The Feasibility study represents the need for business organization to evaluate and determine if a given project is economically feasible. It is an integral part of the business process and is conducted to assist decision makers to assess and analyze all the implications of the proposed project with a focus on the potential impact, based upon which the organization decides if the project should be implemented or not.
Types of feasibility
When conducting a proper feasibility study, the following types of feasibility study should be considered:
1. Operational feasibility
On the one hand, the operational feasibility is related to the personnel who have to carry out the project. For this reason, it is analyzed whether the staff has the necessary work skills to develop and implement them.
The operational feasibility depends primarily on the human resources that are part of the organization. Since they are the ones who have to carry out all the activities in the various processes of the system in order to achieve the proposed goals. Of course, it must be evaluated whether they have the necessary prerequisites for the implementation of the project.
In fact, when developing a project or business, a system must be implemented. The following should be observed with every newly implemented system:
Unless it is very complicated for the workers who will be operating it.
Notice if workers are reluctant to use it for other reasons.
Analyze whether employees can adapt to change, especially if the change occurs very quickly.
Assess whether it can't get out of date very quickly and look for contingency plans.
2. Technical feasibility
This aspect also evaluates whether the technical infrastructure that the company has at its disposal can react cheaply and efficiently to the development of the planned project or business. It should also be verified that people have the necessary technical knowledge to use the necessary equipment and software.
3. Economic feasibility
With regard to profitability, a comprehensive analysis of the cost-benefit ratio of the company or project must be carried out and both aspects must be weighed. If the evaluation shows that the costs outweigh the benefits, it would be better not to. When the benefits exceed the costs, the decision to implement the project becomes less risky, although that does not mean that there are no risks.
4. Commercial feasibility
In the commercial part, it will now be determined whether there is a possibility that there will be a sufficient number of customers. These customers must be ready to consume or use the products that the company or project will offer in the market.
In addition, the logistics of sales and marketing are evaluated for their adaptation to market needs.
5. Political and Legal Feasibility
Of course, in this part it is checked whether the type of business to be developed or the project to be developed does not comply with laws or regulations of a municipal, state or global nature or violates them. Otherwise it cannot be implemented as it violates the legal requirements and is therefore not feasible.
6. Feasibility of time
Finally, the feasibility of time makes it possible to know whether the time allotted to carry out the project coincides with the real time required for its implementation.
Feasibility study: definition
Feasibility study is carried out before starting the project and can be defined as: An analysis that checks whether the project is feasible, profitable and economical or not. Various factors are examined as part of a feasibility study to answer this question:
• Economic and financial factors: will the project be profitable in the long term (economic feasibility)?
• Technological factors: What technology is needed and are the necessary resources already in place in the organization? Is the technical feasibility given?
• Organizational factors: What resources and competencies are available to you?
• Legal factors: are there any legal peculiarities to be considered?
• Business factors: are there opportunities in the market? Potential customers and goals? This is not unlike market research. As part of project management, all of these points to be analyzed must be put into perspective with regard to the deadlines and of course the quality of the expected results.
A feasibility study will also examine elements related to the objectives of the project and its progress over time.
Your results are also useful in project planning as they are based on technical-scientific analyzes.
What are the goals of the feasibility study?
Regardless of the type of project or business idea (company creation, launch of a new product, construction or architectural project, etc.), the objectives of the feasibility study are as follows:
• Determine what conditions and actions are required to ensure the success of the project;
• Assess possible risks and limitations;
• Identify resources;
• Calculation of the necessary budget as well as the achievable ROI in order to evaluate profitability;
• Knowledge of the various possible scenarios and the risk
• Brief the various stakeholders about the conditions and phases of the implementation of the project;
• Ensure that the project ultimately achieves its goals .
This project study offers a detailed analysis of the technical and organizational feasibility , but above all the financial viability of a project or an idea. If at this stage you find that it is not profitable or the risk is too high, you should redefine the goals and scope, or even postpone or give it up .
Feasibility study: sample table
This study usually results in the creation of a table of assessment criteria and a score for each area. Depending on the type of project, different criteria can be included in a feasibility study table describing the different scenarios considered.
Step 1: Identify Specific Goals
A feasibility study is only effective if the end goal of the project and the
Step 2: Investigation of the project environment
Investigate the realities of the market or environment that will influence your project .
?? A PESTEL analysis is ideal for this!
Step 3: Determine needs and budget
What exactly are the needs of the project and what resources must be used to achieve the goals of your project?
The best way to find out is to list all of your needs , such as: B .:
• Material requirements
• technical requirements
• Employees and skills
• Marketing and communication needs, etc.
With all of these items listed, it is time to evaluate the costs involved. In this way you will receive a cost estimate for the implementation of your project .
Step 4: calculate the ROI of the project
What is the use of tackling a project if it is not making enough profit , or worse, if you are at a loss! Therefore, the feasibility study includes the calculation of the ROI (Return on Investment) .
By estimating the budget and identifying future business opportunities , you can gauge whether the project will bring you a profit , and if so, when and how much.
Step 5: create multiple scenarios
Experts recommend drafting several scenarios in order to be prepared for all eventualities. Therefore sketch:
• an optimistic scenario,
• a pessimistic scenario,
• a neutral scenario.
? ? Each of them must be profitable, even the pessimistic scenario !
The different plans must be as detailed as possible and contain all the elements that are important to your decision-making !
?? The various scenarios can be constructed using a SWOT analysis (Strengths, Weaknesses, Opportunities and Threats).
Step 6: Choose the ideal scenario and start the project
After the feasibility study has been carried out, the ideal scenario should be selected, taking into account all the analyzed elements and the respective advantages and disadvantages .
In this way, you can move on to the next phase with confidence, namely the actual implementation phase of the project.
? ? What to do with scenarios that are not selected? Just put them aside. They can be reused for other projects or for the current project if it needs to be readjusted during the course of the project.