What is a feasibility study and why is it so important for a project? Jennifer Bridges, PMP, explains what project managers need to know about feasibility studies in this short tutorial video.
In Review – How to Conduct a Feasibility Study
Jennifer began by clarifying what a feasibility study is. She said a feasibility study is simply an assessment of the practicality of a proposed plan or method. 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 you do a feasibility study? Jennifer suggested that it should be done during that point in the project 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 will make the business opportunity a success, making it pretty important.
7 Steps for a Feasibility Study
Jennifer said to follow these steps when conducting a feasibility study:
- Conduct a preliminary analysis
- Prepare a projected income statement
- Conduct a market survey, or perform market research
- Plan business organization and operations
- Prepare an opening day balance sheet
- Review and analyze all data
- Make a go/no-go decision
Best Practices for a Feasibility Study
- Use templates/tools/surveys, 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
Feasibility Report Template
Finally, Jennifer outlined the nine parts of a feasibility report:
- Executive summary
- Description of product/service
- Technology considerations
- Product/service marketplace
- Marketing strategy
- Financial projections
- Findings and recommendations
That final item is broken down into subsets of technology, marketing, organization and financial findings and recommendations.
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.
Thanks for watching!
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.
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?”
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.
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.
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.com.