How to prepare a feasibility report of manufacturing plant?

How to prepare a feasibility report of manufacturing plant?

October 07, 2022 Admin
feasibility report feasibility study feasibility report of a manufacturing plant

A feasibility report assesses the viability of proposed project plans or methods from a technical, commercial, and financial angle. The study helps narrow down the risk factors in the implementation of a project.


The feasibility report of a manufacturing plant entails the examination and assessment of a proposed project -- whether it’s viable to manufacture the product to meet customer needs. The report assesses but is not limited to the following (as applicable): staying within budget and finding appropriate resources, location, technology, facilities, tools, capacity, software, and staff with the skills required, including support functions, available or anticipated to be available as required to implement the project.


Purpose of a feasibility report

A feasibility report looks at a variety of factors to determine whether a new venture will be profitable and worthwhile now or in the future. A preliminary analysis is the first step in preparing a report. Interviews with stakeholders are conducted, market research is carried out, and a business strategy is formed. If everything looks good, real research is initiated. This involves the selection of a proper location, a listing of technological requirements, market analysis, a description of the marketing strategy, an outline of the required human capital, a project timetable, and funding. The report outlines estimated costs as well as projected advantages.


The following steps are involved in conducting a feasibility study

  • Performing preliminary assessments
  • Generating an estimated income statement
  • Carrying out a market research survey
  • Designing the new project's organizational structure 
  • Preparing an opening day balance sheet
  • Studying and examining the project's internal points of vulnerability that can be remedied or eliminated
  • Determining whether to proceed with the plan/project
How to prepare a feasibility report of manufacturing plant?

Sections to include in a feasibility report

The feasibility report differs from one organization to the next based on the instructions offered by the company. Most reports usually include the following key sections


  • Executive summary - Executive summary, the first component of the feasibility study, contains essential elements and an overview of the project to assist readers in gaining a brief understanding of the project.
  • Introduction- The executive summary is followed by an introduction that briefly describes the nature of the project as well as the challenges with the proposed alternatives.
  • Evaluation criteria - Evaluation criteria assist readers in getting a handle on the numerous grounds for evaluation, which may include financial expenses, tax implications, public perception, environmental repercussions, resources required, etc.
  • Evaluation of solutions - Evaluation of the solutions section constitutes a vital part of the feasibility study. This section fulfils the goal of a feasibility report, which is to assess the viability of various options and project plans.


Before making the final recommendation, the conclusion offers a review of the report to highlight important arguments, advantages, and drawbacks of each option evaluated.


Final recommendation

The final portion, as the name implies, comprises the best recommendation to be made based on the assessments and approaches outlined previously.

When contemplating the launch of a new project or product, feasibility reports are critical. Accepting a proposed business strategy is an investment for any firm; it is imperative to review all aspects of a project from pre-planning to the conclusion.


Below are a few reasons why feasibility studies are important:

  • Identifies valid reasons to advance or veto a project idea
  • Improves the focus of the project team
  • Provides useful information on the steps to be followed after the study
  • Narrows potential business alternatives
  • Enhances the success rate of the project by assessing all variables
  • Estimates the return on investment

Four Aspects of the Feasibility Report

A typical feasibility report considers the practicality of four aspects of a project:

  • Technical: A list of software and hardware requirements and the specialized manpower needed to operate them.
  • Financial: An approximation of the entire project's cost and potential return.
  • Market: An examination of the market (for goods or services), industry, competitors, consumer trends, sales predictions, and growth estimates.
  • Organizational: A sketch of the business structure and management team needed for the successful execution of the project.

The Bottom Line

Feasibility reports of manufacturing plants assist project executives in assessing the viability of the project or commercial venture and identifying crucial elements that may contribute to its success. The analysis illustrates the possible return on investment as well as threats to the venture's success.

The study contains a detailed report on everything necessary to complete the project. It identifies funding and sources of capital and also includes a description of the new venture, a study of the market trend, the technology & equipment and the manpower required. The report often includes financial predictions, the probability of success, and a yes-or-no judgment based on key financial ratios and SWOT analysis.

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