What is an economic feasibility study?
An economic feasibility study is the process of evaluating a new project or investment by studying all aspects related to it, including technical, financial, marketing, legal, and environmental aspects.
The importance of the economic feasibility study
The importance of the economic feasibility study is that it provides investors and financiers with important information that helps them make their investment decisions, as it determines the economic feasibility of the project, helps identify potential risks, and develop a business plan for the project.
Benefits of economic feasibility study
The benefits of an economic feasibility study are as follows:
Helps determine the economic feasibility of the project:
- Through an economic feasibility study, investors and financiers can determine whether the project will achieve profits or not, by studying the expected revenues and expected costs of the project.
Helps identify potential risks:
- Through an economic feasibility study, investors and financiers can identify potential risks associated with the project, by studying market, competition, legal and environmental factors.
Helps develop a business plan for the project:
- Through the economic feasibility study, investors and financiers can develop a business plan for the project, by defining the project objectives and implementation steps.
Results of the economic feasibility study
The economic feasibility study ends with a recommendation to investors and financiers, either to implement the project or not to implement it. This recommendation is usually based on the results of the economic feasibility study. If the results of the study indicate that the project is economically feasible, the recommendation will be to implement the project. If the results of the study indicate that the project is not economically feasible, the recommendation will be not to implement the project.
Factors for the success of the feasibility study
The success of the economic feasibility study depends on several factors, the most important of which are:
- Accuracy of the information used in the study: The information used in the feasibility study must be accurate and reliable, so that the results of the study are accurate and reliable.
- Objectivity of the study: The feasibility study must be objective, so that the results are not biased.
- Comprehensive analysis: The feasibility study must include a comprehensive analysis of all aspects related to the project, including technical, financial, marketing, legal and environmental aspects.
Feasibility study steps
The economic feasibility study consists of several steps, the most important of which are:
- Determining project objectives: In this step, the project objectives are determined by studying the market and identifying customer needs.
- Market Analysis: In this step, the market is analyzed, by studying competitors and the expected demand for the product or service.
- Industry Analysis: In this step, the industry is analyzed, by studying the future trends of the industry.
- Study of technical factors: In this step, the technical factors related to the project are studied, by studying the site, facilities, and required equipment.
- Study of financial factors: In this step, the financial factors related to the project are studied, by studying the expected revenues and costs.
- Study of legal factors : In this step, the legal factors related to the project are studied, by studying the applicable legislation and regulations.
- Study of environmental factors: In this step, the environmental factors related to the project are studied, by studying the impact of the project on the environment.
Conclusion
The economic feasibility study is one of the most important steps that must be taken before implementing any new project or investment, as it provides investors and financiers with important information that helps them make their investment decisions.
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