Study Your Project Before the Feasibility Study: What to Know Before You Commit

Many people ask for a "feasibility study" when what they really want is an answer to one question: should I enter this market, at this location, or not? A full feasibility study answers many other questions, most of which come after that decision, not before it. The two steps do not compete: one answers "should I enter?", the other describes "how the project will run" once you have decided to enter.

To be clear: NGIOM does not sell feasibility studies. What we offer is a project study before the feasibility study, that is, testing the assumptions the study will later be built on.

What a feasibility study covers

The technical description, the organisational structure, five-year cash flows, the financing schedule and the return on investment. It is a useful document for the bank and for partners, but it is built entirely on the assumption that the project will enter the market.

What the project study before it covers

It tests the very assumption a feasibility study starts from, through specific questions:

• Can the market take one more business?
• Who are the competitors, and what do their customers say?
• Which of the candidate sites is better, and why?
• What risks threaten the project?
• Which assumptions must hold for it to work?

Its result is an initial verdict, one of four: enter, adjust, verify, or wait.

Which comes first?

The project study comes first, because it is quicker and costs less, and because its result may spare you a full study of a project that is not worth it. If the result is "enter", the feasibility study that follows is built on dated indicators rather than desk assumptions.

An early gap is not proven demand

The costliest mistake in small projects is treating an early indicator as an established fact. "There is no café in this neighbourhood" is a true sentence, but it does not tell you whether residents want a café, or why nobody opened one before you. And the absence of a pharmacy in a neighbourhood does not mean the neighbourhood needs one.

An early gap is an observation from public data: fewer businesses than expected for the population, a complaint that recurs in reviews, or a service people ask for that nobody provides. It is a hypothesis; its value is that it directs verification, not that it replaces it.

Demand becomes proven when someone pays: advance bookings, real orders at a temporary site, contracts with early customers, or measured uptake of a trial product. Everything before that is an indicator, however convincing.

A gap can also be a trap, because it exists for a reason: high rent the business cannot carry, regulation that blocks licensing, or a buying habit that sends residents to another area. That is why checking why a gap exists matters more than checking that it exists.

We present the gap as a hypothesis, and tell you what must hold for it to become demand.

More in our article: Reading your competitors in Oman before you enter the market

Why the world is rethinking the feasibility study

The way feasibility studies are written is changing around the world. Here are five ideas researchers and practitioners raise today, and how we apply them in the project study:

• A decades-old template: the best-known reference for the structure of an industrial feasibility study is a manual issued by UNIDO in 1978, and many offices still copy its sections as they are. Length is not always a sign of quality; it can be an inherited habit. So we start from the investor's question, not from a template.
• Untested assumptions: The Lean Startup, one of the most influential management books, criticised the "detailed plan, then capital, then build" pattern because it rests on assumptions not verified before commitment. So we test the assumption against market indicators before you commit, and state what still needs verifying.
• The rigid document versus the flexible framework: several sources describe traditional plans as long, rigid and out of date as soon as conditions change, which is why the Business Model Canvas emerged, summarising the business model on a single, editable page. So we write a report that can be updated whenever the figures or the location change.
• Whoever pays the bill wants a "yes": large academic studies of major projects, most famously the work of Bent Flyvbjerg and colleagues, found that costs are underestimated and benefits overestimated in the great majority of cases, and that the party with an interest in approving the project tends towards optimism. The lesson: the numbers you are comfortable with are not necessarily correct. So our sources are dated and stated, and we show what supports the decision and what threatens it, even if you don't like the result.
• AI, speed with a risk of fabrication: the use of AI in market analysis is accelerating, and many warn that it can produce confident conclusions with no basis in the data, a serious risk in a financial decision. So every indicator in our report traces back to a dated source; analysis tools help with sorting, and the advisor, not the tool, reviews the result and frames the hypotheses.

Questions to ask yourself before you commission a feasibility study

• Do I know whether the market can take one more business, or am I assuming it?
• Have I read what competitors' customers say about them, and what is asked for but missing?
• Is the opportunity I see an early gap or proven demand that someone has paid for?
• Do I know why nobody has opened in this area before me?
• Have I compared two or more sites on the same criteria and the same date?
• Are the figures I rely on dated with a stated source, or are they figures I am comfortable with?

If your answer is "no" to more than one question, the next step is not a feasibility study yet, but a project study that answers these questions first.

What neither study does

Neither guarantees success. Both are decision-support tools. The difference is that the project study says so openly, and puts "what must be verified" in a separate section, so you know what is still unresolved before you commit to a lease, financing or a full study.

We don't promise you the future. We give you a clearer picture of what supports your decision, what threatens it, and what you must verify before you commit.

How NGIOM helps

NGIOM's Project Study comes before the feasibility study: we test the market, the competitors, the candidate sites and the risks, separate what is proven from what is a hypothesis, and hand you a written report with dated sources that ends with an initial verdict and a list of what needs verifying. If you decide to go ahead, your feasibility study rests on a clearer foundation; if the project needs adjusting, you find out before you commit.

Sources: UNIDO, Manual for the Preparation of Industrial Feasibility Studies (1978); Eric Ries, The Lean Startup (2011); Alexander Osterwalder and Yves Pigneur, Business Model Generation (2010), the source of the Business Model Canvas; Bent Flyvbjerg, Nils Bruzelius and Werner Rothengatter, Megaprojects and Risk: An Anatomy of Ambition (2003), and Flyvbjerg's later work on optimism bias in project estimates.