Common Feasibility Study Mistakes That Cost Projects

Blog Article

Feasibility studies are critical in determining whether a project is viable from technical, financial, legal, and operational perspectives. In the dynamic and rapidly developing economy of Saudi Arabia, the importance of such studies has grown exponentially. Vision 2030 has ignited an investment surge across sectors like tourism, renewable energy, logistics, and manufacturing. With billions being funneled into development, missteps during the feasibility stage can lead to enormous financial losses, missed opportunities, and reputational damage. Unfortunately, many projects fail before they even begin due to avoidable mistakes made during the feasibility study process.

In this article, we will explore the most common feasibility study mistakes that derail projects and how investors, entrepreneurs, and business leaders in the Kingdom of Saudi Arabia (KSA) can avoid them. Whether you're conducting a feasibility study in Saudi Arabia for a new resort on the Red Sea coast, a logistics hub in Riyadh, or a green hydrogen plant in NEOM, understanding and mitigating these pitfalls is essential to ensuring your project's success.

1. Lack of Clearly Defined Objectives

One of the most common and detrimental mistakes made during a feasibility study is failing to establish clear, specific, and measurable objectives. A feasibility study is not merely a checklist item—it must be strategically aligned with what the stakeholders truly want to achieve. Vague goals such as "assess market demand" or "evaluate profitability" are insufficient unless they are accompanied by measurable criteria and decision thresholds.

In KSA, where the economic environment is both fast-evolving and highly competitive, not having a defined objective can lead to studies that are too broad, miss critical details, or fail to focus on the specific risks relevant to the Kingdom's regulatory or cultural context. Whether you're examining labor laws, zoning regulations, or demand trends, clarity of purpose allows feasibility experts to ask the right questions and gather the most relevant data.

2. Insufficient Market Research

Another major pitfall is underestimating the importance of comprehensive market research. Many companies rely on outdated or foreign market data, neglecting the nuances of the local Saudi market. For instance, consumer behavior in Jeddah can differ significantly from that in Dammam or Abha due to regional culture, income levels, and purchasing patterns. A feasibility study in Saudi Arabia must take these differences into account to avoid false conclusions.

Moreover, market research should not be limited to desktop reviews. Field surveys, interviews with industry players, competitor analyses, and regulatory consultations are necessary to form an accurate market picture. If this step is rushed or handled by individuals unfamiliar with the local market, the resulting study may suggest a project is feasible when it is not—or overlook viable opportunities entirely.

3. Overlooking Local Regulatory and Cultural Factors

Saudi Arabia’s regulatory framework is undergoing rapid transformation. While these reforms are designed to encourage foreign investment and private sector participation, they also introduce complexity that must be carefully navigated. One common error is failing to account for required licenses, labor quotas, Saudization targets, or zoning restrictions. Missing these factors during the feasibility phase can lead to costly delays or complete project cancellations later.

Cultural factors also play a role, particularly for businesses in retail, hospitality, and healthcare. What might work in Western markets may require significant adaptation to meet Saudi consumer preferences and expectations. For example, entertainment venues must comply with cultural norms regarding gender segregation and religious holidays.

Engaging feasibility study companies that have on-the-ground experience in Saudi Arabia ensures that these risks are properly identified and assessed during the early stages of planning.

4. Engaging Inexperienced or Non-Specialized Consultants

Not all feasibility study providers are created equal. One of the most damaging mistakes is hiring consultants who lack local experience or specific industry expertise. A feasibility study for a high-tech logistics operation is very different from one for a boutique hotel or a solar power plant. When businesses rely on generic consulting firms or choose providers based solely on price, they often receive studies that are not actionable, lack insight, or fail to withstand investor scrutiny.

Investors and project owners in KSA should seek out specialized feasibility study companies that have a proven track record in the Kingdom, understand the legal framework, and can provide insights tailored to the sector in question. These firms not only deliver more accurate results but also provide strategic recommendations that are implementable within the Saudi context.

5. Neglecting Risk Assessment and Scenario Planning

Risk assessment is often one of the most overlooked components of a feasibility study. Many reports simply provide a single projection of success based on best-case assumptions. This can be dangerously misleading. The reality is that every project carries risk—be it market volatility, supply chain issues, regulatory changes, or political developments. In Saudi Arabia, where many projects involve public-private partnerships or rely on government support, policy shifts can significantly impact project outcomes.

Comprehensive feasibility study services should always include scenario planning. What happens if demand is 30% lower than projected? What if a key supplier delays delivery? What are the financial implications of interest rate fluctuations or new tariffs? Exploring multiple scenarios and assigning probabilities allows decision-makers to understand not just whether a project is feasible, but under what conditions it remains viable.

Choosing feasibility study services that prioritize risk modeling and offer financial sensitivity analysis can dramatically improve decision-making and reduce costly surprises down the line.

6. Ignoring Technological and Operational Realities

In the rush to greenlight projects, feasibility studies often gloss over operational complexity and technical feasibility. A common example is in the logistics and manufacturing sectors, where companies assume that infrastructure, labor, and suppliers are readily available. In practice, projects often face unexpected challenges like a shortage of skilled labor, long lead times for imported equipment, or inadequate digital infrastructure.

In the context of Saudi Arabia’s ambitious plans to become a global logistics and industrial hub, operational assumptions must be rigorously tested. A study must include site evaluations, technology readiness assessments, supply chain analyses, and even pilot testing if needed. Without this level of scrutiny, operational failures can emerge only after significant investment has already been committed.

7. Over-Optimistic Financial Projections

Inflated revenue forecasts and underestimated costs are among the most frequent causes of project failure. Entrepreneurs and stakeholders, eager to gain investor buy-in, often present overly rosy scenarios that do not reflect realistic conditions. In feasibility studies, this manifests in unrealistic pricing assumptions, underestimating time to market, ignoring working capital needs, or neglecting tax and compliance costs.

In Saudi Arabia, changes in VAT, evolving regulatory fees, and government procurement processes must all be factored into financial models. Using conservative, evidence-based assumptions and applying rigorous financial modeling standards is essential to building investor confidence and ensuring long-term viability.

8. Failing to Involve Key Stakeholders

Feasibility studies often fail to incorporate the perspectives of all relevant stakeholders, including local authorities, future users, community members, and operational staff. This leads to blind spots in areas such as community acceptance, land use challenges, or employee recruitment. In KSA, where alignment with Vision 2030 goals and local development plans is crucial, engaging stakeholders early can uncover valuable insights and help secure necessary approvals.

Engaging the right stakeholders also ensures that the study reflects real-world conditions and not just theoretical scenarios. It facilitates smoother implementation, better resource planning, and fewer surprises during execution.

9. Treating the Feasibility Study as a One-Time Task

Finally, one of the most fundamental mistakes is viewing the feasibility study as a static, one-time document. Markets evolve, regulations change, and business assumptions become outdated. A study completed six months ago may no longer reflect current realities, especially in fast-moving sectors like technology or renewable energy.

Feasibility studies should be living documents, updated periodically as new information becomes available or as conditions shift. Ongoing validation and real-time data integration ensure that decisions remain grounded in current realities.

A well-conducted feasibility study can make the difference between a successful, sustainable project and a costly failure. In Saudi Arabia, where the stakes are high and the pace of development is unprecedented, avoiding these common feasibility study mistakes is more important than ever. From clear goal setting to comprehensive risk assessment, choosing experienced feasibility study companies, and leveraging expert feasibility study services, each step plays a crucial role in ensuring your project gets off the ground and thrives.

For investors, entrepreneurs, and developers in the Kingdom, the message is clear: take the time to do your feasibility study right, and it will pay dividends in the form of informed decisions, resilient planning, and project success.

COMMON FEASIBILITY STUDY MISTAKES THAT COST PROJECTS

Common Feasibility Study Mistakes That Cost Projects