Project Identification, Market Survey and Feasibility Study
From idea to report
Project identification means spotting a product or service with unmet demand. Sources include local surveys, industrial directories, government schemes, import data and customer complaints. Screening removes ideas that fail resource, skill, legal or market tests. A market survey estimates demand, supply, competition, price and buyer behaviour. A feasibility study then checks technical, financial, economic, managerial and environmental viability; a project report records these findings.
Key tools
Break-even quantity = fixed cost ÷ (selling price − variable cost per unit). Contribution per unit is price minus variable cost. Margin of safety = expected sales − break-even sales. Payback period = initial investment ÷ annual cash inflow. A demand–supply gap suggests room for a new unit, but only if the firm can compete.
Worked example
Fixed cost is ₹2,00,000; selling price ₹50; variable cost ₹30. Contribution = ₹20. Break-even quantity = 2,00,000 ÷ 20 = 10,000 units. If expected sales are 12,000 units, margin of safety = 2,000 units. The project is viable at that volume, but a fall below 10,000 units produces a loss.
Traps that cost marks
Do not treat a market survey as a feasibility study; the survey is one input. Do not divide fixed cost by price minus total cost. Do not ignore working capital in the project report. Do not present demand without evidence of willingness to pay.