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How to conduct a feasibility study: Template and examples

customer feasibility study meaning

Opportunities are everywhere. Some opportunities are small and don’t require many resources. Others are massive and need further analysis and evaluation.

How To Conduct A Feasibility Study: Template And Examples

One of your key responsibilities as a product manager is to evaluate the potential success of those opportunities before investing significant money, time, and resources. A feasibility study, also known as a feasibility assessment or feasibility analysis, is a critical tool that can help product managers determine whether a product idea or opportunity is viable, feasible, and profitable.

So, what is a feasibility analysis? Why should product managers use it? And how do you conduct one?

What is a feasibility study?

A feasibility study is a systematic analysis and evaluation of a product opportunity’s potential to succeed. It aims to determine whether a proposed opportunity is financially and technically viable, operationally feasible, and commercially profitable.

A feasibility study typically includes an assessment of a wide range of factors, including the technical requirements of the product, resources needed to develop and launch the product, the potential market gap and demand, the competitive landscape, and economic and financial viability.

Based on the analysis’s findings, the product manager and their product team can decide whether to proceed with the product opportunity, modify its scope, or pursue another opportunity and solve a different problem.

Conducting a feasibility study helps PMs ensure that resources are invested in opportunities that have a high likelihood of success and align with the overall objectives and goals of the product strategy .

What are feasibility analyses used for?

Feasibility studies are particularly useful when introducing entirely new products or verticals. Product managers can use the results of a feasibility study to:

  • Assess the technical feasibility of a product opportunity — Evaluate whether the proposed product idea or opportunity can be developed with the available technology, tools, resources, and expertise
  • Determine a project’s financial viability — By analyzing the costs of development, manufacturing, and distribution, a feasibility study helps you determine whether your product is financially viable and can generate a positive return on investment (ROI)
  • Evaluate customer demand and the competitive landscape — Assessing the potential market size, target audience, and competitive landscape for the product opportunity can inform decisions about the overall product positioning, marketing strategies, and pricing
  • Identify potential risks and challenges — Identify potential obstacles or challenges that could impact the success of the identified opportunity, such as regulatory hurdles, operational and legal issues, and technical limitations
  • Refine the product concept — The insights gained from a feasibility study can help you refine the product’s concept, make necessary modifications to the scope, and ultimately create a better product that is more likely to succeed in the market and meet users’ expectations

How to conduct a feasibility study

The activities involved in conducting a feasibility study differ from one organization to another. Also, the threshold, expectations, and deliverables change from role to role.

For a general set of guidelines to help you get started, here are some basic steps to conduct and report a feasibility study for major product opportunities or features.

1. Clearly define the opportunity

Imagine your user base is facing a significant problem that your product doesn’t solve. This is an opportunity. Define the opportunity clearly, support it with data, talk to your stakeholders to understand the opportunity space, and use it to define the objective.

2. Define the objective and scope

Each opportunity should be coupled with a business objective and should align with your product strategy.

customer feasibility study meaning

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customer feasibility study meaning

Determine and clearly communicate the business goals and objectives of the opportunity. Align those objectives with company leaders to make sure everyone is on the same page. Lastly, define the scope of what you plan to build.

3. Conduct market and user research

Now that you have everyone on the same page and the objective and scope of the opportunity clearly defined, gather data and insights on the target market.

Include elements like the total addressable market (TAM) , growth potential, competitors’ insights, and deep insight into users’ problems and preferences collected through techniques like interviews, surveys, observation studies, contextual inquiries, and focus groups.

4. Analyze technical feasibility

Suppose your market and user research have validated the problem you are trying to solve. The next step should be to, alongside your engineers, assess the technical resources and expertise needed to launch the product to the market.

Dig deeper into the proposed solution and try to comprehend the technical limitations and estimated time required for the product to be in your users’ hands.

5. Assess financial viability

If your company hasa product pricing team, work closely with them to determine the willingness to pay (WTP) and devise a monetization strategy for the new feature.

Conduct a comprehensive financial analysis, including the total cost of development, revenue streams, and the expected return on investment (ROI) based on the agreed-upon monetization strategy.

6. Evaluate potential risks

Now that you have almost a complete picture, identify the risks associated with building and launching the opportunity. Risks may include things like regulatory hurdles, technical limitations, and any operational risks.

7. Decide, prepare, and share

Based on the steps above, you should end up with a report that can help you decide whether to pursue the opportunity or not. Either way, prepare your findings, including any recommended modifications to the product scope, and present your final findings and recommendations to your stakeholders.

Make sure to prepare an executive summary for your C-suite; they will be the most critical stakeholders and the decision-makers at the end of the meeting.

Feasibility study example

Imagine you’re a product manager at a digital software company that specializes in building project management tools.

Your team has identified a potential opportunity to expand the product offering by developing a new AI-based feature that can automatically prioritize tasks for users based on their deadlines, workload, and importance.

To assess the viability of this opportunity, you can conduct a feasibility study. Here’s how you might approach it according to the process described above:

  • Clearly define the opportunity — In this case, the opportunity is the development of an AI-based task prioritization feature within the existing project management software
  • Define the objective and scope — The business objective is to increase user productivity and satisfaction by providing an intelligent task prioritization system. The scope includes the integration of the AI-based feature within the existing software, as well as any necessary training for users to understand and use the feature effectively
  • Conduct market and user research — Investigate the demand for AI-driven task prioritization among your target audience. Collect data on competitors who may already be offering similar features and determine the unique selling points of your proposed solution. Conduct user research through interviews, surveys, and focus groups to understand users’ pain points regarding task prioritization and gauge their interest in the proposed feature
  • Analyze technical feasibility — Collaborate with your engineering team to assess the technical requirements and challenges of developing the AI-based feature. Determine whether your team has the necessary expertise to implement the feature and estimate the time and resources required for its development
  • Assess financial viability — Work with your pricing team to estimate the costs associated with developing, launching, and maintaining the AI-based feature. Analyze the potential revenue streams and calculate the expected ROI based on various pricing models and user adoption rates
  • Evaluate potential risks — Identify any risks associated with the development and implementation of the AI-based feature, such as data privacy concerns, potential biases in the AI algorithm, or the impact on the existing product’s performance
  • Decide, prepare, and share — Based on your analysis, determine whether the AI-based task prioritization feature is a viable opportunity for your company. Prepare a comprehensive report detailing your findings and recommendations, including any necessary modifications to the product scope or implementation plan. Present your findings to your stakeholders and be prepared to discuss and defend your recommendations

Feasibility study template

The following feasibility study template is designed to help you evaluate the feasibility of a product opportunity and provide a comprehensive report to inform decision-making and guide the development process.

Remember that each study will be unique to your product and market, so you may need to adjust the template to fit your specific needs.

  • Briefly describe the product opportunity or feature you’re evaluating
  • Explain the problem it aims to solve or the value it will bring to users
  • Define the business goals and objectives for the opportunity
  • Outline the scope of the product or feature, including any key components or functionality
  • Summarize the findings from your market research, including data on the target market, competitors, and unique selling points
  • Highlight insights from user research, such as user pain points, preferences, and potential adoption rates
  • Detail the technical requirements and challenges for developing the product or feature
  • Estimate the resources and expertise needed for implementation, including any necessary software, hardware, or skills
  • Provide an overview of the costs associated with the development, launch, and maintenance of the product or feature
  • Outline potential revenue streams and calculate the expected ROI based on various pricing models and user adoption rates
  • Identify any potential risks or challenges associated with the development, implementation, or market adoption of the product or feature
  • Discuss how these risks could impact the success of the opportunity and any potential mitigation strategies
  • Based on your analysis, recommend whether to proceed with the opportunity, modify the scope, or explore other alternatives
  • Provide a rationale for your recommendation, supported by data and insights from your research
  • Summarize the key findings and recommendations from your feasibility study in a concise, easily digestible format for your stakeholders

Overcoming stakeholder management challenges

The ultimate challenge that faces most product managers when conducting a feasibility study is managing stakeholders .

Stakeholders may interfere with your analysis, jumping to conclude that your proposed product or feature won’t work and deeming it a waste of resources. They may even try to prioritize your backlog for you.

Here are some tips to help you deal with even the most difficult stakeholders during a feasibility study:

  • Use hard data to make your point — Never defend your opinion based on your assumptions. Always show them data and evidence based on your user research and market analysis
  • Learn to say no — You are the voice of customers, and you know their issues and how to monetize them. Don’t be afraid to say no and defend your team’s work as a product manager
  • Build stakeholder buy-in early on — Engage stakeholders from the beginning of the feasibility study process by involving them in discussions and seeking their input. This helps create a sense of ownership and ensures that their concerns and insights are considered throughout the study
  • Provide regular updates and maintain transparency — Keep stakeholders informed about the progress of the feasibility study by providing regular updates and sharing key findings. This transparency can help build trust, foster collaboration, and prevent misunderstandings or misaligned expectations
  • Leverage stakeholder expertise — Recognize and utilize the unique expertise and knowledge that stakeholders bring to the table. By involving them in specific aspects of the feasibility study where their skills and experience can add value, you can strengthen the study’s outcomes and foster a more collaborative working relationship

Final thoughts

A feasibility study is a critical tool to use right after you identify a significant opportunity. It helps you evaluate the potential success of the opportunity, analyze and identify potential challenges, gaps, and risks in the opportunity, and provides a data-driven approach in the market insights to make an informed decision.

By conducting a feasibility study, product teams can determine whether a product idea is profitable, viable, feasible, and thus worth investing resources into. It is a crucial step in the product development process and when considering investments in significant initiatives such as launching a completely new product or vertical.

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What is a Feasibility Study? Explained in Detail

Explore the ins and outs of Feasibility Studies, understanding their critical role in decision-making. This comprehensive blog covers their purpose, methodology, and how they assess the viability of projects, ensuring informed choices and successful outcomes.

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Moreover, this essential tool provides decision-makers with valuable insights, enabling them to make informed choices, allocate resources wisely, and mitigate risks, all of which are crucial for achieving favourable outcomes in various endeavours. In this blog, you will learn how a Feasibility Study examines the practicality of a proposed project, analysing its potential benefits and drawbacks to determine its viability. 

Table of Contents 

1) Understanding the concept of a Feasibility Study 

2) Importance of a Feasibility Study 

3)  Looking at the types of Feasibility Study 

4)  The various elements of a Feasibility Study 

5) How to conduct a Feasibility Study? 

6) Conclusion 

Understanding the concept of a Feasibility Study 

A Feasibility Study is a critical, systematic, and comprehensive assessment conducted at the early stages of project development, business planning, or investment evaluation. The findings of a Feasibility Study provide valuable insights for decision-makers, helping them decide whether to proceed, make modifications, or abandon a project, ultimately saving time and resources and mitigating risks.   

The primary objective of a Feasibility Study is to determine the practicality and viability of a proposed initiative before substantial resources are committed.  

The Feasibility Study involves in-depth analysis and research across various dimensions: 

a) Market feasibility: It examines the target market, customer demand, competition, and market trends to assess whether there's a demand for the proposed product or service. 

b) Technical feasibility: This aspect evaluates whether the project can be technologically implemented, addressing factors like equipment, software, and expertise. 

c) Financial feasibility: Financial forecasts, cost estimations, and potential return on investment (ROI) are analysed to determine whether the project is financially viable. 

d) Operational feasibility: It focuses on the practicality of implementing the project within the organisation's existing processes and resources. 

e) Legal and regulatory feasibility: This examines the legal and regulatory requirements and ensures the project complies with them. 

Understanding the concept of a Feasibility Study

Looking at the types of Feasibility Study 

Feasibility studies play a pivotal role in the decision-making process for projects, businesses, and investments. They are structured evaluations conducted to assess different facets of an initiative's viability.  

Each type of feasibility study serves a specific purpose, contributing to the comprehensive understanding of whether a project is worth pursuing. Let's delve into five distinct types of feasibility studies: 

Pre-Feasibility Study 

A Pre-Feasibility Study, often the first step in project evaluation, is a vital process for determining the initial viability of a proposed project, business endeavour, or investment. This study acts as a filtering mechanism, helping stakeholders decide whether to proceed with a more comprehensive feasibility study or abandon the idea altogether. 

Significance of a Pre-Feasibility Study

a) Project overview: The study begins by providing a clear and concise description of the project, including its objectives, scope, and expected outcomes. This overview helps all stakeholders understand the project's core concept. 

b) Market assessment: Pre-Feasibility includes a preliminary market analysis aimed at assessing the demand, market size, and potential customer base for the project's products or services. This step helps identify whether there is a viable market for the project. 

c) Technical evaluation: A brief technical assessment explores whether the project can be executed with available technology and resources. It considers the feasibility of implementing the project from a technological standpoint. 

d) Preliminary financial projections: Although not as detailed as in a full economic feasibility study, preliminary financial estimates are made. This includes rough estimations of costs and potential revenues. It offers a high-level view of the financial landscape. 

e) Risk assessment: An initial risk assessment identifies potential challenges and obstacles that the project might face. While not exhaustive, this step highlights key risks that could influence the project's success. 

Technical Feasibility Study 

A Technical Feasibility Study is a critical component of the broader feasibility analysis process that focuses on evaluating whether a proposed project or business endeavour can be successfully executed from a technical perspective.  

This study primarily assesses the availability of technology, resources, and expertise necessary for the project's realisation.  

Here's an in-depth look at the key components and the significance of a Technical Feasibility Study: 

a) Technical requirements: The study begins by identifying the specific technological needs of the project, including machinery, software, hardware, and any other specialised equipment. 

b) Resource availability: It evaluates whether the necessary resources, such as raw materials, energy, and infrastructure, are readily accessible or can be obtained at a reasonable cost. 

c) Expertise and human resources: Assessing whether the required technical skills and expertise are available within the organisation or can be sourced externally through recruitment or partnerships. 

d) Technology compatibility: Examining whether the project's technology choices are compatible with existing systems or if they necessitate significant adjustments or upgrades. 

e) Development timelines: Estimating the time required for the development, testing, and implementation of the project's technical components. 

Economic Feasibility Study 

An Economic Feasibility Study is a comprehensive evaluation that focuses on the financial viability of a proposed project, business venture, or investment. It is a crucial phase in the feasibility analysis process, designed to determine whether the project will generate adequate financial returns to justify its pursuit.  

Significance of an Economic Feasibility Study

a) Financial projections: This is a central element of the study, involving the estimation of both costs and revenue. It includes the prediction of initial capital costs, operating expenses, and income projections. 

b) Return on Investment (ROI): Calculating the ROI is a fundamental aspect of economic feasibility. It involves comparing the potential returns from the project to the capital investment required. A favourable ROI is a strong indicator of financial feasibility. 

c) Break-even analysis: This analysis identifies the point at which the project's revenue equals its expenses, signifying when the project starts to generate profit. Understanding the break-even point is essential for decision-makers. 

d) Cash flow analysis: It examines the project's cash inflows and outflows over time, ensuring that there are sufficient funds available to cover operational expenses and to service debt if applicable. 

e) Risk assessment: Providing a clear financial picture helps identify potential financial risks and uncertainties, allowing for the development of risk mitigation strategies. 

Learn the tools and methods to manage projects by signing up for our Introduction to Project Management Certification Course now! 

Legal Feasibility Study 

A Legal Feasibility Study is an essential component of the broader feasibility analysis process that concentrates on evaluating whether a proposed project or business venture complies with relevant laws and regulations.  

This study is crucial in understanding the legal landscape and potential challenges that may arise during the project's execution.  

Here are the key components and the significance of a Legal Feasibility Study: 

a) Regulatory compliance: The study entails a comprehensive examination of all local, state, national, and international laws, regulations, and standards relevant to the proposed project. It identifies the specific legal requirements that the project must meet. 

b) Permit and licensing requirements: It assesses the necessity and process for obtaining permits, licenses, and approvals from government agencies or regulatory bodies. 

c) Intellectual property: This aspect examines intellectual property considerations such as patents, trademarks, copyrights, and trade secrets, ensuring that the project does not infringe on the intellectual property rights of others. 

d) Contractual obligations: Legal feasibility studies analyse existing and potential contractual obligations, including agreements with suppliers, partners, customers, and other stakeholders. 

e) Liabilities and risk assessment: It identifies potential legal liabilities, risks, and challenges that the project might encounter and outlines strategies for risk mitigation. 

Market Feasibility Study 

A Market Feasibility Study is a vital component of the broader feasibility analysis process, focusing on evaluating the demand, potential market size, and overall viability of a proposed project, product, or service within a specific market or customer segment.  

Now, this study provides valuable insights into whether there is a viable market for the offering, whether it can effectively meet customer needs, and how it should be positioned within the competitive landscape.  

Here are the key components and the significance of a Market Feasibility Study: 

a) Market research: This includes data collection and analysis to understand customer demographics, preferences, and behaviours. It also involves studying market trends and dynamics. 

b) Competitive analysis: Evaluating existing and potential competitors, their strengths, weaknesses, and market positioning to determine how the project can gain a competitive edge. 

c) Sales projections: Estimating future sales and market share by taking into account the potential demand and expected customer adoption rates. 

d) Pricing strategy: Analysing pricing strategies and determining the optimal price point for the product or service to maximise profitability and market penetration. 

e) Market validation: It confirms whether there is genuine demand for the product or service, providing assurance that there is a market willing to purchase. 

Various elements of a Feasibility Study 

A Feasibility Study is a systematic and comprehensive assessment conducted before embarking on a project, business venture, or investment. It serves as a critical tool for decision-making, ensuring that a proposed initiative is practical, viable, and worth pursuing.  

Elements of a Feasibility Study

Project scope 

The project scope defines the boundaries of the study and what it aims to achieve. It outlines the specific objectives and goals of the project and identifies the key areas to be examined. Defining the scope ensures that the study remains focused and aligned with the project's core concept. 

Current analysis 

The current analysis is an exploration of the existing conditions or status quo. It assesses the current situation, market dynamics, competition, and technological landscape. This phase serves as a baseline against which the proposed project is compared. It helps stakeholders understand the context in which the project will operate and identifies gaps or opportunities for improvement. 

Requirements 

This component outlines the prerequisites and resources necessary for the project. It includes human resources, technological requirements, financial needs, regulatory compliance, and any other elements essential for the project's success. Identifying requirements early in the process ensures that nothing critical is overlooked during project planning.

Approach 

The approach outlines the methodology and strategies that will be used to conduct the feasibility study. It specifies the data collection methods, analysis techniques, and how different aspects of the study will be explored. A well-defined approach ensures that the study is conducted systematically and consistently. 

Evaluation 

The evaluation phase is where data is analysed, and potential challenges, opportunities, and risks are assessed. It involves examining the information gathered in the study against predefined criteria. This evaluation helps quantify the project's viability and practicality. 

Review 

The review is the final step of the feasibility study. It involves summarising the study's findings and conclusions. The review should present the results clearly and offer insights into whether the project should proceed, be modified, or be abandoned. It also includes recommendations for decision-makers. 

Acquire the skills and methods necessary to deliver projects effectively by signing up for our Project Management Masterclass now! 

How to conduct a Feasibility Study? 

The process of conducting a Feasibility Study varies from organisation to organisation. However, it comprises the same factors, which are: 

Preliminary Analysis 

The Preliminary Analysis is the foundational stage of a Feasibility Study, offering an initial assessment of a proposed project or business venture. In this phase, stakeholders outline the project's core concept, identify potential challenges, and evaluate its basic feasibility.  

Now, the key components include defining objectives, estimating market potential, projecting costs, and conducting an initial risk assessment. This early-stage analysis acts as a filter, helping decision-makers determine whether to proceed with a more detailed feasibility study or abandon the idea.  

Moreover, preliminary analysis helps efficiently save resources by quickly identifying unviable projects and sets the stage for informed decision-making throughout the feasibility study process. 

Recommended components 

Recommended components in a Feasibility Study

a) Executive summary: This concise section provides an overview of the entire study, summarising its critical findings, recommendations, and conclusions. It serves as a quick reference point for decision-makers. 

b) Technological considerations: Assessing the necessary technology, equipment, and infrastructure required for project implementation. It determines whether the project can be technically realised. 

c) Existing marketplace: Analysing the current market conditions, including competition, customer demographics, trends, and market size. This assessment helps understand the project's potential within the existing market. 

d) Marketing strategy: Outlining the strategies and tactics to introduce the project to the market. It includes pricing, distribution, promotion, and positioning plans. 

e) Required staffing: Identifying the human resources needed for the project. This involves assessing skill sets, hiring, and training requirements. 

f) Schedule and timeline: Defining a detailed project schedule and timeline. It sets milestones, task durations, and critical dates for a structured project management plan. 

g) Project financials: Estimating the financial aspects of the project, including initial capital requirements, operating costs, revenue projections, Return on Investment (ROI), and a break-even analysis. 

h) Findings and recommendations: Summarising the study's outcomes and providing well-informed recommendations. This section forms the basis for decision-making, helping stakeholders decide whether to proceed, modify the project, or abandon it altogether. 

Attain the skills to become a stellar Project Manager by signing up for our Project Management Courses | Training & Certifications now! 

Conclusion 

You are now more familiar with how a well-executed Feasibility Study is a cornerstone of informed decision-making in Project Management and business ventures. It acts as a critical guide, helping organisations assess the practicality and viability of their initiatives, ultimately minimising risks and increasing the likelihood of success. 

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What Is a Feasibility Study?

Understanding a feasibility study, how to conduct a feasibility study.

  • Feasibility Study FAQs

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Feasibility Study

customer feasibility study meaning

A feasibility study is a detailed analysis that considers all of the critical aspects of a proposed project in order to determine the likelihood of it succeeding.

Success in business may be defined primarily by return on investment , meaning that the project will generate enough profit to justify the investment. However, many other important factors may be identified on the plus or minus side, such as community reaction and environmental impact.

Although feasibility studies can help project managers determine the risk and return of pursuing a plan of action, several steps should be considered before moving forward.

Key Takeaways

  • A company may conduct a feasibility study when it's considering launching a new business, adding a new product line, or acquiring a rival.
  • A feasibility study assesses the potential for success of the proposed plan or project by defining its expected costs and projected benefits in detail.
  • It's a good idea to have a contingency plan on hand in case the original project is found to be infeasible.

Investopedia / Lara Antal

A feasibility study is an assessment of the practicality of a proposed plan or project. A feasibility study analyzes the viability of a project to determine whether the project or venture is likely to succeed. The study is also designed to identify potential issues and problems that could arise while pursuing the project.

As part of the feasibility study, project managers must determine whether they have enough of the right people, financial resources, and technology. The study must also determine the return on investment, whether this is measured as a financial gain or a benefit to society, as in the case of a nonprofit project.

The feasibility study might include a cash flow analysis, measuring the level of cash generated from revenue versus the project's operating costs . A risk assessment must also be completed to determine whether the return is enough to offset the risk of undergoing the venture.

When doing a feasibility study, it’s always good to have a contingency plan that is ready to test as a viable alternative if the first plan fails.

Benefits of a Feasibility Study

There are several benefits to feasibility studies, including helping project managers discern the pros and cons of undertaking a project before investing a significant amount of time and capital into it.

Feasibility studies can also provide a company's management team with crucial information that could prevent them from entering into a risky business venture.

Such studies help companies determine how they will grow. They will know more about how they will operate, what the potential obstacles are, who the competition is, and what the market is.

Feasibility studies also help convince investors and bankers that investing in a particular project or business is a wise choice.

The exact format of a feasibility study will depend on the type of organization that requires it. However, the same factors will be involved even if their weighting varies.

Preliminary Analysis

Although each project can have unique goals and needs, there are some best practices for conducting any feasibility study:

  • Conduct a preliminary analysis, which involves getting feedback about the new concept from the appropriate stakeholders
  • Analyze and ask questions about the data obtained in the early phase of the study to make sure that it's solid
  • Conduct a market survey or market research to identify the market demand and opportunity for pursuing the project or business
  • Write an organizational, operational, or business plan, including identifying the amount of labor needed, at what cost, and for how long
  • Prepare a projected income statement, which includes revenue, operating costs, and profit
  • Prepare an opening day balance sheet
  • Identify obstacles and any potential vulnerabilities, as well as how to deal with them
  • Make an initial "go" or "no-go" decision about moving ahead with the plan

Suggested Components

Once the initial due diligence has been completed, the real work begins. Components that are typically found in a feasibility study include the following:

  • Executive summary : Formulate a narrative describing details of the project, product, service, plan, or business.
  • Technological considerations : Ask what will it take. Do you have it? If not, can you get it? What will it cost?
  • Existing marketplace : Examine the local and broader markets for the product, service, plan, or business.
  • Marketing strategy : Describe it in detail.
  • Required staffing : What are the human capital needs for this project? Draw up an organizational chart.
  • Schedule and timeline : Include significant interim markers for the project's completion date.
  • Project financials .
  • Findings and recommendations : Break down into subsets of technology, marketing, organization, and financials.

Examples of a Feasibility Study

Below are two examples of a feasibility study. The first involves expansion plans for a university. The second is a real-world example conducted by the Washington State Department of Transportation with private contributions from Microsoft Inc.

A University Science Building

Officials at a university were concerned that the science building—built in the 1970s—was outdated. Considering the technological and scientific advances of the last 20 years, they wanted to explore the cost and benefits of upgrading and expanding the building. A feasibility study was conducted.

In the preliminary analysis, school officials explored several options, weighing the benefits and costs of expanding and updating the science building. Some school officials had concerns about the project, including the cost and possible community opposition. The new science building would be much larger, and the community board had earlier rejected similar proposals. The feasibility study would need to address these concerns and any potential legal or zoning issues.

The feasibility study also explored the technological needs of the new science facility, the benefits to the students, and the long-term viability of the college. A modernized science facility would expand the school's scientific research capabilities, improve its curriculum, and attract new students.

Financial projections showed the cost and scope of the project and how the school planned to raise the needed funds, which included issuing a bond to investors and tapping into the school's endowment . The projections also showed how the expanded facility would allow more students to be enrolled in the science programs, increasing revenue from tuition and fees.

The feasibility study demonstrated that the project was viable, paving the way to enacting the modernization and expansion plans of the science building.

Without conducting a feasibility study, the school administrators would never have known whether its expansion plans were viable.

A High-Speed Rail Project

The Washington State Department of Transportation decided to conduct a feasibility study on a proposal to construct a high-speed rail that would connect Vancouver, British Columbia, Seattle, Washington, and Portland, Oregon. The goal was to create an environmentally responsible transportation system to enhance the competitiveness and future prosperity of the Pacific Northwest.

The preliminary analysis outlined a governance framework for future decision-making. The study involved researching the most effective governance framework by interviewing experts and stakeholders, reviewing governance structures, and learning from existing high-speed rail projects in North America. As a result, governing and coordinating entities were developed to oversee and follow the project if it was approved by the state legislature.

A strategic engagement plan involved an equitable approach with the public, elected officials, federal agencies, business leaders, advocacy groups, and indigenous communities. The engagement plan was designed to be flexible, considering the size and scope of the project and how many cities and towns would be involved. A team of the executive committee members was formed and met to discuss strategies, lessons learned from previous projects and met with experts to create an outreach framework.

The financial component of the feasibility study outlined the strategy for securing the project's funding, which explored obtaining funds from federal, state, and private investments. The project's cost was estimated to be between $24 billion to $42 billion. The revenue generated from the high-speed rail system was estimated to be between $160 million and $250 million.

The report bifurcated the money sources between funding and financing. Funding referred to grants, appropriations from the local or state government, and revenue. Financing referred to bonds issued by the government, loans from financial institutions, and equity investments, which are essentially loans against future revenue that needs to be paid back with interest.

The sources for the capital needed were to vary as the project moved forward. In the early stages, most of the funding would come from the government, and as the project developed, funding would come from private contributions and financing measures. Private contributors included Microsoft Inc., which donated more than $570,000 to the project.

The benefits outlined in the feasibility report show that the region would experience enhanced interconnectivity, allowing for better management of the population and increasing regional economic growth by $355 billion. The new transportation system would provide people with access to better jobs and more affordable housing. The high-speed rail system would also relieve congested areas from automobile traffic.

The timeline for the study began in 2016 when an agreement was reached with British Columbia to work together on a new technology corridor that included high-speed rail transportation. The feasibility report was submitted to the Washington State land Legislature in December 2020.

What Is the Main Objective of a Feasibility Study?

A feasibility study is designed to help decision-makers determine whether or not a proposed project or investment is likely to be successful. It identifies both the known costs and the expected benefits.

In business, "successful" means that the financial return exceeds the cost. In a nonprofit, success may be measured in other ways. A project's benefit to the community it serves may be worth the cost.

What Are the Steps in a Feasibility Study?

A feasibility study starts with a preliminary analysis. Stakeholders are interviewed, market research is conducted, and a business plan is prepared. All of this information is analyzed to make an initial "go" or "no-go" decision.

If it's a go, the real study can begin. This includes listing the technological considerations, studying the marketplace, describing the marketing strategy, and outlining the necessary human capital, project schedule, and financing requirements.

Who Conducts a Feasibility Study?

A feasibility study may be conducted by a team of the organization's senior managers. If they lack the expertise or time to do the work internally it may be outsourced to a consultant.

What Are the 4 Types of Feasibility?

The study considers the feasibility of four aspects of a project:

Technical: A list of the hardware and software needed, and the skilled labor required to make them work.

Financial: An estimate of the cost of the overall project and its expected return.

Market: An analysis of the market for the product or service, the industry, competition, consumer demand, sales forecasts, and growth projections

Organizational: An outline of the business structure and the management team that will be needed.

Feasibility studies help project managers determine the viability of a project or business venture by identifying the factors that can lead to its success. The study also shows the potential return on investment and any risks to the success of the venture.

A feasibility study contains a detailed analysis of what's needed to complete the proposed project. The report may include a description of the new product or venture, a market analysis, the technology and labor needed, as well as the sources of financing and capital. The report will also include financial projections, the likelihood of success, and ultimately, a go-or-no-go decision.

Washington State Department of Transportation. " Ultra-High-Speed Ground Transportation Study ."

GeekWire. " Microsoft donates $223K to finish Seattle-Vancouver high-speed rail feasibility study by 2020 ."

StartRunGrow. " Who Conducts Feasibility? "

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What Is a Feasibility Study? How to Conduct One for Your Project

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Table of Contents

What is a feasibility study, what’s the importance of a feasibility study, what is included in a feasibility study report, types of feasibility study.

  • 7 Steps To Do a Feasibility Study

Feasibility Study Examples

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 you know the importance, read on to learn what you need to know about feasibility studies.

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 that accomplishes what you propose? Do you have the people, tools and resources necessary? And, will the project get you the ROI you expect?

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Feasibility study template

Use this free Feasibility Study Template for Word to manage your projects better.

A project feasibility study should be done during 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?” Why is it important to conduct a feasibility study?

An effective feasibility study points a project in the right direction by helping decision-makers have a holistic view of the potential benefits, disadvantages, barriers and constraints that could affect its outcome. The main purpose of a feasibility study is to determine whether the project can be not only viable but also beneficial from a technical, financial, legal and market standpoint.

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
  • Organization/staffing
  • Financial projections
  • Findings and recommendations

Free Feasibility Study Template

Use this free feasibility study template for Word to begin your own feasibility study. It has all the fundamental sections for you to get started, and it’s flexible enough to adapt to your specific needs. Download yours today.

Free feasibility study template

There are many things to consider when determining project feasibility, and there are different types of feasibility studies you might conduct to assess your project from different perspectives.

Pre-Feasibility Study

A pre-feasibility study, as its name suggests, it’s a process that’s undertaken before the feasibility study. It involves decision-makers and subject matter experts who will prioritize different project ideas or approaches to quickly determine whether the project has fundamental technical, financial, operational or any other evident flaws. If the project proposal is sound, a proper feasibility study will follow.

Technical Feasibility Study

A technical feasibility study consists in determining if your organization has the technical resources and expertise to meet the project requirements . A technical study focuses on assessing whether your organization has the necessary capabilities that are needed to execute a project, such as the production capacity, facility needs, raw materials, supply chain and other inputs. In addition to these production inputs, you should also consider other factors such as regulatory compliance requirements or standards for your products or services.

Economic Feasibility Study

Also called financial feasibility study, this type of study allows you to determine whether a project is financially feasible. Economic feasibility studies require the following steps:

  • Before you can start your project, you’ll need to determine the seed capital, working capital and any other capital requirements, such as contingency capital. To do this, you’ll need to estimate what types of resources will be needed for the execution of your project, such as raw materials, equipment and labor.
  • Once you’ve determined what project resources are needed, you should use a cost breakdown structure to identify all your project costs.
  • Identify potential sources of funding such as loans or investments from angel investors or venture capitalists.
  • Estimate the expected revenue, profit margin and return on investment of your project by conducting a cost-benefit analysis , or by using business forecasting techniques such as linear programming to estimate different future outcomes under different levels of production, demand and sales.
  • Estimate your project’s break-even point.
  • Conduct a financial benchmark analysis with industrial averages and specific competitors in your industry.
  • Use pro forma cash flow statements, financial statements, balance sheets and other financial projection documents.

Legal Feasibility Study

Your project must meet legal requirements including laws and regulations that apply to all activities and deliverables in your project scope . In addition, think about the most favorable legal structure for your organization and its investors. Each business legal structure has advantages and disadvantages when it comes to liability for business owners, such as limited liability companies (LLCs) or corporations, which reduce the liability for each business partner.

Market Feasibility Study

A market feasibility study determines whether your project has the potential to succeed in the market. To do so, you’ll need to analyze the following factors:

  • Industry overview: Assess your industry, such as year-over-year growth, identify key direct and indirect competitors, availability of supplies and any other trends that might affect the future of the industry and your project.
  • SWOT analysis: A SWOT analysis allows organizations to determine how competitive an organization can be by examining its strengths, weaknesses and the opportunities and threats of the market. Strengths are the operational capabilities or competitive advantages that allow an organization to outperform its competitors such as lower costs, faster production or intellectual property. Weaknesses are areas where your business might be outperformed by competitors. Opportunities are external, such as an underserved market, an increased demand for your products or favorable economic conditions. Threats are also external factors that might affect your ability to do well in the market such as new competitors, substitute products and new technologies.
  • Market research: The main purpose of market research is to determine whether it’s possible for your organization to enter the market or if there are barriers to entry or constraints that might affect your ability to compete. Consider variables such as pricing, your unique value proposition, customer demand, new technologies, market trends and any other factors that affect how your business will serve your customers. Use market research techniques to identify your target market, create buyer personas, assess the competitiveness of your niche and gauge customer demand, among other things.

7 Steps to Do a Feasibility Study

If you’re ready to do your own feasibility study, follow these 7 steps. You can use this free feasibility study template to help you get started.

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, 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 working 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. Factor in what services are required and how much they’ll cost and 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.

Market research will 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, in 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 isn’t 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 land, buildings and equipment, financing for assets and accounts receivables.

6. Review and Analyze All Data

All of these steps are important, but the review and analysis are especially important to ensure that everything is as it should be and that nothing requires changing or tweaking. Take a moment to look over your work one last time.

Reexamine your previous steps, such as the income statement, and compare them with your expenses and liabilities. Is it still realistic? This is also the time to think about risk 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 or not the project is feasible. 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 are whether the commitment is worth the time, effort and money and whether it aligns with the organization’s strategic goals and long-term aspirations.

Here are some simple feasibility study examples so you have a better idea of what a feasibility study is used for in different industries.

Construction Feasibility Study

For this construction feasibility study example, let’s imagine a large construction company that’s interested in starting a new project in the near future to generate profits.

  • Pre-Feasibility Study: The first step is to conduct a preliminary feasibility study. It can be as simple as a meeting where decision-makers will prioritize projects and discuss different project ideas to determine which poses a bigger financial benefit for the organization.
  • Technical Feasibility Study: Now it’s time to estimate what resources are needed to execute the construction project, such as raw materials, equipment and labor. If there’s work that can’t be executed by the company with its current resources, a subcontractor will be hired to fill the gap.
  • Economic Feasibility Study: Once the construction project management team has established what materials, equipment and labor are needed, they can estimate costs. Cost estimators use information from past projects, construction drawings and documents such as a bill of quantities to come up with an accurate cost estimate. Then, based on this estimate, a profit margin and financial forecasts will be analyzed to determine if there’s economic feasibility.
  • Legal Feasibility Study: Now the company needs to identify all potential regulations, building codes and laws that might affect the project. They’ll need to ask for approval from the local government so that they can begin the construction project .
  • Market Feasibility Study: Market feasibility will be determined depending on the nature of the project. For this feasibility example, let’s assume a residential construction project will be built. To gauge market potential, they’ll need to analyze variables such as the average income of the households in the city, crime rate, population density and any trends in state migration.

Manufacturing Feasibility Study

Another industry that uses feasibility studies is manufacturing. It’s a test run of the steps in the manufacturing production cycle to ensure the process is designed properly. Let’s take a look at what a manufacturing feasibility study example would look like.

  • Feasibility Study: The first step is to look at various ideas and decide which is the best one to pursue. You don’t want to get started and have to stop. That’s a waste of time, money and effort. Look at what you intend to manufacture, does it fill an unserved need, is the market able to support competition and can you manufacture a quality product on time and within your budget?
  • Financial Feasibility Study: Find out if your estimated income from the sale of this product is going to cover your costs, both direct and indirect costs. Work backward from the income you expect to make and the expenses you’ll spend for labor, materials and production to determine if the manufacturing of this product is financially feasible.
  • Market Feasibility Study: You’ve already determined that there’s a need that’s not being served, but now it’s time to dig deeper to get realistic projections of revenue. You’ll want to define your target demographic, analyze the competitive landscape, determine the total market volume and what your market share will be and estimate what market expansion opportunities there are.
  • Technical Feasibility Study: This is where you’ll explore the production , such as what resources you’ll need to produce your product. These findings will inform your financial feasibility study as well as labor, material, equipment, etc., costs have to be within your budget. You’ll also figure out the processes you’ll use to produce and deliver your product to the market, including warehousing and retail distribution.

There could be other feasibility studies you’ll have to make depending on the product and the market, but these are the essential ones that all manufacturers have to look at before they can make an educated decision as to whether to go forward or abandon the idea.

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.

ProjectManager's Gantt chart is ideal for tracking feasibility studies

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, 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!

feasibility study definition and template

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.

ProjectManager's Gantt chart, ideal to track your feasibility study

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.

Transcription

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 that 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 to plan the business organization and operations. 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 are some of the best practices to use during your feasibility study.

One is to 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.

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 are 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.

If you’ve been looking for an all-in-one tool that can help with your feasibility study, consider ProjectManager. We offer five project views and countless features that make it seamless to plan projects, organize tasks and stay connected with your team. See what our software can do for you by taking this free 30-day trial.

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What Is a Feasibility Study and How to Conduct It? (+ Examples)

Appinio Research · 26.09.2023 · 27min read

What Is a Feasibility Study and How to Conduct It Examples

Are you ready to turn your project or business idea into a concrete reality but unsure about its feasibility? Whether you're a seasoned entrepreneur or a first-time project manager, understanding the intricate process of conducting a feasibility study is vital for making informed decisions and maximizing your chances of success.

This guide will equip you with the knowledge and tools to navigate the complexities of market, technical, financial, and operational feasibility studies. By the end, you'll have a clear roadmap to confidently assess, plan, and execute your project.

What is a Feasibility Study?

A feasibility study is a systematic and comprehensive analysis of a proposed project or business idea to assess its viability and potential for success. It involves evaluating various aspects such as market demand, technical feasibility, financial viability, and operational capabilities. The primary goal of a feasibility study is to provide you with valuable insights and data to make informed decisions about whether to proceed with the project.

Why is a Feasibility Study Important?

Conducting a feasibility study is a critical step in the planning process for any project or business. It helps you:

  • Minimize Risks: By identifying potential challenges and obstacles early on, you can develop strategies to mitigate risks.
  • Optimize Resource Allocation: A feasibility study helps you allocate your resources more efficiently, including time and money.
  • Enhance Decision-Making: Armed with data and insights, you can make well-informed decisions about pursuing the project or exploring alternative options.
  • Attract Stakeholders: Potential investors, lenders, and partners often require a feasibility study to assess the project's credibility and potential return on investment.

Now that you understand the importance of feasibility studies, let's explore the various types and dive deeper into each aspect.

Types of Feasibility Studies

Feasibility studies come in various forms, each designed to assess different aspects of a project's viability. Let's delve into the four primary types of feasibility studies in more detail:

1. Market Feasibility Study

Market feasibility studies are conducted to determine whether there is a demand for a product or service in a specific market or industry. This type of study focuses on understanding customer needs, market trends, and the competitive landscape. Here are the key elements of a market feasibility study:

  • Market Research and Analysis: Comprehensive research is conducted to gather market size, growth potential , and customer behavior data. This includes both primary research (surveys, interviews) and secondary research (existing reports, data).
  • Target Audience Identification: Identifying the ideal customer base by segmenting the market based on demographics, psychographics, and behavior. Understanding your target audience is crucial for tailoring your product or service.
  • Competitive Analysis : Assessing the competition within the market, including identifying direct and indirect competitors, their strengths, weaknesses, and market share.
  • Demand and Supply Assessment: Analyzing the balance between the demand for the product or service and its supply. This helps determine whether there is room for a new entrant in the market.

2. Technical Feasibility Study

Technical feasibility studies evaluate whether the project can be developed and implemented from a technical standpoint. This assessment focuses on the project's design, technical requirements, and resource availability. Here's what it entails:

  • Project Design and Technical Requirements: Defining the technical specifications of the project, including hardware, software, and any specialized equipment. This phase outlines the technical aspects required for project execution.
  • Technology Assessment: Evaluating the chosen technology's suitability for the project and assessing its scalability and compatibility with existing systems.
  • Resource Evaluation: Assessing the availability of essential resources such as personnel, materials, and suppliers to ensure the project's technical requirements can be met.
  • Risk Analysis: Identifying potential technical risks, challenges, and obstacles that may arise during project development. Developing risk mitigation strategies is a critical part of technical feasibility.

3. Financial Feasibility Study

Financial feasibility studies aim to determine whether the project is financially viable and sustainable in the long run. This type of study involves estimating costs, projecting revenue, and conducting financial analyses. Key components include:

  • Cost Estimation: Calculating both initial and ongoing costs associated with the project, including capital expenditures, operational expenses, and contingency funds.
  • Revenue Projections: Forecasting the income the project is expected to generate, considering sales, pricing strategies, market demand, and potential revenue streams.
  • Investment Analysis: Evaluating the return on investment (ROI), payback period, and potential risks associated with financing the project.
  • Financial Viability Assessment: Analyzing the project's profitability, cash flow, and financial stability to ensure it can meet its financial obligations and sustain operations.

4. Operational Feasibility Study

Operational feasibility studies assess whether the project can be effectively implemented within the organization's existing operational framework. This study considers processes, resource planning, scalability, and operational risks. Key elements include:

  • Process and Workflow Assessment: Analyzing how the project integrates with current processes and workflows, identifying potential bottlenecks, and optimizing operations.
  • Resource Planning: Determining the human, physical, and technological resources required for successful project execution and identifying resource gaps.
  • Scalability Evaluation: Assessing the project's ability to adapt and expand to meet changing demands and growth opportunities, including capacity planning and growth strategies.
  • Operational Risks Analysis: Identifying potential operational challenges and developing strategies to mitigate them, ensuring smooth project implementation.

Each type of feasibility study serves a specific purpose in evaluating different facets of your project, collectively providing a comprehensive assessment of its viability and potential for success.

How to Prepare for a Feasibility Study?

Before you dive into the nitty-gritty details of conducting a feasibility study, it's essential to prepare thoroughly. Proper preparation will set the stage for a successful and insightful study. In this section, we'll explore the main steps involved in preparing for a feasibility study.

1. Identify the Project or Idea

Identifying and defining your project or business idea is the foundational step in the feasibility study process. This initial phase is critical because it helps you clarify your objectives and set the direction for the study.

  • Problem Identification: Start by pinpointing the problem or need your project addresses. What pain point does it solve for your target audience?
  • Project Definition: Clearly define your project or business idea. What are its core components, features, or offerings?
  • Goals and Objectives: Establish specific goals and objectives for your project. What do you aim to achieve in the short and long term?
  • Alignment with Vision: Ensure your project aligns with your overall vision and mission. How does it fit into your larger strategic plan?

Remember, the more precisely you can articulate your project or idea at this stage, the easier it will be to conduct a focused and effective feasibility study.

2. Assemble a Feasibility Study Team

Once you've defined your project, the next step is to assemble a competent and diverse feasibility study team. Your team's expertise will play a crucial role in conducting a thorough assessment of your project's viability.

  • Identify Key Roles: Determine the essential roles required for your feasibility study. These typically include experts in areas such as market research, finance, technology, and operations.
  • Select Team Members: Choose team members with the relevant skills and experience to fulfill these roles effectively. Look for individuals who have successfully conducted feasibility studies in the past.
  • Collaboration and Communication: Foster a collaborative environment within your team. Effective communication is essential to ensure everyone is aligned on objectives and timelines.
  • Project Manager: Designate a project manager responsible for coordinating the study, tracking progress, and meeting deadlines.
  • External Consultants: In some cases, you may need to engage external consultants or specialists with niche expertise to provide valuable insights.

Having the right people on your team will help you collect accurate data, analyze findings comprehensively, and make well-informed decisions based on the study's outcomes.

3. Set Clear Objectives and Scope

Before you begin the feasibility study, it's crucial to establish clear and well-defined objectives. These objectives will guide your research and analysis efforts throughout the study.

Steps to Set Clear Objectives and Scope:

  • Objective Clarity: Define the specific goals you aim to achieve through the feasibility study. What questions do you want to answer, and what decisions will the study inform?
  • Scope Definition: Determine the boundaries of your study. What aspects of the project will be included, and what will be excluded? Clarify any limitations.
  • Resource Allocation: Assess the resources needed for the study, including time, budget, and personnel. Ensure that you allocate resources appropriately based on the scope and objectives.
  • Timeline: Establish a realistic timeline for the feasibility study. Identify key milestones and deadlines for completing different phases of the study.

Clear objectives and a well-defined scope will help you stay focused and avoid scope creep during the study. They also provide a basis for measuring the study's success against its intended outcomes.

4. Gather Initial Information

Before you delve into extensive research and data collection, start by gathering any existing information and documents related to your project or industry. This initial step will help you understand the current landscape and identify gaps in your knowledge.

  • Document Review: Review any existing project documentation, market research reports, business plans, or relevant industry studies.
  • Competitor Analysis: Gather information about your competitors, including their products, pricing, market share, and strategies.
  • Regulatory and Compliance Documents: If applicable, collect information on industry regulations, permits, licenses, and compliance requirements.
  • Market Trends: Stay informed about current market trends, consumer preferences, and emerging technologies that may impact your project.
  • Stakeholder Interviews: Consider conducting initial interviews with key stakeholders, including potential customers, suppliers, and industry experts, to gather insights and feedback.

By starting with a strong foundation of existing knowledge, you'll be better prepared to identify gaps that require further investigation during the feasibility study. This proactive approach ensures that your study is comprehensive and well-informed from the outset.

How to Conduct a Market Feasibility Study?

The market feasibility study is a crucial component of your overall feasibility analysis. It focuses on assessing the potential demand for your product or service, understanding your target audience, analyzing your competition, and evaluating supply and demand dynamics within your chosen market.

Market Research and Analysis

Market research is the foundation of your market feasibility study. It involves gathering and analyzing data to gain insights into market trends, customer preferences, and the overall business landscape.

  • Data Collection: Utilize various methods such as surveys, interviews, questionnaires, and secondary research to collect data about the market. This data may include market size, growth rates, and historical trends.
  • Market Segmentation: Divide the market into segments based on factors such as demographics, psychographics , geography, and behavior. This segmentation helps you identify specific target markets.
  • Customer Needs Analysis: Understand the needs, preferences, and pain points of potential customers . Determine how your product or service can address these needs effectively.
  • Market Trends: Stay updated on current market trends, emerging technologies, and industry innovations that could impact your project.
  • SWOT Analysis: Conduct a SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis to identify internal and external factors that may affect your market entry strategy.

In today's dynamic market landscape, gathering precise data for your market feasibility study is paramount. Appinio offers a versatile platform that enables you to swiftly collect valuable market insights from a diverse audience.

With Appinio, you can employ surveys, questionnaires, and in-depth analyses to refine your understanding of market trends, customer preferences, and competition.

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Target Audience Identification

Knowing your target audience is essential for tailoring your product or service to meet their specific needs and preferences.

  • Demographic Analysis: Define the age, gender, income level, education, and other demographic characteristics of your ideal customers.
  • Psychographic Profiling: Understand the psychographics of your target audience, including their lifestyle, values, interests, and buying behavior.
  • Market Segmentation: Refine your target audience by segmenting it further based on shared characteristics and behaviors.
  • Needs and Pain Points: Identify your target audience's unique needs, challenges, and pain points that your product or service can address.
  • Competitor's Customers: Analyze the customer base of your competitors to identify potential opportunities for capturing market share.

Competitive Analysis

Competitive analysis helps you understand the strengths and weaknesses of your competitors, positioning your project strategically within the market.

  • Competitor Identification: Identify direct and indirect competitors within your industry or market niche.
  • Competitive Advantage: Determine the unique selling points (USPs) that set your project apart from competitors. What value can you offer that others cannot?
  • SWOT Analysis for Competitors: Conduct a SWOT analysis for each competitor to assess their strengths, weaknesses, opportunities, and threats.
  • Market Share Assessment: Analyze each competitor's market share and market penetration strategies.
  • Pricing Strategies: Investigate the pricing strategies employed by competitors and consider how your pricing strategy will compare.

Leveraging the power of data collection and analysis is essential in gaining a competitive edge. With Appinio , you can efficiently gather critical insights about your competitors, their strengths, and weaknesses. Seamlessly integrate these findings into your market feasibility study, empowering your project with a strategic advantage.

Demand and Supply Assessment

Understanding supply and demand dynamics is crucial for gauging market sustainability and potential challenges.

  • Market Demand Analysis: Estimate the current and future demand for your product or service. Consider factors like seasonality and trends.
  • Supply Evaluation: Assess the availability of resources, suppliers, and distribution channels required to meet the expected demand.
  • Market Saturation: Determine whether the market is saturated with similar offerings and how this might affect your project.
  • Demand Forecasting: Use historical data and market trends to make informed projections about future demand.
  • Scalability: Consider the scalability of your project to meet increased demand or potential fluctuations.

A comprehensive market feasibility study will give you valuable insights into your potential customer base, market dynamics, and competitive landscape. This information will be pivotal in shaping your project's direction and strategy.

How to Conduct a Technical Feasibility Study?

The technical feasibility study assesses the practicality of implementing your project from a technical standpoint. It involves evaluating the project's design, technical requirements, technological feasibility, resource availability, and risk analysis. Let's delve into each aspect in more detail.

1. Project Design and Technical Requirements

The project design and technical requirements are the foundation of your technical feasibility study. This phase involves defining the technical specifications and infrastructure needed to execute your project successfully.

  • Technical Specifications: Clearly define the technical specifications of your project, including hardware, software, and any specialized equipment.
  • Infrastructure Planning: Determine the physical infrastructure requirements, such as facilities, utilities, and transportation logistics.
  • Development Workflow: Outline the workflow and processes required to design, develop, and implement the project.
  • Prototyping: Consider creating prototypes or proof-of-concept models to test and validate the technical aspects of your project.

2. Technology Assessment

A critical aspect of the technical feasibility study is assessing the technology required for your project and ensuring it aligns with your goals.

  • Technology Suitability: Evaluate the suitability of the chosen technology for your project. Is it the right fit, or are there better alternatives?
  • Scalability and Compatibility: Assess whether the chosen technology can scale as your project grows and whether it is compatible with existing systems or software.
  • Security Measures: Consider cybersecurity and data protection measures to safeguard sensitive information.
  • Technical Expertise: Ensure your team or external partners possess the technical expertise to implement and maintain the technology.

3. Resource Evaluation

Resource evaluation involves assessing the availability of the essential resources required to execute your project successfully. These resources include personnel, materials, and suppliers.

  • Human Resources: Evaluate whether you have access to skilled personnel or if additional hiring or training is necessary.
  • Material Resources: Identify the materials and supplies needed for your project and assess their availability and costs.
  • Supplier Relationships: Establish relationships with reliable suppliers and consistently assess their ability to meet your resource requirements.

4. Risk Analysis

Risk analysis is a critical component of the technical feasibility study, as it helps you anticipate and mitigate potential technical challenges and setbacks.

  • Identify Risks: Identify potential technical risks, such as hardware or software failures, technical skill gaps, or unforeseen technical obstacles.
  • Risk Mitigation Strategies: Develop strategies to mitigate identified risks, including contingency plans and resource allocation for risk management.
  • Cost Estimation for Risk Mitigation: Assess the potential costs associated with managing technical risks and incorporate them into your project budget.

By conducting a thorough technical feasibility study, you can ensure that your project is technically viable and well-prepared to overcome technical challenges. This assessment will also guide decision-making regarding technology choices, resource allocation, and risk management strategies.

How to Conduct a Financial Feasibility Study?

The financial feasibility study is a critical aspect of your overall feasibility analysis. It focuses on assessing the financial viability of your project by estimating costs, projecting revenue, conducting investment analysis, and evaluating the overall financial health of your project. Let's delve into each aspect in more detail.

1. Cost Estimation

Cost estimation is the process of calculating the expenses associated with planning, developing, and implementing your project. This involves identifying both initial and ongoing costs.

  • Initial Costs: Calculate the upfront expenses required to initiate the project, including capital expenditures, equipment purchases, and any development costs.
  • Operational Costs: Estimate the ongoing operating expenses, such as salaries, utilities, rent, marketing, and maintenance.
  • Contingency Funds: Allocate funds for unexpected expenses or contingencies to account for unforeseen challenges.
  • Depreciation: Consider the depreciation of assets over time, as it impacts your financial statements.

2. Revenue Projections

Revenue projections involve forecasting the income your project is expected to generate over a specific period. Accurate revenue projections are crucial for assessing the project's financial viability.

  • Sales Forecasts: Estimate your product or service sales based on market demand, pricing strategies, and potential growth.
  • Pricing Strategy: Determine your pricing strategy, considering factors like competition, market conditions, and customer willingness to pay.
  • Market Penetration: Analyze how quickly you can capture market share and increase sales over time.
  • Seasonal Variations: Account for any seasonal fluctuations in revenue that may impact your cash flow.

3. Investment Analysis

Investment analysis involves evaluating the potential return on investment (ROI) and assessing the attractiveness of your project to potential investors or stakeholders.

  • Return on Investment (ROI): Calculate the expected ROI by comparing the project's net gains against the initial investment.
  • Payback Period: Determine how long it will take for the project to generate sufficient revenue to cover its initial costs.
  • Risk Assessment: Consider the level of risk associated with the project and whether it aligns with investors' risk tolerance.
  • Sensitivity Analysis: Perform sensitivity analysis to understand how changes in key variables, such as sales or costs, affect the investment's profitability.

4. Financial Viability Assessment

A financial viability assessment evaluates the project's ability to sustain itself financially in the long term. It considers factors such as profitability, cash flow, and financial stability.

  • Profitability Analysis: Assess whether the project is expected to generate profits over its lifespan.
  • Cash Flow Management: Analyze the project's cash flow to ensure it can cover operating expenses, debt payments, and other financial obligations.
  • Break-Even Analysis: Determine the point at which the project's revenue covers all costs, resulting in neither profit nor loss.
  • Financial Ratios: Calculate key financial ratios, such as debt-to-equity ratio and return on equity, to evaluate the project's financial health.

By conducting a comprehensive financial feasibility study, you can gain a clear understanding of the project's financial prospects and make informed decisions regarding its viability and potential for success.

How to Conduct an Operational Feasibility Study?

The operational feasibility study assesses whether your project can be implemented effectively within your organization's operational framework. It involves evaluating processes, resource planning, scalability, and analyzing potential operational risks.

1. Process and Workflow Assessment

The process and workflow assessment examines how the project integrates with existing processes and workflows within your organization.

  • Process Mapping: Map out current processes and workflows to identify areas of integration and potential bottlenecks.
  • Workflow Efficiency: Assess the efficiency and effectiveness of existing workflows and identify opportunities for improvement.
  • Change Management: Consider the project's impact on employees and plan for change management strategies to ensure a smooth transition.

2. Resource Planning

Resource planning involves determining the human, physical, and technological resources needed to execute the project successfully.

  • Human Resources: Assess the availability of skilled personnel and consider whether additional hiring or training is necessary.
  • Physical Resources: Identify the physical infrastructure, equipment, and materials required for the project.
  • Technology and Tools: Ensure that the necessary technology and tools are available and up to date to support project implementation.

3. Scalability Evaluation

Scalability evaluation assesses whether the project can adapt and expand to meet changing demands and growth opportunities.

  • Scalability Factors: Identify factors impacting scalability, such as market growth, customer demand, and technological advancements.
  • Capacity Planning: Plan for the scalability of resources, including personnel, infrastructure, and technology.
  • Growth Strategies: Develop strategies for scaling the project, such as geographic expansion, product diversification, or increasing production capacity.

4. Operational Risk Analysis

Operational risk analysis involves identifying potential operational challenges and developing mitigation strategies.

  • Risk Identification: Identify operational risks that could disrupt project implementation or ongoing operations.
  • Risk Mitigation: Develop risk mitigation plans and contingency strategies to address potential challenges.
  • Testing and Simulation: Consider conducting simulations or testing to evaluate how the project performs under various operational scenarios.
  • Monitoring and Adaptation: Implement monitoring and feedback mechanisms to detect and address operational issues as they arise.

Conducting a thorough operational feasibility study ensures that your project aligns with your organization's capabilities, processes, and resources. This assessment will help you plan for a successful implementation and minimize operational disruptions.

How to Write a Feasibility Study?

The feasibility study report is the culmination of your feasibility analysis. It provides a structured and comprehensive document outlining your study's findings, conclusions, and recommendations. Let's explore the key components of the feasibility study report.

1. Structure and Components

The structure of your feasibility study report should be well-organized and easy to navigate. It typically includes the following components:

  • Executive Summary: A concise summary of the study's key findings, conclusions, and recommendations.
  • Introduction: An overview of the project, the objectives of the study, and a brief outline of what the report covers.
  • Methodology: A description of the research methods , data sources, and analytical techniques used in the study.
  • Market Feasibility Study: Detailed information on market research, target audience, competitive analysis, and demand-supply assessment.
  • Technical Feasibility Study: Insights into project design, technical requirements, technology assessment, resource evaluation, and risk analysis.
  • Financial Feasibility Study: Comprehensive information on cost estimation, revenue projections, investment analysis, and financial viability assessment.
  • Operational Feasibility Study: Details on process and workflow assessment, resource planning, scalability evaluation, and operational risks analysis.
  • Conclusion: A summary of key findings and conclusions drawn from the study.

Recommendations: Clear and actionable recommendations based on the study's findings.

2. Write the Feasibility Study Report

When writing the feasibility study report, it's essential to maintain clarity, conciseness, and objectivity. Use clear language and provide sufficient detail to support your conclusions and recommendations.

  • Be Objective: Present findings and conclusions impartially, based on data and analysis.
  • Use Visuals: Incorporate charts, graphs, and tables to illustrate key points and make the report more accessible.
  • Cite Sources: Properly cite all data sources and references used in the study.
  • Include Appendices: Attach any supplementary information, data, or documents in appendices for reference.

3. Present Findings and Recommendations

When presenting your findings and recommendations, consider your target audience. Tailor your presentation to the needs and interests of stakeholders, whether they are investors, executives, or decision-makers.

  • Highlight Key Takeaways: Summarize the most critical findings and recommendations upfront.
  • Use Visual Aids: Create a visually engaging presentation with slides, charts, and infographics.
  • Address Questions: Be prepared to answer questions and provide additional context during the presentation.
  • Provide Supporting Data: Back up your findings and recommendations with data from the feasibility study.

4. Review and Validation

Before finalizing the feasibility study report, conducting a thorough review and validation process is crucial. This ensures the accuracy and credibility of the report.

  • Peer Review: Have colleagues or subject matter experts review the report for accuracy and completeness.
  • Data Validation: Double-check data sources and calculations to ensure they are accurate.
  • Cross-Functional Review: Involve team members from different disciplines to provide diverse perspectives.
  • Stakeholder Input: Seek input from key stakeholders to validate findings and recommendations.

By following a structured approach to creating your feasibility study report, you can effectively communicate the results of your analysis, support informed decision-making, and increase the likelihood of project success.

Feasibility Study Examples

Let's dive into some real-world examples to truly grasp the concept and application of feasibility studies. These examples will illustrate how various types of projects and businesses undergo the feasibility assessment process to ensure their viability and success.

Example 1: Local Restaurant

Imagine you're passionate about opening a new restaurant in a bustling urban area. Before investing significant capital, you'd want to conduct a thorough feasibility study. Here's how it might unfold:

  • Market Feasibility: You research the local dining scene, identify target demographics, and assess the demand for your cuisine. Market surveys reveal potential competitors, dining preferences, and pricing expectations.
  • Technical Feasibility: You design the restaurant layout, plan the kitchen setup, and assess the technical requirements for equipment and facilities. You consider factors like kitchen efficiency, safety regulations, and adherence to health codes.
  • Financial Feasibility: You estimate the initial costs for leasing or purchasing a space, kitchen equipment, staff hiring, and marketing. Revenue projections are based on expected foot traffic, menu pricing, and seasonal variations.
  • Operational Feasibility: You create kitchen and service operations workflow diagrams, considering staff roles and responsibilities. Resource planning includes hiring chefs, waitstaff, and kitchen personnel. Scalability is evaluated for potential expansion or franchising.
  • Risk Analysis: Potential operational risks are identified, such as food safety concerns, labor shortages, or location-specific challenges. Risk mitigation strategies involve staff training, quality control measures, and contingency plans for unexpected events.

Example 2: Software Development Project

Now, let's explore the feasibility study process for a software development project, such as building a mobile app:

  • Market Feasibility: You analyze the mobile app market, identify your target audience, and assess the demand for a solution in a specific niche. You gather user feedback and conduct competitor analysis to understand the competitive landscape.
  • Technical Feasibility: You define the technical requirements for the app, considering platforms (iOS, Android), development tools, and potential integrations with third-party services. You evaluate the feasibility of implementing specific features.
  • Financial Feasibility: You estimate the development costs, including hiring developers, designers, and ongoing maintenance expenses. Revenue projections are based on app pricing, potential in-app purchases, and advertising revenue.
  • Operational Feasibility: You map out the development workflow, detailing the phases from concept to deployment. Resource planning includes hiring developers with the necessary skills, setting up development environments, and establishing a testing framework.
  • Risk Analysis: Potential risks like scope creep, technical challenges, or market saturation are assessed. Mitigation strategies involve setting clear project milestones, conducting thorough testing, and having contingency plans for technical glitches.

These examples demonstrate the versatility of feasibility studies across diverse projects. Whatever type of venture or endeavor you want to embark on, a well-structured feasibility study guides you toward informed decisions and increased project success.

In conclusion, conducting a feasibility study is a crucial step in your project's journey. It helps you assess the viability and potential risks, providing a solid foundation for informed decision-making. Remember, a well-executed feasibility study not only enables you to identify challenges but also uncovers opportunities that can lead to your project's success.

By thoroughly examining market trends, technical requirements, financial aspects, and operational considerations, you are better prepared to embark on your project confidently. With this guide, you've gained the knowledge and tools needed to navigate the intricate terrain of feasibility studies.

How to Conduct a Feasibility Study in Minutes?

Speed and precision are paramount for feasibility studies, and Appinio delivers just that. As a real-time market research platform, Appinio empowers you to seamlessly conduct your market research in a matter of minutes, putting actionable insights at your fingertips.

Here's why Appinio stands out as the go-to tool for feasibility studies:

  • Rapid Insights: Appinio's intuitive platform ensures that anyone, regardless of their research background, can effortlessly navigate and conduct research, saving valuable time and resources.
  • Lightning-Fast Responses: With an average field time of under 23 minutes for 1,000 respondents, Appinio ensures that you get the answers you need when you need them, making it ideal for time-sensitive feasibility studies.
  • Global Reach: Appinio's extensive reach spans over 90 countries, allowing you to define the perfect target group from a pool of 1,200+ characteristics and gather insights from diverse markets.

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Why Feasibility Studies Matter (With Examples)

Cassie Wilson

Published: November 11, 2022

As a business leader, you want your projects to generate a return on investment. So before you begin any new venture, it’s a good idea to complete a feasibility study.

business owner conducting a feasibility study

Feasibility studies help to determine the success (or failure) of your proposed project or plan. These types of studies help you make better, informed business decisions. As a result, you can save time and money by starting a plan or a project that you know has a high ROI.

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Here, you’ll learn how to run feasibility studies. This post includes:

What is a feasibility study?

Feasibility study benefits, types of feasibility studies, how to write a feasibility study, feasibility study examples.

A feasibility study analyzes a potential project’s benefits, risks, costs, and potential outcomes. After completing a feasibility study, you and your team will have enough information to determine if the proposed project is a worthy investment.

Two types of sales forecasting data are appropriate for feasibility studies:

  • Quantitative forecasting uses historical business data to predict trends.
  • Qualitative sales forecasting data takes customers’ opinions, market research, and survey results into account.

The type of feasibility study you run determines which type of data you will need. Consider using qualitative forecasting data to determine how well your audience might receive your product. Quantitative data can help you predict revenue.

As a team leader, it’s your job to ensure your team hits yearly sales revenue goals. That may include deciding to take on a project based on projected sales forecasting data.

However, you do not want to take on a proposed plan or project without being sure the project will benefit your organization. Companies with accurate forecasts are 10% more likely to increase revenue yearly , according to Intangent.

That’s why feasibility studies matter. Combine sales forecasting data with the insight from a feasibility report, and you’ll be able to gauge the success rate of your proposed plan before you start.

Other feasibility benefits include:

  • Determining if the project is appropriate for your team.
  • Making sound decisions for your team.
  • Avoiding mistakes.
  • Narrowing the focus of the project.
  • Determining project and team needs.
  • Determining which departments need to be involved in the project.
  • Calculating the amount and source of appropriate funding.
  • Assessing the success or failure rate of your project.
  • Estimating ROI.

Not only do feasibility studies help determine if a proposed plan or project is viable, but they also help narrow the focus of the project. Overall, feasibility studies can help keep your project on track from the start.

Now that you understand the benefits of feasibility studies, it’s time to determine which kind of feasibility study is best for your team.

easibility study types, technical feasibility study, financial or economic feasibility study, operational feasibility study, legal feasibility study, scheduling feasibility study

Technical Feasibility Study

A technical feasibility study looks at your project’s technical aspects. This type of study answers the question: do you have the specialized resources and capabilities to carry out this project?

You might have the appropriate funding for a project, but a technical feasibility study will help you determine if you have the right processes, systems, and staffing for the job.

Best for: Software development teams and project development teams

Financial or Economic Feasibility Study

Financial feasibility studies can help you determine if you have the funding for your project. Plus, you’ll learn the venture is an overall good investment for your team and your company. These kinds of feasibility studies ask: is the allotted funding amount appropriate for this project?

By completing a financial feasibility study, you’ll have already identified funding sources, expenses, your budget, any potential risks, and expected revenue.

Best for: Financial managers and project managers

Operational Feasibility Study

As the name suggests, an operational feasibility study analyzes whether or not your team is equipped to carry out the proposed plan or project. This feasibility study answers the questions:

  • Does your team have the means to complete the project?
  • Will the project add value for your team or your customers?

Consider conducting an operational feasibility study if you have developed a solution for a potential problem. This kind of study will help you determine if the solution solves the problem or creates more issues.

Best for: Project managers and stakeholders

Legal Feasibility Study

This feasibility study should be performed to determine if your proposed project is legal and ethical. Legal feasibility studies are designed to keep you and your team aligned with local, state, and federal laws.

If you are unsure if your project is unethical or unlawful, a legal feasibility study will help you make the appropriate decision before you begin.

Best for: Legal departments and project managers

Scheduling Feasibility Study

When starting a new project, you’ll often be asked, “When can we reasonably expect this project to be completed?”

If you and your team are working for clients and are on a deadline, a scheduling feasibility study looks at the project’s timeline. That can help your team determine a reasonable completion date.

After completing a scheduling feasibility study, you might find the plan requires more time than you thought. This is helpful to know before you begin a project.

Best for: Stakeholders, project managers, and their teams

If you are wondering how to write a feasibility study, look no further than our feasibility study template .

Before you jump into writing your own study with our feasibility study template, take a minute to familiarize yourself with each section of the template. Keep in mind, the feasibility study temple can be customized to fit the needs of you and your team.

1. Executive Summary

Your executive summary should be a one-page summary of the entire study. Make sure to include the following:

  • The project name.
  • A description of the project.
  • The goals of the project or plan.
  • The target market.

feasibility study template, executive summary section

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2. Business Explanation

This section of the feasibility study is your space to introduce the business concept of your project or plan. Consider discussing:

  • The purpose of the project or plan.
  • Products or services.
  • Competitive advantages.
  • Experience of its founders.

If your project is feasible, you’ll want to be as specific as possible in this section and discuss the project’s projected success.

feasibility study template: business explanation

3. Market Overview

This section of your feasibility study should discuss your target market and why your project or plan will (or will not) succeed. You’ll want to discuss your target market in-depth, its pain points, and how your proposed product or service will solve the problems.

You’ll want to include valid data in this section. Consider featuring:

  • The market size and demographics.
  • The market psychographics.
  • Competitors and substitutes.

feasibility study template, how to create a market overview for a feasibility study

4. Financial Projections

Every good business endeavor is meant to make a profit. Your feasibility study should determine if the project or plan is a financially wise investment. The financial projections section of the feasibility template outlines and discusses critical financial metrics.

Considering including and discussing:

  • Capital needs.
  • Projected revenue and expenses.
  • Projected revenue needed to break even.

What is a feasibility study? How to break down financial projections

5. Feasibility Assessment and Conclusion

In your conclusion, be as clear and specific about your proposed project or plan as possible. Use statements like, “Based on our assessment of (X), we have deemed this business project feasible.”

Feasibility study types

Feasibility studies can be helpful across your entire organization — from the sales team to the product development team. Here are a few examples of feasibility studies conducted in various industries.

Howard County Public School System

Feasibility study example, Howard County Public School System 2022

The Howard County Public School System’s feasibility study dives into projected student enrollment over a 10-year period.

What we love: The school system offers an excellent example of a brief, but thorough, executive summary. In this section, Howard County Public Schools also includes specific historical data used throughout the study.

Town of Walpole, Massachusetts

feasibility study example, Town of Walpole Massachusetts

This feasibility study from the Walpole, Massachusetts’ explores the town’s recreation programming and facilities. Throughout, the document includes program recommendations with data that explains how the researchers came to this conclusion.

What we love: This document combines several different types of feasibility studies (financial, technical, and operational) into one comprehensive study. Remember, you can mold your feasibility study to fit your organization’s needs best.

U.S. Fish and Wildlife Service

feasibility study examples, U.S. Fish and Wildlife

In this example, the U.S. Fish and Wildlife Service explores the feasibility of reintroducing sea otters to areas of the Pacific coast. This study also provides a model for structuring the objectives section of this document. A good feasibility study is clear and to the point in each section.

What we love: Here, the U.S. Fish and Wildlife Service distinguishes what the study covers (potential options for reintroduction), and what it cannot accomplish (projected population growth from reintroduction).

While your feasibility study seeks to assess a project’s viability, your document will have a limited scope. If you’ll need to gather additional information moving forward, mention that in your feasibility study.

Holdrege Area Public Library

feasibility study example, Holdrege Area Public Library

Your feasibility study doesn’t need to be all text. The Holdrege Area Public Library makes use of graphics and charts to convey information in its feasibility study.

What we love: Infographics are easy to read. You can absorb important information with a quick skim.

Running Your Feasibility Study

Accurately predicting the success of a project might seem like a daunting task. But it doesn’t have to be. There are many ways to conduct a feasibility study. Stary by leveraging the tools you already have, like HubSpot’s Forecasting Software and our feasibility study template.

Your job as a sales leader is to help your team increase your organization’s bottom line. With the use of sales forecasting data and feasibility studies, you’ll be able to pursue the projects that will yield the highest ROI.

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A free template to help you prove your project's feasibility.

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How to use a feasibility study in project management

Julia Martins contributor headshot

It can be exciting to run a large, complex project that has a huge potential impact on your organization. On the one hand, you’re driving real change. On the other, failure is intimidating. 

What is a feasibility study? 

A feasibility study—sometimes called a feasibility analysis or feasibility report—is a way to evaluate whether or not a project plan could be successful. A feasibility study evaluates the practicality of your project plan in order to judge whether or not you’re able to move forward with the project. 

It does so by answering two questions: 

Does our team have the required tools or resources to complete this project? 

Will there be a high enough return on investment to make the project worth pursuing? 

Feasibility studies are important for projects that represent significant investments for your business. Projects that also have a large potential impact on your presence in the market may also require a feasibility study. 

As the project manager , you may not be directly responsible for driving the feasibility study, but it’s important to know what these studies are. By understanding the different elements that go into a feasibility study, you can better support the team driving the feasibility study and ensure the best outcome for your project.

When should you conduct a feasibility study

A feasibility study should be conducted after the project has been pitched but before any work has actually started. The study is part of the project planning process. In fact, it’s often done in conjunction with a SWOT analysis or project risk assessment , depending on the specific project. 

Feasibility studies help: 

Confirm market opportunities before committing to a project

Narrow your business alternatives

Create documentation about the benefits and detriments of your proposed initiative

Provide more information before making a go/no go decision

You likely don’t need a feasibility study if:

You already know the project is feasible

You’ve run a similar project in the past

Your competitors are succeeding with a similar initiative in market

The project is small, straightforward, and has minimal long-term business impact

Your team ran a similar feasibility study within the past three years

One thing to keep in mind is that a feasibility study is not a project pitch. During a project pitch, you’re evaluating whether or not the project is a good idea for your company, and whether the goals of the project are in line with your overall strategic plan. Typically, once you’ve established that the project is a good idea, you’d then run a feasibility study to confirm the project is possible with the tools and resources you have at your disposal. 

Feasibility study vs. project charter

A project charter is a relatively informal document to pitch your project to stakeholders. Think of the charter like an elevator pitch of your project objectives, scope, and responsibilities. Typically, your project sponsor or executive stakeholders reviews the charter before ratifying the project. 

A feasibility study should be implemented after the project charter has been ratified. This isn’t a document to pitch whether or not the project is in line with your team’s goals—rather, it’s a way to ensure the project is something you and your team can accomplish. 

Feasibility study vs. business case

A business case is a more formalized version of the project charter. While you’d typically create a project charter for small or straightforward initiatives, you should create a business case if you are pitching a large, complex initiative that will make a major impact on the business. This longer, more formal document will also include financial information, and typically involves more senior stakeholders. 

After your business case is approved by relevant stakeholders, you’d then run a feasibility study to make sure the work is doable. If you find it isn’t, you might return to your executive stakeholders and request more resources, tools, or time in order to ensure your business case is feasible.

Feasibility study vs. business plan

A business plan is a formal document of your organization’s goals. You typically write a business plan when founding your company, or when your business is going through a significant shift. Your business plan informs a lot of other business decisions, including your three to five year strategic plan . 

As you implement your business and strategic plan, you’ll invest in individual projects. A feasibility study is a way to evaluate the practicality of any given individual project or initiative. 

4 elements of a feasibility analysis

There are four main elements that go into a feasibility study: technical feasibility, financial feasibility, market feasibility (or market fit), and operational feasibility. You may also see these referred to as the four types of feasibility studies, though most feasibility studies actually include a review of all four elements. 

Technical feasibility

A technical feasibility study reviews the technical resources available for your project. This study determines if you have the right equipment, enough equipment, and the right technical knowledge to complete your project objectives . For example, if your project plan proposes creating 50,000 products per month, but you can only produce 30,000 products per month in your factories, this project isn’t technically feasible. 

Financial feasibility

Financial feasibility describes whether or not your project is fiscally viable. A financial feasibility report includes a cost/benefit analysis of the project. It also forecasts an expected return on investment (ROI), as well as outlines any financial risks. The goal at the end of the financial feasibility study is to understand the economic benefits the project will drive. 

Market feasibility

The market feasibility study is an evaluation of how your team expects the project’s deliverables to perform in the market. This part of the report includes a market analysis, market competition breakdown, and sales projections. 

Operational feasibility

An operational feasibility study evaluates whether or not your organization is able to complete this project. This includes staffing requirements, organizational structure, and any applicable legal requirements. At the end of the operational feasibility study, your team will have a sense of whether or not you have the resources, skills, and competencies to complete this work. 

Feasibility study checklist

Most feasibility studies are structured in a similar way. These documents serve as an assessment of the practicality of a proposed business idea. Creating a clear feasibility study helps project stakeholders during the decision making process. 

A feasibility study contains: 

An executive summary describing the project’s overall viability

A description of the product or service being developed during this project

Any technical considerations , including technology, equipment, or staffing

The market survey , including a study of the current market and the marketing strategy 

The operational feasibility study , evaluating whether or not your team’s current organizational structure can support this initiative

The project timeline

Financial projections based on your financial feasibility report

6 steps to conduct a feasibility study

You likely won’t be conducting the feasibility study yourself, but you will probably be called on to provide insight and information. To conduct a feasibility study, hire a trained consultant or, if you have an in-house project management office (PMO) , ask if they take on this type of work. In general, here are the steps they’ll take to complete this work: 

1. Run a preliminary analysis

Creating a feasibility study is a time-intensive process. Before diving into the feasibility study, it’s important to evaluate the project for any obvious and insurmountable roadblocks. For example, if the project requires significantly more budget than your organization has available, you likely won’t be able to complete it. Similarly, if the project deliverables need to be live and in market by a certain date, but they won’t be available for several months after the fact, the project likely isn’t feasible either. These types of large-scale obstacles make a feasibility study unnecessary, because it’s clear the project is not viable. 

2. Evaluate financial feasibility

Think of the financial feasibility study as the projected income statement for the project. This part of the feasibility study clarifies the expected project income and outlines what your organization needs to invest—in terms of time and money—in order to hit the project objectives. 

During the financial feasibility study, take into account whether or not the project will impact your business's cash flow. Depending on the complexity of the initiative, your internal PMO or external consultant may want to work with your financial team to run a cost-benefit analysis of the project. 

3. Run a market assessment

The market assessment, or market feasibility study, is a chance to identify the demand in the market. This study offers a sense of expected revenue for the project, and any potential market risks you could run into. 

The market assessment, more than any other part of the feasibility study, is a chance to evaluate whether or not there’s an opportunity in the market. During this study, it’s critical to evaluate your competitor’s positions and analyze demographics to get a sense of how the project will do. 

4. Consider technical and operational feasibility

Even if the financials are looking good and the market is ready, this initiative may not be something your organization can support. To evaluate operational feasibility, consider any staffing or equipment requirements this project needs. What organizational resources—including time, money, and skills—are necessary in order for this project to succeed? 

Depending on the project, it may also be necessary to consider the legal impact of the initiative. For example, if the project involves developing a new patent for your product, you will need to involve your legal team and incorporate that requirement into the project plan. 

5. Review project points of vulnerability

At this stage, your internal PMO team or external consultant have looked at all four elements of your feasibility study—financials, market analysis, technical feasibility, and operational feasibility. Before running their recommendations by you and your stakeholders, they will review and analyze the data for any inconsistencies. This includes ensuring the income statement is in line with your market analysis. Similarly, now that they’ve run a technical feasibility study, are any liabilities too big of a red flag? (If so, create a contingency plan !) 

Depending on the complexity of your project, there won’t always be a clear answer. A feasibility analysis doesn’t provide a black and white decision for a complex problem. Rather, it helps you come to the table with the right questions—and answers—so you can make the best decision for your project and for your team. 

6. Propose a decision

The final step of the feasibility study is an executive summary touching on the main points and proposing a solution. 

Depending on the complexity and scope of the project, your internal PMO or external consultant may share the feasibility study with stakeholders or present it to the group in order to field any questions live. Either way, with the study in hand, your team now has the information you need to make an informed decision. 

Achieve project success with Asana

Done with your feasibility study? You’re ready to run a project! Set your project up for success by tracking your progress in a work management tool , like Asana. From the small stuff to the big picture, Asana organizes work so teams know what to do, why it matters, and how to get it done. 

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Market Business News

What is a feasibility study? Definition and examples

A Feasibility Study is an evaluation and analysis of a project or system that somebody has proposed. We also call it a Feasibility Analysis . The study tries to determine whether the project is technically and financially feasible, i.e., is it technically or financially viable? Financially feasible, in this context, means whether the project is feasible within the estimated cost.

A feasibility study also determines whether a project makes good business sense, i.e., will it be profitable?

Put simply; the study is an analysis of how easily or successfully we could complete something. It also tries to determine how profitable or unprofitable it might be.

When large sums of money are at stake, companies and organizations typically carry out feasibility studies.

Such studies are crucial in mitigating risks and ensuring that resources are allocated to projects with the highest potential for success and sustainability.

Feasibility study vs. business plan

The term is similar to a business plan, but the meaning is not the same. When somebody has an initial business idea, the company carries out a feasibility study.

The study aims to flesh out the possibilities in that business idea.

The business plan, on the other hand, describes the company, its goals , strategies, and financial projections (forecasts).

A feasibility analysis tells you whether something will work. A business plan tells you how it will work.

Definition of feasibility

The word ‘ feasibility ‘ means the degree or state of being easily, conveniently, or reasonably done. If something is ‘ feasible ,’ it means that we can do it, make it, or achieve it. In other words, it is ‘doable’ and also ‘viable.’

A viable business, for example , is one we expect will make a profit every year for a long time.

On an Iowa State University webpage, Mary Holz-Clause and Don Hofstrand write:

“A feasibility study is an analysis of the viability of an idea .”

“The feasibility study focuses on helping answer the essential question of ‘should we proceed with the proposed project idea?’ All activities of the study are directed toward helping answer this question.”

A viability study is similar to a feasibility study. However, the viability study only looks at how profitable or commercially successful an idea or project might be. It does not determine whether something is doable.

Feasibility Study

Feasibility study – example

A hospital, for example, aiming to expand, i.e., add an extension to the building, may perform a feasibility study. The study will determine whether the project should go ahead.

The people carrying out the study will take into account labor and material costs. They will also take into account how disruptive the project might be for staff and patients.

The study may have to gauge public opinion regarding the new extension. In other words, would the local community be in favor or against such a project?

It is important to determine how the stakeholders will respond. A stakeholder is a person with an interest or concern in a project, business, or organization.

Hospital stakeholders are, for example, doctors, nurses, other hospital staff, patients, hospital visitors, and the hospital’s owner. Members of the local community may also be stakeholders.

Those conducting the study go through all the pros and cons of the project. They then weigh them against each other. Finally, they determine whether it is a good idea to go ahead.

Cost vs. value

In its simplest terms, the two main criteria to determine whether a project is feasible are:

  • How much will it cost?
  • What value will the project bring upon completion?

A good feasibility study

According to Wikipedia , a good feasibility study should provide:

  • A historical background of the project or business.
  • Accounting statements.
  • Details of all the operations and management.
  • A detailed description of what it is.
  • Financial data.
  • Tax implications and obligations.
  • Legal requirements.
  • Marketing research data and policies .

It should assess the environmental impact and sustainability of the project, ensuring it aligns with contemporary ecological and social responsibility standards. The study should also consider potential technological advancements that could affect the project’s feasibility and future profitability.

These two videos come from our sister channel in YouTube – Marketing Business Network . They explain what a “Feasibility Study” and “Viability Study” are, using easy-to-understand language and examples.

What is a Feasibility Study?

What is a Viability Study?

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Feasibility Study: Definition, Types, Importance & Steps to Write!

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Ever bought a house without getting an inspection done and carefully evaluating if it’s the right fit for you?

Probably not. That’s because it’s typically the largest investment you will ever make. It is something that could affect your financial well-being, for better or for worse.

Similarly, before executing a business project that could cost thousands or millions of dollars – you should always get the lay of the land, gauge the probability of success, or the cost of failure.

In short, you should perform a feasibility study . This study will help you determine the viability of the project and identify possible issues that could hurt your project down the road.

To help you pull it off, we are going to walk you through everything you need to know about the feasibility study, including why it’s beneficial and how to conduct it. Ready? Let’s go!

What Exactly is a Feasibility Study? (Definition)

A feasibility study is conducted to confirm the probability of completing the project successfully. It considers all the aspects of the project, including economic, legal, operational, and technical.

To determine the feasibility of the project , there are several factors are taken into consideration, such as the cost of the project and the return on investment (revenue, sales, and more).

But, a feasibility study isn’t just confined to measuring and forecasting financial gains from a project. It entirely depends on the industry you’re in.

For example, a hospital could conduct a feasibility study to determine whether they would be able to get enough investments for building a cancer research center.

Nonetheless, no matter the industry, every feasibility study serves the same purpose – it helps you identify the risk and returns of a plan of action , and the steps you need to take before moving forward.

In simple words, a feasibility study is an evaluation of how viable a proposed project or plan is, and whether it will succeed or fail. It is also used to identify potential issues that could arise during the project.

Well, now that you know the basics of what a feasibility study is , let’s head over to the next section – reasons why you should conduct a feasibility study before starting any project.

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Why You Should Conduct a Feasibility Study?

1. see the big picture.

We all know that executing a project is not so easy. It’s a huge responsibility for every single person involved – especially the project manager or the head of the project.

With that being said, is important to identify the opportunities and threats associated with the project. You need to take a deep dive into every aspect of the project, and that’s exactly what a feasibility study helps you do.

Let’s understand it with an example. Knowing whether you’ve enough people to complete a project isn’t really a “broader view”. To get the true big picture, ask yourself:

Are the team members capable of working on the project? Will they be available until the end? In case a team member isn’t available, do you have a backup plan?

Read more:   Project Objectives: What are they & How to Write them Effectively?

2. Easier To Plan Things

When you conduct a feasibility study, it becomes easy to list down all the strengths, risks, opportunities, and threats right at the beginning of the project, making planning simpler!

With a foolproof plan in hand, your team members would be able to work effectively and efficiently. Needless to say, without a plan, your entire project might go sideways.

3. Straightforward Execution

Planning and execution always go hand in hand. After all, without a proper plan in the back of your pocket, you won’t be able to execute the project properly.

When you conduct a feasibility study, you can create a rock-solid plan, which paves way for execution. Execution involves cost, time, and resources, so always analyze the viability of the project before starting it.

4. A Back-Up Plan

In case the project goes sideways due to some uncertainties or hindrances, an in-depth feasibility study will allow you to develop an alternate plan immediately.

This will ultimately save cost, time, and resources! How? Because without a feasibility study, you won’t be aware of other opportunities, and then you would have to develop an alternate plan from scratch.

We know that we’ve convinced you to conduct a feasibility study before getting your project off the ground. Now, let’s take a look at a few areas that a feasibility study examines.

The 5 Types of Feasibility Study

1. technical feasibility.

Technical feasibility is all about assessing whether your organization has the technical resources and expertise needed to meet the requirements of the project.

It also involves evaluating the hardware, software, and all other technical requirements of the project. For instance, you won’t put Star Trek’s transporter in your office building, as it’s not technically feasible.

2. Economic Feasibility

To determine the financial viability of the project, you need to evaluate the economic factors. You can conduct a cost-benefit analysis, which will help you compare the project’s financial costs against the projected benefits.

This assessment also enhances project credibility and helps the decision-makers in determining the positive economic benefits that the project will provide to the organization.

3. Legal Feasibility

It goes without saying that your project must meet all the legal requirements. This includes zoning laws, data protection acts, social media laws – basically every law that applies to your project deliverables and activities.

For example, let’s say that you want to build a new office building somewhere. By conducting a feasibility study, you’ll be able to determine whether the location is ideal for your business or not.

4. Operational Feasibility

Operational feasibility involves analyzing whether your project matches your organization’s resources, strategic goals, business objectives, and capacity planning.

In simple words, operation feasibility refers to determining whether (and how well) your organizations’ needs can be met by completing the project.

5. Time Feasibility

This assessment is super important when it comes to project success. After all, if a project isn’t completed on time, it is bound to fail! In time feasibility, you estimate the time needed to execute and complete the project.

Once that’s done, think about how your project timeline aligns with your current operations, such as product schedule, demand planning, and more.

It’s time to explore the entire process of conducting a feasibility study . To make things easier for you, we’ve broken up the process into seven steps. Let’s roll!

How to Conduct a Feasibility Study? (Step-By-Step)

Step 1. conduct a preliminary analysis.

This is more of an exploratory step where you investigate and examine a variety of methods to organize your business or position your product in the market.

After discussing all the business ideas and scenarios, start conducting the pre-feasibility study. This will help you pinpoint the unnecessary ideas and the ones that need to be studied more in-depth.

Step 2. Time For Market Assessment

Through market assessment, you will be able to determine how viable your proposed product or service is in the marketplace. It will also help you recognize the demand for your product in the market.

In this step, identify the market opportunities for your project through focus groups, interviews, and surveys. You should also observe what your competition is doing in terms of marketing, services, and products.

Step 3. Study Your Organizational Structure

Once you’ve performed the above two steps, it’s time to get your organization ready for the project. Study the staffing requirements, management and labor alignment, start-up costs, and operational costs.

Start-up and operations costs include infrastructure, personnel, supply convenience, marketing methods, equipment, and any known (or surprising cost) that might occur during the project.

Step 4. Calculate The Financial Costs

In this step, the projected revenues, expenses, financial costs, and risks involved with the project are studied. These costs might include human resources, materials, third-party services, equipment, and more.

Along with that, during the financial assessment, you also need to assess what impact the project will have on the bottom line of your organization – if it fails.

Step 5. Find Points of Vulnerability

Points of vulnerability are those facets that can hinder the project’s short-term or long-term goals. That’s why it’s important to review and analyze them beforehand so that they can be controlled or eliminated.

To identify points of vulnerability, think about problems and events that could result in project delays or failure. Then, think about solutions that can help you get rid of these problems.

Step 6. Present Your Results and Conclusions

The conclusion of your feasibility study is an in-depth outline of the various scenarios that you have examined. If the results indicate that your project is perfectly viable, you’re good to go!

However, there are times when the outcome of your study is neither positive, nor negative, and the decision of whether to proceed ahead isn’t clear-cut.

You can use the information and insights from the study to gauge the trade-off between the risks and rewards associated with the project and decide if you want to pursue the project or not.

Sometimes, it seems really straightforward to gather, record, and present all the feasibility study data.

However, there are times when you keep running into one challenge after the next while conducting the study, which slows you down (and adds stress to your life).

Well, we have something that will make conducting a feasibility study easier for you –  Bit.ai .

Bit.ai – The Tool That Will Assist You In Your Feasibility Study (And Every Other Research)

Bit.ai  is a robust, new-age document management and collaboration platform where you can create, collaborate, share, track and manage all your documents and research material in one place.

Bit.ai will make recording and presenting all your feasibility study data super easy – you can take our word for it. It’s the perfect platform for you to get work done without having to rely on complicated apps and software.

Want to know a few more reasons why you should use Bit for your feasibility study? Read on!

1. Real-Time Collaboration

While collecting and recording your feasibility study data, you need inputs and insights from your entire team so that you don’t end up miscalculating and misinterpreting numbers.

Bit.ai helps you do that effortlessly. Bit lets you and your team collaborate on a Bit document in real-time by co-editing, making inline comments, accessing version history, chatting via document chat, and much more.

It is an amazing way for your team to handle different aspects of your study together in one place. That means, no more communicating back and forth through emails and messages with your team!

2. Smart Workspaces

Research is something that can never be carried out using one piece of document, especially when it comes to the feasibility study. There is just so much different information that you need to gather from different markets and audiences – and storing all this information can be a pain.

Luckily, Bit solves this problem for you. On Bit, you can gather your team and create workspaces around different markets, target audiences, and teams to keep all your research data organized.

3. Interactive Documents

What if you could keep all your important research files in one single document? We’re talking about those excel sheets, presentations, charts, and more.

Won’t that make your research documents much more comprehensive? The best part – your team won’t have to jump through different files to get information.

It’s possible using Bit! Bit lets you add images, videos, social media content, music, cloud files, surveys/polls, charts, code, presentations, and any other rich media you can think of in your Bit doc.

4. Permissions & Sharing in Multiple Ways

Research findings are crucial documents, and you need to make sure that the right people have access to them at the right time. This is why Bit supports features like document tracking, password protection, file access restrictions, etc. that help keep your important company information safe.

There are multiple ways to share your Bit documents – you can create a shareable live link to share the documents with someone. You can also share your documents via Bit’s guest access.

5. Guest Access

You can use Bit’s Guest Access to your investors, funders, or other interested stakeholders. The ‘guests’ can get two types of access to the documents: comment-only and read-only.

With the comment-only access, they can @mention team members and give their suggestions or feedback while read-only access only allows them to read the content you have shared with them.

There’s nothing like Bit out there when it comes to creating and organizing documents. With a free account for up to 5 members, there’s no reason why you should not give this amazing platform a try.

Wrapping Up

Should we or shouldn’t we? This is the question that a feasibility study answers. It helps you determine if a particular project makes sense from an economical, technical and operational standpoint.

Every business project comes with great risk and expense, and you should always perform a feasibility study to understand the risk factors at play, project parameters, and business goals .

Most importantly, this study helps you identify whether the merits of investing in the project outweigh the risks. Just another reason why it should be a part of your project cycle!

Further reads :

Project Outline: What is it & How to Create it for Your Business?

9 Risk Management Tools & Techniques You Must Try!

9 Project Documents You Must Create For Your Project!

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Crisis Management Plan: Definition, Types & Steps to Create!

Work Breakdown Structure: Definition, Types, Importance & Process!

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What is a feasibility study: step-by-step guide.

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Key takeaways

  • A feasibility study is an essential analytical tool that evaluates the viability of a proposed project on multiple fronts, such as financials, technical requirements, and market demand.
  • Conducted during the project initiation phase, this type of study serves as an early checkpoint to identify potential roadblocks and assess risks.
  • Feasibility studies act as the first line of defense against project failure, saving time, money, and resources.

In this article...

What is a feasibility study?

A feasibility study is an analytical tool used to evaluate the practicality of a proposed project or business idea. It assesses various factors such as financial viability, technical requirements, legal constraints, and market demand. The study aims to answer the question “Are the goals of this project realistically attainable?” by examining data, studies, and other relevant information.

A feasibility study is a crucial step to take before diving into any project and is generally performed during the project initiation phase of project management . It helps identify potential roadblocks, assess risks, and estimate resource allocation; skipping this step can lead to project failure, wasted resources, and financial losses.

Feasibility studies represent one of the many intricacies of project planning . Understanding the other requirements of this crucial step can give you a well-rounded view of how to set your project up for success.

Steps to conduct a feasibility study

Successfully executing a project hinges on thorough planning and risk assessment. Following this step-by-step guide for conducting a feasibility study will help you meticulously evaluate the viability of your project from the outset.

Step 1: Conduct preliminary analysis

This is where you take a good, hard look at your project to determine whether it’s worth pursuing. At this stage, you should also decide if a more detailed feasibility study is necessary.

A few key criteria usually come into play during this initial assessment. First, consider a general sense of the market demand for your project, the resources you have at your disposal, and some ballpark figures for initial costs. If it’s difficult to get clear estimates, it may be worthwhile to invest additional time and resources in a more comprehensive feasibility study. If no significant roadblocks pop up in this preliminary analysis, then you have the green light to proceed.

Some project management software includes useful features that can help you efficiently collect and organize all this data. These features can be very helpful in decision-making, especially when you’re looking at multiple variables.

Step 2: Create a projected income statement

This vital component of the feasibility study involves forecasting the income, expenses, and profitability associated with the proposed project. The projected income statement is akin to peering into a financial crystal ball to see how the numbers might align.

There are several approaches you can take to assess a project’s financial impact. Historical data and industry benchmarks, for example, can serve as reliable guides. These projections are important for assessing financial feasibility and making informed decisions.

The significance of these forecasts cannot be overstated — they help stakeholders understand the project’s potential ROI and ultimately make the go/no-go decision for the project.

Step 3: Survey the market

The market survey stage involves rolling up your sleeves to gather valuable data and insights about your target market(s) and audience(s). Think of it as your project’s reconnaissance mission: You’re scouting the terrain to understand what you’re getting into.

To start, you’ll want to learn your customers’ preferences to see if your project will fulfill a need or solve a problem they currently face. For example, a software company’s research might reveal customer demand for a new feature that aligns with the project’s goals.

Also consider if your project is timely and whether it will make a significant impact now or in the near future, depending on emerging market trends. It may be useful to conduct competitor research as well; knowing what and who you’re up against can help stakeholders decide whether you should move forward with the project and, if so, how you will approach it.

Surveys and interviews are ideal for firsthand quantitative and qualitative data. However, don’t underestimate the power of existing market reports. This preexisting data can offer a broad market landscape view, helping you make data-driven decisions. You can also leverage other research and data collection methods, such as focus groups and publicly available databases like Statista and the U.S. Census Bureau .

Step 4: Review and analyze the data

With all of the necessary information in hand, use tools like a SWOT analysis to evaluate the project’s strengths, weaknesses, opportunities, and threats. A risk assessment is another go-to method that can help you identify potential pitfalls that could derail your project.

At this point in the feasibility study, weigh key metrics and indicators like projected ROI, milestone dates, market penetration rates, and possible vulnerabilities. These gauges, when reviewed in tandem, paint a broader picture of your project’s viability and value.

Step 5: Determine the next steps

Use your research-backed analysis to decide whether the project you’ve proposed is the best way to address the problems it intends to address. If the metrics are favorable and the risks are manageable, you should feel confident advancing to the planning phase. Too many red flags, however, may mean you need to go back to the drawing board.

Here’s a little tech tip to make this decision easier: Many project management software dashboards can compile your key metrics and findings neatly in one visual package. It’s like having a project feasibility snapshot right at your fingertips, which makes it much easier for stakeholders to understand important data and make informed decisions.

Types of feasibility studies

There are different types of feasibility studies that each focus on a unique aspect of projects and project planning . By understanding the nuances of each, you’ll become better equipped to make well-informed decisions, mitigate risks, and ultimately steer your project toward success.

Technical feasibility

Technical feasibility digs into the nuts and bolts of the project. You’re looking at what kind of technology you’ll need, whether it’s available, and if it can be integrated into your current systems. It’s like checking if you have all the ingredients you need before cooking a specific recipe.

Economic feasibility

This study is all about the money — how much the project will cost and what kinds of economic or profitability benefits it will bring forth. With an economic feasibility study, you’re most often doing a cost-benefit analysis to see if the financials add up in your favor. It’s like weighing the pros and cons but in dollar signs. 

Legal feasibility

This is your legal checkpoint. You’re looking at any laws or regulations that might create risks or restrict your project. This feasibility study could also involve checking compliance with industry-specific or regional regulations.

Operational feasibility

An operational feasibility study will help you see how the project fits into your current operations and operational goals and resources. After completing this type of study, you should know if your project will require new workflows and if your team can handle project tasks alongside their current workloads.

This study also evaluates whether the organization has the expertise to accomplish all project goals.

Scheduling feasibility

This feasibility study is all about time. You’re considering how long the project will take and whether you can afford any delays. Gantt charts , a feature commonly found in project management software, can be convenient in this type of study.

These visual timelines allow you to map out the entire project schedule, set milestones, and identify potential bottlenecks. You can also easily see if your project’s timeline is realistic or if you need to make adjustments to avoid delays.

A monday.com Gantt chart shows an overview of various projects with their respective timelines.

Feasibility study examples

Feasibility studies add value to the project lifecycle across diverse industries. With each of these examples, the feasibility study is a critical preliminary step to identify potential roadblocks and assess the likelihood of project success.

Construction

A construction project feasibility study might focus on land evaluation, zoning laws, and material costs to determine if a new housing development is viable. In this example, the study helps avoid legal snags and ensure profitable land use.

A healthcare feasibility study may assess the demand for a new medical facility in a specific location by looking at factors like local population health statistics and existing healthcare infrastructure. This type of research helps determine whether a new facility would serve the community appropriately and utilize resources effectively.

Information technology

An IT feasibility study might analyze the technical requirements, cost, and market demand for a new software application to understand whether the development effort would offer a reasonable return on investment. This information helps project teams avoid sinking time and money into software that no one wants or needs.

Free feasibility study template

Download our feasibility study template for free:

Why are feasibility studies crucial in project management?

In project management, feasibility studies help you gauge whether your project is a go or a no-go, saving you time, money, and a lot of headaches in the long run. But it’s not just about giving your project a thumbs-up or down.

Feasibility studies are also invaluable for decision-making and risk assessment. They provide the data and insights you need to make informed choices. Whether it’s deciding on the project scope, budget, or timeline, these studies offer a comprehensive view of what you’re up against.

Plus, feasibility studies help you identify potential roadblocks and risks, allowing you to prepare effective contingency plans. Operating with a feasibility study as your project’s foundation is like giving your team both a roadmap and a weather forecast to help you better navigate your project journey.

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  • 11.3 Conducting a Feasibility Analysis
  • Introduction
  • 1.1 Entrepreneurship Today
  • 1.2 Entrepreneurial Vision and Goals
  • 1.3 The Entrepreneurial Mindset
  • Review Questions
  • Discussion Questions
  • Case Questions
  • Suggested Resources
  • 2.1 Overview of the Entrepreneurial Journey
  • 2.2 The Process of Becoming an Entrepreneur
  • 2.3 Entrepreneurial Pathways
  • 2.4 Frameworks to Inform Your Entrepreneurial Path
  • 3.1 Ethical and Legal Issues in Entrepreneurship
  • 3.2 Corporate Social Responsibility and Social Entrepreneurship
  • 3.3 Developing a Workplace Culture of Ethical Excellence and Accountability
  • 4.1 Tools for Creativity and Innovation
  • 4.2 Creativity, Innovation, and Invention: How They Differ
  • 4.3 Developing Ideas, Innovations, and Inventions
  • 5.1 Entrepreneurial Opportunity
  • 5.2 Researching Potential Business Opportunities
  • 5.3 Competitive Analysis
  • 6.1 Problem Solving to Find Entrepreneurial Solutions
  • 6.2 Creative Problem-Solving Process
  • 6.3 Design Thinking
  • 6.4 Lean Processes
  • 7.1 Clarifying Your Vision, Mission, and Goals
  • 7.2 Sharing Your Entrepreneurial Story
  • 7.3 Developing Pitches for Various Audiences and Goals
  • 7.4 Protecting Your Idea and Polishing the Pitch through Feedback
  • 7.5 Reality Check: Contests and Competitions
  • 8.1 Entrepreneurial Marketing and the Marketing Mix
  • 8.2 Market Research, Market Opportunity Recognition, and Target Market
  • 8.3 Marketing Techniques and Tools for Entrepreneurs
  • 8.4 Entrepreneurial Branding
  • 8.5 Marketing Strategy and the Marketing Plan
  • 8.6 Sales and Customer Service
  • 9.1 Overview of Entrepreneurial Finance and Accounting Strategies
  • 9.2 Special Funding Strategies
  • 9.3 Accounting Basics for Entrepreneurs
  • 9.4 Developing Startup Financial Statements and Projections
  • 10.1 Launching the Imperfect Business: Lean Startup
  • 10.2 Why Early Failure Can Lead to Success Later
  • 10.3 The Challenging Truth about Business Ownership
  • 10.4 Managing, Following, and Adjusting the Initial Plan
  • 10.5 Growth: Signs, Pains, and Cautions
  • 11.1 Avoiding the “Field of Dreams” Approach
  • 11.2 Designing the Business Model
  • 11.4 The Business Plan
  • 12.1 Building and Connecting to Networks
  • 12.2 Building the Entrepreneurial Dream Team
  • 12.3 Designing a Startup Operational Plan
  • 13.1 Business Structures: Overview of Legal and Tax Considerations
  • 13.2 Corporations
  • 13.3 Partnerships and Joint Ventures
  • 13.4 Limited Liability Companies
  • 13.5 Sole Proprietorships
  • 13.6 Additional Considerations: Capital Acquisition, Business Domicile, and Technology
  • 13.7 Mitigating and Managing Risks
  • 14.1 Types of Resources
  • 14.2 Using the PEST Framework to Assess Resource Needs
  • 14.3 Managing Resources over the Venture Life Cycle
  • 15.1 Launching Your Venture
  • 15.2 Making Difficult Business Decisions in Response to Challenges
  • 15.3 Seeking Help or Support
  • 15.4 Now What? Serving as a Mentor, Consultant, or Champion
  • 15.5 Reflections: Documenting the Journey
  • A | Suggested Resources

Learning Objectives

By the end of this section, you will be able to:

  • Describe the purpose of a feasibility analysis
  • Describe and develop the parts of a feasibility analysis
  • Understand how to apply feasibility outcomes to a new venture

As the name suggests, a feasibility analysis is designed to assess whether your entrepreneurial endeavor is, in fact, feasible or possible. By evaluating your management team, assessing the market for your concept, estimating financial viability, and identifying potential pitfalls, you can make an informed choice about the achievability of your entrepreneurial endeavor. A feasibility analysis is largely numbers driven and can be far more in depth than a business plan (discussed in The Business Plan ). It ultimately tests the viability of an idea, a project, or a new business. A feasibility study may become the basis for the business plan, which outlines the action steps necessary to take a proposal from ideation to realization. A feasibility study allows a business to address where and how it will operate, its competition, possible hurdles, and the funding needed to begin. The business plan then provides a framework that sets out a map for following through and executing on the entrepreneurial vision.

Organizational Feasibility Analysis

Organizational feasibility aims to assess the prowess of management and sufficiency of resources to bring a product or idea to market Figure 11.12 . The company should evaluate the ability of its management team on areas of interest and execution. Typical measures of management prowess include assessing the founders’ passion for the business idea along with industry expertise, educational background, and professional experience. Founders should be honest in their self-assessment of ranking these areas.

Resource sufficiency pertains to nonfinancial resources that the venture will need to move forward successfully and aims to assess whether an entrepreneur has a sufficient amount of such resources. The organization should critically rank its abilities in six to twelve types of such critical nonfinancial resources, such as availability of office space, quality of the labor pool, possibility of obtaining intellectual property protections (if applicable), willingness of high-quality employees to join the company, and likelihood of forming favorable strategic partnerships. If the analysis reveals that critical resources are lacking, the venture may not be possible as currently planned. 46

Financial Feasibility Analysis

A financial analysis seeks to project revenue and expenses (forecasts come later in the full business plan); project a financial narrative; and estimate project costs, valuations, and cash flow projections Figure 11.13 .

The financial analysis may typically include these items:

  • A twelve-month profit and loss projection
  • A three- or four-year profit-and-loss projection
  • A cash-flow projection
  • A projected balance sheet
  • A breakeven calculation

The financial analysis should estimate the sales or revenue that you expect the business to generate. A number of different formulas and methods are available for calculating sales estimates. You can use industry or association data to estimate the sales of your potential new business. You can search for similar businesses in similar locations to gauge how your business might perform compared with similar performances by competitors. One commonly used equation for a sales model multiplies the number of target customers by the average revenue per customer to establish a sales projection:

Another critical part of planning for new business owners is to understand the breakeven point , which is the level of operations that results in exactly enough revenue to cover costs (see Entrepreneurial Finance and Accounting for an in-depth discussion on calculating breakeven points and the breakdown of cost types). It yields neither a profit nor a loss. To calculate the breakeven point, you must first understand the two types of costs: fixed and variable. Fixed costs are expenses that do not vary based on the amount of sales. Rent is one example, but most of a business’s other costs operate in this manner as well. While some costs vary from month to month, costs are described as variable only if they will increase if the company sells even one more item. Costs such as insurance, wages, and office supplies are typically considered fixed costs. Variable costs fluctuate with the level of sales revenue and include items such as raw materials, purchases to be sold, and direct labor. With this information, you can calculate your breakeven point—the sales level at which your business has neither a profit nor a loss. 47 Projections should be more than just numbers: include an explanation of the underlying assumptions used to estimate the venture’s income and expenses.

Projected cash flow outlines preliminary expenses, operating expenses, and reserves—in essence, how much you need before starting your company. You want to determine when you expect to receive cash and when you have to write a check for expenses. Your cash flow is designed to show if your working capital is adequate. A balance sheet shows assets and liabilities, necessary for reporting and financial management. When liabilities are subtracted from assets, the remainder is owners’ equity. The financial concepts and statements introduced here are discussed fully in Entrepreneurial Finance and Accounting .

Market Feasibility Analysis

A market analysis enables you to define competitors and quantify target customers and/or users in the market within your chosen industry by analyzing the overall interest in the product or service within the industry by its target market Figure 11.14 . You can define a market in terms of size, structure, growth prospects, trends, and sales potential. This information allows you to better position your company in competing for market share. After you’ve determined the overall size of the market, you can define your target market, which leads to a total available market (TAM) , that is, the number of potential users within your business’s sphere of influence. This market can be segmented by geography, customer attributes, or product-oriented segments. From the TAM, you can further distill the portion of that target market that will be attracted to your business. This market segment is known as a serviceable available market (SAM) .

Projecting market share can be a subjective estimate, based not only on an analysis of the market but also on pricing, promotional, and distribution strategies. As is the case for revenue, you will have a number of different forecasts and tools available at your disposal. Other items you may include in a market analysis are a complete competitive review, historical market performance, changes to supply and demand, and projected growth in demand over time.

Are You Ready?

You’ve been hired by a leading hotel chain to determine the market and financial potential for the development of a mixed-use property that will include a full-service hotel in downtown Orlando, located at 425 East Central Boulevard, in Orlando, Florida. The specific address is important so you can pinpoint existing competitors and overall suitability of the site. Using the information given, conduct a market analysis that can be part of a larger feasibility study.

Work It Out

Location feasibility.

You’re considering opening a boutique clothing store in downtown Atlanta. You’ve read news reports about how downtown Atlanta and the city itself are growing and undergoing changes from previous decades. With new development taking place there, you’re not sure whether such a venture is viable. Outline what steps you would need to take to conduct a feasibility study to determine whether downtown Atlanta is the right location for your planned clothing store.

Applying Feasibility Outcomes

After conducting a feasibility analysis, you must determine whether to proceed with the venture. One technique that is commonly used in project management is known as a go-or-no-go decision . This tool allows a team to decide if criteria have been met to move forward on a project. Criteria on which to base a decision are established and tracked over time. You can develop criteria for each section of the feasibility analysis to determine whether to proceed and evaluate those criteria as either “go” or “no go,” using that assessment to make a final determination of the overall concept feasibility. Determine whether you are comfortable proceeding with the present management team, whether you can “go” forward with existing nonfinancial resources, whether the projected financial outlook is worth proceeding, and make a determination on the market and industry. If satisfied that enough “go” criteria are met, you would likely then proceed to developing your strategy in the form of a business plan.

What Can You Do?

Love beyond walls.

When Terence Lester saw a homeless man living behind an abandoned, dilapidated building, he asked the man if he could take him to a shelter. The man scoffed, replying that Lester should sleep in a shelter. So he did—and he saw the problem through the homeless man’s perspective. The shelter was crowded and smelly. You couldn’t get much sleep, because others would try to steal your meager belongings. The dilapidated building provided isolation away from others, but quiet and security in its own way that the shelter could not. This experience led Lester to voluntarily live as a homeless person for a few weeks. His journey led him to create Love Beyond Walls (www.lovebeyondwalls.org), an organization that aids the homeless, among other causes. Lester didn’t conduct a formal feasibility study, but he did so informally by walking in his intended customers’ shoes—literally. A feasibility study of homelessness in a particular area could yield surprising findings that might lead to social entrepreneurial pursuits.

  • What is a social cause you think could benefit from a formal feasibility study around a potential entrepreneurial solution?
  • 46 Ulrich Kaiser. “A primer in Entrepreneurship – Chapter 3 Feasibility analysis” University of Zurich Institute for Strategy and Business Economics . n.d. https://docplayer.net/7775267-A-primer-in-entrepreneurship-chapter-3-feasibility-analysis.html
  • 47 In a preliminary financial model and business plan, startup costs should be allocated, as they are intended for one-time investments in development; pre-launch costs and other necessary expenses will not carry over once the product/solution has launched.

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  • Authors: Michael Laverty, Chris Littel
  • Publisher/website: OpenStax
  • Book title: Entrepreneurship
  • Publication date: Jan 16, 2020
  • Location: Houston, Texas
  • Book URL: https://openstax.org/books/entrepreneurship/pages/1-introduction
  • Section URL: https://openstax.org/books/entrepreneurship/pages/11-3-conducting-a-feasibility-analysis

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  • How to Conduct a Feasibility Study the Right Way

customer feasibility study meaning

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customer feasibility study meaning

All businesses have to critically examine the actions they take, whether the business is just starting out or has been in operation for a while. Establishing the viability of an idea or action can ultimately determine whether a business succeeds or not. The best tool for determining this is by conducting a feasibility study.

How to Conduct a Feasibility Study the Right Way

© Shutterstock.com | Rawpixel.com

In this guide, we will examine what a feasibility study entails and when it should be used . We’ll then outline the five key elements of a feasibility study and provide you with six steps for conducting one within your organization . Lastly, you’ll see some examples of feasibility studies .

WHAT IS A FEASIBILITY STUDY?

A feasibility study is a study, which is performed by an organization in order to evaluate whether a specific action makes sense from an economic or operational standpoint. The objective of the study is to test the feasibility of a specific action and to determine and define any issues that would argue against this action.

The question a feasibility study essentially tries to answer is: “ Should we proceed with the specific action plan? ” On top of determining whether the plan is viable, organizations can use a feasibility study for understanding the risks better and preparing for them.

It’s important to remember that a feasibility study is not the same as a business plan. A business plan provides a planning function and defines the actions needed to take a business idea into reality, whereas a feasibility study provides an investigation into a specific function and whether it’s viable.

While it’s important to conduct both plans before setting up a company, a business plan should only be conducted once the business has been deemed viable by a feasibility study.

When should a feasibility study be used?

While feasibility studies are typically conducted by business organizations, other organizations can naturally benefit from it as well. Since the study aims to discover whether an action is viable, it can help organizations to avoid costly or operationally exhausting ventures.

The study is typically used in situations where an important strategic decision needs to be taken .

This can vary and some of the example situations include:

  • Change in business location
  • Purchase of new equipment or software
  • Acquisition of another company
  • Hiring of additional employees

As mentioned above, a feasibility study is often at the core of launching a business. It can be the key to launching a successful start-up, as it helps to underline the future pain points and to determine whether the plan is viable in the first place.

Overall, a feasibility study is the perfect tool for situations where the impact is likely to be big in terms of operational or economic significance.

David E. Gumpert nailed the essential importance of a feasibility study in his book How to Really Create a Successful Business Plan . When discussing the possible failure of a feasibility study (i.e. the negative result), Gumpert wrote, “ Although [an unsuccessful feasibility study] may appear to be a failure, it’s not. The failure would have been if you had invested your own and others’ money and then lost it due to barriers you failed to research in advance. ”

Finally, you can watch the below video to understand the importance of a feasibility study for business success through a simple example:

CORE ELEMENTS OF A FEASIBILITY STUDY

You’ll need to study the main elements when conducting a feasibility study. While these are often all required for conducting a study, you might sometimes focus mostly on a single element or a combination of a few of them.

#1  Technical feasibility

The first element deals with technical feasibility of the proposed action plan. If your organization is introducing a new product or a service, the technical feasibility study will determine if it’s a technically viable action.

This part of the feasibility study should answer the following questions :

  • What is the proposed product or service?
  • Is the product or service already on sale? If not, how far is it from an existing marketplace and what will the introduction cost?
  • How can you protect the product or service from the competition?
  • What are the strengths of the product or service?
  • What are the main benefits to customers or users?
  • What resources are required for producing or providing it?
  • How capable is the organization to acquire these resources?
  • What are the regulatory standards surrounding the product or service and its use?

Remember the above questions can be used when you are introducing a new product or launching a business, but also if you are implementing a new product or service within your organization. For instance, if you are introducing new software, you must understand the strengths of it, as well as the resources required for implementing it.

#2  Market feasibility

The second element focuses on testing the market for the proposed action or idea. It examines issues like whether the product or service can be sold at reasonable prices or if there’s a marketplace for it.

Market feasibility should answer the following questions :

  • What market segments are you targeting?
  • Why would people buy the product or service?
  • Who are the potential customers and how many of them are there?
  • What are the buying patterns of these potential customers?
  • How will you sell the product or service? Where?
  • Who are your competitors? Including past, current and future competitors.
  • What are the strengths and weaknesses of your competitors?
  • What is your product or service’s competitive edge?

The above essentially points out to the importance of conducting market research as part of your feasibility study. Market feasibility is an important part of a feasibility study when the plan of action deals with issues such as business expansion, new product or service launch, product development and starting up a business.

#3  Commercial feasibility

Commercial feasibility is an element of the study focused on the probability of commercial success. It’s mainly focused on studying the new business or a new product or service, and whether your organization can create enough profit with it.

The questions that require answering as part of the commercial feasibility study include:

  • What are the strengths and weaknesses of your business?
  • What are the potential sales volumes of the product or service?
  • What is the pricing structure you’ll use?
  • What are the sensitivity points for your business in terms of sales?
  • What is the ROI ?

Furthermore, if you are conducting a feasibility study as part of launching a business , you also need to answer the following questions:

  • How long can your business survive without a sale?
  • How long before you break even with the product or service?
  • How much money is required to start operating?
  • Will your organization require external finance?

While the above points are mainly important for new businesses, any organization can benefit from thinking about them when launching a new operation.

For example, if you are adding a new product line to your business, you should use the above questions as a guide to understanding the implications to your other operations and the financial viability of the new product.

#4 Overall risk assessment

The fourth element focuses on the major risks the proposed plan can entail. The overall risk assessment part of a feasibility study examines the different ways your organization can reduce the risk of embarking on the new action.

The overall risk assessment should answer the following questions :

  • What are the major risks associated with the operation?
  • What is the survival outlook for each of the above risks?
  • How sensitive are the profits?
  • What are the best ways to minimize these risks?

The aim is to try to cover all the possibilities and create a risk assessment map, which deals with the probability of the risk and the impact it would have on the business. It’s aimed at recognizing the risks that can make or break your business from the smaller, more manageable risks.

For instance, consider your business is conducting a feasibility study in order to hire a new employee. One risk might deal with the possibility the hire is an inadequate fit and leaves after six month trial period. But your risk assessment might show that while the risk of this is relatively high, the survivability of your business doesn’t depend on it. For example, the cost of a bad hire could be low due to your recruitment strategy or the position not being essential for operations.

This is how you can create your own risk assessment map .

[slideshare id=1707548&doc=riskmanagementframework-090710200059-phpapp01&w=640&h=330]

In addition, if you are launching a new business, the overall risk assessment should also consider one final question. Answering the question “ When can your business be able to support you and itself without extra financing? ” is an important part of a feasibility study. Self-sufficiency is crucial for business success, as having to borrow can hinder the long-term survivability of your business.

#5 Feasibility of purchasing an existing business

The final essential element of a feasibility study is not necessarily relevant to every business. Nonetheless, it is an important aspect to keep in mind, as it deals with the impact of acquiring a new business. This is not only relevant to new businesses, as your organization might acquire a new business as part of its growth strategy.

The purpose of this final element is to study whether purchasing an existing business is a sound investment to make. It requires your organization to answer questions such as :

  • Why is the current owner selling the business?
  • What is the business’ performance? If it’s poor, what are the reasons behind it?
  • What is the competition like?
  • What is the valuation of the assets included in the sale?
  • What are the advantages and disadvantages of the current business location? Is your organization continuing operations in the same premises or not? Why?

STEPS TO CONDUCTING A FEASIBILITY STUDY

Now that we’ve examined the different core elements of a feasibility study, we can look at the steps you need to take in order to conduct a feasibility study.

Step 1: Conduct preliminary analysis

A feasibility study can be a time-consuming process and it doesn’t come without its costs. It’s therefore auspicious to start by conducting preliminary analysis . This is essentially a pre-screening of the proposed action and it examines whether a proper feasibility assessment is worth the time and money.

For example, before you conduct a feasibility study on the viability of acquiring a business, you want to check quickly the overall attainability of the action. If the acquisition is so risky that it could bankrupt your business, there’s no reason for conducting a proper feasibility study.

Preliminary assessment should consist of the following steps:

  • First, you want to outline the planned idea or action . This means looking at what you are looking to achieve and why.
  • Second, you should examine the market space and the commercial viability of the action . You want to get an overall feel of what type of customers are you potentially attracting.
  • Third, you should examine the unique characteristics of the idea and whether they are strength or a weakness. The idea or action might have certain unique characteristics (i.e. location, price, usability) and these might help your organization.
  • Fourth, you need to determine if there are insurmountable risks to the action . It’s essential to outline any risks that could possibly reduce the viability of the action or idea close to zero.

Keep in mind the above is just to get an overall feel of the idea. You don’t need to conduct full market research at this point, but simply understand whether there’s any kind of space for the action within the market.

If your preliminary analysis doesn’t find any insurmountable obstacles and the commercial viability is possibly there, you can continue with the proper feasibility study.

Step 2: Outlining the project scope and conducting current analysis

Next, you should move on to outlining the project scope by defining the area of study for the feasibility study. Do you need to look at all five elements of the study, for example?

The scope must be detailed and outline the objectives of the feasibility study clearly. It’s a good idea to examine the above five elements in terms of your action or idea and create an action plan for each section that applies to the project.

It’s essential to study the different parts of your business that might be influenced by the proposed action or idea, even when you aren’t proposing something that impacts the whole business directly (i.e. launching a new product, acquiring a business or starting a business). Actions, such as hiring new personnel to a single department, can sometimes have an impact on sectors that might not immediately seem obvious.

The key to outlining the scope is about understanding the different participants and end-users of the proposed idea or action. For instance, if you are moving the business to new premises, you have to understand the impact it’ll have on the workforce (change in commute can an impact on employee morale, etc.) and the customer (will all customers follow your business to a new location, etc.).

Finally, you also need to analyze the current situation prior to the implementation of the idea or action. You can do so by describing the weaknesses and strengths of the business. Once you’ve done this, you can study the savings and the operational benefits you are hoping to achieve with the new proposal.

Step 3: Comparing your proposal with existing products/services

You’ll also need to research the current competitive landscape in order to understand whether the proposed idea or action is viable. Whether you are implementing a new software or equipment or launching your own new product, you need to compare the proposed product or service with other similar items on the market.

This might mean you need to compare the feasibility of your chosen software (for example, accounting platform) with other products on the market. What are the benefits of your proposed choice and what are the weaknesses? Are the risks associated with your chosen software smaller or bigger than those of competitive products?

The same analysis applies when launching a new product. Part of your feasibility study must then focus on understanding what the customers are looking for and whether your proposed idea answers these needs. You should also compare the proposed product with the existing products or services and focus on the advantages, as well as disadvantages, you might have.

Learn more about Porter’s five forces in this video.

Step 4: Examining the market conditions

You also need to examine the market conditions. There are four specific points when it comes to the analyzing market in terms of feasibility.

  • Defining the target market.
  • Studying the buying habits of the target market.
  • Understanding the sale and market share outlook of the proposal.
  • Outlining the product awareness required for the use of your product or service.

The main goal of this part of the feasibility study is to understand the revenue projection for implementing the proposed idea or action. You want to have a realistic understanding of the kind of sale numbers you can expect and the scope of the promotional activities you are required to undertake.

For example, in terms of product or service awareness, you must be able to determine the type of marketing required for potential customers to understand and be able to use the item.

Step 5: Understanding the financial costs

One of the most important steps for concluding a feasibility study involves calculating the financial costs related to the proposal. No matter what type of idea or action your organization is considering, the financial cost of it can be the major point in determining its viability.

The first rule of any successful business is the need to have income or it goes bust. Therefore, any action your organization takes has to examine the impact it’ll have on the income and profit of the business.

The financial costs associated with your proposed idea or action will naturally depend on the proposal. But you have to consider the following points in all instances:

  • The resources required to implement the idea or action.
  • The source for these resources: internal or external financing.
  • The realistic benefits of the idea or action , whether it’s sales figures, boost in productivity, or a cut in operational costs.
  • The break-even schedule for the proposal . This refers to the time it takes to a point when the profits from the idea or action equal the costs associated with it.
  • The financial risks associated with the idea or action . This can refer to risky market conditions, the probability of requiring more resources and so on.
  • The financial cost of failure . You also need to calculate the financial cost of the worst-case scenario. This can determine whether your business has the means of embarking on this new venture or not.

The likelihood of having to use estimates in the above calculations is relatively high. It’s important to conduct proper research and to be as realistic with your figures as possible. After all, positive surprises (for example, exceeding sales figures) are not difficult to manage, unlike overly positive calculations that turn out wrong.

Step 6: Reviewing and analysing data

Finally, you need to review your feasibility study carefully and examine the findings with time. A good rule of thumb is to simply take a step back and reflect on the research before jumping into conclusions.

After your study, look around and consider the following questions :

  • Are there any risks you weren’t aware of previously?
  • Have the market conditions changed?
  • Has the competition changed?
  • Is your business situation still the same, in terms of operations and economic situation?

If the conditions have changed, you can review these parts of the feasibility study. Once you’ve reviewed your results, you can go ahead with the final decision. The feasibility study should provide you the answer of either moving ahead with the proposed idea or action, or scrapping the idea and looking for something different.

EXAMPLES OF FEASIBILITY STUDIES

Use the following examples as inspirations for your own feasibility study.

Feasibility study for setting up a bakery .

[slideshare id=28843825&doc=feasibilitystudy-131203075213-phpapp02&type=d&w=640&h=330]

Feasibility study for setting up a water refilling station .

[slideshare id=40064756&doc=alphaedit-141009073249-conversion-gate02&type=d&w=640&h=330]

Feasibility study for setting up a poultry business .

[slideshare id=41782939&doc=feasibilitystudyaboutchicken-141119201619-conversion-gate02&type=d&w=640&h=330]

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Feasibility study: meaning, types & process.

Feasibility Study

Growing your company yields tremendous benefits, like increasing your market presence and profits. But it also makes it harder to run your organisation.

Your project managers need to ensure that your initiatives are doable. They can use several strategies to achieve this, one of which is to conduct a feasibility study.

In this entry, we’ll explain the basics of a feasibility study and list the most common types. We’ll also show you how to carry out your feasibility study.

Table of Contents

What Is a Feasibility Study?

Types of feasibility studies, elements of a feasibility study report, how to conduct a feasibility study, benefits of a feasibility study, freshbooks offers solutions for business owners, key takeaways.

Frequently Asked Questions

A feasibility study is an evaluation of proposed projects. It assesses various critical factors. These factors dictate the chance of success in the early stages of a new business venture.

The main factor a feasibility study considers is project practicality. In other words, it evaluates whether a business venture is viable. 

We determine whether a project is viable using market research of the proposed project. For this, we look at marketing strategy, a project’s cost, and data collection. We also look at the organisational structure and other feasibility factors of the project plan.

After conducting a feasibility study, you’ll know whether your idea is a good business opportunity. The study ensures your project is technically and legally viable. And it tells you if you have enough funds and other resources to finance the venture.

Sometimes, your projects might not be doable. They may be too resource-intensive, keeping you from allocating money to other departments. In other cases, you might not earn enough money to make the investment worthwhile.

Studies can involve many details, including the historical background of your project. Such studies often precede project implementation and technical development.

Here are a few other details you can find in a feasibility study:

  • Description of your products or services
  • Accounting statements
  • Information about management and current operations
  • Marketing policies and research
  • Market surveys
  • Legal requirements
  • Tax obligations
  • Financial data

Track Dollars And Sense

A feasibility study can have different operational and technological considerations. These depend on the type of study you want to conduct. Let’s take a look at each type of study.

Technical Feasibility

This type of study concerns technical resources available to your organisation. It reveals if you have enough technical resources to accomplish a proposed plan. It also shows if your management team can convert ideas into operational systems.

Financial Feasibility

There is also financial feasibility. As the name suggests, it tells you if you have enough money to cover your project’s costs. This preliminary analysis can also forecast the return on investment (ROI) and risks.

Financial viability studies have a simple goal. They highlight the economic advantages of your venture. Project management can use these studies to adjust ventures. Your team can also rely on them to see if there’s a more viable alternative.

Market Feasibility

Market feasibility evaluates how your project may perform in your target market. It also helps in developing a marketing strategy. The report includes the following points:

  • Market research
  • Sales projections
  • Breakdown of market competition

Organisational Feasibility

Organisational feasibility assesses if you have enough management capacity to launch a venture. This study should test your project managers based on their ability to execute ideas. The analysis can consist of several considerations:

  • The enthusiasm of your project managers and other team members about your idea
  • Industry expertise
  • Professional experience
  • Educational background

You need to be objective when conducting an organisational feasibility study. Be honest about your company and your team’s skill sets. Otherwise, you might lose a lot of money trying to launch a venture your organisation can’t afford.

A feasibility study report consists of the following elements: 

  • Executive summary
  • Description of product or service 
  • Technology considerations
  • Product or service marketplace 
  • Marketing strategy
  • Organisation or staffing
  • Schedule 
  • Financial projections 
  • Findings and recommendations 

The main part of a feasibility report is the executive summary. This section introduces the appropriate stakeholders and decision-makers to your project. It also provides the resources to back the legitimacy of your feasibility.

When you want to launch a new product or service to meet the expansion plans of your company, a feasibility study lets you do so. Below, we detail how to conduct one.

Preliminary Analysis

Creating your feasibility study takes time. Before you dive into the study, you need to assess your project to reveal any roadblocks. That’s where a preliminary analysis comes into play.

You can use a preliminary analysis to learn if the project needs more money than anticipated. You’ll discover if you need to change something or end the project to avoid straining finances.

A preliminary study doesn’t just offer financial projections. It also lets you figure out if you can complete the project on time. The venture isn’t viable if the preliminary analysis shows you can’t meet deadlines.

Discovering large-scale obstacles is a key part of the feasibility analysis. This step will help with project management so you meet your goals.

A financial feasibility study serves as your projected income statement. It clarifies project financials, such as what you need to invest in to achieve certain goals. It includes the amount of money and time necessary for the project.

When performing an economic feasibility report, consider if the venture impacts cash flow. Your project management team might also want to consult your financial team. They may need a detailed cost-benefit analysis to assess viability.

Market Assessment

Market evaluation allows you to identify the current demand. It outlines the amount of profit you can expect by completing a project. Additionally, it can involve the risks you may encounter.

The feasibility report is a great way to find profitable markets. You can use it to assess the position of your competitors and their/your demographics. Both of these will indicate the direction your project may take.

Prepare Your Opening-Day Balance Sheet

An opening-day balance sheet shows the position of your company at the start of the project. Its purpose is to tell you how much money you have available from the get-go. It’s a basis for tracking income and expenses.

The data in the balance sheet is key to making informed decisions. Here’s what it should include:

  • Cash on hand
  • Accounts receivable
  • Accounts payable
  • Prepaid expenses
  • Fixed assets
  • Notes payable
  • Long-term liabilities

Operational and Technical Evaluation

Your target market and financial resources may look good. But that alone doesn’t mean you’re ready to start the project. You still need to perform an operational and technical evaluation. Doing so indicates if you can afford the initiative.

For example, you may need to consider the equipment and staff necessary for your project. The analysis may involve time feasibility and outline the necessary skills.

You might also want to think about the potential legal effects of your initiative. This especially holds true if your project involves developing patents for your products. If that’s the case, you need to conduct legal feasibility. This step will reveal if the venture meets legal requirements.

Review of Risk Points

At this point, your project management team has analysed several elements. These include:

  • Operational feasibility
  • Market analysis

Before they make recommendations, they should review the information for any weak points. They need to pinpoint any liabilities and develop a contingency plan.

You might not always get a clear-cut answer—especially if you want to complete a complex project. But at least reviewing potential hurdles allows you to reconsider your initiative again. This step should also pinpoint answers that will help you make smart moves.

Decision-Making

The final stage summarises the operating costs, projected benefits, and organisational structure. It should touch on critical points for project management and propose a solution.

In some cases, you may want to share the study with stakeholders or other members of the business. This way, they will see how much they can gain from your project.

There are many reasons to do a feasibility study before every project, including:

Listing Potential Benefits

Just because you can complete a project, doesn’t mean you should. It might strain your resources in other areas. It can also prevent you from pursuing future projects that would offer a larger ROI.

A project feasibility study demonstrates the risk-to-reward ratio, overall return, and opportunity costs. These tell you whether you should begin, postpone, or scrap your venture altogether.

Identifying Optimal Timing

If your feasibility study doesn’t consider the time of year of the project, reevaluate it. The projected results may change depending on the season.

For example, a project might be easier to do in winter than in spring. It may cause less stress on your project management team and help in other key areas, such as:

  • Financing options
  • Supply chain
  • Production capacity

Projecting Cash Flow

A feasibility analysis is beneficial because it shows your cash flow at the start of the project. It determines if you need to delay your venture until you collect more cash.

For instance, the proposed project sales might be good in January. However, you may also need to repay your creditors that same month. This can limit the amount of available cash and prevent you from financing your project. A feasibility study can predict this and prevent any issues.

Analysing Labour

A feasibility study doesn’t just look at the number of team members available for a project. It also tells you if they’re skilled enough to carry out the venture.

Suppose you’re launching a new magazine. You have a large number of graphic artists with free schedules. They have plenty of time to work on the project, but they may not have mastered the following elements:

  • Creating magazine grids
  • Print typography
  • Developing departments, feature layouts, columns, and other sections

A feasibility study provides an overview of their experience and skill sets. You can use this information to determine if your staff has the expertise to launch your product.

Managing Supply Chain

Some projects might seem like sure things. The finances and technical resources check out, so everything looks great. 

But these projects may still stress your company. For instance, they may need a lot of marketing planning. If the marketing staff already works at full capacity, they’ll need to multitask. This can lower their productivity.

Also, the project can strain your production, warehousing, shipping, and billing. A feasibility study clarifies whether the project is worth the effort.

Does all this preparation seem overwhelming? If it does, consider FreshBooks’s Project Management and Team Collaboration software. 

This all-in-one solution allows you to organise your files and documents in one place. Plus you can collaborate with team members and stakeholders and track project profitability. In the end, you’ll save tons of time and money.

Raise a Hand If You Know Which Projects Are Profitable

Launching a product or service sometimes feels like taking a shot in the dark. But you can reduce a lot of your uncertainty with a feasibility study. This study helps you evaluate projects by looking at several critical factors.

A feasibility study should include data like market research and a company’s financial resources. It should also include technical requirements and operational feasibility. All this data helps you make the right decision and reduce unnecessary costs.

Integrate with software from FreshBooks for all your feasibility study needs.

FAQs About Feasibility Studies

Who conducts a feasibility study.

The project management team conducts feasibility studies. But sometimes they may delegate the process to senior staff. This happens if they don’t have the right knowledge or time to complete the study.

What Is ROI in a Feasibility Study?

The ROI in your feasibility study tells you the profitability of your investment. It compares potential gains to costs. To calculate ROI, you need to divide the return on investment by the cost of your investment. The results are then expressed as a ratio or percentage.

Is a Feasibility Study Qualitative or Quantitative?

A feasibility study can be both qualitative and quantitative. For example, it can reveal the number of workers required for a project (quantitative). And at the same time, it can reveal the profiles of these workers (qualitative).

What Is the Difference Between a Business Plan and a Feasibility Study?

A business plan keeps track of financial and operational goals. It also outlines plans for how to achieve these goals. On the other hand, a feasibility study reveals whether the goals are possible.

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What is a feasibility study (definition and overview).

If you're interested in breaking into finance, check out our Private Equity Course  and Investment Banking Course , which help thousands of candidates land top jobs every year.

Feasibility Study Decoded

A feasibility study is a comprehensive and systematic analysis that evaluates the practicality of a proposed project or system.

The depth and breadth of a feasibility study can vary significantly based on the project or investment's nature. However, at its core, typical research will feature five key components.

Market Feasibility

An understanding of the market landscape is essential for any business venture. For instance, when Amazon acquired Whole Foods in 2017, a thorough market analysis would have been crucial. Market feasibility includes:

Identifying The Target Market: Understanding customer demographics, needs , and purchasing habits.

Competitive Analysis: Assessing the competition, its strengths, and weaknesses.

Market Trends and Dynamics: Scrutinizing industry trends, growth rates, and expected market share.

Feasibility Study

Technical Feasibility

This component assesses the resources required to turn the project from a proposal into reality. Tesla's Gigafactory in Nevada is a prime example of assessing technical feasibility, as it requires extensive resources. Factors to consider include:

Required Technology and Resources : What technology, machinery, and materials are required?

Production Processes : What processes are necessary to produce the goods or services?

Operational Capabilities : Can your team meet the operational demands?

Financial Feasibility

Financial feasibility is a critical aspect of any feasibility study. For example, when Microsoft acquired LinkedIn for $26.2 billion, a rigorous financial feasibility study would have been pivotal. Key considerations include:

Capital Requirements and Funding Sources: How much will the project cost, and where will the funding come from?

Cost-benefit Analysis: Will the benefits outweigh the costs over time?

Projected Financial Performance: What are the projected revenues, cash flow, and profitability?

Organizational Feasibility

An often overlooked aspect of feasibility studies is organizational feasibility — evaluating whether your company has the capability to manage the project successfully . When Google restructured to become Alphabet Inc. in 2015, organizational feasibility would have been critical. Factors to consider include:

Management Structure and Team: Do you have the right team and leadership in place to execute the project?

Legal and Regulatory Considerations: Are there any legal hurdles or requirements that must be addressed?

Risk Management: What potential risks are there, and how will they be mitigated?

Environmental/Social Impact Feasibility

In today's world, businesses must be mindful of their environmental and social impact . Consider Patagonia's dedication to environmental responsibility as an example. Feasibility in this aspect includes:

Environmentally Sustainable Practices: Will the project adhere to environmental standards and promote sustainability?

Social Impact and Community Acceptance: What is the potential social impact, and how will the community react?

Legal and Regulatory Compliance: Are there any environmental laws or regulations that need to be considered?

If you're interested in breaking into finance, check out our Private Equity Course and Investment Banking Course , which help thousands of candidates land top jobs every year.

Common Mistakes and Pitfalls to Avoid When Conducting a Feasibility Study

A well-conducted feasibility study can provide a wealth of information, helping you make informed and strategic decisions. However, as valuable as these studies can be, they can also lead to costly mistakes if not executed properly. Let's dive into four common pitfalls and how to avoid them.

Insufficient Market Research

One of the most common pitfalls when conducting a feasibility study is inadequate market research. This lack of insight can lead to misconceptions about the demand for a product or service, its market value, or the competitive landscape .

Insufficient Market Reseach

For instance, the mobile streaming platform Quibi made headlines in 2020 for its rapid rise and even quicker downfall. Despite significant investment, the platform was shut down just six months after launch, largely due to a misunderstanding of market trends and consumer behavior. Prevention:

To avoid this pitfall, it's crucial to invest time and resources into comprehensive market research. This involves understanding the target audience, competition, pricing, market trends, and other key factors. Utilize both primary and secondary sources of information for a well-rounded perspective.

Unrealistic Financial Projections

Another common mistake is making unrealistic financial projections. This error often stems from overly optimistic assumptions about revenues, costs, or market penetration rates .

For example, Pets.com became infamous for its financial missteps during the dot-com bubble in the early 2000s. The company, like many others at the time, overestimated the market demand and underestimated the logistical costs, leading to its demise.

Prevention:

To avoid this, you should always adopt a conservative approach when making financial projections. This includes estimating revenues, costs, cash flows, and return on investment. It's also crucial to conduct a sensitivity analysis to understand how changes in assumptions can impact financial outcomes.

Ignoring Legal and Environmental Factors

Often, feasibility studies focus too heavily on market and financial factors and overlook important legal and environmental considerations. These could include regulatory requirements, potential legal disputes, and environmental impacts, among other things.

A prime example of the fallout from ignoring these aspects is the Volkswagen emission scandal . The automaker faced huge fines and a significant hit to its reputation after it was discovered it had installed software in cars to cheat emission tests.

To circumvent this, ensure that your feasibility study includes a thorough review of all relevant legal, regulatory, and environmental factors. If necessary, seek expert advice to help you navigate these complex areas.

Overlooking Organizational Capacity

Organizational Capacity

A final common mistake is underestimating the organizational capabilities needed to execute the project. This encompasses aspects like the team's skills and experience , management structures, and internal processes.

A cautionary tale in this regard comes from the merger of HP and Compaq . The integration led to organizational chaos, with cultural clashes, leadership issues, and a lack of clear strategy causing significant problems.

To avoid this, it's essential to conduct an honest assessment of your organization's capacity and readiness for the project. This should include looking at the skills and knowledge of the team, as well as the processes and structures in place to support the project's execution.

Feasibility studies are an integral part of the investment and project planning process. By carefully considering market, technical, financial, organizational, and environmental factors, you can make informed decisions that optimize your chance of success.

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feasibility study

Definition of feasibility study

Examples of feasibility study in a sentence.

These examples are programmatically compiled from various online sources to illustrate current usage of the word 'feasibility study.' Any opinions expressed in the examples do not represent those of Merriam-Webster or its editors. Send us feedback about these examples.

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“Feasibility study.” Merriam-Webster.com Dictionary , Merriam-Webster, https://www.merriam-webster.com/dictionary/feasibility%20study. Accessed 21 Feb. 2024.

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Table of Contents

What is a feasibility study, understanding a feasibility study, types of feasibility study, importance of feasibility study, benefits of a feasibility study, what is included in a feasibility study report, tools for conducting a feasibility study, examples of a feasibility study, what is the purpose of a feasibility study, how do you write a feasibility study, 7 steps to do a feasibility study, how to conduct a feasibility study, feasibility study vs. business plan, reasons to do or not to do a feasibility study, enroll today with these pgp on project management to enhance your skills, feasibility study and its importance in project management.

Feasibility Study and Its Importance in Project Management

Reviewed and fact-checked by Sayantoni Das

The growth and recognition of project management training have changed significantly over the past few years, and these changes are expected to continue and expand. And with the rise of project management comes the need for a feasibility study.

It can be thrilling to start a complex, large-scale project with a significant impact on your company. You are creating real change. Failure can be scary.  This article will help you get started if you have never done a feasibility study on project management.

Getting certified as a project management professional is simple with Simplilearn's PMP Certification . Take advantage of this opportunity by enrolling now.

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6% Growth in PM Jobs By 2024 - Upskill Now

A feasibility study is a comprehensive evaluation of a proposed project that evaluates all factors critical to its success in order to assess its likelihood of success. Business success can be defined primarily in terms of ROI, which is the amount of profits that will be generated by the project.

A feasibility study evaluates a project's or system's practicality. As part of a feasibility study, the objective and rational analysis of a potential business or venture is conducted to determine its strengths and weaknesses, potential opportunities and threats, resources required to carry out, and ultimate success prospects. Two criteria should be considered when judging feasibility: the required cost and expected value.

As the name implies, a feasibility analysis is used to determine the viability of an idea, such as ensuring a project is legally and technically feasible as well as economically justifiable. It tells us whether a project is worth the investment—in some cases, a project may not be doable. There can be many reasons for this, including requiring too many resources, which not only prevents those resources from performing other tasks but also may cost more than an organization would earn back by taking on a project that isn’t profitable.

A well-designed study should offer a historical background of the business or project, such as a description of the product or service, accounting statements, details of operations and management, marketing research and policies, financial data, legal requirements, and tax obligations. Generally, such studies precede technical development and project implementation.

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Project management is the process of planning, organizing, and managing resources to bring about the successful completion of specific project goals and objectives. A feasibility study is a preliminary exploration of a proposed project or undertaking to determine its merits and viability. A feasibility study aims to provide an independent assessment that examines all aspects of a proposed project, including technical, economic, financial, legal, and environmental considerations. This information then helps decision-makers determine whether or not to proceed with the project.

The feasibility study results can also be used to create a realistic project plan and budget. Without a feasibility study, it cannot be easy to know whether or not a proposed project is worth pursuing.

A feasibility analysis evaluates the project’s potential for success; therefore, perceived objectivity is an essential factor in the credibility of the study for potential investors and lending institutions. There are five types of feasibility study—separate areas that a feasibility study examines, described below.

1. Technical Feasibility

This assessment focuses on the technical resources available to the organization. It helps organizations determine whether the technical resources meet capacity and whether the technical team is capable of converting the ideas into working systems. Technical feasibility also involves the evaluation of the hardware, software, and other technical requirements of the proposed system. As an exaggerated example, an organization wouldn’t want to try to put Star Trek’s transporters in their building—currently, this project is not technically feasible.

2. Economic Feasibility

This assessment typically involves a cost/ benefits analysis of the project, helping organizations determine the viability, cost, and benefits associated with a project before financial resources are allocated. It also serves as an independent project assessment and enhances project credibility—helping decision-makers determine the positive economic benefits to the organization that the proposed project will provide.

3. Legal Feasibility

This assessment investigates whether any aspect of the proposed project conflicts with legal requirements like zoning laws, data protection acts or social media laws. Let’s say an organization wants to construct a new office building in a specific location. A feasibility study might reveal the organization’s ideal location isn’t zoned for that type of business. That organization has just saved considerable time and effort by learning that their project was not feasible right from the beginning.

4. Operational Feasibility

This assessment involves undertaking a study to analyze and determine whether—and how well—the organization’s needs can be met by completing the project. Operational feasibility studies also examine how a project plan satisfies the requirements identified in the requirements analysis phase of system development.

5. Scheduling Feasibility

This assessment is the most important for project success ; after all, a project will fail if not completed on time. In scheduling feasibility, an organization estimates how much time the project will take to complete.

When these areas have all been examined, the feasibility analysis helps identify any constraints the proposed project may face, including:

  • Internal Project Constraints: Technical, Technology, Budget, Resource, etc.
  • Internal Corporate Constraints: Financial, Marketing, Export, etc.
  • External Constraints: Logistics, Environment, Laws, and Regulations, etc.

The importance of a feasibility study is based on organizational desire to “get it right” before committing resources, time, or budget. A feasibility study might uncover new ideas that could completely change a project’s scope. It’s best to make these determinations in advance, rather than to jump in and to learn that the project won’t work. Conducting a feasibility study is always beneficial to the project as it gives you and other stakeholders a clear picture of the proposed project. 

Below are some key benefits of conducting a feasibility study:

  • Improves project teams’ focus
  • Identifies new opportunities
  • Provides valuable information for a “go/no-go” decision
  • Narrows the business alternatives
  • Identifies a valid reason to undertake the project
  • Enhances the success rate by evaluating multiple parameters
  • Aids decision-making on the project
  • Identifies reasons not to proceed

Apart from the approaches to feasibility study listed above, some projects also require other constraints to be analyzed -

Feasibility Study Infographic

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Preparing a project's feasibility study is an important step that may assist project managers in making informed decisions about whether or not to spend time and money on the endeavor. Feasibility studies may also help a company's management avoid taking on a tricky business endeavor by providing them with critical information.

An additional advantage of doing a feasibility study is that it aids in the creation of new ventures by providing information on factors such as how a company will work, what difficulties it could face, who its competitors are, and how much and where it will get its funding from. These marketing methods are the goal of feasibility studies, which try to persuade financiers and banks whether putting money into a certain company venture makes sense.

When starting a business, one of the most important steps is to conduct a feasibility study. This study will help to determine if your business idea is viable and has the potential to be successful. Several factors need to be considered when conducting a feasibility study, including the marketability of your product or service, the competition, the financial stability of your company, and more. A feasibility study should cover the amount of technology, resources required, and ROI.

The results of your feasibility studies study are summarized in a feasibility report, which typically comprises the following sections.

  • Executive summary
  • Specifications of the item or service
  • Considerations for the future of technology
  • The marketplace for goods and services
  • Approach to marketing
  • Organization/staffing
  • The financial forecasts
  • Recommendations based on research

Suggested Best Practices

While every project has its own goals and needs, the following are best practices for conducting a feasibility study.

  • Do a preliminary analysis. This includes getting feedback from relevant stakeholders on the new project. Also, look for other business scenarios.
  • To ensure that the data is solid, determine and ask queries about it in the initial phase.
  • Take a market survey to identify market demand and opportunities for the new concept or business.
  • Create an organizational, operational, or business plan. This includes identifying how much labor is required, what costs, and how long.
  • Make a projected income statement that involves revenue, operating expenses, and profit.
  • Create an opening day balance sheet.
  • You will need to identify and address any vulnerabilities or obstacles.
  • Take an initial decision to go ahead with the plan.

Suggested Components

Here are the some suggested components for conducting a feasibility study:

  • Executive Summary: Write a narrative describing the project, product, or service.
  • Technological considerations: Ask yourself what it will take. Are you able to afford it? How much will it cost?
  • Current marketplace: Find out the market for your product, service, or plan in the local and global markets.
  • Marketing strategy: Define in the detailed description.
  • Required staff: What human resources are needed for this project?
  • Timeline and schedule: Use important interim markers to indicate when the project will be completed.
  • Project financials. Project financials are the different ways managers can account for money spent and earned on projects. One of the most important aspects of financial management is creating and tracking accurate project financials.

A local university was concerned about the state of the science building, which was built in the 1970s. School officials sought to determine the costs and benefits of expanding and upgrading the building, given the scientific and technological advances over the past 20 years. A feasibility study was therefore conducted.

School officials looked at several options and weighed the costs and benefits of updating and expanding the science building. There were concerns expressed by school officials about the project's cost and public reaction. The proposed new science building will be larger than the current one. The community board rejected similar proposals in the past. The feasibility study will address these concerns and any possible legal or zoning issues.

The feasibility study examined the technology requirements of the proposed concept(new science building), the potential benefits for students, and its long-term viability. Modernizing the science facility will increase the scientific research potential and ameliorate its modules. It also would allure new students.

Financial projections provided information about the scope & cost of this project and also provided information on raising funds. This covers issuing an investor's bonds and tapping into its endowment. Projections also help determine how the new science program attracts more fresh students to enroll in offered programs, increasing tuition and fees revenue.

The feasibility study proved that the proposed concept was feasible, which allowed for the expansion and modernization of the science building. The feasibility study would not have allowed school administrators to know if the expansion plans were feasible without it.

A feasibility study is an important first step in starting a new business. It is a detailed examination of whether or not a proposed business venture is likely to be successful. A feasibility study aims to provide information that will help business owners make informed decisions about their new venture.

The feasibility study will answer important questions about the proposed business, including:

  • What is the target market for this business?
  • Who are the competitors?
  • What are the costs associated with starting and running this business?
  • What are the potential risks and rewards associated with this venture?
  • How much revenue can this business generate?
  • What are the estimated profits and losses for this business?
  • What is the potential for growth in this industry?

This feasibility study will outline why your business idea is worth pursuing and will also help you identify any potential risks or problems that could occur. When writing a feasibility study, there are a few key things to keep in mind:

  • Outline your target market and how you plan to reach them.
  • Discuss your product or service in detail and explain why it is unique and needed.
  • Outline your financial projections and explain how you plan to make a profit.

1. Conduct a Preliminary Analysis

A preliminary investigation is necessary to determine whether a full feasibility study is warranted. During this stage, key information will be gathered to assess the project's potential and make a preliminary decision about its feasibility. This should include a review of relevant documents, interviews with key personnel, and surveys of potential customers or users.

2. Prepare a Projected Income Statement

To do a feasibility study, you must create a projected income statement. Your projected income statement will show how much money your business is expected to make in the coming year. It will include both your estimated revenue and your estimated expenses. This document will be essential in helping you make informed decisions about your business.

3. Conduct a Market Survey, or Perform Market Research

Conducting market research is an important step in any feasibility study. By understanding the needs and wants of your potential customers, you can determine if there is a market for your product or service. You can also get an idea of what your competition is doing and how to best position your business to meet the needs of your target market.

There are a variety of ways to conduct market research. One popular method is to conduct a survey. You can survey potential customers directly or use data from secondary sources such as surveys conducted by other organizations. You can also use focus groups or interviews to get feedback from potential customers.

Once you have gathered your data, you can use it to create a profile of your ideal customer. This will help you understand your target market and how to reach them.

4. Plan Business Organization and Operations

When starting a business, one of the first things you need is to plan your organization and operations. This involves creating a structure for your company and figuring out the logistics of how you will run it. There are many factors to consider when planning your organization and operations, such as:

  • Company Structure: What type of company will you be (sole proprietorship, partnership, corporation, etc.)? What will the hierarchy look like?
  • Location: Where will your business be located? Will you have a physical storefront or operate online only?
  • Marketing: How will you promote your business?

5. Prepare an Opening Day Balance Sheet

The opening day balance sheet is a snapshot of the company's financial position at the beginning of the business venture. The purpose of the opening day balance sheet is to give an idea of the amount of money that the company has to work with and track its expenses and income as they occur. This information is vital to making sound business decisions. The opening day balance sheet will include the following:

  • Cash on hand
  • Accounts receivable
  • Prepaid expenses
  • Fixed assets
  • Accounts payable
  • Notes payable
  • Long-term liabilities

6. Review and Analyze All Data

The feasibility study should include reviewing and analyzing all data relevant to the proposed project. The data collected should be verified against source documentation, and any discrepancies should be noted. The purpose of the feasibility study is to provide a basis for making a decision, and the data should be sufficient to support that decision.

The analysis should consider both the positive and negative aspects of the proposed project. The financial analysis should be thorough, and all assumptions should be documented. The risk assessment should identify any potential risks and mitigation strategies. The team assigned to the project should review the feasibility study and recommend the organization's leadership.

Organizational leadership should decide whether to proceed with the project based on the feasibility study's findings. If the project is approved, the organization should develop a project plan that includes a detailed budget and timeline

7. Make a Go/No-Go Decision

It is important to know when to cut your losses when starting a business. The go/no-go decision in a feasibility study comes in. The go/no-go decision is a key part of a feasibility study, and it can help you determine whether or not your business idea is worth pursuing.

Making the go/no-go decision is all about risk assessment. You need to weigh the risks and rewards of starting your business and decide whether the potential rewards are worth the risks. If the risks are too high, you may want to reconsider your business idea.

Now, let's discuss a few of the steps we take in order to do the feasibility study.

  • To begin, we do a preliminary study of the business case to define what is included and what we are examining and attempting to find is realistic.
  • Following that, we generate a forecasted income statement. We need to understand the revenue sources; how are we going to profit from this? Where does the income originate? Additionally, we must do a market study.
  • We need to find out whether this is a demand for our product. How much demand does this have? Is there a market for this product or service?
  • Plan your company's structure and operations, which is the fourth step. Specifically, what type of organization do we need, and what resources do we have? Do we have any specific personnel needs?
  • We also plan to generate a balance sheet on the first day. What are the income and expenses, and how can we be confident we'll be able to decide whether we're going to make our ROI?
  • As a result, we plan to go through and examine all of our data before making a final decision on whether or not to go forward. In other words, are we going to pursue this project or business opportunity?

When starting a business, you must create two very important documents: a feasibility study and a business plan. While they may seem similar, they are two different things with different purposes.

A feasibility study is a preliminary document that assesses the feasibility of a proposed business. It looks at the market potential, the competition, the costs and benefits of starting the business, and the risks and rewards involved.

On the other hand, a business plan is a more detailed document that outlines how a business will be run and what its goals are. It includes information about its mission statement, its products and services, its target market, its finances, and its management team.

There are many factors to consider when deciding whether or not to conduct a feasibility study. The most important question is whether the study will help you make a better decision.

Some reasons to do a feasibility study include:

  • You are considering a major change or investment
  • You want to assess the viability of a new business or product
  • You need to understand the risks and potential rewards associated with a project

On the other hand, some reasons not to do a feasibility study include:

  • You are pressed for time and don't think the study will provide enough value to justify the time commitment.
  • You are confident that your idea is feasible, and a study will only confirm what you already believe.
  • The change or investment is not significant enough to warrant the study.
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This article introduces the concept of a feasibility study and provides a few tips on conducting one. A feasibility study is an important tool for evaluating a project before starting it. By understanding the feasibility of a project, you can make better decisions about whether to move forward.

We hope this helped you understand the concept of feasibility study better. To learn more about similar project management concepts , explore our library of Project Management articles or check out our Post Graduate Program in Project Management that covers new trends, emerging practices, tailoring considerations, and core competencies required of a Project Management professional .

Q1. What Is the Main Objective of a Feasibility Study?

Feasibility study helps decision makers to determine the success or failure of a proposed project or investment. It evaluates the predicted cost and benefits of the proposed project. 

Q2. What Are the Steps in a Feasibility Study?

The first step in a feasibility study is to conduct the primary analysis and create the projected income statement. Followed by doing a market survey and accordingly planning business operations. The last step is to create a balance sheet to review and analyze data. Based on your analysis, you can decide whether to go or not go ahead with the proposed statement. 

Q3. Who Conducts a Feasibility Study?

Feasibility study is done by the senior management of the organization. Sometimes, they take help from mid-senior employees to complete the analysis in short span of time. 

Q4. What Are the 5 Types of Feasibility?

The 5 types of feasibility study are Scheduling Feasibility, Operational Feasibility, Legal Feasibility, Economic Feasibility, and Technical Feasibility. 

Q5. Why is a Feasibility Study Important?

A feasibility study helps in identifying the financial, market and logistical challenges of a proposed project. It is done by evaluating the estimated funds for the project and return of investment.

Q6. When is the Feasibility Study Done?

The feasibility study is done before the business plan is created. 

Q7. What is the Primary Purpose of Conducting a Feasibility Analysis?

The objective of feasibility study is to assess the financial viability of developed plan and whether it will be successful or not.

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Feasibility study: definition, benefits and differences with a Business Plan

  • Last updated on 09 January, 2024

Welcome to our series of articles on feasibility studies.

  • What is a Feasibility study?
  • What is a bankable feasibility study?
  • How to do a feasibility study?
  • Feasibility study consultants: expertise needed
  • Cost of a feasibility study
  • Car Park Feasibility Study: Key considerations
  • Hotel Feasibility Study: Methodology
  • Feasibility study of solar PV projects: Key components
  • Feasibility study of real estate developments
  • Feasibility study of marina projects

In this post, we will touch on all the basic concepts behind a feasibility study. definition, benefits of doing it, main parts, differences with a business plan, etc. Aninver Development Partners is a consulting firm specializing in Feasibility studies for projects such as hotels, infrastructure, energy, technology, etc. We assist clients globally. 

Definition of Feasibility study

A feasibility study is a comprehensive and systematic analysis and evaluation of a proposed project, business venture, or initiative to determine its practicality, viability, and potential for success. It involves a thorough examination of various factors, such as financial, technical, operational, legal, environmental, and market-related aspects, to assess whether the project is feasible and worth pursuing. 

The primary goal of a feasibility study is to provide stakeholders with essential information and insights to make informed decisions about whether to proceed with the project, abandon it, or make necessary adjustments to enhance its chances of success.

Differences between a feasibility study and a business plan

Feasibility studies and business plans are both important tools in the development and evaluation of a business or project, but they serve different purposes and are created at different stages of the process. Here are the key differences between a feasibility study and a business plan:

Differences in Purpose

  • Feasibility Study : Feasibility studies are conducted in the early stages of project development or business planning. Their primary purpose is to determine whether a proposed project or business idea is viable and should be pursued. Feasibility studies focus on assessing the potential risks, challenges, and opportunities associated with the project.
  • Business Plan : Business plans are created after the feasibility study, once it has been established that the project is viable. The purpose of a business plan is to outline in detail how the business will be structured, operated, and grown. It serves as a roadmap for the future of the business and is often used to secure financing.

Differences in Content

  • Feasibility Study : A feasibility study includes an analysis of the project's overall concept, market research, technical requirements, financial projections, potential risks, and recommendations. It provides a high-level overview of the project's feasibility.
  • Business Plan : A business plan is a detailed document that outlines the company's mission, vision, goals, organizational structure, market strategy, marketing and sales plans, financial forecasts, and operational details. It delves into the specifics of how the business will operate.

Differences in Timing

  • Feasibility Study : Feasibility studies are conducted at the outset of a project or business idea to assess its potential feasibility. They help stakeholders decide whether to move forward with the project.
  • Business Plan : Business plans are typically created after the feasibility study, once it has been determined that the project is feasible and worth pursuing. They provide a roadmap for the actual operation and growth of the business.

Differences in Audience

  • Feasibility Study : The primary audience for a feasibility study includes project stakeholders, investors, and decision-makers who need to determine whether the project should proceed.
  • Business Plan : Business plans are used to communicate the business's vision and strategy to a wider audience, including potential investors, lenders, partners, and employees.

In summary, a feasibility study is a preliminary assessment of the potential success of a project, while a business plan is a detailed document that outlines how a business will be run. The feasibility study helps determine whether a business plan should be developed, while the business plan provides a comprehensive strategy for the ongoing operation and growth of the business.

Feasibility study vs Pre-feasibility study

Let's explore now the key differences between a prefeasibility study and a feasibility study:

Purpose and Scope : A prefeasibility study and a feasibility study both play critical roles in project evaluation, but they serve distinct purposes. A prefeasibility study is typically the initial phase in the assessment process. Its primary purpose is to provide a preliminary evaluation of a project's potential viability. It helps stakeholders decide whether it's worth investing further resources into a detailed feasibility study. In contrast, a feasibility study goes into much greater depth and detail, assessing the project's practicality from technical, financial, operational, and market perspectives. It aims to provide a comprehensive understanding of whether the project is feasible and worth pursuing.

Level of Detail : One of the key distinctions between the two studies is the level of detail they encompass. A prefeasibility study offers a broad overview of the project, examining high-level factors like market demand, technical requirements, and rough cost estimates. It provides enough information to make an initial go/no-go decision. In contrast, a feasibility study drills down into finer details, providing precise financial projections, risk assessments, engineering specifics, and a comprehensive business plan. It seeks to leave no stone unturned in assessing the project's practicality.

Resource and Cost Implications : A prefeasibility study is generally less resource-intensive and cheaper to conduct compared to a full feasibility study. It acts as a cost-effective filter to eliminate unviable projects early in the evaluation process. Once a project passes the prefeasibility stage and proceeds to a feasibility study, it implies a commitment of more resources, time, and finances due to the comprehensive nature of the study. A prefeasibility study helps in efficient resource allocation by focusing only on the most promising projects, while a feasibility study is a more intensive process suitable for projects that have demonstrated a higher likelihood of success during the prefeasibility assessment.

Benefits of doing a Feasibility study

Conducting a feasibility study offers numerous benefits, making it an essential step in the decision-making process for any project, business venture, or initiative. Here are the key advantages of performing a feasibility study:

  • Risk Assessment : Feasibility studies help identify potential risks and challenges associated with a project. By thoroughly examining technical, financial, operational, and market-related aspects, stakeholders can pinpoint areas of concern and develop strategies to mitigate or manage these risks effectively.
  • Decision-Making : Feasibility studies provide critical information to decision-makers, helping them make informed choices about whether to proceed with a project. These studies offer a basis for go/no-go decisions, preventing resources from being wasted on unviable endeavors.
  • Resource Allocation : By assessing the feasibility of a project, stakeholders can allocate resources more efficiently. They can avoid overinvesting in projects with limited potential and allocate resources to those with a higher likelihood of success.
  • Financial Planning : Feasibility studies include detailed financial projections and cost estimates. This financial information is invaluable for securing funding from investors, lenders, or other sources. It helps in creating a solid business case.
  • Market Insight : Market feasibility studies provide insights into customer demand, market trends, and competitive dynamics. This information is crucial for designing products or services that meet market needs and for formulating effective marketing strategies.
  • Optimized Design : Technical feasibility studies ensure that a project's technical requirements and design are viable. They help in avoiding costly design flaws and ensuring that the project can be implemented as planned.
  • Legal and Regulatory Compliance : Feasibility studies can identify potential legal and regulatory challenges. This allows for the development of strategies to navigate and comply with relevant laws and regulations, reducing the risk of legal complications later on.
  • Enhanced Project Viability : Feasibility studies may lead to adjustments and improvements in the project plan, making it more viable and likely to succeed. This iterative process ensures that potential issues are addressed proactively.
  • Investor and Stakeholder Confidence : When potential investors and stakeholders see that a comprehensive feasibility study has been conducted, they are more likely to have confidence in the project. This can make it easier to secure funding and support.
  • Long-Term Planning : Feasibility studies not only assess the viability of a project in the short term but also help in long-term planning. They provide insights into the sustainability and growth potential of a business or initiative.

In summary, conducting a feasibility study is a valuable step in the project development process. It provides a structured approach to assess the viability of a project, manage risks, make informed decisions, secure financing, and set the stage for a successful venture. The benefits of a feasibility study extend beyond initial decision-making and contribute to the overall success and sustainability of a project or business.

Components of a Feasibility study

A feasibility study typically consists of several key components that provide a comprehensive evaluation of a project, business venture, or initiative. These components help stakeholders make informed decisions about the feasibility and viability of the proposed endeavor. The main components of a feasibility study include:

Executive Summary

The executive summary provides a concise overview of the entire feasibility study. It includes a brief description of the project, its objectives, and the key findings and recommendations. It serves as a quick reference for decision-makers.

Project Description

This section outlines the project's goals, objectives, and scope. It defines the problem the project aims to solve or the opportunity it seeks to capture. It also specifies the project's location and the stakeholders involved.

Market Analysis

Market analysis assesses the demand for the product or service within the target market. It includes information on target customers, market size, growth potential, competition, and market trends. This component helps determine whether there is a viable market for the project.

Technical Feasibility

Technical feasibility examines the project's technical requirements. It assesses whether the necessary technology, equipment, and resources are available or can be developed. It also identifies any technical challenges that may need to be addressed.

Operational Feasibility

Operational feasibility evaluates how the project will be implemented and operated. It includes details about project timelines, workflow, personnel requirements, and operational processes. This section helps in understanding how the project will function on a day-to-day basis.

Financial Feasibility

Financial feasibility is a critical component that includes detailed financial projections and analysis. It covers aspects such as startup costs, revenue forecasts, expense estimates, cash flow analysis, and return on investment calculations. It assesses the project's financial viability and potential profitability.

Legal and Regulatory Analysis

This section examines the legal and regulatory requirements that may impact the project. It identifies permits, licenses, or compliance issues that need to be addressed. Understanding and addressing legal and regulatory aspects are essential to avoid potential obstacles.

Risk Assessment

The risk assessment component identifies potential risks and challenges associated with the project. It evaluates the probability and impact of these risks and suggests risk mitigation strategies. Risks can be financial, technical, operational, market-related, or related to external factors.

Recommendations and Conclusion

In this section, the feasibility study summarizes the findings and presents clear recommendations based on the assessment. It often includes a conclusion that states whether the project is feasible and worth pursuing or whether it should be abandoned or modified.

The appendices contain additional supporting documentation and data, such as detailed financial spreadsheets, market research reports, technical specifications, and any other relevant information. These provide a more in-depth reference for stakeholders.

The main components of a feasibility study collectively provide a thorough assessment of a project's viability from multiple angles, ensuring that decision-makers have a comprehensive understanding of the project's potential, risks, and benefits.

Examples of Feasibility studies

Let's look now into some examples of feasibility studies for different types of projects and initiatives:

  • Real Estate Development

A real estate developer is considering constructing a residential apartment complex in a growing urban area. A feasibility study would assess factors like market demand, location, zoning regulations, construction costs, potential revenue from rentals, and the financial viability of the project.

  • Manufacturing Plant Expansion

A manufacturing company is considering expanding its operations by building a new production facility. The feasibility study would evaluate factors such as available land, infrastructure, equipment requirements, workforce, environmental impact, and the financial feasibility of the expansion.

  • Small Business Startup

An entrepreneur is exploring the feasibility of starting a small restaurant in a specific location. The feasibility study would examine the local market, including competitors, target customer demographics, startup costs, regulatory requirements, and financial projections for the first few years of operation.

  • Renewable Energy Project

A renewable energy company is considering the construction of a solar power plant. The feasibility study would assess the site's solar exposure, grid connection feasibility, equipment costs, revenue from energy sales, environmental impact, and the return on investment over the project's lifespan.

  • Healthcare Facility Expansion

A hospital is contemplating an expansion to meet growing patient demands. The feasibility study would include an assessment of the required medical equipment, staffing needs, regulatory compliance, funding sources, and the anticipated patient load.

  • Tourism Development

A tourist destination is considering the construction of a new hotel and recreational facilities. The feasibility study would evaluate the area's appeal to tourists, competition with existing businesses, construction costs, expected occupancy rates, and potential revenue from tourism.

  • Nonprofit Program Expansion

A nonprofit organization is looking to expand its community outreach programs. The feasibility study would assess the need for the programs, funding sources, volunteer availability, operational costs, and the impact of the expansion on the organization's mission and goals.

  • E-commerce Startup

An entrepreneur plans to launch an e-commerce website. The feasibility study would examine market demand, website development costs, marketing strategies, competitive analysis, and projected sales revenue and profitability.

These examples illustrate how feasibility studies are conducted in various fields and industries to evaluate the potential success and viability of a wide range of projects and initiatives. The specific components and focus areas of a feasibility study will vary depending on the nature of the project and the questions it seeks to address.

7 steps to conduct a Feasibility study

Now, let's think we are going to write a feasibility study. Let's check what steps we need to take to develop the final report.

  • Conduct a Preliminary Analysis

Begin by conducting an initial evaluation of the project's objectives and scope. This step involves defining the problem the project intends to address or the opportunity it aims to seize. Ensure that the project's goals are clear and well-defined.

  • Analyze Technical Specifications

Examine the technical aspects of the project in detail. Evaluate the availability of required technology, equipment, and resources. Verify that the project's technical requirements can be met effectively.

  • Conduct a Commercial Analysis

Perform a comprehensive analysis of the project's commercial aspects. This step involves assessing the market's demand for the product or service, analyzing market size, competition, customer needs, and market trends. Determine if there is a feasible market for the project.

  • Prepare a Projected Income Statement

Create a detailed projected income statement for the project. This includes estimating startup costs, revenue forecasts, expense projections, and cash flow analysis. Calculate the return on investment (ROI) to determine the project's financial viability, the Internal Rate of Return (IRR) of the investment and the Net Present Value (NPV) of future cash flows.

  • Prepare a Day-Zero Balance Sheet

Develop a balance sheet that represents the project's financial position at the outset (day zero). This financial snapshot should account for all assets, liabilities, and equity to provide a clear overview of the project's financial situation before it begins.

  • Analyze Different Alternatives for Feasibility

Explore various alternatives and scenarios for the project's feasibility. Assess different approaches, technologies, or business models to identify the most viable option. Consider the potential impact of these alternatives on the project's success. Make sensibilities to potentila risks.

  • Make a Go/No-Go Decision

Based on the findings and analysis conducted throughout the feasibility study, make a well-informed decision on whether to proceed with the project (a "Go" decision) or abandon it (a "No-Go" decision). Ensure that the decision aligns with the project's goals and aligns with the information presented in the study.

These steps provide a structured approach to conducting a feasibility study, ensuring that all relevant aspects of the project are thoroughly assessed and considered before making a decision on its viability.

In conclusion, a feasibility study is an indispensable tool for any project, business venture, or initiative. It serves as the critical bridge between a concept and a well-informed decision. By following a systematic process that includes a preliminary analysis, technical assessment, commercial evaluation, financial projections, and a careful consideration of alternatives, stakeholders can gain a comprehensive understanding of a project's viability.

The feasibility study's ability to assess market demand, technical feasibility, operational requirements, financial viability, and potential risks empowers decision-makers to make informed choices. Whether it's a real estate development, a new product launch, a manufacturing expansion, an IT system upgrade, or any other endeavor, a feasibility study helps in risk management, efficient resource allocation, and, ultimately, the successful realization of the project's goals.

It's important to remember that a well-conducted feasibility study not only serves the purpose of greenlighting a project but also provides a foundation for its long-term success. It gives stakeholders the confidence that the project is based on sound analysis and planning. In a world of complex challenges and opportunities, the feasibility study is a guiding compass for those seeking to turn innovative ideas into reality.

Make sure you hire the right consultants to deliver your feasibility study or business plan. Our firm, Aninver Development Partners, specializes in designing bankable feasibility studies  to make sure projects continue to their following phase. 

Send us a message on our contact page and we can discuss how we can help you. 

Some of our experience conducting feasibility studies can be seen below:

  • Feasibility Study for a new marina in the island of San Andrés through PPP
  • Pre-feasibility study for construction of silo storages in Northern Ghana through PPP
  • Feasibility study of a real estate WAQF project in Cotonou (Benin)
  • Feasibility study and analysis of strategic alternatives of a touristic development in Natal
  • Feasibility study for creation of an Investment and Export Promotion Agency of Health services in Tunisia
  • Feasibility Study for car parks in Bishkek though PPP
  • Feasibility study of markets in Benin and Togo under PPP scheme
  • Feasibility Study for the establishment of a Large-Scale Cashew Processing Plant in Zambia
  • Public Private Partnership (PPPs) study in the Housing Sector
  • Review of Business Case for Manila Central Subway
  • First Mover PPP Prefeasibility Study
  • Review of the feasibility study of the PPP project Complejo El Brillante, in Cordoba (Spain)
  • Review of pre-feasibility study of a Health PPP project

Alvaro de la Maza picture

Alvaro de la Maza is one the founding partners of Aninver Development Partners. Alvaro is a Civil Engineer, MS on Infrastructure Management and MBA by IESE Business School.Alvaro has extensive experience in Infrastructure and Public Private Partnerships. Alvaro has worked and led multiple consulting projects for clients such as the World Bank, the African Development Bank and other donors.Alvaro has extensive creating digital products and he has led the development of market intelligence platfor...

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  1. How to conduct a feasibility study: Template and examples

    A feasibility study, also known as a feasibility assessment or feasibility analysis, is a critical tool that can help product managers determine whether a product idea or opportunity is viable, feasible, and profitable. So, what is a feasibility analysis? Why should product managers use it? And how do you conduct one? What is a feasibility study?

  2. What is a Feasibility Study: Definition, Types, and Benefits

    A Feasibility Study is a critical, systematic, and comprehensive assessment conducted at the early stages of project development, business planning, or investment evaluation.

  3. Feasibility Study

    A feasibility study is an assessment of the practicality of a proposed plan or project. A feasibility study analyzes the viability of a project to determine whether the project or venture is...

  4. What Is a Feasibility Study? How to Conduct One for Your Project

    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?"

  5. What Is a Feasibility Study and How to Conduct It? (+ Examples)

    A feasibility study is a systematic and comprehensive analysis of a proposed project or business idea to assess its viability and potential for success. It involves evaluating various aspects such as market demand, technical feasibility, financial viability, and operational capabilities.

  6. Why Feasibility Studies Matter (With Examples)

    A feasibility study analyzes a potential project's benefits, risks, costs, and potential outcomes. After completing a feasibility study, you and your team will have enough information to determine if the proposed project is a worthy investment. Two types of sales forecasting data are appropriate for feasibility studies:

  7. Feasibility Study

    A feasibility study, as the name suggests, is designed to reveal whether a project/plan is feasible. It is an assessment of the practicality of a proposed project/plan. A feasibility study is part of the initial design stage of any project/plan.

  8. Using Feasibility Studies in Project Management [2023] • Asana

    To conduct a feasibility study, hire a trained consultant or, if you have an in-house project management office (PMO), ask if they take on this type of work. In general, here are the steps they'll take to complete this work: 1. Run a preliminary analysis. Creating a feasibility study is a time-intensive process.

  9. What is a feasibility study? Definition and examples

    A Feasibility Study is an evaluation and analysis of a project or system that somebody has proposed. We also call it a Feasibility Analysis. The study tries to determine whether the project is technically and financially feasible, i.e., is it technically or financially viable?

  10. What Is a Feasibility Study? Definition, Benefits and Types

    A feasibility study is an assessment that determines the likelihood of a proposed project being successful, such as a new product line or technical system. The study analyzes the project's relevant factors, such as technical, economic and legal considerations, to assess whether the project is worth an investment.

  11. Feasibility study

    A feasibility study aims to objectively and rationally uncover the strengths and weaknesses of an existing business or proposed venture, opportunities and threats present in the natural environment, the resources required to carry through, and ultimately the prospects for success.

  12. Feasibility Study: Definition, Types, Importance & Steps to Write!

    Nonetheless, no matter the industry, every feasibility study serves the same purpose - it helps you identify the risk and returns of a plan of action, and the steps you need to take before moving forward. In simple words, a feasibility study is an evaluation of how viable a proposed project or plan is, and whether it will succeed or fail.

  13. What Is a Feasibility Study: Step-by-Step Guide

    A feasibility study is an essential analytical tool that evaluates the viability of a proposed project on multiple fronts, such as financials, technical requirements, and market demand. Conducted during the project initiation phase, this type of study serves as an early checkpoint to identify potential roadblocks and assess risks.

  14. 11.3 Conducting a Feasibility Analysis

    Describe and develop the parts of a feasibility analysis. Understand how to apply feasibility outcomes to a new venture. As the name suggests, a feasibility analysis is designed to assess whether your entrepreneurial endeavor is, in fact, feasible or possible. By evaluating your management team, assessing the market for your concept, estimating ...

  15. How to Conduct a Feasibility Study the Right Way

    A feasibility study is a study, which is performed by an organization in order to evaluate whether a specific action makes sense from an economic or operational standpoint. The objective of the study is to test the feasibility of a specific action and to determine and define any issues that would argue against this action.

  16. Feasibility Study: Meaning, Types & Process

    A feasibility study is an evaluation of proposed projects. It assesses various critical factors. These factors dictate the chance of success in the early stages of a new business venture. The main factor a feasibility study considers is project practicality. In other words, it evaluates whether a business venture is viable.

  17. What is a Feasibility Study (Definition and Overview)

    A feasibility study is a comprehensive and systematic analysis that evaluates the practicality of a proposed project or system. The depth and breadth of a feasibility study can vary significantly based on the project or investment's nature. However, at its core, typical research will feature five key components.

  18. Feasibility Study: Definition, Components, Types and Steps

    A feasibility study is a report that assesses the strengths and weaknesses and practicality of a proposed project to determine its viability. When preparing a feasibility analysis, managers consider economic, legal, technical, financial, operational and time factors that can influence a project. Project managers conduct feasibility analysis ...

  19. What is a feasibility study and why is it important?

    A feasibility study is important when determining the viability of a project. It considers several aspects of a project, including legalities, personnel and resources needed so that businesses can make actionable plans. Understanding what this study is and what it includes ensures you make informed business decisions.

  20. Feasibility study Definition & Meaning

    The meaning of FEASIBILITY STUDY is a study to show if something can be done.

  21. Feasibility Study and Its Importance in Project Management

    A feasibility study is a comprehensive evaluation of a proposed project that evaluates all factors critical to its success in order to assess its likelihood of success. Business success can be defined primarily in terms of ROI, which is the amount of profits that will be generated by the project.

  22. Aninver

    Definition of Feasibility study. A feasibility study is a comprehensive and systematic analysis and evaluation of a proposed project, business venture, or initiative to determine its practicality, viability, and potential for success. It involves a thorough examination of various factors, such as financial, technical, operational, legal ...

  23. How to Conduct a Feasibility Study for Engineering Projects

    1 Define the scope. The first step in conducting a feasibility study is to define the scope of your project, which means identifying the problem you want to solve, the objectives you want to ...