In Gujarat in 2010, govt bought solar power at 2010 PPA rates of Rs 9.13 – Rs 15. And capital investment in the solar system at that time was 8 Cr – 10 Cr at that time.

Case 1, Year 2008  

2008 – Considering Rs 12 PPA, yearly earnings will be 1,68,00,000

Payback period (7,00,00,000/1,68,00,000) = 4.5 Year

Case 2, Year 2022

Considering Rs 3 PPA, Yearly earnings will be 42,00,000

Payback period ((4,00,00,000/42,00,000) = 9.5 Years

Looking at the above calculations we take investment decisions in the solar system we will not be much profitable in current times. We need to consider and analyze current data to make the decision for better investments and calculations.

Also, changes in policies in present and in future should also be considered.

Please note – the mentioned data is considered for showing calculations only.

To land upon a better decision here are

8 Steps to Conduct a Feasibility Study for your Engineering Project

1.   Conduct a Preliminary Analysis

Any engineering project needs huge investments and efforts right from planning to implementation. But what if the project goes wrong? It will be a loss of money, time, and effort. Very first to analyze is the market demand for the planned product and whether a proposed project is worth the effort. Hence at the initial stage, only the roadblocks will be identified and treated likewise. If the stage is not clear there is no point in going ahead with the further steps.

We get 12-16% returns through mutual funds and shares. If our engineering project can’t give us higher returns than mutual funds, it’s always advisable to scrap the idea.

2.   Define the scope of work

Before going ahead with the project budget and any other analysis defining the scope of work is important. This includes defining the project’s goals, tasks, phases, costs, deliverables, and deadlines. This will help in determining internal as well as external stakeholders and the workflow. Also, will clarify the next steps to be considered to fulfil the scope of the project and hence will help in budget allocations.

3.   Prepare a Projected Income Statement

Once the project idea is finalized as per the preliminary analysis. The next is to check whether the planned project is affordable. After rigorous analysis, if the budget is not there all the efforts will go into veins. Hence it is always recommended to plan and allocate the budget first and then perform further analysis. Start with what you expect the income from the project to be and then what project funding is needed to achieve that goal.

4.   Conduct a Market Survey, or Perform Market Research

The next thing to analyze is the accurate return on investment the planned project is going to achieve. If you don’t have a team to perform these calculations you will have to outsource the right firm to calculate sit for you considering the geographic influence on the market, demographics, analyzing competitors, and the value of the market. Hidden risk analysis is an important factor to look up to while calculating return on investment.

5.   Plan Business Organization and Operations

 Planning and setting up an organization and operational functions is the next factor. Checking if the project meets all the feasibility factors as mentioned in Different Types of Feasibility Study is an important factor to be analyzed. This analysis should include start-up costs, fixed investments and operating costs. To establish the project effectively a proper business organization (team) and all the standard methodologies should be in place.

6.   Prepare an Opening Day Balance Sheet

This includes an estimate of the assets and liabilities, one that should be as accurate as possible. To do this, create a list that includes items, sources, costs and available financing. Liabilities to consider are such things as leasing or purchasing land, buildings and equipment, financing for assets and accounts receivables.

7.   Review and Analyze All Data

All these steps are important, but the review and analysis are especially important to make sure that everything is as it should be and that nothing requires changing or tweaking. So, take a moment to look over your work one last time.

Reexamine your previous steps, such as the income statement, and compare it with your expenses and liabilities. Is it still realistic? This is also the time to think about risk, analyze and manage, and come up with any other plans.

8.   Make a Smart Decision

You’re now at the point to make a decision about whether the project is feasible or not. And deciding this is dependent on the results of all the previously performed steps of the feasibility analysis steps. And every goal should be smart (Smart, Measurable, Attainable, Relevant, and Time-Bound). All the steps help in deciding if the planned project is SMART. If it is smart, it will surely be profitable.