The feasibility study is an integral part of project management. A project shows the probability of its success and failure. Moreover, a feasibility study shows a detailed analysis of a proposed project including all the aspects that show how and when it will be accomplished and what resources are needed.
Suppose you want to start a new project for your organization. In that case, this study enables you to evaluate many important factors and organize all the necessary resources to make this project successful. This article will let you know the importance, purpose, types, and understanding of a feasibility study, and how to conduct it effectively. So let’s get started!
What Is A Feasibility Study?
The feasibility study, feasibility report, or feasibility analysis is the evaluation or a detailed analysis of a project or a business to examine its viability, practicality, and all other possible suspects that can lead a business or an organization towards success or failure.
In other words, it is held to determine the availability of resources including technology, financials, and other things that might be part of a project plan. Furthermore, along with cost and value, it tells about the revenue that will be generated through the project.
A good feasibility study digs out the apparent as well as hidden facts of the proposed project including evaluation of the products and services, financial data, need for operations and management and marketing strategies, etc. And consequently, you will be able to decide whether to move forward or step back.
Types Of Feasibility Study
A feasibility study examines many aspects and areas of a project. Understanding the types and elements of it in project management is crucial to take your business to heights. Let’s discuss 3 main types of feasibility studies.
1. Technical Feasibility
The main focus of the technical feasibility study is to examine the technical resources required for a project. This study involves what technical resources are needed for the operations and management, and whether these resources and the technical team are enough to complete the project.
For example, manufacturing 1000 products per day are part of the project plan but your organization has not had enough team and equipment to complete the task in a day. So the assessment evaluates that your project is not technically feasible.
2. Economic Or Financial Feasibility
The financial feasibility study analyzes the cost and benefit of the project. In other words, the study evaluates the cost of all resources needed for the development of the project including hardware resources, human resources, cost of employees, and operational costs.
In short, you will get an idea through financial feasibility that how much investment you need for the project and what possible profit will be made through it. For example, you have an investment of one million dollars for a project but a financial feasibility study says you need an amount of 1.2 million dollars for the project. In that case, your project is not feasible financially.
3. Operational Feasibility
An operational feasibility study gives an estimated idea of whether an organization is in a position to perform all the operations to accomplish the project or not.
These operations include equipment, staff, workers, and legal requirements. When all the facts will be uncovered, an organization has a comprehensive overview of whether it has enough resources for the operations or not.
Importance Of Feasibility Study
Feasibility study makes an organization or businessman capable of goal setting, time management with the help of a timer app, and budget management. Also, it makes a sketch or picture of the project in your mind that helps to make a strong decision. Let’s discuss some key benefits of conducting a feasibility study.
- This study helps the project team to put 100% effort
- It enables to find new ways to accomplish a project
- It helps you to take a wise decision
- It maximizes the profits
- It introduces alternative business plans
Steps To Conduct A Feasibility Study
The feasibility study can be conducted by following simple steps.
- Begin with the basic analysis of the business case to take a general overview of the products and services.
- Build a fresh income statement including revenue sources and profit evaluation
- Conduct a study on the demand for products and services in the market
- Make a structure of resources that are essential to perform operations
- Evaluate the cost and income for the project and generate a balance sheet
- Finally, collect all data in one place and decide on whether or not to implement the plan
The concept of feasibility study in project management is valuable for all kinds of businesses to make better decisions. A better understanding of feasibility studies leads to a better way of organizing a project to be successful in your business. Before beginning a project, make sure that all the technical, economical, and operational aspects are feasible for the project. Moreover, continuing with the pre-planned strategies and targeted goals will help to accomplish a project as well as generate unexpected revenue for an organization.