What is a feasibility study?
Feasibility study can be defined as a preliminary evaluation of a potential project to determine its viability and merits. It provides an independent assessment which helps to examine the technical, financial and legal factors.Effective project management demands a detailed feasibility study before commencement of a potential project.Feasibility study reports help to minimize risks and improve ROI of a proposed project.The practicality of a project can be analyzed in depth, with the help of a good feasibility report.It is a rational way of evaluation which helps in determining the strength, weaknesses, threats,opportunities and ultimate success prospects of a given project.The major considerations while conducting a feasibility study are: the required cost and expected value.
There are a lot of factors that contribute to the success of a project. Primarily, it is evaluated based on the ROI, that includes the percentage of profit the project creates.Feasibility study ensures whether a project is legally, technically and economically viable. In short, the worth of a project can be calculated using a feasibility study report.A detailed feasibility study offers a deep review on the historical background of the project as well as the details of operations, legal obligations and tax compliances.Usually, feasibility study precedes the project implementation stage.
Feasibility study types:
Major objective of Feasibility study is to understand the credibility of a potential project. There are basically 5 types of Feasibility study:
1. Technical Feasibility
This feasibility studies the capability of the technical team and availability of technical resources in order to commence the project. It involves the evaluation of software, hardware and other required technical support for the project.
2. Economic Feasibility
Economic feasibility study is basically the cost/benefit analysis of the proposed system, which helps in deciding the economical viability, benefits and costs involved in the project.; It is assessed before the financial resources are allocated. The positive prospects of the project in economic terms can be analyzed with the help of economical feasibility study.
3. Legal Feasibility
The legal aspects of the project are evaluated in this study. It checks whether the project conflicts with the legal compliances like data protection, zoning laws or social media laws.
4. Operational Feasibility
This evaluation involves how the operational needs of the projected system are met by the organization.
5. Scheduling Feasibility
The timing is important while undertaking a project. Scheduling Feasibility computes the required time to finish a project so that the project finishes within the calculated time.
Many other constraints are also identified and evaluated through feasibility study which includes Financial, Technological, Marketing and other environmental constraints.
Importance of Feasibility Study:
Before completely committing to the project, including time, budget and resources associated with it, every organization has the desire to get things right with the right analysis and calculations. That’s when the feasibility study comes into action. New ideas, trends and challenges can also be discovered with the help of feasibility study. It is also useful for the stakeholders as it gives a clear picture on the proposed project.
Major benefits of feasibility study:
- To unlock new opportunities
- To discover the challenges and threats
- To acquire information regarding the advancement of the project.
- Let the team improve focus on important areas
- Helps in proper decision-making
- Helps in figuring out new alternatives
- Gives clear idea on the success parameters
Content of a Feasibility Study Report
- Executive summary
- Specifications of the item or service
- Considerations for the future of technology
- The marketplace for goods and services
- Approach to marketing
- Organization/staffing
- Schedule
- The financial forecasts
- Recommendations based on research
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