Techno-Economic Viability (TEV) is a risk mitigation task that provides an appraisal of the technological parameters of a project and its impact on the financial viability of a project. The report takes into account relevant data about the project’s technical feasibility and economic sustainability. On this basis, the project is recommended for selection, modification and rejection by the bank.
Sounds too technical, right?
It is a study that helps promoters of the project and bankers to take a relevant decision for financing a project. It gives an idea about the success and provides confidence that the project is technically feasible- both commercially and financially.
TEV takes different parameters into account while conducting the study, such as:
- analysis of technological risk
- market risk
- financial risk
- regulatory risk
A techno-legal economic feasibility report (TEFR) focuses on providing a brief idea of the strengths and weaknesses possessed by a business or venture and also reveals the prospects that can lead to success.
The study is conducted by experts present in independent agencies depending on the nature of the project. While mostly, financing banks have their own panel of approved agencies who undertake the study considering credit facilities, including project finance loan, composite term loan, term loan and likewise.
TEV: Purpose and Benefits
The sole purpose of this study is to provide utility to sanctioning authority to conclude whether to accept or reject the project.
There are several benefits of TEV that includes:
- It provides a checklist to confirm the functional aspects of the project and giving an assurance that the project is a success.
- It aids the management for managing project implementation and COP (coefficient of performance).
- It helps to convince bankers, partners, government to support the desired project.
- It facilitates in market analysis, risk mitigation, process, operations and financing of the project.
Let’s head down to understand the components involved in the TEV study.
Appraisal of promoters
From the banker’s point of view, assessing promoters is an essential aspect of credit appraisal as it helps the promoters to know whether to be a part of the project or not.
The study includes both personal and financial aspects of the promoter. Personal profile assessment encompasses financial support and stability, family background, stakes in other companies, the ability to arrange for finances and likewise.
Technical appraisal
It includes the latest technology adopted for the project, change in technology, suitability, project rationale, selection of latest plant and machinery, project implementation schedule, adequacy of the current production process and likewise.
Management appraisal
The management team should have relevant experience of production, marketing, human resource development, project implementation, the size of the project, profile of key personnel, job designation and their expertise in the particular field.
Industry analysis
It focuses on key parameters like products, financial growth trends, operational patterns and also covers the geographical location of the employees working on the project.
Market assessment
It encompasses the future outlook of the project by considering market size, product supply, future growth potential, competition scenario, etc.
Risk analysis
Experts identify operational risk, market risk, financial risk, resource mobilization risk, political risk and likewise. Not only this, they are well-tuned to find solutions to the identified risks.
After examining all these risks, a critical evaluation of all these parameters will give you a meaningful TEV report.
Are you searching for a professional firm providing Techno-economic viability studies?
Rakesh Narula & Co. (RNC) has a blend of proficient and highly competent technical and commercial team facilitates bankers and investors to make suitable lending or investment decisions.
Rakesh Narula & Co. 