economic analysis

Producing reliable economic models & analysis to best align your R&D with market demand

We are happy to invite you to have a complimentary exploratory session on your current economic model and our best practices.

Steering R&D requires high-quality economic models and analysis.

We bring the know-how and resources to develop these models. ​

Evaluating the economic viability and sustainability of an innovation is an utterly important activity during the development of new products or services. 

Too often these aspects are not treated with the required attention by lack of time or adequate internal expertise. 

 

 

 


 

A few examples of situations where high-quality models are required

 

  • Demonstrating the economic viability of an innovation or the feasibility of a cost-reduction trajectory to secure financing or continued investment.

  • Making complex decisions related to an R&D project or an R&D portfolio: Go-NoGo decisions, choosing between several product options, etc.

  • Evaluation of an Intellectual Property and technology in view of a license or an acquisition, and calibrating earn-out-like mechanisms.

  • Manage the company stakeholders and develop influence and leadership on its sector collective roadmap by providing relevant and reliable analysis.

What is a techno-economic model?

A techno-economic analysis is a cost-benefit analysis, usually conducted in a specific methodology framework, and based on a technico-economic model, to analyze the technical and economic performance of an innovation, whether it is a process, a product or a service.

 

It can be applied to several types of scenarios and interrogations one might need to answer.

Investment Chart

What are the outcomes of a techno-economic analysis? 

Many valuable outcomes are produced by a technico-economic analysis. To name a few of them:

  • Cash flow forecasts the innovation can generate and, expected return on investment. In discounted cash flow models, a net present value (NPV) is produced.

  • Product/service unit levelized cost for a product resulting from a continuous process.

  • Unit product cost, as a function of production volume, for unitary products.

  • Option assessments, improvement analysis, scalability analysis of a technology and minimum/ideal plant size option analysis.

  • Comparisons of different technologies to produce the same final product, especially with competing technologies.

  • For mature enough innovations, models can even help analyze the influence of operation scheduling, alternative production strategies, and different raw materials options on operating expenses and other indicators.

What are the steps of a techno-economic study?

Here are the steps processed in an iterative manner 

Goal & Scope Definition

 

This includes key questions to be addressed, the context of the study, and the intended use. It usually requires a discussion on acceptable limitations and the expected audience (e.g. R&D experts, general public, funding agencies, investors, business partners, policymakers, NGOs) for the analysis.

 

Technico-economic studies are generally targeting

  • R&D questions such as the identification of significant barriers and enablers to a given performance objective. 
  • Business questions like assessing different investment opportunities.

  • Market questions like the innovation induced transformation of the value chains.

 

When the analysis includes scenarios, these are defined in interaction with the study stakeholders to ensure that they remain realistic and relevant to the intended audience.

 

Data Inventory

 

Documentation of data used in the model and study is a critical task, as reliable documentation enabling assessment, comparison, and effective communication is required.

Model Development - Calculations and Parametric Studies

Calculations have to be organized in a transparent manner. A clear separation must be established between input data, intermediate results and output criteria.

Interpretation 

Interpretation of results is naturally carried out in parallel with all phases of the analysis. Continuous verification of the quality, consistency, completeness and reliability of the data is necessary.

Usually, the interpretation is completed after the model is finalized, and it is frequently the starting point of further steps in the development of the model and the innovation.

Report and Presentation

 

Depending on the target audience of the study, a report can adopt several formats: internal reports, media briefs, scientific articles, investor presentations, etc.

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