Feasibility studies
Feasibility studies in Panama
A feasibility study does not exist to confirm that the project is a good one. It exists to answer, before the money is committed, whether there is any reasonable scenario in which it is not.
DB Consultants Group prepares feasibility studies for investment projects in Panama: new business lines, capacity expansions, plants, real estate developments and asset acquisitions.
When it is needed
Before the capital is committed, not after
The study earns its keep when the decision is hard to reverse: when it involves long-term debt, a building or a plot of land, a production line, or entry into a market the company does not know.
- A new business line or a product that demands its own investment and structure.
- A capacity expansion: plant, warehouse, fleet, points of sale.
- A real estate development or the purchase of an asset financed over the long term.
- Entry into a new market, inside or outside the country.
- A requirement from the bank or the investor, who will not finance without seeing the evidence.
It also works the other way round, and that is its least discussed value: a study that recommends not doing the project saves far more than it costs.
The content
The four questions it answers
Is there a market?
Size, growth, competition, current prices and the share of that market the project can realistically take. Estimated demand is the assumption that sinks projects most often.
Can it be built?
Technical requirements, location, installed capacity, inputs, staffing, construction schedule and the permits the operation requires in Panama.
What does it cost and how is it funded?
Upfront investment, working capital, debt and equity structure, and the disbursement calendar against the revenue calendar, which rarely coincide.
Is it worth it?
Net present value, internal rate of return, payback period and break-even point, with scenarios and sensitivity analysis on the variables that actually move the result.
The parameter that decides
What the return is measured against
A project is not good because it shows a positive return. It is good if it beats what the market demands for taking that risk in this country. That hurdle is the cost of capital, and using another market’s is the error that turns a bad project into an apparently profitable one.
11.7%
Cost of equity for a Panamanian company of average risk in the third quarter of 2026, built from a risk-free rate of 4.64% and a market risk premium for Panama of 7.08%.
A project returning below that figure destroys value, even if its accounting result is positive. See the calculation and its sources (in Spanish).
Sources: 10-year US Treasury note (25 August 2026) and A. Damodaran, NYU Stern (January 2026).
The process
How the study is prepared
- Defining the projectExactly what will be done, at what scope, and what is left out. Half of the studies that fail do so because the project was never defined precisely.
- Market researchAvailable sector data, prices, competition, and interviews when public information is not enough.
- Technical and investment sizingWith real quotations, not order-of-magnitude estimates, and with the execution schedule.
- Financial modelA full projection — income statement, balance sheet and cash flow — with explicit assumptions traceable back to their source.
- Scenarios and sensitivityBase, optimistic and pessimistic, plus how far each key variable would have to move before the project stops being viable.
- Report and presentationA document with an explicit conclusion, presented to the board, the partner or the bank.
Four to eight weeks, depending on how much primary market research is needed.
Deliverables
What the client receives
- The full report, with an explicit conclusion: do it, do not do it, or do it under which conditions.
- The financial model in a spreadsheet, open, with assumptions separated from the calculations.
- The indicators: net present value, internal rate of return, payback period and break-even point.
- The risk map, with the critical variables and the margin each one has before the project is compromised.
- A presentation session for whoever has to approve the investment.
Warnings
Five ways to fool yourself with a study
- Adjusting the assumptions until the project works. If the conclusion was decided beforehand, the study is an expensive formality.
- Forgetting working capital. The project gets financed, starts up and runs out of cash in month four.
- Estimating demand by analogy. That it works in another country or another city says nothing about how much sells here.
- Using a comfortable discount rate. Lowering it by two points makes almost anything viable on paper.
- Not costing the permits or the time they take. Regulatory delay is a real financial cost and it almost never appears in the model.
Common questions
Frequently asked questions
How long does a feasibility study take?
Four to eight weeks. The difference is how much primary market research is required: if there is enough public data, the timeline shortens.
What is the difference between a feasibility study and a business plan?
A business plan describes how a project that has already been decided will be executed. A feasibility study exists to decide whether to do it, which is why it has to be able to conclude that you should not.
Can it be presented to a bank?
Yes. It is prepared to the standard of evidence a credit committee expects: explicit assumptions, scenarios and sensitivity analysis, not only the favourable case.
We are a foreign group with no operation in Panama yet. Can you still do it?
Yes, and it is a frequent case. When there is no local history, the study leans more heavily on primary market research, on real quotations from local suppliers and on the permit and timeline map, which is where foreign investors most often underestimate the calendar.
What information do we need to provide?
The description of the project, whatever investment quotations exist, the company’s financial statements if the project rests on it, and access to whoever knows the operation from the inside.
Does it include the market study?
Yes. Size, growth, competition and prices are part of the scope; when public information is not enough, primary research is carried out.
What if the conclusion is that the project is not worth doing?
Then that is what the report says, with the evidence behind it. A study that recommends against investing saves far more than it costs, and it is one of the reasons it should be done by a third party rather than by whoever is championing the project.
Is the engagement confidential?
Yes. The nature of every engagement is confidential and is not disclosed without the client’s written authorisation.
Let’s talk about your project
A first conversation is enough to define the scope, establish what information exists and estimate the timeline. It is confidential and commits you to nothing.