Feasibility studies of Project

Before making a final decision to take up a project, the technical, economic, commercial and
financial feasibility of the project shall be studies and ascertained in concrete terms. Feasibility
study is also known as techno-economic feasibility study
Feasibility study is a process of detailed examination of several aspects of the project before it
is recommended. The institution that is going to fund the project has to satisfy itself that the
investment on the proposed project will generate sufficient returns and that loan amount
disbursed for the implementation of the project will be recovered with interest in reasonable
period of time based on which a decision will be taken as to whether to fund the project or not.
Hence, to conclude on the viability of the project, there necessity of feasibility studies from
various angles.
Technical feasibility should broadly involve a critical study of the following aspects:

Selection of process/technology

Scale of operations

Quality and quantity of availability of raw material

Technical know how

Collaboration agreements

Product mix

Selection & procurement of Plant and Machinery

Plant layout

Location of the project

Product scheduling and implementation

Commercial feasibility:

Demand and supply positions for the product

Distribution channels

Pricing of product

Government policies and incentives

Socio-economic Feasibility:

There are projects which may not offer attractive returns as far as commercial
profitability is concerned but still such projects are undertaken since they have social
implications

Projects like road, railway, irrigation projects etc play a significant role in socio-economic
considerations than mere commercial profitability

The socio-economic feasibility takes into account the real cost of direct costs and real
benefit of direct benefits as against the direct costs and direct benefits taken for
commercial profitability at market prices

The socio- economic analysis takes into account the indirect costs and indirect benefits
to the nation

Objectives of Socio-economic feasibility

Contribution of the project to the Gross Domestic Product (GDP) of the economy
Contribution of the project in improving the socio-economic conditions of the poorer
sections of society and to reduce the regional imbalances in growth and development
Justification of use of scarce resources of the economy by the project
Contribution of the project in improving the environmental conditions

Prepared By: Dr. Sarbesh Mishra

Sr. Associate Professor, Finance Area
National Institute of Construction Management & Research (NICMAR)
NAC Campus, Kondapur P.O, Hyderabad 500 084
E-mail sarbeshmishra@nicmar.ac.in