What exactly is a feasibility study?
A feasibility analysis, as the name implies, is used to determine the viability of an idea, such as ensuring that a project is legally and technically feasible, as well as economically justifiable. It tells us whether a project is worthwhile to invest in—in some cases, a project may be impossible to complete. There could be a variety of reasons for this, including the need for too many resources, which not only prevents those resources from performing other tasks but may also cost more than an organization would earn back by taking on a non-profitable project.
A well-designed study should provide a historical background of the business or project, such as a product or service description, accounting statements, operational and management details, marketing research and policies, financial data, legal requirements, and tax obligations. In most cases, such studies come before technical development and project implementation.
Feasibility Study Types
A feasibility analysis assesses the project’s likelihood of success; thus, perceived objectivity is an important factor in the study’s credibility for potential investors and lending institutions. There are five types of feasibility studies—individual areas that a feasibility study investigates, as described below.
1. Technical Suitability
This assessment focuses on the organization’s technical resources. It assists organizations in determining whether technical resources are adequate and whether the technical team is capable of translating ideas into working systems. Technical feasibility also includes an assessment of the proposed system’s hardware, software, and other technical requirements. As an exaggerated example, a company would not want to try to install Star Trek transporters in their building—this project is currently not technically feasible.
2. Economic Suitability
This assessment typically includes a cost/benefit analysis of the project, which assists organizations in determining the viability, cost, and benefits of a project before allocating financial resources. It also serves as an independent project assessment and increases project credibility by assisting decision-makers in determining the positive economic benefits that the proposed project will provide to the organization.
3. Legal Suitability
This assessment looks into whether any aspect of the proposed project violates any laws, such as zoning laws, data protection acts, or social media laws. Assume a company wants to build a new office building in a specific location. A feasibility study may reveal that the ideal location for the organization is not zoned for that type of business. That organization has just saved a lot of time and effort by discovering that their project was not feasible from the start.
4. Operational Susceptibility
This assessment entails conducting research to determine whether—and how well—the organization’s needs can be met by completing the project. Operational feasibility studies also look at how a project plan meets the requirements identified during the system development requirements analysis phase.
5. Possibility of Scheduling
This is the most important assessment for project success; after all, a project will fail if it is not completed on time. An organization estimates the length of time it will take to complete a project in scheduling feasibility.
When all of these areas have been thoroughly examined, the feasibility analysis can help identify any constraints that the proposed project may face, such as:
Internal Project Constraints: Technical, technological, financial, and resource constraints, among others.
Financial, marketing, export, and other internal corporate constraints
External constraints include logistics, the environment, laws and regulations, and so on.
The Value of a Feasibility Study
The significance of a feasibility study stems from an organization’s desire to “get it right” before investing resources, time, or money. A feasibility study may uncover new ideas that completely alter the scope of a project. It is preferable to make these decisions ahead of time rather than jumping in and discovering that the project will not work. A feasibility study is always advantageous to the project because it provides you and other stakeholders with a clear picture of the proposed project.
The following are some of the primary advantages of conducting a feasibility study:
Increases the focus of project teams
discovers new opportunities
Provides useful information for making a “go/no-go” decision.
Reduces the number of business options
Identifies a valid reason for carrying out the project
By evaluating multiple parameters, the success rate is increased.
Assists in project decision-making
Reasons for not proceeding are identified.
Aside from the approaches to feasibility study listed above, some projects necessitate the examination of additional constraints –
Internal Project Constraints: Technical, technological, financial, and resource constraints, among others.
Financial, marketing, export, and other internal corporate constraints
External constraints include logistics, the environment, laws and regulations, and so on.
We hope this has helped you better understand the concept of the feasibility study. Explore our library of Project Management articles to learn more about similar project management concepts, or enroll in our Introduction to Project Management program, which covers new trends, emerging practices, tailoring considerations, and core competencies required of a Project Management professional. Enjoy your reading!
