What is economic feasibility assessment?

What is economic feasibility assessment?

The purpose of an economic feasibility study (EFS) is to demonstrate the net benefit of a proposed project for accepting or disbursing electronic funds/benefits, taking into consideration the benefits and costs to the agency, other state agencies, and the general public as a whole.

What are the steps for assessing economic feasibility?

To assess economic feasibility, one should:

  1. Identify costs and benefits of the proposed system.
  2. Assign values to the costs and benefits.
  3. Determine the cash flow of the project over the analysis period.
  4. Determine the project’s net present value.
  5. Determine the project’s return on investment.
  6. Calculate break-even point.

What are the tools for conducting a feasibility study?

Tools for Conducting a Feasibility Study Conduct a market survey or market research to identify the market demand and opportunity for pursuing the project or business. Write an organizational, operational, or business plan, including identifying the amount of labor needed, at what cost, and for how long.

What are the various methods for assessing project feasibility?

7 Steps to Do a Feasibility Study

  • Conduct a Preliminary Analysis.
  • Prepare a Projected Income Statement.
  • Conduct a Market Survey, or Perform Market Research.
  • Plan Business Organization and Operations.
  • Prepare an Opening Day Balance Sheet.
  • Review and Analyze All Data.
  • Make a Go/No-Go Decision.

What is economic feasibility example?

Economic Feasibility : Tesla Ltd wants to invest in a new portable solar electricity product with a life of 8 years. State Government in order to promote solar energy provides a tax-free subsidy for $1.25 million on initial capital investment. The equipment cost at the beginning of the project will be $17.5 million.

What is the importance of economic feasibility?

Importance Of Economic. Economic Feasibility is vital for the development of your projects. This analysis allows you to visualize through projections the real potential of the return on investment. In this way, it will be easy for you to make the decision whether or not to go ahead with the project.

What determines the economic feasibility of a project?

To assess economic feasibility, management has to analyze costs and benefits associated with the proposed project. The capital cost of a project affects the economic evaluation. Cost estimating is essentially an intuitive process that attempts to predict the final outcome of a future capital expenditure (Chen 1996).

What are the tools for assessing the financial viability of a project?

According to the [16] , the most common methods for assessing financial viability of a project are accounting the rate of return, payback period, net present value (NPV,) and internal rate of return (IRR).

What are the benefits of economic feasibility?

Economic feasibility allows the company to determine the cost and benefits analyses, which helps provide decision-makers with a list of potential economic benefits to the organization.

What is the important of economic feasibility?

What is the difference between viability and feasibility?

Feasibility is the possibility and ability for something to be done. Viability is that something’s ability to survive. Sustainability is executing and maintaining that something so that it is not detrimental to the economy, to the environment nor society.

What is financial viability assessment?

What is a Financial Viability Appraisal? Also known as an FAV, this is the process of assessing whether a site is financially viable, by looking at whether the value generated by a development is more than the cost of developing it. Typically, this is calculated using a Residual Land Value approach.

What is the difference between economic feasibility and financial feasibility?

While financial analysis uses market prices to check the balance of investment and the sustainability of project, economic analysis uses economic price that is converted from the market price by excluding tax, profit, subsidy, etc. to measure the legitimacy of using national resources to certain project.

What are the 6 components of a feasibility study?

If you are planning on conducting a feasibility study, you will need to include the following six elements:

  • The project scope. First, the business problem/opportunity has to be addressed clearly.
  • The current analysis.
  • The requirements.
  • The approach.
  • Evaluation.
  • Review.

What are the seven 7 steps when conducting a feasibility study?

The seven feasibility study steps

  • Preliminary analysis.
  • Defining the scope.
  • Market research.
  • Financial assessment.
  • Roadblocks and alternative solutions.
  • Reassessment.
  • Go or no-go decision.

What are the objectives of feasibility analysis?

The main objective of a feasibility study is to determine whether or not a certain plan of action is likely to produce the anticipated result—that is, whether or not it will work, and whether or not it is worth doing economically.