Feasibility Study – An Important aspect of Project Management
As the name implies, a feasibility study is used to determine the viability of an idea. The objective of such a study is to ensure a project is legally and technically feasible and economically justifiable. It tells us whether a project is worth the investment.
Feasibility studies are useful to businesses in many ways. Some of the reasons organizations conduct feasibility studies are as follows:
- Not every project is doable.
- Not every project should be taken up. This will engage otherwise useful resources and block their use on other tasks.
- Not every project makes effective use of the resources of an organization.
But What is a Feasibility Study?
In simple terms, a feasibility study involves taking a judgment call on whether a project is doable. The two criteria to judge feasibility are cost required and value to be delivered. A well-designed study should offer a historical background of the business or project, 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.
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. [Source: Wikipedia]
Five Areas of Project Feasibility:
- Technical Feasibility - assessment is centered on the technical resources available to the organization. It helps organizations asses if the technical resources meet capacity and whether the technical team is capable of converting the ideas into working systems. Technical feasibility also involves evaluation of the hardware and the software requirements of the proposed system.
- Economic Feasibility - helps organizations assess the viability, cost, and benefits associated with projects before financial resources are allocated. It also serves as an independent project assessment, and enhances project credibility, as a result. It helps decision-makers determine the positive economic benefits to the organization that the proposed system will provide, and helps quantify them. This assessment typically involves a cost/ benefits analysis of the project.
- Legal Feasibility - investigates if the proposed system conflicts with legal requirements like data protection acts or social media laws.
- Operational Feasibility - this involves undertaking a study to analyze and determine whether your business needs can be fulfilled by using the proposed solution. It also measures how well the proposed system solves problems and takes advantage of the opportunities identified during scope definition. Operational feasibility studies also analyze how the project plan satisfies the requirements identified in the requirements analysis phase of system development. To ensure success, desired operational outcomes must inform and guide design and development. These include such design-dependent parameters such as reliability, maintainability, supportability, usability, disposability, sustainability, affordability, and others.
- Scheduling Feasibility is the most important for project success. A project will fail if not completed on time. In scheduling feasibility, we estimate how much time the system will take to complete, and with our technical skills we need to estimate the period to complete the project using various methods of estimation.
Benefits of Conducting a Feasibility Study
Conducting a feasibility study is always beneficial to the project as it gives you and other stakeholders a clear picture of your idea. Below are the key benefits of conducting a feasibility study:
- Gives project teams more focus and provides an alternative outline.
- 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.
Apart from the approaches to feasibility study listed above, some projects also require for other constraints to be analyzed -
- Internal Project Constraints: Technical, Technology, Budget, Resource, etc.
- Internal Corporate Constraints: Financial, Marketing, Export, etc.
- External Constraints: Logistics, Environment, Laws and Regulations, etc.
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. Happy reading!
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