Project Feasibility
Study
Prepared by: Prof. Cypress Ann
Venus S. Macapagal
Objectives:
Able to define what is a project feasibility study
Able to identify the nature of feasibility
Able to discuss the qualities of FS
Able to understand the benefits of the feasibility
Able to classify FS according to different
categories
Able to identify parties requiring a feasibility
study
Able to discuss the project feasibility
framework
Definitions of
Feasibility
Study:
Define as:
“A systematic investigation that ascertains whether a business undertaking is viable and if so, the
degree of its profitability”…Cabrera (2000)
“An analysis or research into the practicality of a proposed plan or method, based on factors like
a marketplace, competition, available technology, manpower, and financial resources”….
( [Link], n.d)
“ is an analysis of the ability to complete a project successfully, taking into account the legal,
economic, technological, scheduling and other factors”….([Link] , n.d.)
“ a systematic inquiry on a proposed business is an activity that is used to determine its viability
in all areas directed towards the measurement of a profitability level.
Nature of Feasibility
Systematic Inquiry
Proposed Business Activity
Viability In All Areas
Measurement of Profitability
Level
FS Description:
a. Serves as the framework for how the business project can easily be performed
b. Highlights the thinking process
c. Requirements for plant expansion, additional product lines, or new business opportunities
d. Business without FS is more likely to fail
e. Embraces key areas in disciplines
f. Undertaken by profit-oriented organizations
g. Serves as a medium in conveying valuable information to investors
h. Involves cost-benefits for investors
i. Forecast relies heavily on the documentation of historical data
QUALITIES OF:
FS Must Be:
Comprehensive Objective Simple Reliable
Benefits of
Feasibility Study
Enhance the sustainability of a particular business endeavor or
undertaken
Easily facilitate the evaluation of a project’s success in all areas covered
by the study
Seek the infusion of additional fresh working capital from a financial
institution
Benefits are: Determine the recovery period of capital investment or the expected
return on investment
Serve as a measurement instrument in evaluating actual project results
Mitigate, if not totally avoid, the expected business difficulty that may
be experienced during the actual implementation of the project
Meet and satisfy the requirements set by the investors of a proposed
business project
CLASSIFICATION
S OF :
As to the amount of investment
FS is only As to the status of the project
prepared for
business As to the industry classification
enterprises
As to nature of management
only.
As to the liability of the investors
Parties requiring
Feasibility
Parties:
Prospective
Management Proponents
Investors
Financial Government
Shareholders
Institutions Agencies
PROSPECTIVE INVESTORS MANAGEMENT
An existing project wants to determine:
Wants to conduct FS to determine the 1. The viability of the proposed expansion,
ff: such as the opening of a new manufacturing
plant, new branch, or a new product line
1. If the profitability of a business can be
sustained during the entire life 2. The appropriate selling price of an existing
business that the organization is planning to
2. The amount of funds to be committed dispose of
3. The rate of return on invested capital 3. The appropriate price of a particular
business that the company plans to buy
4. The gap between the expected demand and
the estimated supply for a new product line
that the business plans to introduce
PROPONENTS FINANCIAL INSTITUTIONS
Promoters conduct to determine the ff: Lending institutions or banks interest
1. Test the viability of a new project for the ff:
through the applications of the appropriate 1. Determine the capacity of proposed
projection tools projects to settle their financial
2. Answer the queries of other interested obligations before they extend the
parties necessary credit
3. Identify possible ways to improve project 2. Define the terms and conditions for
specifications, particularly through a market extended credit, particularly the interest
study rate, repayment period, or collaterals
used to secure the amount borrowed
4. Use the study as an instrument to attract
prospective investors
SHAREHOLDERS GOVERNMENT AGENCIES
Shareholders need to accomplish the ff: Keen to evaluate to determine the ff:
1. Have a basis for deciding on the sale 1. Whether the project has complied with
of the existing business or the the minimum requirements
purchase of a new one. 2. Whether the project needs to be
2. Decide whether or not to commit supported in terms of providing
additional fresh capital to a proposed incentives or grants
new project 3. Whether the project contributes to the
3. Determine the expected return on socio-economic program promoted by
their investment in a new project the government
Project
Feasibility
Framework
Major aspect of FS on the sequential flow of
data:
1. Market Study
2. Technical Study
3. Management Study
4. Financial Study
5. Socio-economic Study
Self learning thru reading and watching:
1. For the usefulness of Feasibility Study
[Link]
2. Limitations of Feasibility Study
[Link]
End.
Sources:
Writing Project Feasibility Study by Nick L. Aduana, 2nd ed. 2021.
Youtube and [Link]
