Politehnica University of Bucharest

Faculty of Engineering in Foreign Languages

Eugen Andreiadis & Andrei Iancu
Project Feasibility Study
Project Feasibility Study
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Outline.





1. Background 3
2. Project Definition 4
2.1. Project Brief 4
2.2. Objectives 4
2.3. Requirements 5
2.3.1. Company 5
2.3.2. Headquarters 5
2.3.3. Equipment 8
2.3.4. Services 11
2.3.5. Labour force 13
2.3.6. Financials 13
2.4. Analyses 15
2.4.1. Market Analysis 15
A. SWOT analysis 15
B. Promotion 16
C. Clients 16
D. Competition 17
E. Conclusions 18
2.4.2. Risk Analysis 18
A. Technical risks 19
B. Financial Risks 19
C. Legal Risks 20
D. Staff related risks 20
E. Other risks 20
2.4.3. Financial Analysis 21
A. Preliminaries 21
B. Indexes 21
3. Project Planning 22
3.1. PERT Analysis 22
3.2. Gantt Chart 23
3.3. Future Development 23
4. Conclusions 26





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1. Background.




The aim of this project is to create a commercial centre offering students and
other possible clients various paper services, such as copying and printing. The
project arisen as a direct consequence of the lack of similar copy centres in the
vicinity of two major universities. Such a situation is not new. Many locations
around the city suffer from the absence of a performance copy centre (university
campuses, financial, legal or administrative offices, a.s.o.), and such market
opportunity is addressed by this project.

The location of the centre was chosen in order to correspond to our space
requirements and renting capabilities, and also to be situated in the proximity of
the universities, in a high visibility area.

As any other projects, the constraints affecting us regard the financial, time
and quality aspects of the project. Since the time factor is of little importance, and
we are prepared to accept a somewhat lower quality (many pieces of equipment
will be purchased second hand), the major constraint was the budget, as we
decided (based on the securities we could offer and the possibility of
reimbursement) to keep it at a maximum of 10.000 euros.

The activity will be targeted towards the student clientele and accordingly
we expect a high demand for services such as copying, printing, binding and
scanning. As a consequence, the charges will be very low for these services, but
given the high workload, we assume a good profit. We also expect clients from
other social categories, for services such as digital photo scanning and printing,
identity services or text editing. For such orders the price will be higher, but still
under the market average charge.

The competition in the region is quite low and we expect no major
hindrance in attracting customers, as the services we will offer are of higher
quality and at a lower price. The productivity and the overall level of
professionalism are also emphasized.









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2. Project Definition.



2.1. Project Brief

Project title: NEXTPRINT
Keywords: copy centre, paper services, imaging services, identity services.
Overall objective: establishing a commercial centre offering copy, print and
binding services, mainly targeted towards students, along more
professional services such as photo editing and identity services.
Leaders and sponsors: Eugen Andreiadis, Andrei Iancu. Main sponsor: BERD
through BCR
Duration: Total duration: 2.5 months
Proposed start date: 1 February 2005
Required end date: 17 May 2005
Motivation: the addressing of a strong market opportunity in the lack of a
copy centre at the specified location, coupled with a keen interest in office
equipment and technology.
Deliverables: reports, payment documents.
Beneficiaries: targeted clients, NEXTPRINT company.
Strategy: keeping a very low price for the services offered and in the same
time maintaining a constant quality
Estimated cost: Initial estimated cost: 300.000.000 ROL
Monthly operation costs: 55.500.000 ROL
Social and economical impact: the centre will not have significant influence
on the environment or the local community.


2.2. Objectives

The overall objective of the project is the establishment of a commercial centre
offering copy, print, binding and other related services to a student targeted
clientele, along with more professional services such as photo editing or identity
products for other clients, including . The objective will be reached by locating the
centre in the vicinity of two universities and a student campus, in a heavy traffic
area with a high visibility, and by fulfilling some other intermediary objectives,
such as:
Keeping a very low price for student services, but at the same time
Maintaining constant quality outputs and
Maximising the equipment usage.
The end objective is the obtaining of profit, which will allow for:
Covering monthly expenses and
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Extending the equipment line and services.
All these objectives can be synthesised in an organigram as shown in Figure 1.


2.3. Requirements


2.3.1. Company

This project implies the existence of the S.C. NEXTPRINT S.R.L. firm, having as
object of activity various paper and photo services, such as copying, printing and
scanning. The directors of the firm are Eugen Andreiadis and Andrei Iancu. This
company will be further quoted as NEXTPRINT and is the legal entity through
which the activities, described in the present project, are run.


2.3.2. Headquarters

This subsection will discuss the details of the location (description, specifications,
selection, principles of selection, local conditions, infrastructure, social-economic
environment).
Considering the profile of the offered services, the location was selected
based on the proximity of two universities (Dimitrie Cantemir Christian University
and Nicolae Titulescu University). Next to the location there is also the Timpuri Noi
Figure 1. Organigram
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subway station and the intersection of four major avenues (Sincai Blvd., Calea
Vacaresti, Splaiul Independentei and Nerva Traian Blvd.), providing heavy traffic
and a high visibility.

Besides the fact that the centre is located in a residential area, an university
campus is also being built in the vicinity, which will provide additional labour
force and clientele.

The topography of the headquarters is illustrated in Fig. 2. The surface of the
centre will be of 20 square meters at a price of 10 euros/square meter monthly
rent. The total rent expense will be 200 euros/month.



Figure 2. Topography of the neighbouring area


The shops interior design style will be concentrated on functionality,
productivity and efficiency, as shown in Figure 3. The costs for this operation are
estimated at only 35.000.000 ROL, as we intend to purchase the furniture items
second hand. A detailed description of the furniture and its price is given in Table 1.



Project Feasibility Study
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Table 1. Workspace elements

Code Item Qty. Price (ROL/piece) Observations
A Chairs 2 1.500.000 For staff
B Chairs 2 1.000.000 For clients
C PC curved
workbenches
2 6.500.000 For PCs.
D Counters 2 3.000.000 Storage and equipment such
as scanner and printer.
E Bookcases 2 1.000.000 For paper storage.
F Counter 1 4.000.000 For storage with lock. The
top side is for clients: sorting.
G Curved counter 1 5.000.000 For supplies storage and
equipment such as laminator,
trimmer etc.
H Tap 1 - For staff. Already installed.


Other expenses will cover the acquisition of various necessities such as light
bulbs, cleaning items (mop, bucket etc.), small carpets etc. (estimated cost:
1.000.000 ROL).

Facilities such as sanitation (running water) and power (220V/50Hz) are also
provided.
Figure 3. Interior layout
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Social-economic environment is not important for this type of business, as
the services are quite affordable, appeal to a variety of persons and are not
discriminatory in any circumstances. The centre will not have significant influence
on the environment and on the local community.

The area has a medium to low criminality. Nonetheless, for protection and
safety of the equipment, metal blinds will be installed (estimated price: 5.000.000
ROL). The headquarters will also be protected by a police monitored alarm system.

The total cost of furnishing and other auxiliary items is approximated at
41.000.000 ROL.


2.3.3. Equipment

Given the profile of the business, the equipment will consist of copiers, printers,
PCs and other related equipment, which are described in Table 2.

Table 2. Technical Equipment

Equipment Model Technical Specifications Cost (ROL) Observations
Copier Minolta EP
8010
81 ppm, A3/A4, sorter,
duplex, large paper tray.
53.000.000 This professional copier is
intended for the heavy
duty workloads as can be
seen from the technical
specifications. Purchased
second hand.
Copier Minolta
CF900
Digital, colour, A3/A4, 8
ppm colour, 30 ppm
colour, PC interface.
60.000.000 This digital copier has
multiple roles such as
colour printing, colour
copying and scanning (A3
and A4). Purchased
second hand.
Laser
Printer
Minolta PP
1300W
A4 monochrome,
1200x1200, 16 ppm, 8 MB
memory, USB + parallel,
48 MHz processor, 15.000
pages/month, 150 page
feeder.
7.000.000 The laser printer is an
auxiliary piece of
equipment for printing
medium workloads, from
digital medium.
Inkjet
Printer
HP
PhotoSmart
7660
A4, photo, thermal inkjet,
4800x1200 dpi, 12 ppm
monochrome, 15 ppm
colour, 16 MB, PCL3, USB +
card reader (11 types),
colour display, PhotoRET
IV, 6 colours, 3000
pages/month
6.400.000 The HP PhotoSmart is
used for high quality
colour prints from digital
cameras or other digital
media (CD-ROM, memory
cards, scanned film etc.)
as part of the digital
photo service.
Film
Scanner
UMAX
PowerLook
180
CCD, 1800 dpi, 42bit, USB,
Adobe Photoshop LE
13.000.000 This device is used for
scanning 35 mm
negatives and slides, as
part of the digital photo
service.
Flatbed
scanner
UMAX
Astra 6700
CCD, A4, 2400 dpi, 48bit,
USB 2.0, OCR
8.000.000 The flatbed scanner is
used for scanning prints
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and text, as part of the
digital photo and text
editing services.
PC Best Pentium 4, 2.4 GHz, 512
DDR-RAM, 80 GB Western
Digital, CDRW Asus,
DVDROM Asus, mouse,
keyboard, graphic tablet.
25.000.000 Because of the powerful
configuration, this PC is
used for photo editing
and identity services.
PC Siemens
Scenic 600
Pentium III, 700 MHz, 512
MB, 40 GB, CDRW, mouse,
keyboard.
10.000.000 This PC is mainly used for
text editing, printing and
text and photo scanning.
Purchased second hand.
Display Sony
Trinitron
19, 1600x1200@70Hz, 0.24
dot pitch, TCO 99
2 x
4.000.000
This equipment is used in
configuration with one of
the PCs.
Binding
Machine
Dahle
75030
Capacity: 150 sheets,
paper guide, built-in
margin control.
11.500.000 Heavy duty model with
straightforward effortless
operation. Used for
bindings.
Thermal
Binding
Machine
Attalus 200 200 pages capacity, built-
in cover size guide,
cooling tray.
5.000.000 Professional model used
for thermal binding
documents with special
covers.
Laminator Attalus
Novo A3
A3 size, speed: 325
mm/min, protection
against moisture, dirt,
tear, cold lamination also
possible.
4.000.000 Hot roller system used for
protecting documents
with the aid of pouches.
Trimmer GBC 3530 Cutting length 35 cm,
capacity 3,5 mm (35
sheets), automatic clamp
and security cover.
5.000.000 Apparatus used for
straight trimming.
Roll
Trimmer
GBC 360 A4, capacity 1 mm (10
sheets).
2.000.000 Apparatus used for
various shaped trimming.
Surge
Protection
Infosec
PFS6
Master TFR
Voltage 250V, intensity
10A, power 2350W, peak
voltage 5000V, noise
filter, phone line
protection.
2 x
1.400.000
Devices used for
protecting the equipment
against power surges.
Cash
Register
Rohnson Thermal printing. 9.000.000 Used for fiscal operations.
Alarm
System
Viper 3000 Motion sensors, heat
sensors, dual power: AC
and DC. Calls up to 5
numbers.
10.000.000 Used for protection of
the location.
Stationery - Stapler, perforator,
dispenser etc.
2.000.000 Necessary office
equipment.


The projected cost for the equipment detailed in the above table is around
243.000.000 ROL. Besides this equipment, we also take into account an initial
stock of consumables, estimated to last more than a month, which are listed in
Table 3.



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Table 3. Initial stock of consumables

Consumable good Price (ROL)
Copy paper A4 (500 sheets/pack) 50 x 100.000
Copy paper A3 (500 sheets/pack) 2 x 200.000
Cardboard (various thicknesses, colours, textures) 1.000.000
Transparent sheets A4 750.000
Laminator pouches 500.000
Thick paper A4 750.000
Special paper (photo, coloured, glossy) 1.000.000
Thermal binding covers (various thicknesses, formats) 500.000
Envelopes (personalized with company id) 500.000
Other necessities (paper clips, adhesive tape, staples etc.) 600.000
Ink and toner (various types) 4.000.000

The estimated cost of the consumables totals to 15.000.000 ROL.


Stock Management

Due to the intrinsic activity in the company, the stocks are classified according the
their importance (i.e., the rate of consumption) and not according to their value.
Indeed, the less expensive items (standard copier paper) are also the most
important. Accordingly, the stock is divided into:

High consumption items (e.g., A4 copier paper)
Medium consumption items (e.g., cardboards, transparent foils, bindings
etc.)
Low consumption items (e.g., photo paper, A3 copier paper, thermal
binding etc.)

The consumption rate varies proportionally to the demand for that item, and
thus the accessibility is essential for the high consumption supplies. For example, a
large stock of copier paper will be located in the bookcases E near the copiers (see
for reference Figure 2). The bookcases are also useful for holding various
unfinished orders and other necessary items, such as cardboards, transparent
sheets, coloured paper and A3 format paper.

Near the PC workbenches, in counter D, will be stored another stock of
supplies useful for the specific activities run there (e.g., A4 paper, transparent
foils, cardboards, photo paper etc.), On the top of the curved counter G will be
placed the trimmer, binding machine and the laminator, and so the counter will
store the necessary consumables, such as cardboards, bindings, thermal binding
cases a.s.o. The major part of the supplies stock will be kept locked in counter F
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and will be available only to the executive staff. In this way we can prevent the
excessive use of supplies and maintain a necessary level of security. Other
expensive items such as ink cartridges, copier toner and drums are also kept
locked in the same counter.

The initial stock of consumables is expected to last for about one week (in
the case of the high and medium consumption supplies) and about one month for
the rest. Depending on the specific demands, the stock will be replenished when
necessary.

The supplies are to be bought directly from producers or importers (when
possible), of from major wholesalers, trying to obtain discounts for high orders.
Attention will be given to the exact specifications for each type of consumable.


2.3.4. Services

The company offers a broad range of services, meant to suit a wide variety of
necessities and needs in the domain that we operate. The services provided are
presented below:

Copying services: black and white / colour, A3 / A4, paper / cardboard /
transparent sheets / stickers / thermal transfer paper;
Printing services: black and white / colour, inkjet / laser, various media
(including CD printing), photo paper printing;
Photo services: film scanning (35 mm slide / negative), photo printing,
photo editing and repair;
Binding: plastic / metal bindings, thermal binding;
Laminating services: A3/A4;
Scanning services: text (OCR) / photo / transparencies (35 mm film and
slide);
Cartridge refill: laser / inkjet, various models;
Identity services: flyers / brochures / cards / id tags / logos / presentations /
catalogues / personalized sheets / product labels;
Text editing services: text editing / layout / translations;
Promotional offers: various discounts for large orders / important orders
are delivered in an envelope with the NEXTPRINT logo;
Additional services: CDR / CDRW burning.

A detailed account of the services offered, their charged price and the net
profit in each case is given in the table below:







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Table 4. Services

Service
class
Service Price (ROL) Net profit
(ROL)
A4 black and white 400 150
A4 colour 8.000 5.000
A3 black and white 800 350
A3 colour 16.000 10.000
A4 Cardboard + 5.000 + 1.500
Copying
A4 Transparent sheets + 15.000 + 5.000
A4 black and white / laser 1.000 750
A4 colour / laser 8.000 5.000
A3 black and white / laser 2.000 1.500
A3 colour / laser 16.000 10.000
A4 Cardboard + 3.500 + 1.500
Printing
A4 Transparent sheets + 15.000 + 5.000
Film scanning (per 1 frame) 15.000 15.000
A4 Photo scanning 10.000 10.000
A4 Photo printing photo paper 25.000 15.000
Photo
Photo editing and repair (per hour) 180.000 180.000
Plastic bindings (diam. 6 51 mm) 12.000
35.000
10.000
30.000
Binding
A4 Thermal binding 50.000 25.000
Laminating A4 pouches 10.000 5.000
A3 pouches 20.000 10.000
A4 Text scanning 8.000 8.000
A3 Text scanning 16.000 16.000
A4 Colour scanning 12.000 12.000
A3 Colour scanning 24.000 24.000
Scanning
OCR (per sheet) + 10.000 + 10.000
Identity Per hour of work 230.000 230.000
Text
editing
Per sheet 75.000 75.000
CDR/CDRW burning (per CD) 7.500 7.500 Additional
CDR burning (CD included, per CD) 20.000 9.500


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2.3.5. Labour force

The major source of labour force for the centre will be provided by the near-by
universities. Additional labour force will be available from the local residents.

The qualifications required from the employees will be mainly PC skills
(Windows, Microsoft Office, Adobe Photoshop, Adobe Illustrator, Corel Draw) and
creativity. Preferably the employee should have the know-how for copier
maintenance. As the main target as employees will be students, college degree
will not be required.

Minimal training will be required for the new employees on using the
copiers, scanners and other specific equipment (laminator, binders). Additional
training will be provided for better understanding of extended functions of
equipment and specific internal procedures.

The employee selection will be made considering the persons social traits
such as: teamwork, presence, tact.

For the beginning, besides the firm directors (2, which also work in the
premises), there will be permanently hired another employee for copier duty. In
the exams period, when we expect heavier workloads, we will temporarily employ
a second person to handle the supplementary clientele.

The predicted wages will be:
Directors: 7.000.000 ROL (each)
Employee: 5.500.000 ROL

The working hours will start at 8.00 am and end at 7.00 pm during work
days, and will start at 9.00 am and end at 3.00 pm on Saturdays. The centre will be
closed on Sundays and national holidays. In case the workload exceeds the
allocated time, the centre will work overtime until the completion of the orders.
The employees will be paid for working overtime.


2.3.6. Financials

As detailed in the sections above, the total initial costs for this project include:

- Equipment acquisition costs, estimated at 243.000.000 ROL. Includes the costs
for main equipments such as copiers, PCs, printers and scanners and also
additional equipment such as binding machine, trimmer, cash register and
alarm system.
- Initial stock of supplies, approximated at 15.000.000 ROL. The high
consumption items are estimated to last a month, while the rest of the supplies
will have a higher life time.
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- Office facilities, estimated at 41.000.000 ROL. Include furnishing costs,
purchase of other necessary items and the installing of metal blinds for
protection.

All this totals to an initial cost of 300.000.000 ROL, or the equivalent of
7.300 euros.

We analysed the option of opening a credit line of 10.000 euros, which will
cover all the initial costs and the first months costs, allowing also for the existence
of a reserve fund in case of necessity (impact of major risks, a.s.o.). The
programme chosen is founded by the European Bank for Reconstruction and
Development through the Romanian Commercial Bank and is intended specifically
to Small and Medium Enterprises. The eligibility conditions are fully met. The loan
period is of 4 years with an yearly interest rate of 8%. The bank commissions total
to 2%. A maximum grace period of 6 months is granted, depending on the type
of project.

Under these specific conditions, the monthly reimbursement adds up to
9.200.000 ROL.

The monthly costs take into account the following:

- Location rent (20 square meters at a price of 10 euros/sqm), estimated at
10.000.000 ROL.
- Stock replenishment, estimated at 7.000.000 ROL.
- Equipments spare parts, 1.000.000 ROL.
- Technical assistance, 200.000 ROL.
- Promotional expenses, 300.000 ROL.
- Electrical bill, 2.000.000 ROL.
- Mobile phone bill, 1.000.000 ROL.
- Wages, estimated at 19.500.000 ROL.
- Accounting services, 5.000.000 ROL.
- Bank loan payments of 9.200.000 ROL.

All the above costs total to a monthly expense of 55.500.000 ROL.

The budget expenses for the next two years are detailed in the table below:

Table 5. Budget Forecast

Total
(First and second year)
Estimations (ROL)
First year
Estimation
(ROL)
Second year
Estimation
(ROL)
A. Direct expenses - total 789.600.000 394.800.000 394.800.000
A1. Personnel expenses 468.000.000 234.000.000 234.000.000
A.1.1. Permanent personnel wages 468.000.000 234.000.000 234.000.000
A.1.2. Additional personnel wages 0 0 0
A.1.3. Other expenses 0 0 0
A.2.1. Equipment expenses 192.000.000 96.000.000 96.000.000
a). Equipments 24.000.000 12.000.000 12.000.000
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b). Consumables 168.000.000 84.000.000 84.000.000
A.2.2.Third-party services 129.600.000 64.800.000 64.800.000
a). Legal services 120.000.000 60.000.000 60.000.000
b). Promotion expenses 7.200.000 3.600.000 3.600.000
c). Interior design 2.000.000 1.000.000 1.000.000
e). Technical assistance 400.000 200.000 200.000
B. Indirect expenses - total 532.800.000 266.400.000 266.400.000
B.1. Rent 240.000.000 120.000.000 120.000.000
B.2. Facilities 48.000.000 24.000.000 24.000.000
B.3. Loan reimbursement 220.800.000 110.400.000 110.400.000
B.4. Phone bill 24.000.000 12.000.000 12.000.000
C. Acquisitions 299.000.000 299.000.000 0
C.1. Furniture, equipments, office
utilities
221.600.000 221.600.000 0
C.2. PC equipment and peripherals 77.400.000 77.400.000 0
TOTAL (A+B+C) 4.331.400.000 2.315.200.000 2.016.200.000



2.4. Analyses

2.4.1. Market Analysis

A. SWOT analysis

By analyzing the market of the paper and photo services in the targeted area, we
have come to the following SWOT analysis:

Strengths:
The location near two private universities, a subway station and the
intersection of four major avenues providing heavy traffic and high
visibility.
Fast delivery, high quality and low price of services, along with the personal
involvement of the staff.
Extended work hours depending on orders, ability to meet deadlines.

Weaknesses:
Because the company is small and newly created, there are insufficient
funds for a proper advertising strategy and campaign, thus the consumer
awareness is low.
The profit is variable, due to the cyclic nature of the activity; the maximum
peak is before and during the exams period.
Low budget available for development.
The requirement to reimburse a loan.

Opportunities:
Near the location of the centre, a student campus is being built, which will
drastically increase the number of clients.
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Fast growth possibility due to the traffic generated by the near-by
universities and subway station.

Threats:
Other market competitors, as described in Section D.


B. Promotion

The promotion will be limited by the initial budget only to distribution of flyers in
high traffic areas, around the universities and student campus, advertisements
and notices posted inside the student campus and the universities, on high
visibility public areas, in local newspapers and on the Internet.

The company will also be present on the Internet with a functional website.
The company logo is presented below, in Fig. 4.




Figure 4. The company logo

For large orders there will be available promotional offers, in the form of
discounts and delivery in envelopes with the NEXTPRINT identity.


C. Clients

The copy and print services are targeted towards students, and are priced below
the market minimum price. The professional services (photo editing, identity
services) are targeted towards a more demanding clientele, and have somewhat
higher prices, but still under the market average charge. Along the regular
clientele, the professional services are expected to appeal to corporate clientele
also.

Estimations of the service demand and the expected monthly profit are
represented in Table 6.

Table 6. Service demand and the profit per month

Service
class
Service Sold qty. Net profit per
item (ROL)
Net profit per
service (ROL)
A4 black and white 25.000 150 3.750.000
A4 colour 500 5.000 2.500.000
A3 black and white 300 350 105.000
A3 colour 50 10.000 500.000
Copying
A4 Cardboard 100 + 1.500 150.000
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A4 Transparent sheets 100 + 5.000 500.000
A4 black and white / laser 5.000 750 3.750.000
A4 colour / laser 500 5.000 2.500.000
A3 black and white / laser 100 1.500 150.000
A3 colour / laser 25 10.000 250.000
A4 Cardboard 250 + 1.500 375.000
Printing
A4 Transparent sheets 100 + 5.000 500.000
Film scanning (per 1 frame) 150 15.000 2.250.000
A4 Photo scanning 100 10.000 1.000.000
A4 Photo printing photo paper 300 15.000 4.500.000
Photo
Photo editing and repair (per hour) 6 180.000 1.080.000
Plastic bindings (diam. 6 51 mm) 375 10.000
30.000
7.500.000 Binding
A4 Thermal binding 50 25.000 125.000
Laminating A4 pouches 100 5.000 500.000
A3 pouches 10 10.000 100.000
A4 Text scanning 50 8.000 400.000
A3 Text scanning 5 16.000 80.000
A4 Colour scanning 50 12.000 600.000
A3 Colour scanning 5 24.000 120.000
Scanning
OCR (per sheet) 40 + 10.000 400.000
Identity Per hour of work 75 230.000 17.250.000
Text
editing
Per sheet 50 75.000 3.750.000
CDR/CDRW burning (per CD) 50 7.500 375.000 Additional
CDR burning (CD included, per CD) 50 9.500 475.000

The monthly revenue is estimated around 56.250.000 ROL, considering the
projections presented in the above table.


D. Competition

The market competition can be divided in two, according to the geographical
positioning of the respective players.

a) Market players in the vicinity of the centre:

one copy centre inside the university. Low threat, their services are
expensive.
Project Feasibility Study
18
one copy stand located inside the subway station. Low threat, it offers only
copying services at a moderate price.

b) Other similar copy centres, offering related or more complex services, located in
other areas than the immediate vicinity:

OCE: their main services revolve around plotting, they have a very well
established clientele among the students at the Architecture Institute. They
also offer printing, copying and scanning services, but at a higher price.
Copy & Print Center: this centre represents the true competition in this
market niche, as it offers quite similar services and is located centrally, in
the vicinity of the Economic Studies Academy. It has a very well established
position among the students at ESA. Medium threat, their location is too
far away from NEXTPRINTs to exert a strong influence.


E. Conclusions

Considering the low competition, the high demand of this type of service in the
area and the adequate location, NEXTPRINT shall be able to establish a fair share
of the market in a short period of time, even if lacking a more intensive
marketing campaign.


2.4.2. Risk Analysis

The risk assessment was done taking into account as many factors as possible that
could influence the project and prevent its completion and further development.
Each risk was ranked according to its probability of occurrence (on a scale of 1 to
9, where 9 stands for a high probability) and impact on the project (high, medium
and low).

High Significant effects on the project schedule and costs.
Must be monitored regularly and carefully.
Medium Less serious effect on the schedule.
Some effect on costs.
Monitored regularly.
Low Not expected to have any serious effect on the project.
Reviewed regularly for ranking and monitoring.

The risks are classified into technical, financial, legal, staff related and other
risks. A detailed analysis is presented below.






Project Feasibility Study
19
A. Technical risks

Description Ranking Consequences Strategy
The equipment
does not meet
the required
performance
and quality
standards.
Probability:
2
Impact:
High
- Test failure on run-up
- Breakdowns
- Not enough capacity
- Low utilization factor
- Overall performance
decrease
- Quality decrease
- thorough equipment control on
acquisition
- purchasing quality new and
second hand equipment
Equipment
failure
(accidentally or
as a result of
wear)
Probability:
4
Impact:
High
- partial / total cease of
activity
- schedule delays of
orders
- products with warranty (even
second hand)
- hiring of person with proper
know-how on equipment
maintenance and repair (copiers,
PCs, printers) in case of minor
defects.
- continuous monitoring of
equipment
- protection against power surges
using adequate devices
- the acquisition of equipment is
preceded by a rigorous analysis
of the market offers and benefits
- (in case of accidental or staff
negligence failure): ensuring
thorough training of staff
Destruction /
deterioration of
clients
materials
Probability:
3
Impact:
Medium
- payment of
compensation to the
client
- ensuring that the staff is trained
- the compensation of the client is
deducted from the responsible
employees wage
Depletion of
consumables
stock
Probability:
3
Impact:
Low
- total / partial
cessation of activity
- schedule delays
- efficient stock management and
monitoring
Inadequate
consumables
specifications
Probability:
1
Impact:
Medium
- poor quality outputs
- equipment damaging
- delays
- careful purchase of supplies
- running a specifications check


B. Financial Risks

Description Ranking Consequences Strategy
Impossibility of
finding financing
Probability:
2
Impact:
High
- project
compromising
- assuming a low budget,
resulting in a low credit
requirement
- exploring of all financing
possibilities
- creation of a economically
viable project, which could
attract investors
Impossibility of
bank loan
payment
Probability:
3
Impact:
High
- bankruptcy - assuming a low budget,
resulting in low payments
- efficient marketing, resulting in
profits
Project Feasibility Study
20
- finding co-financers to back the
project
Under or over -
evaluated cost
estimations
Probability:
4
Impact:
Medium
- budget over-run
- insufficient resources
- thorough cost and profit
analysis and correct estimation
- efficient cost management and
marketing


C. Legal Risks

Description Ranking Consequences Strategy
Unlicensed PC
software
Probability:
7
Impact:
High
- fines
- imprisonment
- gradual license acquiring for the
important PC software


D. Staff related risks

Description Ranking Consequences Strategy
Lack of tact and
professionalism
Probability:
3
Impact:
Low
- client loss
- damaging of
company image
- careful hiring of qualified
personnel, adapted to the
company requirements.
Insufficient
qualification,
incompetence,
lack of experience
and training
Probability:
3
Impact:
Medium
- client loss
- equipment and
materials damaging
- work related
accidents
- damaging of
company image
- careful hiring of qualified
personnel, adapted to the
company requirements.
Un-effective
teamwork
Probability:
4
Impact:
Low
- conflicts between
employees
- careful hiring of qualified
personnel, adapted to the
company requirements.
Equipment and
supplies stealing
Probability:
3
Impact:
Medium
- shortage of supplies
and equipment
- motivating wage
- various benefits and incentives
- rigorous control of supplies
- equipment protection


E. Other risks

Description Ranking Consequences Strategy
Schedule delays Probability:
6
Impact:
Medium
- clients loss
- damaging of
company image
- rearranging the workload in
order to fulfil an order
- put more effort and additional
resource into the job
- lower the scope and/or quality
of the results demanded (not
recommended)
Theft / damaging
of equipment;
headquarters
Probability:
5
Impact:
- temporary cessation
of activity
- supplementary
- securing the headquarters
(metal blinds, police monitored
alarm system)
Project Feasibility Study
21
destruction High expenses for repairs /
acquisitions
- protection of valuable
equipment and supplies
- theft insurance
Fire Probability:
3
Impact:
High
- temporary /
permanent cessation
of activity
- high expenses for
repairs / acquisitions
- respecting the safety
regulations
- presence of fire extinguishers
- fire insurance
Natural risks:
earthquakes,
floods etc.
Probability:
1
Impact:
High
- temporary /
permanent cessation
of activity
- high expenses for
repairs / acquisitions
- ignored



2.4.3. Financial Analysis

A. Preliminaries

As detailed in Section 2.3.6. the initial costs for this project are of 300.000.000
ROL, and the monthly expenses add up to 55.500.000 ROL. The monthly revenues
are of 56.250.000 ROL, as was estimated in Section 2.4.1. Paragraph C. The net
profit per month is of 750.000 ROL, and is predicted to remain at a low value for
the next 4 years, until the bank loan reimbursement is completed. A budget
forecast for the next two years is also presented in Section 2.3.6.

B. Indexes

A few financial indexes are computed below.

VNA (actualised net revenue) computed for the first two years (millions
ROL):
680
15 0 1
000 000 96
15 0 1
000 000 96 000 000 300
15 0 1
000 000 675
15 0 1
000 000 675
2 1 2 1
=

+
+
+
+

+
+
+
=
) . (
. .
) . (
. . . .
) . (
. .
) . (
. .
VNA

Interpretation: VNA > 0 so the project can be accepted.

R
S
(Long Debt to Equity) per one year:
42 0
000 000 675 000 000 300
000 000 410
.
. . . .
. .
R
S
=
+
=

MP (Profit Margin On Sales)
72 0 100
000 500 103
000 750
. *
. .
.
MP = =

Res (Retum on Equity / Net Worth)
0025 0
000 000 300
000 750
.
. .
.
s Re = =
Project Feasibility Study
22

3. Project Planning.


3.1. PERT Analysis

The tasks required for the execution of the project are as follows:

Table 7. Tasks List

ID Task Name Duration Start Finish Pred
1 Business plan definition 16 days Tue 01.02.05 Tue 22.02.05
2 Market Analysis 13 days Tue 01.02.05 Thu 17.02.05
3 Define the opportunity addressed 1 day Tue 01.02.05 Tue 01.02.05
4 Describe the market and the new business 1 day Wed 02.02.05 Wed 02.02.05 3
5 Create market analysis plan 1 day Thu 03.02.05 Thu 03.02.05 4
6 Interview owners of similar businesses 5 days Fri 04.02.05 Thu 10.02.05 5
7 Assess market size and stability 2 days Fri 11.02.05 Mon 14.02.05 6
8 Identify competition 2 days Tue 15.02.05 Wed 16.02.05 7
9 Identify target market niche 1 day Thu 17.02.05 Thu 17.02.05 8
10 Identify Needed Materials and Supplies 3 days Fri 18.02.05 Tue 22.02.05
11 Identify required equipments 1 day Fri 18.02.05 Fri 18.02.05 9
12 Identify needed consumables 1 day Mon 21.02.05 Mon 21.02.05 11
13 Estimate the equipment costs 1 day Tue 22.02.05 Tue 22.02.05 12
14 Assess the risks 1 day Tue 22.02.05 Tue 22.02.05 12
15 Business Plan Development 12 days Tue 22.02.05 Wed 09.03.05
16 Describe the objectives 1 day Tue 22.02.05 Tue 22.02.05 12
17 List assumptions 1 day Wed 23.02.05 Wed 23.02.05 16
18 Make SWOT analysis 1 day Thu 24.02.05 Thu 24.02.05 17
19 Estimate sales volume 1 day Fri 25.02.05 Fri 25.02.05 18
20 Forecast operating costs 1 day Mon 28.02.05 Mon 28.02.05 19
21 Establish pricing strategy 1 day Tue 01.03.05 Tue 01.03.05 20
22 Forecast revenue 1 day Wed 02.03.05 Wed 02.03.05 21
23 Develop startup plan 2 days Thu 03.03.05 Fri 04.03.05 22
24 Develop sales and marketing strategy 1 day Mon 07.03.05 Mon 07.03.05 23
25 Reassess the risks 2 days Tue 08.03.05 Wed 09.03.05 24
26 Business Plan Execution 63 days Fri 18.02.05 Tue 17.05.05
27 Choose a location 1 day Thu 10.03.05 Thu 10.03.05 11;25
28 Establish Business Structure 40 days Fri 18.02.05 Thu 14.04.05
29 Choose a name and identify implications 1 day Fri 18.02.05 Fri 18.02.05 9
30 Choose a Bank 5 days Fri 11.03.05 Thu 17.03.05
31 Establish accounts 4 days Fri 11.03.05 Wed 16.03.05 27;29
32 Establish line of credit 1 day Thu 17.03.05 Thu 17.03.05 31
33 Choose legal representation 1 day Thu 17.03.05 Thu 17.03.05 31
34 Solving Administrative Aspects 20 days Fri 18.03.05 Thu 14.04.05
35 Set up the accounting system 2 days Fri 18.03.05 Mon 21.03.05 33
36 Obtain the licenses and authorizations 12 days Tue 22.03.05 Wed 06.04.05 35
37 Obtain needed insurance 4 days Thu 07.04.05 Tue 12.04.05 36
38 Establish security plan 2 days Wed 13.04.05 Thu 14.04.05 37
39 Develop Marketing Program 4 days Fri 18.03.05 Wed 23.03.05
40 Establish an advertising program 2 days Fri 18.03.05 Mon 21.03.05 32
Project Feasibility Study
23
41 Develop a logo 1 day Tue 22.03.05 Tue 22.03.05 40
42 Develop promotional materials 1 day Wed 23.03.05 Wed 23.03.05 41
43 Provide Physical Facilities 15 days Fri 15.04.05 Thu 05.05.05
44 Location renting 2 days Fri 15.04.05 Mon 18.04.05 38;41
45 Provide furniture and equipment 5 days Tue 19.04.05 Mon 25.04.05 44
46 Equipment installing 1 day Tue 26.04.05 Tue 26.04.05 45
47 Select computer hardware 1 day Wed 27.04.05 Wed 27.04.05 46
48 Install computer software 1 day Thu 28.04.05 Thu 28.04.05 47
49 Testing the equipment 1 day Fri 29.04.05 Fri 29.04.05 48
50 Acquiring other utilities 3 days Mon 02.05.05 Wed 04.05.05 49
51 Move in 1 day Thu 05.05.05 Thu 05.05.05 50
52 Provide Staffing 8 days Fri 06.05.05 Tue 17.05.05
53 Interview and test candidates 5 days Fri 06.05.05 Thu 12.05.05 51
54 Hire staff 1 day Fri 13.05.05 Fri 13.05.05 53
55 Train staff 2 days Mon 16.05.05 Tue 17.05.05 54
56 Start up the business 0 days Tue 17.05.05 Tue 17.05.05 55


These tasks can be organized in a logical diagram according to their dependencies
as shown in the PERT diagram (Figure 5).


3.2. Gantt Chart

The project is due to start on the 1
st
February 2005 and its duration is estimated at
2.5 months. The expected end date is on the 17
th
May 2005 which will coincide
with the start of the exam period generating a heavy workload. The details of the
plan are presented in the Gantt Chart (Figure 6).


3.3. Future Development

The future plans and their expected consequences and effects are discussed in
Table 8.

Table 8. Future Actions

Action Effect
Purchase of another heavy duty
copier (second hand, such as a
Canon MP 6050 at a cost of
45.000.000 ROL)
Extending the centre copying capacity
Faster delivery of services
Backup copier (in case of other equipment failure
Acquisition of software licenses Minimization of legal risks
Installing an air conditioning
unit
Increase in comfort of clients and staff
Renting additional space Expanding the usable workspace
Possibility of increasing the number of massive
equipments used (copiers, laser printers)
Purchase of new equipment for
document binding and
manipulation
Extending the range of provided services
4
5
6
7
8
9
11
12
13 14 16
17
18
19
20
21
22
23
24
25
27
29
31
32 33
35
36
37
38
40
41
42
44
45
46
47
48
49
50
51
53
54
55
56
3
Figure 6. PERT Diagram 24
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Figure 7. Gantt Chart
Project Feasibility Study
26


4. Conclusions.



The aim of this project is to establish a commercial centre offering paper and
identity services to students and other more professional clients. The project is
financed by a bank loan which must be reimbursed in four years, covering all the
equipment costs and other expenses. The monthly revenues are sufficient to cover
all the expenses allowing for a small profit. The duration of the project is of 2.5
months with an expect end date of the 15
th
of May 2005. The analyses conclude
that the project is viable and that the market can accept this type of business.

Project Feasibility Study
27














































This document was prepared as a project for the Project Management Course.
Submission Date: May 2004
Contact Information: andreiadis@dap.ro; andrei.iancu@home.ro