Sample (A-4)
General Framework for Feasibility Studies
Submitted to the Authority for the purpose of establishing companies
First: Identify data sources which formed the basis of the study:
- Field Sources: such as interviews, meetings, seminars and workshops with
prospective clients and all parties concerned with the study, government officials,
chambers of commerce, etc.
- Office Sources: consist of data and statistics published in bulletins issued by
government authorities and agencies, in addition to scientific researches.
Second: Executive summary of the study:
- This part includes Project Feasibility Summary and its indicators’ results.
Third: Summary of global regional and local economic conditions with an impact on
project feasibility.
Fourth: : General Overview of the Project
- Project idea and its importance (determine its objectives, legal aspect, vision and
tasks).
- Reason for selecting the project.
- Clarify project appropriateness for the sector’s national strategy and the long-term
development programme.
- Short note on partners and their expertise.
- Roles of concerned partners.
- Table of contributions in the capital.
- Any other general information about the project.
Fifth : Essential Parts of Feasibility Studies
- Marketing feasibility study.
- Technical feasibility study.
- Administrative and organisational feasibility study.
- Social feasibility study.
- Environmental feasibility study.
- Financial and economic feasibility study.
- Project feasibility indicators.
- Analysis of project sensitivity.
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Below are details of the basic components recommended to be available in every part of
the feasibility study:
1.
Essential components that must exist in the marketing feasibility study:
Market description/Describe extent of need of products/Project services.
- Identify market structure, its size and characteristics, and the organisational
procedures to deal with.
- Current and prospective competitors, magnitude of competition, competitors’
shares in the market, their competitive position, and characteristics of each one of
them.
- Study factors that determine the supply and demand of products/services.
rendered by the project.
- Assess current and future demand situation and its trends.
- Assess of current and future supply situation and its trends.
- Determine current gap between supply and demand.
- Estimate project’s share in the market in light of demand and supply, and project
conditions before its competitors.
- Prevailing and projected prices.
- Identify customers views, tastes and preferences vis-à-vis the product or the
service to be rendered by the project, and appropriate forms and sizes of the
product. Such information can be obtained by interviewing randomly selected
consumers.
- Data on consumers of the product or the service to be rendered by the project –
main consumer categories of project end result (gender, number, average income)
- Marketing and sales plan, marketing policy to be followed.
- Competitive advantages of the project.
- Sales estimates/future revenues.
2.
Essential components that must exist in the technical feasibility study:
The technical study of any project should include all or some of the following
components, depending on each project's:
- State the basis on which the project site was selected.
- State the basis of determining the size of the project: determine size of production,
normal and maximum production capacities, and expected future expansions.
- Specify time table for project execution.
- Internal project planning: Analyze project site, determine the various parts of the
project, and determine the location of buildings and other constructions specific
for each part of the project in light of the total project area. Determine areas and
location of machinery, equipment, stores, production wards, management offices,
and storage system for the input or the product.
- Determine production method and appropriate technological means.
- Identify project needs in terms of capital assets (machinery and equipment/
hardware/ furniture/ transportation/ etc.).
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Describe the production/service processes, and determine areas needed and
branches to present the products or the services.
Determine availability of necessary production factors in terms of extent of their
continuous availability and quality (raw materials/ assets/ machinery/equipment
and tools/ technology).
Assess annual project need of raw materials and supplies, energy and other
different production factors and their cost; must be taken into account : the quality
of required raw materials and their specifications, accessibility and proximity to
project site, import conditions and continued future import, determine quantities
needed for a full operational cycle, determine raw materials prices and estimate
the cost of each one to determine total cost of raw materials and fuel; must also be
taken into account : estimated raw material reserves that need to be stored, cost of
raw material transportation to project site, types of dynamic energy needed for the
project (electricity, gasoline, diesel), total size of energy need and prices that can
be obtained, and water sources, prices and costs.
Assess the annual operating cost of the project during the period of financial
forecasts.
3.
Essential components that must
organisational feasibility study:
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Assess project needs in terms of manpower quality (direct and indirect labour,
supervisory and administrative labour), their efficiency, job levels, and wages
estimates.
The company’s organisational chart and managerial chart should clarify the
responsibilities exercised by managers and employees.
Description of the systems and internal and organisational procedures for running
the business, and the project’s operating systems.
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exist in
the administrative
and
4. Essential components that must exist in the social feasibility study:
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Project impact on creating news job opportunities, amount of jobs required for the
project, employment rate of UAE and GCC nationals in the project.
Experience and training courses planned to improve the project’s national workers
skills.
Project impact on providing a national product and reduce imports.
Project impact on attracting new and sophisticated technology.
Project impact on developing other national projects (integration of products and
services).
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5. Essential components that must exist in the environmental feasibility study:
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Determine the positive or negative impact of the project on the environment.
Identify environmental issues that might arise from project and assess its actual
cost.
Propose mechanisms for reducing environmental damages that might arise from
the project implementation.
6. Essential components that must exist in the financial feasibility study:
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7.
State the extent of investments needed and the basis of such estimation.
State the proposed financing structure of the project, to include internal funding
(owners’ funds) and external funding (funds-in-trust facilities, internal and
external loans).
State the payment schedule for reimbursing the investment charges.
State the proposed payment schedule for reimbursing the money.
State the proposed payment schedule for obtaining loans.
Sate the proposed payment schedule for reimbursing the loans.
State the list of the funding sources and their uses.
State the working capital of the project.
State the pre-operating costs, including: cost of conducting the economic
feasibility studies, cost of obtaining the license and registration of the project,
legal advice sought during project establishment phase, advertising cost, wages
and salaries, training cost, and any other cost during the project establishment
phase).
State a summary of potential problems the project might face and types of risks
that might result from the project.
Prepare lists of financial estimates for the financial forecasts period (five years at
least), and in accordance with the project’s nature. These lists would include :
o Income estimates
o Budgetary estimates
o Cash-flow estimates
For preparing the financial and economic project estimates:

(A) Prepare the financial indicators of the project feasibility which
includes:
Criteria for measuring the non-deducted profitability:
- Estimate the net profit expected from the project.
- Pay-back period (capital/investment costs).
- Average rate of return on investment (capital/investment costs).
- Break-even analysis.
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Criteria for measuring the deducted profitability:
- Net present value.
- Directory of profitable returns to deductable revenues.
- Internal return rate (for the project/for the property rights).
(B) Analyze project sensitivity:
- Measure project sensitivity to increase investment costs to a point
higher than what was estimated in the financial forecast.
- Measure project sensitivity to increase annual operating cost to a point
higher than what was estimated in the financial forecast.
- Measure project sensitivity of delay in the implementation period
different that what was estimated in the technical study.
- Measure project sensitivity due to sales price lesser than what was
estimated in the marketing study.
- Measure project sensitivity due to productivity lower than what was
estimated in the marketing and technical studies.
- A combination of some of the previous measurements.
(C) Analyze the elements of strength and weakness, opportunities and
challenges (SWOT Analysis)
Attachments:
₋ Statement of the in-kind share (if any), its amount, and method of evaluating
tangible fixed assets and intangible assets.
₋ Any documents and copies of contracts related to the study.
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