Feasibility Study

1. FEASIBILITY STUDY

2. STAGES OF FEASIBILITY STUDIES
A PREFEASIBILITY
STUDY
A FEASIBILITY
STUDY

3. DIMENSIONS OF
FEASIBILITY
STUDY
MARKET ANALYSIS
TECHNICAL ANALYSIS
FINANCIAL ANALYSIS
ECONOMIC ANALYSIS
ECOLOGICAL ANALYSIS
LEGAL AND ADMINISTRATIVE

4. MARKET ANALYSIS

5. MARKET
ANALYSIS
• Market research is the systematic gathering, recording
and analysing of data about problems relating to the
marketing of goods and services.
• Market research is the means by which those who
provide goods and services keep themselves in touch
with the needs and wants of those who buy these
goods and services.

6. MARKETING
QUESTIONS
• What is the market?
• Who are the competitors?
• Who is the target audience?
• What do customers want?
• What do competitors offer?
• What is your USP?
• What do customers think you offer them?

7. METHODS OF
MARKET
RESEARCH
• FIELD RESEARCH
• Personal interview
• Telephone
interview
• Postal surveys
• Purchase survey

8. DESK RESEARCH
• Internal Sources
• osales figures
• oaccounting records
• ocustomers’ comments and complaints
• osales representatives’ reports
• Online Research
• Search Engines
• Newspapers
• University has many useful databases online
• Printed Research
• Business Directories
• Business Statistics
• Industrial Market Research Reports

9. FINANCIAL ANALYSIS

10. FINANCIAL
ANALYSIS
• Financial analysis seeks to ascertain whether the
proposed project will be financially viable in the sense of
being able to meet the burden of servicing debt and
whether the proposed project will satisfy the return
expectations of those who provide the capital. The
aspects which have to be looked into while conducting
financial appraisal are:
• Investment outlay & cost of project.
• Means of financing
• Project profitability
• Break-even-point
• Cash flows of the project
• Investment worthwhileness judged in terms of various
criteria of merit
• Projected financial position

11. INVESTMENT OUTLAY & COST OF PROJECT
"Investment outlay" refers to
the financial resources
committed to an investment.
The “cost of project”
represents the total of all
items of outlay associated
with a project which are
supported by long-term
funds. The major cost
elements of a project are the
following:
• Land and site development
• Buildings and civil works
• Plant and machinery
Technical know-how and
engineering fees
• Fixed assets
• Preliminary and capital issue
expenses
• Margin money for working capital
Initial cash losses

12. MEANS OF
FINANCING
• Means by which a budget deficit is financed, or a surplus is used. Means of financing are not
included in the budget totals. The primary means of financing is borrowing from the public. In
general, the cumulative amount borrowed from the public (debt held by the public) will
increase if there is a deficit and decrease if there is a surplus, although other factors can affect
the amount that the government must borrow. Those factors, known as other means of
financing, include reductions (or increases) in the government's cash balances, changes in
outstanding checks, changes in accrued interest costs included in the budget but not yet
paid, and cash flows reflected in credit financing accounts.
• To meet the cost of project the following means of finance are available:
• Share capital
• Term loans
• Debenture capital
• Deferred credit
• Incentive sources
• Miscellaneous sources

13. PROJECT
PROFITABILITY
• The Project Profitability report is used to monitor
the planned and real cost related to a project.
• Project Profitability is the state or condition of a project
to describe the yielding of a financial profit or gain
from that project. It is a measure of project operational
efficiency in terms of financial benefits. As a rule, it is
calculated by the cost-income ratio.
• Estimation is the major activity that ensures project
profitability. Through estimating project parameters
(such as cost, performance and time) it is possible to
determine how the project is changed and to explore
current status of project benefits.

14. BREAK EVEN
POINT
• Definition At this point the income of the business exactly equals
its expenditure. If production is enhanced beyond this level, profit
shall accrue to the business and if it is decreased from this level,
loss shall be suffered by the business.
• The break even point is :-
• The point where the gains equal the losses.
• The point defines when an investment will generate a
positive return.
• The point where sales or revenues equal expenses.
• The point where total costs equal total revenues.
• There is no profit made or loss incurred at the break even
point.
• It is the lower limit of profit when prices are set and margins
are determined.

15. • Formula
Break even point
= (Fixed cost) / (Contribution per unit)
Where,
Contribution = Selling cost – Variable cost
Fixed Cost = Contribution - profit