FS Training Guide PDF

[email protected] 05 Jul 2022 FS Training Guide INTRODUCTION TO SOFTWARE-AIDED FEASIBILITY STUDY PREPARATION With Emphasis on Agricultural and Fisheries...

[email protected] 05 Jul 2022 FS Training Guide INTRODUCTION TO SOFTWARE-AIDED FEASIBILITY STUDY PREPARATION With Emphasis on Agricultural and Fisheries Mechanization Projects and Facilities [email protected] 05 Jul 2022 Training Guide INTRODUCTION TO SOFTWARE-AIDED FEASIBILITY STUDY PREPARATION With Emphasis on Agricultural and Fisheries Mechanization Projects and Facilities Philippine Copyright © 2022 by Arthur It. Tambong, FPSAE All rights reserved. [email protected] 05 Jul 2022 This training guide is protected by Philippine copyright and international treaties. Written permission should be obtained from the author before any prohibited reproduction, storage in a retrieval system, or transmission in any form or by any means, photocopying, recording, electronic, mechanical or other methods. [email protected] 05 Jul 2022 Republic of the Philippines Department of Agriculture BUREAU OF AGRICULTURAL AND FISHERIES ENGINEERING Diliman, Quezon City Tel. No. (02) 294-6452 Fax No. (02) 941-8151 Email Add: [email protected] Foreword This training guide employs the outcomes-based learning approach similar to the approach in teaching academic programs. It covers the first two competencies of whole training on feasibility study preparation with emphasis on agricultural and fisheries mechanization projects and facilities. The training also teaches the participants to be resource persons in the area of computer- aided feasibility study preparation that is compliant to the International Accounting Standard (IAS) and the International Financial Reporting Standard (IFRS). As learning outcomes, the training participants are expected to be able to do the tasks and possess the knowledge, skills and attitude for the following competencies after completing the whole training course: Competency 1 - Knowledge of Feasibility Study (FS) Concept, Parts and Preparation Process; Competency 2 - Using a Feasibility Study Making Software; Competency 3 - Encoding and Validating FS Data; Competency 4 - Automating Feasibility and Sensitivity Analyses and Interpreting Results; Competency 5 - Software-Guided Writing of FS Discussion; Competency 6 - Generating FS Report; and Competency 7 - Generating and Interpreting Financial Statements and Ratios with Break-Even Analysis As a strategy for speeding up the preparation of feasibility studies, this training guide uses the feasibility study making software Bytex Feasibility Analyzer. It is a computer program compliant with the international accounting standards – the IAS and the IFRS. Its earliest version is an award-winner during the 47th Annual National Convention of the PSAE, now the Philippine Society of Agricultural and Biosystems Engineers or PSABE. As can be noticed in this training guide's contents and examples, the resource person is also the author of the feasibility study making software and conferred Fellow of the PSAE. Professor Arthur It. Tambong employs learning strategies to convey knowledge, skills and attitude in feasibility study preparation with emphasis on agricultural and fisheries projects and facilities in a systematic way. Engr. Ariodear C. Rico Director IV [email protected] 05 Jul 2022 iv Training Guide: Introduction to Software-Aided Feasibility Study Preparation Acknowledgment The author expresses his gratitude to Visayas State University for the many supports provided to the author, leading to this training guide's realization. To the former Dean of the College of Engineering and Technology, Dr. Roberto C. Guarte, who shared brilliant ideas and contents on the outcomes-based learning approach and the Head of the Department of Agricultural and Biosystems Engineering, Engr. Eldon P. De Padua, for his expert inputs on farm machinery and mechanization. The author also wishes to thank the VSU Web Team, especially Mr. Jed Asaph D. Cortes, Mr. Derek B. Alviola and Professor Winston M. Tabada, who shared online learning strategies. The same gratitude is accorded to the many men and women behind the VSU task force for instructional materials development, with special mention to Dr. Nancy C. Donayre-Abunda and Dr. Ma. Rachel Kim L. Aure, who shared valuable techniques in making quality instructional materials. The author is thankful for the close guidance on the aspects of agricultural and fisheries mechanization projects and facilities, the emphasis in this training guide, provided by the Bureau of Agricultural and Fisheries Engineering with special mention to its Director - Engr. Ariodear C. Rico, its Assistant Director - Dr. Juana T. Tapel, its Chief of the Engineering Plans, Designs and Specifications Division - Engr. Noemi L. Carpio, and its Training Incharge for Agricultural and Fisheries Mechanization - Engr. Allan C. Goleng. To the Tambong family members for the all-out support during the preparation of this training guide and the Almighty Provider for the knowledge, strength, and opportunity to share knowledge with others on software-aided feasibility study preparation, my wholehearted gratitude. Arthur It. Tambong, FPSAE Author [email protected] 05 Jul 2022 About the Author Professor Arthur It. Tambong, FPSAE The author received the Bachelor of Science in Agricultural Engineering degree, cum laude, in 1984 at Visayas State College of Agriculture, now Visayas State University, Two years later, he received the Master of Engineering degree specializing in irrigation & drainage engineering at the Asian Institute of Technology, Thailand. He is a 16th placer in the Licensure Examination for Professional Agricultural Engineers. He authored the feasibility study making software Bytex Feasibility Analyzer and the book Biogas Plant Design. He has presented a paper entitled “Advantages and Disadvantages of Time-Saving Innovation Bytex Feasibility Analyzer v5.18 in Feasibility Study Consulting” during the Scientific Conference on Economics & Entrepreneurship held on 18-19 October 2018 at Riga Technical University, Latvia, Europe. He was awarded as the 1994 Most Outstanding Agricultural Engineer on three different occasions by separate bodies - the Philippine Society of Agricultural Engineers, Professional Regulation Commission, and Philippine Federation of Professional Associations. He is a recipient of the His Excellency Fidel Ramos Presidential award for his paper on the telemetering of hydroelectric power plants in the Philippines. In 1999, based on his achievements, he was conferred as Fellow by PSAE, now the Philippine Society of Agricultural and Biosystems Engineers. As of 2021, he ranks as Professor III in Agricultural and Biosystems Engineering at Visayas State University. The author has also served as Professor of Agricultural Engineering at the main campus of Mindanao State University, as Visiting Computer Consultant at the IIU, Malaysia, and as Trainor On-Call for Long-range Energy Alternatives Planning at the Food and Agriculture Organization of the United Nations, FAO Regional Office for Asia and the Pacific, Bangkok, Thailand. [email protected] 05 Jul 2022 vi Training Guide: Introduction to Software-Aided Feasibility Study Preparation Table of Contents Foreword iii Acknowledgment iv About the Author v Table of Contents vi List of Tables vii List of Figures viii Training Course Syllabus ix Competency 1: Feasibility Study Concept, Parts and Preparation Process 16 Definitions 16 Why do We Conduct Feasibility Study? 17 Project Identification from Problem Scenario, Best Intervention and Associated Risks 18 Parts of a Feasibility Study 19 Feasibility Criteria 20 Feasibility Study Preparation Process 21 Competency 2: Using a Feasibility Study Making Software 24 The Software Used in the Training Course 24 Features of Bytex Feasibility Analyzer 24 Data Inputs of Bytex Feasibility Analyzer 26 Software Outputs 26 Software Basic Operation 27 Software Navigation 28 Windows of the Software 29 Preview of the FS Report 32 Printout of the FS Report 33 [email protected] 05 Jul 2022 List of Tables Tab. 1. Example of a simplified rational project identification result........... 18 Tab. 2. Examples of project-associated risks and how they are addressed in the feasibility study.................................................... 19 Tab. 3. Pre-feasibility study activities......................................................... 21 Tab. 4. The feasibility study preparation process....................................... 22 Tab. 5. Basic operational commands of Bytex Feasibility Analyzer........... 27 Tab. 6. Software navigational commands.................................................. 28 [email protected] 05 Jul 2022 viii Training Guide: Introduction to Software-Aided Feasibility Study Preparation List of Figures Fig. 1. Major factors considered in project identification and their interrelationships............................................................................. 18 Fig. 2. Opening window of Bytex Feasibility Analyzer, Version 5.18........... 25 Fig. 3. Focal window of the software with push-button type menu.............. 26 Fig. 4. The focal window showing activated print window........................... 29 Fig. 5. General data and assumptions window........................................... 29 Fig. 6. Investments window........................................................................ 30 Fig. 7. Operation and maintenance expenses window............................... 30 Fig. 8. Benefits window..............................................................................31 Fig. 9. Technical feasibility discussion window........................................... 31 Fig. 10. Financial feasibility analysis preview............................................. 32 Fig. 11. Economic feasibility analysis preview............................................ 32 Fig. 12. Sample printout of the first page of the project summary............... 33 Fig. 13. Sample printout of the first page of the technical feasibility discussion..................................................................................... 34 Fig. 14. Sample printout of the loan amortization schedule........................ 35 Fig. 15. Sample printout of the alternative financial feasibility analysis....... 35 Fig. 16. Sample printout of the financial sensitivity analysis....................... 36 [email protected] 05 Jul 2022 Training Course Syllabus Training Course Code SAFS101 Training Course Title Online Trainor's Training on Software-Aided Feasibility Study Preparation Training Course Agricultural and Fisheries Mechanization Projects and Emphasis/Application Facilities Trainee’s Qualifications BS degree holder Computer literate Prerequisite None Credit Non-credit Training Duration 43.75 training-workshop hours & 8 assessment hours Training Modality Online, face-to-face or blended (The guide can also be used for face-to-face modality) Training Host’s Needed E-Learning platform (Google Classroom or MOODLE) Facilities Teleconferencing platform (Zoom, Google Meet, WebEx, etc.) Trainee’s Needed Desktop/laptop computer w/ Windows operating sys. Personal Equipment Computer camera with microphone Reliable internet connection Training Software Bytex Feasibility Analyzer, Version 5.18 ©1997-2013 by Arthur It. Tambong, FPSAE Requires 64-bit or 32-bit Windows operating system Course Description Software-aided feasibility study preparation Learning Outcomes At the end of the whole training, the participants should be able to do the tasks in the following competencies (this training guide covers the first 2 competencies): Competency 1 - Knowledge of Feasibility Study (FS) Concept, Parts and Preparation Process Competency 2 - Using a Feasibility Study Making Software Competency 3 - Encoding and Validating FS Data Competency 4 - Automating Feasibility and Sensitivity Analyses and Interpreting Results Competency 5 - Software-Guided Writing of FS Discussion Competency 6 - Generating FS Report Competency 7 - Generating and Interpreting Financial Statements and Ratios with Break-Even Analysis [email protected] 05 Jul 2022 x Training Guide: Introduction to Software-Aided Feasibility Study Preparation Training Course Contents and General Program of Activities Day Teaching Learning Assessment Schedule of Topic Task 8:00 AM Activities Activities Submission -5:45 PM Pre-Training  Enrollment of the Activities trainees to the host’s Online Learning Program & issuance of trainees’ 2-3 usernames & days passwords before start of  Posting of training announcement at virtual classroom  Uploading of training guide and feasibility study software link to the virtual classroom Pre-Training  Uploading of  First access to  Pretest  NOTICE: Activities additional training the virtual Software materials (as classroom generated needed) Current  IMPORTANT: License No. Downloading (CLN) should  Issuance of of the Training Renewal License be submitted to Guide, the RP through No. (RLN) with exercises and built-in software the link in the Bytex virtual load to each feasibility study trainee who have classroom (not software from emailed) submitted the the virtual 1-2 software before the start classroom, of the training days generated software before Current License for software start of installation & load issuance. No. (CLN) generation of training software The RP Current CANNOT issue License No. or software loads CLN during lecture time.  IMPORTANT: Submission of Deadline of the software Pretest is 1:00 generated CLN PM of Day 1 of for software the training. load issuance Training  Teleconference  Attend opening Orientation program & Opening program  Keynote Address orientation 1  Use and  Taking down Training Policies, navigation of the notes Requirements & online classroom Assessment  Participate in the open forum [email protected] 05 Jul 2022 COMPETENCY 1:  Teleconferencing  Attend  Exercise  Not later than Knowledge of with synchronized 9:00 PM of the Feasibility Study synchronized lecture same day  Quiz Concept, Parts and lecture Preparation  Takedown  Please see 1 Process  Open forum notes training policies for  Consultation  Participate in the details open forum  Do the exercise COMPETENCY 2:  Teleconferencing  Attend  Exercise  Not later than Using a with synchronized 9:00 PM of the Feasibility Study synchronized lecture same day  Quiz Making Software lecture  Takedown  Please see 2  Open forum notes training policies for  Consultation  Participate in the details open forum  Do the exercise COMPETENCY 3:  Teleconferencing  Attend  Exercise  Not later than Encoding and with synchronized 9:00 PM of the Validating synchronized lecture same day  Quiz Feasibility Study lecture Data  Takedown  Please see 2  Open forum notes training policies for  Consultation  Participate in the details open forum  Do the exercise COMPETENCY 4:  Teleconferencing  Attend  Exercise  Not later than Automating with synchronized 9:00 PM of the Feasibility and synchronized lecture same day  Quiz Sensitivity lecture Analyses and  Takedown  Please see 3 Interpreting  Open forum notes training Results policies for  Consultation  Participate in the details open forum  Do the exercise COMPETENCY 5:  Teleconferencing  Attend  Exercise  Not later than Software-Guided with synchronized 9:00 PM of the Writing of synchronized lecture same day  Quiz Feasibility Study lecture  Takedown 3 Discussion notes  Please see  Open forum training  Participate in the policies for  Consultation open forum details  Do the exercise COMPETENCY 6:  Teleconferencing  Attend  Exercise  Not later than Generating with synchronized 9:00 PM of the Feasibility Study synchronized lecture same day  Quiz Report lecture  Takedown  Please see 4  Open forum notes training policies for  Consultation  Participate in the details open forum  Do the exercise [email protected] 05 Jul 2022 xii Training Guide: Introduction to Software-Aided Feasibility Study Preparation COMPETENCY 7:  Teleconferencing  Attend  Exercise  Not later than Generating and with synchronized 9:00 PM of the Interpreting synchronized lecture same day  Quiz Financial lecture Statements and  Takedown  Please see Ratios with  Open forum notes  Posttest training 5 Break-Even policies for Analysis  Consultation  Participate in the details open forum  Do the exercise CLOSING  Teleconferencing  Attend closing CEREMONY FOR with closing program 5 THE TRAINING program PROPER Training  None  None  None  Not applicable Assessment of 6 Participants by the Resource Person References and Other Learning Materials A. Self-Learning Materials Developed by the Training Resource Person Tambong AI. 2022. Training Guide: Introduction to Software-Aided Feasibility Study Preparation - with Emphasis on Agricultural and Fisheries Mechanization Projects and Facilities Tambong AI. 2020. Sample AFMESC Feasibility Study for a 1,000-hectare Rice, Corn and Vegetable Area in Baybay City, Leyte - No Appendices Bytex Feasibility Analyzer, version 5.18 Feasibility Study Making Software © 1997-2013 by Arthur It. Tambong https://drive.google.com/open?id=1VIIawFOD7qKJSiYZyn6Ja3OZD8HVlHcs Tambong AI. 2013. User’s Manual of Bytex Feasibility Analyzer, version 5.18. Bytex Information Technology and Engineering Services, Iligan City, Philippines. https://drive.google.com/open?id=1XnjLVWLj5n_0_3C5SzkrH2m71gtRspAX B. E-books/Textbooks (in order of relation to the training course) EU-MFCR. 1997. Guidelines for Financial and Economic Analysis of Projects. Retrieved 8-18-2018 https://www.mfcr.cz/assets/cs/media/EU-MFCR_Pr-015_1997_Guidelines.pdf International Accounting Standards Board (IASB). 2016a. International Accounting Standards No. 7 (IAS 7) – Statement of Cash Flows. Retrieved 8-18-2020 https://www.iasplus.com/en/standards/ias/ias7 International Accounting Standards Board (IASB). 2016b. International Financial Reporting Standards No. 15 (IFRS 15) – Revenue from Contracts with Customers. Retrieved 8-18-2020 https://www.iasplus.com/en/standards/ifrs/ifrs15 International Accounting Standards Board (IASB). 2009. International Accounting Standards No. 18 (IAS 18) – Revenue. Retrieved 8-18-2020 https://www.iasplus.com/en/standards/ias/ias18 [email protected] 05 Jul 2022 IFRS Foundation. 2019. Discount Rates in IFRS Standards - Project Summary. International Financial Reporting Standards Foundation, London, United Kingdom https://www.ifrs.org/-/media/project/discount-rates/project-summary.pdf Kurin Waste Collection and Management, Inc. 2015. Pre-Feasibility Study of Waste Collection, Advanced Processing, Recycling, Energy Generation and Environmental Protection using ReCulture Technology (Feasibility Study Report). Mandaue City, Philippines Tambong A & Preciados L. 2018. Advantages and Disadvantages of Time-saving Innovation “Bytex Feasibility Analyzer V5.18” in Feasibility Study Consulting. Paper presented during the Scientific Conference on Economics and Entrepreneurship, 18-19 October 2018, Riga Technical University, Latvia, Europe https://www.researchgate.net/publication/336252627_Advantages_and_Disadvantages_of_ Time-saving_Innovation_Bytex_Feasibility_Analyzer_V518_in_Feasibility_Study_Consulting Tambong AI. 2014. Determining Financially Feasible Digester Size and Greenhouse Gas Emission Reduction of Covered Lagoon Biodigester through Computer Simulation. Journal of Society and Technology, 4:136-142. Retrieved 8-25-2018 http://www.nsu.edu.ph/images/download/JST%20Files/14_Determining.pdf Tambong AI. 2002. Comparative Economic Evaluation of Photovoltaic Electrification Systems. Philippine Agricultural Engineering Journal, ISSN 924-1497, XXX (2) Tambong AI. 2000. Techno-Economic Feasibility of GIS-Based National Food Security System. Phil. Agricultural Engineering Journal, ISSN 924-1497, XXVIII (3) Tambong AI. 1997. Development and Evaluation of a Software for Feasibility Analysis. Philippine Agricultural Engineering Journal, ISSN 924-1497, XXVI (1) C. YouTube Links (Free) Feasibility Study by Nick Jackson https://youtu.be/A57ZQKMxQSs Feasibility Study by Penn State Extension https://youtu.be/5ATiyRVclhc Feasibility Study Training Course Structure by Feasibility.pro https://youtu.be/3w4BIAMIRVs Introduction to Risk Management by QualityGurus https://youtu.be/Cp_XEhexcDw A Look Inside a Modern Combine Harvester by Food Farmer Earth https://youtu.be/KwQKKaZzrK4 How a Combine Harvester Works and What It's Like to Drive by Harry’s Garage https://youtu.be/Wih6A7VFgvM Yanmar AW70V with Corn-Kit Attachment (for rice and corn combine harvester) by Yanmar Philippines https://youtu.be/ju59-eofX3w [email protected] 05 Jul 2022 xiv Training Guide: Introduction to Software-Aided Feasibility Study Preparation Training Course Assessment and Evaluation Item Percentage No. of Individual Task % Assessment Tasks No. Contribution Times Contribution 1 Quizzes 10% 5 2% per quiz 2 Exercises/Assignment 30% 5 6% per exercise 3 Posttest 10% 1 10% per posttest 4 Training Course Project (FS) 50% 1 50% per project Rating System (60% Passing) Range Rating Certificate Issued 60-100 Passed Certificate of Completion 0-59 Failed Certificate of Attendance Training Policies 1. In case of teleconferencing connection problem, each participant shall check his/her email for any invitation to an alternative teleconferencing platform. If there’s no invitation received within 10 minutes, the participant shall use his/her downloaded electronic copy of the self-learning Training Guide and exercises in place of synchronized lecture and proceed in doing the affected exercises on schedule. The Resource Person shall be informed of the problem by email. In case of virtual classroom access problem, the affected training exercises shall be done offline and shall be submitted through the virtual classroom once access to the classroom resumes. The deadlines for submission of affected training exercises, quizzes, tests and project shall be moved accordingly. The Resource Person shall also be informed of the problem by email. 2. All submitted write-ups shall be subjected to plagiarism check. Any work having two or more successive sentences copied from the internet shall not be graded unless the original author is shown by indicating in pair of parenthesis the surname of the author(s) and the year it was published, e.g. (Cruz, 2018) and (Reyes & Cortez, No Date). 3. Chatting with co-participants shall not be allowed during the opening program, synchronized lectures, open fora and closing ceremony unless the chat is official. A connection request from participants shall be addressed to the teleconferencing host. 4. The same or closely similar works shall not be graded. Each work of a participant shall be different from the work of any other participant unless the task calls for uniform results among participants. 5. All requirements shall be submitted on or before the deadline indicated in the Training Course Syllabus or as announced by the Resource Person. Late submission shall be penalized with a 5% deduction per day or fraction of a day. All requirements shall be submitted through the virtual training classroom. 6. For clarifications or questions related to the lectures and requirements, the training participant shall contact the Resource Person through the virtual training classroom or teleconferencing platform during the official training schedule, Monday to Friday. In cases in which the above platforms are not accessible, the contact information indicated at the Resource Person’s Information shall be used. 7. All training participants shall observe all policies, regulations, and rules of the training host/sponsor(s) and applicable laws. 8. These training policies shall serve as the written agreement for the whole training course. The training participants shall be informed immediately of any changes on these policies that may arise for improving the delivery of the quality of learning and for the betterment of the training process. [email protected] 05 Jul 2022 Resource Person’s Information 1. Name of Resource Person (RP) Engr. Arthur It. Tambong, FPSAE 2. Address Tambong Residence, Badiang-II, Brgy. Bunga, Baybay City 6521, Leyte, Philippines 3. Telephone/Mobile Numbers +63 965 150 4338, +63 921 1951 438 4. Email Addresses [email protected] 5. FB Messenger Contact Name Arthur Tambong 6. Consultation Time As announced in the online training classroom [email protected] 05 Jul 2022 Competency 1: Feasibility Study Concept, Parts and Preparation Process Overview This lesson gives an introductory discussion of the training course. It covers related definitions, the main reason for doing a feasibility study, project formulation from problem scenario, intervention and associated risks. Feasibility study parts and preparation process are also discussed. Learning Outcome At the end of the lesson, the training participants should be able to decide when to conduct a feasibility study and know the general process on how to do it. Prerequisite Taking the Training Course Pretest is a prerequisite before starting this lesson. The pretest is given separately in the virtual classroom. Motivational Question How to do a simple and rational project identification? Time Frame: 60 minutes Definitions A feasibility study (FS) is an analytical report of the assessment of a project concerning its market, technical, financial, socio-economic and management feasibilities. A pre-feasibility study (pre-FS) generally covers the same parts as feasibility studies but contains less detail. A business plan is a less analytical document containing the plan on how to establish and operate the business. A business plan or pre-FS cannot substitute a feasibility study, which contains in-depth and comprehensive series of analyses on the financial and economic viabilities. This series of analyses foresees the major project risks. Without these analyses, implementing a multi-million project is a big gamble. The entire process of doing the data gathering, analysis, write-up and other needed tasks to produce an FS is referred to as the conduct of feasibility study. [email protected] 05 Jul 2022 Financial benefit is the benefit to the project owner. Hence, the financial feasibility analysis accounts the costs and benefits to the project owner. It uses market prices. Economic benefit is the benefit to society regardless of who in the society receives the benefit. From this definition, it follows that the economic feasibility analysis accounts the costs and benefits to the society or the people benefited by the project. It uses shadow prices. In the feasibility study context, shadow price is the equivalent cost to society. Shadow pricing is a complex subject. To facilitate easy economic feasibility analysis, shadow price is estimated. For goods and services paid to the business establishments, it is estimated as market price less tax. For labor paid to a person, shadow price is estimated as 60% of payment due to multiple taxations involved after the money left a person’s hand. The shadow price is usually expressed as a percentage of the market price. For instance, if one buys a combine harvester worth Php2,000,000 and the tax is 12%, the shadow price is estimated at 88% or 100% less 12%. If the tractor operator is paid at Php750 daily, regardless of amount, the shadow price is estimated at 60% of the daily wage since it is classified as labor paid to a person. If part of the project expenditure is shouldered by a government grant, it is considered as government share in the project and its shadow price is still estimated as market price less tax. Competence is the combination of knowledge, skills and attitude possessed by a person. Competency is the observable and measurable combination of knowledge, skills and attitude that contribute to a person’s work performance. A person can be considered to have a competency in feasibility study preparation if he/she is observed doing each part of the work and the work output passes the minimum requirements of a feasibility study upon evaluation. Why do We Conduct Feasibility Study? We conduct a feasibility study to know if the project is viable in terms of financial and economic aspects and doable in terms of market, technical and management aspects. In doing this, we prevent project failure and save money and effort intended for the project. Based on experts’ estimates, only about 5 percent of all ideas is feasible. Hence, if a project is implemented without a feasibility study, there is about 95 percent chance that it will be a failure and only about 5 percent chance that it will be a success. [email protected] 05 Jul 2022 18 Training Guide: Introduction to Software-Aided Feasibility Study Preparation Project Identification from Problem Scenario, Best Intervention and Associated Risks From the problem scenario or the problematic situation in a certain area or locality, one should analyze the situation carefully based on objectives, identify the best project intervention based on strength to solve or alleviate the problem and the major threats or risks associated with the intervention. If the major risks can be managed and there is no market, technical, social or management hindrance, the project intervention is adopted. This is project identification. It is done to find project possibilities toward making an investment decision. Fig. 1. Major factors considered in project identification and their interrelationships (Source: SlideShare, 2019) Tab. 1. Example of a simplified rational project identification result [email protected] 05 Jul 2022 The intervention should have a foreseen benefit and the most fitted solution to the problem considering resources that are available and the ones that can be tapped. The benefits could be financial, economic or both. The associated risks should include the major ones that are likely to be encountered in the proposed project's operation. Sensitivity analysis is the tool to determine the risk impact to the project quantitatively. The table below shows some examples of project- associated risks. The table also indicates how these risks are addressed in the FS. If there are two or more equally important interventions, feasibility analyses using estimates are needed to identify the best option. Tab. 2. Examples of project-associated risks and how they are addressed in the feasibility study Parts of a Feasibility Study A standard feasibility study (FS) contains the following parts: 1. Project summary - capsulizes the project and its financial and economic feasibilities. 2. Market feasibility - deals with the marketing aspects of the project and the fitness of the implementor to carry them out. 3. Technical feasibility - affirms that the machinery, equipment and facilities and their operating conditions are doable. 4. Financial feasibility - presents information and analyses on the financial viability of the project. For commercial projects, this is the most important part of an FS since it foresees the major risks on financial viability. Non-revenue generating projects like farm-to-market roads and irrigation facilities that are service-oriented need not be financially feasible but needs to be economically feasible such that they can be implemented. If the net present value of the project is negative, this value indicates the level of subsidy needed. [email protected] 05 Jul 2022 20 Training Guide: Introduction to Software-Aided Feasibility Study Preparation 5. Socio-economic feasibility - shows the economic viability, socio- economic impact such as, but not limited to, reduction of production cost, increase in yield and income of beneficiaries, and generation of jobs and employment attributed to the project. For service-oriented non-revenue generating projects, this is the most important part of an FS since it foresees the major risks on economic viability. In order to be implemented, non-revenue generating projects need to be economically feasible even if they are not financially feasible. 6. Management feasibility - considers institutional or organizational setup, manpower requirements and administrative support. Feasibility Criteria The indicators used in the feasibility criteria are standard in the international community. These indicators are Net Present Value, Internal Rate of Return, Benefit-Cost Ratio, Payback Period and Return on Investment. Revenue earning projects like buy and sell business use financial feasibility analysis while development projects like irrigation and road projects use economic feasibility analysis. The financial analysis uses market prices while the economic analysis uses shadow prices. The feasibility criteria are: A. For a revenue generating project – uses financial analysis 1. Net Present Value ≥ 0 2. Financial Internal Rate of Return (FIRR) ≥ Opportunity Cost of Investment Resources (OCIR) or Prevailing Deposit Interest Rate in the Banks 3. Benefit-Cost Ratio ≥ 1 4. Payback Period ≤ Longest Acceptable Payback Period Desired by the Investor 5. Overall Return on Investment (ROI) ≥ OCIR or Prevailing Bank Deposit Interest Rate The project is financially feasible if these criteria are all satisfied. B. For a development project – uses economic analysis 1. Net Present Value ≥ 0 2. Economic Internal Rate of Return (EIRR) ≥ Opportunity Cost of Investment Resources (OCIR) or Social Discount Rate (SDR) 3. Benefit-Cost Ratio ≥ 1 4. Payback Period ≤ Acceptable Payback Period Desired by the Investor 5. Overall ROI ≥ OCIR or Social Discount Rate Payback period and ROI can be optional in economic analysis. The project is economically feasible if the non-optional criteria are all satisfied. [email protected] 05 Jul 2022 Under financial feasibility, the financial statements, liquidity, indebtedness, profitability ratios, and break-even analysis are also prepared as secondary bases of feasibility. Feasibility Study Preparation Process The feasibility preparation process needs to undergo a pre-feasibility study activity before the main preparation process is undertaken. The table below shows the pre-feasibility study activities that need to be done prior to the conduct of feasibility study. Tab. 3. Pre-feasibility study activities Step Activity 1 Verify the inclusion of the project in the priority list of target funding agency. 2 Conduct a site visit to determine the suitability of establishing the project in the target location/site. 3 Make initial financial and economic feasibility analyses using the closest possible data estimates and quantifying all the non-optional feasibility indicators specified in the feasibility criteria. If the project is not feasible based on the feasibility criteria, the pre- feasibility activity stops and no full-blown FS shall be conducted. 4 Conduct social and institutional capacity assessment/preparation through community consultation/dialogues as to the project acceptability in the community. 5 Verify the inclusion of the project in the lists of Environmentally Critical Projects (ECPs) and/or Environmentally Critical Areas (ECAs) per DENR Administrative Order No. 30, s. 2003. If included, advise the project proponent that Environmental Impact Assessment needs to be conducted separately and ECC is required prior to project implementation. 6 Prepare other FS attachments (maps, resolution, etc.) based on FS required parts. 7 Comply complete documentation of Rights-of-Way (ROW), signed and notarized deed of donation, acquisition and expropriation, if applicable. 8 Determine the necessity for Detailed Engineering Design (DED). If necessary, advise the project proponent that it needs to be prepared separately and completed prior to project implementation. In place of DED, preliminary engineering design with cost estimate(s) can serve as FS attachment. 9 Conduct free and prior information consultation in Indigenous People areas and secure the necessary Free and Prior Inform Consent (FPIC) clearances from the National Commission for Indigenous People, if applicable. 10 Coordinate with partner agencies and institutions, if applicable. The pre- feasibility study activities end. Doing the above pre-feasibility study activities is a prerequisite to the conduct of the full-blown feasibility study. All of the above steps are necessary. For instance, if Step 1 above is not done, there is a big possibility that the project will not be funded. If Step 3 is omitted, there is a big chance that the project will be found to be not financially or economically feasible later. Similarly, if Steps 5 and 8 are not done, the [email protected] 05 Jul 2022 22 Training Guide: Introduction to Software-Aided Feasibility Study Preparation implementation of the project can be delayed if it involves the conduct of an Environmental Impact Assessment and/or Detailed Engineering Design. The process of preparing the full-blown feasibility study follows the steps in the following table. Tab. 4. The feasibility study preparation process Step Activity 1 Check if the project can proceed to full FS preparation by checking the completion of the Preparatory FS Activities. If it was done, the FS preparation process proceeds, otherwise do the Preparatory FS Activities. 2 Read the provisions in the FS Terms of Reference (TOR). If no TOR is ready, it shall be prepared and signed by concerned parties. 3 Visit the proposed project site and conduct an ocular investigation. 4 Gather all the details of investments, operating costs and benefits/revenues needed for feasibility analysis. Incorporate to the details the cost estimates, salvage values and life spans of structures from Preliminary Engineering Design, if any, and the current valuations of all existing facilities and equipment, if applicable. 5 Make detailed financial and economic feasibility analyses quantifying all the non-optional feasibility indicators specified in the feasibility criteria. 6 Determine if the project is financially and/or economically feasible based on the feasibility criteria. If unfeasible, the FS preparation process may optionally stop depending on the provision stipulated in the TOR. 7 Make a go-signal to the project proponent to separately prepare all the documentary requirements required to be attached to the FS report. 8 Do the market feasibility study. 9 Do the technical feasibility study. 10 Do the rest of the financial feasibility study. 11 Do the rest of the socio-economic feasibility study. 12 Do the management feasibility study. 13 Prepare the project summary. 14 Attach the Preliminary Engineering Design or the Detailed Engineering Design (if necessary) and other documentary attachments separately prepared by the project proponent then check for complete compliance to the TOR. 15 Print the first FS draft and submit it to the project proponent for comments and corrections. 16 Revise the first FS draft as commented/corrected, print the second FS draft, then resubmit it to the project proponent for second review. 17 Revise the second FS draft as commented/corrected by the project proponent. If a third revision is stipulated in the TOR, resubmit the FS draft for further comments and corrections, else print the final report and submit it to the project proponent. 18 The process ends. [email protected] 05 Jul 2022 Further Learning The YouTube videos listed below and other related videos found on YouTube are recommended to enhance learning. YouTube Links (Free) Feasibility Study by Nick Jackson https://youtu.be/A57ZQKMxQSs Feasibility Study by Penn State Extension https://youtu.be/5ATiyRVclhc Introduction to Risk Management by QualityGurus https://youtu.be/Cp_XEhexcDw Assessment The exercise and quiz for this competency are given separately in the virtual classroom. [email protected] 05 Jul 2022 24 Training Guide: Introduction to Software-Aided Feasibility Study Preparation Competency 2: Using a Feasibility Study Making Software Overview This lesson introduces Bytex Feasibility Analyzer, version 5.18, the software used in the entire training course. The lesson also gives a quick tour of the software features and capabilities such that the training participants can make full use of these software capabilities in their future feasibility study jobs. Learning Outcome At the end of the lesson, the training participants should be able to familiarize the key features of the software Bytex Feasibility Analyzer, version 5.18, in the preparation of feasibility studies. Motivational Question What are the data inputs and outputs of the Bytex Feasibility Analyzer? Time Frame: 120 minutes The Software Used in the Training Course The feasibility study making software Bytex Feasibility Analyzer, version 5.18, is used in this training course. The software was selected based on its features and capabilities that are important in making standard feasibility studies. Features of Bytex Feasibility Analyzer The software Bytex Feasibility Analyzer, version 5.18, was observed to offer convenience when doing FS consulting tasks with the following features (Tambong A & Preciados L, 2018): 1. User-friendly, menu-driven, context-sensitive help is always available, with an electronic user’s manual, built-in file manager and step-by-step tutorial 2. Generates an auto-formatted and ready-to-bind feasibility study report [email protected] 05 Jul 2022 3. Quick, completes FS including discussions in days if data are available 4. Automatically rejects apparently incorrect data with matching help message 5. Compliant to the International Accounting Standards (IAS) and the International Financial Reporting Standards (IFRS) 6. Performs long-term financial and economic analyses using money discounting and standard life cycle cash flow accounting 7. Quantifies important feasibility indicators - Net Present Value, Internal Rate of Return, Benefit-Cost Ratio, Payback Period, Return on Investment 8. Gives more accurate payback period than the averaging method by basing on year-to-year cash flows 9. Explicitly indicates whether the project analyzed is feasible or not 10. Automatically generates loan amortization schedule, if necessary 11. Projects operating costs and benefits based on set growth rates 12. Allows fluctuating operating costs and benefits when using trend coefficients as the projection method 13. Covers discussion on Project Summary, Market Feasibility, Technical Feasibility, Financial Feasibility, Socio-Economic Feasibility and Management Feasibility 14. Guides users on what discussion topics to include and what to write, saves user’s thinking time 15. Differentiates financial from economic benefits 16. Allows data file creation and data entry, except results generation, even without software licensing and allows calculation in the tutorial mode without software licensing but uses randomized tutorial data 17. Prints output to an installed printer, text file or any available virtual printer such as PDF or image file 18. Quickly converts monetary data in any currency, allowing FS report presentation in another currency Fig. 2. Opening window of Bytex Feasibility Analyzer, Version 5.18 [email protected] 05 Jul 2022 26 Training Guide: Introduction to Software-Aided Feasibility Study Preparation Data Inputs of Bytex Feasibility Analyzer The software has the following data inputs: 1. General data and pre-defined assumptions; 2. Details (quantity, unit, description, unit price, etc.) of investments; 3. Details of operating costs; and 4. Details of financial and economic benefits. Software Outputs The software has the following outputs: 1. Financial feasibility analysis; 2. Economic feasibility analysis; 3. Financial and economic sensitivity analyses; 4. Loan amortization schedule, if applicable; 5. Printout of all input data; 6. Income statement, cash flow statement, balance sheet, break-even analysis and financial ratios compliant to the International Accounting Standard (IAS) auto-generated via an external accessory program; and 7. Auto-formatted feasibility study report. Fig. 3. Focal window of the software with push-button type menu [email protected] 05 Jul 2022 Software Basic Operation Operating the software is simple. From the opening window, just click the Make Feasibility Study button to enter project data, calculate and print FS report. The software is equipped with a push-button type menu. To run the program, simply double click its desktop link or double click the bfa.exe application file, the one with open book icon, while it is displayed under Windows File Explorer. Making a desktop link to the bfa.exe application file is recommended for quick software running outside of the Windows File Explorer. The recommended name of the link to bfa.exe is “Bytex FS Maker 5.18” or any similar name. Tabulated below are the basic operational commands of the software. Tab. 5. Basic operational commands of Bytex Feasibility Analyzer Operation Command Activate help Click the Help button or press Alt+H simultaneously. Activate or deactivate Click the Tutorial button or press Alt+T tutorial window simultaneously. Calculate input data Click the Calculate button. Clear all current Click the New button. Change currency Click the Currency button. Close pop-up message Press the ESC key to restore the old input value caused by inconsistent then click the Close button in the message box. assumption data input Delete file Click filename at file manager then click Del button. Exit the program Click the Exit button. Input deneral data and Click the Assumptions button. assumptions Input investments data Click the Investments button. Input operating costs data Click the Operating Costs button. Input benefits data Click the Benefits button. Input irregular data Click the Irregulars button. Input trend coefficients Click the Trends button. Open file Double click the filename in the file manager. Print FS report Click the Print button. The button is disabled while calculation has not been done from the start of program execution. FS report needs to be printed on paper or file before exiting the program, otherwise you need to recalculate to generate FS report again. Refresh table grand total Click the Ok button then go back to the same table. Save data as a new file Enter the filename then click the Save As button. Save data in same filename Click the Save button. Scroll window up or down Move the scroll window handle up or down Write project summary Click the Summary button. Write market discussion Click the Market button. Write technical discussion Click the Technical button. Write financial discussion Click the Financial button. Write socio-economic Click the Socio-Economic button. discussion Write management Click the Management button. discussion [email protected] 05 Jul 2022 28 Training Guide: Introduction to Software-Aided Feasibility Study Preparation Software Navigation Navigation from one part of the software to the other is quick and easy. Like the basic software operation, navigation within the same window or jumping from one window to the other is quickly done by just clicking buttons. Tabulated below are the navigational commands of the software. Tab. 6. Software navigational commands Navigation Command Go back to focal window Click the Ok button. from any data entry window Go back to the main Click the Close button. window or the focal window from the printing window Go back to the focal or Click any part of the focal window. This command is main window without needed when not using the default TXT output file closing the printing window extension (see previewing and printing). Output files with non-TXT extensions are hidden and the user should record the filename including file extension. Go back to the unclosed Click the BFA Printing Options in the task bar, not printing window, preserving the Print button in the focal window. Clicking the the non-TXT filename as Print button in the focal window instead of the BFA entered in the file manager Printing Options in the taskbar will cause the file manager to use the default TXT file extension. Go directly to any major Hold the Alt key and press the corresponding short button or data entry box cut key. The short cut key is the underlined key. Go from opening window to Click the Make Feasibility Study button. The main main window window is the focal point or home base of all windows of the software. Jump from main window to Click the corresponding button located at the left any data entry or printing side of the main window. windows Jump to any entry box Click on the entry box. Leave any input table or Press the Enter key to commit your latest input then tabular input window click the Ok button. Move the pointer or the Press the Enter, vertical Arrow or Tab key. cursor to next item in the same window Move the pointer or the Press the Up Arrow key or Shift +Tab keys. cursor backward [email protected] 05 Jul 2022 Windows of the Software The following figures show some major windows of the software. All these windows can be accessed from the focal window or main window. The focal window contains the push-button menu, file manager and analysis summary. Fig. 4. The focal window showing activated print window Fig. 5. General data and assumptions window [email protected] 05 Jul 2022 30 Training Guide: Introduction to Software-Aided Feasibility Study Preparation Fig. 6. Investments window Fig. 7. Operation and maintenance expenses window [email protected] 05 Jul 2022 Fig. 8. Benefits window Fig. 9. Technical feasibility discussion window [email protected] 05 Jul 2022 32 Training Guide: Introduction to Software-Aided Feasibility Study Preparation Preview of the FS Report The feasibility study report can be previewed for any data encoding errors before printing. The following figures show the previews of the financial and economic feasibility analyses. Fig. 10. Financial feasibility analysis preview Fig. 11. Economic feasibility analysis preview [email protected] 05 Jul 2022 Printout of the FS Report The printout of the software is an auto-formatted feasibility study report. Inasmuch as appendices are separately prepared, they are not included in the auto-formatted report and are needed to be attached before binding. The figures below show sample printouts of some parts of the feasibility study report. Fig. 12. Sample printout of the first page of the project summary [email protected] 05 Jul 2022 34 Training Guide: Introduction to Software-Aided Feasibility Study Preparation Fig. 13. Sample printout of the first page of the technical feasibility discussion [email protected] 05 Jul 2022 Fig. 14. Sample printout of the loan amortization schedule Fig. 15. Sample printout of the alternative financial feasibility analysis [email protected] 05 Jul 2022 36 Training Guide: Introduction to Software-Aided Feasibility Study Preparation Fig. 16. Sample printout of the financial sensitivity analysis Assessment The exercise and quiz for this competency are given separately in the virtual classroom.