A feasibility study answers one question: should this project go ahead? It examines whether there is demand, whether the project can be built and operated, whether it makes financial sense and whether it is legally possible. For investors and lenders, a well-prepared study is often the basis for funding.
The five components
1. Market feasibility
Who are the customers, how large is the demand and who are the competitors? Prices, volumes and growth assumptions are tested with data. Our market research provides this foundation.
2. Technical feasibility
Can the project be built or delivered with available technology, sites, materials and skills? This covers location, capacity, technology choice and suppliers. See our engineering and design advisory.
3. Financial feasibility
Investment cost, operating costs, revenue scenarios, cash flow, financing structure, payback period, net present value and internal rate of return.
4. Legal and regulatory feasibility
Permits, zoning, licences, environmental requirements, tax and ownership rules.
5. Operational feasibility
Organisation, staffing, processes and the management capacity to run the project.
Steps to prepare a feasibility study
- Define the project scope and objectives.
- Collect market and technical data.
- Build the financial model and scenarios.
- Review legal and regulatory requirements.
- Assess risks and sensitivity to key assumptions.
- Conclude with a clear go, no-go or redesign recommendation.
Example: a new production facility
A manufacturer considering a plant in a new country would compare sites, estimate local demand and export potential, model construction and operating costs, check incentives and permits, and test how sensitive returns are to prices and utilisation. The result might be a go decision at a smaller initial capacity with an expansion option.
Common mistakes
- Optimistic demand forecasts without market evidence
- Underestimating working capital and ramp-up time
- Ignoring regulatory timelines
- No sensitivity or downside scenario
OAD Consultancy prepares feasibility studies as part of our project development and investment advisory services. For cross-border projects, our guide to country risk analysis complements the study. Contact us to discuss your project.
Frequently asked questions
What are the main components of a feasibility study?
Market, technical, financial, legal and regulatory, and operational or organisational feasibility, followed by risks and a recommendation.
What is the difference between a feasibility study and a business plan?
A feasibility study decides whether a project should proceed. A business plan describes how a project or company will be run once the decision to proceed has been made.
Who needs a feasibility study?
Developers, investors, lenders and companies launching new facilities, products or market entries use feasibility studies to justify investment decisions.
