Techno-Economic Viability (TEV) Study: Perks and Components

Unlock the insights of a TEV study with our comprehensive guide. Delve into key components like promoter rating, technical evaluation, market analysis, industry research, financial viability, and risk assessment. Elevate your understanding for informed decision-making. Read more on TEV studies at our blog.

1. TEVStudy(Techno-Economic
Viability):PerksandComponents
Thedynamicsoftoday'sbusinessenvironmenthavechangedrapidlywithincreasingrisks
anduncertainties.Therefore,itiscrucialforcompaniestooutperformtheircompetitorsby
providingvalueandefficiencytotheircustomers.Tobesuccessfulinthisfield,onemustfirst
carryoutpreciseplanningandanalysisbeforeenteringtheindustry.ATEVstudyisthebest
exampleofthistypeofanalysis.
WhatdoyoumeanbyTEVstudy?
Aproject'sTechnoEconomicViability(TEV)studyincludesevaluatingtechnicalandfinancial
informationabouttheproject,aswellasrelevantdataaboutitstechnologicalfeasibilityand
economicviability,intooneorafewguidelinesonthebasisofwhichtheprojectis
recommendedforselection,modification,orrejection.
TechnoeconomicViabilityStudy&FeasibilityReportsprovideanassessmentofaproject's
technologicalparametersandtheirimpactonthefinancialviabilityoftheproject.TEV
analysisisariskmitigationtaskperformedbybanksandfinancialinstitutionspriortomaking
lendingdecisionsandunderstandingtherisksinherentinanyfinancingorinvestmentina
projecttodeterminewhetherornottolendforsuchaproject.

2. Purpose
ThepurposeofaTechno-EconomicViability(TEV)Studyevaluationistohelplenders
determinetheacceptabilityoftheamountofriskinvolvedinaproject.
●Itconsiderstechnologicalrisk,marketrisk,regulatoryrisk,financialrisk,andsoon.
FormeaningfulTEVresearch,acriticalevaluationoftheseparametersisrequired.
●TEVtarget
●Themainobjectivesoftechnical-economicviabilityarelistedbelow.
●TheTechno-EconomicViability(TEV)studyhelpsadvocatesmakeimportant
decisions.TheTEVstudyincludestheassessmentoftechnicalfeasibilityandits
impactonfinancialviability.
●TEVresearchisusedtodeterminewhetherabusinessopportunityistechnically,
practicallyandfinanciallyfeasible.TEVanalysisprovidesarealisticassessmentof
boththepositiveandnegativeaspectsofapotentialopportunity.Awrongdecisionat
thisstagecanleadtothecollapseofthecompany.
●TheTEVreportrequiresextensiveknowledgeofbothtechnicalandfinancialaspects.
RNC'scombinationofexperiencedandhighlycompetenttechnicalandcommercial
teamenablesbankersandinvestorstomakeappropriatelending/investment
decisions.
Whyisthisimportant?
Technoeconomicvitalityplaysacrucialroleinanorganization.Whenpromotingan
organization,itisnecessarytohavein-depthknowledgeonthesubject.Belowaresome
reasonswhythisisnecessary.
●Identifythestrengthsandweaknessesofanexistingbusiness.
●Analysisofthreatsandopportunitiesinthecurrentenvironment.
●Reducethenumberofresourcesrequiredforsuccess.
●Understandtheproject'sprospects.
Banksandotherorganisations
●Banks,AssetReconstructionCompanies(ARCs),engineeringfirms,andother
institutionsrequirethisstudyforthefollowingreasons:
●Projectloanevaluation
●Projectfunding(includingtermloans)
●Revivingdistressedassets
●Improvetheleadershipabilitiestobettermanagetheteam.
●Reducecostswithoutsacrificingquality
Automatethecompany.
Theprimarygoalofthisresearchistogainathoroughunderstandingoftheproject
descriptions,accountingstatements,resourceallocations,legalrequirements,financialdata,
taxobligations,andsoon.
Advantagesofthestudy
Thisstudyisrequiredpriortotechnicaldevelopmentandprojectexecutiontodetermine
whethertheprojectisprofitableornot.

3. Evenbeforedecidingonpersonnel,timeandeffort,itisnecessarytohaveagoodideaof
​​whethertheprojectwillbesuccessful.
Increaseprojectteamfocusandefficiency.
Allowsyoutodiscoverandexploitnewopportunities.
Helpyouunderstandthehowandwhyofaprojectbeforecommittingtoit.
Taketimetooptimizeyourbusinessoptions.
Findproblemsbeforetheyoccurandhelpsolvethem.
Helpsreducerisks.
Providesteammembersandstakeholderswithvaluableinformationaboutallproject
opportunities.
ComponentsofTechnoeconomicProfitability
TheTEVstudyincludesallthenecessaryelementstomakeaninformeddecisionon
whethertoacceptaprojectasaloanorasaninvestment.
PromoterRating
Sincethepromotersmanagetheproject,thecreditworthinessofthepromoteriscrucial.TEV
researchrequirespersonalandfinancialprofilesofprojectsponsors.Inordertounderstand
thefinancialcapabilitiesandcompetenciesofprojectsponsors,apersonalprofile
assessmentisnecessary.Theseincluderesourcefulness,arecordofprevioustravel
experiences,financialstabilityandsupport,familyhistory,sharesinotherbusinesses/firms,
etc.
Chooseacapablemanagementteam.
Managementmusthavesupervisedexpertsfromvariousindustriestoensurethesuccessof
theproject.Eachteammembermusthaveextensiveexperiencein:
●Manufacturing,Marketing
●HumanResourcesDevelopment,Finance
●ProjectDelivery
●Theassignedindividualmusthavetherequiredskillsandexperienceintherelevant
disciplinedependingonthesizeoftheproject..
Technicalevaluation
Thisoneentailsextensiveresearchintothemostrecenttechnologyandresourcesneeded
fortheproject.onemustalsoinvestigatethesuitabilityandadequacyoftheproduction
processinordertoachievetheprojectedoutput,theadaptabilityofprojectlocationselection,
projectrationale,projectimplementationschedule,projectstatus,andsoon.
Marketanalysis
Itisessentialtoevaluatetheproject'sfuturegrowthandoutlook!Toassessthedemandand
supplyoftheproductsusedintheproject,onemusthaveafutureoutlookintheindustry.

4. Keepaneyeonwhethertheproductsupplycoversmarketsize,whichincludesthe
competitionscenario,consumertrends,andsoon.
Extensiveindustryresearch
Businessownersandotherindividualsconductindustryanalysestoassessthecurrent
businessenvironment.Understandingallthedifferenteconomicaspectsoftheindustryand
howtheycanbeusedtogainanedgeoverthecompetitorsisbeneficial.
CriticalComponent
ThisisacriticalcomponentintheTechno-EconomicViabilitystudy,asitisinother
businesses,whereonecomparesvariouskeyparameterssuchasoperations,products,
services,andfinancialgrowthtrendswithsimilarprojects.
Italsotakesintoaccountthegeographicallandscapeofotherindustryleadersinthesame
lineofbusiness.
Project'sfinancialviability
Thismeansthattheprojectoughttobeabletogenerateenoughcashflowtoprovidea
risk-adjustedreturnoninvestment.Theprojectneedstobeabletorepayitsobligationsand
generateadequatereturns.Thiscomponentisassessedbyexaminingtheproject'sabilityto
generateadesirableprofitusingrealisticfinancialprojections.Todeterminetheproject's
financialviability,onemustconsiderfactorssuchasratioanalysis,workingcapital
requirements,termloanrequirements,andsoon.
Sensitivityanalysis/Simulationanalysis
Inthismethod,onecanperforminfinitecalculationstodeterminethepossibleoutcomesand
probabilitiesofanyaction.Thisfinancialmodelisfrequentlyusedtoforecasttheoutcomeof
adecisionbasedonasetofvariables.Inthiscase,onecanexaminetheimpactofchanges
inkeyassumptionssuchassellingandrawmaterialpricestodeterminetheproject's
financialviability.
SWOTAssessment
SWOTisanacronymthatstandsforStrengths,Weaknesses,OpportunitiesandThreats.It
isastrategicplanningtoolthatinvolvesidentifyinginternalandexternalfactorsand
highlightingprojectobjectivestolookforfavourableandunfavourableelementstoachieve
thedesiredgoal.Thesearesomevariablesthatyouhavesomecontroloverandcan
changetoachievethedesiredresult.
FinancialStability
Itcontainscapitalandcollateralandallowslenderstoevaluatethecoverageofthe
collateral.

5. RiskAssessment
Lastbutnotleast,ariskassessmentisrequired.Itiscarriedoutbyidentifyingoperational
risk,marketrisk,financialrisk,resourcemobilisationrisk,projectexecutionrisk,regulatory
risk,andpoliticalrisk.Thesimplereasonforincludingthisstudyistomitigatetheidentified
riskanddeveloppreventivemeasurestodealwithissuesinthenearfuture.
Conclusion
TEVanalysisisanessentialcomponentofprojectmanagement,andawell-definedTEV
analysisincreasesthelikelihoodofprojectsuccess.Aproject'sTechnoEconomicViability
(TEV)studyincludesevaluatingtechnicalandfinancialinformationabouttheproject,aswell
asrelevantdataaboutitstechnologicalfeasibilityandeconomicviability,intooneorafew
criteriaonthebasisofwhichtheprojectisrecommendedforselection,modification,or
rejection.ThepurposeofaTechno-EconomicViability(TEV)Studyevaluationistohelp
lendersdeterminetheacceptabilityofthedegreeofriskinvolvedinaproject.Technology
risks,marketrisks,regulatoryrisks,financialrisks,etc.aretakenintoaccount.Foracritical
assessmentoftheseparametersisrequired.
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