A feasibility study is a key step in determining whether a proposed project is viable and worth pursuing. It includes an assessment of the project’s technical, financial, organizational and legal aspects, while its purpose is to determine whether the project has a sufficient chance of successful and timely completion.
Feasibility study – table of contents:
- How to prepare a feasibility study?
- What data is worth including in a feasibility study?
Feasibility studies have been used in Europe since the Roman Empire when engineers conducted them to determine the feasibility of building infrastructure such as roads and aqueducts.
One source discussing feasibility studies in antiquity is the book “Feasibility studies: ancient roots, modern applications” by David G. Luenberger. The author mentions more than just the Romans – he also gives examples of how the ancient Egyptians and Chinese employed similar methods to assess the feasibility of large-scale projects, such as the construction of the pyramids and the Great Wall of China.
Some of the study preparation principles and techniques from ancient times are still applied today. What is most important has remained unchanged: when preparing a study, the Project Manager should clearly define what the project is supposed to achieve, what opportunities and threats he sees, and indicate the methods he used to obtain the data contained in the study.
However, unlike their ancient predecessors, today’s Project Managers cannot stop at a single feasibility study. Typically, the basic document is prepared during the project initiation phase, but the data and guidance therein keep getting updated as milestones are reached, or when important market changes occur.
How to prepare a feasibility study?
To prepare a feasibility study, there are several key steps to follow:
- Define the goals and scope of the project.
- Conduct market analysis.
The purpose of the analysis is to determine the target market – the audience, its size and availability, as well as the size of the competition. It is also important to assess the potential demand for the project results. Its preparation may involve conducting preliminary surveys among the target audience.
- Evaluate technical feasibility. Assessing technical feasibility should include answering two key questions:
- Assess financial risk.
Financial risk plays a different role depending on the type of project. If its results are to be a source of income, the most important question stakeholders ask is, “Is it financially viable?” If, on the other hand, the project involves, for example, modernization or implementation of research, the financial risk is related to the planned effects of implementing the planned solutions.
In such case, formulate the question accordingly: “What time frame is required for the project investment to pay off, given the assumed efficiency improvements after the upgrade?”, or “How does the risk of failure of the research project translate into the potential creation of a patent with implementation potential if it is successful?”.
- Consider feasibility from the organization’s point of view. Here, the important questions are:
- Take into account legal aspects.
This will be especially important in projects whose execution takes place in public spaces, or those whose implementation involves fields that require special permits – for example, medicine, technologies that may threaten the environment, and activities that require the use of personal data.
- Prepare the report.
The feasibility study is the document that is most often presented to the organization’s management. That is why it is so important to prepare a summary, which will include the most important information and data, as well as the Project Manager’s recommendations for further action.
A) Does the organization have the technologies and resources necessary to complete the project?
B) Does the scope of the project include the creation or adaptation of available technologies for implementation? And if so, what are the risks associated with creating or modifying these solutions?
A) What changes are necessary for the operation of the organization to implement the project?
B) How will they affect the organization’s current mode of operation?
C) What resources will have to be used in other ways?
What data is worth including in a feasibility study?
To make the feasibility study more credible, the Project Manager should conduct or commission research to obtain:
- cost estimates for materials, labor, equipment and software
- financial projections of revenues and expenditures taking into account inflation and price fluctuations
- technical specifications and capabilities of the required technology
- information on any relevant legislation or legal requirements
- market data, in particular:
- the target group of the project’s results – their preferences, means of communication, and affluence, among others,
- demand and market saturation
- trends and developments
You can obtain detailed analyses based on large data sets through reports published by agencies specializing in market research, such as:
It is worth remembering that the data in the feasibility study must stay updated for long-term projects. This is a key step in the process of reliable project development, which in the long run can save a lot of time and resources by identifying potential problems early.
A feasibility study is a key document for determining whether a proposed project is viable and worth pursuing. It includes an assessment of the project’s technical, financial and operational aspects, and aims to determine whether it can be completed. Early detection of potential problems will allow for quick response, changing project goals or priorities, and saving time and resources.If you like our content, join our busy bees community on Facebook, Twitter, LinkedIn, Instagram, YouTube, Pinterest, TikTok.
Getting started with project management:
- What is a project?
- What is project management?
- How to manage projects?
- Project management methods
- Types of projects
- 4 examples of projects
- Prioritization of projects
- Areas of project activity
- Definition of success in project management
- Why use project management software?
- How to choose the best project management software?
- Overview of project management software
- Project life cycle
- What is the project vision for?
- Project goal. What is it and how to define it well?
- Project initiation phase - what to pay attention to?
- The domain of planning in project management
- What is a project schedule and what is it for?
- How to use milestones in a project?
- Project execution
- How to prepare a successful project contingency plan?
- Importance of project closure
- Project failure. 5 reasons why projects fail
- 4P of management: project, product, program and portfolio
- Most important tasks and responsibilities of the Project Manager
- Most useful project manager skills
- How to become a project manager?
- 5 books every project manager should read
- How to set up a project team?
- Work breakdown structure - how to delegate work in a project?
- How to lead a team during hybrid work?
- Challenges project managers face when working with a team
- Types of project meetings
- Project monitoring. What parameters to watch?
- How to write a compelling
- How to define the scope of a project and avoid scope creep?
- Feasibility study – can we implement this project?
- Risk analysis in projects and tools to facilitate it
- How to create a project charter?
- What is a stakeholder register?
- Gantt chart in project management planning
- How to create a project budget?
- Time management in project
- How to create a project risk register?
- Project risk management strategies
- Project marketing
- Sources and areas of change in the project
- Project management change models
- What's after Agile? Methods in project management