Usefulness of Feasibility Study for Project Management

Project Management or project planning is one of a series of activities that a business can carry out on a certain planning scale. Planning a new project is usually one of the steps to increase the productivity and potential of your business or company.

The goal is to achieve better profits for the business and cannot be separated from the possibility of major changes and subsequent failures. Therefore, it is important to conduct a feasibility study in order to minimize losses before a new project is approved.

 

What is a feasibility study?

Feasibility study is an analytical technique used to evaluate whether the plan of a project will be successful or not. A feasibility study is also known as a feasibility analysis or a feasibility report.

Its function is to evaluate the future practice of the project plan as well as to assess whether the project can be continued or not. The role of a feasibility study is important for projects that represent a significant investment in the continuity of your business.

By understanding the different elements of a feasibility study, you can provide better support to your team and ensure the best possible outcome for your project.

 

When to do a feasibility study?

Feasibility studies should be carried out after the project is submitted but before any work is started, this study is part of the project planning process. By conducting a feasibility study, you will help the following things.

• Confirm market opportunities before committing to a project
• Narrow your business alternatives
• Document the benefits and drawbacks of your proposed initiative
• Provide more information before making a decision

You may not need a feasibility study under the following conditions:

• You already know that the project is feasible
• Have you run a similar project before
• Your competitors are already successful with similar initiatives in the market
• The project is small, straightforward, and has minimal long-term business impact
• The team you are running has carried out a feasibility study in the last three years

One thing to remember is that the feasibility study is not a project pitch. Establishing a project is a good idea and goes along with the overall plan. After that, just do a feasibility study to ensure that the project can run with the tools and resources you have.

 

Elements That Are Part of the Feasibility Study

There are four main elements that are included in the series of feasibility studies. Usually, the involvement of the four elements in project management can be a driving force for general planning. Matters that include elements of a feasibility study include the following.

• Technical feasibility

This study reviews the technical resources available for your project. This study determines whether you have the right equipment, sufficient equipment, and the right technical knowledge to complete your project objectives.

• Financial feasibility

This study explains whether your project is fiscally viable or not, and includes a cost/benefit analysis of the project. The study also estimates the expected return on investment (ROI), and outlines any financial risks. The objective of financial feasibility is to understand the economic benefits that the project will drive.

• Market feasibility

This study evaluates how your team expects project results to perform in the marketplace. This section of the report includes market analysis, details of market competition, and sales projections.

• Operational feasibility

This study is to evaluate whether your company can complete this project or not. This includes staffing requirements, organizational structure, and applicable legal requirements. At the end of this study, your team will know whether you have the resources, skills and competencies to complete this job or not.

 

Complete list for conducting a feasibility study

Some of the documents below serve as an assessment of the practicality of the proposed business idea. Creating a clear feasibility study helps project stakeholders during the decision-making process. Feasibility study contains:

• Executive summary explaining the overall feasibility of the project
• Description of the product or service developed during this project
• Any technical considerations, including technology, equipment or employees
• Market surveys, including studies of current markets and marketing strategies
• Operational feasibility study, evaluates whether your team's current organizational structure can support this initiative
• Project timeline
• Financial projection based on financial feasibility report

 

Feasibility Study Stages

In carrying out the feasibility study, you can work with the internal project management office (if any) or hire a trained consultant. In general, here are the steps they will take to get the job done.

1. Run preliminary analysis

Before carrying out a feasibility study, it is important to be able to evaluate the project against possible obstacles that will inevitably exist and cannot be overcome. If the project requires a budget that is significantly larger than capacity, or if the output of the project must be on the market at a certain time but you cannot afford to provide it for several months in advance, the project is most likely not viable.

2. Evaluation of financial feasibility

Think of financial feasibility as a projected income statement for the project. This study describes the expected project revenues and outlines what your organization will need to invest in to achieve the project objectives. Also consider whether the project will affect your business cash flow or not.

3. Run a market assessment

Market assessment is an opportunity to identify demand in the market. This study offers an overview of the expected revenue for the project, as well as the potential market risks it may face. Market assessment also has the opportunity to evaluate whether there are opportunities in the market.

4. Consider technical and operational feasibility

Apart from financial readiness and good opportunities in the market, it is important to evaluate the operational feasibility, considering the staff or equipment requirements needed to carry out this project.

5. Review project vulnerabilities

After seeing the four elements of the feasibility study and before executing the recommendations, the next element to do is review and analyze the data to find inconsistencies. This includes making sure the income statement is in line with your market analysis.

6. Propose a decision

The final step of the study is an executive summary that touches on the main points and proposes solutions.

This is an explanation of the usefulness of a feasibility study in your project management. Depending on the complexity of your project, a feasibility study will not always provide clear answers to complex problems.

Feasibility studies help you make the best decisions with the right questions and answers on the plans that are being carried out in your business. Company executives can also participate in the Problem Solving & Decision Making program to better understand operational management strategies and tactics to ensure the smooth implementation of responsibilities.