Feasibility Study

Source: Project Management Videos

A Feasibility Study is any analysis that considers the project’s economic, legal, technical factors to arrive at a conclusion. The conclusion is regarding the decision whether the project can be successfully completed in the light of the aforesaid factors.

Since, any project requires a considerable commitment in terms of funds and time , feasibility study needs to be done in an effective and efficient manner. Feasibility study provides crucial information to the company’s management and lending institutions and helps them in evaluating the risk of the businesses effectively.


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Areas of Feasibility Study

Technical Feasibility – This type of assessment analyses the technical resources available to any organization. Feasibility study helps organizations to ascertain if there are adequate resources in a company to meet the capacity requirements of any new project.

Such study also incorporates the ability of human resources to convert ideas to working systems. Technical feasibility basically evaluates hardware and software of any system which is proposed.

Economic Feasibility 

This type of assessment incorporates cost and benefit approach for any project. Economic feasibility helps the organizations to determine the cost and viability which is associated with any proposed project.

Before any financial resources are deployed, such an assessment enhances project credibility by highlighting and rectifying any loopholes in the project. Hence, economic benefits of such kind of feasibility studies is immense.


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Legal Feasibility 

Legal Feasibility assessment basically deals with all aspects of the legal system which is linked with a particular proposed project. Legal feasibility deals with areas in the law framework and requirements like zoning laws, corporate laws, Acts of data protection, Copyright/Patent laws etc. 

Operational Feasibility 

This assessment involves analyzing and determining whether a project plan satisfies the prerequisites which are identified in the planning phase. The operational feasibility studies examine the response of everyone who is involved in the project.

This includes end-users, stakeholders, employees If during this analysis any type of resistance is found, that is addressed before funds are allotted to the project.


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Scheduling Feasibility

Scheduling Feasibility is the most important for successful completion of a  project because if a project fails to complete on time all the other aforesaid feasibility studies will become null or void right away. The cost of capital or funds deployed will rise which will make the project economically unviable.

The technical resources may run out, legal issues may crop up and operational challenges and resistance may happen because a project was not completed in time. In scheduling feasibility, an organization estimates the time taken to complete a particular project. 

Steps involved in any feasibility study:

  • Conducting a preliminary analysis at each stage of feasibility study.
  • Preparation of projected income statement and financials 
  • Market Research and Market Survey must be conducted
  • Thorough planning of business operations
  • Analysing and reviewing of all data
  • Using tools, templates, or any form of technology which provides the required leverage.
  • Involvement of stake holders for feedback on the project and third party evaluation of the project.

Importance of Feasibility Study

The significance of a plausibility study depends on the hierarchical want to “hit the nail on the head” before submitting assets, time, or spending plan. A practicality study may reveal new thoughts that could change an undertaking’s extension. It’s ideal for making these judgments ahead of time, as opposed to hop in and to discover that the venture won’t work. Leading an attainability study is consistently useful to the venture as it gives you and different partners an away from the proposed venture. 

The following are some key advantages of leading a plausibility study: 

  • Improves venture groups’ core interest 
  • Recognizes new chances 
  • Gives important data to a “go/off-limits” choice 
  • Strait the business choices 
  • Recognizes a legitimate motivation to embrace the venture 
  • Improves the achievement rate by assessing various boundaries 
  • Helps dynamic on the undertaking 
  • Recognizes reasons not to continue 

Aside from the ways to deal with plausibility study recorded over, a few tasks likewise require different limitations to be broke down – 

  • Inner Task Imperatives: Specialized, Innovation, Spending plan, Asset, and so forth. 
  • Inner Corporate Limitations: Budgetary, Showcasing, Fare, and so forth. 
  • Outside Limitations: Coordination, Condition, Laws and Guidelines, and so forth.

How to conduct a feasibility study?

Conduct a Preliminary Analysis

Start by delineating your arrangement. You should concentrate on an ill-served need, a market where the interest is more noteworthy than the gracefully, and whether the item or administration has a particularly favorable position. At that point, you have to decide whether the obstacles are too high to even consider clearing (for example, excessively costly, incapable to successfully advertise, and so on).

Prepare a Projected Income Statement

This progression expects you to work in reverse. Start with what you anticipate that the pay from the task should be, and afterward, what venture is expected to accomplish that objective. This is the establishment of a salary articulation. Things to consider here incorporate what administrations are required and the amount they’ll cost, any changes following incomes, for example, repayments, and so on.

Conduct a Market Survey, or Perform Market Research

This progression is critical to the achievement of your possibility study, so make it as careful as could reasonably be expected. It’s critical to such an extent that on the off chance that your association doesn’t have the assets to do a legitimate one, at that point, it is favorable to employ an outside firm to do as such. The statistical surveying is going to give you the clearest image of the incomes you can practically anticipate from the undertaking. A few interesting points are the geographic effect available, socioeconomics, dissecting contenders, the estimation of the market, and what your offer will be and if the market is available to development (that is, reaction to your offer).

Plan Business Organization and Operations

When the basis of the past advances has been laid, it’s an ideal opportunity to set up the association and activities of the arranged undertaking. This is certifiably not a shallow, broad-stroke attempt. It ought to be intensive and incorporate beginning up costs, fixed ventures, and activity costs. These costs address things, for example, hardware, promoting techniques, land, workforce, gracefully accessibility, overhead, and so forth.

Prepare an Opening Day Balance Sheet

This incorporates a gauge of the benefits and liabilities, one that ought to be as exact as could be expected under the circumstances. To do this, make a rundown that incorporates things, source, cost, and accessible financing. Liabilities to consider are such things as renting or buying of land, structures and hardware, financing for resources, and records receivables.

Review and Analyze All Data

Every one of these means is significant. However, the survey and investigation are particularly imperative to ensure that everything is as it ought to be, and nothing requires changing or tweaking. In this way, pause for a minute to investigate your work one final time. Reconsider your past advances, for example, the pay explanation, and contrast it and your costs and liabilities. Is it still practical? This is likewise an opportunity to consider a chance, breaking down and overseeing, and think of any emergency courses of action

Make a Go/No-Go Decision

You’re presently at the point of settling on a choice about whether the undertaking is practical or not. That sounds basic. However, all the past advances we’re prompting this dynamic second. A few different interesting points before settling on that twofold decision is whether the responsibility merits the time, exertion, and cash and is it lined up with the association’s vital objectives and long haul goals

Best Practices for a Feasibility Study

  • Use templates/tools/surveys, or any data and technology that gives you leverage
  • Involve the appropriate stakeholders to get their feedback
  • Use market research to further your data collection
  • Do your homework and ask questions to make sure your data is solid

FAQ

What is the feasibility study of a project?

Ans. A Feasibility Study is an analysis that considers the project’s economic, legal, technical factors to arrive at a conclusion. The conclusion is regarding the decision about whether the project can be successfully completed in the light of the aforesaid factors.

What is an example of a feasibility study?

Ans. Here is the example of the feasibility study:
If a business wants to expand, he/she may prefer a feasibility study. This will determine whether they should proceed with this or not. All those who are involved in this will take care of all the costs.

What are the four types of feasibility?

Ans. There are 4 types of feasibility:
1. Operational feasibility study
2. Technical feasibility study
3. Scheduled feasibility study
4. Economic feasibility study

What is the most important part of the feasibility study?

Ans. The most important part of the feasibility study is economics. It is the reason most projects are offered.

What is the best product for a feasibility study?

Ans. Here is the list of product for feasibility:
1. Ice Cream Sandwich Cake
2. Philadelphia Cream Cheese
3. Oreo Truffles Valentine’s Hearts
4. Fresh Strawberry Lemonade
5. 10 Fun And Delicious Recipes You Can Make With Your Kids

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About the Author

Rachit believes in the power of education and has studied from the top institutes of IIIT Allahabad, IIM Calcutta, and Francois Rabelias in France. He has worked as Software Developer with Microsoft and Adobe. Post his MBA, he worked with the world’s # 1 consulting firm, The Boston Consulting Group across multiple geographies US, South-East Asia and Europe.

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