How to do the economic feasibility study! It is one of the most important steps that must be taken, when carrying out any project, because it is the one that provides the owner of the project with all the information he needs, in order to answer many questions that will know whether this project will succeed or not?
Given that feasibility studies are expensive, especially for those who start a small new project, and in the interest of a cultural information site to provide everything that is new and useful, we present to you this article, through which we will get acquainted with how to do a complete feasibility study for any project, whether small or large Follow us.
How to make a feasibility study for any project, with steps
The feasibility study is the basis for any project that guarantees its continuity because it provides all the information about what it needs in terms of marketing, technical and financial operations, and this is done through several points, as follows
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First – the market study
The study of the market is carried out through several basic points, as follows
1- Conducting a full study on the target customers and the extent of the market’s absorption of the quantities required for either the service or the product, and what are the future expectations for an increase or decrease in the quantities on the request of the commodity or service provided by the project.
2 – Make an accurate comparison in the markets between the offered good or service, and what customers are actually consuming, and understand all the methods that competitors follow between each other.
3 – Knowing everything related to the service or product in terms of quality and style in distribution, how to market it, and what are the prices that have been set by competitors?
Also read: How to Calculate Profit and Loss for a Small Business
Second – Study the technical aspects of the project
And it is done by following certain steps which are as follows
1 – It is imperative to accurately define the project’s fixed assets, as well as to know what suits it from the site until it is established, and what will be needed for it in terms of equipment or materials for its construction.
2- Carrying out a careful study of all the raw materials that the project will need, as well as the workers and public facilities that must be available in it.
3 – Study the production process of the project, in terms of the stages of production, down to the process of storing goods, what is the production cycle, and is there a certain amount that must be produced? What is this quantity?
Third – a financial study for the project
This financial study is carried out through a number of basic points
The first point
It is where all the costs that will be needed by the project are studied, and we find that they are divided into
* Establishment costs, which are the set of costs that the project will need in its early stages, especially with regard to the fees paid in obtaining official papers and licenses, as well as consultations, which are expenses that will not be recovered after that.
* Capital costs, including the location on which the project will be located and the equipment that will produce the production, which are expenses that can be recovered if sold again.
* Operating costs, which are specific to the place in which the project is produced, which are calculated within one year of the productive projects cycle.
* Fixed costs, which are related to what will be spent for the establishment of the project, and they do not change even if the project has increased production, for example the rent of the place as well as periodic maintenance in addition to the salaries of workers.
* Variable costs which are related to the percentage that the project carries out with the production. They are variable according to the volume that is produced from the commodity. They also include the raw materials used in production, workers’ wages and bills that are paid for public utilities.
Watch also: How to Make a Successful Feasibility Study for a Project in Just 5 Steps
The second point
At this stage, several calculations are made, such as the monthly revenue and the quantity that was sold, as well as the monthly cost of operation, and also the profit that was achieved in a whole month.
And the last thing that we will present in this comprehensive article is to emphasize that, everything that we have presented is not necessarily applicable to every project, there are projects that do not require all these steps, may God bless you all
Information on the feasibility study
Types of economic feasibility studies
The topic of economic feasibility studies has received attention for its great role in achieving the optimal use and distribution of the available economic resources. There is a close relationship between economic feasibility studies and the nature of investment decisions. The more the decision is based on comprehensive, accurate, objective and scientific studies, the more successful and safe the decisions will be in achieving goals.
First: Initial feasibility studies.
Initial feasibility studies, which is a study or a preliminary report that represents the general lines of all aspects of the project or proposed projects, through which a decision can be reached either to abandon the project or move to a more detailed study. As a result of this study, the project is abandoned or the detailed study is moved.
Second: detailed feasibility studies.
Detailed feasibility studies: These are subsequent studies of the initial feasibility studies, but they are more detailed, accurate and comprehensive than they are, and it is a detailed report that includes all aspects of the proposed project, on the basis of which the higher management can make its decision, either to abandon the project permanently or move to the implementation stage. The preliminary and detailed feasibility studies are considered complementary and consecutive, and one study cannot be satisfied in order to be a substitute for the other study, meaning it is not compensated, and as a result of this study, either the project is abandoned or the implementation process begins.
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How to do a feasibility study
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