Technical viability

Part 3

introduction

The possibility of implementing the proposed project in terms of engineering and technical through the study of different alternatives to reach to estimate the total investment and operating costs, called the study in some literature to study alternatives, where the content of the study is to choose between alternatives at each stage where the choice between sites and between the production methods of various Win Offers different machines from different markets and And the different types of production technology used, and a suitable alternative is chosen from among these alternatives in light of the capabilities and objectives of the project

Steps of the technical study

A technical study Include the following steps:1. Study and site selection project.

2. Planning the production process.3. Determine the method of production and choice of

technology.4. Planning needs of the project from raw materials and

labor.

5. Estimate the total cost of the project.

1-Study and site selection project

The first decision to be taken is to identify the geographic area that will be held by the project,Then specify the precise location to site the project in the selected area.

and the importance of studying different location from one project to another depending on the nature of the project, but in general the following factors help in the selection of Project site

1 - determinants of site selection

Keep in mind that there is no fixed recipe appropriate and reliable when deciding whether to choosing a particular site, in certain cases, the more important factors in other cases highlight the importance of other factors as the nature of the activity.

Even so, the decision to choose a site in preference to another is affected by factorsThe following considerations:

A – site natural and technical characteristics:

Such as soil characteristics of the project proposed in the case of a project that uses huge machines must examine the properties of the soil well so bear these machines are large and less importance of this factor in the service project does not require such machines, the more important factor climate in the case of an agricultural project requires a certain degree of Heat, or in the case of a third project needs to certain amounts of water.

B - the cost of obtaining land in different locations:

Either the cost in the form of rent paid for the use of land or purchase of this land for the project to be on it.

Each site has its advantages and associated these

benefits in one form or another at a cost of rent or the purchase of land in each location.

The length of the duration of the project plays an

important role in the preference between leasing and ownership.

If the project planned for a temporary period may be more appropriate to a lease, if the project is characterized by survival and may continue to advise ownership.

C - Economic factors :

The most important of these factors:

• the availability of fuel and the driving forces and water.• Proximity to production requirements, and workforce and

proximity to markets.• proximity to main roads and the availability of means

transportation.• Plan and investment policy of the country.• The presence of associated industries and services.

2 - determining the capacity and the appropriate size of the project

One of the important cornerstones in the technical and engineering feasibility studies is determining the production capacity that The project will operates to meet the estimated demand in the marketing feasibility study.

The process of determining the production capacity and the maximum production Capacity, we can distinguish between normal production capacity and the maximum production capacity, the former refers to the maximum of what can be produced (expressed in hours of automated work or the number of units produced by the machine or Department of production) through the full use of the equipment or machine in a certain period of time

2 - determining the capacity and the appropriate size of the project

Which are often written by the manufacturer on the machine without periods of rest or regular maintenance. And knowledge of this capacity is useful in periods of peak or the intensification of demand for the product under study, where the machines can bear a huge load for a certain period of time, we use such a method only at certain times in order to preserve the useful life of the machine.

But for the normal capacity of production (available), they reflect the capacity of production under normal circumstances prevailing, while allowing for periods of periodic maintenance, comforts and other technical matters. And this capacity is the maximum capacity minus the percentage of waste and damage and excess capacity.

capacity and the appropriate size of the project

There is another concept called the actual capacity i.e the rate of the actual operation that meets the existing demand.

several methods are used to determine the volume of production, which the project could work with without exposure to losses, and most prominent of these analysis methods is Break Even Analysis.

capacity and the appropriate size of the project

After determining the volume of the break even production we compare it with the volume of production required to meet the demand, according to the market study, if the estimated size in the marketing study is less than the size of break even the project rejected because it is less than economic size (the size of break even), but if the opposite happens ie the size of the marketing study Larger than the size of the break even the project shall be justified.

3 -Determining the method of production

Often there are several different ways to produce any of the products, there are methods that rely heavily on the human element, called the method of intensive production use for work(Labor Intensive), There is also a way that rely primarily on the capital and called the intensive use of capital (Capital Intensive) There are also methods depends heavily The cognitive component (Knowledge Intensive).

The method of production Is determined in the light of data from local resources and capabilities, and in light of the nature of the product,

3 -choice of technology.

The issue of technology, impose a number of issues such as:

Will the project buy the technology or will it be used with the payment of fees, patents, or it will come with foreign direct investment? Are modern production methodswill be understandable to the human element directly or that these elements need to be trained? Who bears the the costs of training (project or source of Technology) and other questions.

Determinants of technology choice.

In general, the degree of population density and level of technical education and the level of specialized training and the quality of technical skills available to the project and method of performance and implementation of production processes are important determinants of technology choice.

The size of the production capacity and the type of technology used affects on the types of production facilities required and the production processes and the internal arrangement of the project and the required raw materials and the human element.

A - Selection and description of the production process

The aim of this stage to know the sequence of production processes and oversight in all phases of Production of the product or service in each alternative technology was chosen through the so-called Process Chart (general or detailed information for each activity).

These charts and other simple forms assist on identifying the problems facing the productive processes, and then propose appropriate solutions. Also serve as the maps in cost estimation.

Model of process chart

B - the selection and description of of production machinery

This stage comes after you select the required production processes, is determining appropriate machines by the following factors:

1- The type of product or service.

2- The level of quality required.

3- the nature of industrial processes (automatic or manual). 4-The nature and type of materials used in production.

5- The type of expertise used.

Determining appropriate machines

preference between different alternatives of machinery and equipment necessary for the proposed project in accordance with standards and the following indicators:

1. Operating costs, maintenance and installation of machinery and the the costs of training and expertise necessary for the operation.

2. Production capacity of the machine and the number of hours of operation.

3. Cost of financing the purchase of machinery from different sources.

4. Source of power and energy dynamics necessary for the operation and the cost.

Determining appropriate machines

5. Estimated useful life of the machine and the premium annual depreciation and salvage value after the end of its useful life.

6- The impact of installing the machine on the internal organization of the project and the cost of the resulting bottlenecks.

Determining appropriate machines

preference between investment alternatives in equipment and machinery according to several criteria.

In deciding among the alternatives should focus on: A- the cost of the machine and B- the life expectancy of cash flows, and C- there are several criteria the most famous internal

rate of return (IIR), this standard takes into account the present value of the cash basis of a coefficient or average cost of capital or the rate at which the project sees that as a minimum return on investment when Interest rate (ie the cost of financing) specific.

5 - needs assessment of labor and raw materials

The project needs are usually two types of employment: temporary workers needed in times of certain special phases of the foundation and the establishment of the project such as architects and engineers to installor conducting preliminary studies.

Permanent employment needed by the project permanently, even after the end of the periodof foundation, and this number varies from project to project depending on the nature of the project and type of good produced,and depends on the size of the project and the production capacity and the type of machinery, tools and raw materials used in the production.

A- For determining the necessary human elements required follow the following steps:

- Identify the activities and functions necessary to implement the targeted production

- analysis of these functions and the necessary work to do and determine the time necessary to do all the function or activity.

- After you determine the maximum operating hours per capita can determine the number of personnel required for each function or activity

by dividing the total number of working hours necessary to perform the function in the day to / maximum hours of operation for person per day.

For determining the necessary human elements required follow the following steps

- Determination of technical and administrative specializations necessary for the performance of each function or activity,

and after the application of all the previous steps on all the activities and functions in the project we have to estimate the total needs of individuals.

Determining the production requirements from raw materials

For determining the production requirements from raw materials requires to:

A- determine the types and specifications of raw materials and

B- determine the the technical transactions (the participation rate of raw materials in the final product) in each unit of the final product, and

C- determine the size of the target production of the product to be.

B- Determining needs of the project of the furniture and the administrative tasks and means of transport

The preliminary estimate of the cost of purchasing through using processes’ charts mentioned above in this regard.

C - Preparation of the internal organization chart of the project:

the internal organization chart of the project which is determined by:

the quantity and quality of the production facilities required to build it; which initiate an impact on the efficiency of production processes and also affect the production lines.

this organization chart determined A- the place of production processes and the place of

management , area of each in the sections and the work system within each section and,

B- means of communication between departments and,

C- other things that ensure the flow of production processes within a project.

Examples for organizational chartsHotel

Travel agency

Restaurant