Feasibility Studies

It is very common for a company or investor to have many doubts about whether or not to make an investment. That is why the decision to bring forward a new product is not an easy decision. Fortunately, comprehensive, technical, commercial and financial experts can help you prepare Feasibility Studies.

What is a feasibility study?

Feasibility studies are the most appropriate mechanism for making decisions on investment issues.

Many times, what happens is that the investor or the administration fails to collect enough information in time. In fact, you cannot perform the analyses necessary to support a decision and the issue is delayed. It is there, where you miss the opportunity to be the first to enter the market with a good chance of success. Usually, what happens is that the competition comes out first.

The feasibility study is an instrument to guide decision-making in the evaluation of a project. In the context, it corresponds to the last phase of the pre-operational or formulation stage within the project cycle. It should be formulated on the basis of supported information that has as little uncertainty as possible. From this, depend on the chances of having a success or failure of an investment project, relying on it will be made the decision whether or not to proceed with its implementation.

Investment decision-making process

 

The feasibility study should contain at least:

  • Clear definition of the project through market study, the definition of market size, capabilities and value offered, the location of the facilities, the selection of technology and process.
  • Clear design of the business model and proper planning appropriate for each stage of the implementation project.
  • Estimation of the level of investments required and their timeline/same as operating costs and revenue calculation.
  • Full identification of funding sources and regulation of project participation commitments.
  • Definition of procurement terms and tender specifications for procurement of main and complementary civil constructions and equipment.
  • The feasibility of obtaining permits and operating licenses for the project, before the respective planning and environmental authorities.
  • The evaluation criteria defined, both financial, economic, social and environmental. This allows arguments to be made for the decision to carry out the project.

Expected results of such studies

From the feasibility study you can expect: or leave the project because it is not sufficiently feasible, convenient or timely; or improve it, developing a definitive design, taking into account the suggestions and modifications that will arise from analysts representing the alternate sources of funding, or from state planning officials at different levels, nationally, regional, local or business sectoral sectoral sector.

Accordingly, the objectives of any feasibility study can be summarized as follows:

  1. Verification of the existence of a potential market or of an unmet need.
  2. Demonstration of the technical feasibility and availability of human, material, administrative and financial resources.
  3. Corroboration of the financial, economic, social or environmental benefits of allocating resources towards the production of a good or the provision of a service.

Source: Miranda Miranda, Juan José. Project management: identification, formulation, financial-economic-social-environmental evaluation. MMEditors, 2005

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