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Introduction
Do you remember a time when you came up with a brilliant plan but were not too certain how it would turn out? Yes, this is where a feasibility study comes in handy. It assists us in determining whether our concepts can become actual projects. In this blog post, we will discuss feasibility studies, why they are essential, and how to approach them.
If you are a student with the idea to give the world a brand new invention or an active observer of how a large company outlines its project, this manual will be useful for you.
Well, let’s go ahead and understand how feasibility studies can bring those great ideas to life!
What Is a Feasibility Study?
A feasibility study is an evaluation of a project to determine its possibilities. It examines the technical, economic, legal, and market feasibility to assess whether the project can be successful.
What’s the Importance of a Feasibility Study?
As pointed out below, a feasibility study can help decision-makers. This tool offers a holistic picture of the advantages, drawbacks, and challenges that may affect a project.
The study uses criteria like technical feasibility, economic feasibility, legal feasibility, and market feasibility to keep the project feasible and valuable.
What Is Included in a Feasibility Study Report?
A feasibility study report usually includes an executive summary, the product or service proposal, technology factors, market analysis, the marketing plan, the human resource plan, the time frame, financials, and the conclusion or recommendation.
This report aims to enable stakeholders to make the right decisions. Proficiency in Project Management Tools can greatly enhance the quality of these reports.
Who Conducts a Feasibility Study?
A feasibility study is usually conducted for an enterprise by the senior managers in the organization.
If the required professional help or time is not feasible, then it can be procured from consultants who are into feasibility consulting.
How to Conduct a Feasibility Study?
- Preliminary Analysis: This can first be done by surveying the various stakeholders of the proposed project. This helps identify any improper functions that may be contained in the process.
- Market Research: Conduct a feasibility analysis to learn about the prevailing consumer trends within that particular industry and your competitors’ activities. This will help assess the soundness of the project’s entire market plan.
- Business Plan: Write staff requirements for implementing the business plan, the approximate cost and time needed to complete it, and other details of the plan. This plan will also serve as a basis for formulating other plans regarding the company.
- Financial Projections: Analyze balance sheets reflecting possible sales, overheads, and probable profit levels. This step is particularly important when determining the project’s profitability potential.
- Risk Analysis: What changes are occurring in the business environment that may be beneficial or deleterious to the business? A number of risks have been identified; it is important to devise means of containing them.
- Decision Making: Based on the analyzed project data, decide whether to proceed with the project.
For a more detailed guide, you can check our Project Management Masters Program.
Feasibility Study Template
A Feasibility Study Template is a structured document that helps evaluate the viability of a proposed project or business idea.
It typically includes sections for:
Executive Summary
Use this section to introduce the project and provide a broad stroke picture of what it intends to do and what it plans to achieve. Include an overview of the sources you used to support your conclusions.
Description of Product/Service
Here, you’ll want to assess the appeal of the product or service being proposed, analyzing its desirability and demand.
Technical Considerations
Show how the product or service will be delivered to customers, such as the materials used, the labor involved, transportation from where the business is located, and all the technology that will bring this project together.
Product/Service Marketplace
Research the target market for the product or service, including its depth and condition and whether there’s enough demand for it to make the project viable. Include key competitors.
This template guides decision-makers through a comprehensive assessment of the project’s potential success. For professionals looking to enhance their project management skills, obtaining a PMP Certification can be highly beneficial.
Types of Feasibility Study
Pre-Feasibility Study
The pre-feasibility analysis is quite similar to the feasibility study, but it is a preliminary study. It assists in deciding on whether to take up the project or not. This analysis points at any explicit technical, financial, or operational hitch that can render the project unfeasible.
Technical Feasibility Study
This analysis determines the readiness of the organization in terms of technical capacity to deliver the project as specified in the project description. It concerns manufacturing capability, space requirements, logistics, and codes to obey in some nations.
Economic Feasibility Study
The economic feasibility study examines a particular project’s financially viable returns. It involves forecasting the business’s capital needs, costs, and revenues to identify the project’s profitability or lack thereof.
Legal Feasibility Study
This analyzes areas that concern the legal sphere, including legal frameworks and legal requisites. By doing so, the project avoids noncompliance with laws and regulations, diminishing its legal exposure.
Market Feasibility Study
A market feasibility study, therefore, determines the project’s marketability. It involves identifying the key drivers in the given industry, which include, but are not limited to, market trends, competitors, and customers.
SWOT is one of the most common analyses used to determine market strengths, weaknesses, opportunities, and threats. For those interested in mastering these skills, learning how to become a Project Manager can be a great next step.
Feasibility Study Examples
Construction Feasibility Study
A construction feasibility study assesses the possibility of a building construction project. Some of the aspects we look at include site characteristics, Permits/ Regulatory Considerations, and funding. This study aids in determining whether the construction project is viable.
Manufacturing Feasibility Study
The manufacturing feasibility study focuses on the practicality of producing a certain good. However, it still looks at aspects such as production, supply, and relative cost. The study is carried out to ensure that the product is possible and profitable to manufacture.
Conclusion
Feasibility studies could be compared to maps that help us navigate our ideas. They help us get a vision of the road in front of us and potential obstacles or turnoffs that are readily apparent.
Using the results of these studies, one is better placed to decide which project to start on next and how best to ensure the success of the identified projects.
Thus, the next time you will come up with a great concept, remember to do a feasibility study. You might just find it to be the tool that makes your dreams come true!
For a more in-depth understanding of project management concepts, you might find our Project Management Tutorial helpful.
FAQs
What is a feasibility study example?
A feasibility study example includes construction or manufacturing projects where practical and financial factors are assessed.
What are the 4 areas of a feasibility study?
The four areas of a feasibility study are technical, economic, legal, and market feasibility.
Why is a feasibility study important?
A feasibility study is important because it helps determine if a project is viable and worth pursuing.
What are the steps of a feasibility study?
The steps include conducting a preliminary analysis, market research, developing a business plan, financial projections, risk analysis, and making a decision.
