Evaluate the Technical Viability of Business
The dynamics of today’s business environment have changed rapidly with the increase of risks and uncertainties. With this, it becomes vital for businesses to overcome competitors by providing value and efficiency to their clients. To survive in this arena, you need to have accurate planning and conduct analysis before plunging into the industry. The best example of this analysis is the Techno Economic Viability or TEV study.
What is TEV Report?
The Techno Economic Viability (TEV) report evaluates the feasibility and financial viability of a specific project or venture. It combines technical and economic analysis to determine the project’s potential for success and profitability. The TEV report takes into account various factors such as market demand, technical requirements, operational costs, revenue projections, and financial considerations. It helps stakeholders, investors, and financial institutions assess the risks and rewards associated with the project and make informed decisions regarding its implementation or funding. The TEV report is commonly used in sectors such as infrastructure development, energy, manufacturing, and other industries where large-scale projects are involved.
Why TEV is important?
These reports are recommended by financial institution/investor to ascertain the viability of a projects. It is conducted to do diagnosis of an unsatisfactory functioning unit.
- Reveal the strengths and weaknesses of an existing business.
- Analyze the threats and opportunities in the current environment.
- Streamline all the resources required to make it a success.
- Understand the prospects of the project.
It is also required by banks, asset reconstruction companies (ARCs), engineering firms, and other institutions for the following purposes:
- Project loans appraisal.
- Project financing (that includes term loans).
- Revitalizing distress assets.
- Sharpen leadership skills to manage your team.
- Cut expenses without compromising on quality.
- Automate your business.
Components of TEV Report
A thorough TEV (Techno Economic Viability) study considers technological, market, regulatory, and financial risks. Evaluating these parameters critically is vital for a meaningful analysis.
1. Technical Feasibility Assessment: This involves evaluating factors such as the availability and suitability of land for the project, infrastructure requirements and availability, the presence of skilled manpower, and an assessment of the existing capacity.
2. Market Potential Analysis: Examining the present and future market scenario, assessing the available marketing infrastructure, conducting a demand-supply analysis, and evaluating the competition within the industry.
3. Management Capabilities Assessment: Evaluating the capabilities of the management team involved in the project.
4. SWOT Analysis: Conducting a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis to identify key internal and external factors that can impact the project’s success.
5. Financial Viability Assessment: This component entails evaluating the future cash flows and profitability of the project, analyzing financial projections, including income and costs, assessing metrics such as IRR (Internal Rate of Return), DSCR (Debt Service Coverage Ratio), DP (Depreciation), MPBF (Maximum Permissible Bank Finance), and conducting sensitivity analysis of the project.
These components collectively provide a comprehensive understanding of the project’s feasibility, market potential, financial viability, management capabilities, and overall strengths and weaknesses.
What is Lender’s Independent Engineer’s (LIE)??
The Lender’s Independent Engineer (LIE) report is a detailed evaluation conducted by an independent engineer chosen by the lender. It assesses the technical aspects and potential risks associated with a project. This report helps the lender understand the project’s feasibility, construction progress, adherence to technical standards, and overall performance. It provides valuable insights to the lender, enabling them to make informed decisions about financing and managing technical risks. Essentially, the LIE report ensures that the lender has a clear understanding of the project’s technical aspects and potential challenges before providing financial support.
The scope of the Report encompasses: –
- Assessing the project’s cost and providing comments on its reasonableness.
- Reviewing contracts awarded by the company for different works, including liquidated damages and performance guarantees, while also evaluating the reasonability of the contract prices.
- Examining the necessary approvals, clearances, consents, licenses, registrations, permits, or authorizations required from statutory or regulatory authorities or any third party for the project’s construction, operation, and maintenance.
We, at the FinLender Capital, provide a comprehensive assessment of all the risk factors such as market, technical & financial and delivers customised TEV Report format that meet the client’s requirement. These reports are prepared keeping in mind specific customer’s needs and hence contains enhanced information and analytical content.