Why many studies stall
Many industrial projects have a feasibility study, yet few of those studies move a lender or investor to act. The usual reasons are familiar: market figures without sources, optimistic prices, a technical concept that is too vague to cost, or a financial model that cannot be tested.
Investors and industrial development funds, such as the Saudi Industrial Development Fund in the Kingdom, read many studies. They look for evidence, consistency and a clear view of risk. A study that answers their questions before they ask them moves forward faster.
A market analysis that stands up
The market section explains who will buy the product, at what price and in what volume. It should rest on data that a reader can check.
- Current demand and its drivers, with named sources
- Existing local producers, their capacity and their position
- Imports and the share local production could realistically replace
- Target customers and how the product will reach them
- Price assumptions based on current market prices, with a clear reasoning for any premium
Be careful with the jump from total market size to your own sales. Reviewers want to see why customers would switch to a new supplier, whether through price, quality, delivery time or local availability. A short, specific argument here carries more weight than pages of general market description.
Letters of intent or framework agreements from potential customers strengthen this section considerably. So does a realistic ramp-up: few plants sell their full capacity from the first month.
A technical basis that can be costed
The technical section shows how the product will be made. It should describe the process, the main equipment, the capacity and the raw material and utility needs in enough detail to support the cost figures.
Lenders look for a concept that is proven and appropriately sized. Name the technology and, where possible, the equipment suppliers. Include budget quotations from suppliers, and show the layout, the land and building requirements and the utility connections. If used equipment is part of the plan, include an independent assessment of its condition and remaining life.
Raw material supply deserves its own attention. Where will inputs come from, at what price, and how secure is that supply? A plant that depends on one imported material carries a different risk from one supplied locally.
Include the project schedule as well. A realistic timeline for design, permits, equipment delivery, construction and commissioning lets reviewers judge when revenue will start and how long the project must be financed before it does.
A financial model that can be tested
The financial model turns the market and technical sections into numbers. Reviewers judge it by how clearly it shows the path from assumptions to results.
- A full capital cost breakdown, including civil works, installation, commissioning and contingency
- Operating costs built from quantities and unit prices, covering materials, energy, labour and maintenance
- Working capital needs during ramp-up
- Projected income statements, cash flows and balance sheets
- Standard return measures such as payback, internal rate of return and debt service coverage
- A clear list of every key assumption, in one place
Keep the model transparent. A reviewer should be able to change a price or a volume and see the effect immediately. Hidden calculations and hard-coded results undermine trust quickly.
Risk, sensitivity and structure
No project is free of risk, and reviewers know it. What they want to see is that the sponsors understand the risks and have a plan for them. A good study tests the project against lower prices, higher costs, slower ramp-up and delays, and shows how the project performs in each case.
It also explains the ownership and financing structure: how much equity the sponsors contribute, what debt is requested, and how the project will repay it. Funds often have their own templates and requirements, so check these at the start and shape the study to fit them.
What to have ready
A study that reaches a decision usually arrives with supporting documents: supplier quotations, land or lease documents, customer letters, permits or approvals in progress and the profiles of the sponsors and management team. Having these ready shortens the review considerably.
Finally, keep the study current. Prices, exchange rates and supplier quotations change, and a study that is a year old may no longer reflect the project. Update the key figures before each submission so that reviewers see one consistent, recent set of numbers.
Wavy Solutions prepares market, technical and financial feasibility studies, expansion studies and studies for financing bodies, backed by hands-on engineering and equipment experience. We can help you build a study that reviewers can test and trust.