The economic feasibility of the project is the third element of the elements of the feasibility study, as this study consists of three main elements, which are a market feasibility study, a technical feasibility study, and an economic and financial feasibility study.
What is meant by the economic table
It is a study carried out by a specialist, as this study is based on the calculation of all project costs from capital costs, operating costs and other costs, and this study can only be done after the first and second component, which is the market study and the technical study, as this study is based on the two previous studies, a study Economic feasibility is the calculation of all costs in order to determine the profitability of the project, which makes it easier for the owner of the project to make the decision to proceed with the establishment of this project or cancel it.
Elements of economic viability
Feasibility is divided into several elements and an illusion
Investment or capital costs, which are all costs spent at the beginning of the project, for example, the purchase of fixed assets, machinery, equipment, and buildings, and all licensing costs and other such costs that are only one-time.
Operating or running costs, which refer to all costs related to the production process from the purchase of raw materials, electricity and water consumption costs, if any, in addition to the salaries of project workers and other costs that are spent regularly and sometimes irregularly.
Funding sources, which is the process of beautifying the project from several sources in order to meet the needs of the project, and from sources of financing, for example, capital, loans, or project revenues.
Calculating revenues, which is based on expected sales during a specified period, in order to calculate profits and financial flow.
The importance of the economic feasibility study
They are the ones on which the plans that help in the production process financially are based, as they determine the economic and financial strength of the project and based on this it gives the project owner the choice from several alternatives available to him, and helps the project owner to avoid wasting money and project capital by using the economic feasibility study where They are used by them before starting a project and continue with it even in the production process as a reference that can be used.
Some points that must be met when studying the economic feasibility
The size of the target customers to purchase the commodity.
Determine the ratio of supply and demand for a commodity in the market.
Knowing the competing products in terms of quality and prices, as it helps the project owner to determine the quality and price of the product.
Pre-completion of the technical study because the economic study depends on it greatly.
Determine the quality and price of imported goods.
Taking into consideration currency rates in the case of export or import of raw materials.
The size and type of employment.
The importance of the feasibility study
The importance of the feasibility study is considered one of the indispensable matters when starting a project, as it is one of the matters that discuss all the details of the market details and other technical and financial and economic details of the project before starting it, until the decision is taken by the project owner to implement or cancel it. Watch here