Project

background

Market
analysis

Raw
material

Financial

Engineering

Site location

Feasibility study is an
analysis of the
viability of an idea.

All activities of the study are directed toward

helping answer should we proceed with the
proposed project idea?

 Objective & description

Market & resource location

Plant capacity & location

Implementation schedule
Economic

 Includes a description of the industry, current

& future market potential, competition, sales
projections, potential buyers, etc.
If an adequate level of demand does not exist
and you do not know how to differentiate the
product to compete with established industry
players, then the proposed venture should
not be pursued.

Possible questions to answer:

What are the possible target
markets for the product? How
large are these markets? Where
are they located? Is the market
expected to grow in the future?

 Who are the competitors? How large are these

competitors? How established are they? How do
they price their goods? How will these competitors
react to the entrance of your product?

 How will you differentiate your product from those

of the competitors? What are the competitors
strengths and weaknesses, and how would you
compare against them? How do you plan on gaining
market share?

 Market surveys , government statistical

publications, trade journals, industry reports
& internet has also opened up new routes to
obtaining information.

 Identify & describe resources needed

Assess the availability & supply
Estimate the cost

 Location should be wide geographical area

which several alternative sites can be
considered

Each project sites should be identified &

assessed in detail including environmental
impact assessment

 Selection factors:
Technical

Environmental

Social

Commercial

Financial

 What are the possible locations? What size of

facility is needed? What are the costs of the
building? Does the proposed location have
adequate access to infrastructures and services?

 Design functional & physical layout for

industrial plant
Determine corresponding investment
expenditures & operational costs
Select appropriate technology
Determine required machinery & equipment
Plan skills development

 What type of equipment and technology will the

business need to produce its product? What are the
costs involved? This includes both the initial
purchase and installation costs of the equipment as
well as the operational costs of running the
equipment.

Who are the potential

suppliers of this equipment?
Where are they located?
What sort of service and
warranties do they provide?
How long will it take to
acquire the equipment and
begin operations?

Based on its projected business volume, how much

raw product will be required? What are the quality
specifications? Will you have a sufficient membership
base that can provide the raw materials?

 Projects how much start-up capital is needed,

sources of capital, returns on investment, etc.

 What are the capital costs of

the land, plant and
equipment, and other startup costs such as legal and
accounting costs?

 Based on the estimated

demand, what are the revenue
projections? How will you
determine its pricing
arrangements?

 What are the possible sources of

financing? Who are potential
lenders? What will be their
required terms and limitations of
borrowing?
Based on the estimated
revenues and costs, what is
the projected profit(loss)?
What is the break-even
point?

 Conducting a feasibility study is a good

business practice. If you examine successful
businesses, you will find that they did not go
into a new business venture without first
thoroughly examining all of the issues and
assessing the probability of business
success.

 The feasibility study is a critical step in the

business assessment process. If properly
conducted, it may be the best investment
you ever made.

List things needed to make the business work

Identify problems and solutions
Develop marketing strategies
Serve as a solid foundation for business plan

 Feasibility study should outline in depth the

various alternatives examined and the
implications and strengths and weaknesses
of each.

 Discuss how the business can succeed. Be

honest in your assessment because investors
wont just look at your conclusions they will
also look at the data and will question your
conclusions if they are unrealistic.

 Remember, it is not the purpose of the

feasibility study or the role of the consultant
to decide whether or not to proceed with a
business idea, it is the role of the project
leaders.

 Feasibility studies contain comprehensive,

detailed information about:
business structure
products and services
market
logistics
resources

The need for various types of design estimates during the lifecycle of
product development and commercialization (Frohlich, 1999).

New Product Candidates

Feasibility

Level 1

Evaluation of Product
Opportunities

Level 2

Development Stage
Setting Development Objectives,
Preparation of Budgets

Level 3
Level 4

Market
Entry

Commercial Products

Level 5