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Module 1-Project Feasibility Study-Intro

This document provides an overview of project feasibility studies. It defines feasibility studies as analyses that determine the viability and profitability of business undertakings. Feasibility studies are systematic inquiries into all areas affecting a proposed project. They benefit prospective investors, management, proponents, financial institutions, shareholders, and government agencies by evaluating factors like markets, costs, management and financial returns. A key framework involves studying markets, technical requirements, management, financials, and socioeconomic impacts. Feasibility studies enhance sustainability, facilitate evaluation, and help secure funding while mitigating risks for new projects.

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169 views22 pages

Module 1-Project Feasibility Study-Intro

This document provides an overview of project feasibility studies. It defines feasibility studies as analyses that determine the viability and profitability of business undertakings. Feasibility studies are systematic inquiries into all areas affecting a proposed project. They benefit prospective investors, management, proponents, financial institutions, shareholders, and government agencies by evaluating factors like markets, costs, management and financial returns. A key framework involves studying markets, technical requirements, management, financials, and socioeconomic impacts. Feasibility studies enhance sustainability, facilitate evaluation, and help secure funding while mitigating risks for new projects.

Uploaded by

Joshua Barraca
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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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”….
( dictionary.com, n.d)
 “ is an analysis of the ability to complete a project successfully, taking into account the legal,
economic, technological, scheduling and other factors”….(Investopedia.com , 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


https://www.youtube.com/watch?v=NscSAwOzwbw

2. Limitations of Feasibility Study


http://smecastle.com/2016/01/22/feasibility-study-pros-cons/
End.
Sources:
Writing Project Feasibility Study by Nick L. Aduana, 2nd ed. 2021.
Youtube and smecastle.com

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