Answer to Question #189969 in Management for KAM

Question

Subject : Project Planning and Control

How to conduct financing project viability study? ( Please answer in 200 words)

Answer 1

A viability study is a form of assessment aimed at determining the pros and cons of investing in a particular idea . The first step entails performing a preliminary study. At this stage, one identifies the distinct advantages and challenges that will be realized by actualizing the ideas. Then a projected income statement is prepared to approximate the amount of money required for the investment based on the expected returns. Based on the statements a market research is perfomed to establish the most realistic revenues that can be attained. Similarly, the market is analized in terms of demographics, level of competition, value and its expansion potential. Once all these have been ascertained, an opening day balance sheet is prepared by establishing the available sources of financing, assets and liabilities ,which include leasing or renting of property to facilitate the plan. Reviewing the data from the previous steps allows the organization formulate contingency plans for the identified risks. The final step entails making a decision on whether the investment is worthwhile.