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How to calculate a feasibility study. Feasibility study in the construction industry

FEDERAL AGENCY FOR EDUCATION OF THE RUSSIAN FEDERATION

MOSCOW STATE UNIVERSITY

TECHNOLOGY AND MANAGEMENT

Department of Finance and Credit

abstract

Subject "Investment"

Topic: "Technical economic justification and business plan

investment project»

Completed by: student of the Far Eastern Federal District, 4th year

Specialties: 06.04.00

Chichilina V.V.

Checked by: Zhuravinkin K.N.

Grade________________________

An investment project is a complex of interrelated activities that involves certain capital investments for a limited time in order to generate income in the future. At the same time, in a narrow sense, an investment project can be considered as a set of organizational, legal, accounting, financial, design and technological documents necessary to justify and carry out appropriate work to achieve investment goals.

Often the life cycle of a project is determined by cash flow: from the first investment (costs) to the last receipts Money(benefits). The initial stage of the implementation of the investment project is characterized, as a rule, by a negative amount of cash flow, since funds are invested. Subsequently, with the growth of project income, its value becomes positive. Thus, any investment project from its inception to completion goes through a number of stages: pre-investment, investment and operational.

In this paper, the pre-investment stage will be considered, in the form of a feasibility study and a business plan for an investment project.

A feasibility study (feasibility study) of an investment project is a set of calculation and analytical materials that contain the necessary initial data, technical solutions, organizational measures, cost, estimated and other indicators, considering and analyzing which one can conclude that the project is viable and sufficiently effective .

In accordance with the instructive and regulatory provisions in the Russian Federation, the development of a feasibility study is mandatory with full or partial financing of the project at the expense of appropriations from budgetary, non-budgetary funds, as well as own funds of state enterprises. As for the private sector, the decision to develop a feasibility study for an investment project is made by the customer in agreement with the financing or lending institution of the bank. However, if a feasibility study is not being developed for an investment project of the non-state sector, then its main indicators should be reflected in the business plan of this project with even greater detail.

In the feasibility study of investments, first of all, a pre-design study of solutions (technological, engineering, architectural, planning and construction) is carried out, alternative options are considered and the best one is selected. Then, in the feasibility study, the adopted above indicators, as well as issues of environmental protection measures, are considered and specified in more detail. In a relatively enlarged version, the commercial, financial and, in general, economic efficiency of this investment project is assessed.

One of the main subjects of the organization and implementation of the investment process is the customer, who at the initial stage of the development of the feasibility study prepares a declaration of investment intentions. It contains such basic data as information about the investor with an indication of his address, characteristics of the projected object (its name, technical and economic parameters, the need for labor, material and financial resources, a list of main buildings and structures, the need and availability of a number of social and household purposes, the possibility of the impact of the future investment object on the environment, etc.). This declaration is sent to all interested instances, including state self-government bodies. After receiving a positive assessment, you can begin to develop a feasibility study.

The main purpose of the feasibility study is to confirm to the financing or lending entity that sufficient economic efficiency of the project, financial stability and solvency of the future enterprise (created on the basis of the project under consideration) in terms of timely fulfillment of contractual obligations, ensuring cost recovery, obtaining sufficient profit, timely repayment, etc. The feasibility study is also used to develop a business plan, when considering tender proposals, carrying out the necessary approvals, examination and approval of design and technical documentation.

Thus, the feasibility study is the main pre-investment project document, the main purpose of which is to answer questions about the possibility, expediency and versatile validity of continuing work on an investment project. It is necessary for all subjects of the organization to carry out the investment process for this project to the customer, investor, performer (contractor), financing or lending bank, and others.

In practice, there is no single approach to the development of a feasibility study. Consequently, there is no solid standard structure for it. And yet, taking into account the rather capacious foreign experience and the well-established domestic practice, it is possible to give a general or recommendatory structure of the feasibility study with a focus on the cases of its development for the most complex and large investment projects.

1. General terms implementation of the project and its background (history and main idea of the project, cost and investment studies already carried out, etc.);

2. Market analysis and marketing strategies (methods of market analysis, marketing concept, sales forecast, production program, etc.);

3. Material factors of production (raw materials and resources - necessary for the production process, approximate requirements for factors of production - availability of resources and raw materials, the situation with their supplies in the present and future, an approximate calculation of annual costs, etc.);

4. Locations of the object and territory (preliminary selection of the location of the object and the construction site, analysis of the impact on the environment, etc.);

5. Design documentation (preliminary definition of the scope of the project, production technology and equipment, civil engineering facilities necessary for the normal functioning of the enterprise, etc.);

6. Organization of the enterprise and overhead costs (approximate organizational structure, estimated overhead costs, etc.);

7. Labor resources (estimated resource requirements by category of workers; estimated annual labor costs in accordance with the above classification, including overhead costs for salaries and wages etc.);

8. Planning the timing of the project (proposed approximate project schedule, project cost estimates, tranches, etc.);

9. Financial and economic evaluation (total investment costs, project financing, production costs, financial assessment, national economic assessment, etc.);

10. Structural plan (summary of all the main provisions of each chapter).

This feasibility study structure consists of 10 sections. Consider the main content of these sections. In practice, the development of a feasibility study for each investment project can be structured differently, but all sections should always be interconnected.

The first section of the feasibility study structure deals with issues related to the main idea of the investment project. In order to successfully develop a feasibility study, it is required to clearly understand to what extent the project idea corresponds to the general economic conditions and the level of development of the region where the invested object will be located, and the country as a whole. Therefore, it is necessary to give a detailed description of the project idea and identify potential investors with a statement of the motives for their interest in the implementation of this project.

Noteworthy is also the description of the history of the project under consideration, starting from the moment the idea of its creation appeared, about the availability and results of previous studies and survey work that can be used in the development of this investment project.

In the same section, it is advisable to provide the most important parameters and characteristics of the project, including:

description and analysis of proposed strategic decisions;

Destination of future project products (or provision of services) for domestic and foreign markets;

the main principles of economic, social, financial, credit policy, which can have a significant impact on the fate of the project.

This section covers market analysis and marketing strategy. It should be borne in mind that the main goal of almost all investment projects (with the exception of projects to achieve a social effect) is to generate income (profit) both by using existing resources and by creating new production to meet existing or potential demand for future products ( service). Therefore, when compiling this section of the feasibility study, one should know the methods of market analysis, the concept of marketing, forecasts and costs, quantitative indicators of the main and related products.

Due to the fact that the definition of demand for the project's products (provision of services), as well as the characteristics of the sales market (both internal and external), is to determine the optimal production program and the most successful (favorable) location of the projected facility (see section 4 of the feasibility study structure). Greater attention should be paid to carefully structuring and planning the market analysis so as to obtain the required information about it and at the same time determine the possible strategic aspects of marketing and production.

The concept of marketing covers the issues of penetrating the domestic and foreign markets and fixing on it, developing the sale of project products (provision of services), diversification, collecting proper processing and systematic evaluation of information about markets and the market area - issues of demand and competition, consumer needs, behavior of participants, the state of competing products and other factors that are associated with market relations.

The composition of marketing cost forecasting includes the constituent components of all costs of the marketing activity process. Based on the scope of the study and the detail of the analysis, they can be predicted, both for each product individually and in aggregate for groups. In cases of detailed study, direct variables are determined, as well as fixed costs for each center of their occurrence and indirect costs in the form of overhead costs.

The third section defines and describes the various materials and resources that are necessary for the construction of the invested object, analyzes their estimated need, actual availability, determines the sources and possibilities of their supply, as well as costs. At the same time, it should be borne in mind that the need for material resources is directly dependent on the design capacity of the investment facility, the intended technology, the selected equipment, the location of the facility and other factors, because they are all interconnected.

Specifying View Selection material resources carried out primarily on the basis of technical requirements to the investment project and the market for future products. And the choice of raw materials, basic and auxiliary materials depends on environmental factors (depletion of resources and environmental pollution), as well as criteria that relate to the strategic aspects of the project (tasks to minimize the costs of material resources, risks in the process of selling products, etc.) . In order to minimize costs, one should first classify material resources by their types and types, and then determine the optimal need for them, check the actual availability and evaluate the costs associated with them.

In the process of developing a feasibility study, the real needs for material resources and their supplies for the normal functioning of the designed facility must be determined, analyzed and specified both in terms of quantitative and qualitative parameters.

Here they turn to the problem of the most successful determination of the location of the object and the construction site. It should be borne in mind, however, that the choice of location for an investment project may refer to the coverage of a much wider geographic region, where several alternative options choice of building site.

In the process of considering alternative options, it is very important to carefully analyze the impact of each of them on the environment, both during construction and installation works, and during the operation of the future enterprise (investment object). If it is determined that the project has a significant impact on the environment, then detailed studies of the socio-economic and environmental consequences of this impact should be carried out. The results of these studies and conclusions should be taken into account in the process of implementing the project under consideration, if in principle a positive decision is made on its implementation.

When choosing a location for an investment object, the following should be analyzed:

ª local climate conditions, natural environment, environmental safety requirements;

ª possible impact of the designed facility on the environment (negative, neutral or may be positive) with a simultaneous assessment of the amount of costs and benefits from this impact;

ª the current socio-economic policy in the region, established incentives and restrictions, and other circumstances.

The essential factors for a positive decision on the choice of the location of the investment project are the sufficient availability of raw materials, basic and auxiliary materials, transport network(roads and railways, sea, river transport), proximity to the main sales market, etc.

After deciding on the location of the object
investment project in the feasibility study proceed to the definition of a specific construction site and consideration of its alternative options.

When considering plots located in the target region (the location of the investment object) and in order to select the best of them, the following basic requirements and conditions are analyzed:

ª environmental problems - the state of the soil structure, possible dangerous features of the site, geological, hydrogeological features, climate, etc.;

ª a differentiated approach to the environmental impact of each of the alternative sites;

ª social and economic conditions;

ª state of infrastructure;

ª availability of local raw material and material, as well as labor resources;

ª prospects and potential opportunities for further expansion of production;

ª differences and motives in the cost of a land plot and options for the development costs of a construction site, etc.

The fifth structural section of the feasibility study deals with the design and technology selection process. It should be borne in mind that the design capacity of the future enterprise should be linked to: market requirements and strategic aspects of marketing, real resource needs and forecasts for their supply; the most advanced technologies and economy, which is determined by the state of the production volume in the given industry (in which and for which the investment project will operate), the minimum economic parameters and restrictions on production equipment, as well as alternative project options.

One should not disregard the fact that the one-time development of the entire design capacity at the initial stage of operation of the future enterprise is unrealistic. This is largely due to various technological, manufacturing and commercial issues.

The most important element of any feasibility study of an investment project is the skillful justification of the choice of the most appropriate technology. The basis of this choice should be a detailed consideration and evaluation of alternative technology options for each specific investment project, taking into account socio-economic conditions, as well as environmental conditions.

When choosing a technology, one should also take into account such an important factor as fierce competition in the market economy. In other words, the technology chosen for the investment project should contribute as much as possible to the production of competitive products (or the provision of services).

In view of the foregoing in this section, the feasibility study should
describe the content of the chosen technology, substantiate the motives for choosing this particular technology, its advantages and benefits compared to other alternatives, prospects and opportunities for further improvement of the technological process. Further, in order to evaluate this technology, it is necessary to define its impact on the socio-economic life of society and on the national economy as a whole, i.e. analyze indicators of costs and benefits, the impact on the level of employment and income, meeting the needs of a given area, etc.

Along with the rationale for an acceptable choice of technology, no
less relevant is the successful choice of machinery and equipment for the investment project. At the stage of development of the feasibility study, this choice consists in determining the optimal set of required machines and equipment in clear relation to the capacity of future production and technology. As a rule, a list (list) of the required equipment is compiled, broken down by main groups - technological, energy, transport, mechanical, instrumentation (CIP), electromechanical, etc.

The feasibility study for civil engineering provides architectural and planning materials and provides an overall assessment of the construction and installation work associated with this investment project. These works include the preparation and development of a site for the placement of an investment facility, the erection of buildings and structures, construction work related to the provision of public services, the reduction of harmful emissions, protective structures, a security system, etc.

In order to ensure the normal and uninterrupted operation of the future enterprise in the investment project, it is necessary to provide for the timely replacement of wearing items of technological equipment, tools, spare parts, as well as a number of components and other materials for machines, equipment, buildings and structures that are part of this project. At the same time, it is advisable to maintain an optimal balance between real needs and reserves for the replacement of the listed parts, structures and materials.

In the same section of the feasibility study, an overall assessment of capital costs for the investment project under consideration is given. To do this, tables are compiled for each type of investment costs - for survey work, preparation and development of the construction site, the required technology, the purchase of machinery and equipment, construction and installation works (CWR), auxiliary production, temporary buildings and structures, working capital, etc.

It addresses the issues of rational creation of an organizational chart, which is necessary for effective management and proper control over all production and operational activities of the future enterprise, as well as the overhead costs associated with this process.

At the same time, the development organizational structure carried out in the following sequence:

1) Preliminary definition of the main commercial goals and main tasks.

2) Carrying out the identification and grouping of functions that are necessary for the successful solution of the tasks.

3) Comprehensive development of the organizational structure for managing the future enterprise, drawing up the necessary training program and recruiting production and maintenance personnel.

Organizational design includes activities to create administrative divisions, the main of which are divisions of the general level, financial control, personnel management (personnel), marketing and sales, production supply, economic calculations, transportation and storage, etc.

Overhead costs are determined as a percentage of the so-called direct costs. In market conditions, the main groups of overhead costs include:

³factory-wide, which includes payroll costs, including benefits and benefits social insurance workers and employees who are not directly employed in production;

³expenses for auxiliary materials, details and designs; expenses for electricity, water, gas, steam and other utilities at the construction site;

³administrative and economic expenses, consisting of salary costs with accruals, utility costs, stationery, engineering costs, rent, taxes, insurance, etc.

Moreover, the latter (administrative and economic expenses) are calculated separately in cases where they are large-scale and important. In other (normal) conditions, they are included in general factory overheads.

In the seventh section of the feasibility study structure, the optimal need for labor resources is determined. These resources are calculated separately for the category of personnel (executives, specialists, workers and technical performers), as well as for functional duties(technologists, economists, apparatchiks, lawyers, car drivers, etc.).

Then the following steps are sequentially carried out, which are related to labor resources:

1) An analysis is made of the socio-economic conditions and cultural environment in the area where the investment project is located, covering such issues as labor rationing and safety, health protection and social protection people and others.

2) The real need for personnel is calculated for all categories and for all stages (phases) of the organization and implementation of the investment process for this project.

3) The issues of supply and demand for labor are analyzed, both in the project area and in the country as a whole, the policy and methods of hiring workers and employees, the state of infrastructure, etc. are studied.

4) It is planned to train (retrain) personnel in conjunction with the technology and other parameters of this investment project.

5) The total costs are calculated, which are associated with the planned (calculation-defined) labor resources, which include the costs of the main and additional wages with the corresponding deductions to various off-budget funds, rental fees and other expenses.

This section of the feasibility study includes the main issues of planning the process of implementing an investment project. The period of time from the moment the project decision is made to the start of commercial production (sale of products or provision of services) is the period of implementation of the investment project. The implementation of an investment project means the completion of all construction and installation, reconstruction, commissioning and other works, both on the construction site itself and outside it, which can ensure the transfer of the project from the feasibility study to the operational stage, i.e. to the state of readiness of the investment object to release products (render services).

The implementation process of the investment project is carried out sequentially in the following main stages:

1. Definition of a designer (developer of an investment project).

2. Creation of an appropriate enterprise (firm or company).

3. Implementation of financial planning.

4. Formation of production and organizational structures.

5. Acquisition and transfer of appropriate technology.

6. Formation of personnel (a set of necessary labor resources).

7. Implementation of technological design.

8. Tender procedures (preparation of the necessary documentary materials, announcement and holding of a tender, consideration of the results and determination of the winner).

9. Preparation and conclusion of contracts (or work contracts).

10. Preparation construction site(acquisition or lease of land).

11. Performance of construction, installation and commissioning works.

12. Putting a fully completed facility into operation.

13. Start of production and services.

Taking into account the above sequence and the planned technical and economic indicators of a particular investment project, a schedule for its implementation is drawn up, which should be differentiated in time in conjunction with the nature and characteristics of each stage (implementation stage). At the same time, this schedule should be visual, coordinated by related and related operations. Its development should be accompanied by a detailed analysis and proper modeling of the entire process of implementing an investment project. Of the existing various methods analysis and compilation of the mentioned graph, the so-called line graph is considered the simplest and most common. When constructing this type of schedule, the entire period of project implementation is divided into successively implemented stages (stages) and their calculated optimal duration is shown.

The considered eighth section of the feasibility study ends with justification of the amount of financial resources required for the implementation of the investment project, with a breakdown of the total amount of these resources by the above successive stages. This takes into account the time factor of the real need for financial costs by stages.

To determine not only the viability, but also the level of economic efficiency of the project, a financial analysis and investment evaluation are carried out, which are considered in the penultimate ninth section of the feasibility study structure. The main purpose of this analysis is a realistic assessment of the costs of the implementation of this project, as well as the benefits (future net income) from its implementation.

Various concepts and techniques are used to perform financial analysis and investment appraisal. It should be emphasized that the skillful and successful use of these techniques requires knowledge of economic theory, the very sector of the economy to which the project under consideration belongs, the theory and practice of analyzing the financial and economic activities of an enterprise, the process of financing and lending investments, the current tax regulations and other legislative acts, related to the organization and implementation of investment activities.

In the process of conducting a cost analysis, the costs of the initial investment, then on manufacturing process, marketing and sales of products (provision of services), modernization of equipment and technology, optimal needs for working capital and, finally, the costs of the possible liquidation of the investment project (in the event that it exhausts the production life cycle).

The size of the initial investment is defined as the sum of the main capital investments, i.e. as the sum of capital investment costs and pre-production costs, as well as net working capital. At the same time, the fixed capital is understood as the sum of the costs for the construction of buildings, structures, the purchase and installation of equipment (the total estimated cost of the object), and the net working capital is the resources that are necessary for the full or partial operation of the investment object.

Economically, the life cycle (service life) of the enlarged components of an investment project (buildings, machines, equipment, installations, etc.) is not the same. Therefore, to ensure the uninterrupted operation of the enterprise, each of the listed and other components must be updated at the appropriate time, the costs of this update (replacement, modernization) should be taken into account when drawing up a feasibility study.

The feasibility study should also reflect the costs of various pre-production costs (advertising, issuance of securities, brokerage, processing and placement of shares, legal services for drafting a memorandum and constituent documents future legal entity (enterprise)), as well as various pre-production operations (pre-installation revision of equipment, commissioning, start-up tests, etc.).

No less relevant in the development of a feasibility study is also the definition and accounting of production costs, consisting of the cost of resources that are associated with the production activities of the future enterprise - the production of products (rendering services), entering the market and fixing on it. In the process of determining production costs, they use the same methods and methods of calculation as in calculating the cost of production.

Marketing costs substantiated in this section of the feasibility study are formed from the sum of costs for all types of marketing activities, which include costs associated with trading operations - salaries of sales personnel, commission discounts, advertising costs, costs for tare and packaging, storage, marketing of products and other.

Questions of methods for evaluating investment projects and their financing occupy a large place in this section of the feasibility study. For a general assessment of investment projects, there are technical, commercial, financial, institutional and economic (generalizing) types of analysis in a large scale.

And, finally, in the tenth section, a generalized presentation of the main content of the feasibility study is given - a summary. Although it is carried out last in the sequence of developing a feasibility study, it is placed at the beginning in terms of significance and for practical purposes.

In addition, various supporting documents are attached to the feasibility study - protocols of intentions, approvals, schedules, research materials, etc.

In order to make a more confident decision on the implementation of the intentions of an investment project, along with a feasibility study (feasibility study), especially for relatively large and complex facilities, a more detailed and at the same time short final document is required in market conditions.

For this purpose, a business plan is drawn up. It is the main document that allows you to substantiate the real possibilities of an investment project in a versatile way, to reliably determine the size of costs (expenses) and benefits (incomes), to analyze in more detail such important indicators as break-even, payback, competitiveness, etc.

In other words, a business plan is a kind of special tool for managing an investment project, an original form of presenting the essence and content of a feasibility study for an investment project. Its main task is to give a holistic systemic assessment of the sufficient efficiency and prospects of an investment project.

In practice, there is a sufficient variety of business plans that differ from each other in the scale and complexity of the investment project, the scope of capital investment, the duration of implementation, the composition of the participating entities, the variety and magnitude of the ratio between the expenditure and revenue parts.

The development of a business plan belongs to the pre-investment stage of the project formation and at the same time is its integral and integral part. In the business plan, an economically desirable and practically feasible situation for doing business in the investment field should be outlined in advance.

Often there are cases when the development of a business plan is carried out earlier than a feasibility study. This happens, for example, for relatively simple and medium-sized objects. A business plan in some cases can also be a substitute for a feasibility study, and for the largest and most complex objects it can serve as a generalizing final and at the same time compact document.

In the business plan, the goals and ways of achieving the production created by this project (output of products or provision of services) must be sufficiently detailed and convincingly stated, and the required investment efficiency must be substantiated. This is its main difference and advantage over the feasibility study.

The business plan should describe the main aspects of the future project, as well as analyze all the problems that participants in the organization and implementation of the investment process may encounter, identify ways to solve them in a fierce market competition.

Its value is also determined by what it can and should:

Provide an opportunity to establish viability, enter the market and secure the future enterprise on it;

To be an important tool for obtaining financial and credit sources from both internal and, especially, external investors.

In addition, the main content of the business plan should reflect a clearly structured system of data on commercial intentions, the possibilities and prospects for the practical implementation of the project, the need and condition of financial, material and labor resources, etc.

The composition and level of detail of the content of the business plan depend mainly on three main factors:

Nature, which means the production and release of new or traditional products (services) by the future enterprise;

Dimensionalities, consisting in the fact that the projected object is a large, multi-profile complex or a separate relatively small object;

Complexities of the future project - means a functionally complex, technological, energy, unique complex or an ordinary simple object.

The quality and validity of a business plan largely depends on how successfully the preliminary collection and proper processing of sufficiently reliable initial information is carried out, how the goals and objectives of the future project are defined. At this stage, it is necessary to take into account the features of the equipment and technology planned by the project, the novelty and competitiveness of the products (services) to be released, the degree of elaboration of a number of organizational, financial, market and other issues.

It should be borne in mind that the development of a real business plan (which is its main requirement) is not an easy and rather time-consuming task, especially for industrial and production facilities. Suffice it to say that even the adjustment of one indicator may necessitate recalculation in all sections of the absolute majority of calculated and total indicators for the entire business plan. This circumstance is further complicated by the fact that the developers of the business plan must receive, analyze and use a fairly large amount of both internal and external initial information, skillfully regulate emerging new connections in the relationship between the participants in the formation and implementation of the investment project. However, these difficulties can be greatly alleviated by the complete computerization of the development of the business plan.

Thus, the business plan is essentially one of the main documents for all partners in the formation and implementation of the project. For example, it is necessary:

To the customer - for the preparation and implementation of a comprehensive program of action in the process of project implementation, incl. organizing advertising, conducting and making decisions on the results of tenders, establishing contacts with future partners, concluding all kinds of contracts (agreements), etc.;

Investor (creditor) - to determine the sufficient efficiency of investments and the feasibility of investing capital (provision of a loan);

State (in the public sector) and other regulatory bodies - for the appropriate control and regulation of financial and credit relations, etc.

As well as according to the feasibility study, there is no solid standard for the structure of a business plan, since it depends on many factors for a particular investment project. Therefore, consider the most common business plan structure, which is given below.

1. SUMMARY

1.1. Name and address of the enterprise

1.2. Founders

1.3. Essence and goals of the project

1.4. Project cost

1.5. Need for investment

1.6. Payback period

1.7. The level of confidentiality of project materials

2. INDUSTRY ANALYSIS

2.1. The current situation in the industry and its development trends

2.3. Immediate prospects for the development of the company

2.4. Description of leading companies in the industry

3. SUMMARY OF THE PROPOSED PROJECT

3.1. Products (services, works)

3.2. Technology

3.3. Licenses

3.4. Patents

4. MARKET ANALYSIS

4.1. Potential consumers products

4.2. Market capacity and trends of its development

4.3. Estimated market share of the company

5. MARKETING PLAN

5.2. Price policy

5.5. Sales forecast for new products

6. PRODUCTION PLAN

6.1. Manufacturing process

6.2. Industrial premises

6.3. Equipment

6.4. Sources of supply of raw materials, materials, equipment and workers

6.5. Subcontractors

7. ORGANIZATIONAL PLAN AND PERSONNEL MANAGEMENT

7.1. Type of ownership

7.2. Partners, company owners

7.3. Management team

7.4. Organizational structure

8. RISK ANALYSIS

8.1. Weaknesses of the company

8.2. Probability of new technologies

8.3. Alternative Strategies

9. FINANCIAL PLAN

9.1. Profit Statement

9.2. Cash flow statement

9.3. Balance

9.4. Performance indicators

10. APPS

10.1. Copies of contracts, licenses, etc.

10.2. Copies of documents from which source information was obtained

Let us consider in more detail the content of the listed sections of the business plan.

Chapter " Summary” is a summary of the business plan. The main purpose of this introductory part is to attract the attention of those who get acquainted with the content of the project, to arouse their interest from the very first words, to make them delve into the details.

According to the content of the introductory part, the investor judges whether it is worth wasting time and reading the plan to the end. Therefore, the summary, as well as other sections of the business plan, should be written concisely and extremely clearly so that it is easy to read, and the investor can easily find answers to all questions that arise. Don't overuse technical terminology. It is much better to give a few figures that will prove the benefits of the project to any uninitiated.

The introductory part of the business plan, as a rule, is the last one, after all the other sections have been prepared.

In this section, it is recommended not only to characterize the current state of the industry, but also to outline the trends in its development. Particular attention should be paid to the specifics and size of the enterprise, indicating how its development plans will affect the production and scientific potential, product distribution channels, market share, etc. It is useful to list potential competitors, to identify their strengths and weaknesses. Based on the study of forecasts for the development of the industry, it is necessary to explain which consumer the goods (services) of the company are designed for. It is necessary to provide information about the latest innovations in the industry.

When writing a section, they usually use information from trustworthy sources, special and mass periodicals, etc.

The main purpose of the section is to give a description of the products (services) that will be offered to the consumer. In this case, the emphasis should be placed on the features that distinguish the offered products (services) from the products (services) of competitors, as well as on the company's product policy, i.e. plans for further improvement of goods (services). It is very important that this information be presented in clear, simple language. It is inappropriate to overload the text with technical and technological details, special terminology.

A red thread through the section should be the idea of the uniqueness of the products (services) offered by the company, no matter how this uniqueness manifests itself: innovative technology, unique quality, unprecedented low cost or some other advantages that satisfy the needs of demanding customers. Here it is not bad to give a table that allows you to compare the technical and operational parameters of the company's products (services) and competitors.

Convincing arguments in favor of new products (services) will be the opportunities for its improvement, economic, social, environmental and other benefits that the consumer will receive.

Separately, the issue of product ownership should be clarified. Registration of patents, registration of copyrights, trademarks and trade marks, etc.

This section is formed in the first place, since market conditions determine the feasibility of the project. The purpose of this section is to identify the main characteristics of potential markets for new products, as well as ways to promote new products to the consumer and achieve the required sales volumes.

In order to convince the investor of the existence of demand for products or services, it is necessary to identify the market segment that will be the main one for the company and determine its capacity. The choice of segment, among other things, depends on the severity of competition.

1) general characteristics market, assessment of its current size (sales volume) and development stage (nascent, growing, mature or dying).

2) Short description products sold in this market (it is advisable to dwell on what stage of its “life cycle” a particular type of product goes through).

3) Analysis of product requirements of different customer groups (novelty, high technical level, excellent quality, reliable operation, fashionable design, good after-sales service, low cost).

4) Assessment of demand in a particular market segment.

5) Determining the level of competitiveness of products.

In the "Marketing Plan" section, you need to show what measures will ensure the successful sale of products. The following aspects are considered here:

¤ setting goals and choosing appropriate ways to enter the market;

¤ formulation of pricing policy and analysis of expected sales volumes of new products;

¤ marketing and distribution planning;

¤ substantiation of methods for promoting products on the market, including the organization of after-sales and warranty service, advertising campaign.

Pricing policy is built taking into account a variety of factors, including: product competitiveness, market structure, product life cycle stage, common goals companies, as well as the extent to which resource suppliers, product consumers, product distribution network participants, competitors, the state and other market agents are able to influence the price level.

For example, when a new product is introduced to the market, the “penetration price” is often deliberately set low, allowing it to quickly attract many buyers and capture a significant market share. Manufacturers who want to recoup the costs of research and development of products that are of high quality and novelty, assign a flail in such a way as to maximize profit.

When calculating the price of science-intensive products, it is advisable to evaluate the economic effect that the consumer of the product will receive from its use.

So, the main argument in choosing one or another pricing policy is the profit received by the company. The sales program should be based on an analysis of the functioning of the existing sales network, an assessment of the feasibility of using traditional channels for distributing products or creating new ones. In addition, you should bring a plan for an advertising campaign and sales promotion by providing price discounts for the subsequent purchase of new versions and modifications of the product, warranty and after-sales customer service, etc.

In the "Production plan" section, a description of the technology is given, an assessment of the need for material and technical resources, and also consider the proposed location of the enterprise in terms of its proximity to sales markets.

It is recommended to provide information about the technological equipment park, the professional and qualification structure of the working personnel required production capacity, the planned level of equipment loading, as well as data on the work performed by subcontractors.

It is necessary to reflect the structure and level of production costs, highlighting in their composition fixed costs, which are calculated for a time interval equal to the duration of the operational phase of the project, and variable costs attributable to the cost of production.

The section "Organizational plan" usually contains a description of the organizational structure of project management, information about the organizational and legal status of the enterprise, form of ownership and staffing requirements.

If the enterprise is a limited or unlimited liability company, the conditions on which its activities are based should be stated. When characterizing a joint-stock company, it is necessary to indicate which shares and in what quantity it issues.

When describing the organizational structure of project management, it is advisable to clarify the composition and legal status participants, ownership rights and scope of responsibility of each.

The section usually contains information about the leadership of the project, including the names of leading administrators and specialists, addresses, and brief biographies. Particular attention should be paid to the distribution of rights, duties and responsibilities. It is assumed that, ideally, the qualifications and skills of top-level employees should complement each other, covering all management functions (marketing, financial management, personnel management, production coordination).

Particular attention should be paid to motivation, in particular, material incentives for employees, explaining what methods will make it possible to interest personnel in achieving the goals set by the business plan.

Thus, getting to know organizational plan will allow the investor to get an idea of who and how will manage the project, how relations between the participants will develop.

In the "Risk Analysis" section, the probability of occurrence during the implementation of the project of adverse events is considered, the causes that cause them and measures to prevent or reduce damage are given.

Situations that threaten adverse consequences should be described simply and objectively. At the same time, it is necessary to link them to specific phases of the project implementation (pre-investment, investment, operational), reveal the nature and origin of the danger (actions of competitors, own mistakes and miscalculations, changes in tax legislation, etc.).

Even if none of the internal and external factors does not contain any serious threat, you should still list them and explain why there is nothing to fear.

When determining risk mitigation measures, it is necessary to provide a list of specific measures, including the following: creation of reserves to cover unforeseen expenses, risk distribution among project participants, insurance.

Inclusion in the business plan of a pessimistic scenario that depicts the worst case scenario and a plan for overcoming the crisis will allow the investor to formulate an opinion on the degree of riskiness of investing in the project.

The purpose of the section is to predict the economic efficiency of the project based on the analysis of inflows and outflows of funds.

The financial plan is drawn up for a period of 3 - 5 years. It includes: income statement; cash flow statement; balance; a set of indicators characterizing the solvency and liquidity of the enterprise, the ratio of attracted, borrowed and own funds.

The sequence of presentation should be as follows:

The initial assumptions on the basis of which the calculations are performed (usually the basis for the calculations is the pessimistic, optimistic and most probable forecast);

Calculation of the required financial resources, based on the projected volumes of production and sales of products;

Sources of financing and conditions for attracting borrowed capital;

Itemized calculation of current income and costs (production costs, distribution costs, costs for servicing loans, mandatory deductions, etc.) indicating the timing and amount of receipts and payments;

Forecast of net cash flow, income and expenses;

Balance plan;

Calculation of the economic efficiency of the project.

At present, despite a certain novelty in the preparation of business plans, a certain amount of experience in their formation has been accumulated. However, the developers of business plans do not always correctly take into account the indicators of this important document, as a result of which the implementation of investment projects occurs with a violation of the deadlines for completing the work included in the project and exceeding their cost.

As the analysis of the activities of the credit departments of commercial banks and the competition commission under the Ministry of Finance of the Russian Federation showed, the existing shortcomings of investment design can be conditionally divided into two groups according to their characteristic features: general and methodological.

One of the main problems of investment design is that the business plan (plan business activities enterprises) is always “addressed”, i.e. focused on a specific investor. Universal, suitable "but all occasions", business plans simply do not exist. Since each investor determines his own conditions for the possible allocation of funds, he has his own requirements for the composition and completeness of the supporting materials. Accounting for this circumstance is fundamental in investment design. For example, a business plan developed for a commercial bank in order to attract a loan takes into account the basic requirements of this particular bank and cannot meet the criteria of other investors.

Most often, when developing an investment project, an incorrect assessment of the cost of the project and the total need for investment is given. The indicators that form them are related in a certain respect, but only partly similar in content. As an economic category, the concept of "investment" is much broader, and the estimated cost is only one of its components.

The estimated cost of the project is the amount of funds required for its implementation in accordance with the project materials. This indicator is the basis for determining the amount of capital investments, construction financing, and the formation of contractual prices for construction products, settlements for performed contract (construction and installation, repair and construction) works, payment of expenses for the acquisition of equipment and its delivery, as well as reimbursement of other costs at the expense of the funds provided for in the consolidated estimate calculation.

Based on the estimated cost, the book value of the fixed assets of the enterprise put into operation is determined. The estimated cost of the project does not take into account the need for working capital and some other types of costs necessary for the implementation of the investment project. In this case, the cost of the equipment is formed as the sum of all costs for its acquisition and delivery: the contract price (including spare parts), customs payments, other costs for the purchase and transportation, value added tax.

The volume of working capital is calculated (according to the standards in force in the industry) as the minimum need for them to start production within the framework of this investment project. The total amount of funds from all sources should be equal to the amount of investment.

The practice of considering investment projects shows that a significant problem in business planning is the determination of the enterprise's own funds. It is not uncommon for business plans to include fixed assets, cash equivalents of property and non-property rights, and other assets, which is methodologically incorrect.

In economics, the concept of "own funds" includes financial resources enterprises formed at the expense of the statutory fund, net profit, target, insurance funds, etc. The use of borrowed funds (credits, loans, accounts payable, etc.) is not included in the concept of own funds.

Also, a lot of important mistake is the definition of the billing period in the business plan. For example, for competitive investment projects, the duration of the settlement period accepted in the business plan is determined by the conditions for financing the project and cannot be less than the term for paying debts on loans, i.e. should cover the entire repayment period of the loan from the beginning of lending to its end.

The accepted settlement period is divided into steps: by quarters (half-years) and years. At the same time, as the concept of “years”, we mean not calendar years, but settlement years.

The estimated period thus obtained includes the time for the development of investments, the commissioning of an object, the achievement of design indicators, and the “normal” functioning of the enterprise.

For investment projects applying for state support in the form of allocation of funds from the Development Budget of the Russian Federation to finance high-performance projects, the accepted calculation period cannot be less than three years from the start of the project.

For projects for the provision of state guarantees and loans financed by state external borrowings of the Russian Federation, the duration of the settlement period cannot be less than the term of the loan agreement.

Thus, taking into account all negative consequences associated with a deviation from the methodological recommendations for calculating the effectiveness of investments, will have a positive impact not only on the implementation of investment projects, but also on the inflow of real investment in the development of the country.

In this paper, the pre-investment stage of the project was considered, which begins with the formation of an investment plan and the identification of investment opportunities. This work is carried out as part of a feasibility study in order to obtain convincing arguments in favor of the implementation of the investment project, the methods of its implementation and profitability not only from the customer (investor and his partners), but also, if necessary, from external structures who make decisions on the feasibility of implementing this project in a given area (at a given enterprise).

Feasibility studies are necessary to create the first pre-project investment justification document - a declaration of investment intent, the purpose of which is to interest potential investors.

The next step is the development of a feasibility study for the feasibility of investments (feasibility study of investments), which is based on the investment proposals accepted by the customer and approved by potential investors (indicated in the declaration of investment intent) and contains assessments of risks, required resources and expected results.

Thus, the feasibility study determines the traditional parameters of the projected enterprise: production capacity, range and quality of products, provision of raw materials, materials, semi-finished products, fuel, electricity and heat, water and labor resources. Based on the comparison of options, the most effective technical, organizational, economic solutions for the operation and construction of the facility are selected, including the selection of a specific site for construction and the determination of the estimated cost of construction and the main technical and economic indicators of enterprises.

If a decision is made to continue the project, then on the basis of the feasibility study materials and additional information, in order to reduce the uncertainty of investment results, a project business plan is drawn up. As a rule, the business plan is drawn up by the same team of specialists that prepared the feasibility study for the project.

A business plan is, like a feasibility study (FS), a clearly structured document that requires careful study, describing the goals of the enterprise and how to achieve them. The peculiarity of the business plan is not so much in the accuracy and reliability of quantitative indicators, but in the meaningful, qualitative justification of the project ideas.

A business plan helps an entrepreneur to gain a clear vision of the future of the business, serves as a guide to action. For investors who want to profitably invest money, this is a document that gives an idea of expected sales and profits, helping to predict the risk of investing.

So, the preparation of a business plan allows an enterprise to evaluate the effectiveness of an investment project in a competitive environment, to determine the prospects for the development of production and marketing of products.

Thus, the business plan completes the pre-investment stage and is a tool for managing an investment project at the investment and operational stages.

1. Heydarov M.M. Analysis of investment projects: Textbook. − Almaty, 2006.

2. Kuznetsov B.T. Investments. − M.: UNITI-DANA, 2009.

3. Neshitoy A.S. Investments: Textbook. - M.: "Dashkov and KO", 2009.

www.md-bplan.ru - "MD-Business Plan": informational portal about business plans.
www.bizplan.ru - Business planning, business plan, feasibility study.

A feasibility study is made up if it is necessary to prove why it is necessary to purchase any equipment, choose certain technologies, follow a certain path for the development of an enterprise, and calculate what benefits it will bring.

Feasibility study: what is it

A feasibility study (feasibility study) is a documentary justification for the feasibility of a project. This document should contain an analysis of the necessary investments and the expected result.

The feasibility study shows the profitability of the project and whether it is worth investing in it.

Thanks to him, certain tasks are solved:

attracting additional finance;
selection of the most profitable project;
increasing the efficiency of the enterprise;
improvement of the financial position of the enterprise.

Feasibility study and business plan: what is the difference

A business plan and a feasibility study are similar to each other. They differ only in that the feasibility study substantiates some project at an already existing enterprise, and the business plan shows why this company should exist.

Therefore, such areas as marketing research, market analysis, description of the organization itself and manufactured products are not taken into account when compiling it. A feasibility study is, in contrast to a business plan, a shorter but rather informative document.

Feasibility studies are usually based on:

on the features of the technological process;
on what requirements are set for production equipment, equipment, communications;
on employees and costs for the work process;
what is the free price for products;
the time frame for the implementation of the project;
on economic results;
on environmental factors.

In what cases do you need a feasibility study of the project, goals and objectives

Life is full of a wide variety of situations, different tasks arise, their degree of importance is also different. The essence of the feasibility study is the calculation of possible or expected changes. The costs required to complete the projects are also taken into account.

A feasibility study is an answer to the question of whether a given project is worth the estimated costs.

Thus, a feasibility study is necessary in order to assess the situation that has developed in an organization after making qualitative or quantitative changes in its work. When compiling it, a wide variety of factors are taken into account that directly or indirectly affect the organization and how much its financial performance has changed.

If this document is drawn up correctly, the effectiveness of investing in new developments and in the refinement of existing activities is visible, whether any other changes or subsidies are needed, or perhaps loans are needed. A feasibility study is necessary if you need to select new equipment, make a choice of technologies for the organization and then implement them in life, decide on the organization of the enterprise.

Drawing up a feasibility study is necessary for both the head of the enterprise and its investor. The first - to understand whether the expectations assigned to the project will justify themselves, the second - to understand when the invested funds will pay off.

A feasibility study can be developed both by the businessman himself and by a group of specialists if the project is complex.

Learn how to prepare a feasibility study for a business project from the video.

Structure and process of preparing a feasibility study

The concept of a feasibility study in the business world is one of the most used and used. There is a rough structure from which you can deviate, depending on the characteristics of the project.

It can either narrow or expand, depending on the complexity of the planned changes.

Usually, the document describes the direction in which the company operates, and also justifies the choice of the location of the business, the type of products produced, and the rationale for their cost. Among the mandatory items can be called the financial part of the project.

It should indicate the sources of financing, when and how the debt will be repaid.

When compiling a feasibility study, as a rule, they include the following thematic sections:

initial indicators, data on the business sector;
capabilities entrepreneurial activity to date;
raw materials used, financial opportunities for the development of the enterprise;
estimated costs to achieve the company's goals;
operating costs necessary to bring the project to life;
proposed development plan;
financial goals of the enterprise;
general data of the future project, its effectiveness and payback, conclusions.

The feasibility study should contain tables with data on the movement of material resources, their balance.

Terms of preparation of the feasibility study

The terms for preparing a feasibility study are related to:

with detailed description;
with the volume that is planned to be developed;
with the number of processes to be considered;
with whether the material has been prepared, how up-to-date these regulations and other company documentation are;
with whether the necessary personnel are available;
with whether the infrastructure is ready.

On average, the preparation of a feasibility study takes from one month to a year, depending on the complexity of the project.

Project Feasibility Study Example

If the sequence of work on the business plan and its structure are clearly spelled out, then when drawing up a feasibility study, such requirements are not put forward. Depending on the problems that are considered and will be solved, the feasibility study options may differ.

Example one:

Present state of the company.
Analysis of the business and production capacity of the organization.
Technical documentation.
The state of labor resources.
The company's overhead and organizational expenses.
Project duration analysis.
Assessment of the material and economic attractiveness of the project.

Second example:

What is the project: its essence, foundations and principles of implementation.
A brief description of the business, highlighting the results of various studies to better understand the demand for a newly introduced service or product.
Engineering and technological component of the project: work process (description);
substantiation of the need to purchase new equipment and improve the existing one;

how New Product complies with current standards;

analysis of a new product, its pros and cons.

Economic and financial indicators:

necessary and expected investments;

sources of funds, both internal and external;

estimated costs of production.

Analysis of the effectiveness and profit from the project, guaranteed return of external loans.
Assessment of the susceptibility of a new product to known business risks, resistance to similar crises in the future.
Analysis of performance from external investment.

Example three:

Announcement of all the main provisions of the feasibility study.
Under what conditions is it possible to bring these plans to life (the author of all the main ideas, where the source material came from, a description of the preparatory stages and research).
Description of prospective sales markets, assessment of the company's capabilities, calculation of the company's strengths, a variety of factors.
Ensuring production (available resources and planned reserves), assessment of competitors' capabilities, possible suppliers, possible costs.
Geographic location of the company and associated costs.
Estimated rental payment calculation.
Documentation (project, design work).
Analysis of the necessary auxiliary facilities, without which it is impossible to carry out all the planned activities.
The human factor: how many employees are needed, and what positions, to implement the project.
The number of workers, engineers and other specialists is calculated. It is also important to indicate how many local or nonresident (foreign) specialists will work at the planned enterprise.
It is necessary to calculate the company's expenses for the salaries of these employees, taxes, pension and other fees.
When it is planned to start the implementation of the planned project.
Material and economic assessment of the benefits of this project.

Most of these examples of feasibility studies can be compared to a meticulously written business plan. The line that exists between a feasibility study and a business plan is thin enough to argue that these are completely different things.

Loan Feasibility Study: Case Study

When applying for a loan for the development of an enterprise, you cannot do without this document. A feasibility study is a demonstration of the seriousness of the borrower's intentions.

Here he proves that the enterprise needs credit funds and what it intends to spend them on, and most importantly, that it will be able to return them. This document can be executed in any form, the main thing is to prove to creditors that the money will go to the right things and this investment will pay off over time, thanks to which the borrower will be able to give bank funds with interest.

On average, the volume of a feasibility study prepared for a report to the bank is several pages, occasionally more.

Whether the owner of the enterprise receives credit funds depends on how well and competently the feasibility study of the loan is drawn up. This document must indicate all the nuances and reasons why a credit institution should issue a loan.

This document should state the facts confirming the payback of the planned project. This document is of equal importance, both for the applicant and for the financial structure.

When applying for a loan, a potential borrower draws up a feasibility study, the purpose of which is:

prove to the credit institution that the company needs these funds and that the company will be able to repay this loan;
provide economic and technical evidence of project feasibility.

In order for the bank to agree to a loan agreement, the document must reflect the effectiveness of the economic plan and the ability to recoup the costs for the loan period.

An approximate example of a feasibility study for a loan looks like this:

control dates of the contract;
funds available for this moment in the daily life of the company;
accounting for currency fluctuations at the time of conclusion of the contract;
the price of the entire transaction (for contracts with foreign partners, all excise customs duties must be taken into account);
expected profit from the project;
accounting for possible costs;
the movement of funds;
tax on estimated profits.
The real amount of money that will remain with the client after the payment of the loan and all taxes. Calculation of the profitability ratio and profit from this transaction.

For example, one company wants to take a loan in the amount of 50 million rubles. at 15 percent per year for 3 months for the purchase of any product, for example, perfumes. Signed a warranty contract with an insurance company.

The organization wants to carry out these actions without using its own funds and the money of contributors. It is planned to make a monthly profit, from which the debt on the loan will be paid. Some funds will remain for the enterprise.

After evaluating this feasibility study, specialists from the banking structure will immediately determine the low profitability of this project.

They will conclude that the company will be able to repay the loan on time with a three-fold turnover.

Moreover, taking into account all tax payments, the profit will be even less. Turnover in this situation is possible only with established relationships with partners.

It can be concluded that without the involvement of own funds in the turnover of this project, the future transaction cannot be considered profitable.

Most likely, the bank will not take risks and the company will not receive a loan under such conditions.

Learn how to write a business plan and a feasibility study from the video.

A business case is a document that sets out the profitability, analysis, calculation of indicators and the effectiveness of an investment project. The purpose of the project may be the acquisition of machinery, equipment, the construction or reconstruction of an industrial building, etc.

Instruction

The main goal of the economic justification is to bring to the investor the amount of costs for the project, its payback period and the results of the work. The difference between this document and the business plan is that it is prepared for new products already existing enterprise, therefore, questions regarding market analysis, marketing research are not presented in it. The business case usually contains a detailed description of the technologies and equipment, as well as the reasons for their choice.

When drawing up a business case, it is necessary to follow a certain sequence. It starts with initial data, information about the market sector. It then describes the existing opportunities for development of activities, sources of raw materials, material resources for expanding the business, the amount of capital expenditure required to achieve the goal, the production plan, financial policy, as well as general information about the project.

Thus, the economic justification contains a description of the industry where the enterprise operates, the type of input products, and the price level for it. The financial part of this document includes the conditions for attracting borrowed funds, sources of their coverage. Calculations are given in tables that reflect the movement of cash flows.

When compiling an economic justification, it is necessary to study the current position of the enterprise, its place in the market, the technologies and equipment used. In addition, it is necessary to determine ways to increase the profitability of the company and develop the business, predict the level of profitability that can be achieved during the implementation of the project, study the necessary technical data, analyze the level of training personnel. It will also be necessary to draw up a project implementation plan, cost estimate and cash flow plan, as well as an overall economic assessment of the investment.

Justification stage project very important. During it, you can identify and, if possible, correct those points that may lead to failure in the future. Pay special attention to starting early and you will achieve better results.

Instruction

Determine the goals and objectives of the justification project. You need to answer the main question: do you need a project. Based on how well you work out the idea and convey the benefits that a new business can bring, a decision will be made on acceptance or non-acceptance project.

Describe the essence project. Tell us exactly what is planned to be done and what goals are being pursued. Explain how the need for a new case arose and why this path was chosen.

Communicate to the reader or listener the main ideas and ways in which the result will be achieved. Convince him that the chosen methods are the most effective in this case.

Tell us how many employees will be required to carry out your project and what qualifications they should be. Give justifications that the labor composition should be exactly like this. Describe in detail the functions of each member of the team. If you already have candidates, please state their first and last names. In addition, committee members or your management should be aware of how participation in the project will affect the core work of these employees.

Establish a sequence of actions and announce deadlines project. Clearly list the main stages of its implementation. Then elaborate on each stage. A logical relationship should be visible between the actions so that it is clear why one item follows the other. Speak real terms, if this is problematic, do not give only the minimum possible due date project, it is better to specify the maximum period. Explain what factors can affect the time it takes to complete a task.

Give a calculation of the material resources that will be involved in the project. Show what each item of expenditure consists of. Reread everything before the presentation. Remember that if you make an inaccurate calculation or omit some important article, it can blur the whole impression of the rest of your rationale and lead to rejection. project.

How to write a business case

A business case is also called a financial-economic assessment, which is a form of impact assessment. It is used to evaluate changes in all net cash flows that arise as a result of the implementation of methods state regulation, establishing regulatory legal documentation, corporate programs that are aimed at changes in the economic and social structure.

Instruction

Introduce changes in technical regulation standards, as well as change industry norms, introduce various technical regulations. This will help you change and redistribute the benefits, costs, risks of the enterprise.

Make a forecast of changes in all existing factors (benefits, costs) at the stage of designing a change in technical regulation standards. Evaluate the financial and economic result of the implementation of these norms, ensure the optimization of costs for the implementation of the norms.

Adjust the direction for the standards development process and provide a simulation of the impact of all standards development in the position of enterprises and their industries. Create a plan for more effective interaction requirements for different levels of the structure of technical regulation.

A large part of the financial analysis with a special form of impact assessment shows how to write a business case. An example of the use of such a form, tracing the process of changing net financial flows that arise as a result of the implementation of measures will be presented in this article. Such a plan for assessing cash flows in corporate programs should be aimed at positive changes in the socio-economic sphere.

Law

Russian lawmaking practice has clearly outlined how to write a business case, an example of which is presented in Article 105 (Regulations of the State Duma of the Russian Federation), and it concerns financial feasibility when introducing bills that require certain material costs for implementation. The government considers relevant materials before submitting a bill.

First of all, an explanatory note is prepared, which sets out the concept of the bill with all the subjects of legislative regulation. The second document demonstrates how to write a business case. This example is not universal, since it is designed for a specific project and respects the interests of a particular customer. Naturally, each case requires an individual approach - each time with different calculations and plans, since financial justifications are written everywhere and by everyone - from State Duma legislators to students in technology classes in high school.

FEO

How to write a business case? You can see an example below. It all depends on the object to which it is dedicated: whether it is technical regulations, organizations with their own standards, or even a national economy looking for financial ways for economic recovery. Take, for example, technical regulation, which requires clearly defined financial justifications for changing norms or technical regulations.

When implementing the project, the costs, benefits and risks of each subject of the state, enterprise or community will inevitably be redistributed. Not many people know how to write a business case. A template exists for every activity, but it cannot be called universal. The implementation of such a procedure is required at the initial stage - during the design, which allows you to avoid many mistakes and acquire a lot of opportunities.

Benefits of business case

First of all, with the writing of the rationale, changes in costs are predicted, risks and benefits of all economic entities are identified. This is due to an accurate assessment of the financial and economic effect due to changes in certain norms. Costs are optimized by adjusting the direction of economic development, and the development of new rules will help to achieve this goal.

Specific modeling of the secured impact of these emerging regulations will guide you step by step on how to write a business case. The sample hardly reflects the actual situation of a given enterprise, industry, society. Only the person inside the situation can identify the winning and losing sides. The demands for change must be effectively harmonized with all systems undergoing technical regulation, using all the advantages of the implementation of any project.

Bills

Normative legal acts also require material or financial costs, and therefore the legislator proposing a new project must write an economic justification, that is, provide specific financial calculations. These justifications, which are directly related to the introduction of a new norm or a change in a legal act, should include the revenues and expenditures of budgets at all levels, the costs of each economic entity, the costs of society (or third parties), tax revenues, and budget efficiency.

This is how all reforms in the state are done: management mechanisms are changed, self-regulatory organizations, the rules of trade and production are changing, members of associations and associations are providing certain new services. In truth, the effectiveness of the introduction of any bill is rarely amenable to direct and accurate calculation, which society is now observing with its own eyes - a lot of errors and inaccuracies accompany them. Apparently, not all legislators know how to write a business case for ongoing operations. When carrying out reforms, the forecast of socio-economic consequences and effects is especially important.

How is it necessary?

The financial and economic assessment of any innovation should be as accurate as possible and identify political, administrative, economic and other effects and consequences in advance. How to write an economic justification for the alienation of property from the state, the "young reformers" know best of all, but the consequences of this knowledge are now being overcome by society - with great difficulty, pain and losses. But it was necessary to evaluate in monetary terms not only our acquisitions, but also our losses (this is from the section of the business case called "additional costs"). Has the impact of such changes on the finances of all stakeholders and budgets of absolutely all levels been identified? And this is an indispensable condition for the correct preparation of the economic justification.

No, nothing was revealed, just a huge number of citizens of the country "did not fit into the market." How do you write a business case for a salary gap that people haven't seen in months? It was necessary to conduct a thorough analysis of all changes in the structure of income, expenses and risks of economic entities, the whole society, that is, third parties, and this is an unshakable rule for compiling economic justifications. A detailed analysis of everything related to changes in control mechanisms was needed. In this financial calculation, it was necessary to honestly evaluate (monetize!) the redistribution of benefits, and for absolutely all parties interested in or affected by the changes.

About expediency

It is an honest and impartial analysis of the situation even before the start of any changes that can help in assessing the feasibility of any project, primarily in terms of money. Then recommendations are given on its compliance with this state of affairs. Feasibility studies should be carried out already at the very first stage, when the project is still in the development stage. Designing Code Changes legal regulation requires sufficiently weighty justifications, since only then the risks, benefits and costs of various economic entities are predicted. Only a business case can lay out costs based on expected revenue increases or cost reductions. Money is spent in order to earn significantly more or spend less in the future.

Financial niceties

How to write a business case for a bank to convince them to invest in a project? First you need to deal with some immutable truths of a borrowed nature. Does the written justification take into account the fact that money today, as a rule, is worth more than even through the most a short time? After all, the bank will give them, of course, at a percentage. But even if there are personal free amounts that can cover expenses, does the justification calculate the percentage on the deposit that will inevitably be lost when investing money in the project?

How to write a business case for an agreement with a bank so that it proves that all expenses will be effectively and more than repaid, that is, future income will pay off the interest on the loan or exceed the interest on the deposit? You need to find the most promising parties in this project and prove in the justification that all the proposed costs will actually bring savings or income equal to the planned ones. And you do not need to look for ready-made forms and printed forms. It must be remembered that there are simply no firm rules for documenting a financial or feasibility study.

The business case form should be as simple as possible and must include the reason that influenced the organization's decision to undertake the project. But the discussion of the expected benefits should be very detailed, with the application of alternatives that may come in handy, and the most detailed financial analysis that will determine the investment attractiveness of the project. In practice, usually no one knows how to write a feasibility study, especially for projects where significant risk is assumed. Most often, it is drawn up as a separate document and serves as an annex to the exact form of initialization of this project. If, in fact, the project is small, then all the benefits can be listed directly in the initialization form.

Individual elements

Usually, the results of the project in its material aspect are determined and indicated, that is, all parameters are measurable: cost savings, increase in capacity or productivity, increase in the market, increase in income, and the like. Before writing a justification, it makes sense to talk to people interested in project investments, or with permitting authorities, about what exactly they want to see in the justification, what is most important to them.

And yet, some material elements must be kept in mind without fail when writing justifications. And the more complex the project, the more such elements will be present in it: cost reduction, savings, the possibility of generating additional income, increasing the company's market share, complete customer satisfaction, cash flow directions. The latter is documented as the main part of the business case for the project.

cash flows

This review is intended to help committees or individuals who review projects select the most suitable ones for implementation. The measurable elements have already been listed above, but the business case does not end there. There are also intangible ones, and there are many of them. For example, the main ones include the transition period and its costs, operating costs, changing a business process, replacing personnel, and the like.

It is also necessary to pay tribute to the economic justification for alternative solutions, listing all available methods for implementing the project in practice. For example, among thousands of suppliers with millions of identical products offered, there is practically no one and the same price.

How to make a purchase profitable? The business case will have to answer many, often uncomfortable or simply difficult questions. It is more profitable to buy a ready-made solution or find an alternative, your own version. And you can partially buy, partially implement it yourself. There should be many such answers in the economic justification.

Guardianship

Depending on the culture of the organization, the business case is written by the trustee or the project manager himself. But in any case, the guardian, that is, the investor, is responsible for the project, it is he who is responsible for financial efficiency, while the leader plans, executes and practically implements. The head is the form, and the guardian is the content, that is, the investment. And therefore, the main thing is to bring to the investor the exact amount of costs for the entire project, identify the correct payback periods and predict attractive results.

A large part of the financial analysis with a special form of impact assessment shows how to write a business case. An example of the use of such a form, tracing the process of changing the net financial flows that arise as a result of the implementation of measures, will be presented in this article. Such a plan for assessing cash flows in corporate programs should be aimed at positive changes in the socio-economic sphere.

Law

FEO

Benefits of business case

Specific modeling of the secured impact of these emerging regulations will guide you step by step on how to write a business case. The sample hardly reflects the actual situation of a given enterprise, industry, society. Only the person inside the situation can identify the winning and losing sides. The requirements for change must be effectively harmonized with all systems subject to technical regulation, taking full advantage of the implementation of any project.

Bills

This is how all reforms in the state are done: management mechanisms are changed, self-regulatory organizations are introduced, the rules of trade and production are changed, certain new services are provided by members of associations and associations. In truth, the effectiveness of the introduction of any bill is rarely amenable to direct and accurate calculation, which society is now observing with its own eyes - a lot of errors and inaccuracies accompany them. Apparently, not all legislators know how to write a business case for ongoing operations. When carrying out reforms, the forecast of socio-economic consequences and effects is especially important.

How is it necessary?

About expediency

It is an honest and impartial analysis of the situation even before the start of any changes that can help in assessing the feasibility of any project, primarily in terms of money. Then recommendations are given on its compliance with this state of affairs. Feasibility studies should be carried out already at the very first stage, when the project is still in the development stage. Projecting changes in the norms of legal regulation requires sufficiently strong justifications, since only then the risks, benefits and costs of various economic entities are predicted. Only a business case can lay out costs based on expected revenue increases or cost reductions. Money is spent in order to earn significantly more or spend less in the future.

Financial niceties

How to write a business case for a bank to convince them to invest in a project? First you need to deal with some immutable truths of a borrowed nature. Does the justification written take into account that money is generally worth more today than it will in even the shortest of time? After all, the bank will give them, of course, at a percentage. But even if there are personal free amounts that can cover expenses, does the justification calculate the percentage on the deposit that will inevitably be lost when investing money in the project?

Individual elements

cash flows

Guardianship

Depending on the culture of the organization, the business case is written by the trustee or the project manager himself. But in any case, the guardian, that is, the investor, is responsible for the project, it is he who is responsible for financial efficiency, while the manager plans, executes and practically implements. The head is the form, and the guardian is the content, that is, the investment. And therefore, the main thing is to bring to the investor the exact amount of costs for the entire project, identify the correct payback periods and predict attractive results.