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.
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.
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.
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.
This assessment involves analysing and determining whether a project plan satisfies the pre requisites which are identified in the planning phase. The operational feasibility studies examines the response of everyone who is involved in the project. This includes end users, stake holders, employees If during this analysis any type of resistance is found , that is addressed before funds are allotted to the project .
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.