Project Feasibility

1
Project Feasibility Time Value of Money
Anjum Asim Shahid Rahman Chartered Accountants.
Member firm of Grant Thornton International
2
Scope of work
Project Concept
SWOT Analysis
Financial Analysis
Way Forward
Market Assessment
Investors Benefit
Project Feasibility

• A decision making toll to do or forgo a project.
  It includes
• Justification of Project Need
• Viability/do ability of a project
• Financial Economic Analysis
• Risks identification and mitigation
• Option Analysis

Anjum Asim Shahid Rahman Chartered Accountants.
Member firm of Grant Thornton International
Anjum Asim Shahid Rahman Chartered Accountants.
Member firm of Grant Thornton International
3
Scope of work
Project Concept
SWOT Analysis
Financial Analysis
Way Forward
Market Assessment
Investors Benefit
Project Feasibility - Justification of Project
Need

• Demand Supply Gap
• Better Quality or increased efficiency
• Cost Reduction
• Strategic objective
• Regulatory Requirement

Anjum Asim Shahid Rahman Chartered Accountants.
Member firm of Grant Thornton International
Anjum Asim Shahid Rahman Chartered Accountants.
Member firm of Grant Thornton International
4
Scope of work
Project Concept
SWOT Analysis
Financial Analysis
Way Forward
Market Assessment
Investors Benefit
Project Feasibility - Viability/do ability of a
Project

• Project feasibility access project viability from
  following perspectives
• Legal
• Technical
• Financial
• Environmental
• Social

Anjum Asim Shahid Rahman Chartered Accountants.
Member firm of Grant Thornton International
Anjum Asim Shahid Rahman Chartered Accountants.
Member firm of Grant Thornton International
5
Scope of work
Project Concept
SWOT Analysis
Financial Analysis
Way Forward
Market Assessment
Investors Benefit
Project Feasibility - Financial Economic
Analysis

• Financial Analysis is investors perspective and
  includes
• Determining Investment Requirement
• Bankability of Project
• Opportunity Cost
• Estimation of Required Return
• Projections of Expected Return
• Economic analysis measures overall benefit to
  economy and is normally from government
  perspective for prioritizing a project.

Anjum Asim Shahid Rahman Chartered Accountants.
Member firm of Grant Thornton International
Anjum Asim Shahid Rahman Chartered Accountants.
Member firm of Grant Thornton International
6
Scope of work
Project Concept
SWOT Analysis
Financial Analysis
Way Forward
Market Assessment
Investors Benefit
Project Feasibility-Risk Identification
Mitigation Plan

• Normal Project Risks
• Cost overrun
• Time overrun
• Performance Risk
• Natural Hazards
• Demand Risk
• Economic Risks
• Government Support
• Mitigation plan involves structuring project so
  as to pass through maximum possible risks

Anjum Asim Shahid Rahman Chartered Accountants.
Member firm of Grant Thornton International
Anjum Asim Shahid Rahman Chartered Accountants.
Member firm of Grant Thornton International
7
Scope of work
Project Concept
SWOT Analysis
Financial Analysis
Way Forward
Market Assessment
Investors Benefit
Infrastructure Projects Feasibility

• High Capital Costs
• Long duration of projects
• No easy exits

Anjum Asim Shahid Rahman Chartered Accountants.
Member firm of Grant Thornton International
Anjum Asim Shahid Rahman Chartered Accountants.
Member firm of Grant Thornton International
8
Scope of work
Project Concept
SWOT Analysis
Financial Analysis
Way Forward
Market Assessment
Investors Benefit
Time Value of Money

• This is about perceived value of time and is so
  different for different people /groups
• It is based on concept of equal purchasing parity
  over different time periods.
• Normally it is defined as Interest Cost

Anjum Asim Shahid Rahman Chartered Accountants.
Member firm of Grant Thornton International
Anjum Asim Shahid Rahman Chartered Accountants.
Member firm of Grant Thornton International
9
Scope of work
Project Concept
SWOT Analysis
Financial Analysis
Way Forward
Market Assessment
Investors Benefit
Time Value of Money- Infrastructure Projects

• Cost of delaying a project
• 100 Billion -------gt 150 Billion (50 Billion)
• In addition there are other costs including Poor
  quality of life for delayed period and other
  economic losses.

Anjum Asim Shahid Rahman Chartered Accountants.
Member firm of Grant Thornton International
Anjum Asim Shahid Rahman Chartered Accountants.
Member firm of Grant Thornton International
10
Scope of work
Project Concept
SWOT Analysis
Financial Analysis
Way Forward
Market Assessment
Investors Benefit
TVM Project Prioritization Toll

• limited availability of capital requires
  prioritization of projects.
• Different projects may have different cash flow
  patterns over the project life .
• TVM equates cash flows of each project in present
  value terms .All else equal, the project with
  highest NPV should be taken first

Anjum Asim Shahid Rahman Chartered Accountants.
Member firm of Grant Thornton International
Anjum Asim Shahid Rahman Chartered Accountants.
Member firm of Grant Thornton International
11
Scope of work
Project Concept
SWOT Analysis
Financial Analysis
Way Forward
Market Assessment
Investors Benefit

• Thank you

Anjum Asim Shahid Rahman Chartered Accountants.
Member firm of Grant Thornton International
Anjum Asim Shahid Rahman Chartered Accountants.
Member firm of Grant Thornton International