Company Capability

Proposals must provide specific information that shows that the company is capable of completing the project with the resources on hand or that it otherwise will have available. There are five required sections:

• Managerial capability
• Technological capability and project feasibility
• Financial capability
• Cost tracking and accounting system
• Business plan

Managerial capability

This section of the proposal must show that the company possesses, or can reasonably be expected to secure, the requisite managerial capability to achieve the stated objectives of the project. The following information, at a minimum, is required:

• the pertinent experience and expertise (corporate and individual, technical and managerial) of the project management team
• for collaborations, joint ventures and partnerships, the roles and responsibilities of all the parties, the allocation and contribution of resources among the parties, and the management of the relationship
• management's ability and commitment to complete the project as planned
• key managerial capability risks and the company's mitigation strategies for same.

Technological capability and project feasibility

This section of the proposal must demonstrate, with a focus on risk, that the company possesses, or can be reasonably expected to secure, the technological capability to achieve the stated objectives of the project. In particular, the proposal should make clear that qualified personnel with relevant experience and background are assigned to the project, and that they will be conducting a systematic investigation. The following, at a minimum, is required:

• details of previous related work
• a description of the available technical resources (e.g. personnel, facilities, equipment, partners)
• information about collaborations, joint ventures or partnerships relevant to the successful completion of the project
• a description of the company's approach to managing the project and the tools required to do so (e.g. for assembling the project team, planning, budgeting, scheduling, allocating responsibility, controlling)
• an explanation of the key technological capability risks and the company's mitigation strategies for same.

The proposal must also show — again, with a focus on risk — that the project is technologically feasible, with reference to state-of-the-art technology and proposed schedules, resources and activities. The company should provide an assessment of the Technology Readiness Level of the project, if available, both at the project's beginning and completion. The proposal text should set out the following:

• the nature of the activity (e.g. new technology development, incremental technology improvement or optimization, system integration, ongoing engineering development)
• the stage of development (e.g. concept stage, bench scale, scaled prototype, test or trials, demonstration, certification)
• achievements to date with the technology, if any
• key technological challenges remaining
• overall performance targets being sought relative to current performance
• key technological feasibility risks and the company's mitigation strategies for same.

Financial capability

Financial status

This section of the proposal must include the company's audited annual financial statements for the last three years, the latest interim financial statements, and the most recent annual report or audited financial statements of the parent company or principal owner. For companies that propose repayment plans to be based on a distinguishable business unit, the financial statements of the division or branch directing the project must also be included.

When company officials anticipate that the parent firm will be providing a financial guarantee for the project, the proposal must include that firm's complete audited financial statements for each of the last three years, or since the date of business start-up, as well as the latest interim financial statements.

Financial resources

The proposal must set out a multi-year budget that shows that the company possesses, or can reasonably be expected to secure, the financial resources to complete the project and otherwise satisfy its obligations under the contribution agreement.

The budget must list all anticipated sources of funding, the timing of that funding, and key assumptions, such as the company's taking advantage of existing and likely corporate funding sources (e.g. available funds, cash from operations generated during the R&D program) and new sources (planned financing activities). The text must include sufficient detail on any of the key assumptions (e.g. with regard to revenue forecasts, unit cost, selling price and annual sales volume).

The proposal must clearly distinguish between existing or negotiated funding, and planned or potential funding. Government funding should be listed separately from other external funding. The financial statements may report funding as a net reduction in costs.

The proposal must list any financial assistance the company has received, or is likely to receive, from federal, provincial-territorial and municipal governments. The text must also describe any anticipated tax credits and other incentives related to the project, including setting out the basis for calculating the tax credits (what percentage of the project work is eligible for tax credits and how the tax credits are earned each year). Total government assistance to the project is limited to 75 percent of total assistance.

This section of the proposal must also include information about the following:

• special conditions attached to any of the above funding
• key financial risks and the company's proposed mitigation strategies for same
• annual research and development spending activities for the last three years
• sales figures for the last 10 years, when available (to facilitate the assessment of the royalty base; see Repayment for more on this).

In addition, the proposal must contain forecast statements for the entire period during which the company will be completing the research and development:

• based on the company's fiscal year
• in soft and hard copy in spreadsheet format with worksheets, pages and tables containing the supporting assumptions and calculations
• in the same format, when possible, as the historical audited statements to allow for comparison
• in the same detail as the annual audited statements and including a forecast balance sheet, income statement and statement of cash flow.

For development-phase companies that are not forecasting to be profitable by the end of the research and development phase, the proposal should extend forecasts to the first year that officials anticipate the firm will achieve profitability.

Cost tracking and accounting system

The proposal should explain how the company will track project costs and describe the accounting system the company uses.

The text should include sufficient detail to show that the company will be able to accurately track and record project costs. In particular, the proposal should set out how the company is going to record direct labour, specifically the time spent on each aspect of the project.

Business plan

The proposal must include the company's business plan. This plan should describe how the company will integrate the technology and intellectual property developed during the project into operations and successfully exploit the technology. In particular, the business plan should include the following:

• the company's strategic plan showing how the project fits into it
• a market analysis that
  • defines and describes the market
  • assesses the importance of the technology to market forces (To what need does the technology respond? What is the demand?)
  • identifies key competitors and products, and their market share
  • identifies competitive and market access issues (e.g. regulatory approvals, market positioning, the cost of competing products versus the cost of project-related products, corporate mandates)
  • identifies the share of the market the company currently has and the share of the market it expects to achieve, based on the firm's sales forecasts
  • describes the projected annual sales revenue from innovative products and processes attributed to the project
  • describes the company's strategy for how it intends to penetrate the market and increase its market share
  • describes the current state of the market life cycle for the products and services associated with the project (i.e. emerging, mature, saturated, fragmented)
  • identifies potential opportunities to apply the technology to other new and innovative products and services.
• the company's production and distribution strategy, including manufacturing timing and location, if applicable (If this involves a significant scale-up of activity, the proposal should clearly demonstrate that the company possesses the requisite financial and managerial resources to implement the strategy. The proposal should note whether there are challenges related to manufacturing facilities or marketing and distribution channels.)
• details of the nature, amount and timing of any significant additional investments that will be required to integrate the project technology into operations, and the means by which they will be financed
• key commercial risks and mitigation strategies
• any third-party data (e.g. market research reports) that support company claims (as an attachment to the proposal).