In the rapidly evolving economic landscape of the Kingdom of Saudi Arabia, businesses are confronted with unprecedented opportunities and challenges. With Vision 2030 unlocking vast sectors such as infrastructure, tourism, renewable energy, logistics, and advanced manufacturing, the stakes for capital allocation decisions have never been higher. Yet despite this transformative environment, many Saudi firms continue to bypass feasibility study services, often underestimating their value. The cost of this oversight is significant: firms that skip detailed feasibility planning risk overshooting their capital needs by 20 to 30 percent and facing heightened project failure rates.
This professional semantic SEO article explores why rigorous feasibility assessment is indispensable for Saudi enterprises, how skipping it inflates capital requirements, and what the latest 2026 data reveals about this ongoing challenge.
The Strategic Importance of Feasibility Studies in Saudi Arabia
At its core, a feasibility study is a structured analytical process that evaluates a project’s viability across financial, market, technical, regulatory, and operational dimensions before significant capital is committed. Its purpose is to determine whether a venture should proceed and under what constraints feasibility study services can provide the most accurate cost and risk projections possible. In Saudi Arabia’s context, such studies have become essential due to the complexity of modern projects and the kingdom’s pivot to diversified economic growth.
A comprehensive feasibility assessment helps firms:
- Define capital expenditure more accurately
- Identify market demand and competitive dynamics
- Forecast revenue, costs, and expected returns
- Uncover regulatory or logistical barriers
- Quantify risk and provide mitigation options
Without this foundational step, decision-makers resort to intuition or incomplete data, leading to costly miscalculations.
Quantifying the Cost of Skipping Feasibility
Recent data underscores the tangible dangers of neglecting feasibility planning. A 2026 industry analysis found that projects launched without rigorous feasibility evaluation experienced average cost overruns of 52 percent and schedule delays of 41 percent. In contrast, projects supported by structured feasibility assessments contained cost overruns to just 8 percent and managed schedule delays at around 11 percent. These figures highlight how inadequate planning directly contributes to inefficient use of capital.
In environments where capital is scarce or weighed against other investment priorities, such misallocation can erode shareholder value and expose firms to financial strain. A cost overrun of 20 to 30 percent on a major industrial or infrastructure project can translate into hundreds of millions of Saudi riyals in unexpected outlays capital that could otherwise be channeled into innovation, workforce development, or expansion.
Case Context: Saudi Megaprojects and the Reassessment Imperative
Saudi Arabia’s ambitious megaprojects offer real-world examples of how feasibility impacts capital strategy. The Mukaab project in Riyadh, part of the broader New Murabba development, was recently suspended for reassessment of its financial viability and strategic relevance, illustrating the risks of proceeding without earlier or more effective feasibility analysis. The reassessment reflects a broader strategic shift within the Saudi Public Investment Fund toward prioritizing projects with clearer short-term economic returns.
Similarly, the multi-billion-dollar NEOM project has undergone revisions and scaled-back components due to budget pressures, delayed timelines, and concern over return projections again, issues that more precise upfront feasibility work can help clarify.
These high-profile examples emphasize that even state-backed ventures are not immune to misestimating capital needs. For private and mid-sized firms, the margin for error is even narrower.
How Misestimation Happens: The Root Causes
Several key factors contribute to the inflated capital needs seen in firms that skip feasibility studies:
1. Inaccurate Market Demand Forecasts
Without a robust analysis of customer behavior, competitive pressures, and long-term trends, firms often overestimate sales potential or fail to anticipate shifts in demand. This leads to overinvestment in capacity, inventory, or infrastructure.
2. Underestimated Costs and Hidden Expenses
Construction costs, supply chain bottlenecks, regulatory compliance fees, and financing charges can easily be misjudged without detailed financial modeling and risk assessment. Engineers surveyed in Saudi Arabia have highlighted cost estimation errors and inadequate project management as recurring sources of budget overruns.
3. Regulatory and Compliance Surprises
Saudi Arabia’s evolving regulatory landscape requires careful navigation. Projects that fail to anticipate licensing, environmental, and licensing costs often encounter delays and fines that drive up capital needs beyond initial expectations.
4. Insufficient Risk Mitigation
Feasibility studies quantify risks and develop mitigation strategies. Without them, firms may face unforeseen challenges such as supply disruptions or financing shortfalls that force higher capital reserves or rework budgets.
The ROI of Doing Feasibility Right
In addition to preventing overruns, structured feasibility analysis often boosts project performance. Analyses show that organizations that institutionalize feasibility planning significantly reduce project failure rates and improve strategic success. Projects backed by robust evaluation are more likely to meet ROI targets and align with long-term business goals.
In practical terms, this means:
- Lower capital buffers for unplanned contingencies
- Better access to financing through credible data packages
- Enhanced investor confidence
- Stronger strategic alignment with national economic goals such as those outlined in Vision 2030
These advantages make the cost of feasibility studies a wise investment relative to the potential savings from avoided overruns and failures.
Best Practices for Effective Feasibility Planning
To maximize the value of feasibility assessment, KSA firms should adopt structured approaches:
Integrate Multidisciplinary Expertise
Feasibility involves finance, engineering, market research, legal and regulatory expertise. Firms should either build integrated internal teams or partner with specialized consultants.
Use Local and Global Data Sources
Local market trends, regulatory conditions, and competitor intelligence must be paired with global best practices to produce relevant and reliable assessments.
Scenario Planning and Sensitivity Analysis
Evaluating multiple future scenarios such as changes in interest rates, material costs, or demand shifts helps firms anticipate variations and plan accordingly.
Continuous Review and Update
Feasibility is not a one-time activity. As projects evolve, so should the underlying analyses to ensure ongoing relevance and accuracy.
In 2026, amid intensifying competition and rising operational complexity, skipping feasibility study services is no longer a tolerable risk for Saudi firms. Evidence shows that bypassing this critical step often leads to capital needs inflating by 20 to 30 percent, schedule overruns, and higher project failure rates.
Feasibility studies provide the analytical foundation that guides strategic decision-making, constrains budget uncertainty, and unlocks better access to financing. For firms operating in Saudi Arabia’s vibrant and ambitious economic ecosystem, embedding professional feasibility analysis into project life cycles is essential to safeguarding capital efficiency and long-term success. Investing in feasibility study services today can save significant costs tomorrow and help firms align with national priorities and global standards for sustainable growth. As market dynamics continue to shift, this disciplined planning approach will remain a cornerstone of successful investment outcomes across industries.
Finance Advisory 