What is the economic justification of the project

Before the implementation of any project, it is necessary to calculate its economic rationale.It shows that the chosen methods of production, the necessary equipment, facilities, and other factors have economic justification.And it is important to determine whether its use cost effective.

Usually feasibility study of the project includes some technical calculations.It has a specific structure.It includes, first of all, the general provisions or criteria.The name of the project, its goals and organizers.It also includes a description of the product, which is expected to produce, market, technology that will be used, the necessary equipment, production facilities and their locations.It also describes the terms of execution and exemplary economic performance to be obtained.All these data are provided in the form of a brief review and become familiar with the project.

further feasibility study includes a comprehensive overview of the market for the sale of products.Here there is a market assessment, its condition, the presence of identical goods that would compete with the products.It also describes the product itself, and its advantages, it has estimated its competitiveness in this market.More details emphasize the special qualities of the product, its technical characteristics.In assessing the market and take into account demand for these products, fluctuations in the value of these products and pricing.

next item that has a feasibility study is the description of the process equipment to be used in the project.It describes in more detail the necessary technical resources and their amount.The attention is focused on the specifics of production, which depends on the choice of equipment.It also discusses the possible providers, which is supposed to work.Much attention is paid to the production technology.

A description of the required production areas.Here, in more detail paying attention to the territories and their features.Also consider and describe the necessary infrastructure and utilities.Important is the climatic conditions and, if necessary, the availability of geological development.

Substantiation of economic efficiency of the project is required to include, as the main point, the very production program and its scope.To calculate the possible indicators that can be derived from the implementation of the project, you must know its power.

Naturally, the project also includes the need for procurement and supply of raw materials.Be sure to enter a list of them, the approximate price level and modes of transportation.Volumes of supplies should be calculated for several years ahead.It also provides the scheme of delivery of raw materials to the place of production.

Important is the footage needed for the project and the production process, as well as their education.The following timetable for the development of the project.Do not forget about the compliance of ecology and environmental protection.It is also important due to the public and authorities.

Finally indicate cost estimates and investment.This includes all funds that should be spent on the purchase of materials, equipment and production space for rent, salaries, advertising, taxes, insurance and other possible costs.

feasibility study must contain the sources of financing of the project, its terms and schedule.After making such a detailed plan can actually begin to implement it if it has a positive economic assessment.