Feasibility Study

What Exactly Is an Economic Feasibility Study?

An economic feasibility study is a professional assessment conducted before entering into a business venture to determine whether a business idea is financially and economically viable. The outcome is a well-documented report that presents the required investment, costs, projected revenues, and overall profitability of the project over a specified period, typically three years.

An economic feasibility study is typically required when you:

* Want to determine how much initial capital a business idea requires.
* Plan to apply for bank financing or attract investors.
* Need to obtain a license or permit to establish or expand an industrial, service, or agricultural operation.
* Want to assess the project's financial risk before making a final investment decision.

Key Components of an Economic Feasibility Study

To develop a reliable and defensible feasibility study, a comprehensive set of data and financial indicators is analyzed simultaneously and integrated to provide a well-founded assessment:

1. Initial Investment Estimate

Determining the exact amount of capital required to launch the project, including fixed costs such as land, buildings, machinery, and equipment, as well as working capital.

2. Expected Profitability

Determining the rate of return that the investor can expect from the project (typically ranging from 10% to 30%, depending on the project's scale and nature, as well as the level of business risk).

3. Corporate Income Tax Rate

Applying the applicable tax rate for the relevant economic activity to determine the net profit.

4. Value Added Tax (VAT) and Annual Inflation

Taking into account Value Added Tax (VAT), currently at 10%, and the inflation rate (typically ranging from 20% to 25%) to forecast future costs and revenues and ensure that the figures presented in the feasibility study remain reasonably aligned with the country's economic conditions.

5. Cost and Revenue Analysis

Performing the necessary calculations to determine total costs and total revenues, and comparing these two key financial metrics over a specified period.

6. Final Financial and Economic Indicators

Extracting the resulting data and establishing a sound basis for the final investment decision.

What Scale of Business Requires an Economic Feasibility Study?

Depending on the scale of investment and the complexity of the project, economic feasibility studies are prepared at three levels:

Large-Scale: Suitable for high-investment industrial and infrastructure projects, including the establishment of factories and large-scale production facilities, mining projects, solar energy projects, and similar ventures.

Medium-Scale: Suitable for growing businesses requiring moderate levels of investment.

Small-Scale: Suitable for small manufacturing units, expansion projects for light industrial workshops, emerging business ideas, service-based businesses, startups, and small businesses.

Project Implementation Requirements

1. Initial Information Gathering

Gathering initial information from you about the proposed business idea or venture.

2. Market and Cost Analysis

Market assessment, investment estimation, and evaluation of the required costs.

3. Financial Indicator Calculation

Calculation of key financial indicators by our experienced professionals.

4. Preparation of the Final Report

Preparation of the final economic feasibility study report for presentation to the prospective investor.

5. Delivery of the Feasibility Study

Delivery of the feasibility study and addressing any questions you may have regarding the final report.

In Cases Where the Project Demonstrates Strong Economic Viability and Investment Value:

1. Re-engagement and Contract Renewal with the Client
To develop the implementation process in alignment with the economic feasibility study.

2. Renewal of the Contract for Project Implementation
Based on a four-stage pilot process: implementation, feedback collection, and refinement.

3. Participation in the Required Business Investment
Subject to the suitability and potential of the business.

4. Delegation of Overall Operations to Daya Technical
For businesses aligned with industrial structures and large-scale, capital-intensive projects.