Why is a feasibility study so important in project management? For one, the feasibility study or feasibility analysis, is the foundation upon which your project plan resides. That’s because the feasibility analysis determines the viability of your project. Now that we got your attention, read on to learn what you need to know about feasibility studies.
What Is a Feasibility Study?
A feasibility study is simply an assessment of the practicality of a proposed project plan or method. This is done by analyzing technical, economic, legal, operational and time feasibility factors. Just as the name implies, you’re asking, “Is this feasible?” For example, do you have or can you create the technology to do what you propose? Do you have the people, tools and the resources necessary? And, will the project get you the ROI you expect?
When should project managers do a feasibility study? It should be done during that point in the project management life cycle after the business case has been completed.
So, that’s the “what” and the “when” but how about the “why?” Meaning, why do you need a feasibility study? Well, it determines the factors that affect project feasibility, making it pretty important.
As you’re researching the feasibility study, project management software can help you keep track of all that information. ProjectManager does more than just collect items as with most to-do lists. Assign a team member to get the feasibility analysis data you need. See their progress in real time. They can attach supporting documents. You can even comment on the task any time, anywhere. If you need an answer to a question, tag anyone on the team and they’re alerted to the message by email and in-app notifications. Streamline the feasibility analysis process with ProjectManager. Try it free today.
What Is Included in a Feasibility Study Report?
The findings of your project feasibility study are compiled in a feasibility report that usually includes the following elements.
- Executive summary
- Description of product/service
- Technology considerations
- Product/service marketplace
- Marketing strategy
- Financial projections
- Findings and recommendations
Watch the video below to learn what is a feasibility report and how to create one.
Types of Feasibility Study
- Technical Feasibility: Consists in determining if your organization has the technical resources and expertise to meet the project requirements.
- Economic Feasibility: You’ll need to do an assessment of the economic factors of your project to determine its financial viability. You can use a cost-benefit analysis to compare its financial costs against its projected benefits.
- Legal Feasibility: Your project must meet legal requirements. That includes laws and regulations that apply to all activities and deliverables in your project scope.
- Operational Feasibility: Operational feasibility refers to how well your project matches your organization’s capacity planning, resources, strategic goals and business objectives.
- Time Feasibility: Estimate the time that will take to execute the project and set deadlines. Then think how your project timeline fits with your current operations, such as your demand planning, production schedule, among many other things.
7 Steps To Do a Feasibility Study
1. Conduct a Preliminary Analysis
Begin by outlining your project plan. You should focus on an unserved need, a market where the demand is greater than the supply, and whether the product or service has a distinct advantage. Then you need to determine if the feasibility factors are too high to clear (i.e. too expensive, unable to effectively market, etc.).
2. Prepare a Projected Income Statement
This step requires you to work backward. Start with what you expect the income from the project to be and then what project funding is needed to achieve that goal. This is the foundation of an income statement. Things to take into account here include what services are required and how much they’ll cost, any adjustments to revenues, such as reimbursements, etc.
Related: Free Project Management Templates
3. Conduct a Market Survey, or Perform Market Research
This step is key to the success of your feasibility study, so make your market analysis as thorough as possible. It’s so important that if your organization doesn’t have the resources to do a proper one, then it is advantageous to hire an outside firm to do so.
The market research is going to give you the clearest picture of the revenues and return on investment you can realistically expect from the project. Some things to consider are the geographic influence on the market, demographics, analyzing competitors, the value of the market and what your share will be and if the market is open to expansion (that is, response to your offer).
4. Plan Business Organization and Operations
Once the groundwork of the previous steps has been laid, it’s time to set up the organization and operations of the planned project to meet its technical, operational, economic and legal feasibility factors. This is not a superficial, broad-stroke endeavor. It should be thorough and include start-up costs, fixed investments and operating costs.
These costs address things such as equipment, merchandising methods, real estate, personnel, supply availability, overhead, etc.
5. Prepare an Opening Day Balance Sheet
This includes an estimate of the assets and liabilities, one that should be as accurate as possible. To do this, create a list that includes items, sources, costs and available financing. Liabilities to consider are such things as leasing or purchasing of land, buildings and equipment, financing for assets and accounts receivables.
6. Review and Analyze All Data
All these steps are important, but the review and analysis are especially important to make sure that everything is as it should be and that nothing requires changing or tweaking. So, take a moment to look over your work one last time.
Reexamine your previous steps, such as the income statement, and compare it with your expenses and liabilities. Is it still realistic? This is also the time to think about risk, analyze and manage, and come up with any contingency plans.
7. Make a Go/No-Go Decision
You’re now at the point to make a decision about whether the project is feasible or not. That sounds simple, but all the previous steps lead to this decision-making moment. A couple of other things to consider before making that binary choice is whether the commitment is worth the time, effort and money and is it aligned with the organization’s strategic goals and long-term aspirations.
Best Practices for a Feasibility Study
- Use project management software like ProjectManager to organize your data and work efficiently and effectively
- Use templates or any data and technology that gives you leverage
- Involve the appropriate stakeholders to get their feedback
- Use market research to further your data collection
- Do your homework and ask questions to make sure your data is solid
If your project is feasible then the real work begins. ProjectManager helps you plan more efficiently. Our online Gantt chart organizes tasks, sets deadlines, adds priority and links dependent tasks to avoid delays. But unlike other Gantt software, we calculate the critical path for you and set a baseline to measure project variance once you move into the execution phase.
Watch a Video on Feasibility Studies
There are many steps and aspects to a project feasibility study. If you want yours to be accurate and forecast correctly whether your project is doable or a dude, then you need to have a clear understanding of all its moving parts.
Jennifer Bridges, PMP, is an expert on all aspects of project management and leads this free training video to help you get a firm handle on the subject.
Here’s a screenshot for your reference!
Thanks for watching!
Pro-Tip: When completing a feasibility study, it’s always good to have a contingency plan that you test to make sure it’s a viable alternative.
ProjectManager Improves Your Feasibility Study
A feasibility study is a project, so get yourself a project management software that can help you execute it. ProjectManager is an award-winning software that can help you manage your feasibility study through every phase.
Once you have a plan for your feasibility study, upload that task list to our software and all your work is populated in our online Gantt chart. Now you can assign tasks to team members, add costs, create timelines, collect all the market research and attach notes at the task level. This gives people a plan to work off of, and a collaborative platform to collect ideas and comments.
If you decide to implement the project, you already have it started in our software, which can now help you monitor and report on its progress. Try it for yourself with this free 30-day trial and get started on that feasibility study right away.
Today we’re talking about How to Conduct A Feasibility Study, but first of all, I want to start with clarifying what a feasibility study is.
Feasibility Analysis Definition
Basically, it’s an assessment of the practicality of a proposed plan or method. Basically, we’ll want to want to know, is this feasible? Some of the questions that may generate this or we can hear people asking are, “Do we have or can we create the technology to do this? Do we have the people resource who can produce this and will we get our ROI, our Return On Investment?”
When to Do a Feasibility Study
So when do we do the feasibility study? So it’s done during a project lifecycle and it’s done after the business case because the business case outlines what we’re proposing. Is it a product or service that we’re proposing?
So why do we do this? The reason we do this is because we need to determine the factors that will make the business opportunity a success.
How to Conduct a Feasibility Study
Well, let’s talk about a few steps that we do in order to conduct the feasibility study.
Well, first of all, we conduct a preliminary analysis of what all’s involved in the business case and what we’re analyzing and what we’re trying to determine is feasible.
Then we prepare a projected income statement. We need to know what are the income streams, how are we gonna make money on this? Where’s the revenue coming from? We also need to conduct a market survey.
We need to know, is this a demand? Is there a market for this? Are customers willing to use this product or use this service?
The fourth one is, plan the business organization and the operations. Like, what is the structure, what kind of resources do we need? What kind of staffing requirements do we have?
We also want to prepare an opening day balance sheet. What are the…how again, what are the expenses, what’s the revenue and to ensure that being able to determine if we’re gonna make our ROI.
So we want to review and analyze all of the data that we have and with that, we’re going to determine, we’re going to make a go, no-go decision. Meaning, are we going to do this project or this business opportunity or not.
Well, here’s some of the best practices to use during your feasibility study.
One is, use templates, tools and surveys that exist today. The great news is, data is becoming more and more prevalent. There are all kinds of technologies. There are groups that they do nothing but research. Things that we can leverage today.
We want to involve the appropriate stakeholders to ensure that input is being considered from the different people involved.
We also want to use again the market research to ensure we’re bringing in good, reliable data.
We also…I mean do your homework, meaning act like is if this is your project, if it’s your money. So do your homework and do it well and make sure you give credible data.
What Is a Feasibility Report?
So ultimately in the end what we’re doing is, we’re producing and we’re providing a feasibility report. So in that report, think of this is like a template.
So what you’re gonna do is give it an executive summary of the business opportunity that you’re evaluating and the description of the product or the service.
You want to look at different technology considerations. Is it technology that you’re going to use? Are you going to build the technology?
What kind of product and service marketplace and being able again, to identify the specific market you’re going to be targeting. Also, what is the marketing strategy you’re going to use to target the marketplace?
And also what’s the organizational structure? What are the staffing requirements? What people do you need to deliver the product or service and even support it?
So also we want to know the schedule to be able to have the milestones to ensure that as we’re building things, that as we’re spending money that we’re beginning to bring in income to pay and knowing when we’re going to start recuperating some of the funding. Again, which also ties into the financial projections.
Ultimately in this report, you’re going to provide the findings and the recommendations.
Again, we’ll probably talk about technology. Are you going to build it? Are you going to buy it? What’s the marketing strategies for the specific marketplace organization? You may have some recommendations for whether you’re going to insource the staff, maybe you are going to outsource some staff and what that looks like and also financial recommendation.
So this is a little bit about the feasibility study, and if you need a tool that can help you with yours, then sign up for our software now at ProjectManager.