A feasibility study is a thorough evaluation that takes into account all of the important factors from a project proposal to ascertain the chances of success. Return on investment indicates that the project will yield sufficient revenue to justify the funding. This is one way to describe a company's success. The growth and prominence of project management training have changed, and such changes are here to continue and grow further. Several types of feasibility studies in project management help a project foray further.
Here, a feasibility study comes to the rescue by evaluating all the factors critical to a project’s success. This study lets us know whether a project is worth the investment or is it doable. To have the ability to use feasibility tools and break down tasks into manageable pieces with achievable deadlines, get the best Project Management certifications now.
What is Feasibility Study?
The goal of a feasibility study within software engineering is to determine whether a given program or technology is feasible. One of the crucial four stages of the software management process is the feasibility study. As the name implies, a feasibility study is an investigation of the viability of a project or a measurement of the system product's potential value to the company from a practical standpoint.
A project feasibility study is conducted for various reasons, including determining whether a system software will be appropriate for creation, implementation, and overall contribution to the company.
Features of Feasibility Study
For a financial feasibility study to be practical, it must first and primarily be thorough and include every area of the project since judgments made by the company based on an incomplete financial feasibility report would be unsuccessful.
A business feasibility study should weigh the advantages and disadvantages of launching a new venture or project, and it shouldn't be prejudiced because that will result in mistakes. Consequently, regardless of whether it injures the psyche of the upper executives, the business should not proceed with the strategy. If you want to learn more about financial feasibility analysis, you can opt for the online course for PMP certification that covers financial feasibility study and other project management techniques.
The five most important features include:
- Demographic research
- Competitive evaluations
- Pricing research
- Online polls
- Participant interviews
Types of Feasibility Study in Project Management
The five criteria listed below receive the most attention in the financial feasibility study. The Economic Feasibility Study is its most important component among them, although the Legal Feasibility Study is not generally regarded as a feasibility study.
Technical Feasibility
Technical Feasibility study of a project analyzes and evaluates its present resources, including equipment, programming, and necessary innovation. This technical feasibility analysis provides information about whether the technologies and resources needed to build the project are available. Additionally, a feasibility study examines the engineering team's expertise, the viability of using open systems, the ease of maintaining and upgrading the technology of choice, and other factors.
Operational Feasibility
Operational Feasibility study examines how well a product will satisfy needs and how simply it will be used and maintained after implementation. Along with this, additional operational responsibilities include evaluating the product's usefulness and the suitability of an application development teams offered to fix.
Economic Feasibility
The economic market feasibility study examines the project's expense and value. This implies that a thorough analysis is done to determine the program's development costs, including the cost of the design process and operating costs. After that, it is determined if the venture will be profitable.
Legal Feasibility
The project is examined from a legal standpoint in examining Legal Feasibility. It evaluates project implementation legal obstacles such as privacy laws or social networking regulations, business certificates, licenses, trademarks, etc. Ultimately, it can be argued that a legal feasibility study is an investigation to determine whether a project proposal complies with the law and ethical guidelines.
Schedule Feasibility
A scheduling feasibility study's primary focus is the project proposal's schedules and due dates. This assessment involves how long it will take team members to finish the project, which significantly affects the company as the program's intended outcome may not be achieved if it cannot be completed on time.
Key Benefits of Conducting Feasibility Study in Project Management
The feasibility study phase of the software project management process is essential. It determines whether to move forward with the proposed project because it is feasible or to end it because further development, thought, or evaluation of the project venture is not appropriate or viable.
In addition to this, project feasibility aids in recognizing the risk elements involved in creating and implementing systems. Preparing for risk assessment also helps to focus on potential business options and improve success rates by examining various project-related aspects.
- Provides Valuable Information for a "go/no-go" Decision - A feasibility report evaluates all parameters and identifies if the risk-to-reward ratio is beneficial to the company or not.
- Improves Project Team Focus - If the risks are carefully analyzed, the team knows the most critical tasks that need to be addressed immediately.
- Narrows Business Alternatives - Riskier business ventures are ruled out, narrowing the business alternatives.
- Identifies New Opportunities - The primary objective of a company might change if the report shows extreme value in one of the branches of the business or a potential venture.
- Identifies Valid Reason to Undertake the Project - The report justifies the cost with the reward and gives a valid reason for company time and resources to be used.
- Aids Decision-making on the Project - Making company decisions based on logic is far superior to making them emotionally. Defining figures helps in a faster decision-making process.
- Identifies Reason Not to Proceed - If the risk-to-reward ratio is not favorable or qualifies, it is better to have a project with an extremely good ratio. Doing so reduces the chances of loss, even if the venture fails.
- Enhances Success Rate by Evaluating Multiple Parameters- Finance, time, management, future prediction, market demand, and many more are covered under the feasibility report.
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How to Conduct Feasibility Study for a Project?
Perform an Initial Analysis
An initial examination is required to decide if a comprehensive economic feasibility study is necessary. To evaluate the program's potential and arrive at a form of information about its viability, crucial data will be acquired during this stage. This process should involve a study of pertinent papers, important personnel interviews, and polls of prospective users or clients.
Create an Anticipated Income Statement
It would help if you produced a predicted net income before conducting an economic feasibility study. Your expected financial statements display how much revenue your company is anticipated to grow in the upcoming year. It will contain both your projected earnings and your projected outlays. You will need this paper to make wise business decisions, so use it wisely.
Carry Out Market Research Or Review of Consumer Base
Every feasibility study should include a stage for doing market research. You may figure out if there is a demand for your goods or service by becoming familiar with the requirements and preferences of your prospective customers. Additionally, one can learn more about what your rivals are up to and how to structure your company to serve the requirements of your intended clientele best.
Arrange Your Company's Structure and Systems
Planning your structure and processes is among the first tasks you should do when beginning a firm. This entails organizing your business's structure and determining its operational procedures. When managing your business and operations, there are several things to keep in mind, such as:
- Finance which includes NPA, Assets, Liquid Cash, Stock Prices, etc.
- Time Management
- Organization's structure and hierarchy
- Logistics
Construct a Launch Day Financial Statement
The corporation's economic situation at the start of the commercial venture is captured in the first-day income statement. The initial day financial statement is a snapshot of the company's finances and a running tally of its outgoings and incomings. Developing informed business decisions requires the use of this knowledge. These items will be on the first-day balance sheet:
- Money on reserve
- Payables outstanding
- Stock
- fixed costs
- Fixed resources
- Receipts to be made.
- Notes to Pay
- Long-term obligations
Examine and Evaluate Data
All information pertinent to the construction plan should be analyzed as part of the feasibility assessment. Any differences between the data collected and the source material should be noted. The objective of the feasibility study is to lay a foundation for decision-making, and the information ought to be adequate. If you are considering being a project manager, then going for a PRINCE2 certification would help you learn things that you can use to improve your firm’s performance and decision-making process more quickly.
Depending on the outcomes of the feasibility report, organizational leadership must determine whether to move forward with the project. If the project is accepted, the company must develop a business plan with a detailed schedule and a budget.
Decide Whether to Proceed or Not
When launching a company, you must understand when to minimize your losses. When doing a financial feasibility study, a go/no-go choice is made. A feasibility study's crucial go/no-go conclusion will assist you in deciding whether or not your proposed business is worthwhile exploring.
When launching a company, knowing when and how to minimize your expenses. A feasibility study's crucial go/no-go conclusion will assist you in deciding the extent to which your proposed business is worthwhile exploring.
What is Included in Feasibility Study Report?
A financial feasibility report, which usually consists of the following elements, summarizes the findings of your feasibility analysis:
- A concise summary
- Information about the product or service
- Considering the innovation and technologies
- The industry for products and services
- Method of advertising
- The monetary projections
- Advisory opinions derived from studies.
Feasibility Report Examples
There are multiple areas where a feasibility study is essential. Here are a few feasibility study examples:
- For instance, examining the setup and capabilities of a laptop before purchase mimics feasibility tests.
- A model car is a device for the feasibility study.
- A rat study to discover a novel drug is a technique for feasibility analysis.
Conclusion
A financial feasibility study is an effective tool for assessing a venture before it is launched. An effective project manager requires understanding what is possible given all the limitations and opportunities. You will learn everything about specific projects from this research, and to manage projects successfully, you must base your decisions on that information.
PMP is the most highly regarded training for project managers and those who wish to succeed as project managers. If you are willing to grow and prosper, KnowledgeHut courses on Project Management are among the most suitable. You can check out our website for more details and enroll.
Frequently Asked Questions (FAQs)
1. What is the purpose of a feasibility study?
An evaluation of the financial viability of a productive area and its likelihood of succeeding or failing is the primary objective of a feasibility study.
2. What is feasibility study critical?
The value of prospective hazards is evaluated through feasibility studies. A thorough feasibility study can distinguish real business possibilities from potentially riskier assets.
3. What is a feasibility plan?
The feasibility plan focuses on the nature of your company's commodity or service; the comprehensive business strategy builds on this assessment and goes into greater detail on how you will carry it out. Finally, a feasibility study explicitly states the project's activities for stakeholders and identifies the program's good or service.
