Technical Analysis

Technical Analysis
Technical analysis means to find out adequacy of the proposed plant and
equipment to prescribed norms- following points to be considered-
1. Availability of Land and site.
2.Availability of Water Power
3.Transport
4.Communication facilities
5.Availability of servicing facilities like machine shop, electric repair shop etc.
6.Coping with anti pollution law
7.Availability of work force
8.Availability of required raw material as per quantity and quality

Aspects of Technical Analysis
1.Material Inputs and Utilities

2.Manufacturing Process/Technology
3.Product Mix
4.Plant Capacity
5.Location and Site
6.Machineries and Equipments
7.Structures and civil works
8.Project charts and layouts
Analysis of technical and engineering aspects is done
continually when a project is being examined and formulated
Materials
Materialand inputsand Utilities
Inputs
• Defining the materials and inputs required
• Specifying their properties and setting up their supply programme.
Types of Materials & Inputs

Processed Auxiliary
industrial materials and Utilities
Raw materials
materials and factory
components supplies and
Raw Materials:
Raw materials (processed and /or semi processed) may be

classified into four types-
Agricultural Mineral
products products
Livestock
Marine
and forest
products
products
• Processed industrial materials and components-
Semi-
Manufactured Small
Base metals processed
parts/components Components
materials
Technically following parameters are kept in mind with related to input materials
• Properties
• Total Requirement
• Availability from Domestic Source
• Availability from Foreign Sources
• Dependency on Supplies Past Trend in Prices
• Likely Future Behavior of Prices

Auxiliary materials and factory supplies-
In addition to the basic raw materials and processed industrial materials and
components, a manufacturing project requires various auxiliary materials and factory
supplies like-
• Chemicals
• Additives
• Packaging materials
• Paints
• Varnishes/Oils/grease
• Cleaning materials
The requirements of such auxiliary materials and supplies should be taken into account
in the feasibility study.
Utilities
A broad assessment of utilizes (power, water, steam, fuel,

etc.) should be made at the time of input study. Since the
successful operation of a project critically depends on
adequate availability of utilities, the following questions
should be raised while conducting the inputs study.
• What quantities are required?

• What are the sources of supply?
• What would be the potential availability?
• What are the shortages/bottlenecks?
• What measures may be taken to augment supplies?
Manufacturing Process/Technology
For manufacturing a product/service often two or more alternative technologies are
available.
For example:
• Steel can be made either by the Bessemer process or the open hearth process.
• Cement can be made either by the dry process or the wet process.
• Soda can be made by the electrolysis method or the chemical method.
• Paper, using bagasse as the raw material, can be manufactured by the kraft
process or the soda process or the Simon Cusi process.
Choice of Technology
The choice of technology is influenced by variety of considerations:
1. Plant Capacity: Often there are close relationship between plant

capacity and production technology. Certain product technology
sometimes can meet the plant capacity.
2. Principal Inputs: In some cases, raw materials available also

influences the technology chosen. Quality of limestones determines the
process for cement manufacturing.
3. Investment Outlay and Production Cost: There can be an impact of

technology on investment options and the overall production cost. It needs
to be assessed carefully.
Choice of Technology
5. Product Mix: The technology chosen must be judged in terms of
the total product-mix generated by it, including saleable by-products.
6. Latest Developments: The Technology adopted must be based

on latest developments
7. Ease of Absorption: The ease with which a particular technology

can be absorbed also influences the choice of technology.
Sometimes there is a scarcity of trained personnel when high level
technology is used.
4. Use by Other Units: Technology adopted should be proven by

successful use by other units, preferably in India.
Product Mix
Product Mix is concerned with:
• Product mix decision
• Market Requirements
• Flexibility in production
• Quality of products
Plant Capacity
Plant Capacity is concerned with:
• Feasible normal production capacity.
• Nominal maximum production capacity.
Location and sites
Location – broad area like a city, an industrial zone or a coastal area
Site- a specific piece of land where the project will be set up
The choice of location is influenced by a variety of considerations:

• Proximity to raw materials and markets
• Availability of infrastructure
• Government Policies
• Other factors
Machinery and Equipments
The requirement of machinery and equipment is dependent on
production technology and plant capacity and type of project.
Following procedure is followed to choose the type of machinery:
• Estimate the likely levels of production over time.

• Define the various machining and other operations.
• Calculate the machine hours required for each type of operation.
• Select machinery and equipment required for each function.
In addition to the machinery and equipment, a list should be prepared of spare

parts and tools required.
This may be divided into:
• Spare parts and tools to be purchased with original equipment
• Spare parts and tools required for operational wear and tear
Structures and Civil Works
Structures and civil works may be divided

into three categories:
• Site preparation and development
• Buildings and structures
• Outdoor works
Project Charts and Layouts
• Once data is available on the principal dimension of the

project- market size, plant capacity, required technology,
equipment and civil works, conditions obtaining at plant
site, and supply of inputs to the project- project charts and
layouts may be prepared.
• These define the scope of the project and provide the

basis for detailed project engineering and estimation of
investment and production costs.
THANK YOU
BY- Rishika Bajpai

Nishtha Bajpai
3rd Semester
Finance and Control

Technical Analysis

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Technical Analysis

2.Availability of Water Power

6.Coping with anti pollution law

7.Availability of work force

8.Availability of required raw material as per quantity and quality

1.Material Inputs and Utilities

• Specifying their properties and setting up their supply programme.

Types of Materials & Inputs

Raw materials (processed and /or semi processed) may be

• Availability from Domestic Source

• Availability from Foreign Sources

• Dependency on Supplies Past Trend in Prices

• Likely Future Behavior of Prices

A broad assessment of utilizes (power, water, steam, fuel,

• What quantities are required?

• Soda can be made by the electrolysis method or the chemical method.

1. Plant Capacity: Often there are close relationship between plant

2. Principal Inputs: In some cases, raw materials available also

3. Investment Outlay and Production Cost: There can be an impact of

6. Latest Developments: The Technology adopted must be based

7. Ease of Absorption: The ease with which a particular technology

4. Use by Other Units: Technology adopted should be proven by

Location – broad area like a city, an industrial zone or a coastal area

Site- a specific piece of land where the project will be set up

The choice of location is influenced by a variety of considerations:

Following procedure is followed to choose the type of machinery:

• Estimate the likely levels of production over time.

In addition to the machinery and equipment, a list should be prepared of spare

• Spare parts and tools to be purchased with original equipment

Structures and civil works may be divided

• Site preparation and development

• Buildings and structures

• Once data is available on the principal dimension of the

• These define the scope of the project and provide the

BY- Rishika Bajpai

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