Feasibility Study

Feasibility studies help companies and investors evaluate projects and investment opportunities before implementation by analyzing the economic, commercial, and financial aspects of the proposed project. These studies also support the investment decision-making process by assessing the overall viability of the project and the possibility of its successful implementation.

A feasibility study seeks to determine if a new business idea/concept or the expansion plans of an existing business are viable and feasible. A Feasibility study is important as it guides the decision-maker on the potential benefits or anticipated losses of taking up a prospective venture before dedicating any investment.

In general, feasibility studies should include essential components in order to achieve their intended purpose.

What Are The Components of a Feasibility Study?

The main components of a feasibility study include the following:

1. Technical Study

   Evaluates the Capital Expenditure (CAPEX) requirements and Manpower Resources needed to successfully execute the project or its expansion.

2. Market Study

   Analyzes the target market by assessing the demand, supply, competition, market gap and market share of the project.

3. Financial Study

   Assesses the financial viability, including revenue forecasts, cost projections, and potential returns, determining whether the project or expansion is financially sustainable.

What is the difference between a preliminary feasibility study and a comprehensive feasibility study?

A preliminary feasibility study aims to conduct an initial, brief assessment of a project idea before allocating more time and resources to study it in depth. In contrast, a comprehensive feasibility study provides a detailed and thorough analysis of the various aspects of the project, supporting the final investment decision regarding its implementation.

In this context, there are also feasibility studies that require specific components depending on the purpose for which they are prepared. Examples include, but are not limited to, the following:

1. Feasibility studies for crowdfunding

   Crowdfunding is a form of fundraising where a company asks the public for small contributions (usually in exchange for equity in the company), typically via the internet. Crowdfunding has emerged as a popular alternative financing method, allowing entrepreneurs and startups to raise small amounts of capital from a large number of individuals/ investors to finance a new business venture, concept, or the expansion plans of an existing business.

   The success of a crowdfunding campaign relies on several factors; therefore, conducting a feasibility study from an unbiased third party is essential to enhance the likelihood of success. Therefore, the Capital Markets Authority in the State of Kuwait requires all listed and licensed companies to submit a feasibility study for the purpose of a crowdfunding application.

   What are the governing references that companies are required to submit Feasibility Studies for the preparation of crowdfunding applications?

   In accordance with Module Nineteen, “Financial Technologies”, Article 2-3-6 stipulates that:

   The Eligible Offer Issuer is required to engage the services of a Licensed Person by the Authority (Investment Advisor or Asset Valuator), or an Auditor registered with the Authority (including Subsidiary Companies) in order to prepare the following:

   1. A feasibility study of the project and its payments plan.
   2. Specifying the necessary funding amount and its payments.
   3. Assessing the value of the stake/share wavered by the Eligible Offer Issuer in the Crowdfunding Offer.

   Taking into consideration that the service-providing party is an independent, neutral and is of no affiliation to the platform, agent or the Eligible Offer Issuer.

2. Feasibility Studies for Public-Private Partnership Projects

   Public–private partnership (PPP) projects involve a contract between the public and private sectors, mainly targeting development and infrastructure projects. The role of the public sector is to establish a framework for developmental action at the level of policies, laws, and regulations. Meanwhile, the role of the private sector is to invest the inherent know-how and expertise based on quality, efficiency, and economic sustainability in various areas to implement mega projects, such as housing and infrastructure, including sewage, power plants, etc.

What are the most important sectors for PPP projects?

The Kuwait Authority for Partnership Projects (KAPP) between the Public and Private Sectors offers numerous projects across various economic sectors, including, but not limited to, the following:

• Transport Sector
• Real Estate Sector
• Energy Sector
• Education Sector

What is The Added Value to Business Entities From Feasibility Studies?

• Assist business entities in understanding the level of demand for a product or service and the feasibility of the project as a whole.
• Assess available resources and the marketability of the product or service.
• Assist investors and relevant stakeholders in objectively evaluating investment opportunities and making investment decisions based on accurate economic and financial analyses.
• Comply with the requirements of administrative and regulatory authorities and enhance trust and credibility among stakeholders.

What are the feasibility study services provided by Baker Tilly Kuwait?

• Preparation of feasibility studies
• Preparation of preliminary feasibility studies
• Preparation of feasibility studies for crowdfunding applications
• Preparation of feasibility studies for Public–Private Partnership (PPP) projects

Why Baker Tilly Kuwait?

1. Baker Tilly in Kuwait is a member of the Baker Tilly International network based in the UK, ranked amongst the top 10 global accounting networks, enabling the use of the latest internationally recognized methodologies and access to global subject matter experts.
2. Extensive experience in providing Feasibility Study service to companies operating across various business sectors in the State of Kuwait.
3. Highly experienced bilingual team with specialized academic qualifications and professional certifications.
4. Commitment to performing Feasibility Study engagements according to predefined timelines with no delays, and responsiveness to client requirements.