While project managers are not needed to do the feasibility study themselves, they utilize it as a framework to drive the project and get an awareness of project specifications, business goals, and risk considerations from start to finish.
What is a Feasibility Study?
A feasibility study evaluates the viability of a given idea or proposal.
The research, as the name implies, aids in determining whether or not the idea is viable.
After you have established your project’s business case, you should do this research.
The goal is to objectively assess all of the proposed project’s or venture’s strengths, weaknesses, opportunities, and dangers.
It also contains a list of all project materials, including a project description, background knowledge, market analysis, financial records, and other relevant data.
The feasibility study assists you in determining whether the project’s outcome will be worth the resources invested.
A feasibility study is an evaluation of a project’s economic, legal, and technological viability.
Genuinely said, it tells us whether a project is feasible or worthwhile.
A well-designed feasibility study should provide perspectives into the project’s overview, resources allocation, financial reports, financial data, legal requirements, and tax duties.
It aids in determining if the idea is both feasible and lucrative for the firm to pursue.
As a result, this analysis is required prior to technical development and project implementation.
Types of Feasibility
Based on the domain under examination, there are five types of feasibility studies:
1. Technical Feasibility
From the standpoint of an organization, this research assesses the technical resources available to carry out a project.
It entails ensuring that the technical resources are sufficient and that the hardware and software requirements are satisfied.
If established technologies and procedures exist to enable the proposed development, technical feasibility will be considered.
2. Economic Feasibility
Before allocating financial resources, this evaluation does a cost/benefit analysis of the project.
This analysis provides a clear picture of project credibility (viability) and the project’s economic advantages to the business.
3. Legal Feasibility
The legal requirements of the proposed project are examined in this form of feasibility assessment.
Several factors are examined, ranging from zone legislation to data protection legislation, and compliance demands are defined.
4. Operational Feasibility
This research will aid in analyzing and determining if the project’s completion will meet the organization’s objectives.
5. Scheduling Feasibility
It is the most critical evaluation for project success. It calculates the time required to execute the project after taking into account the organization’s capabilities and assesses if that time is accessible.
Feasibility Study in Project Management- An overview
One can be sure that before any CEO approves a project that might cost thousands (or millions) of dollars, they will want to see a feasibility assessment.
In project management, what exactly is a feasibility study?
It affects if the project will be successful in the first place.
It is usually carried out before any early project stages, such as planning, are performed. It is one of the most vital, if not the most essential, elements in determining whether or not the project can proceed.
The study defines the project market, outlines the project’s primary aims, maps out potential blockages, and proposes alternative solutions. It takes into account time, money, legal, and labor need to evaluate if the project is not solely feasible yet profitable for the organization to undertake.
Even though project managers may not be the ones performing the feasibility study, they can serve as crucial guidance as the project gets going.
The feasibility study may help project managers comprehend the project specifications, business objectives, and risk concerns.
Essential aspects of a feasibility study
In project management, a feasibility study often evaluates the following factors:
Does the company have the necessary technical resources to carry out the project?
Does the company have the financial ability to carry out the project, and does the cost/benefit analysis justify moving forward?
What are the project’s legal requirements, and is the business capable of meeting them? What are the risks of embarking on this project? Is the risk worth it to the organization in terms of perceived benefits?
Does the project, in its intended scope, suit the needs of the company by solving issues and capitalizing on identified opportunities?
Can the project be finished within a realistic time frame?
Benefits of feasibility study in project management
The following are the advantages of doing a feasibility study in project management:
- Before devoting funding, labor, and time, determine whether the project is likely to succeed.
- Improves the productivity and concentration of project teams
- Aids in the detection and capitalization of fresh possibilities
- Provides proof on why and how a project should be carried out.
- Streamlines the business options
- Diagnoses issues and assists with troubleshooting
- Prevents the occurrence of dangers and aids in risk mitigation
- Offers useful information to the project team as well as stakeholders.
How to Conduct Feasibility Study in Project Management?
A feasibility analysis is a thorough procedure that identifies the aspects that will influence whether a project succeeds or fails.
Conducting this type of study evaluates a project’s likelihood of success.
1. Preliminary Analysis
A full-fledged feasibility study takes time and resources, so rather than diving headfirst into this mammoth examination, it is vital to test the waters and do preliminary research.
Consider this an eligibility requirement before the feasibility study.
A preliminary evaluation consists of four main steps:
Make an overview of your ideas:
Outline what you aim to accomplish by undertaking this project and why it is vital to your team, company, or business.
Examine the market for this project:
Look for instances of this sort of project and whether or not others have succeeded in executing it.
Examine your competitive advantage:
What will you do differently to assure the success of your project, such as talent, location, technology, and so on?
Determine the project’s risks:
Risk management is a crucial component in determining the feasibility of any project. Conduct a risk assessment to identify anything that might jeopardize your achievement.
After you have done your preliminary evaluation, you will have a better sense of whether or not to continue investigating the viability of your proposal.
If you don’t identify any large insurmountable hazards during this evaluation, it’s ready to go on to the complete feasibility study.
Word of advice:
This is not the last say on whether a project is genuinely viable.
All of your early research is merely on the surface, and difficulties you didn’t see previously may crop out later during the feasibility study.
2. Outline the project’s scope.
Now that you have a basic knowledge of what you’re getting into with this project, it’s time to write a scope overview. This overview will clarify the project’s objectives by employing the five feasibility questions that I discussed before in this guide:
- Is this strategy technically viable?
- Is this strategy legal?
- Is this proposal practical in terms of execution?
- Is this idea doable in a fair amount of time?
- Is this proposal financially viable?
Using all these 5 questions, you will outline the core concepts of your project, such as what the existing condition or issue is that you aim to fix, what you want to accomplish, project impact estimates, and what it will take to achieve this goal.
Word of Advice:
Before you start writing your outline, examine your organization’s strengths and limitations in regards to this project.
Determine which factors of your company will influence the success or failure of this project.
3. Perform market research
The next step is to do market research and a market survey to acquire a better understanding of the type of income you may expect from your project. It is crucial to do a market survey.
It, if you are unable to conduct one yourself, make sure you employ a third-party agency to do so for you.
Demographics, geographical effect on the market, competition analysis, and calculating the volume in the market region, anticipated market share, and market expansion potential must all be included in the market survey.
The following are the five primary advantages of market research:
- Identification of extra market prospects for your project (new consumers, extra uses, etc.) through focus groups, surveys, and possible client interviews.
- Insight on your competitors’ products, services, marketing strategies, clientele, and so on.
- Market information for your project, including the size and demands of your potential clientele.
- Outcomes on whether or not this project has previously succeeded, how much it cost to accomplish, and what success entails.
- Insight into the best ways to carry out a project, such as a timeline, the necessary staff, and even management styles.
Word of Advice-
Note that target groups and interviews produce more qualitative information than other approaches such as surveys, social media listening, and public domain data.
When conducting market research, try to collect both subjective and objective data.
4. Calculate the financial cost
Regardless of the type of project you are proposing, the financial cost is often what sinks the practicality.
A variety of financial aspects will be considered while analyzing the viability of a project proposal; nevertheless, there are a few important elements to bear in mind while performing these calculations:
- Will your financial resources come from within your company or from a third-party financier?
- What is the financial penalty for failing to complete your project?
- Which hazards will put an excessive strain on your project’s budget?
- What is the profit break-even threshold after your project is up and running, if applicable?
- How much money would you need to finish this project, considering risks?
Keep Murphy’s Law in mind while assessing the financial viability of your project, because anything that may cost you money will cost you money.
Call it confirmation bias, but I usually work under the assumption that my projects would always cost more than I anticipated.
Word Of advice:
It is usually preferable to overestimate your project’s financial costs.
This will become clear when you go through your risk assessment and assign costs and probabilities to each potential event.
5. Opening Day Balance Sheet
The first-day balance sheet computes the total assets and liabilities at the start of the project. It is essential to computing this as precisely as possible. Prepare a list of all the assets required for the project, including their sources, price, and ways of funding.
It is also the time to clear any liabilities and essential investments.
6. Review research and present conclusions to the client
The moment of truth has come, and it’s time to analyze all you’ve discovered, consolidate it all, and give it to the appropriate customers or stakeholders.
Make sure your results answer all five feasibility questions, and if each one is answered in the yes, you have all you need to support the project’s approval.
However, if there are certain questions about specific areas of practicality, you do not have to abandon the idea entirely.
Perhaps this is a chance to rethink your approach, budgets, or objectives to better fit your business.
Word of Advice:
Even though the choice to proceed with a project is made by another party, such as a stakeholder, it doesn’t harm to share your opinion on the subject.
To make your summary argument at the end of the study, use concise, significant results from your research.
Feasibility Study Template
After completing all of the above-mentioned procedures, you should have a thorough feasibility report to deliver to stakeholders.
Here is a template for a feasibility study to help you get a better concept of what it should look like.
- Executive summary
- Description of product
- Technological considerations
- Existing marketplace
- Marketing strategy
- Schedule and timeline
- Financial projections
- Findings and recommendations
A feasibility study is an essential part of the project management process. It is crucial to map out all of the specifics involved, such as expenses, obligations, expected revenue, and so on.
This will assist you and the project stakeholders in determining whether or not your project is feasible and worth pursuing.