A feasibility study is an analysis used in measuring the ability and to complete a project successfully including all relevant factors. The factors that influence the feasibility study are economic, technological, legal and scheduling factors. It’s very useful to Project managers to determine positive and negative outcomes of a project before investing a considerable amount of time and money into it.
The goal of a feasibility study is to emphasize problems that could occur if one pursues a project and determine if, after considering all significant factors, the project is a good idea. Feasibility studies useful to address where and how it will operate, potential obstacles, competition and the funding needed to get the business up and running.
A feasibility study helps the organisations to determine and organize all the details to make a business work. A feasibility study helps in identifying logistical problems, and nearly all business-related problems and their solutions. Feasibility studies can also leads to the development of marketing strategies that convince investors or a bank that investing in the business is a wise choice.
There are several components of a feasibility study are there .They are explained as follows:
- Market feasibility – It contains description of the industry, the current and future market potential, competition, sales estimations and prospective buyers.
- Technical feasibility – It contains the details on how a company will deliver goods or services, including transportation, business location, technology needed, materials and labour.
- Financial feasibility – A projection of the amount of funding or start-up capital needed, what sources of capital a business can and will use, and what is the return on investment.
- Organizational feasibility – It explains the corporate and legal structure of the business. This includes information about the founders, their professional background and ability skills to get the company off the ground and keep it operational.
- Economic feasibility – It helps the organisation economically and it involves the projection of funding that is needed throughout the project and the expected return on investment. In other words it is a cost/benefit analysis of a project helping the organisation undertaking the project determines the viability associated with the project before allocating financial resources.
- Scheduling feasibility – It helps in estimating the time required for competition a project and it is very crucial for project success.
- Legal feasibility – It is useful in ensuing that the undertaken project meeting all the legal and ethical requirements or not. The analysis considers whether any aspect of the proposed project conflicts with legal requirements. This would save the organisation considerable time and effort even before kick-starting the project.
- Resource feasibility – It helps in measuring the company has enough required resources or not for completing the project as per the estimated.
So this is about the concept of “Feasibility study” and a feasibility study might uncover new ideas that could completely change a project’s scope. It’s very useful to do this feasibility study before initiating any project.