Businessmen speak different languages, but financial statements speak only one language – the language of money.
As the old adage goes: Money is a matter of functions four; a value, a measure, a standard, a store.
Project feasibility is best presented in a manner that the reader understands. And traditionally, readers are trained to read the project reports in a particular format.
Although new patterns are emerging, it is still recommended to stick to the basics and present a project’s feasibility study in a traditional report format.
This service is available throughout the world.
However, it is carried out remotely from UAE (United Arab Emirates). If required outside UAE, then all travel arrangements are to be made / reimbursed by the client and time spent is paid at time used / wasted and is not fixed to the engagement.
|Only Calculations – Detailed →
|Complete Study / Report – Complex →
|USD 3,500 per section
|Only Calculations – Simple →
|Complete Study / Report – Simple →
|USD 2,000 per section
|Complete Report – for Subsidy Projects →
|USD 1,500 subject to conditions
|Only Calculations – Detailed →
|USD 5,500 and above
|Complete Study / Report – Detailed →
|USD 5,500 and above per section
|Tiny Reports – Frivolous →
|USD 500 and above
[SME = small and medium enterprises; TSE = tiny enterprises; SPR = subsidy projects; VLSI = very large scale enterprises; PSF = project reports submitted as a mere formality]
|Fixed Asset Procurement
|Human Resource Planning
|Introductions, Document Compilation & Complete Presentable Report Preparation
For more information on how fees, in general, are calculated in detail, Read More
The fee for studying and reporting financial feasibility of a project is USD 200 per hour. It’s simply a function of the time required to prepare a report.
When the nature of business becomes simpler and the scale of its operations contracts, the time required to study it reduces. So the fees reduce.
All modifications to the project report will be charged at USD 200 per hour.
If the original report is already printed and the modification is to be reprinted, then proportionate additional fee will be charged for printing the modified report too.
A discount is available for the reports being submitted to specific state sponsored entrepreneurship development funds.
The tacit understanding is that we will charge a fee of between AED 5,000 and 10,000 for a project report in UAE, which includes the financial calculations and compiling of the report on the basis of all other information provided by the promoter.
This does not include the fee for collecting information for the other sections of the project report. This also does not include the fee for meetings and physical visits. This discounted fee will be revoked in entirety – and normal fee charged – if the project is presented for funding to any other financial institution or commercial bank.
If all information is available, it takes about 20 hours to work out the detailed financial projections. Which is why, at USD 200 per hour, the fee is about AED 4,000.
Since the work requires concentration and is strenuous, it is executed in about 5 to 7 days spread over a fortnight.
Merely printing out all sections to compile in a report format takes about 4 hours each time. Which is why, printing additional reports is charged up to USD 1,000 per copy.
However, this is applicable only for complete reports. Multiple copies of only financial calculations / projections may be provided without any additional fee.
However, this fee is rarely required. Since we provide soft copies (including workings in spreadsheets) to the client in entirety, he is free to ask his administrative assistant to replicate the file from the available information, matching the extra one that we have provided.
Most project feasibility studies can be standardised in the above manner. However, some studies are complex. The time required for them cannot be precisely estimated and runs for month.
For example (i): new cement plant – Read More
We carried out a detailed study for setting up cement plants in UAE, Oman and Iran. That required days upon days of visits and discussions that went much beyond the primary and secondary areas that are studied for a normal project.
To elaborate some odd jobs further: (a) coordination with geological authority to obtain mineral maps to identify areas in close proximity to the raw material sources (all raw materials) (note that it is more economical to move raw material than finished product, although a third of the raw material turns to thin air), (b) coordination with local authorities to identify large plot of open land in the vicinity of the raw material mines, (c) identifying clear corridors for haulage right up to the export point, (d) clearances of environment control and other authorities, (e) acquire private property that is an impediment to the project and such unexpected matters.
For example (ii), we visited Ethiopia and South Sudan to evaluate setting up of a mining operation. This too, was different, as it required coordinating with local authorities like above.
For example (iii): an airport asphalting project – Read More
We helped calculate the aggregate procurement for an airport project. This requires an interesting approach and an equally interesting solution. A typical crusher produces 35% crushed sand (5mm or 0-6mm or 3/16”), 25% fine aggregate (10mm or 6-12mm or 3/8”) and 40% coarse aggregate (20mm or 12-22mm or 3/4") besides other sizes in a linear manner.
But the requirement of the airport is not linear. They need more coarse aggregate and sand in the initial stages and more fine aggregate and sand in the final stages. Stockpiling the aggregate is not only a cost, but having a 50 ton equipment running over the stockpile multiple times and the sheer weight of a 100,000 ton stockpile crushes the grains at the bottom and renders it contaminated and defective, practically unusable. Besides that, the cost of transporting aggregate is more than the cost of procuring it, so if inventory is held at the destination, it more than doubles the inventory holding cost and makes waste disposal exceedingly costly.
And in all this, the material to be used needs to be of the highest quality. So ordinary aggregate that has higher water absorption or is shapeless (beyond the acceptable flakiness and elongation standards) and with a high abrasion rate are not acceptable for the project.
So, over a period of 3 years, which the airport was expected to take to construct, we planned an elaborate method of using three different export points, a single destination with over hundred individual stockpiles strategically located with due consideration to the timing of production of requirement and the relative costs involved.
For example (iv), an international cement and readymix acquired a local plant. They wanted to know the ideal material (3 kinds of materials available locally) and the most economical and next economical route (the material is available from 6 different regions, between 60 and 120 kms away on different routes) that was plotted for them on a map and precise information for about 135 suppliers including their contact details, production capacity, product quality, prices, transport costs and in short a complete database to source their main raw material was provided.
The precise requirement differs from project to project. You may like to read this summary concurrently with how we make your project report. But a broad outline of the required information (all copies) can be summarised as below Read More
It is not necessary to be a chartered accountant to prepare a project report or study it. Any person who can present the entire business plan appropriately and adequately would suffice.
In this section, we explain in elaborate detail how we present your project report. A bonus tip – you may use it to compile your project report by yourself.
We have taken – as an example – an existing manufacturing facility that is going into an expansion of facilities with the same line of products. All projects are unique, with manufacturing projects being among the more elaborate ones, we believe this is a good enough representation to cover the basics.
What came first – the hen or the egg? It’s difficult to imagine whether you should gather the information first or start preparing the file first.
When we gather the information, we already know in our mind how we’ll be compiling it – we visualise the end result – here we familiarise you with the final product first (like showing you a photo of a man on the Mount Everest) and then begin guiding you from the treadmill to the Everest base camp.
Our goal – the index
The first page is the index of contents. As a sample, check these out:
Now that we know what your end result will look like, let us take you through the process of how we gather the information and place / present it in the file – that becomes your report.
You may also browse what information is needed to prepare a report.
Before we start – the file
We get a file – your report will be a file full of pages upon pages of printouts and photocopies. We obtain a thick box file to hold about 500 pages.
We get a basic index – and file separators – the information is divided into 10 broad sections.
d)The simplest part first – Banker’s Notes (Section 1)
We keep the first part blank for the banker / financer. They need to write their own notes, compile their own observations and then note down their approvals and other process. It makes sense to dedicate a portion of the file to them.
The most difficult part next – Curtain Raiser (Section 2)
It’s tough to be precise and concise simultaneously.
Part 1 – the Executive Summary
In between half a page to at the most a full page, is an ‘elevator speech’ of the project. (Read More to know what an elevator speech means.)
An elevator speech is a simple concept. Assume you have been thinking hard about approaching a particular large company for becoming their supplier and you suddenly happen to bump into their CEO in an elevator – just you and him. You now have about a minute to speak to him and in that minute, impress him to such an extent that he should invite you over for a meeting – or at least agree to meet you – or perhaps simply remember you from this incidence when you meet him next. So, write something powerful enough to motivate the reader to go through the remaining file.
In general, we mention the following Read More
Part 2 – the Synopsis of the company
This may spread out to 2 or 4 pages. We mention – in summary points – various information that would be appearing throughout the rest of the project report.
The simpler parts – Introductions (Section 3)
These introductions are – in a way – simple. They can be prepared by any undergraduate. The skilful part is connecting them to the company and to the project at hand.
Many a project preparer wonders why it is even necessary to provide these introductions. Doesn’t the banker, who is already financing a couple of projects of a similar nature, already know of these relationships between the country and the industry? Well, they know. But by mentioning this in the project, we get to tell them how well you know about it – and that is an important consideration for the funding party.
We prefer writing a couple of pages on each topic with maps, charts and graphs of all sorts. And we summarise the matter as a small index at the beginning of the section, so that if one doesn’t go through the rest of the section, the index itself becomes sufficient for the reader.
Part 1 – the Country
Mention keeping in mind the correlation to the industry and the company:
Part 2 – the Industry
Explain the industry scenario, keeping in mind that almost every industry has a global equivalent, a regional sector – like manufacturing / trading or wholesale / retail – and peripheral service providers for logistics, trade associations and main products in the overall industry.
Highlight the sector in which the company plays a major role.
Part 3 – the Company
Part 4 - the Promoter
The known part – the Company (Section 4)
No one knows your company better than you. It’s your responsibility as well as an opportunity to showcase it.
Depending on your ability to gather information and our ability to present it, using descriptive text, charts, graphs, tables, comparisons and such tools, give adequate information.
Like photographs are used for products and assets, use company logos for customers, suppliers and advisors and give contact details of the account managers there.
Yes, we agree that it is likely that no one would read the roughly 2025 pages of content that you accumulate here, but it is a helpful exercise without an iota of doubt and should not be avoided for paucity of time or resources.
The main purpose of this report – the Project (Section 5)
We describe the project elaborately. Every question that might come to the banker is presented here.
It is pertinent to note that your relationship manager or the credit officer is normally merely collecting information as per guidelines given to him. This information is later passed on to a technical analyst, a finance expert and a team of other people within the bank. So the information should be available in this section to answer all of their doubts.
And if this information is not available, crucial time is lost in them asking questions, you answering them and then them analysing the same again. This waste of time needs to be avoided by making this section strong with information.
They would like to know a lot, so we include:
Our expertise - financial projections(Section 6)
This is what is colloquially referred to as the “Project Report” but as you can see, it is merely one section of an overall project report, albeit (a) among the most important because the banker will read this in most detail and (b) because we are expected to have better expertise than you in preparing one.
It has always been presented in a fairly similar format. There are other formats available, like the traditional CMA Data Format. And some presentations are simple while some are complex. But they essentially present the same information. And financers analyse the same set of parameters and infer the same analysis.
Depending on the nature of the business, the scale of its operations, the life of the underlying assets and the repayment schedule, the financial projections should be for 8 years. This includes:
However, the number of years may be adjusted depending on the comfort of the financer.
The financial projections are based on an analysis of your past performance, the performance of other companies in the industry with a similar scale of operations and the other information gathered by you (or us) that contributes to this performance.
We would include:
The key documents – Company documents (Section 7)
These KYC documents might already be available with your bank. But your regular relationship manager has them. It is not fair to expect that the other officers in the head office of the financer would have immediate access to them. To save their time and effort – and to avoid adding to their annoyance – it is recommended to attach them again.
These would include:
Information about the key investment – land, building and machinery (Section 8)
These form the primary security of the bank. The suppliers of these are going to be the recipients of money from the bank. And these are the entire subject matter of this report. So, these are very important.
These would include:
The most important asset – Personnel (Section 9)
The key strength of any company is its people. We include their pertinent details here.
And the financial foundation – Financial history (Section 10)
Although these are referred several times earlier, these need to be submitted in adequate detail and in the form of readable copies.
They may include:
And finally – make it ready for submission
Not just Baa Baa Black Sheep, but even we need to keep 3 box files full.
One for the banker – your relationship manager should retain one set entirely for himself
One for the head office – earlier we used to prepare two, one each for the technical evaluator and the financial evaluator, but now-a-days they don’t prefer to do it simultaneously
One for you – you don’t want to be peeping into their file and fumbling for papers when they ask you for details during your discussion with them
Attitude – we insist that carry your attitude of a businessman while meeting the bankers. Avoid taking along the project consultant (us or anyone else). Afterall, the bank is funding you, not us (him / her).
Point #p for being Prudential…… now that you know what we do, choose us.
It is difficult to present a complete project report as a sample. However, as of now, we are presenting how a few calculations will look like. Choose from among the ones below.
Good is not good when better is expected. So, if one doesn’t expect or need a better report, it does not make any sense to get it prepared from us.
It has been our experience that some bankers do not like reports that contain extensive details. So if the primary purpose is to obtain funds – and not a detailed and critical study of the successful implementation of a project – then we should not be appointed.
The persons who have prepared the project report, although experts in their respective fields, have no liability towards the project. The promoters who set up the project are wholly and solely responsible towards all financial and other liabilities created in the process. Disclaimers include:
GIGO – a term that evolved around the 1980s – means garbage in garbage out. Essentially used for computer applications – and meaning that if one feeds garbage to a database then it will give garbage as a result – thereby promoting feeding relevant, sufficient and accurate information to a process to derive the best possible results.
Accordingly, our questions are designed to obtain maximum information from you, out of which the best quality of data is extracted, analysed to determine that it will indeed work and then presented as your report.
Businessmen are smart. They bring together men, material and money to create a meaningful product or service that has a market.
They know what services to avail from the market, which people to appoint, what machinery to buy, which market to establish themselves in, what product to create and how to distribute it. They know which dish in a restaurant is good, which car is good to drive, which refrigerator or washing machine will work best at home and a host of other things that rely on multitudinous factors to reach a single decision that will last for years together.
We take a bow and let this pass – for you can figure it out and take a decision based on your best judgement – you do not need to be told which project report looks better.
You are protected by a non-conformity and non-disclosure clause where although we retain your information, all working papers and a copy of the final report, we do not share it with anyone else, for whatever reason whatsoever, without first obtaining your written consent for the same.
However, the market intelligence that we have acquired during the course of this engagement and all information that is freely available and does not belong specifically to you will be used by us, wherever required, with no obligation towards you.
Although we do not usually name our clients, we retain the right to use the fact that your esteemed organisation has been our prestigious client in our marketing material to brag about our accomplishments, praying fervently that people take enough interest to notice.
One whose in-house team is busy in daily matters and will not be able to dedicate a month or so required for a special project. Where in-house teams can be deployed, we advise doing that.
The key advantage of the in-house team is that they are aware of the business philosophy of the promoters and their spending / investing psychology, so their recommendations will not surprise the implementation team when the project is being executed.
The key disadvantage may be that one loses the opportunity to study a project differently and replicates the existing business patters - which should not be a problem if it has worked so far.
One whose in-house teams are already engaged in more profit making ventures.
Take into account a CEO and / or CFO who churn out a profit of USD 1 million per year. Their cumulative earning to the company is USD 3,333 per day (assuming 300 working days) or USD 416 per hour (assuming 8 hours a day). And all that, assuming that they actually engage in decision making throughout the 300 days of 8 hours each, which is unachievable, thereby meaning that the CEO and / or CFO is earning 4 times more - or USD 1,667 per effective hour. Where the promoters have such efficient management, it makes sense to use our secondary expertise at an eighth of the cost and let their in-house CEO and CFO review the report prepared by our team.
One whose in-house team does not have the required expertise.
Not all companies have CEOs and CFOs. Some may be family managed. Some may be technocrats. Some may have realised that they made mistakes last time, which they would not like to repeat this time - as they cost money as well as time. Overall, if one believes that our expertise would save them time and money during the implementation stage - and give a better idea of what is going to follow at the conceptualisation stage - then he / she should appoint an external consultant.
Whose financer has asked for an independent feasibility report.
Some financers prefer an independent analyst works out the feasibility and presents his / her report. It does entail additional expenditure, but it eventually makes immense sense in the long run to have a second opinion at the conception stage at a cost that is a tiny fraction of the overall project cost.
We will add more examples based on the suggestions from our team, the readers of our website and our experience.
Those who possess the ability to study their own project and prepare a report for the same.
As mentioned by us often, one does not need to be an expert auditor to do it and a businessperson with effective presentation skills is adequately positioned to do it in-house.
This includes the ability of their colleagues and consultants. We recommend using the ingenuity and enthusiasm of business management students as this works out considerably economical.
Promoters who believe that project funding is the process of preparing a report that shows fantastic profitability, bribing the representative of the financer and obtain a facility that they can use in whatever manner they wish, should not approach Prudential.
There are several problems in this approach with Prudential. And the main problem, which defeats the purpose of such promoters, is that the Prudential Team first assures themselves that the project is going to be feasible and then works on making the report presentable. If the project is not feasible, Prudential will not proceed with the report preparation.
There's a difference in a perfunctorily prepared project report that is submitted for licensing purposes to most authorities - who take it as a formality and aren't interested in the actual outcomes - and that prepared for satisfying genuine funding requirements that will ultimately repay the loans.
We have a facility to prepare such reports, which as not as elaborate or costly - that may be used.
We will add more examples to this section with due experience.