Introduction

The Difference Between Economic and Financial Feasibility Studies: A feasibility study is considered one of the most important steps before implementing any project, whether it is a small project or a large investment. It is a roadmap that allows the project owner or investor to evaluate the various aspects related to the project, determine the construction idea, study the costs, and conclude the project with potential profits and potential risks.
 
Although the term “feasibility study” is widely used, many people do not realize that this study is divided into different types, the most important of which are economic feasibility studies and financial feasibility studies. Confusion arises between the two types of studies, despite the fundamental differences between them, as each plays an independent and complementary role in evaluating the project from different perspectives.
 
In this article, we will delve into the details of both economic and financial feasibility studies, highlighting their differences and complementarities, while focusing on their importance in making agile investment decisions. We will also highlight how “feasibility studies and business solutions” can contribute to providing professional solutions that combine financial and economic dimensions to serve the investor and society as a whole.

First: Economic Feasibility Study – A Perspective that Includes Development and Growth
 
General Growth:
An economic feasibility study is an integrated analysis aimed at evaluating the feasibility of a project from an economic, social, and national perspective, not just from the perspective of profitability for the project owner. This type of study is concerned with answering a fundamental question:
Does this project achieve general benefit for society and the national economy?
 
Aspects covered by the economic study:
Analyzing the overall impact on the local and national economy: such as improving GDP, reducing imports, increasing exports, and addressing economic balance.
Providing employment opportunities: Measuring the project’s ability to create direct and indirect jobs.
Utilizing local resources: raw materials, labor, and infrastructure.
Achieving balanced development, especially in remote areas, or at least as a model.
Environmental Impact Assessment: Programs such as the project’s impact on the environment, public health, and community activities.
 
Examples of projects that require an economic study:
Major government projects.
Infrastructure projects (roads, bridges, railways).
National industrial projects.
Projects that require state support or public funding

Second: Financial Feasibility Study – The Investor’s View of Return and Profitability
 
General Concept:
A financial feasibility study is an analytical process aimed at determining whether a project will generate profitable financial returns for the investor. It focuses on costs, revenues, profits, and the project’s financial analysis.
 
The most important elements of financial feasibility:
Determining the capital required for investment: This includes start-up costs and fixed assets.
Analyzing operating and daily operating costs.
Estimating expected revenues based on market research.
Analyzing future cash flows.
Calculating profitability indicators:
Net Present Value (NPV)
Internal Rate of Return (IRR)
Payback Period
Break-Even Point Analysis
Sensitivity Analysis to Market Fluctuations
 
Primary Objective:
To determine whether the expected returns justify the initial investment and whether the project is capable of withstanding and generating profits in the face of financial challenges and economic fluctuations.

Third: The Importance of Combining the Two Studies
 
In a changing investment environment, it is a mistake to rely on only one type of feasibility study. A successful project is one that:
Generates satisfactory profits for the investor (financial feasibility) while simultaneously contributing to sustainable development and achieving public benefits (economic feasibility).
For example, a project may generate good profits on paper, but cause significant environmental damage or deplete scarce resources. In this case, the economic feasibility study fails despite the financial success. Conversely, a project may be beneficial to the economy, but operational costs make it difficult for the investor to achieve profits. This is where the importance of balancing the two types comes in.

Fourth: How can Value for Feasibility Studies and Business Solutions help you prepare accurate and balanced studies?
 
Who are we?
Value for Feasibility Studies and Business Solutions is an expert house specializing in preparing economic and financial feasibility studies, providing integrated solutions to investors in the Kingdom of Saudi Arabia, the Gulf, and the Arab region.
 
What do we offer?
Preparing comprehensive feasibility studies covering financial, economic, technical, marketing, and operational aspects.
Using the latest financial modeling and data analysis software.
Presenting multiple risk scenarios.
Providing studies that support obtaining bank or investment financing.
Preparing studies that align with the requirements of Saudi Vision 2030, especially for development projects.

Why Value?
 
A team of certified economists and financial analysts.
Experience in dealing with government and private entities.
Specific studies tailored to the project sector (tourism, energy, manufacturing, services, etc.)
Speed ​​completion with accurate analysis and recommendations.

Understanding the difference between an economic and financial feasibility study is not a substitute for academic adjustments; rather, it is essential for anyone seeking a successful and sustainable investment.
Both types of studies are essential to ensure that decisions are made based on accurate information and in-depth analysis, not just predictions or intuition.
In light of the increasing economic challenges, it has become necessary to seek the assistance of specialized experts to ensure the accuracy and comprehensiveness of studies.
If you are looking to launch a new project or develop an existing one, do not hesitate to contact us at Value for Feasibility Studies and Business Solutions.
Our team is ready to provide full support to transform your ideas into reality. Contact us via WhatsApp or direct call, and we will be happy to answer your inquiries and provide the consultations that suit your needs with professionalism and expertise.