Dr. Mohammed Haitham Salman Represents ME-Alliance at the 2024 Abu Dhabi Government Legal Affairs Forum
November 19, 2024
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ME-ALLIANCE BUSINESS INSIGHTS
A Guide to Understanding Feasibility Studies
Undertaking any business project entails significant risks. Business owners must thoroughly understand the potential outcomes of initiating or terminating such projects. One method for evaluating a project plan is a feasibility study, which addresses the fundamental question: “Is it feasible?” This study assesses whether the company possesses sufficient resources and capabilities to launch the project successfully and whether investing these resources will generate favourable returns.
Feasibility studies typically include these elements, though their composition may vary depending on the organization and industry:
1. Initial assessment: Gathering input from key stakeholders involved in the project.
2. Executive summary: Summarizing all project details, including the goods or services offered.
3. Technological assessment: Identifying necessary resources for project execution, and evaluating the costs if these resources are not readily available.
4. Staffing requirements: Identifying and detailing the personnel necessary to complete the project.
5. Timeline and schedule: Establishing clear objectives, assigning responsibilities to individuals or teams, and setting deadlines for each phase and task.
6. Market analysis: Evaluating the current market to pinpoint potential competitors.
7. Promotion strategy: Outlining the marketing strategy and selecting appropriate advertising channels.
8. Financial evaluation: Projecting costs and revenues through cash flow and income statements.
9. Feasibility study findings: Organizing conclusions into relevant sections, such as marketing and financial analysis.
Feasibility studies offer several benefits by performing various detailed tasks:
• They gather comprehensive data including resources, capacity, and projected duration.
• They document potential costs and revenues, aiding in decision-making about project launch (projected cash flows).
• They outline risks and potential challenges.
• They identify the target market and opportunities within it.
• They help narrow down project alternatives.
Feasibility studies can be tailored for any project type, regardless of its size or duration (whether long-term or short-term). They can be conducted internally by managers or outsourced to external consultants. In both cases, these studies typically encompass essential feasibility analyses: technical, focusing on required resources; financial, estimating costs and expected revenues; market, confirming differentiation and identifying competitors; and organizational, analysing the organizational structure.
It is advisable for every decision-maker to undertake a feasibility study before launching a project to mitigate potential risks and determine the most effective approach. Additionally, entrepreneurs should consider developing a contingency plan (“plan B”) in case the project is discontinued or not initiated. By integrating and reviewing diverse data obtained throughout the study process, entrepreneurs gain vital insights to make well-informed and advantageous decisions.
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