An analysis regarding feasibility study is one of the most essential parts in any project. It determines if one will undertake a project or not, considering all possible aspects that could affect the approval of such a project. A feasibility plan ensures wise resource allocation and minimises chances of failure by analysing all possible challenges, costs, risks, and benefits of a project. This article will discuss the importance of a feasibility study and give a brief overview of several different types of feasibility studies so that one can understand the complete horizon of project feasibility analysis. Enroll now in the Feasibility Studies and Business Planning course to enhance your skills in resolving disputes and fostering stronger collaborations.
An analysis regarding feasibility study is one of the most essential parts in any project. It determines if one will undertake a project or not, considering all possible aspects that could affect the approval of such a project. With such a challenge, the costs, risks, and benefits involved with a project, feasibility planning makes sure that resources are adequately utilized with the least probability of loss. This article will discuss the importance of a feasibility study and give a brief overview of several different types of feasibility studies so that one can understand the complete horizon of project feasibility analysis.
There are various forms of feasibility studies, with each concentrating on a particular aspect of the project. Understanding these types is very much necessary for a proper project feasibility analysis.
The major types are as follows:
Technical feasibility refers to the determination of whether the proposed project can be carried out with the existing technology, expertise, and resources. It concerns the degrees of technicality needed for the project, that is, whether any technology can meet the project's goals or new technology is warranted. If new technology is warranted, technical feasibility determines if such technology is available, cost-effective, and reliable.
For example, the technical feasibility will assess whether a company has the knowledge, infrastructure, and tools for programming required to develop software when the company intends to launch a new software product.
Next to financial objectives oriented towards the financial dimensions of a project, the economic feasibility of the project is the concern. This type of study determines expected costs associated with development, implementation, and maintenance, and analyses them against expected revenues or cost savings generated by the project.
Components include an entire analysis of upfront costs, continuous costs, and expected returns. They include case funding requirement assessment and possible sources of capital such as loans, grants, or investors. It is the study of a project's return on investment (ROI), whether it is specific.
This aspect relates to whether there is enough market demand for the product or service the project is supposed to deliver. Ideally, it should also indicate the target markets, customer tastes, competitors, and market trends. A good market feasibility study assures that customers will find the product or service attractive and will successfully penetrate the market.
For example, if a company intends to introduce a new smartphone, it will assess the market feasibility-the market demand for smartphones in its target market, customer preferences, competition, and pricing strategies.
Operational feasibility, meanwhile, looks at operational areas in the project and examines in detail if the organisation can execute and maintain the project. It will cover the organizational structure, human resources, operational processes, and current infrastructure to measure direct integration into company operations.
Operational feasibility checks if the project will also need major changes in their existing organisational workflows and if the staff is capable to handle the project, and whether current resources can sufficiently support the project implementation.
Legal feasibility is a study on all legal aspects of the project. Also, it looks at legal limitations and issues that might arise to stop the smooth progress of the project by reviewing regulations, compliance requirements, licenses, permits, and intellectual property rights that will arise while working on the project.
For example, a company that intends to build a factory would conduct its legal feasibility study around that location based on whether it meets zoning laws, environmental regulations, and labor laws concerning having such a factory.
Schedule feasibility is the act of checking if the project's deadlines permit the successful completion of operations. It looks at timeframes and deadlines of the project together with resource availability to ensure that the project gets completed. Schedule feasibility is necessary for projects that have pressing deadlines, like construction or event planning projects.
For example, suppose a company intends to launch a product within a year. In that case, it will have to assess if product development, testing, and marketing can all happen within the course of that specific year.
While all elements of a feasibility study may be considered equally important, the most important of all these should probably go to the financial side of feasibility. And that's because without either sufficient funds or a sound financial plan, even the most technically feasible and marketable project will likely fail at its implementation. Financial feasibility is the one that determines whether or not the project can generate sufficient revenues or savings to justify the initial investment and cover ongoing operating expenses.
However, the importance of each of these aspects will differ, depending on the type of project. For example, in the case of a project depending much on new technology, the most important feasibility would be a technical one, a project innovated in market terms will belong to the category of market feasibility.
The project feasibility study is a vital element of ensuring success in a project by evaluating the technical aspects, financial aspects, market aspects, operational aspects, legal aspects and time scheduling aspects of the project. Each type of feasibility study will serve the purpose of identifying potential risks and optimally utilising resources. In this way, projects collect such kinds of studies as tailored to the projects and benefit long term.
The British Academy for Training and Development offers courses on Feasibility Study to enhance your skills.