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ARTICLES

Vol. 6 Núm. 1 (2011): Abril/2011

Economic Feasibility of Projects in the Civil Construction Sector : the Case of Ceramic Tiles

DOI
https://doi.org/10.7177/sg.2011.V6N1A2
Enviado
October 19, 2010
Publicado
2011-06-01

Resumen

The objective of this article is the study of the economic feasibility of an industrial venture in the area of Civil Engineering Construction, specifically the production of ceramic tiles. Given its multiple product types and various applications in construction, this sector has shown a recent remarkable development, which leads to an increased level of investment both in quantity and quality of the products. Moreover, due to the high production levels in Brazil and its significant importance in the international scenario, the study examines the worldwide market sector, highlighting the participation of all major producers, consumers and exporters. The methodology of the work has involved research into the specialized literature and related sites, data from trade associations, technical and cost data for a particular project, and methods of economic evaluation of projects. At the concluding section, a hypothetical, but technically detailed, case study is made regarding a small ceramic tile industry in the State of São Paulo. The study has examined various scenarios of prices, and the financing has considered either equity or long-term debt, but has assumed a required rate of return of 15%. The case study arrived to several conclusions. One is that the feasibility of the project is uncertain, depending on higher market prices; another is that debt financing improves dramatically its feasibility, and, finally, accepting a lower rate of return would favor the feasibility of the project.

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