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Saturday, 29 September 2018

Importance of a Feasibility Study




       It is important to undertake a feasibility study before embarking on a project on new product development program.

This is because of the following reasons :

1. It highlights specific difficulties when properly carried out : It uncovers problems and bottlenecks. If the study is not properly carried out the problems or difficulties will manifest or become evident at the implications stage of the project and by this time it would have become too late to find an immediate solution. For example, it could be that raw materials may be out of stock and this may not have been uncovered initially.

2. A feasibility study is capable of providing detailed cost specifications : That is, how much will require to execute the project. This makes it possible to obtain financial assistance. The banks look into the study to get the conviction that the project owner is factual in his projections before they can give financial assistance. Banks look for potential and if they are non existent they will not commit their fund to the business.

3. A good feasibility study highlights incentives to the notice of the business man : They maybe tax reliefs or rebates, duty drawback ctc. Also the study will expose constraints like government regulation to apply to the ministry of external affairs for permission to recruit external or foreign labour.