Economic Feasibility Study
Truth provides the entrepreneurs with monetary and finance advices and helps in preparing the economic feasibility study in Abu Dhabi on the grounds of the market study, the technical, engineering, or financial study. Further, Truth assists in finding and procuring the finance necessary for completing projects’ invested capital from banks and treasuries, the specialized and commercial.
Preparation of the initial and detailed economic feasibility study in Abu Dhabi is one of the services rendered by Truth Economic Consultancy, for which an official and professional license was issued by the Department of Economic Development in the UAE. This license is the legal framework, by which we practice our business in the state.
Our accumulated experience in preparing feasibility studies made us a standout in this domain. The reports issued by Truth are peculiar and the specialized can identify the form and style of our studies. Anyway, preparing feasibility studies for economic projects includes the following sections:
Monetary and Finance Consultancies:
Technical and Engineering Study.
Monetary and Finance Advices:
Assisting in finding and procuring the finance necessary for completing the invested capital for projects from banks and treasuries, the specialized and commercial.
Banks and Finance Advices
Truth is distinguished with its ability to provide finance from several sources, local and foreign, at proper interest rate. In addition, Truth hires unique and specialized competencies including engineers and technical cadre that are empowered to design projects and supervise their implementation until the starting up for fulfilling market purposes.
Truth has special relationships with the most important local and Arab treasuries and funds, which provide their facilities to the economic projects prepared by Truth. The most important facilities provided by the funds are:
- Contribution to the capital at an agreed percent.
- Offering financial facilities in different forms, the most important of which are:
- Istisna’ (a long-term contract whereby a party undertakes to manufacture, build or construct assets, with an obligation from the manufacturer or producer to deliver them to the customer upon completion)
- Murabaha (an Islamic term for a sale where the buyer and seller agree on the markup for the item(s) being sold)
- Al-Ijarah (rent/lease/hire)
- Soft loans
- Documentary credit for financing the capital.
The most important institutions of which are:
- The Arab Authority for Agricultural Investment and Development (Joint Arab Authority based in Khartoum – Dubai)
- El-Khaleej Investment Company (joint Gulf foundation based in Kuwait).
- The Islamic Corporation for the Development of the Private Sector (one of the most important projects of the Islamic Development Bank based in Jeddah – the Kingdom of Saudi Arabia).
- Emirates Industrial Bank (Abu Dhabi- the UAE).
- Abu Dhabi Investment Company (Abu Dhabi- the UAE)
- Mubadala Office (Abu Dhabi – the UAE).
- The Arab Bank for Economic and Social Development (Kuwait).
- Khalifa Fund for Enterprise Finance.
“The detailed economic feasibility studies made by Truth Economic ConsultancyCompany about joint stock companies (public- private) are licensed by the ESCA and approved by the Executive Council of Abu Dhabi Emirate.”
- Market Study
The main objective of preparing the market study is obtaining results closer to reality through the following points:
- The volume of actual demand of a commodity (service).
- The volume of actual supply of a commodity (service).
- The actual gap of demand of a commodity (service).
- Estimation of the actual demand gap volume within 10 years.
- The competitive commodities (services) and the volume of their spread in the market.
- Prices of competitive commodities.
- The proposed marketing policy and advertisement campaign.
- Studying the job structure of the sales, marketing, and workers’ remedies department.
- In light of the previous results, reaching a decision of how feasible it is to establish a project for producing this commodity or rendering this service.
- Technical and Engineering Study
The main objective of preparing the technical study for producing a commodity or rendering a service is to reach precisely the following points:
- Determining the unit of cost.. hour- meter- kilogram – ton..etc.
- The cost of the unit, and the intended aim is calculating all the direct and indirect costs (industrial- service) relating to production and dividing it on the number of producing units (either commodity- service) at full capacity.
The technical and engineering feasibility study is deemed a main pillar in the project’s feasibility study. Further, carrying out this study necessitates having several marketing and economic data and information that are available at different stages of the project’s feasibility study; as the technical study aims at determining to what extent the project is technically feasible. In particular, this study includes a number of steps represented in:
- Description of the project.
- Selecting the site appropriate for the project.
- Selecting the appropriate production type.
- Determining the main elements required by the project.
- Evaluating the project environmentally.
- Estimating the economic life of the project.
- Estimating the project’s costs.
Analyzing all the technical and engineering aspects is deemed a major stage in the project’s feasibility studies; as this study is an attempt of checking whether or not the project can technically be carried out. Several ideas are generated and some investment opportunities came up with products that satisfy a real demand in the markets. Yet, a small number of these ideas can be technically carried out; as the available production ways, the proposed technological method, the availability of raw materials, and all the other operation requirements…etc. determine whether or not the project is feasible.
The financial feasibility study is of paramount importance for two reasons; First: The results of the other previous aspects have an impact on the financial study in the form of data, figures of revenues, and costs that are translated to financial values and meanings. Second: The financial study provides indicators for the extent of the project’s commercial profitability, which concerns several parties such as investors, banks, and responsible governmental entities. Through estimation of investment proposals, the extent of the project’s attractiveness and profitability rates can be known in comparison with the costs of alternative opportunities and other projects. This helps investors make propaganda of the project before the local and foreign financers and all the concerned parties. On the other hand, through the prepared financial statements based on the data of demand, production, and labor, potentials such as provision of foreign currencies, labor and employment opportunities, which the project can avail, can be estimated. Accordingly, the project can be evaluated in terms of the social profitability.
The objective of preparing the financial feasibility study is evaluating the usefulness of investment opportunities in the viewpoint of investors, based on a number of methods and standards. Hence, investors, eventually, are able to select the economically accepted investment opportunities.
Furthermore, the financial study is the most important part of the economic feasibility study . Its importance lies in leading to take the decision of the project establishment- through the results found. This does not mean to belittle the importance of the other study sections, namely:
- The Market study.
- The Technical study.
The financial study is responsible for:
- Determining the total amount of money invested for the project, and how it is procured from its sources whether from entrepreneurs, banks, and treasuries.
- Preparing the estimated closing accounts (balance sheet- income statement) on the grounds of the assumptions adopted throughout the project life expectancy.
- Extracting the most important financial indicators from the estimated balance sheet and income statements throughout the life expectancy of the project (Preparing cash flow statements, Cash outflow statement, Cash inflow statement, Net flow).
- – Preparing cash flow statements.
– Cash outflow statement.
– Cash inflow statement.
– Net flow.
- – Extracting the most important investment indicators of the project
– Recovery period.
– Current net value.
– Internal revenue rate.
– Break-even point.
– Sensitivity analysis.
– Mosallam ratio.
- The study recommendation of how much the project is feasible