Seven steps of Feasibility Study of a project that help you in decision making
Understanding feasibility study
When parents buy a bicycle for their kid, they check the bicycle on various factors.
When an investor invests in a startup, he/she checks whether the returns are worth the cost
When a company hires a candidate, it checks the education and experience of the candidate.
When two countries form a partnership, they conduct a study to find the benefits from the other.
Before getting into organic farming, a farmer checks its benefits and costs.
All of the above are examples of a feasibility study. It is a process of checking the practicality of an idea. It is a procedure to find out if it is possible to conduct the project smoothly and successfully.
A feasibility study is an answer to the question, “Can this project be done?” To answer this question, you need to conduct a detailed assessment of the requirements of the project. When you get to know that all the relevant requirements are available, you can consider the project as feasible.
Feasibility study in a project involves finding the strengths and weaknesses of the project. You also check for the possibility of opportunities and threats to the project. In this way, you know whether it is feasible to carry out the proposed project or not.
With the feasibility study of a project, you find out:
If the company has relevant expertise, technology, budget, and time to conduct the project
If the company will generate enough returns on its investment
For any feasibility study in a project, you can evaluate several factors. These factors include technology, operations, legal, and many others. Evaluation of each factor leads to a different type of feasibility study.
Types of feasibility studies
Different types of feasibility studies in a project are:
This feasibility study primarily involves an examination of the costs and benefits of the project. It assesses what costs will be involved and are those justified for a project of this nature. It tries to find the benefits that the project will be able to generate for the entity.
In the technical feasibility study, you evaluate the technical capability of the entity. It involves an assessment of the IT assets and technology environment required for the project. It checks whether the entity has the technical capacity and capability to convert the input to output.
An operational feasibility study assesses whether the project can achieve the desired goals. It helps you to analyze if the proposed project is capable of addressing the pain points. On paper, it may look feasible. But, you need to assess the available resources to check whether it is operationally viable.
Timing is a critical aspect of any project. Schedule feasibility check involves evaluating the time taken to complete the project. It checks whether all the resources will be able to complete the project by the deadline date.
This type of feasibility study checks the legal practicality of the project. It assesses whether any of the project elements conflict with some regulations or laws. These laws may relate to social media, environment, data protection, construction, labor, etc.
Steps to find your project’s feasibility
Whatever type of feasibility study you are conducting, you need a defined approach. We provide you with the following steps to conduct a feasibility study:
Conduct a preliminary analysis
You start with understanding the use of conducting this feasibility study. List down the project, its objectives, expected outcomes, and other details. Now, try to find out what is the purpose of doing this project.
You must know if the results of this project will prove beneficial to any stakeholder. You must find out if this project will address a market need or not. You also must analyze if this project will lead to innovation or just a change in the existing product/service.
Carry out market research
Now, you must try to study the market. Here, you try to understand:
Your competitors and the point of competition in the industry
Demand for your product/service
Alignment of project objectives with firm’s goals
Demographics of potential customers and their buying behavior
The possible market value that you can gain
You can conduct market analysis using interviews, surveys, focus groups, or a combination of these methods. Make sure that you gain all the information about the current market.
Prepare a Projected Income Statement
Now, you must estimate the cost of the project. The costing will include operational costs, fixed costs, and other variable costs for completing the project. You must also identify the source of funding for the project – internally or external investors.
You need to find out the threshold for possible losses. Along with this, you must find out after what limit, you will start earning profits. Overall, you must conduct a financial assessment of the project to determine revenues and costs.
Assess the possible challenges and solutions
An important part of the feasibility study is the identification of challenges that may obstruct the project. These challenges may be of any nature or affect any function of the project. But, it may lead to delays, a rise in costs, or a complete failure.
Along with possible challenges, you must also try to find solutions for these problems. These solutions must be immediately implemented as and when the problems arise. This analysis will help you in project execution when uncertain situations arise.
Prepare a feasibility report
Now, since you are aware of the market, project, budget, and challenges, prepare the report. You need to prepare a structured report for reference for other stakeholders. The plan must have all the components such as information on:
Operational capacity and capability
The financial strength of the firm to execute the project
Possibility of earning profits
Technical resources required for project execution
Assurance of compliance with legal and regulatory laws
Facility for the project, necessary equipment, and other utility services needed
Solutions for any problems or concerns that arise during the project
Check and review every assessment and analysis
A feasibility report is an important document for any project. So, you must ensure that it is accurate and complete. You must not miss any angle of analysis because firms make informed decisions based on this report.
So, you must ensure to review it again before submission. Check if your report is clear, precise, relevant, realistic, and complete on all aspects of the feasibility study. Also, give a professional look to it.
Present findings to stakeholders
Now, present this report to all the relevant stakeholders of the project. Discuss with them the key points to give them a summarized analysis of your report. Now, it is their turn to decide to move ahead or not with the project.
Understand that a feasibility study is crucial for any project. When you get a project, you may be tempted to skip this step. But, that may lead to project failures, directionless work, or misalignment of project goals with company goals.
So, to avoid waste of effort, time, and money, you must ensure to conduct the feasibility study. It helps you identify all possibilities that may affect the project positively or negatively. This way, you improve your chances of achieving project success.
How Technovisors can help you with the feasibility study
Technovisors is a top-notch IT consultant in Ahmedabad. We also provide digital marketing and data analytics services. Our clients range from small to medium-sized businesses in different industry sectors.
We help companies with a feasibility analysis of their projects in different geographies. We also help you with preparing the report that will aid the final decision. For more information on how we can make your project feasibility study successful, you can contact us.
• You get to decide whether to move ahead or not with the project
• A detailed view of several factors improves the chances of project success
• It also increases the confidence of team members in the project
• The assessment in various areas makes your decision making easier and faster
• You might identify new areas of opportunities, which you can explore later
• The feasibility study helps you decide whether to conduct the project or not. But, business plans define how to conduct the project.
• A feasibility study leads to a conclusion on the project’s viability. A business plan provides a roadmap of how to go about the business.
• A feasibility study precedes any kind of planning for the project. A business plan is made once you conclude that the project is feasible.
• The feasibility study is conducted for the entity and project team. A business plan is presented to the investors for possible investment in the project.
About the Author
(CISA, FCA, CS, DISA (ICAI), FAFP (ICAI))
Pathik is a multi-disciplinary professional with more than 22 years of experience in compliance, risk management, accounting, system audits, IT consultancy, and digital marketing. He has extensive knowledge of Anti-Money Laundering rules and regulations, and he helps companies comply with legal requirements. Pathik also helps companies generate value from their IT investments.