INVESTMENT PROJECT: It is made up of a determined set of material and human resources that produce goods and services and contributes to the achievement of the objectives itself.
The essential idea is that it is an investment unit that has such a magnitude and autonomy that it can itself be subject to financial analysis and eventually other types of analysis.
components-of-an-investment-project-presentationPreparation and Presentation of an Investment Project
The structure and intensity of the “Investment Project” document is prepared taking into account various factors, such as the nature (sector) and complexity of the project, requirements requested by the entity to which the project is addressed and the expected function of the document, this can be a request for credit, request for budgetary resources, justification of authorization, among others.
Preparation and presentation of investment projects, whose purpose is to request investment resources.
In this general structure of investment projects. Three levels of depth are distinguished.
Identification of the Idea: which is elaborated from the existing information, the common judgment and the PROFILE OR GREAT opinion that the experience gives. In monetary terms, it only presents global calculations of investment, costs and income.
Prefeasibility Study: the investigation is investigated in secondary and primary sources in market investigations, it details the technology that will be used, determines the total costs and economic profitability of the project and is the basis on which investors rely to be able to take decisions
Final Project: it contains all the information of the preliminary project but here the fine points are treated. All the information that is presented must not alter the decision made regarding the investment, provided that the calculations made in the preliminary draft are reliable and have been well evaluated.
COMPONENTS OF THE FEASIBILITY STUDY OF A PROJECT
1 MARKET STUDY
2 THE CONSUMER
3 THE DEMAND
- DISTRIBUTION AND TYPOLOGY OF CONSUMERS CURRENT BEHAVIOR DEMAND FRACTION THAT WILL BE SERVED BY THE PROJECT FACTORS THAT CONDITION FUTURE DEMAND
4 THE OFFER
- DISTRIBUTION AND TYPOLOGY OF BIDDERS CURRENT BEHAVIOR IMPORTS FACTORS THAT CONDITION FUTURE SUPPLY
5 THE PRODUCT
- PRODUCT IDENTIFICATION TECHNICAL SPECIFICATION DURABILITY SUBSTITUTE OR SIMILAR PRODUCT COMPLEMENTARY PRODUCTS PRODUCT PRICE
6 MARKETING
TECHNICAL STUDY
In the study of the financial variability of a project, it aims to provide information to quantify the timing of investments and the cost of pertinent operations in this area.
Technically, there may be various optional production processes, the hierarchy of which may differ depending on their degree of financial perfection. It is normally considered that the most modern procedures and technologies should be applied, a solution that may be technically optimal, but not financially so.
One of the results of this study will be to define the production function that optimizes the use of available resources in the production of the project's good or service. Here you can obtain information on capital needs, labor and material resources, both for commissioning and for the subsequent operation of the project.
In particular, the technical study must determine the factory equipment requirements for the operation and the amount of the corresponding investment. From the analysis of the characteristics and technical specifications of the machines it will be possible to determine their imposition in the plant, which in turn will allow the size of the physical space needs for its normal operation, in consideration of the rules and principles and administration of production.
If the analysis of these same antecedents will make it possible to quantify the labor needs by level of specialization and assign them a level of remuneration for the calculation of operating costs. Likewise, maintenance and repair costs must be deducted, as well as equipment replacement costs.
Plant capacity
- Factors that determine the size of the plant
They are those where the factors that determine and influence predominantly the section of the plant size are indicated and explained.
- Installed capacity
It is the one that indicates the maximum production capacity that will be achieved with the available resources. This capacity is expressed in the quantity to be produced per unit of time, that is, volume, weight, value or units of product produced per year, month, days, hour, etc. In some cases the capacity of the plant is expressed, not in terms of the quantity of product that is obtained, but as a function of the volume of raw material that is processed.
- Capacity used
The percentage of installed capacity utilization is indicated and explained, taking into account the demand, learning curve. Availability of raw materials, labor, etc.
PRODUCTION AND SALES PROGRAM
- Production program
Consider the installed capacity and the percentage of capacity utilization.
Sales program
This expresses the annual sales quantities in monetary units.
Processes and technologies
They are the existing and available technologies for production processes.
Description of the production process
All the stages that make up the production process of each of the products are described.
- Existing machinery, equipment and tools
They are machinery, transport and laboratory equipment, tools, vehicles, etc. Necessary to carry out the objectives of the project.
Description of the necessary facilities
The land requirements are described, specifying land tenure, size, value, access road, adequacy for the type of activity carried out, problems it presents, basic services (water, electricity, telephone, etc.). Description infrastructure and construction indicating characteristics, value, size and location.
Physical distribution
The physical distribution of machinery and equipment within the plant is indicated, to establish the size and location of the industrial areas dedicated to the recovery of inputs, production, auxiliary services, storage and intercommunication of the plant.
Factors determine the location
- Location of the consumer market Location of raw material sources Availability and characteristics of the workforce Adequate transportation and communication facilities Availability and cost of electricity and fuel Location of manufacturing industry legal, fiscal or policy provisions Availability of public services, water, telephone, roads, infrastructure, waste disposal.
FINANCIAL STUDY
The objectives of this stage are to order and systematize the monetary information provided by the previous stages, to prepare the analytical tables and additional information for the evaluation of the project, and to evaluate previous information to determine its profitability.
The systematization of financial information consists of identifying and ordering all the items of investments, costs and income that can be deducted from previous studies.
At this stage, all those elements that, being necessary for the evaluation, must be provided by the financial study itself must be defined.
It begins with the determination of the total costs and the initial investment, based on engineering studies, since both the total costs and the initial investment depend on the selected technology, continues with the determination of the depreciation and amortization of all the initial investment.
Another of its important points is the calculation of working capital, which although it is also part of the initial investment, is not subject to depreciation and amortization, given its liquid nature. Within the financial study you can find:
- TOTAL CAPITAL NEEDS: They are the needs of monetary resources necessary for the development and start-up of the project, comprising tangible and intangible fixed assets and working capital. TOTAL ASSETS REQUIREMENT: This item indicates the destination that will be given TANGIBLE AND INTANGIBLE FIXED ASSETS: All tangible and intangible assets to be used in the project are broken down in detail. WORKING CAPITAL: It is the one that will be used in the project in the time estimated by the mentioned project FINANCING MODALITY: It indicates the investment modality, the promoter's own contribution and the requested credit. FINANCING SOURCES: The project indicates if the financing is due to indebtedness with any financial entity and the current situation of the same,In the same way, the financial entity to which the current loan will be requested is indicated. CREDIT CONDITIONS: Indicates the amount of the credit, interest rate, amortization period, period of deferred interest. DEBT AMORTIZATION: Present the credit amortization table. ANNUAL INVESTMENT DURING THE LIFE OF THE PROJECT: Reflect in a table the investments necessary during the useful life of the project. DEPRECIATION AND AMORTIZATION OF THE INVESTMENT: Explain the method used for the depreciation of tangible fixed assets and the method for the amortization of intangible fixed assets.COST STRUCTURE WITH FINANCING: Indicate and carry out a descriptive analysis of the cost structure table. CASH FLOW WITH FINANCING: Carry out a descriptive analysis of the results of cash flow,throughout the useful life of the project.PAYMENT CAPACITY: Carry out a descriptive analysis on the source and use of project resources, indicating the availability of annual staff. PROJECT EVALUATION INDICES: Conceptually define the financial indices and carry out a brief descriptive analysis of their results for the project.: TASA
INTERNAL RETURN; NET PRESENT VALUE; BREAKEVEN; UNIT COSTS.
- LEGAL ASPECTS: Consider the current national and local legal regulations related to your project, company registration, specify the subscribed and paid share capital, names and identity cards of the partners, required permits, guarantees to present. ENVIRONMENTAL ASPECTS: Explain the incidence or impact positive or negative of the development of the project in the environment.
CONCLUSIONS:
The investment project is a system that can be defined as a set of resources arranged in a coordinated manner until one or more objectives are reached that, at least in part, have an economic nature. This system can be reasonably analyzed and evaluated as an independent unit.
The structure for preparing and presenting investment projects begins with an idea. Each of the following stages is a deepening of the initial idea.
The last part of the project is the crystallization of the idea with the physical installation of the plant, the production of the good or service and finally the satisfaction of human or social need, which was what originally gave rise to the idea and to the project, seeking to systematically collect, create and analyze a set of antecedents that allow judging to quantify the advantages and disadvantages of allocating resources to a given initiative.
In the study of the financial variability of a project, it aims to provide information to quantify the timing of investments and the cost of pertinent operations in this area.
Technically, there may be various optional production processes, the hierarchy of which may differ depending on their degree of financial perfection. It is normally considered that the most modern procedures and technologies should be applied, a solution that may be technically optimal, but not financially so.
One of the results of this study will be to define the production function that optimizes the use of available resources in the production of the project's good or service. Here you can obtain information on capital needs, labor and material resources, both for commissioning and for the subsequent operation of the project.
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