineering design for fuel tank, fuel pump/piping facilities, fire protection, ventilation and air conditioning system.

Writing Step for Winning Business Proposal

Business development which required written proposal is avoided by some business people because they believe that writing proposal is tricky. I believe that if you will know the basic steps, it will never be difficult because once you clearly define your plan of action and follow simple steps; you will have a winning business proposal.

The first thing you should do with your business proposal is to clearly define the benefits from the proposed business venture. It should be state visibly how it will benefit for them and how you plan to do it. The next step is to tell them why your company is the best for the job.

Describe the product and services you are offering and state clearly your main objectives that it will be the best solution to their company. Identify the points why your company should be chosen by your client.

Then, carefully identify your financial projections. You can employ professional assistance to estimate your business proposal for your prospective client. Always remember that business is not static entity. Convince them that your offer is the most effective and cost effective. Also, you can research your client’s requirement and make sure that your information is up to date as possible.

Make your business proposal informative as much as possible. Any research done and facts based projects should be included in your proposal. You can use charts and graphs to identify your information where necessary.

Finally, use professional layout and eye-catching cover as well good layout such as bullet points, charts, graphs, financial projections and summaries for quick review by prospective clients. It is essential for your business proposal to create a very positive impression.

Cost Analysis of Comparative Analysis of Physico-Chemical Characteristics

Product Cost

The following data shows the prices of identified fuel oil

Bunker Fuel = 14.2617 php/liter
CME  = 70 php/liter

Cost per liter of Bunker Oil with 20% CME

1 liter = 1000 ml
1000 ml – 200 ml = 800 ml
800 ml (0.0142617 php/ml) = 12.55 php
200 ml (0.07 php/ml) = 14.00 php
Total Cost = 26.55 php

Cost per liter of Bunker Oil with 25% CME

1 liter = 1000 ml
1000 ml – 250 ml = 750 ml
750 ml (0.0142617 php/ml) = 10.70 php
250 ml (0.07 php/ml) = 17.50 php
Total Cost = 28.20 php

Evaluation and Benefits of the Project

The study will serve as a platform in providing technical support the widespread and efficient use of bio-diesel/bunker blended fuel.  Promoting the widespread use of bio-fuel blend will improve our environment while reducing dependence on foreign oil, stretching our fossil fuel reserves and providing value added markets for our coconut industry.

This sample cost analysis is taken from the project study entitled, “Comparative Analysis of Physico-Chemical Characteristics between 20% and 25% CME Blend by Volume on Bunker Fuel and the Effect of Exhaust Gas Emission” by: Kristian G. Barario, Rhio C. Dimakiling, Orley G. Fadriquel and Manuel Robles.