importance of business plan feasibility study

Table of Contents

What is a feasibility study, understanding a feasibility study, types of feasibility study, importance of feasibility study, benefits of a feasibility study, what is included in a feasibility study report, tools for conducting a feasibility study, examples of a feasibility study, what is the purpose of a feasibility study, how do you write a feasibility study, 7 steps to do a feasibility study, how to conduct a feasibility study, feasibility study vs. business plan, reasons to do or not to do a feasibility study, enroll today with these pgp on project management to enhance your skills, feasibility study and its importance in project management.

Reviewed and fact-checked by Sayantoni Das

The growth and recognition of project management training have changed significantly over the past few years, and these changes are expected to continue and expand. And with the rise of project management comes the need for a feasibility study.

It can be thrilling to start a complex, large-scale project with a significant impact on your company. You are creating real change. Failure can be scary.  This article will help you get started if you have never done a feasibility study on project management.

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A feasibility study is a comprehensive evaluation of a proposed project that evaluates all factors critical to its success in order to assess its likelihood of success. Business success can be defined primarily in terms of ROI, which is the amount of profits that will be generated by the project.

A feasibility study evaluates a project's or system's practicality. As part of a feasibility study, the objective and rational analysis of a potential business or venture is conducted to determine its strengths and weaknesses, potential opportunities and threats, resources required to carry out, and ultimate success prospects. Two criteria should be considered when judging feasibility: the required cost and expected value.

As the name implies, a feasibility analysis is used to determine the viability of an idea, such as ensuring a project is legally and technically feasible as well as economically justifiable. It tells us whether a project is worth the investment—in some cases, a project may not be doable. There can be many reasons for this, including requiring too many resources, which not only prevents those resources from performing other tasks but also may cost more than an organization would earn back by taking on a project that isn’t profitable.

A well-designed study should offer a historical background of the business or project, such as a description of the product or service, accounting statements, details of operations and management, marketing research and policies, financial data, legal requirements, and tax obligations. Generally, such studies precede technical development and project implementation.

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Project management is the process of planning, organizing, and managing resources to bring about the successful completion of specific project goals and objectives. A feasibility study is a preliminary exploration of a proposed project or undertaking to determine its merits and viability. A feasibility study aims to provide an independent assessment that examines all aspects of a proposed project, including technical, economic, financial, legal, and environmental considerations. This information then helps decision-makers determine whether or not to proceed with the project.

The feasibility study results can also be used to create a realistic project plan and budget. Without a feasibility study, it cannot be easy to know whether or not a proposed project is worth pursuing.

A feasibility analysis evaluates the project’s potential for success; therefore, perceived objectivity is an essential factor in the credibility of the study for potential investors and lending institutions. There are five types of feasibility study—separate areas that a feasibility study examines, described below.

1. Technical Feasibility

This assessment focuses on the technical resources available to the organization. It helps organizations determine whether the technical resources meet capacity and whether the technical team is capable of converting the ideas into working systems. Technical feasibility also involves the evaluation of the hardware, software, and other technical requirements of the proposed system. As an exaggerated example, an organization wouldn’t want to try to put Star Trek’s transporters in their building—currently, this project is not technically feasible.

2. Economic Feasibility

This assessment typically involves a cost/ benefits analysis of the project, helping organizations determine the viability, cost, and benefits associated with a project before financial resources are allocated. It also serves as an independent project assessment and enhances project credibility—helping decision-makers determine the positive economic benefits to the organization that the proposed project will provide.

3. Legal Feasibility

This assessment investigates whether any aspect of the proposed project conflicts with legal requirements like zoning laws, data protection acts or social media laws. Let’s say an organization wants to construct a new office building in a specific location. A feasibility study might reveal the organization’s ideal location isn’t zoned for that type of business. That organization has just saved considerable time and effort by learning that their project was not feasible right from the beginning.

4. Operational Feasibility

This assessment involves undertaking a study to analyze and determine whether—and how well—the organization’s needs can be met by completing the project. Operational feasibility studies also examine how a project plan satisfies the requirements identified in the requirements analysis phase of system development.

5. Scheduling Feasibility

This assessment is the most important for project success ; after all, a project will fail if not completed on time. In scheduling feasibility, an organization estimates how much time the project will take to complete.

When these areas have all been examined, the feasibility analysis helps identify any constraints the proposed project may face, including:

• Internal Project Constraints: Technical, Technology, Budget, Resource, etc.
• Internal Corporate Constraints: Financial, Marketing, Export, etc.
• External Constraints: Logistics, Environment, Laws, and Regulations, etc.

The importance of a feasibility study is based on organizational desire to “get it right” before committing resources, time, or budget. A feasibility study might uncover new ideas that could completely change a project’s scope. It’s best to make these determinations in advance, rather than to jump in and to learn that the project won’t work. Conducting a feasibility study is always beneficial to the project as it gives you and other stakeholders a clear picture of the proposed project. 

Below are some key benefits of conducting a feasibility study:

• Improves project teams’ focus
• Identifies new opportunities
• Provides valuable information for a “go/no-go” decision
• Narrows the business alternatives
• Identifies a valid reason to undertake the project
• Enhances the success rate by evaluating multiple parameters
• Aids decision-making on the project
• Identifies reasons not to proceed

Apart from the approaches to feasibility study listed above, some projects also require other constraints to be analyzed -

Preparing a project's feasibility study is an important step that may assist project managers in making informed decisions about whether or not to spend time and money on the endeavor. Feasibility studies may also help a company's management avoid taking on a tricky business endeavor by providing them with critical information.

An additional advantage of doing a feasibility study is that it aids in the creation of new ventures by providing information on factors such as how a company will work, what difficulties it could face, who its competitors are, and how much and where it will get its funding from. These marketing methods are the goal of feasibility studies, which try to persuade financiers and banks whether putting money into a certain company venture makes sense.

When starting a business, one of the most important steps is to conduct a feasibility study. This study will help to determine if your business idea is viable and has the potential to be successful. Several factors need to be considered when conducting a feasibility study, including the marketability of your product or service, the competition, the financial stability of your company, and more. A feasibility study should cover the amount of technology, resources required, and ROI.

The results of your feasibility studies study are summarized in a feasibility report, which typically comprises the following sections.

• 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
• The financial forecasts
• Recommendations based on research

Suggested Best Practices

While every project has its own goals and needs, the following are best practices for conducting a feasibility study.

• Do a preliminary analysis. This includes getting feedback from relevant stakeholders on the new project. Also, look for other business scenarios.
• To ensure that the data is solid, determine and ask queries about it in the initial phase.
• Take a market survey to identify market demand and opportunities for the new concept or business.
• Create an organizational, operational, or business plan. This includes identifying how much labor is required, what costs, and how long.
• Make a projected income statement that involves revenue, operating expenses, and profit.
• Create an opening day balance sheet.
• You will need to identify and address any vulnerabilities or obstacles.
• Take an initial decision to go ahead with the plan.

Suggested Components

Here are the some suggested components for conducting a feasibility study:

• Executive Summary: Write a narrative describing the project, product, or service.
• Technological considerations: Ask yourself what it will take. Are you able to afford it? How much will it cost?
• Current marketplace: Find out the market for your product, service, or plan in the local and global markets.
• Marketing strategy: Define in the detailed description.
• Required staff: What human resources are needed for this project?
• Timeline and schedule: Use important interim markers to indicate when the project will be completed.
• Project financials. Project financials are the different ways managers can account for money spent and earned on projects. One of the most important aspects of financial management is creating and tracking accurate project financials.

A local university was concerned about the state of the science building, which was built in the 1970s. School officials sought to determine the costs and benefits of expanding and upgrading the building, given the scientific and technological advances over the past 20 years. A feasibility study was therefore conducted.

School officials looked at several options and weighed the costs and benefits of updating and expanding the science building. There were concerns expressed by school officials about the project's cost and public reaction. The proposed new science building will be larger than the current one. The community board rejected similar proposals in the past. The feasibility study will address these concerns and any possible legal or zoning issues.

The feasibility study examined the technology requirements of the proposed concept(new science building), the potential benefits for students, and its long-term viability. Modernizing the science facility will increase the scientific research potential and ameliorate its modules. It also would allure new students.

Financial projections provided information about the scope & cost of this project and also provided information on raising funds. This covers issuing an investor's bonds and tapping into its endowment. Projections also help determine how the new science program attracts more fresh students to enroll in offered programs, increasing tuition and fees revenue.

The feasibility study proved that the proposed concept was feasible, which allowed for the expansion and modernization of the science building. The feasibility study would not have allowed school administrators to know if the expansion plans were feasible without it.

A feasibility study is an important first step in starting a new business. It is a detailed examination of whether or not a proposed business venture is likely to be successful. A feasibility study aims to provide information that will help business owners make informed decisions about their new venture.

The feasibility study will answer important questions about the proposed business, including:

• What is the target market for this business?
• Who are the competitors?
• What are the costs associated with starting and running this business?
• What are the potential risks and rewards associated with this venture?
• How much revenue can this business generate?
• What are the estimated profits and losses for this business?
• What is the potential for growth in this industry?

This feasibility study will outline why your business idea is worth pursuing and will also help you identify any potential risks or problems that could occur. When writing a feasibility study, there are a few key things to keep in mind:

• Outline your target market and how you plan to reach them.
• Discuss your product or service in detail and explain why it is unique and needed.
• Outline your financial projections and explain how you plan to make a profit.

1. Conduct a Preliminary Analysis

A preliminary investigation is necessary to determine whether a full feasibility study is warranted. During this stage, key information will be gathered to assess the project's potential and make a preliminary decision about its feasibility. This should include a review of relevant documents, interviews with key personnel, and surveys of potential customers or users.

2. Prepare a Projected Income Statement

To do a feasibility study, you must create a projected income statement. Your projected income statement will show how much money your business is expected to make in the coming year. It will include both your estimated revenue and your estimated expenses. This document will be essential in helping you make informed decisions about your business.

3. Conduct a Market Survey, or Perform Market Research

Conducting market research is an important step in any feasibility study. By understanding the needs and wants of your potential customers, you can determine if there is a market for your product or service. You can also get an idea of what your competition is doing and how to best position your business to meet the needs of your target market.

There are a variety of ways to conduct market research. One popular method is to conduct a survey. You can survey potential customers directly or use data from secondary sources such as surveys conducted by other organizations. You can also use focus groups or interviews to get feedback from potential customers.

Once you have gathered your data, you can use it to create a profile of your ideal customer. This will help you understand your target market and how to reach them.

4. Plan Business Organization and Operations

When starting a business, one of the first things you need is to plan your organization and operations. This involves creating a structure for your company and figuring out the logistics of how you will run it. There are many factors to consider when planning your organization and operations, such as:

• Company Structure: What type of company will you be (sole proprietorship, partnership, corporation, etc.)? What will the hierarchy look like?
• Location: Where will your business be located? Will you have a physical storefront or operate online only?
• Marketing: How will you promote your business?

5. Prepare an Opening Day Balance Sheet

The opening day balance sheet is a snapshot of the company's financial position at the beginning of the business venture. The purpose of the opening day balance sheet is to give an idea of the amount of money that the company has to work with and track its expenses and income as they occur. This information is vital to making sound business decisions. The opening day balance sheet will include the following:

• Cash on hand
• Accounts receivable
• Prepaid expenses
• Fixed assets
• Accounts payable
• Notes payable
• Long-term liabilities

6. Review and Analyze All Data

The feasibility study should include reviewing and analyzing all data relevant to the proposed project. The data collected should be verified against source documentation, and any discrepancies should be noted. The purpose of the feasibility study is to provide a basis for making a decision, and the data should be sufficient to support that decision.

The analysis should consider both the positive and negative aspects of the proposed project. The financial analysis should be thorough, and all assumptions should be documented. The risk assessment should identify any potential risks and mitigation strategies. The team assigned to the project should review the feasibility study and recommend the organization's leadership.

Organizational leadership should decide whether to proceed with the project based on the feasibility study's findings. If the project is approved, the organization should develop a project plan that includes a detailed budget and timeline

7. Make a Go/No-Go Decision

It is important to know when to cut your losses when starting a business. The go/no-go decision in a feasibility study comes in. The go/no-go decision is a key part of a feasibility study, and it can help you determine whether or not your business idea is worth pursuing.

Making the go/no-go decision is all about risk assessment. You need to weigh the risks and rewards of starting your business and decide whether the potential rewards are worth the risks. If the risks are too high, you may want to reconsider your business idea.

Now, let's discuss a few of the steps we take in order to do the feasibility study.

• To begin, we do a preliminary study of the business case to define what is included and what we are examining and attempting to find is realistic.
• Following that, we generate a forecasted income statement. We need to understand the revenue sources; how are we going to profit from this? Where does the income originate? Additionally, we must do a market study.
• We need to find out whether this is a demand for our product. How much demand does this have? Is there a market for this product or service?
• Plan your company's structure and operations, which is the fourth step. Specifically, what type of organization do we need, and what resources do we have? Do we have any specific personnel needs?
• We also plan to generate a balance sheet on the first day. What are the income and expenses, and how can we be confident we'll be able to decide whether we're going to make our ROI?
• As a result, we plan to go through and examine all of our data before making a final decision on whether or not to go forward. In other words, are we going to pursue this project or business opportunity?

When starting a business, you must create two very important documents: a feasibility study and a business plan. While they may seem similar, they are two different things with different purposes.

A feasibility study is a preliminary document that assesses the feasibility of a proposed business. It looks at the market potential, the competition, the costs and benefits of starting the business, and the risks and rewards involved.

On the other hand, a business plan is a more detailed document that outlines how a business will be run and what its goals are. It includes information about its mission statement, its products and services, its target market, its finances, and its management team.

There are many factors to consider when deciding whether or not to conduct a feasibility study. The most important question is whether the study will help you make a better decision.

Some reasons to do a feasibility study include:

• You are considering a major change or investment
• You want to assess the viability of a new business or product
• You need to understand the risks and potential rewards associated with a project

On the other hand, some reasons not to do a feasibility study include:

• You are pressed for time and don't think the study will provide enough value to justify the time commitment.
• You are confident that your idea is feasible, and a study will only confirm what you already believe.
• The change or investment is not significant enough to warrant the study.
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This article introduces the concept of a feasibility study and provides a few tips on conducting one. A feasibility study is an important tool for evaluating a project before starting it. By understanding the feasibility of a project, you can make better decisions about whether to move forward.

We hope this helped you understand the concept of feasibility study better. To learn more about similar project management concepts , explore our library of Project Management articles or check out our Post Graduate Program in Project Management that covers new trends, emerging practices, tailoring considerations, and core competencies required of a Project Management professional .

Q1. What Is the Main Objective of a Feasibility Study?

Feasibility study helps decision makers to determine the success or failure of a proposed project or investment. It evaluates the predicted cost and benefits of the proposed project. 

Q2. What Are the Steps in a Feasibility Study?

The first step in a feasibility study is to conduct the primary analysis and create the projected income statement. Followed by doing a market survey and accordingly planning business operations. The last step is to create a balance sheet to review and analyze data. Based on your analysis, you can decide whether to go or not go ahead with the proposed statement. 

Q3. Who Conducts a Feasibility Study?

Feasibility study is done by the senior management of the organization. Sometimes, they take help from mid-senior employees to complete the analysis in short span of time. 

Q4. What Are the 5 Types of Feasibility?

The 5 types of feasibility study are Scheduling Feasibility, Operational Feasibility, Legal Feasibility, Economic Feasibility, and Technical Feasibility. 

Q5. Why is a Feasibility Study Important?

A feasibility study helps in identifying the financial, market and logistical challenges of a proposed project. It is done by evaluating the estimated funds for the project and return of investment.

Q6. When is the Feasibility Study Done?

The feasibility study is done before the business plan is created. 

Q7. What is the Primary Purpose of Conducting a Feasibility Analysis?

The objective of feasibility study is to assess the financial viability of developed plan and whether it will be successful or not.

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How to conduct a feasibility study: Templates and examples

Conducting a feasibility study is an important step in successful project management. By evaluating the viability of a proposed project, a feasibility study helps you identify potential challenges and opportunities, ensuring you make informed decisions. In this guide, we’ll walk you through how to conduct a feasibility study with practical templates and real-world examples, designed for project managers seeking to optimize their project planning process.

It can be exciting to run a large, complex project that has a huge potential impact on your organization. On the one hand, you’re driving real change. On the other hand, failure is intimidating. 

What is a feasibility study? 

A feasibility study—sometimes called a feasibility analysis or feasibility report—is a way to evaluate whether or not a project plan could be successful. A feasibility study evaluates the practicality of your project plan in order to judge whether or not you’re able to move forward with the project. 

It does so by answering two questions: 

Does our team have the required tools or resources to complete this project? 

Will there be a high enough return on investment to make the project worth pursuing? 

Benefits of conducting a feasibility study

There are several key benefits to conducting a feasibility study before launching a new project:

Confirms market opportunities and the target market before investing significant resources

Identifies potential issues and risks early on

Provides in-depth data for better decision making on the proposed project's viability

Creates documentation on expected costs and benefits, including financial analysis

Obtains stakeholder buy-in by demonstrating due diligence

Feasibility studies are important for projects that represent significant investments for your business. Projects that also have a large potential impact on your presence in the market may also require a feasibility assessment. 

As the project manager , you may not be directly responsible for driving the feasibility study, but it’s important to know what these studies are. By understanding the different elements that go into a feasibility study, you can better support the team driving the feasibility study and ensure the best outcome for your project.

When should you conduct a feasibility analysis?

A feasibility study should be conducted after the project has been pitched but before any work has actually started. The study is part of the project planning process. In fact, it’s often done in conjunction with a SWOT analysis or project risk assessment , depending on the specific project. 

Feasibility studies help: 

Confirm market opportunities before committing to a project

Narrow your business alternatives

Create documentation about the benefits and disadvantages of your proposed initiative

Provide more information before making a go-or-no-go decision

You likely don’t need a feasibility study if:

You already know the project is feasible

You’ve run a similar project in the past

Your competitors are succeeding with a similar initiative in market

The project is small, straightforward, and has minimal long-term business impact

Your team ran a similar feasibility analysis within the past three years

One thing to keep in mind is that a feasibility study is not a project pitch. During a project pitch, you’re evaluating whether or not the project is a good idea for your company and whether the goals of the project are in line with your overall strategic plan. Typically, once you’ve established that the project is a good idea, you'll run a feasibility study to confirm that the project is possible with the tools and resources you have at your disposal. 

Types of feasibility studies

There are five main types of feasibility studies: technical feasibility, financial feasibility, market feasibility (or market fit), operational feasibility, and legal feasibility. Most comprehensive feasibility studies will include an assessment of all five of these areas.

Technical feasibility

A technical feasibility study reviews the technical resources available for your project. This study determines if you have the right equipment, enough equipment, and the right technical knowledge to complete your project objectives . For example, if your project plan proposes creating 50,000 products per month, but you can only produce 30,000 products per month in your factories, this project isn’t technically feasible. 

Financial feasibility

Financial feasibility describes whether or not your project is fiscally viable. A financial feasibility report includes a cost-benefit analysis of the project. It also forecasts an expected return on investment (ROI) and outlines any financial risks. The goal at the end of the financial feasibility study is to understand the economic benefits the project will drive. 

Market feasibility

The market feasibility study is an evaluation of how your team expects the project’s deliverables to perform in the market. This part of the report includes a market analysis, a market competition breakdown, and sales projections.

Operational feasibility

An operational feasibility study evaluates whether or not your organization is able to complete this project. This includes staffing requirements, organizational structure, and any applicable legal requirements. At the end of the operational feasibility study, your team will have a sense of whether or not you have the resources, skills, and competencies to complete this work. 

Legal feasibility

A legal feasibility analysis assesses whether the proposed project complies with all relevant legal requirements and regulations. This includes examining legal and regulatory barriers, necessary permits, licenses, or certifications, potential legal liabilities or risks, and intellectual property considerations. The legal feasibility study ensures that the project can be completed without running afoul of any laws or incurring undue legal exposure for the organization.

Feasibility assessment checklist

Most feasibility studies are structured in a similar way. These documents serve as an assessment of the practicality of a proposed business idea. Creating a clear feasibility study helps project stakeholders during the decision making process. 

The essential elements of a feasibility study are: 

An executive summary describing the project’s overall viability

A description of the product or service being developed during this project

Any technical considerations , including technology, equipment, or staffing

The market survey , including a study of the current market and the marketing strategy 

The operational feasibility study evaluates whether or not your team’s current organizational structure can support this initiative

The project timeline

Financial projections based on your financial feasibility report

6 steps to conduct a feasibility study

You likely won’t be conducting the feasibility study yourself, but you will probably be called on to provide insight and information. To conduct a feasibility study, hire a trained consultant or, if you have an in-house project management office (PMO) , ask if they take on this type of work. In general, here are the steps they’ll take to complete this work: 

1. Run a preliminary analysis

Creating a feasibility study is a time-intensive process. Before diving into the feasibility study, it’s important to evaluate the project for any obvious and insurmountable roadblocks. For example, if the project requires significantly more budget than your organization has available, you likely won’t be able to complete it. Similarly, if the project deliverables need to be live and in the market by a certain date but won’t be available for several months after that, the project likely isn’t feasible either. These types of large-scale obstacles make a feasibility study unnecessary because it’s clear the project is not viable.

2. Evaluate financial feasibility

Think of the financial feasibility study as the projected income statement for the project. This part of the feasibility study clarifies the expected project income and outlines what your organization needs to invest—in terms of time and money—in order to hit the project objectives. 

During the financial feasibility study, take into account whether or not the project will impact your business's cash flow. Depending on the complexity of the initiative, your internal PMO or external consultant may want to work with your financial team to run a cost-benefit analysis of the project. 

3. Run a market assessment

The market assessment, or market feasibility study, is a chance to identify the demand in the market. This study offers a sense of expected revenue for the project and any potential market risks you could run into. 

The market assessment, more than any other part of the feasibility study, is a chance to evaluate whether or not there’s an opportunity in the market. During this study, it’s critical to evaluate your competitor’s positions and analyze demographics to get a sense of how the project will go. 

4. Consider technical and operational feasibility

Even if the financials are looking good and the market is ready, this initiative may not be something your organization can support. To evaluate operational feasibility, consider any staffing or equipment requirements this project needs. What organizational resources—including time, money, and skills—are necessary in order for this project to succeed? 

Depending on the project, it may also be necessary to consider the legal impact of the initiative. For example, if the project involves developing a new patent for your product, you will need to involve your legal team and incorporate that requirement into the project plan.

5. Review project points of vulnerability

At this stage, your internal PMO team or external consultant have looked at all four elements of your feasibility study—financials, market analysis, technical feasibility, and operational feasibility. Before running their recommendations by you and your stakeholders, they will review and analyze the data for any inconsistencies. This includes ensuring the income statement is in line with your market analysis. Similarly, now that they’ve run a technical feasibility study, are any liabilities too big of a red flag? (If so, create a contingency plan !) 

Depending on the complexity of your project, there won’t always be a clear answer. A feasibility analysis doesn’t provide a black-and-white decision for a complex problem. Rather, it helps you come to the table with the right questions—and answers—so you can make the best decision for your project and for your team.

6. Propose a decision

The final step of the feasibility study is an executive summary touching on the main points and proposing a solution. 

Depending on the complexity and scope of the project, your internal PMO or external consultant may share the feasibility study with stakeholders or present it to the group in order to field any questions live. Either way, with the study in hand, your team now has the information you need to make an informed decision.

Feasibility study examples

To better understand the concepts behind feasibility assessments, here are two hypothetical examples demonstrating how these studies can be applied in real-world scenarios.

Example 1: New product development

A consumer goods company is considering launching a new product line. Before investing in new product development, they conduct a feasibility study to assess the proposed project.

The feasibility study includes:

Market research to gauge consumer interest, assess competitor offerings, and estimate potential market share for the target market.

Technological considerations, including R&D requirements, production processes, and any necessary patents or certifications.

In-depth financial analysis projects sales volumes, revenue, costs, and profitability over a multi-year period.

Evaluation of organizational readiness, including the skills of the current management team and staff to bring the new product to market.

Assessment of legal feasibility to ensure compliance with regulations and identify any potential liability issues.

The comprehensive feasibility study identifies a promising market opportunity for the new business venture. The company decides to proceed with the new project, using the feasibility report as a template for their business development process. The study helps secure funding from key decision-makers, setting this start-up product initiative up for success.

Example 2: Real estate development deal

A property developer is evaluating the feasibility of purchasing land for a new residential community. They commission a feasibility study to determine the viability of this real estate development project.

The feasibility assessment covers:

Detailed analysis of the local housing market, including demand drivers, comparable properties, pricing, and absorption rates.

Site planning to assess the property's capacity, constraints, and technological considerations.

In-depth review of legal feasibility, including zoning, permitting, environmental regulations, and other potential legal hurdles.

Financial analysis modeling various development scenarios and estimating returns on investment.

Creation of an opening day balance sheet projecting the assets, liabilities, and equity for the proposed project.

Sensitivity analysis to evaluate the impact of changes in key assumptions on the project's scope and profitability.

The feasibility study concludes that while the real estate start-up is viable, it carries significant risk. Based on these findings, the developer makes an informed decision to move forward, but with a revised project's scope and a phased approach to mitigate risk. The comprehensive feasibility analysis proves critical in guiding this major investment decision.

Which phase of the project management process involves feasibility studies?

Feasibility studies are a key part of the project initiation and planning phases. They are typically conducted after a project has been conceptualized but before significant resources are invested in detailed planning and execution.

The purpose of a feasibility assessment is to objectively evaluate the viability of a proposed project, considering factors such as technical feasibility, market demand, financial costs and benefits, legal requirements, and organizational readiness. By thoroughly assessing these aspects, a feasibility study helps project stakeholders make an informed go-or-no-go decision.

While feasibility studies are a critical tool in the early stages of project management, they differ from other planning documents like project charters, business cases, and business plans. Here's a closer look at these key differences:

Feasibility study vs. project charter

A project charter is a relatively informal document to pitch your project to stakeholders. Think of the charter as an elevator pitch for your project objectives, scope, and responsibilities. Typically, your project sponsor or executive stakeholders review the charter before ratifying the project. 

A feasibility study should be implemented after the project charter has been ratified. This isn’t a document to pitch whether or not the project is in line with your team’s goals—rather, it’s a way to ensure the project is something you and your team can accomplish.

Feasibility study vs. business case

A business case is a more formalized version of the project charter. While you’d typically create a project charter for small or straightforward initiatives, you should create a business case if you are pitching a large, complex initiative that will make a major impact on the business. This longer, more formal document will also include financial information and typically involve more senior stakeholders. 

After your business case is approved by relevant stakeholders, you'll run a feasibility study to make sure the work is doable. If you find it isn’t, you might return to your executive stakeholders and request more resources, tools, or time in order to ensure your business case is feasible.

Feasibility study vs. business plan

A business plan is a formal document outlining your organization’s goals. You typically write a business plan when founding your company or when your business is going through a significant shift. Your business plan informs a lot of other business decisions, including your three- to five-year strategic plan . 

As you implement your business and strategic plan, you’ll invest in individual projects. A feasibility study is a way to evaluate the practicality of any given individual project or initiative.

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What is Feasibility Study in Project Management?

Feasibility studies play a crucial role in the early stages of project development, offering invaluable insights into a project’s viability and potential challenges. In this blog, we’ll explore the fundamentals of feasibility study, types, components, Its Importance in project management, the process of conducting a feasibility study with real-world example, and the the differece between feasibility studies and business plans. 

Whether you’re new to project management or seeking to deepen your understanding, this guide provides a solid foundation on this critical aspect of project planning.

Table of Contents

• What is feasibility study?

Why Feasibility Study is Important During a Project?

What are the different types of feasibility study, what is included in a feasibility study report, how to conduct a feasibility study, an example of feasibility study, feasibility study vs. business plan, what is feasibility study.

A feasibility study is a crucial assessment tool in project management . It offers a systematic evaluation of a proposed project’s viability. This comprehensive analysis encompasses various dimensions, including technical, economic, legal, operational, and scheduling considerations. 

By analyzing these factors, the feasibility study aims to unearth potential obstacles, assess risks, and identify opportunities associated with the project. 

Through this process, stakeholders gain valuable insights to make informed decisions regarding the project’s feasibility and advisability.

Ultimately, the feasibility study culminates in a detailed report outlining its findings, recommendations, and justifications. This report serves as a roadmap for stakeholders, clearly understanding the project’s prospects and potential challenges. 

Armed with this information, decision-makers can determine whether to proceed with the project, make adjustments to mitigate risks or abandon it altogether. 

Thus, the feasibility study is key in guiding strategic decision-making, ensuring that resources are allocated wisely and projects are set up for success from the outset.

A feasibility study is important during a project for several reasons. Firstly, it serves as a critical decision-making tool, allowing stakeholders to assess the viability and potential risks associated with the project before significant resources are invested. 

By conducting the study early in the project lifecycle , organizations can avoid pursuing ventures unlikely to succeed, saving time, money, and effort.

Secondly, a feasibility study helps identify potential obstacles and challenges during the project execution phase. By thoroughly analyzing technical, economic, operational, and legal aspects, the study enables stakeholders to anticipate and mitigate risks, thus enhancing the project’s chances of success.

Moreover, a it provides a structured framework for evaluating different project alternatives and determining the most suitable action. By comparing various scenarios and assessing their feasibility, stakeholders can make well-informed decisions that align with organizational goals and priorities.

Additionally, the findings of a study help in securing buy-in and support from key stakeholders, including investors, sponsors, and senior management. 

A comprehensive feasibility study report communicates the motive behind the project, the potential benefits, and the associated risks, thereby instilling confidence and trust in the project’s viability.

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In bringing a project to completion, it’s crucial to gauge its feasibility from multiple angles. This comprehensive assessment examines various aspects, from technical capabilities to market demand. 

This section demonstrates the types of feasibility studies essential for project evaluation. From examining technological readiness to analyzing economic viability, operational compatibility, schedule adherence, and market potential, each study plays a crucial role in determining the project’s feasibility. 

Join us as we explore the significance of these studies in ensuring successful project outcomes.

Technical Feasibility Study

This study evaluates whether the proposed project can be implemented from a technical perspective. It evaluates factors such as available technology, expertise, infrastructure, and compatibility with existing systems. The goal is to determine if the necessary technical resources and capabilities are available to execute the project successfully.

Economic Feasibility Study

It helps evaluate a project’s financial viability. They analyze costs, benefits, and financial projections to determine whether the project is economically feasible and can generate a satisfactory return on investment (ROI). This study helps stakeholders understand the potential financial risks and rewards associated with the project.

Operational Feasibility Study

Operational feasibility studies consider whether the project aligns with the organization’s operational capabilities and objectives. 

They examine factors such as staffing requirements, workflow processes, organizational culture, and potential impacts on day-to-day operations. The goal is to ensure the project can be implemented smoothly and effectively within the existing operational framework.

Schedule Feasibility Study

Schedule feasibility studies evaluate whether the project can be completed within the specified time frame. They analyze project timelines , resource availability, dependencies, and potential risks to determine if the proposed schedule is realistic and achievable. This study helps stakeholders identify and mitigate potential schedule delays or bottlenecks.

Market Feasibility Study

Market feasibility studies focus on assessing the demand for the product or service in the target market. They analyze market trends, customer needs, competitive landscape, and potential market share to determine if there is sufficient demand to support the project. This study helps stakeholders understand the market dynamics and potential opportunities or challenges for the project.

Conducting a feasibility study is essential when initiating a project in project management. This study aims to assess the viability and potential success of the project idea. Several crucial factors are evaluated, including market demand, competition, financial stability, and resource requirements. 

A feasibility study in project management encompasses analyzing the technological needs, resource allocation and projected return on investment (ROI).

The findings of the feasibility study are consolidated into a report, typically comprising the following sections:

• Executive Summary
• Project Specifications
• Technological Considerations
• Market Analysis
• Marketing Strategy
• Organizational Structure and Staffing
• Project Schedule
• Financial Forecasts
• Recommendations based on Research

This structured approach ensures that project managers have a comprehensive understanding of the project’s feasibility, enabling informed decision-making and successful project execution.

Conducting a feasibility study is crucial for assessing the viability of a project or business opportunity. By analyzing financial projections, market demand, and operational requirements, organizations can make informed decisions about whether to proceed. 

This section explores the essential steps in conducting a feasibility study, assisting in effective decision-making and project success.

• Preliminary Study and Definition : Begin by conducting a preliminary study of the business case to define the scope of the feasibility study. Identify the key components to examine and establish realistic objectives. This step sets the foundation for the entire study.
• Forecast Income Statement : Generate a forecasted income statement to understand the project’s potential revenue sources and profitability. Analyze how the project will generate income and assess the feasibility of achieving financial goals. Additionally, conduct a market study to evaluate demand and market potential for the product or service.
• Plan Company Structure and Operations : Develop a plan for the company’s structure and operations. Determine the organizational structure needed for the project and assess resource requirements. Identify any specific personnel needs and outline operational processes to ensure efficient functioning.
• Generate Balance Sheet : Prepare a balance sheet to outline the projected income and expenses associated with the project. Evaluate the financial health of the project and assess the ability to achieve return on investment (ROI). This step provides insights into the project’s financial sustainability.
• Data Examination and Final Decision : Review and analyze all collected data before deciding whether to proceed with the project. Consider factors such as market demand, financial feasibility, operational capabilities, and risk assessment. Based on the findings, determine whether the project aligns with organizational goals and if it presents a viable business opportunity.

Conducting a feasibility study is imperative in manufacturing before embarking on projects like electric vehicle (EV) production. Manufacturers can ensure informed decisions and successful ventures by assessing market demand, financial viability, and technical feasibility. 

This comprehensive approach guarantees alignment with market dynamics and technological requirements, fostering competitiveness and sustainable growth in the manufacturing sector.

• Manufacturing Aspect: Let’s consider the production of electric vehicles (EVs) as an example within the manufacturing sector. Before starting the manufacturing process, a comprehensive feasibility study is essential to assess various aspects of the endeavor.
• Financial Aspect: Assessing the financial viability of manufacturing EVs involves analyzing the estimated costs of production, including labor, materials, components, and overhead expenses. Additionally, projected revenue from EV sales must be compared against production costs to determine if the venture is financially possible and can generate a sustainable return on investment.
• Market Aspect: Conducting a market feasibility study involves identifying target demographics for EVs and analyzing consumer preferences and purchasing behaviors. Market research helps estimate potential market demand, determine pricing strategies, and identify market trends and growth opportunities.
• Technical Aspect: Evaluating the technical feasibility of manufacturing EVs entails analyzing production processes, resource requirements, and technological capabilities. This includes assessing manufacturing facilities, equipment needs, supply chain logistics, and compliance with regulatory standards. Technical feasibility studies ensure that the manufacturing process is optimized for efficiency, quality, and scalability.

A feasibility study is conducted early in project development to assess its viability. At the same time, a business plan serves as a detailed roadmap for executing the project post-feasibility study, outlining strategic objectives and operational plans. 

it evaluate practicality, market demand, and risks, informing stakeholders’ decisions, whereas business plans provide comprehensive details for guiding the growth and development of the business over time.

Understanding the key role of feasibility studies in project management is essential for aspiring project managers. From grasping the fundamentals of feasibility studies to exploring their significance in project success, this guide provides comprehensive insights into this critical aspect of project planning. 

Professionals can make informed decisions, mitigate risks, and maximize project success by mastering the art of conducting feasibility studies. Ready to elevate your project management skills? Enroll in Project Management Courses at Invensis Learning today and embark on a journey towards becoming a proficient project management professional. 

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The Importance of a Feasibility Study in Business Planning

Updated: Dec 27, 2023

When starting a new business or embarking on a new project, it is crucial to conduct a feasibility study. A feasibility study is an evaluation of the viability of an idea, project, or business. It involves assessing various factors such as market demand, competition, financial resources, and technical feasibility. A well-executed feasibility study provides essential insights that help in making informed decisions and ensuring the success of the business plan.

One of the main reasons why a feasibility study is important in business planning is its ability to identify potential risks and challenges. By evaluating various factors, such as market trends, customer preferences, and competition, a feasibility study enables business owners to foresee potential hurdles they might face in the future and develop strategies to overcome them. This helps to minimize financial losses and maximize the returns on investment.

Furthermore, conducting a feasibility study helps in determining the financial viability of the business plan. It involves assessing the financial requirements of the project, estimating the potential revenue and expenses, and calculating the return on investment. This analysis provides valuable insights into whether the business idea or project is financially feasible. It helps entrepreneurs assess the profitability and sustainability of their venture, enabling them to make necessary adjustments to their business plan.

In addition to financial feasibility, a feasibility study also helps in assessing the technical and operational aspects of the proposed business. It helps to evaluate the availability of resources, such as raw materials, equipment, and skilled labor, necessary for the successful implementation of the business plan. By identifying any potential technical or operational limitations, entrepreneurs can plan and allocate resources more effectively, ensuring smooth business operations.

Moreover, conducting a feasibility study helps in understanding the target market and identifying potential customers. By analyzing market trends, consumer behavior, and preferences, business owners can identify their target audience and develop effective marketing and sales strategies. This allows them to tailor their products or services to better meet the needs and demands of their customers, increasing the chances of success.

Lastly, a feasibility study plays a crucial role in attracting potential investors or securing financial support from banks and financial institutions. Investors and financial institutions often require a thorough feasibility study before providing funding. A well-prepared study with a comprehensive business plan demonstrates the seriousness and viability of the project, instilling confidence in potential stakeholders.

In conclusion, a feasibility study is an indispensable tool in business planning. It provides valuable insights into the potential risks, financial viability, technical requirements, and market conditions of a proposed business or project. By conducting a feasibility study, entrepreneurs can minimize risks, maximize profits, and ensure smooth business operations. Therefore, it is essential to invest time and effort in conducting a thorough feasibility study before embarking on any business venture.

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What Is a Feasibility Study?

Understanding a feasibility study, how to conduct a feasibility study, the bottom line.

• Business Essentials

Feasibility Study

Yarilet Perez is an experienced multimedia journalist and fact-checker with a Master of Science in Journalism. She has worked in multiple cities covering breaking news, politics, education, and more. Her expertise is in personal finance and investing, and real estate.

A feasibility study is a detailed analysis that considers all of the critical aspects of a proposed project in order to determine the likelihood of it succeeding.

Success in business may be defined primarily by return on investment , meaning that the project will generate enough profit to justify the investment. However, many other important factors may be identified on the plus or minus side, such as community reaction and environmental impact.

Although feasibility studies can help project managers determine the risk and return of pursuing a plan of action, several steps should be considered before moving forward.

Key Takeaways

• A company may conduct a feasibility study when it’s considering launching a new business, adding a new product line, or acquiring a rival.
• A feasibility study assesses the potential for success of the proposed plan or project by defining its expected costs and projected benefits in detail.
• It’s a good idea to have a contingency plan on hand in case the original project is found to be infeasible.

Lara Antal / Investopedia

A feasibility study is an assessment of the practicality of a proposed plan or project. A feasibility study analyzes the viability of a project to determine whether the project or venture is likely to succeed. The study is also designed to identify potential issues and problems that could arise while pursuing the project.

As part of the feasibility study, project managers must determine whether they have enough of the right people, financial resources, and technology. The study must also determine the return on investment, whether this is measured as a financial gain or a benefit to society, the latter in the case of a nonprofit project.

The feasibility study might include a cash flow analysis, measuring the level of cash generated from revenue vs. the project’s operating costs . A risk assessment must also be completed to determine whether the return is enough to offset the risk of undergoing the venture.

When doing a feasibility study, it’s always good to have a contingency plan that is ready to test as a viable alternative if the first plan fails.

Benefits of a Feasibility Study

There are several benefits to feasibility studies, including helping project managers discern the pros and cons of undertaking a project before investing a significant amount of time and capital into it.

Feasibility studies can also provide a company’s management team with crucial information that could prevent them from entering into a risky business venture.

Such studies help companies determine how they will grow. They will know more about how they will operate, what the potential obstacles are, who the competition is, and what the market is.

Feasibility studies also help convince investors and bankers that investing in a particular project or business is a wise choice.

The exact format of a feasibility study will depend on the type of organization that requires it. However, the same factors will be involved even if their weighting varies.

Preliminary Analysis

Although each project can have unique goals and needs, there are some best practices for conducting any feasibility study:

• Conduct a preliminary analysis, which involves getting feedback about the new concept from the appropriate stakeholders.
• Analyze and ask questions about the data obtained in the early phase of the study to make sure that it’s solid.
• Conduct a market survey or market research to identify the market demand and opportunity for pursuing the project or business.
• Write an organizational, operational, or business plan, including identifying the amount of labor needed, at what cost, and for how long.
• Prepare a projected income statement, which includes revenue, operating costs, and profit .
• Prepare an opening day balance sheet .
• Identify obstacles and any potential vulnerabilities, as well as how to deal with them.
• Make an initial “go” or “no-go” decision about moving ahead with the plan.

Suggested Components

Once the initial due diligence has been completed, the real work begins. Components that are typically found in a feasibility study include the following:

• Executive summary : Formulate a narrative describing details of the project, product, service, plan, or business.
• Technological considerations : Ask what will it take. Do you have it? If not, can you get it? What will it cost?
• Existing marketplace : Examine the local and broader markets for the product, service, plan, or business.
• Marketing strategy : Describe it in detail.
• Required staffing : What are the human capital needs for this project? Draw up an organizational chart.
• Schedule and timeline : Include significant interim markers for the project’s completion date.
• Project financials
• Findings and recommendations : Break down into subsets of technology, marketing, organization, and financials.

Examples of a Feasibility Study

Below are two examples of a feasibility study. The first involves expansion plans for a university. The second is a real-world example conducted by the Washington State Department of Transportation with private contributions from Microsoft Inc.

A University Science Building

Officials at a university were concerned that the science building—built in the 1970s—was outdated. Considering the technological and scientific advances of the last 20 years, they wanted to explore the cost and benefits of upgrading and expanding the building. A feasibility study was conducted.

In the preliminary analysis, school officials explored several options, weighing the benefits and costs of expanding and updating the science building. Some school officials had concerns about the project, including the cost and possible community opposition. The new science building would be much larger, and the community board had earlier rejected similar proposals. The feasibility study would need to address these concerns and any potential legal or zoning issues.

The feasibility study also explored the technological needs of the new science facility, the benefits to the students, and the long-term viability of the college. A modernized science facility would expand the school’s scientific research capabilities, improve its curriculum, and attract new students.

Financial projections showed the cost and scope of the project and how the school planned to raise the needed funds, which included issuing a bond to investors and tapping into the school’s endowment . The projections also showed how the expanded facility would allow more students to be enrolled in the science programs, increasing revenue from tuition and fees.

The feasibility study demonstrated that the project was viable, paving the way to enacting the modernization and expansion plans of the science building.

Without conducting a feasibility study, the school administrators would never have known whether its expansion plans were viable.

A High-Speed Rail Project

The Washington State Department of Transportation decided to conduct a feasibility study on a proposal to construct a high-speed rail that would connect Vancouver, British Columbia, Seattle, Washington, and Portland, Oregon. The goal was to create an environmentally responsible transportation system to enhance the competitiveness and future prosperity of the Pacific Northwest.

The preliminary analysis outlined a governance framework for future decision making. The study involved researching the most effective governance framework by interviewing experts and stakeholders, reviewing governance structures, and learning from existing high-speed rail projects in North America. As a result, governing and coordinating entities were developed to oversee and follow the project if it was approved by the state legislature.

A strategic engagement plan involved an equitable approach with the public, elected officials, federal agencies, business leaders, advocacy groups, and Indigenous communities. The engagement plan was designed to be flexible, considering the size and scope of the project and how many cities and towns would be involved. A team of the executive committee members was formed and met to discuss strategies, as well as lessons learned from previous projects, and met with experts to create an outreach framework.

The financial component of the feasibility study outlined the strategy for securing the project’s funding, which explored obtaining funds from federal, state, and private investments. The project’s cost was estimated to be $24 billion to $42 billion. The revenue generated from the high-speed rail system was estimated to be $160 million to $250 million.

The report bifurcated the money sources between funding and financing. Funding referred to grants, appropriations from the local or state government, and revenue. Financing referred to bonds issued by the government, loans from financial institutions, and equity investments, which are essentially loans against future revenue that need to be paid back with interest.

The sources for the capital needed were to vary as the project moved forward. In the early stages, most of the funding would come from the government, and as the project developed, funding would come from private contributions and financing measures. Private contributors included Microsoft Inc., which donated more than $570,000 to the project.

The benefits outlined in the feasibility report show that the region would experience enhanced interconnectivity, allowing for better management of the population and increasing regional economic growth by $355 billion. The new transportation system would provide people with access to better jobs and more affordable housing. The high-speed rail system would also relieve congested areas from automobile traffic.

The timeline for the study began in 2016, when an agreement was reached with British Columbia to work together on a new technology corridor that included high-speed rail transportation. The feasibility report was submitted to the Washington State Legislature in December 2020.

What Is the Main Objective of a Feasibility Study?

A feasibility study is designed to help decision makers determine whether or not a proposed project or investment is likely to be successful. It identifies both the known costs and the expected benefits.

In business, “successful” means that the financial return exceeds the cost. In a nonprofit, success may be measured in other ways. A project’s benefit to the community it serves may be worth the cost.

What Are the Steps in a Feasibility Study?

A feasibility study starts with a preliminary analysis. Stakeholders are interviewed, market research is conducted, and a business plan is prepared. All of this information is analyzed to make an initial “go” or “no-go” decision.

If it’s a go, the real study can begin. This includes listing the technological considerations, studying the marketplace, describing the marketing strategy, and outlining the necessary human capital, project schedule, and financing requirements.

Who Conducts a Feasibility Study?

A feasibility study may be conducted by a team of the organization’s senior managers. If they lack the expertise or time to do the work internally, it may be outsourced to a consultant.

What Are the 4 Types of Feasibility?

The study considers the feasibility of four aspects of a project:

Technical : A list of the hardware and software needed, and the skilled labor required to make them work

Financial : An estimate of the cost of the overall project and its expected return

Market : An analysis of the market for the product or service, the industry, competition, consumer demand, sales forecasts, and growth projections

Organizational : An outline of the business structure and the management team that will be needed

Feasibility studies help project managers determine the viability of a project or business venture by identifying the factors that can lead to its success. The study also shows the potential return on investment and any risks to the success of the venture.

A feasibility study contains a detailed analysis of what’s needed to complete the proposed project. The report may include a description of the new product or venture, a market analysis, the technology and labor needed, and the sources of financing and capital. The report will also include financial projections, the likelihood of success, and ultimately, a “go” or “no-go” decision.

Washington State Department of Transportation. “ Ultra-High-Speed Rail Study .”

Washington State Department of Transportation. “ Cascadia Ultra High Speed Ground Transportation: Framework for the Future .”

Washington State Department of Transportation. “ Ultra-High-Speed Rail Study: Outcomes .”

Washington State Department of Transportation. “ Ultra-High-Speed Ground Transportation Business Case Analysis ,” Page ii (Page 3 of PDF).

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What Is a Feasibility Study? How to Conduct One for Your Project

Table of Contents

What is a feasibility study, what’s the importance of a feasibility study, what is included in a feasibility study report, types of feasibility study.

• 7 Steps To Do a Feasibility Study

Feasibility Study Examples

Why is a feasibility study so important in project management? For one, the feasibility study or feasibility analysis is the foundation upon which your project plan resides. That’s because the feasibility analysis determines the viability of your project. Now that you know the importance, read on to learn what you need to know about feasibility studies.

A feasibility study is simply an assessment of the practicality of a proposed project plan or method. This is done by analyzing technical, economic, legal, operational and time feasibility factors. Just as the name implies, you’re asking, “Is this feasible?” For example, do you have or can you create the technology that accomplishes what you propose? Do you have the people, tools and resources necessary? And, will the project get you the ROI you expect?

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A project feasibility study should be done during the project management life cycle after the business case has been completed. So, that’s the “what” and the “when” but how about the “why?” Why is it important to conduct a feasibility study?

An effective feasibility study points a project in the right direction by helping decision-makers have a holistic view of the potential benefits, disadvantages, barriers and constraints that could affect its outcome. The main purpose of a feasibility study is to determine whether the project can be not only viable but also beneficial from a technical, financial, legal and market standpoint.

The findings of your project feasibility study are compiled in a feasibility report that usually includes the following elements.

• Executive summary
• Description of product/service
• Technology considerations
• Product/service marketplace
• Marketing strategy
• Organization/staffing
• Financial projections
• Findings and recommendations

Free Feasibility Study Template

Use this free feasibility study template for Word to begin your own feasibility study. It has all the fundamental sections for you to get started, and it’s flexible enough to adapt to your specific needs. Download yours today.

There are many things to consider when determining project feasibility, and there are different types of feasibility studies you might conduct to assess your project from different perspectives.

Pre-Feasibility Study

A pre-feasibility study, as its name suggests, it’s a process that’s undertaken before the feasibility study. It involves decision-makers and subject matter experts who will prioritize different project ideas or approaches to quickly determine whether the project has fundamental technical, financial, operational or any other evident flaws. If the project proposal is sound, a proper feasibility study will follow.

Technical Feasibility Study

A technical feasibility study consists in determining if your organization has the technical resources and expertise to meet the project requirements . A technical study focuses on assessing whether your organization has the necessary capabilities that are needed to execute a project, such as the production capacity, facility needs, raw materials, supply chain and other inputs. In addition to these production inputs, you should also consider other factors such as regulatory compliance requirements or standards for your products or services.

Economic Feasibility Study

Also called financial feasibility study, this type of study allows you to determine whether a project is financially feasible. Economic feasibility studies require the following steps:

• Before you can start your project, you’ll need to determine the seed capital, working capital and any other capital requirements, such as contingency capital. To do this, you’ll need to estimate what types of resources will be needed for the execution of your project, such as raw materials, equipment and labor.
• Once you’ve determined what project resources are needed, you should use a cost breakdown structure to identify all your project costs.
• Identify potential sources of funding such as loans or investments from angel investors or venture capitalists.
• Estimate the expected revenue, profit margin and return on investment of your project by conducting a cost-benefit analysis , or by using business forecasting techniques such as linear programming to estimate different future outcomes under different levels of production, demand and sales.
• Estimate your project’s break-even point.
• Conduct a financial benchmark analysis with industrial averages and specific competitors in your industry.
• Use pro forma cash flow statements, financial statements, balance sheets and other financial projection documents.

Legal Feasibility Study

Your project must meet legal requirements including laws and regulations that apply to all activities and deliverables in your project scope . In addition, think about the most favorable legal structure for your organization and its investors. Each business legal structure has advantages and disadvantages when it comes to liability for business owners, such as limited liability companies (LLCs) or corporations, which reduce the liability for each business partner.

Market Feasibility Study

A market feasibility study determines whether your project has the potential to succeed in the market. To do so, you’ll need to analyze the following factors:

• Industry overview: Assess your industry, such as year-over-year growth, identify key direct and indirect competitors, availability of supplies and any other trends that might affect the future of the industry and your project.
• SWOT analysis: A SWOT analysis allows organizations to determine how competitive an organization can be by examining its strengths, weaknesses and the opportunities and threats of the market. Strengths are the operational capabilities or competitive advantages that allow an organization to outperform its competitors such as lower costs, faster production or intellectual property. Weaknesses are areas where your business might be outperformed by competitors. Opportunities are external, such as an underserved market, an increased demand for your products or favorable economic conditions. Threats are also external factors that might affect your ability to do well in the market such as new competitors, substitute products and new technologies.
• Market research: The main purpose of market research is to determine whether it’s possible for your organization to enter the market or if there are barriers to entry or constraints that might affect your ability to compete. Consider variables such as pricing, your unique value proposition, customer demand, new technologies, market trends and any other factors that affect how your business will serve your customers. Use market research techniques to identify your target market, create buyer personas, assess the competitiveness of your niche and gauge customer demand, among other things.

7 Steps to Do a Feasibility Study

If you’re ready to do your own feasibility study, follow these 7 steps. You can use this free feasibility study template to help you get started.

1. Conduct a Preliminary Analysis

Begin by outlining your project plan . You should focus on an unserved need, a market where the demand is greater than the supply and whether the product or service has a distinct advantage. Then, determine if the feasibility factors are too high to clear (i.e. too expensive, unable to effectively market, etc.).

2. Prepare a Projected Income Statement

This step requires working backward. Start with what you expect the income from the project to be and then what project funding is needed to achieve that goal. This is the foundation of an income statement. Factor in what services are required and how much they’ll cost and any adjustments to revenues, such as reimbursements, etc.

Related: Free Project Management Templates

3. Conduct a Market Survey or Perform Market Research

This step is key to the success of your feasibility study, so make your market analysis as thorough as possible. It’s so important that if your organization doesn’t have the resources to do a proper one, then it is advantageous to hire an outside firm to do so.

Market research will give you the clearest picture of the revenues and return on investment you can realistically expect from the project. Some things to consider are the geographic influence on the market, demographics, analyzing competitors, the value of the market and what your share will be and if the market is open to expansion (that is, in response to your offer).

4. Plan Business Organization and Operations

Once the groundwork of the previous steps has been laid, it’s time to set up the organization and operations of the planned project to meet its technical, operational, economic and legal feasibility factors. This isn’t a superficial, broad-stroke endeavor. It should be thorough and include start-up costs, fixed investments and operating costs.

These costs address things such as equipment, merchandising methods, real estate, personnel, supply availability, overhead, etc.

5. Prepare an Opening Day Balance Sheet

This includes an estimate of the assets and liabilities, one that should be as accurate as possible. To do this, create a list that includes items, sources, costs and available financing. Liabilities to consider are such things as leasing or purchasing land, buildings and equipment, financing for assets and accounts receivables.

6. Review and Analyze All Data

All of these steps are important, but the review and analysis are especially important to ensure that everything is as it should be and that nothing requires changing or tweaking. Take a moment to look over your work one last time.

Reexamine your previous steps, such as the income statement, and compare them with your expenses and liabilities. Is it still realistic? This is also the time to think about risk and come up with any contingency plans .

7. Make a Go/No-Go Decision

You’re now at the point to make a decision about whether or not the project is feasible. That sounds simple, but all the previous steps lead to this decision-making moment. A couple of other things to consider before making that binary choice are whether the commitment is worth the time, effort and money and whether it aligns with the organization’s strategic goals and long-term aspirations.

Here are some simple feasibility study examples so you have a better idea of what a feasibility study is used for in different industries.

Construction Feasibility Study

For this construction feasibility study example, let’s imagine a large construction company that’s interested in starting a new project in the near future to generate profits.

• Pre-Feasibility Study: The first step is to conduct a preliminary feasibility study. It can be as simple as a meeting where decision-makers will prioritize projects and discuss different project ideas to determine which poses a bigger financial benefit for the organization.
• Technical Feasibility Study: Now it’s time to estimate what resources are needed to execute the construction project, such as raw materials, equipment and labor. If there’s work that can’t be executed by the company with its current resources, a subcontractor will be hired to fill the gap.
• Economic Feasibility Study: Once the construction project management team has established what materials, equipment and labor are needed, they can estimate costs. Cost estimators use information from past projects, construction drawings and documents such as a bill of quantities to come up with an accurate cost estimate. Then, based on this estimate, a profit margin and financial forecasts will be analyzed to determine if there’s economic feasibility.
• Legal Feasibility Study: Now the company needs to identify all potential regulations, building codes and laws that might affect the project. They’ll need to ask for approval from the local government so that they can begin the construction project .
• Market Feasibility Study: Market feasibility will be determined depending on the nature of the project. For this feasibility example, let’s assume a residential construction project will be built. To gauge market potential, they’ll need to analyze variables such as the average income of the households in the city, crime rate, population density and any trends in state migration.

Manufacturing Feasibility Study

Another industry that uses feasibility studies is manufacturing. It’s a test run of the steps in the manufacturing production cycle to ensure the process is designed properly. Let’s take a look at what a manufacturing feasibility study example would look like.

• Feasibility Study: The first step is to look at various ideas and decide which is the best one to pursue. You don’t want to get started and have to stop. That’s a waste of time, money and effort. Look at what you intend to manufacture, does it fill an unserved need, is the market able to support competition and can you manufacture a quality product on time and within your budget?
• Financial Feasibility Study: Find out if your estimated income from the sale of this product is going to cover your costs, both direct and indirect costs. Work backward from the income you expect to make and the expenses you’ll spend for labor, materials and production to determine if the manufacturing of this product is financially feasible.
• Market Feasibility Study: You’ve already determined that there’s a need that’s not being served, but now it’s time to dig deeper to get realistic projections of revenue. You’ll want to define your target demographic, analyze the competitive landscape, determine the total market volume and what your market share will be and estimate what market expansion opportunities there are.
• Technical Feasibility Study: This is where you’ll explore the production , such as what resources you’ll need to produce your product. These findings will inform your financial feasibility study as well as labor, material, equipment, etc., costs have to be within your budget. You’ll also figure out the processes you’ll use to produce and deliver your product to the market, including warehousing and retail distribution.

There could be other feasibility studies you’ll have to make depending on the product and the market, but these are the essential ones that all manufacturers have to look at before they can make an educated decision as to whether to go forward or abandon the idea.

Best Practices for a Feasibility Study

• Use project management software like ProjectManager to organize your data and work efficiently and effectively
• Use templates 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

If your project is feasible, then the real work begins. ProjectManager helps you plan more efficiently. Our online Gantt chart organizes tasks, sets deadlines, adds priority and links dependent tasks to avoid delays. But unlike other Gantt software, we calculate the critical path for you and set a baseline to measure project variance once you move into the execution phase.

Watch a Video on Feasibility Studies

There are many steps and aspects to a project feasibility study. If you want yours to be accurate and forecast correctly whether your project is doable, then you need to have a clear understanding of all its moving parts.

Jennifer Bridges, PMP, is an expert on all aspects of project management and leads this free training video to help you get a firm handle on the subject.

Here’s a screenshot for your reference!

Pro tip: When completing a feasibility study, it’s always good to have a contingency plan that you test to make sure it’s a viable alternative.

ProjectManager Improves Your Feasibility Study

A feasibility study is a project, so get yourself a project management software that can help you execute it. ProjectManager is an award-winning software that can help you manage your feasibility study through every phase.

Once you have a plan for your feasibility study, upload that task list to our software and all your work is populated in our online Gantt chart. Now you can assign tasks to team members, add costs, create timelines, collect all the market research and attach notes at the task level. This gives people a plan to work off of, and a collaborative platform to collect ideas and comments.

If you decide to implement the project, you already have it started in our software, which can now help you monitor and report on its progress. Try it for yourself with this free 30-day trial.

Transcription

Today we’re talking about How to Conduct A Feasibility Study, but first of all, I want to start with clarifying what a feasibility study is.

Feasibility Analysis Definition

Basically, it’s an assessment of the practicality of a proposed plan or method. Basically, we’ll want to want to know, is this feasible. Some of the questions that may generate this or we can hear people asking are, “Do we have or can we create the technology to do this? Do we have the people resource who can produce this and will we get our ROI, our Return On Investment?”

When to Do a Feasibility Study

So when do we do the feasibility study? So it’s done during a project lifecycle and it’s done after the business case because the business case outlines what we’re proposing. Is it a product or service that we’re proposing?

So why do we do this? The reason we do this is that we need to determine the factors that will make the business opportunity a success.

How to Conduct a Feasibility Study

Well, let’s talk about a few steps that we do in order to conduct the feasibility study.

Well, first of all, we conduct a preliminary analysis of what all’s involved in the business case and what we’re analyzing and what we’re trying to determine is feasible.

Then we prepare a projected income statement. We need to know what are the income streams, how are we gonna make money on this. Where’s the revenue coming from? We also need to conduct a market survey.

We need to know, is this a demand? Is there a market for this? Are customers willing to use this product or use this service?

The fourth one is to plan the business organization and operations. What is the structure, what kind of resources do we need? What kind of staffing requirements do we have?

We also want to prepare an opening day balance sheet. What are the…how again, what are the expenses, what’s the revenue and to ensure that being able to determine if we’re gonna make our ROI.

So we want to review and analyze all of the data that we have and with that, we’re going to determine, we’re going to make a go, no-go decision. Meaning, are we going to do this project or this business opportunity or not.

Well, here are some of the best practices to use during your feasibility study.

One is to use templates, tools and surveys that exist today. The great news is, data is becoming more and more prevalent. There are all kinds of technologies. There are groups that they do nothing but research. Things that we can leverage today.

We want to involve the appropriate stakeholders to ensure that input is being considered from the different people involved.

We also want to use again the market research to ensure we’re bringing in good, reliable data.

Do your homework, meaning act like is if this is your project, if it’s your money. So do your homework and do it well and make sure you give credible data.

What Is a Feasibility Report?

So ultimately in the end what we’re doing is, we’re producing and we’re providing a feasibility report. So in that report, think of this is like a template.

So what you’re gonna do is give it an executive summary of the business opportunity that you’re evaluating and the description of the product or the service.

You want to look at different technology considerations. Is it technology that you’re going to use? Are you going to build the technology?

What kind of product and service marketplace and being able again, to identify the specific market you’re going to be targeting? Also, what is the marketing strategy you’re going to use to target the marketplace?

And also what’s the organizational structure? What are the staffing requirements? What people do you need to deliver the product or service and even support it?

So also we want to know the schedule to be able to have the milestones to ensure that as we’re building things, that as we’re spending money that we’re beginning to bring in income to pay and knowing when we’re going to start recuperating some of the funding. Again, which also ties into the financial projections.

Ultimately in this report, you’re going to provide the findings and the recommendations.

Again, we’ll probably talk about technology. Are you going to build it? Are you going to buy it? What are the marketing strategies for the specific marketplace organization? You may have some recommendations for whether you’re going to insource the staff, maybe you are going to outsource some staff and what that looks like and also financial recommendation.

If you’ve been looking for an all-in-one tool that can help with your feasibility study, consider ProjectManager. We offer five project views and countless features that make it seamless to plan projects, organize tasks and stay connected with your team. See what our software can do for you by taking this free 30-day trial.

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What is a Feasibility Study and How to Conduct It? (+ Examples)

Appinio Research · 26.09.2023 · 28min read

Are you ready to turn your project or business idea into a concrete reality but unsure about its feasibility? Whether you're a seasoned entrepreneur or a first-time project manager, understanding the intricate process of conducting a feasibility study is vital for making informed decisions and maximizing your chances of success.

This guide will equip you with the knowledge and tools to navigate the complexities of market, technical, financial, and operational feasibility studies. By the end, you'll have a clear roadmap to confidently assess, plan, and execute your project.

What is a Feasibility Study?

A feasibility study is a systematic and comprehensive analysis of a proposed project or business idea to assess its viability and potential for success. It involves evaluating various aspects such as market demand, technical feasibility, financial viability, and operational capabilities. The primary goal of a feasibility study is to provide you with valuable insights and data to make informed decisions about whether to proceed with the project.

Why is a Feasibility Study Important?

Conducting a feasibility study is a critical step in the planning process for any project or business. It helps you:

• Minimize Risks: By identifying potential challenges and obstacles early on, you can develop strategies to mitigate risks.
• Optimize Resource Allocation: A feasibility study helps you allocate your resources more efficiently, including time and money.
• Enhance Decision-Making: Armed with data and insights, you can make well-informed decisions about pursuing the project or exploring alternative options.
• Attract Stakeholders: Potential investors, lenders, and partners often require a feasibility study to assess the project's credibility and potential return on investment.

Now that you understand the importance of feasibility studies, let's explore the various types and dive deeper into each aspect.

Types of Feasibility Studies

Feasibility studies come in various forms, each designed to assess different aspects of a project's viability. Let's delve into the four primary types of feasibility studies in more detail:

1. Market Feasibility Study

Market feasibility studies are conducted to determine whether there is a demand for a product or service in a specific market or industry. This type of study focuses on understanding customer needs, market trends, and the competitive landscape. Here are the key elements of a market feasibility study:

• Market Research and Analysis: Comprehensive research is conducted to gather market size, growth potential , and customer behavior data. This includes both primary research (surveys, interviews) and secondary research (existing reports, data).
• Target Audience Identification: Identifying the ideal customer base by segmenting the market based on demographics, psychographics, and behavior. Understanding your target audience is crucial for tailoring your product or service.
• Competitive Analysis : Assessing the competition within the market, including identifying direct and indirect competitors, their strengths, weaknesses, and market share .
• Demand and Supply Assessment: Analyzing the balance between the demand for the product or service and its supply. This helps determine whether there is room for a new entrant in the market.

2. Technical Feasibility Study

Technical feasibility studies evaluate whether the project can be developed and implemented from a technical standpoint. This assessment focuses on the project's design, technical requirements, and resource availability. Here's what it entails:

• Project Design and Technical Requirements: Defining the technical specifications of the project, including hardware, software, and any specialized equipment. This phase outlines the technical aspects required for project execution.
• Technology Assessment: Evaluating the chosen technology's suitability for the project and assessing its scalability and compatibility with existing systems.
• Resource Evaluation: Assessing the availability of essential resources such as personnel, materials, and suppliers to ensure the project's technical requirements can be met.
• Risk Analysis: Identifying potential technical risks, challenges, and obstacles that may arise during project development. Developing risk mitigation strategies is a critical part of technical feasibility.

3. Financial Feasibility Study

Financial feasibility studies aim to determine whether the project is financially viable and sustainable in the long run. This type of study involves estimating costs, projecting revenue, and conducting financial analyses. Key components include:

• Cost Estimation: Calculating both initial and ongoing costs associated with the project, including capital expenditures, operational expenses, and contingency funds.
• Revenue Projections: Forecasting the income the project is expected to generate, considering sales, pricing strategies, market demand, and potential revenue streams.
• Investment Analysis: Evaluating the return on investment (ROI), payback period, and potential risks associated with financing the project.
• Financial Viability Assessment: Analyzing the project's profitability, cash flow, and financial stability to ensure it can meet its financial obligations and sustain operations.

4. Operational Feasibility Study

Operational feasibility studies assess whether the project can be effectively implemented within the organization's existing operational framework. This study considers processes, resource planning, scalability, and operational risks. Key elements include:

• Process and Workflow Assessment: Analyzing how the project integrates with current processes and workflows, identifying potential bottlenecks, and optimizing operations.
• Resource Planning: Determining the human, physical, and technological resources required for successful project execution and identifying resource gaps.
• Scalability Evaluation: Assessing the project's ability to adapt and expand to meet changing demands and growth opportunities, including capacity planning and growth strategies.
• Operational Risks Analysis: Identifying potential operational challenges and developing strategies to mitigate them, ensuring smooth project implementation.

Each type of feasibility study serves a specific purpose in evaluating different facets of your project, collectively providing a comprehensive assessment of its viability and potential for success.

How to Prepare for a Feasibility Study?

Before you dive into the nitty-gritty details of conducting a feasibility study, it's essential to prepare thoroughly. Proper preparation will set the stage for a successful and insightful study. In this section, we'll explore the main steps involved in preparing for a feasibility study.

1. Identify the Project or Idea

Identifying and defining your project or business idea is the foundational step in the feasibility study process. This initial phase is critical because it helps you clarify your objectives and set the direction for the study.

• Problem Identification: Start by pinpointing the problem or need your project addresses. What pain point does it solve for your target audience?
• Project Definition: Clearly define your project or business idea. What are its core components, features, or offerings?
• Goals and Objectives: Establish specific goals and objectives for your project. What do you aim to achieve in the short and long term?
• Alignment with Vision: Ensure your project aligns with your overall vision and mission. How does it fit into your larger strategic plan?

Remember, the more precisely you can articulate your project or idea at this stage, the easier it will be to conduct a focused and effective feasibility study.

2. Assemble a Feasibility Study Team

Once you've defined your project, the next step is to assemble a competent and diverse feasibility study team. Your team's expertise will play a crucial role in conducting a thorough assessment of your project's viability.

• Identify Key Roles: Determine the essential roles required for your feasibility study. These typically include experts in areas such as market research, finance, technology, and operations.
• Select Team Members: Choose team members with the relevant skills and experience to fulfill these roles effectively. Look for individuals who have successfully conducted feasibility studies in the past.
• Collaboration and Communication: Foster a collaborative environment within your team. Effective communication is essential to ensure everyone is aligned on objectives and timelines.
• Project Manager: Designate a project manager responsible for coordinating the study, tracking progress, and meeting deadlines.
• External Consultants: In some cases, you may need to engage external consultants or specialists with niche expertise to provide valuable insights.

Having the right people on your team will help you collect accurate data, analyze findings comprehensively, and make well-informed decisions based on the study's outcomes.

3. Set Clear Objectives and Scope

Before you begin the feasibility study, it's crucial to establish clear and well-defined objectives. These objectives will guide your research and analysis efforts throughout the study.

Steps to Set Clear Objectives and Scope:

• Objective Clarity: Define the specific goals you aim to achieve through the feasibility study. What questions do you want to answer, and what decisions will the study inform?
• Scope Definition: Determine the boundaries of your study. What aspects of the project will be included, and what will be excluded? Clarify any limitations.
• Resource Allocation: Assess the resources needed for the study, including time, budget, and personnel. Ensure that you allocate resources appropriately based on the scope and objectives.
• Timeline: Establish a realistic timeline for the feasibility study. Identify key milestones and deadlines for completing different phases of the study.

Clear objectives and a well-defined scope will help you stay focused and avoid scope creep during the study. They also provide a basis for measuring the study's success against its intended outcomes.

4. Gather Initial Information

Before you delve into extensive research and data collection, start by gathering any existing information and documents related to your project or industry. This initial step will help you understand the current landscape and identify gaps in your knowledge.

• Document Review: Review any existing project documentation, market research reports, business plans, or relevant industry studies.
• Competitor Analysis: Gather information about your competitors, including their products, pricing, market share, and strategies.
• Regulatory and Compliance Documents: If applicable, collect information on industry regulations, permits, licenses, and compliance requirements.
• Market Trends: Stay informed about current market trends, consumer preferences, and emerging technologies that may impact your project.
• Stakeholder Interviews: Consider conducting initial interviews with key stakeholders, including potential customers, suppliers, and industry experts, to gather insights and feedback.

By starting with a strong foundation of existing knowledge, you'll be better prepared to identify gaps that require further investigation during the feasibility study. This proactive approach ensures that your study is comprehensive and well-informed from the outset.

How to Conduct a Market Feasibility Study?

The market feasibility study is a crucial component of your overall feasibility analysis. It focuses on assessing the potential demand for your product or service, understanding your target audience, analyzing your competition, and evaluating supply and demand dynamics within your chosen market.

Market Research and Analysis

Market research is the foundation of your market feasibility study. It involves gathering and analyzing data to gain insights into market trends, customer preferences, and the overall business landscape.

• Data Collection: Utilize various methods such as surveys, interviews, questionnaires, and secondary research to collect data about the market. This data may include market size, growth rates, and historical trends.
• Market Segmentation: Divide the market into segments based on factors such as demographics, psychographics , geography, and behavior. This segmentation helps you identify specific target markets .
• Customer Needs Analysis: Understand the needs, preferences, and pain points of potential customers . Determine how your product or service can address these needs effectively.
• Market Trends: Stay updated on current market trends, emerging technologies, and industry innovations that could impact your project.
• SWOT Analysis: Conduct a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis to identify internal and external factors that may affect your market entry strategy.

In today's dynamic market landscape, gathering precise data for your market feasibility study is paramount. Appinio offers a versatile platform that enables you to swiftly collect valuable market insights from a diverse audience.

With Appinio, you can employ surveys, questionnaires, and in-depth analyses to refine your understanding of market trends, customer preferences, and competition.

Enhance your market research and gain a competitive edge by booking a demo with us today!

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Target Audience Identification

Knowing your target audience is essential for tailoring your product or service to meet their specific needs and preferences.

• Demographic Analysis: Define the age, gender, income level, education, and other demographic characteristics of your ideal customers.
• Psychographic Profiling: Understand the psychographics of your target audience, including their lifestyle, values, interests, and buying behavior.
• Market Segmentation: Refine your target audience by segmenting it further based on shared characteristics and behaviors.
• Needs and Pain Points: Identify your target audience's unique needs, challenges, and pain points that your product or service can address.
• Competitor's Customers: Analyze the customer base of your competitors to identify potential opportunities for capturing market share.

Competitive Analysis

Competitive analysis helps you understand the strengths and weaknesses of your competitors, positioning your project strategically within the market.

• Competitor Identification: Identify direct and indirect competitors within your industry or market niche.
• Competitive Advantage: Determine the unique selling points (USPs) that set your project apart from competitors. What value can you offer that others cannot?
• SWOT Analysis for Competitors: Conduct a SWOT analysis for each competitor to assess their strengths, weaknesses, opportunities, and threats.
• Market Share Assessment: Analyze each competitor's market share and market penetration strategies.
• Pricing Strategies: Investigate the pricing strategies employed by competitors and consider how your pricing strategy will compare.

Leveraging the power of data collection and analysis is essential in gaining a competitive edge. With Appinio , you can efficiently gather critical insights about your competitors, their strengths, and weaknesses. Seamlessly integrate these findings into your market feasibility study, empowering your project with a strategic advantage.

Demand and Supply Assessment

Understanding supply and demand dynamics is crucial for gauging market sustainability and potential challenges.

• Market Demand Analysis: Estimate the current and future demand for your product or service. Consider factors like seasonality and trends.
• Supply Evaluation: Assess the availability of resources, suppliers, and distribution channels required to meet the expected demand.
• Market Saturation: Determine whether the market is saturated with similar offerings and how this might affect your project.
• Demand Forecasting: Use historical data and market trends to make informed projections about future demand.
• Scalability: Consider the scalability of your project to meet increased demand or potential fluctuations.

A comprehensive market feasibility study will give you valuable insights into your potential customer base, market dynamics, and competitive landscape. This information will be pivotal in shaping your project's direction and strategy.

How to Conduct a Technical Feasibility Study?

The technical feasibility study assesses the practicality of implementing your project from a technical standpoint. It involves evaluating the project's design, technical requirements, technological feasibility, resource availability, and risk analysis. Let's delve into each aspect in more detail.

1. Project Design and Technical Requirements

The project design and technical requirements are the foundation of your technical feasibility study. This phase involves defining the technical specifications and infrastructure needed to execute your project successfully.

• Technical Specifications: Clearly define the technical specifications of your project, including hardware, software, and any specialized equipment.
• Infrastructure Planning: Determine the physical infrastructure requirements, such as facilities, utilities, and transportation logistics.
• Development Workflow: Outline the workflow and processes required to design, develop, and implement the project.
• Prototyping: Consider creating prototypes or proof-of-concept models to test and validate the technical aspects of your project.

2. Technology Assessment

A critical aspect of the technical feasibility study is assessing the technology required for your project and ensuring it aligns with your goals.

• Technology Suitability: Evaluate the suitability of the chosen technology for your project. Is it the right fit, or are there better alternatives?
• Scalability and Compatibility: Assess whether the chosen technology can scale as your project grows and whether it is compatible with existing systems or software.
• Security Measures: Consider cybersecurity and data protection measures to safeguard sensitive information.
• Technical Expertise: Ensure your team or external partners possess the technical expertise to implement and maintain the technology.

3. Resource Evaluation

Resource evaluation involves assessing the availability of the essential resources required to execute your project successfully. These resources include personnel, materials, and suppliers.

• Human Resources: Evaluate whether you have access to skilled personnel or if additional hiring or training is necessary.
• Material Resources: Identify the materials and supplies needed for your project and assess their availability and costs.
• Supplier Relationships: Establish relationships with reliable suppliers and consistently assess their ability to meet your resource requirements.

4. Risk Analysis

Risk analysis is a critical component of the technical feasibility study, as it helps you anticipate and mitigate potential technical challenges and setbacks.

• Identify Risks: Identify potential technical risks, such as hardware or software failures, technical skill gaps, or unforeseen technical obstacles.
• Risk Mitigation Strategies: Develop strategies to mitigate identified risks, including contingency plans and resource allocation for risk management.
• Cost Estimation for Risk Mitigation: Assess the potential costs associated with managing technical risks and incorporate them into your project budget.

By conducting a thorough technical feasibility study, you can ensure that your project is technically viable and well-prepared to overcome technical challenges. This assessment will also guide decision-making regarding technology choices, resource allocation, and risk management strategies.

How to Conduct a Financial Feasibility Study?

The financial feasibility study is a critical aspect of your overall feasibility analysis. It focuses on assessing the financial viability of your project by estimating costs, projecting revenue, conducting investment analysis, and evaluating the overall financial health of your project. Let's delve into each aspect in more detail.

1. Cost Estimation

Cost estimation is the process of calculating the expenses associated with planning, developing, and implementing your project. This involves identifying both initial and ongoing costs.

• Initial Costs: Calculate the upfront expenses required to initiate the project, including capital expenditures, equipment purchases, and any development costs.
• Operational Costs: Estimate the ongoing operating expenses, such as salaries, utilities, rent, marketing, and maintenance.
• Contingency Funds: Allocate funds for unexpected expenses or contingencies to account for unforeseen challenges.
• Depreciation: Consider the depreciation of assets over time, as it impacts your financial statements.

2. Revenue Projections

Revenue projections involve forecasting the income your project is expected to generate over a specific period. Accurate revenue projections are crucial for assessing the project's financial viability.

• Sales Forecasts: Estimate your product or service sales based on market demand, pricing strategies, and potential growth.
• Pricing Strategy: Determine your pricing strategy, considering factors like competition, market conditions, and customer willingness to pay.
• Market Penetration: Analyze how quickly you can capture market share and increase sales over time.
• Seasonal Variations: Account for any seasonal fluctuations in revenue that may impact your cash flow.

3. Investment Analysis

Investment analysis involves evaluating the potential return on investment (ROI) and assessing the attractiveness of your project to potential investors or stakeholders.

• Return on Investment (ROI): Calculate the expected ROI by comparing the project's net gains against the initial investment.
• Payback Period: Determine how long it will take for the project to generate sufficient revenue to cover its initial costs.
• Risk Assessment: Consider the level of risk associated with the project and whether it aligns with investors' risk tolerance.
• Sensitivity Analysis: Perform sensitivity analysis to understand how changes in key variables, such as sales or costs, affect the investment's profitability.

4. Financial Viability Assessment

A financial viability assessment evaluates the project's ability to sustain itself financially in the long term. It considers factors such as profitability, cash flow, and financial stability.

• Profitability Analysis: Assess whether the project is expected to generate profits over its lifespan.
• Cash Flow Management: Analyze the project's cash flow to ensure it can cover operating expenses, debt payments, and other financial obligations.
• Break-Even Analysis: Determine the point at which the project's revenue covers all costs, resulting in neither profit nor loss.
• Financial Ratios: Calculate key financial ratios, such as debt-to-equity ratio and return on equity, to evaluate the project's financial health.

By conducting a comprehensive financial feasibility study, you can gain a clear understanding of the project's financial prospects and make informed decisions regarding its viability and potential for success.

How to Conduct an Operational Feasibility Study?

The operational feasibility study assesses whether your project can be implemented effectively within your organization's operational framework. It involves evaluating processes, resource planning, scalability, and analyzing potential operational risks.

1. Process and Workflow Assessment

The process and workflow assessment examines how the project integrates with existing processes and workflows within your organization.

• Process Mapping: Map out current processes and workflows to identify areas of integration and potential bottlenecks.
• Workflow Efficiency: Assess the efficiency and effectiveness of existing workflows and identify opportunities for improvement.
• Change Management: Consider the project's impact on employees and plan for change management strategies to ensure a smooth transition.

2. Resource Planning

Resource planning involves determining the human, physical, and technological resources needed to execute the project successfully.

• Human Resources: Assess the availability of skilled personnel and consider whether additional hiring or training is necessary.
• Physical Resources: Identify the physical infrastructure, equipment, and materials required for the project.
• Technology and Tools: Ensure that the necessary technology and tools are available and up to date to support project implementation.

3. Scalability Evaluation

Scalability evaluation assesses whether the project can adapt and expand to meet changing demands and growth opportunities.

• Scalability Factors: Identify factors impacting scalability, such as market growth, customer demand, and technological advancements.
• Capacity Planning: Plan for the scalability of resources, including personnel, infrastructure, and technology.
• Growth Strategies: Develop strategies for scaling the project, such as geographic expansion, product diversification, or increasing production capacity.

4. Operational Risk Analysis

Operational risk analysis involves identifying potential operational challenges and developing mitigation strategies.

• Risk Identification: Identify operational risks that could disrupt project implementation or ongoing operations.
• Risk Mitigation: Develop risk mitigation plans and contingency strategies to address potential challenges.
• Testing and Simulation: Consider conducting simulations or testing to evaluate how the project performs under various operational scenarios.
• Monitoring and Adaptation: Implement monitoring and feedback mechanisms to detect and address operational issues as they arise.

Conducting a thorough operational feasibility study ensures that your project aligns with your organization's capabilities, processes, and resources. This assessment will help you plan for a successful implementation and minimize operational disruptions.

How to Write a Feasibility Study?

The feasibility study report is the culmination of your feasibility analysis. It provides a structured and comprehensive document outlining your study's findings, conclusions, and recommendations. Let's explore the key components of the feasibility study report.

1. Structure and Components

The structure of your feasibility study report should be well-organized and easy to navigate. It typically includes the following components:

• Executive Summary: A concise summary of the study's key findings, conclusions, and recommendations.
• Introduction: An overview of the project, the objectives of the study, and a brief outline of what the report covers.
• Methodology: A description of the research methods , data sources, and analytical techniques used in the study.
• Market Feasibility Study: Detailed information on market research, target audience, competitive analysis, and demand-supply assessment.
• Technical Feasibility Study: Insights into project design, technical requirements, technology assessment, resource evaluation, and risk analysis.
• Financial Feasibility Study: Comprehensive information on cost estimation, revenue projections, investment analysis, and financial viability assessment.
• Operational Feasibility Study: Details on process and workflow assessment, resource planning, scalability evaluation, and operational risks analysis.
• Conclusion: A summary of key findings and conclusions drawn from the study.

Recommendations: Clear and actionable recommendations based on the study's findings.

2. Write the Feasibility Study Report

When writing the feasibility study report, it's essential to maintain clarity, conciseness, and objectivity. Use clear language and provide sufficient detail to support your conclusions and recommendations.

• Be Objective: Present findings and conclusions impartially, based on data and analysis.
• Use Visuals: Incorporate charts, graphs, and tables to illustrate key points and make the report more accessible.
• Cite Sources: Properly cite all data sources and references used in the study.
• Include Appendices: Attach any supplementary information, data, or documents in appendices for reference.

3. Present Findings and Recommendations

When presenting your findings and recommendations, consider your target audience. Tailor your presentation to the needs and interests of stakeholders, whether they are investors, executives, or decision-makers.

• Highlight Key Takeaways: Summarize the most critical findings and recommendations upfront.
• Use Visual Aids: Create a visually engaging presentation with slides, charts, and infographics.
• Address Questions: Be prepared to answer questions and provide additional context during the presentation.
• Provide Supporting Data: Back up your findings and recommendations with data from the feasibility study.

4. Review and Validation

Before finalizing the feasibility study report, conducting a thorough review and validation process is crucial. This ensures the accuracy and credibility of the report.

• Peer Review: Have colleagues or subject matter experts review the report for accuracy and completeness.
• Data Validation: Double-check data sources and calculations to ensure they are accurate.
• Cross-Functional Review: Involve team members from different disciplines to provide diverse perspectives.
• Stakeholder Input: Seek input from key stakeholders to validate findings and recommendations.

By following a structured approach to creating your feasibility study report, you can effectively communicate the results of your analysis, support informed decision-making, and increase the likelihood of project success.

Feasibility Study Examples

Let's dive into some real-world examples to truly grasp the concept and application of feasibility studies. These examples will illustrate how various types of projects and businesses undergo the feasibility assessment process to ensure their viability and success.

Example 1: Local Restaurant

Imagine you're passionate about opening a new restaurant in a bustling urban area. Before investing significant capital, you'd want to conduct a thorough feasibility study. Here's how it might unfold:

• Market Feasibility: You research the local dining scene, identify target demographics, and assess the demand for your cuisine. Market surveys reveal potential competitors, dining preferences, and pricing expectations.
• Technical Feasibility: You design the restaurant layout, plan the kitchen setup, and assess the technical requirements for equipment and facilities. You consider factors like kitchen efficiency, safety regulations, and adherence to health codes.
• Financial Feasibility: You estimate the initial costs for leasing or purchasing a space, kitchen equipment, staff hiring, and marketing. Revenue projections are based on expected foot traffic, menu pricing, and seasonal variations.
• Operational Feasibility: You create kitchen and service operations workflow diagrams, considering staff roles and responsibilities. Resource planning includes hiring chefs, waitstaff, and kitchen personnel. Scalability is evaluated for potential expansion or franchising.
• Risk Analysis: Potential operational risks are identified, such as food safety concerns, labor shortages, or location-specific challenges. Risk mitigation strategies involve staff training, quality control measures, and contingency plans for unexpected events.

Example 2: Software Development Project

Now, let's explore the feasibility study process for a software development project, such as building a mobile app:

• Market Feasibility: You analyze the mobile app market, identify your target audience, and assess the demand for a solution in a specific niche. You gather user feedback and conduct competitor analysis to understand the competitive landscape.
• Technical Feasibility: You define the technical requirements for the app, considering platforms (iOS, Android), development tools, and potential integrations with third-party services. You evaluate the feasibility of implementing specific features.
• Financial Feasibility: You estimate the development costs, including hiring developers, designers, and ongoing maintenance expenses. Revenue projections are based on app pricing, potential in-app purchases, and advertising revenue.
• Operational Feasibility: You map out the development workflow, detailing the phases from concept to deployment. Resource planning includes hiring developers with the necessary skills, setting up development environments, and establishing a testing framework.
• Risk Analysis: Potential risks like scope creep, technical challenges, or market saturation are assessed. Mitigation strategies involve setting clear project milestones, conducting thorough testing, and having contingency plans for technical glitches.

These examples demonstrate the versatility of feasibility studies across diverse projects. Whatever type of venture or endeavor you want to embark on, a well-structured feasibility study guides you toward informed decisions and increased project success.

In conclusion, conducting a feasibility study is a crucial step in your project's journey. It helps you assess the viability and potential risks, providing a solid foundation for informed decision-making. Remember, a well-executed feasibility study not only enables you to identify challenges but also uncovers opportunities that can lead to your project's success.

By thoroughly examining market trends, technical requirements, financial aspects, and operational considerations, you are better prepared to embark on your project confidently. With this guide, you've gained the knowledge and tools needed to navigate the intricate terrain of feasibility studies.

How to Conduct a Feasibility Study in Minutes?

Speed and precision are paramount for feasibility studies, and Appinio delivers just that. As a real-time market research platform, Appinio empowers you to seamlessly conduct your market research in a matter of minutes, putting actionable insights at your fingertips.

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11.3 Conducting a Feasibility Analysis

Learning objectives.

By the end of this section, you will be able to:

• Describe the purpose of a feasibility analysis
• Describe and develop the parts of a feasibility analysis
• Understand how to apply feasibility outcomes to a new venture

As the name suggests, a feasibility analysis is designed to assess whether your entrepreneurial endeavor is, in fact, feasible or possible. By evaluating your management team, assessing the market for your concept, estimating financial viability, and identifying potential pitfalls, you can make an informed choice about the achievability of your entrepreneurial endeavor. A feasibility analysis is largely numbers driven and can be far more in depth than a business plan (discussed in The Business Plan ). It ultimately tests the viability of an idea, a project, or a new business. A feasibility study may become the basis for the business plan, which outlines the action steps necessary to take a proposal from ideation to realization. A feasibility study allows a business to address where and how it will operate, its competition, possible hurdles, and the funding needed to begin. The business plan then provides a framework that sets out a map for following through and executing on the entrepreneurial vision.

Organizational Feasibility Analysis

Organizational feasibility aims to assess the prowess of management and sufficiency of resources to bring a product or idea to market Figure 11.12 . The company should evaluate the ability of its management team on areas of interest and execution. Typical measures of management prowess include assessing the founders’ passion for the business idea along with industry expertise, educational background, and professional experience. Founders should be honest in their self-assessment of ranking these areas.

Resource sufficiency pertains to nonfinancial resources that the venture will need to move forward successfully and aims to assess whether an entrepreneur has a sufficient amount of such resources. The organization should critically rank its abilities in six to twelve types of such critical nonfinancial resources, such as availability of office space, quality of the labor pool, possibility of obtaining intellectual property protections (if applicable), willingness of high-quality employees to join the company, and likelihood of forming favorable strategic partnerships. If the analysis reveals that critical resources are lacking, the venture may not be possible as currently planned. 46

Financial Feasibility Analysis

A financial analysis seeks to project revenue and expenses (forecasts come later in the full business plan); project a financial narrative; and estimate project costs, valuations, and cash flow projections Figure 11.13 .

The financial analysis may typically include these items:

• A twelve-month profit and loss projection
• A three- or four-year profit-and-loss projection
• A cash-flow projection
• A projected balance sheet
• A breakeven calculation

The financial analysis should estimate the sales or revenue that you expect the business to generate. A number of different formulas and methods are available for calculating sales estimates. You can use industry or association data to estimate the sales of your potential new business. You can search for similar businesses in similar locations to gauge how your business might perform compared with similar performances by competitors. One commonly used equation for a sales model multiplies the number of target customers by the average revenue per customer to establish a sales projection:

Another critical part of planning for new business owners is to understand the breakeven point , which is the level of operations that results in exactly enough revenue to cover costs (see Entrepreneurial Finance and Accounting for an in-depth discussion on calculating breakeven points and the breakdown of cost types). It yields neither a profit nor a loss. To calculate the breakeven point, you must first understand the two types of costs: fixed and variable. Fixed costs are expenses that do not vary based on the amount of sales. Rent is one example, but most of a business’s other costs operate in this manner as well. While some costs vary from month to month, costs are described as variable only if they will increase if the company sells even one more item. Costs such as insurance, wages, and office supplies are typically considered fixed costs. Variable costs fluctuate with the level of sales revenue and include items such as raw materials, purchases to be sold, and direct labor. With this information, you can calculate your breakeven point—the sales level at which your business has neither a profit nor a loss. 47 Projections should be more than just numbers: include an explanation of the underlying assumptions used to estimate the venture’s income and expenses.

Projected cash flow outlines preliminary expenses, operating expenses, and reserves—in essence, how much you need before starting your company. You want to determine when you expect to receive cash and when you have to write a check for expenses. Your cash flow is designed to show if your working capital is adequate. A balance sheet shows assets and liabilities, necessary for reporting and financial management. When liabilities are subtracted from assets, the remainder is owners’ equity. The financial concepts and statements introduced here are discussed fully in Entrepreneurial Finance and Accounting .

Market Feasibility Analysis

A market analysis enables you to define competitors and quantify target customers and/or users in the market within your chosen industry by analyzing the overall interest in the product or service within the industry by its target market Figure 11.14 . You can define a market in terms of size, structure, growth prospects, trends, and sales potential. This information allows you to better position your company in competing for market share. After you’ve determined the overall size of the market, you can define your target market, which leads to a total available market (TAM) , that is, the number of potential users within your business’s sphere of influence. This market can be segmented by geography, customer attributes, or product-oriented segments. From the TAM, you can further distill the portion of that target market that will be attracted to your business. This market segment is known as a serviceable available market (SAM) .

Projecting market share can be a subjective estimate, based not only on an analysis of the market but also on pricing, promotional, and distribution strategies. As is the case for revenue, you will have a number of different forecasts and tools available at your disposal. Other items you may include in a market analysis are a complete competitive review, historical market performance, changes to supply and demand, and projected growth in demand over time.

Are You Ready?

You’ve been hired by a leading hotel chain to determine the market and financial potential for the development of a mixed-use property that will include a full-service hotel in downtown Orlando, located at 425 East Central Boulevard, in Orlando, Florida. The specific address is important so you can pinpoint existing competitors and overall suitability of the site. Using the information given, conduct a market analysis that can be part of a larger feasibility study.

Work It Out

Location feasibility.

You’re considering opening a boutique clothing store in downtown Atlanta. You’ve read news reports about how downtown Atlanta and the city itself are growing and undergoing changes from previous decades. With new development taking place there, you’re not sure whether such a venture is viable. Outline what steps you would need to take to conduct a feasibility study to determine whether downtown Atlanta is the right location for your planned clothing store.

Applying Feasibility Outcomes

After conducting a feasibility analysis, you must determine whether to proceed with the venture. One technique that is commonly used in project management is known as a go-or-no-go decision . This tool allows a team to decide if criteria have been met to move forward on a project. Criteria on which to base a decision are established and tracked over time. You can develop criteria for each section of the feasibility analysis to determine whether to proceed and evaluate those criteria as either “go” or “no go,” using that assessment to make a final determination of the overall concept feasibility. Determine whether you are comfortable proceeding with the present management team, whether you can “go” forward with existing nonfinancial resources, whether the projected financial outlook is worth proceeding, and make a determination on the market and industry. If satisfied that enough “go” criteria are met, you would likely then proceed to developing your strategy in the form of a business plan.

What Can You Do?

Love beyond walls.

When Terence Lester saw a homeless man living behind an abandoned, dilapidated building, he asked the man if he could take him to a shelter. The man scoffed, replying that Lester should sleep in a shelter. So he did—and he saw the problem through the homeless man’s perspective. The shelter was crowded and smelly. You couldn’t get much sleep, because others would try to steal your meager belongings. The dilapidated building provided isolation away from others, but quiet and security in its own way that the shelter could not. This experience led Lester to voluntarily live as a homeless person for a few weeks. His journey led him to create Love Beyond Walls (www.lovebeyondwalls.org), an organization that aids the homeless, among other causes. Lester didn’t conduct a formal feasibility study, but he did so informally by walking in his intended customers’ shoes—literally. A feasibility study of homelessness in a particular area could yield surprising findings that might lead to social entrepreneurial pursuits.

• What is a social cause you think could benefit from a formal feasibility study around a potential entrepreneurial solution?
• 46 Ulrich Kaiser. “A primer in Entrepreneurship – Chapter 3 Feasibility analysis” University of Zurich Institute for Strategy and Business Economics . n.d. https://docplayer.net/7775267-A-primer-in-entrepreneurship-chapter-3-feasibility-analysis.html
• 47 In a preliminary financial model and business plan, startup costs should be allocated, as they are intended for one-time investments in development; pre-launch costs and other necessary expenses will not carry over once the product/solution has launched.

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What is a Feasibility Study and its Importance?

This blog talks about how a study that assesses the potential success of a proposed project. Let’s dive in to learn how to conduct this study and comprehend what determines the viability of a project. It will help you understand how the Feasibility Study evaluates the necessity of a project in terms of legal aspects. Read more!

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A Feasibility Study is a crucial assessment that is during Project Management conducted to determine the viability and potential success of a project. By thoroughly examining such factors, stakeholders can make informed decisions regarding the project’s feasibility. Apart from the technical and financial considerations, this study ensures a project’s compliance with relevant laws, regulations and industry standards. To give you a better overview, this blog will talk about the multiple aspects associated with this. So, let’s dive in to comprehend the significance of a Feasibility Study. After reading this blog, stakeholders can make well-informed decisions that enhance the chances of a project’s success.

Table of Contents 

1) Feasibility Study - An overview

2) Importance of a Feasibility Study 

3)  Types of Feasibility Studies

4) What is included in a Feasibility Study report?

5) Examples of a Feasibility Study

6) Seven steps to do a Feasibility Study

7) Conclusion

Feasibility Study - An overview

A Feasibility Study is an initial investigation into the potential benefits and viability of a project or endeavour. An impartial appraisal that looks at a project's technical, financial, legal, and environmental elements is what this study provides.

Importance of a Feasibility Study

A Feasibility Study may reveal novel concepts that fundamentally alter the Scope of a Project . Feasibility Studies are of the greatest importance in the decision-making process when it comes to projects, businesses, and investments. They are mostly structured assessments that are focused on various aspects of a proposed project`s Feasibility. The following are some of its advantages:

a) Increases the focus of project teams 

b) Finds fresh opportunities 

c) Gives important information to help make a "go/no-go" choice. 

d) Reduces the number of available business options 

e) Finds a good cause to start the project

f) Increases the success rate through the assessment of several factors 

g)  Assists in making project decisions 

h) Identifies grounds for not moving forward

Types of Feasibility Studies

Technical Feasibility Study

A technical Feasibility Study aims to verify whether the organisation is eligible to use its technical in-house resources and expertise to perform successfully. This assessment involves scrutinising various aspects, including the following:

a) Production capacity: Does the company have the resource base to produce that number of products and services for the customers? 

b) Facility needs: Will today’s facilities fulfil the standards required, or will new facilities be constructed?

c) Raw materials and supply chain: Are there enough purchases, and have the organisation maintained a supply chain?

d) Regulatory compliance: Does the Project Execution follow the relevant guidelines and professionals bear the relevant certifications to meet the requirements and the industry standards?

Economic Feasibility Study 

It is a financial Feasibility Study that primarily examines the project's financial viability. The economic Feasibility Study typically involves several steps:

a) Determining capital requirements: Calculate funding collection, overhead, and other capital.

b) Cost breakdown: Determining and listing all the project costs including the purchase of materials, hardware, labour, and overheard costs are too.

c) Funding sources: Trying out a variety of possible solutions like banks, stakes, or grants.

d) Revenue projection: By using prediction tools such as a cost-benefit analysis or business forecasting to get the level of income, return on investment and profit margin.

e) Financial analysis: Projecting the performance of the Project based on means that are related to a financial analysis and are characterised by the utilisation of such things as cash flow statements, balance sheets and financial projections.

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Legal Feasibility Study  

Legal Feasibility is a type of analysis that seeks to confirm that a pProject follows all the relevant laws and regulations. Key considerations include: 

a) Regulatory compliance: Briefing the whole project team about all required laws and regulations that the project has to comply with. 

b) Business structure: Assessing the legal systems (e.g., LLCs vs. corporations) that would best protect liability, governance, and minimising taxation, if any. 

Operational Feasibility Study

An operational Feasibility Study looks at how effectively a product will meet its needs. It also talks about how easy it will be to use and maintain once it is in place. In addition, this study enumerates the necessity of evaluating a product's utility and the response and suggestions of  application development team.

Scheduling Feasibility Study

Proposed project schedules and deadlines are the main subject of a scheduling a Feasibility Study. This evaluation concerns how long team members will need to complete the project. It also highly impacts the business because if the programme isn't finished on time, the planned result might not be realised.

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What is included in a Feasibility Study report? 

You should make a Feasibility Study report before starting a project. This way you can analyse if your business idea is really viable and will bring you success. When you conduct this study, you would have to consider lots of factors such as if the people are going to buy your product or service, how much competition is out there, if the company can afford it and so on. 

The Feasibility Study must include things like how much technology and resources you need and how much you can hope to earn from your investment. The results of this study are put together in a report, which usually includes the following sections:

a) Executive summary

b) Approach to marketing

c) Organisation/staffing

Examples of a Feasibility Study

Feasibility Study has helped decide if big ideas can work. Here are two examples:

University Science Building Upgrade

This example is about a university that wanted to upgrade its old science building from the 1970s. They thought it was outdated and needed a change. To implement this, they evaluated different options and determined how much they would approximately cost. Some people were worried about the project being too expensive or its potential to causeissues in the community. The study also analysed what technology the new building would  require, and how effectively it would help students, and also, if it would attract more students.

Along with this, they looked at the financial aspect too, as to how they would sponsor for it and if they would make more money from having additional students. The study showed that the project could work, so they went ahead with the upgrade.

High-speed Rail Project

This example  is timed when the Washington State Department of Transportation wanted to see if they could build a fast train connecting Vancouver, Seattle, and Portland. To initiate this, they first focused on how to make decisions about the project in the future.

They discussed it with several people and groups to ensure everyone was okay with the plan. Later, they looked at how to pay for it and thought it would cost between $24 billion and $42 billion. They would get money from the government and maybe from loans and investors.

The study showed that the train could bring lots of good things like better jobs and less traffic. They started looking into this in 2016 and finished the study in 2020. They then shared the report with the government.

Seven steps to do a Feasibility Study

As Feasibility Study is a crucial step in determining a potential of a project, it involves a substantial period of time and resources. Let’s take you through some of the steps involved in the following points:

1) Do a preliminary analysis and define the scope of the study

Before going through a Feasibility Study, it is wise that you do just one small check. The time and resources involved in Feasibility Studies may be burdensome; hence, it is imperative to determine if it is worth it as early as possible.

Through this form, one can establish whether the study holds awarding potential and who else should be involved on a higher level. You further this stage by answering questions like what you might win, what pitfalls you will face, and what you need for the success of the project.

2) Prepare a projected income statement

First, while doing a Feasibility Study, you should obtain the income statement projection. In this, the statement calculates earnings and expenditures in subsequent one-year amounts. It is made up of the sum of what you will surely get and the cost you will need to cover.

Smaller businesses tend to need marketing strategies to grow into bigger companies. These facts are extremely important because they help business owners make smart decisions regarding the stage of the business.

3) Carry out market research

Market research is of paramount importance or, naturally, it will be of no use when developing the Feasibility Study. Primarily, it operates to ascertain the viability of the project. This point tells you time, which gives you knowledge of the current market state: Who your customers are, who your competitors are, how big the market is, and how many of it you could have. One way of doing this market research is by asking people questions, referring to experts, and checking very broad social media and other public info to find out what's going on.

4) Organisation and operations plan

Once you've figured out how the market behaves and the scope of your organisation, you can draft the setup of your plan. The detailed work plan for the project will provide the answer to how it will work in a practical form. It tests three aspects of your project, like whether it can be run, whether it is cost-effective, whether it complies with the law, and whether the technology fits.

This is to help you comprehend everything you can do and what you may require to get this project going, for example, the equipment, the materials to start the project, additional costs, and if you need to hire or train people. If you need to, you may make that change if the information you have brought is enough.

5) Calculate and prepare the initial balance of expected revenue and expenses

In this step, you must be expert in handling things from the financial part. You’ll make estimates on how much you may initially spend starting up your project, and then how much your project could make and spend based on that estimate. Among the many issues involved are such as the amount of money you are receiving from your customers, money you owe to others and assets that you own. 

Fixed costs, such as variable costs that will change based on the number of goods you produce, and equipment costs also need to be factored in money you may borrow or pay for land and service other companies. Keeping this in mind, you should also consider your business’ off seasons and how much risk you are willing to take. These calculations save a lot of time and effort and can be used to answer the most difficult questions of Feasibility.

6) Review and analyse all data

After going through all the steps, it's crucial to do a thorough review and analysis. This helps ensure that everything is in order and there's nothing that needs adjusting. Take a moment to carefully look back at your work, including the income statement, and compare it with your expenses and debts. Ask yourself: Does everything still seem realistic?

This is also the perfect opportunity to consider any risks that might come up and create contingency plans to handle them. By doing this, you'll be better prepared for any unexpected challenges that may arise.

7) Make a go/No-go decision

Now, it's time to decide if the project can work. This might seem simple, but all the work you've done so far leads up to this moment of decision-making. Before making the final call, there are a few more things to think about. First, consider if the project is worth the time, effort, and money you'll be putting into it. Is the commitment worth it?

Secondly, think about whether the project fits with what your organisation wants to achieve in the long run. Does it align with the organisation’s strategic goals and plans? These factors are essential to consider before making your decision.

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Conclusion 

You are now more familiar with how a well-executed Feasibility Study is a cornerstone of informed decision-making in Project Management and business ventures. It acts as a critical guide, helping organisations assess the practicality and viability of their initiatives, ultimately minimising risks and increasing the likelihood of success. 

Frequently Asked Questions

Employers value skills like analysis, problem-solving, attention to detail, and communication in Feasibility Study specialists. They need to be good at crunching numbers, finding solutions, and explaining complex ideas clearly.

Many industries need expertise in Feasibility Studies, like Construction, Healthcare, Tech, and more. It helps decide if projects are doable.

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Feasibility Analysis And Study In Project Management: A Comprehensive Guide

Written By : Bakkah

27 May 2024

Table of Content

What is Feasibility Analysis in Project Management?

What is the purpose of a feasibility study, feasibility study examples, importance of feasibility analysis in project management, feasibility analysis in project management example, types of feasibility analysis, what is the feasibility process of project management, feasibility analysis tools, elements of feasibility analysis report, how to write a feasibility study with steps, when should you conduct a feasibility study, difference between feasibility study and project charter, difference between feasibility study and business plan, difference between feasibility study and business case, take your career to new heights by enrolling in bakkah learning's industry-leading certifications today, popular articles.

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Feasibility analysis is the cornerstone of prudent project management , offering a systematic approach to assess the potential success and viability of proposed endeavors. It serves as a critical precursor, providing project managers and stakeholders with invaluable insights before committing substantial resources. It assesses technical, economic, and operational aspects, guiding informed decision-making.

In this article, we explore its purpose, process, and examples across industries, highlighting its crucial role in project success. Join us as we delve into the world of feasibility analysis and its significance in shaping successful ventures.

Feasibility analysis in project management is the systematic evaluation of a proposed project's potential success and viability before committing significant resources to its execution.

It involves assessing various aspects such as technical feasibility, economic feasibility, operational feasibility, legal feasibility, and scheduling feasibility. Conducting a feasibility analysis helps project managers and stakeholders make informed decisions about whether to proceed with a project, modify its scope , or abandon it altogether.

By identifying potential challenges and risks early on, feasibility analysis enables stakeholders to develop strategies to mitigate them, increasing the likelihood of project success. Ultimately, a thorough feasibility analysis minimizes uncertainties, optimizes resource allocation, and enhances the chances of delivering a project that meets its objectives effectively and efficiently.

The purpose of a feasibility study in project management is to thoroughly assess the viability and potential success of a proposed project before committing significant resources to its execution.

This study aims to provide decision-makers with valuable insights into the project's strengths, weaknesses, opportunities, and threats, enabling them to make informed decisions about whether to proceed with the project, modify its scope, or abandon it altogether.

Feasibility studies help identify potential obstacles, risks, and constraints that may impact the project's success, allowing stakeholders to develop strategies to mitigate them. Additionally, feasibility studies provide a basis for evaluating the project's economic, technical, operational, legal, and scheduling feasibility, helping ensure the project aligns with organizational goals, capabilities, and constraints.

Overall, the purpose of a feasibility study is to minimize uncertainties, optimize resource allocation, and enhance the likelihood of delivering a successful project that meets its objectives effectively and efficiently.

Feasibility studies can vary widely depending on the nature and scope of the project. Here are a few examples of feasibility studies across different industries:

1. Real Estate Development

Before embarking on a large-scale real estate development project, developers conduct feasibility studies to assess factors such as market demand, zoning regulations, environmental impact, infrastructure availability, construction costs, and potential return on investment. That helps them determine whether the project is financially viable and aligns with market conditions.

2. New Product Launch

Companies often conduct feasibility studies when considering a new product or service launch. These studies may involve market research to gauge consumer interest and demand, analysis of manufacturing capabilities and costs, assessment of distribution channels, evaluation of regulatory requirements, and estimation of potential revenue and profitability.

3. Information Technology Projects

Feasibility studies are essential for IT projects such as software development or system upgrades. These studies typically examine technical feasibility (e.g., compatibility with existing systems, availability of required technology), economic feasibility (e.g., cost-benefit analysis, return on investment), operational feasibility (e.g., impact on workflow, user acceptance), and legal/regulatory feasibility (e.g., compliance with data protection laws).

4. Renewable Energy Projects

Feasibility studies are conducted to assess the viability of renewable energy projects such as wind farms, solar installations, or hydropower plants. These studies evaluate factors like resource availability (e.g., wind speed, solar radiation), site suitability, environmental impact, regulatory requirements, financing options, and long-term economic viability.

5. Healthcare Facility Expansion

Hospitals or healthcare providers may conduct feasibility studies before expanding or renovating their facilities. These studies assess factors such as patient demographics, demand for services, competitive landscape, regulatory compliance, funding options, and operational considerations to determine the feasibility and potential impact of the proposed expansion.

These examples illustrate how feasibility studies are utilized across various industries to evaluate the viability, risks, and potential benefits of different types of projects before significant resources are committed.

Feasibility analysis in project management is crucial for assessing viability, risks, and resource needs, enabling informed decisions and efficient planning for successful project execution. Here is a detailed discussion of the importance of feasibility analysis in project management:

1. Risk Identification and Mitigation

Feasibility analysis helps identify potential risks and challenges associated with a project early in the planning phase.

By thoroughly assessing technical, economic, operational, legal, and scheduling feasibility, project managers can anticipate potential obstacles and develop strategies to mitigate them, reducing the likelihood of costly delays or failures during project execution.

2. Resource Optimization

Conducting a feasibility analysis enables project managers to assess resource requirements accurately. By evaluating factors such as budget, time, manpower, and technology needs, project managers can allocate resources effectively, ensuring that resources are utilized efficiently and that the project stays within budgetary constraints.

3. Informed Decision-Making

Feasibility analysis provides stakeholders with valuable insights into the viability and potential success of a proposed project. Armed with comprehensive information about the project's strengths, weaknesses, opportunities, and threats, decision-makers can make informed choices about whether to proceed with the project, modify its scope, or abandon it altogether.

That helps minimize uncertainties and increases the likelihood of delivering a successful project that meets its objectives.

4. Alignment with Organizational Goals

Feasibility analysis helps ensure that proposed projects align with the strategic objectives and priorities of the organization. By assessing factors such as market demand, technological feasibility, and regulatory compliance, project managers can determine whether a project supports the organization's mission and contributes to its long-term growth and sustainability.

5. Stakeholder Confidence

Thorough feasibility analysis instills confidence among stakeholders, including investors, clients, employees, and regulatory authorities. By demonstrating a clear understanding of the project's potential risks and rewards, project managers can garner support and buy-in from stakeholders, fostering trust and collaboration throughout the project lifecycle.

In essence, feasibility analysis is a crucial foundation for successful project management by minimizing risks, optimizing resource allocation, facilitating informed decision-making, aligning projects with organizational goals, and building stakeholder confidence.

By conducting thorough feasibility assessments, project managers can increase the likelihood of delivering projects on time, within budget , and to the satisfaction of all stakeholders involved.

Let's consider a hypothetical example of a feasibility analysis in project management:

Project: Construction of a new office building for a multinational corporation.

Feasibility Analysis:

1. Market Demand

Evaluate the demand for office space in the chosen location. Conduct market research to understand the current vacancy rates, rental prices, and trends in commercial real estate. Consider factors such as economic growth, business expansion, and potential tenants' needs.

2. Financial Feasibility

Estimate the total project cost , including land acquisition, construction expenses, permits, taxes, and contingency funds. Compare these costs with the projected revenues from leasing or selling office space. Perform a financial analysis, including net present value (NPV), internal rate of return (IRR), and payback period, to assess the project's financial viability.

3. Technical Feasibility

Evaluate the technical aspects of the project, such as the suitability of the chosen site for construction, environmental impact assessments, zoning regulations, and building codes compliance. Assess the availability of skilled labor, construction materials, and infrastructure (water, electricity, transportation) required for the project.

4. Schedule Feasibility

Develop a project timeline outlining key milestones, such as land acquisition, design approval, construction phases, and occupancy. Consider factors that may affect the project schedule, such as weather conditions, permit approvals, and unforeseen delays. Ensure that the project can be completed within the desired timeframe.

5. Risk Analysis

Identify potential risks and uncertainties that could impact the project's success, such as cost overruns, delays in construction, regulatory changes, or fluctuations in the real estate market. Develop risk mitigation strategies to address these challenges and minimize their impact on the project's objectives.

6. Operational Feasibility

Assess the operational implications of the new office building, such as maintenance requirements, utility costs, security measures, and accessibility for employees and visitors. Consider how the new facility will integrate with existing business processes and support the organization's long-term goals.

7. Stakeholder Analysis

Identify and engage key stakeholders, including the company's management team, investors, local government authorities, tenants, and neighboring communities. Understand their interests, concerns, and expectations regarding the project and incorporate their feedback into the feasibility analysis.

Based on the findings of the feasibility analysis, the project management team can make informed decisions about whether to proceed with the construction of the new office building. If the analysis indicates that the project is financially viable, technically feasible, and aligns with the organization's strategic objectives, it can move forward to the planning and execution phases with greater confidence.

Feasibility analysis in project management involves evaluating market demand, technology, finances, operations, legal compliance, schedule, and environmental impact to assess a project's viability and potential challenges before implementation.

Here are the commonly used types of feasibility analysis in project management:

1. Market Feasibility

Assesses the demand for a product or service within a target market, considering factors like competition, consumer preferences, and market trends.

2. Technical Feasibility

Determines whether the technology required for the project is available, feasible to implement, and capable of meeting project objectives.

3. Financial Feasibility

Evaluate the project's financial viability, including cost estimates, revenue projections, return on investment (ROI), and potential funding sources.

4. Operational Feasibility

Assesses whether the project can be implemented smoothly within the organization's existing operations, considering factors like staffing, processes, and infrastructure.

5. Legal and Regulatory Feasibility

Examines the legal and regulatory requirements that may impact the project, ensuring compliance with laws, permits, and industry standards.

6. Schedule Feasibility

Determines whether the project can be completed within the desired timeframe, considering factors like resource availability, dependencies, and potential delays.

7. Environmental Feasibility

Evaluates the project's impact on the environment, including issues like pollution, habitat disruption, and conservation efforts. These types of feasibility analyses help project managers assess different aspects of a project to ensure its success and viability before committing resources.

The feasibility process in project management typically involves several key steps. First, the project idea or concept is evaluated to determine its alignment with organizational goals and objectives.

Then, a feasibility study is conducted to assess various aspects such as market demand, technical feasibility, financial viability, operational considerations, legal and regulatory compliance, schedule feasibility, and environmental impact.

This analysis helps identify potential risks, challenges, and opportunities associated with the project. Based on the findings of the feasibility study, stakeholders make informed decisions about whether to proceed with the project.

If the project is deemed feasible, detailed planning ensues, including resource allocation, development of project plans , timelines , and milestones. Throughout the project lifecycle, continuous monitoring and evaluation are crucial to ensure that the project remains on track and adaptable to changing circumstances, thus maximizing its chances of success and delivering value to the organization.

Feasibility analysis is essential in project management to assess the viability of proposed projects. Various tools are used to evaluate factors like market demand, technical feasibility, financial viability, operational considerations, legal compliance, schedule feasibility, and environmental impact.

Here, we will discuss the key tools commonly employed in feasibility analysis:

1. SWOT Analysis

SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis helps identify internal strengths and weaknesses of a project or organization, as well as external opportunities and threats, providing a comprehensive view of feasibility factors.

2. Cost-Benefit Analysis (CBA)

CBA compares the costs of implementing a project with its expected benefits, quantifying financial feasibility by determining if the benefits outweigh the costs.

3. Market Research Surveys and Focus Groups

These tools collect data on customer preferences, market trends, and demand, aiding in the assessment of market feasibility.

4. Technical Assessments and Prototyping

Technical feasibility is evaluated through tools like prototype development, simulations, or technical reviews to assess whether the proposed technology can meet project requirements.

5. Financial Modeling Software

Software tools like Microsoft Excel or specialized financial modeling software help analyze project finances, including revenue projections, cash flow analysis, and return on investment calculations.

6. Project Management Software

Platforms like Microsoft Project, Asana, or Trello assist in scheduling, resource allocation, and task management, aiding in the evaluation of schedule feasibility and operational planning.

7. Regulatory Compliance Checklists and Databases

Tools that provide checklists or databases of legal and regulatory requirements help ensure compliance with applicable laws and regulations.

8. Environmental Impact Assessment Software

Specialized software assists in evaluating the environmental impact of a project, including factors like carbon footprint, pollution, and ecological disruption.

9. Decision Matrix

A decision matrix helps in comparing and prioritizing different project options or alternatives based on predefined criteria, facilitating decision-making during feasibility analysis.

10. Risk Management Software

Tools like Risk Management Software or Monte Carlo simulation software assist in identifying, analyzing, and mitigating project risks, enhancing risk assessment during feasibility analysis.

By leveraging these tools, project managers can conduct comprehensive feasibility analyses, identify crucial factors influencing project success, and make informed decisions about project viability and execution.

The feasibility analysis report is a critical document that encapsulates the thorough examination and evaluation of various facets of a proposed project or business venture.

Comprising several essential elements, this report provides stakeholders with a comprehensive understanding of the project's viability, potential challenges, and opportunities. Here are the key elements typically included in a feasibility analysis report:

1. Executive Summary

The executive summary offers a condensed overview of the entire feasibility study, highlighting the key findings, conclusions, and recommendations. It provides stakeholders with a quick snapshot of the project's feasibility and serves as a guide for further exploration within the report.

2. Project Description

This section provides a detailed narrative of the proposed project, elucidating its objectives, scope, and intended outcomes. It outlines the purpose of the project, its significance, and the problem or needs it aims to address. Additionally, it may include background information on the project's origin and evolution.

3. Market Analysis

A comprehensive assessment of the market landscape forms a crucial part of the feasibility analysis report. It involves evaluating market demand, size, trends, competitive landscape, target customers, and potential growth opportunities.

Through thorough market research and analysis, this section helps stakeholders understand the market dynamics and assess the project's market viability.

4. Technical Assessment

The technical assessment delves into the feasibility of implementing the proposed project from a technical perspective. It examines the technical requirements, including technology, infrastructure, resources, and potential constraints or limitations.

By evaluating technical feasibility, this section helps identify any technical challenges or barriers that may impact project execution.

5. Financial Analysis

Financial viability is a cornerstone of any feasibility study, and the financial analysis section provides a detailed examination of the project's financial aspects. It includes estimating project costs, revenue projections, profitability analysis, and financial metrics such as return on investment (ROI), payback period, and net present value (NPV). 

Through financial modeling and scenario analysis, stakeholders can assess the project's financial feasibility and potential returns on investment.

6. Operational Assessment

The operational assessment evaluates how the proposed project integrates with existing operations, staffing requirements, workflow, and potential operational challenges.

It examines factors such as logistics, production processes, resource management, and scalability. By assessing operational feasibility, stakeholders can anticipate and address operational risks and challenges.

7. Regulatory Compliance

Regulatory compliance is a crucial consideration for any project, and this section identifies and reviews the applicable laws, regulations, permits, licenses, and compliance obligations relevant to the project. It ensures that the project complies with legal and regulatory requirements, minimizing the risk of non-compliance and associated penalties.

8. Risk Analysis

Risk analysis involves identifying and assessing potential risks and uncertainties associated with the project. It encompasses market risks, technical risks, financial risks, operational risks, and regulatory risks. By conducting a comprehensive risk assessment, stakeholders can develop risk mitigation strategies and contingency plans to address potential challenges and uncertainties.

9. Conclusion

The conclusion section summarizes the key findings and conclusions drawn from the feasibility analysis. It highlights the overall feasibility assessment, including strengths, weaknesses, opportunities, and threats associated with the project.

The conclusion provides stakeholders with a clear understanding of the project's viability and sets the stage for decision-making.

10. Recommendations

Based on the findings of the feasibility analysis, this section offers actionable recommendations to stakeholders. It may include suggestions for further exploration, adjustments to the project plan, or alternative courses of action.

Recommendations aim to guide stakeholders in making informed decisions regarding the project's future direction. By encompassing these essential elements, the feasibility analysis report serves as a comprehensive document that enables stakeholders to evaluate the viability of a proposed project or business venture effectively.

It provides valuable insights and recommendations to support informed decision-making and mitigate risks associated with project implementation.

A feasibility study involves defining project objectives, gathering data, analyzing market and technical aspects, assessing financial and operational viability, considering legal compliance and risks, compiling findings into a report, presenting to stakeholders, and refining based on feedback, guiding informed decisions.

Let's delve into the steps involved in writing a feasibility study to ensure a thorough assessment of the project's feasibility:

1. Define the Project Scope and Objectives

Clearly outline the purpose, goals, and scope of the project . Identify what you aim to achieve through the feasibility study.

2. Gather Information

Collect relevant data and information related to the project, including market research, technical specifications, financial data, regulatory requirements, and other pertinent details.

3. Conduct Market Analysis

Evaluate the market demand, size, trends, competition, and target customers. Identify potential opportunities and risks in the market.

4. Assess Technical Feasibility

Examine the technical requirements of the project, including technology, infrastructure, resources, and potential limitations. Determine if the proposed solution is technically feasible.

5. Perform Financial Analysis

Estimate the project costs, including startup expenses, operating costs, and capital investments. Develop revenue projections based on market demand and pricing strategies. Calculate key financial metrics such as ROI, payback period, and net present value (NPV) to assess financial feasibility.

6. Evaluate Operational Feasibility

Analyze how the project integrates with existing operations, staffing requirements, workflow, and potential operational challenges. Consider factors such as logistics, production processes, and resource management.

7. Review Legal and Regulatory Compliance

Identify and review applicable laws, regulations, permits, licenses, and compliance obligations relevant to the project. Ensure that the project complies with all legal and regulatory requirements.

8. Assess Schedule Feasibility

Develop a project timeline with key milestones, tasks, and dependencies. Evaluate the feasibility of completing the project within the desired timeframe, considering potential risks and delays.

9. Conduct Risk Analysis

Identify potential risks and uncertainties associated with the project, including market risks, technical risks, financial risks, operational risks, and regulatory risks. Develop risk mitigation strategies and contingency plans to address these risks.

10. Compile the Feasibility Study Report

Document the findings of the feasibility study in a comprehensive report. Organize the report into sections such as executive summary, project description, market analysis, technical assessment, financial analysis, operational assessment, regulatory compliance, risk analysis, conclusion, and recommendations.

11. Present Findings and Recommendations

Present the feasibility study report to stakeholders, including project sponsors, investors, management team, and other relevant parties. Communicate the key findings, conclusions, and recommendations based on the feasibility analysis.

12. Iterate and Refine

Review feedback from stakeholders and incorporate any necessary revisions or updates to the feasibility study report. Continuously refine the analysis to ensure accuracy and relevance.

By adhering to these best practices for a feasibility study, you can effectively write and conduct a feasibility study that provides a comprehensive assessment of the project's viability and helps stakeholders make informed decisions about its future.

A feasibility study should be conducted whenever there's uncertainty about the viability or potential risks of a project or business venture. Whether it is launching a new business, expanding an existing one, making significant investments, developing new products, or undertaking infrastructure projects, a feasibility study helps assess various factors such as market demand, competition, technical feasibility, regulatory compliance, and financial viability.

By conducting a feasibility study upfront, decision-makers can make informed choices, mitigate risks, allocate resources efficiently, and increase the chances of success for the project or venture.

Essentially, it is a crucial preliminary step to evaluate the feasibility and potential outcomes before committing significant time, effort, and resources.

The primary difference between a feasibility study and a project charter lies in their timing and purpose: a feasibility study evaluates a project's viability before it begins, focusing on factors like market demand and financial feasibility, while a project charter is created afterward to formalize the project's initiation and define its objectives and scope.

Here's a detailed comparison between a feasibility study and a project charter:

In summary, a feasibility study assesses the viability of a project, considering market demand, technical feasibility, and financial viability before the project begins.

A project charter, created after the feasibility study, formalizes the project's initiation, defining objectives and scope, and providing a framework for planning and execution.

A feasibility study evaluates the feasibility and viability of a proposed project or business venture, focusing on determining whether the project is technically, financially, and operationally feasible.

On the other hand, a business plan outlines the strategy and operational details for running a business, including marketing, operations, financial projections, and growth plans.

Here's a detailed comparison between a feasibility study and a business Plan:

In summary, a feasibility study assesses the viability of a project, while a business plan outlines the strategy and operational details for running a business.

The main difference between a feasibility study and a business case is that the feasibility study evaluates the technical, financial, and operational feasibility of a proposed project or business venture to determine if it is viable. In contrast, a business case focuses on justifying the investment by presenting the rationale, benefits, costs, and potential returns of the project.

Let's delve into the main differences between a feasibility study and a business case:

In short, a feasibility study evaluates if a project is viable, focusing on technical and financial aspects beforehand. A business case justifies the project's investment, outlining benefits and costs after the feasibility study. While the feasibility study aids decision-making on project viability, the business case guides decisions by presenting the rationale for investing.

Delve into the intricacies of Feasibility Analysis and Study in Project Management through Bakkah Learning's extensive range of certifications.

Explore courses such as Project Management Professional (PMP) , Certified Associate in Project Management (CAPM) , and Project Management Institute Agile Certified Practitioner (PMI-ACP) , designed to deepen your understanding of project feasibility and enhance your project management skills.

Additionally, discover specialized certifications like Risk Management Professional (PMI-RMP ), Management of Portfolios (MoP) , PMI Scheduling Professional (PMI-SP) , and PRINCE2 Agile , which provide in-depth insights into risk assessment, portfolio management , project scheduling, and agile project management methodologies .

Furthermore, explore the realm of Lean Six Sigma with our Yellow Belt , Green Belt , and Black Belt courses, which integrate feasibility analysis into the DMAIC (Define, Measure, Analyze, Improve, Control) methodology, enabling you to identify and mitigate project risks while optimizing processes for maximum efficiency.

Take the next step towards success and enroll today in Bakkah Learning's expert-led training! Equip yourself with the knowledge and skills to conduct comprehensive feasibility analyses, mitigate risks, and drive successful project outcomes.

Don't miss this opportunity to invest in your professional development and achieve your project management goals. Join us now!

In conclusion, feasibility analysis is crucial in project management, providing a structured approach to assess project viability. By conducting thorough studies, stakeholders can identify risks, optimize resources, and make informed decisions, enhancing project success. Embracing best practices in feasibility analysis empowers efficient planning and execution, ensuring projects align with organizational goals.

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Why Feasibility Studies Matter (With Examples)

Published: November 11, 2022

As a business leader, you want your projects to generate a return on investment. So before you begin any new venture, it’s a good idea to complete a feasibility study.

Feasibility studies help to determine the success (or failure) of your proposed project or plan. These types of studies help you make better, informed business decisions. As a result, you can save time and money by starting a plan or a project that you know has a high ROI.

Here, you’ll learn how to run feasibility studies. This post includes:

What is a feasibility study?

Feasibility study benefits, types of feasibility studies, how to write a feasibility study, feasibility study examples.

A feasibility study analyzes a potential project’s benefits, risks, costs, and potential outcomes. After completing a feasibility study, you and your team will have enough information to determine if the proposed project is a worthy investment.

Two types of sales forecasting data are appropriate for feasibility studies:

• Quantitative forecasting uses historical business data to predict trends.
• Qualitative sales forecasting data takes customers’ opinions, market research, and survey results into account.

The type of feasibility study you run determines which type of data you will need. Consider using qualitative forecasting data to determine how well your audience might receive your product. Quantitative data can help you predict revenue.

As a team leader, it’s your job to ensure your team hits yearly sales revenue goals. That may include deciding to take on a project based on projected sales forecasting data.

However, you do not want to take on a proposed plan or project without being sure the project will benefit your organization. Companies with accurate forecasts are 10% more likely to increase revenue yearly , according to Intangent.

That’s why feasibility studies matter. Combine sales forecasting data with the insight from a feasibility report, and you’ll be able to gauge the success rate of your proposed plan before you start.

Other feasibility benefits include:

• Determining if the project is appropriate for your team.
• Making sound decisions for your team.
• Avoiding mistakes.
• Narrowing the focus of the project.
• Determining project and team needs.
• Determining which departments need to be involved in the project.
• Calculating the amount and source of appropriate funding.
• Assessing the success or failure rate of your project.
• Estimating ROI.

Not only do feasibility studies help determine if a proposed plan or project is viable, but they also help narrow the focus of the project. Overall, feasibility studies can help keep your project on track from the start.

Now that you understand the benefits of feasibility studies, it’s time to determine which kind of feasibility study is best for your team.

Technical Feasibility Study

A technical feasibility study looks at your project’s technical aspects. This type of study answers the question: do you have the specialized resources and capabilities to carry out this project?

You might have the appropriate funding for a project, but a technical feasibility study will help you determine if you have the right processes, systems, and staffing for the job.

Best for: Software development teams and project development teams

Financial or Economic Feasibility Study

Financial feasibility studies can help you determine if you have the funding for your project. Plus, you’ll learn the venture is an overall good investment for your team and your company. These kinds of feasibility studies ask: is the allotted funding amount appropriate for this project?

By completing a financial feasibility study, you’ll have already identified funding sources, expenses, your budget, any potential risks, and expected revenue.

Best for: Financial managers and project managers

Operational Feasibility Study

As the name suggests, an operational feasibility study analyzes whether or not your team is equipped to carry out the proposed plan or project. This feasibility study answers the questions:

• Does your team have the means to complete the project?
• Will the project add value for your team or your customers?

Consider conducting an operational feasibility study if you have developed a solution for a potential problem. This kind of study will help you determine if the solution solves the problem or creates more issues.

Best for: Project managers and stakeholders

Legal Feasibility Study

This feasibility study should be performed to determine if your proposed project is legal and ethical. Legal feasibility studies are designed to keep you and your team aligned with local, state, and federal laws.

If you are unsure if your project is unethical or unlawful, a legal feasibility study will help you make the appropriate decision before you begin.

Best for: Legal departments and project managers

Scheduling Feasibility Study

When starting a new project, you’ll often be asked, “When can we reasonably expect this project to be completed?”

If you and your team are working for clients and are on a deadline, a scheduling feasibility study looks at the project’s timeline. That can help your team determine a reasonable completion date.

After completing a scheduling feasibility study, you might find the plan requires more time than you thought. This is helpful to know before you begin a project.

Best for: Stakeholders, project managers, and their teams

If you are wondering how to write a feasibility study, look no further than our feasibility study template .

Before you jump into writing your own study with our feasibility study template, take a minute to familiarize yourself with each section of the template. Keep in mind, the feasibility study temple can be customized to fit the needs of you and your team.

1. Executive Summary

Your executive summary should be a one-page summary of the entire study. Make sure to include the following:

• The project name.
• A description of the project.
• The goals of the project or plan.
• The target market.

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2. Business Explanation

This section of the feasibility study is your space to introduce the business concept of your project or plan. Consider discussing:

• The purpose of the project or plan.
• Products or services.
• Competitive advantages.
• Experience of its founders.

If your project is feasible, you’ll want to be as specific as possible in this section and discuss the project’s projected success.

3. Market Overview

This section of your feasibility study should discuss your target market and why your project or plan will (or will not) succeed. You’ll want to discuss your target market in-depth, its pain points, and how your proposed product or service will solve the problems.

You’ll want to include valid data in this section. Consider featuring:

• The market size and demographics.
• The market psychographics.
• Competitors and substitutes.

4. Financial Projections

Every good business endeavor is meant to make a profit. Your feasibility study should determine if the project or plan is a financially wise investment. The financial projections section of the feasibility template outlines and discusses critical financial metrics.

Considering including and discussing:

• Capital needs.
• Projected revenue and expenses.
• Projected revenue needed to break even.

5. Feasibility Assessment and Conclusion

In your conclusion, be as clear and specific about your proposed project or plan as possible. Use statements like, “Based on our assessment of (X), we have deemed this business project feasible.”

Feasibility studies can be helpful across your entire organization — from the sales team to the product development team. Here are a few examples of feasibility studies conducted in various industries.

Howard County Public School System

The Howard County Public School System’s feasibility study dives into projected student enrollment over a 10-year period.

What we love: The school system offers an excellent example of a brief, but thorough, executive summary. In this section, Howard County Public Schools also includes specific historical data used throughout the study.

Town of Walpole, Massachusetts

This feasibility study from the Walpole, Massachusetts’ explores the town’s recreation programming and facilities. Throughout, the document includes program recommendations with data that explains how the researchers came to this conclusion.

What we love: This document combines several different types of feasibility studies (financial, technical, and operational) into one comprehensive study. Remember, you can mold your feasibility study to fit your organization’s needs best.

U.S. Fish and Wildlife Service

In this example, the U.S. Fish and Wildlife Service explores the feasibility of reintroducing sea otters to areas of the Pacific coast. This study also provides a model for structuring the objectives section of this document. A good feasibility study is clear and to the point in each section.

What we love: Here, the U.S. Fish and Wildlife Service distinguishes what the study covers (potential options for reintroduction), and what it cannot accomplish (projected population growth from reintroduction).

While your feasibility study seeks to assess a project’s viability, your document will have a limited scope. If you’ll need to gather additional information moving forward, mention that in your feasibility study.

Holdrege Area Public Library

Your feasibility study doesn’t need to be all text. The Holdrege Area Public Library makes use of graphics and charts to convey information in its feasibility study.

What we love: Infographics are easy to read. You can absorb important information with a quick skim.

Running Your Feasibility Study

Accurately predicting the success of a project might seem like a daunting task. But it doesn’t have to be. There are many ways to conduct a feasibility study. Stary by leveraging the tools you already have, like HubSpot’s Forecasting Software and our feasibility study template.

Your job as a sales leader is to help your team increase your organization’s bottom line. With the use of sales forecasting data and feasibility studies, you’ll be able to pursue the projects that will yield the highest ROI.

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A free template to help you prove your project's feasibility.

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The Importance of a Feasibility Study

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Uncertainty is a constant that businesses of every size face daily. Getting customers in the door, encouraging them to spend, and ultimately generating a profit are basic objectives that can at times seem difficult to achieve. Changing, adapting and incorporating new products and ideas into your business mix are ways to remove some of the uncertainties you face, but without proper forethought and planning, those steps themselves can be highly uncertain. Enter the feasibility study: a chance to ask and get answers to questions that help you to assess potential, and to predict the likelihood of success or failure.

Likely to Succeed

The term “feasible” describes an action or event that is likely, probably or possible to happen or achieve. A feasibility study is the total of the actions you take and the questions you ask to determine whether an idea, thought or plan is likely to succeed. An effective study can guide you on whether you should move forward with your idea, refine it, or scrap it altogether and go back to the drawing board.

Focused and Specific

Feasibility studies are focused and specific. They start with a single question – asking whether the idea, event or action is a viable solution – and force you to focus solely on that question to the exclusion of everything else, drilling down to explore possible outcomes. A feasibility study is not the same as a business plan. A feasibility study is an investigative tool that might cause you to discount an idea, whereas a business plan is call to action. You can, in fact, use a feasibility study as a predecessor to creating a business plan.

The Big Picture

Feasibility studies are important because they force you consider the big picture first and then think in a top-down fashion. In this way, one or two general starter questions lead to a host of additional, more detailed questions that become increasingly narrower in focus as you get closer to reaching an ultimate answer.

For example, asking whether anyone will buy your new-and-improved product and whether it will generate a profit creates additional questions that force you to consider customer need and possible competition, and to identify risks that you may face. You must also describe your product and its benefits, define your target market, and calculate cost along with break-even and profit points.

Alternative Opportunities and Solutions

Feasibility studies offer you the chance to “get it right” before committing time, money and business resources to an idea that may not work in the way you originally planned, causing you to invest even more to correct flaws, remove limitations, and then simply try again. Feasibility studies may also open your eyes to new possibilities, opportunities and solutions you might never have otherwise considered. There are no right or wrong answers to the questions you ask, but an answer you don’t necessarily want or expect can create new profit potential.

• SurveyGizmo: What Is a Feasibility Study, and How Can Surveys Help?
• Investing News: What are Prefeasibility and Feasibility Studies?

Based in Green Bay, Wisc., Jackie Lohrey has been writing professionally since 2009. In addition to writing web content and training manuals for small business clients and nonprofit organizations, including ERA Realtors and the Bay Area Humane Society, Lohrey also works as a finance data analyst for a global business outsourcing company.

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How to Write a Feasibility Study Step by Step

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Lahle Wolfe has more than 25 years of experience in small business development and ran her own digital marketing firm.

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A feasibility study looks at the viability of a business venture or project with an emphasis on identifying potential problems. The study attempts to answer two main questions: Will the proposed business venture or project work, and should you proceed with it?

Before you start to write your business plan, it's important that you first identify how, where, and to whom you intend to sell your product or service. You also need to assess your competition and figure out how much money you will need to start your business—and more importantly, how much it will take to keep it running smoothly until it is well-established.

A feasibility study also addresses important issues such as where (and how) the business will operate. If done properly, your feasibility analysis will provide in-depth details about all the various components of your business to determine if it can succeed. In the end, this document will serve as a valuable tool for developing a winning business plan.

Why Feasibility Studies Are So Important

The information you gather and present in your feasibility study will help you identify all the things you need to make the business work, pinpoint logistical and other business-related problems and solutions, develop marketing strategies to convince a bank or investor that your business is worth investing in, and serve as a solid foundation for developing your business plan

The Importance of Location

Even if you have a great business idea, you'll have to find a cost-effective way to market and sell your products or services. This is especially important for storefront retail businesses where the location you choose could make or break your business. The right store in the wrong place is doomed to fail. Most  commercial space leases  place restrictions on businesses that can have a dramatic effect on income. A lease might limit business hours or days, parking spaces, and restrict what products or services you can offer. In extreme cases, it can even limit the number of customers a business can receive each day.

You'll need to ask yourself if you should rent space in a business park, industrial park, or retail location—because they each have their own pros and cons.

6 Components of a Feasibility Study

• Description of the Business :   Describes the product or services you plan to offer. 
• Market Feasibility :   Describes the industry, the current market, anticipated future market potential, competition, sales projections, and potential buyers.
• Technical Feasibility :   Details how you will deliver your product or service, including issues of materials, labor, transportation, where your business will be located, and the technology needed. 
• Financial Feasibility:   Projects how much startup capital you'll need and examines potential sources of capital and returns on investment.
• Organizational Feasibility :   Examines the legal and corporate structure of the business. You can also include professional background information about the founders of the business and what skills they can contribute to the business.
• Conclusions:   Discusses how you envision the business succeeding. You need to be honest in your assessment because investors won't look at your conclusions and take that as proof. They will look at the data and question your conclusions if they appear unrealistic.

The Bottom Line

Feasibility studies contain comprehensive, detailed information about your business structure, products, services, and the market. They also examine the logistics of how you will deliver a product or service and the resources you need to make the business run efficiently. 

The feasibility study and why you should conduct one before launching your startup

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Before launching their business, entrepreneurs analyse a host of variables to ensure that their project can scale up and succeed in the market. To this end, entrepreneurs often turn to solutions like a feasibility study, a step prior to giving the green light to the business concept that provides a clear picture of the project by analysing its technical and financial aspects.

Much like a mathematical equation, entrepreneurs seek to eliminate the unknowns to ensure that their business idea has a place in the market. Beyond using indicators like the runway, one of the formulas that entrepreneurs often incorporate are feasibility studies, that is, assessing a project, plan or system to find out whether it is technically and financially feasible and to understand the viability of the business model. In short, these studies determine if the project is feasible at the estimated cost.

There are several reasons that entrepreneurs conduct feasibility studies:

• Launching a new project . A feasibility study makes it possible to determine the reasons for pursuing or rejecting a project as well as identify expected costs and benefits.
• Opening a new line of business or service. It provides the opportunity to evaluate the resources and technology required to develop a new solution, as well as help to identify potential obstacles or competitors offering similar solutions.
• Acquisition of another company. It helps the managers of high-growth companies obtain valuable information and understand the risk of the investment .

Conducting a feasibility study

There are four major types of feasibility that are important to understand before embarking on one of these studies:

• Technical feasibility. Analyses equipment and software, as well as the qualified team needed to operate it properly.
• Financial feasibility. Involves an estimate of the cost of the project and its expected return on investment.
• Market feasibility. This is a market analysis that focuses on the product or service, as well as consumer demand.
• Operational feasibility. Creates a draft of the business structure and management team required to operate.

Elements of a good feasibility study

There are several factors to consider when it comes to developing a successful feasibility study.

• Market size. To examine the startup’s scope of action.
• Resources required. To specify the jobs that will need to be filled, as well as property and vehicles.
• Technological considerations. To gather the technological resources that will be needed to develop and implement the high-growth startup’s business idea.
• Cost and revenue structure. To establish the systems related to the project’s finances and accounting.
• Stakeholder mapping. To establish whether it is feasible to develop a relationship with or collaborate with them.

A feasibility study, step by step

Keeping the type of feasibility study required and its different elements in mind, there are several steps that startups can follow to conduct a feasibility study:

1. Prepare a preliminary analysis

This involves drawing up a specific outline of the services the startup plans to offer , detailing their unique features and the market they will serve. Two questions can help shape this outline:

• Is the product or service going to meet an unmet demand?
• Can it compete with other solutions either on price, design or availability?

It is also useful in this first step to clarify any obstacles that the high-growth company is going to encounter and which may influence its evolution. Itis difficult to move forward with the project if, for example, the required capital is not likely to be available or there are risk factors that may prevent the service from seeing optimal sales.

2. Conduct a market study

This is a critical step when conducting a feasibility study, since it will make it possible to understand the size of the business and come up with a realistic projection of revenues and sales .

There are several variables to consider:

• The region and what the population trends are, as well as their demographic characteristics, so that you can develop solutions tailored to their demands.
• The solutions that the competition has developed and their strengths and weaknesses.
• Market volume to forecast market share.

3. Write a business case

To capture the reasoning for a new strategy based on commercial needs and the benefits that a company will reap by taking advantage of an opportunity, a business case  should be written that covers the results of the market study. The entrepreneur can use this document to create a cost and sales structure that will calculate the minimum amount of investment needed, helping entrepreneurs understand if it will be possible to cover costs.

4. Design the startup’s organizational structure and operations

It is at this point that the technical feasibility and costs of the project start-up and operation, as well as the fixed investments, are determined. The following aspects should be kept in mind when drawing up a detailed plan:

• Marketing methods.

5. Examine and analyse all data

This involves running cross-checks. It is useful to review the projected income statement and compare it with the expected return on investment, as well as consider whether significant changes in the market are likely to occur that could alter forecasts.

6. Implement decisions

After following the above steps, the entrepreneur will have a complete picture with indicators as to whether the project should be pursued. If the study reveals that it is possible to obtain the minimum expected ROI and that there is potential for development, then the project is feasible.

When it comes to looking to the future, conducting this type of analysis provides startups with an excellent opportunity to confirm that their solution will find a place in the market and that it has the potential to evolve and expand to other regions. In short, it gives startups a broader vision to ensure that their proposal is a success.

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Feasibility Analysis: Meaning, Importance, Report, Types, Process, Objectives and Advantages | Business

In this article we will discuss about:- 1. Meaning & Concept of Feasibility Analysis 2. Importance of FSR 3. Steps in Writing a FSR 4. Contents of a Feasibility Report 5. Types of Feasibility Analysis 6. Steps Involved in Conducting a Feasibility Study 7. Objectives of Feasibility Analysis 8. Advantages of Feasibility Analysis.

• Advantages of Feasibility Analysis

1. Meaning & Concept of Feasibility Analysis:

A feasibility study aims to objectively and rationally uncover the strengths and weaknesses of an existing business or proposed venture, opportunities and threats present in the environment, the resources required to carry through, and ultimately the prospects for success. In its simplest terms, the two criteria to judge feasibility are cost required and value to be attained.

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A well-designed feasibility study should provide a historical background of the business or project, a description of the product or service, accounting statements, details of the operations and management, marketing research and policies, financial data, legal requirements and tax obligations. Generally, feasibility studies precede technical development and project implementation.

A feasibility study evaluates the project’s potential for success; therefore, perceived objectivity is an important factor in the credibility of the study for potential investors and lending institutions. It must, therefore, be conducted with an objective, unbiased approach to provide information upon which decisions can be based.

Investment proposals, involving huge capital outlay are invariably irreversible. Therefore, before starting a project/proposal, it is necessary and imperative to find out whether the same is feasible or not.

Feasibility is an analysis and evaluation of a proposed project to determine if it is :

a. Technically feasible

b. Feasible within the estimated cost

c. Profitable.

Feasibility studies are almost always conducted where large sums are at stake and are also called Feasibility Analysis.

Feasibility study is an assessment of the practicality of a proposed project or system.

Four Test for Feasibility :

a. Operational feasibility is a measure of how well the solution will in the organization. It is also a measure of how people feel about the system/project.

b. Technical feasibility is a measure of the practicality of a specific technical solution and the availability of technical resources and expertise.

c. Schedule feasibility is a measure of how reasonable the project timetable is.

d. Economic feasibility is a measure of the cost effectiveness of a project or solution.

Designing a Feasibility Report :

A feasibility study is one of the key activities within the project initiation phase. It aims to analyze and justify the project in terms of technical feasibility, business viability and cost-effectiveness. The study serves as a way to prove the project’s reasonability and justify the need for launch.

Once the study is done, a feasibility study report (FSR) should be developed to summarize the activity and state if the particular project is realistic and practical.

Let us learn what FSR means and contents of a good feasibility report :

Meaning of Feasibility Study Report (FSR):

It is just a document that aims to identify, explore, and evaluate a project’s solutions to save time and money. The following definition gives a broader understanding of the document: A Feasibility Study Report (FSR) is a formally documented output of feasibility study that summarizes results of the analysis and evaluations conducted to review the proposed solution and investigate project alternatives for the purpose of identifying if the project is really feasible, cost-effective and profitable. It describes and supports the most feasible solution applicable to the project.

The report gives a brief description of the project and some background information. Formally this document is the starting point for running the Pre-Charter Sub-Phase. In practice, it signifies that the sponsor can proceed with deciding on project investment and make necessary assignments to the project manager.

2. Importance of FSR :

The process to write the report is called feasibility study reporting. Often it is a responsibility of the project manager to control such a process.

The importance of writing the report can be summarised as follows:

(i) It helps in providing legal and technical evidence of the project’s vitality, sustainability and cost-effectiveness.

(ii) The reporting process allows the senior management to get the nec­essary information required for making key decisions on budgeting and investment planning.

(iii) A well-written feasibility study report template helps in developing solutions for Project Analysis

(iv) FSR helps link project efficiency to budgeted costs.

(v)It helps in Risk Mitigation because it helps with contingency planning and risk treatment strategy development.

(vi) The report can be used by senior management to identify staffing needs as well as acquire and train necessary specialists.

ADVERTISEMENTS: (adsbygoogle = window.adsbygoogle || []).push({}); 3. Steps in Writing a FSR :

(i) Write Project Description:

At this step, you need to collect background information on your project to write the description. A brief and candid description will help the reader to know the purpose of the FSR.

(ii) Describe Possible Solutions:

In this step you are required to perform an alternatives analysis and make a description of possible solutions for your project.

(iii) List Evaluation Criteria:

Under this third step, set and define evaluation criteria for possible solutions. This step of feasibility study report writing requires you to investigate the solutions and put them against a set of evaluation criteria.

(iv) Propose the Most Feasible Solution:

The next step for writing a feasibility study report is to determine the most economically reasonable and technically feasible solution which lets the company (1) keep to optimal use of project resources and (2) gain the best possible benefit. The report might include: “After the evaluation of the possible solutions, the most feasible solution for this project is identified and selected, so the project turns to be cost-effective, vital and practical.”

(v) Write Conclusions:

The final step of the feasibility study reporting process requires you to make a conclusion by summarizing the project’s aim and stating the most feasible solution.

4. Contents of a Feasibility Report :

The content of sample feasibility report is formatted and structured according to a range of requirements which may vary from organization to organization but there are common suggestions, which are listed below.

(i) Title Page or Front Matter :

To begin with writing a sample feasibility report, first you need to create a title page that provides a descriptive yet concise title, con­taining the name of the writer, email, job position, and also the or­ganization for which you are writing the report.

Next, you must include an itemized list of contents that provides headings and sub-headings sequenced the same way as they are structured in the report body. Also add a list of all material such as tables, figures, illustrations, annexes etc. which have been used within the document.

Keep in mind that the title page should not be numbered and that no more than 4-5 pages should be dedicated to the front matter.

(ii) Body of the Report :

There are many different styles and requirements for formatting the body of feasibility study report, it may be difficult to select right format.

However, there are several common suggestions which are as follows:

a. Each page of the report body needs to include a descriptive header with an abbreviated title for the report, the author’s name and page number

b. Structure the report by headings and sub-headings and indicate this structure within the document content

c. Make sure headings are properly formatted (i.e., flush left, indented, etc.) on each page

d. Use the same style for headings throughout the entire report template

e. Never use too larger or too small font (font should have a professional look, 10-12 point)

f. Use the same citation style (e.g., CBE, APA, etc.) for formatting sources used in your feasibility study.

(iii) Sections of the Report :

The following list provides an outline of the key sections to be included in report content:

a. Executive Summary – A description of the problem/opportu­nity highlighted in the study, the purpose of the report, and the importance of the research for your target audience

b. Background – A more detailed description of the feasibility study, who it was carried out, and whether it was implemented elsewhere

c. Analysis – An examination and evaluation method employed in the conducting your feasibility study

d. Alternatives and Options – An overview of any alternative proposals or options and their features in comparison to the main proposal of the study

e. Cost-Benefit Evaluation – A rigorous analysis method that was implemented to examine and evaluate the main proposal for cost-benefit effectiveness and to demonstrate the tech feasibility, economic practicality, social desirability, and eco soundness of the proposal.

f. Conclusion – A summary of the work done and your own conclusions regarding your analysis

g. Recommendations & Suggestions – A series of recommendations practices and follow-up actions based on your conclusions

(iv) Back or End Matter/Last Page :

One last thing you need to consider when writing your feasibility study report is that the report should include a Reference page that lists all reference material such as articles, books, web pages, period­icals, reports, etc. cited in your document. This page should be styled appropriately.

Additionally, you can create an Appendix page that provides detailed discussions of all criteria used in analyzing feasibility and examples of each criterion. This page should also be styled appropriately.

5. Types of Feasibility Analysis :

This feasibility can be ascertained on following parameters:

(i) Financial Feasibility

(ii) Commercial Feasibility

(iii)Technical Feasibility

(iv) Economic Feasibility

(v) Social Feasibility

(vi) Environmental feasibility

(vii) Legal feasibility

(viii) Operational feasibility

(ix) Schedule feasibility

(x) Market and real estate feasibility

(xi) Resource feasibility

Each one is being discussed in brief below:

(i) Financial Feasibility:

In order to ascertain financial viability, finan­cial projections are made and on the basis of such projections which need to be objective and realistic, the followings broad parameters are evaluated for determining the feasibility of the project-

a. Return on Investment

b. Payback period of the outlay

c. Internal rate of return

d. Profitability index.

In case of a new project, financial viability can be judged on the following parameters:

a. Total estimated cost of the project

b. Financing of the project in terms of its capital structure, debt to equity ratio and promoter’s share of total cost

c. Existing investment by the promoter in any other business

d. Projected cash flow and profitability

The financial viability of a project should provide the following information:

a. Full details of the assets to be financed and how liquid those assets are

b. Rate of conversion to cash-liquidity

c. Project’s funding potential and repayment terms

d. Sensitivity in the repayments capability to the following factors

e. Mild slowing of sales

f. Acute reduction/slowing of sales

g. Small increase in cost

h. Large increase in cost

i. Adverse economic conditions.

If, on the above mentioned parameters, the project is found suitable, then only further feasibility tests are carried out.

(ii) Commercial Feasibility:

Commercial Feasibility is ascertained by finding out the following:

a. Current and Potential competition

b. Profit margin

c. Size of the market.

d. Degree of demand for the product

e. Future growth of market

(iii) Technical Feasibility:

This assessment is based on an outline design of system requirements, to determine whether the company has the technical expertise to handle completion of the project. When writing a feasibility report, the following should be taken to consid­eration.

The technical feasibility assessment is focused on gaining an understanding of the present technical resources of the organization and their applicability to the expected needs of the proposed system. It is an evaluation of the hardware and software and how it meets the need of the proposed system.

An in depth and critical study of following parameters is done:

a. Plant location

c. Plant & machinery and equipment

d. Manufacturing process

e. Infrastructure

f. Technology

g. Efficient waste disposal.

(iv) Economic Feasibility:

The purpose of an economic feasibility study (EFS) is to demonstrate the net benefit of a proposed project for accepting or disbursing electronic funds/benefits, taking into consideration the benefits and costs to the agency, other state agencies, and the general public as a whole.

In sync with the phrase “Parity between haves and have not’s”, a social cost-benefit analysis (SCBA) of the project should be carried out. This ensures that the organization is contributing to the GDP of the economy and is also discharging its social obligations, by providing employment opportunities and bringing in improvement in quality of life.

The purpose of business in a capitalist society is to turn a profit, or to earn positive income. While some ideas seem excellent when they are first presented, they are not always economically feasible. That is, that they are not always profitable or even possible within a company’s budget. Since companies often determine their budget’s several months in advance, it is necessary to know how much of the budget needs to be set aside for future projects.

Economic feasibili­ty helps companies determine what that amount is before a project is ultimately approved. This allows companies to carefully manage their money to insure the most profitable projects are undertaken. Economic feasibility also helps companies determine whether or not revisions to a project that at first seems unfeasible will make it feasible.

(v) Social Feasibility:

Social feasibility is a detailed study on how one interacts with others within a system or an organization. Social impact analysis is an exercise aimed at identifying and analyzing such impacts in order to understand the scale and reach of the project’s social impacts.

At a minimum, all projects demand a review of project data at the Appraisal Phase, so as to identify if material social impacts exist. Social impact analysis greatly reduces the overall risks of the project, as it helps to reduce resistance, strengthens general support, and allows for a more comprehensive understanding of the costs and benefits of the project.

However, social impact analysis can be expensive and time consuming, so the full analysis process cannot be justified for all projects. At a minimum, all projects demand a review of project data at the Appraisal Phase, so as to identify if material social impacts exist. If they do, a full social impact analysis should be conducted.

(vi) Environmental Feasibility:

The environmental feasibility study considers both human and environmental health factors. The ES is a comparative process that looks at all potential solutions, and then evaluates them against specific criteria to ultimately find the best choice. It is a fact that external environment exerts considerable influence on the organizations. In fact the climatic conditions in a particular area/region have a significant impact on the existence of an enterprise. Therefore, it is necessary to ascertain the environment viability as well.

The parameters considered are:

a. Overall protection of public and environmental health

b. Effective reduction of hazardous waste toxicity, mobility and volume.

c. Long-term and short-term effectiveness of environmental policies of the company

d. Potential consequences of the remedial measures taken for protecting environment

(vii) Legal Feasibility:

It should first be determined whether the proposed project conflicts with legal requirements, and if the proposed venture is acceptable in accordance to the laws of the land. The project team has to make a thorough analysis of the legal issues surrounding the project, across several dimensions.

A detailed legal due diligence should be done to ensure that all foreseeable legal requirements, which have not or will not be dealt with, in other appraisal exercises, are met for the development of the project.

The main objectives of the legal feasibility analysis are as follows :

a. To ensure that the project is legally doable;

b. To facilitate risk management, indicating the risks and obstacles that need to be addressed within the technical analyses, the financial model and/or the Value for Money analysis; and

c. To avoid, to the extent possible, major problems in the project’s development and implementation, specifying the requirements that need to be considered at subsequent stages of the PPP process, [public private partnership]

(viii) Operational Feasibility:

Operational feasibility is the measure of how well a proposed system solves the problems, and takes advantage of the opportunities identified during scope definition and how it satisfies the requirements identified in the requirements analysis phase of system development.

The operational feasibility assessment focuses on the degree to which the proposed development projects fits in with the existing business environment and objectives with regard to development schedule, delivery date, corporate culture and existing business processes.

To ensure success, desired operational outcomes must be imparted during design and development. These include such design-dependent parameters as reliability, maintainabili ty, supportability, usability, producibility, disposability, sustainability, affordability and others.

These parameters are required to be considered at the early stages of design if desired operational behaviours are to be realised.

(ix) Schedule Feasibility:

A project will fail if it takes too long to be completed before it is useful. Typically this means estimating how long the system will take to develop, and if it can be completed in a given time period using some methods like payback period. Schedule feasibility is a measure of how reasonable the project timetable is.

Some projects are initiated with specific deadlines. It is necessary to determine whether the deadlines are mandatory or desirable. To do proper scheduling, the versatile techniques like PERT & CPM are adopted.

(x) Market and Real Estate Feasibility:

Market feasibility studies involve testing geographic locations for a real estate development project, and usually involve parcels of real estate land. Developers often conduct market studies to determine the best location within a jurisdiction, and to test alternative land uses for given parcels. Jurisdictions often require developers to complete feasibility studies before they will approve a permit application for retail, commercial, industrial, man­ufacturing, housing, office or mixed-use project. Market Feasibility takes into account the importance of the business in the selected area.

(xi) Resource Feasibility:

This involves questions such as how much time is available to build the new system, when it can be built, whether it interferes with normal business operations, type and amount of resources required, dependencies, and developmental procedures with company revenue prospects.

There are resources necessary to complete any project. All the important resources like human resource, artificial resources, financial resource etc. are taken care of by indulging in complete research on feasibility of the resources needed to complete the project.

6. Steps Involved in Conducting a Feasibility Study :

(i) Conduct a Preliminary Analysis:

The primary purpose of the preliminary analysis is to screen project ideas before extensive time, effort, and money are invested. Two sets of activities are involved. In this step the planned services, target markets, and unique char­acteristics of the services are described or outlined, as specifically as possible by answering following questions-

a. Does the practice serve a currently unserved need?

b. Does the practice serve an existing market in which demand exceeds supply?

c. Can the practice successfully compete with existing practices?

d. Are capital requirements for entry or continuing operations unavailable or unaffordable?

e. Do any factors prevent effective marketing to any or all referral sources?

If the information gathered so far indicates that the idea has potential, then it is continued with a detailed feasibility study.

(ii) Prepare a Projected Income Statement:

Anticipated income must cover direct and indirect costs, taking into account the expected in­come growth curve. Working backward from the anticipated income, the revenue necessary to generate that income can be derived in order to build a projected income statement. Factors that determine this statement are services provided, fees for services, volume of services, and adjustments to revenues etc.

(iii) Conduct a Market Survey:

A good market survey is crucial. If the planner cannot perform this survey, an outside firm should be hired. The primary objective of a market survey is a realistic projection of revenues.

The major steps include:

a. Defining the geographic influence on the market.

b. Reviewing population trends, demographic features, cultural factors, and purchasing power in the community.

c. Analyzing competing services in the community to determine their major strengths and weaknesses. Factors to consider include pricing, product lines, sources of referral, location, promotional activities, quality of service, consumer loyalty and satisfaction, and sales.

d. Determining total volume in the market area and estimate expected market share.

e. Estimating market expansion opportunities (e.g., responsiveness to new/enhanced services).

(iv) Plan Business Organization and Operations:

At this point, the organization and operations of the business should be planned in sufficient depth to determine the technical feasibility and costs involved in start-up, fixed investment, and operations.

Extensive effort is necessary to develop detailed plans for:

a. Equipment

b. Merchandising methods

c. Facility location and design & layout

d. Availability and cost of personnel

e. Supply availability (e.g., vendors, pricing schedules exclusive or franchised products)

f. Overheads

(v) Prepare an Opening Day Balance Sheet:

The Opening Day Balance Sheet should reflect the practice’s assets and liabilities as accurate­ly as possible at the time the practice begins, before the practice generates income. Prepare a list of assets required for practice operations. The list should include item, source, cost, and available financing methods.

Necessary assets include everything from cash necessary for working capital to buildings and land. Although the resulting list is rather simple, the amount of effort required may be extensive. Liabilities to be incurred and the investment required by the practice must also be clarified.

These items need to be considered:

a. Whether to lease or buy land, buildings, and equipment

b. Method to finance asset purchases

c. Way to finance accounts receivable

(vi) Review and Analyze All Data:

The planner should determine if any data or analysis performed should change any of the preceding analyses. Basically, this step means is based on the principle “Step back and reflect one more time.” Re-examine the Projected Income Statement and compare with the list of desired assets and the Opening Day Balance Sheet.

It is good to find out that all expenses and liabilities, in the Income Statement are reflecting realistic expectations. Risk and contingencies are analyzed for Considering the likelihood of significant changes in the current market that could alter projections.

(vii) Make “Go/No Go” Decision or Green/Red Signal Decisions :

All the preceding steps have been aimed at providing data and analysis for the “go/no go” decision. If the analysis indicates that the business should yield at least the desired minimum income and has growth potential, a “go” decision is appropriate. Anything less, than the desired result, will imply a “no go” decision.

Additional considerations include answers to following questions:

a. Is there a commitment to make the necessary sacrifices in time, effort and money?

b. Will the activity satisfy long-term aspirations?

7. Objectives of Feasibility Analysis :

Businesses undertake feasibility studies to determine if a proposed strategic action is operationally viable and will produce the desired results. The studies enable company leaders to understand both positive and negative impacts before making a change.

The main objectives of carrying out a feasibility analysis are:

(i) To determine the outcome of the proposed action.

(ii) To ascertain whether it will work as anticipated and generate the projected revenue or anticipated cost savings.

(iii) To identify the customers in the current and potential market

(iv) To learn more about customers’ current and future needs,

(v) To gauge interest of the customer in the product or service that is being offered.

(vi) To determine whether the primary customers will need the new product or service and how much they can and will pay.

(vii ) To determine if the product will be satisfactory.

(viii) To ascertain company’s strengths, weaknesses and position in the marketplace

(ix) To determine the financial benefits of the action vs. its costs.

(x) To gauge the competitor’s strengths and weakness and take corrective actions while carrying out the feasibility analysis.

8. Advantages of Feasibility Analysis :

Effective feasibility studies can do more than just help executives choose which projects to green light. Managers involved in a feasibility study can actually use much of the same data to shape the project planning process.

Four main advantages to feasibility studies can generate crucial insight for approved projects:

(i) Helps in Understanding Demand:

Feasibility studies always analyze whether a real demand exists for a product or a service. This holds true for internal projects as well as for potential consumer offerings. This way, project managers can avoid spending resources on features or projects with low impact and low demand among end users.

(ii) Helps in Assessing Resources:

Another of the advantages of feasi­bility studies is the opportunity to catalogue the current resources available for a project and to estimate the need for additional re­sources. Feasibility studies that recommend against projects often cite a lack of human resources or financial capital.

(iii) Helps in Ascertaining Marketing Feasibility:

Even for products and services with measurable demand, companies must examine their ability to spread the word about a new offering. During the evaluation process, project managers learn whether the market is already over saturated with stronger competitors. Company leaders can also discover any potential legal roadblocks involving trademarks, patents, or other intellectual property rights.

(iv) Helps in Marking a Timeline:

One of the biggest advantages of a feasibility study is the validation of a prospective timeline. When moving into a formal project planning phase, a project manager can use data generated by the study to help set milestones and deadlines. A quality feasibility study examines the timetable suggested by project sponsors for potential delays or breakdowns.

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Importance of Business Feasibility Study

May 22, 2024.

• A feasibility study, as the name suggests, is designed to reveal whether a project/plan is feasible.
• It is an assessment of the practicality of a proposed project/plan.
• It is part of the initial design stage of any project/plan. It is conducted in order to objectively uncover the strengths and weaknesses of a proposed project or an existing business.

Need of Feasibility Study?

• It can help to identify and assess the opportunities and threats present in the natural environment, the resources required for the project, and the prospects for success.
• Does the company possess the required resources and technology?
• Will the company receive a sufficiently high return on its investment?

Steps in Feasibility Study?

Conducting a feasibility study involves the following steps:

• Conduct preliminary analyses.
• Prepare a projected income statement. What are the possible revenues that the project can generate?
• Conduct a market survey. Does the project create a good or service that is in demand in the market? What price are consumers willing to pay for the good or service?
• Plan the organizational structure of the new project. What are the staffing requirements? How many workers are needed? What other resources are needed?
• Prepare an opening day balance of projected expenses and revenue
• Review and analyze the points of vulnerability that are internal to the project and that can be controlled or eliminated.
• Decide whether to go on with the plan/project.

Types of Feasibility Study?

1. Technical Feasibility

• Technical: Hardware and software
• Existing or new technology
• Site analysis
• Transportation

2. Financial Feasibility

• Initial investment
• Resources to procure capital: Banks, investors, venture capitalists
• Return on investment

3. Market Feasibility

• Type of industry
• Prevailing market
• Future market growth
• Competitors and potential customers
• Projection of sales

4. Organizational Feasibility

• The organizational structure of the business
• Legal structure of the business or the specific project
• Management team’s competency, professional skills, and experience

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Why Feasibility Studies are Important

All business endeavors pose some level of risk. Feasibility studies examine potential risks to determine whether they’re worth taking. A comprehensive feasibility study can distinguish real economic opportunities from investments that could fail.

Why Conduct a Feasibility Study?

Feasibility studies are appropriate for almost any type of potential business project.

Feasibility studies are used by tribal governments as economic development decision-making tools, and they can be used to access funding opportunities. Some state and federal grants require feasibility studies, and most lenders and investors prefer to review a feasibility study before providing capital.

What Does a Feasibility Study Evaluate?

Feasibility studies can identify the logistical, financial, and market challenges of a proposed project by evaluating:

• What the estimate would be to fund the project
• When the potential business will offer a return on investment
• The market for the proposed product or service
• Likely consumers of the product or service
• Likely competitors with a similar product or service
• The price consumers may be willing to pay for the product or service
• How large of a market share a tribal business is likely to capture

Who Should Conduct a Feasibility Study for a Tribe?

It’s generally recommended that a study should be conducted by a “qualified” professional or consultant with no financial or personal stake in the outcome of the study.

“Qualified” means that the professional or consultant has enough subject matter expertise about the proposed project, has academic or professional licenses or credentials relevant to the proposed project, and/or has experience conducting similar studies.

If a study recommends that a tribe not pursue a particular project, the tribe can save itself from wasting funds on a project that was destined to fail.

If a study recommends that a tribe move forward on a project proposal, that information can used to persuade lenders and investors to provide financial backing for it. A tribe can also use findings from a feasibility study as the basis for successful application for a federal, state, or private grant.

In either case, a feasibility study’s recommendations are intended to help tribes make informed decisions. As sovereign nations, tribes can always choose to accept or reject the suggestions.

Avoiding Scams

Federal Trade Commission data suggests that American Indians and Alaska Natives are more likely to be victims of scams and less likely to report scams than other racial and ethnic groups, which makes them an even more attractive target for con artists.

Promoters often try to persuade tribal governments to invest in economic development projects inside and outside of tribal communities when they’ve exhausted more traditional modes of financing.

Some promoters offer credible opportunities, but even these claims should be thoroughly vetted by a tribal government.

Other proposals made by promoters may involve unproven technologies, pose a strong likelihood of failure, or are even intended to defraud tribes.

One strategy that a tribe can adopt to protect their interests is to request that a promoter fund a feasibility study conducted by consultants chosen by the tribe before committing to a long-term investment in a proposed project.

Financing a Study

The cost of conducting a feasibility study depends on the complexity of the issues being addressed and the expertise required to evaluate them.

In 2020, the Native American Business Development Institute (NABDI) of the Office of Indian Economic Development (IED) awarded feasibility study grants ranging in value from $25,000 to $75,000.

The IED offers many different types of grants for feasibility studies including the NABDI Grant , the Energy and Mineral Development Program (EMDP) Grant , the Tribal Energy Development Capacity (TEDC) Grant , and the National Tribal Broadband Grant (NTBG) .

Additional Information

Related pages.

• How to Avoid Getting Scammed
• Finding the Best Economic Development Strategy
• Native American Business Development Institute (NABDI) Grant
• Energy and Mineral Development Program (EMDP) Grant
• Tribal Energy Development Capacity (TEDC) Grant
• National Tribal Broadband Grant (NTBG)

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