The rationale behind project management as a field or domain is effectiveness and efficiency. It is about arriving at the desired goals and objectives within the required timelines, with the fewest resources and mistakes possible.
Throughout the globe, institutions, organizations, and businesses have undertaken numerous projects with the hope of realizing some specific objectives. Every project first starts with an idea that must be fine-tuned and vetted against prevailing circumstances as well as the true definition of its success. This is done by conducting a feasibility study. The fundamental question that this article will anchor its insights on, therefore, is: What is a feasibility study in project management?
The basic definition of a feasibility study is an evaluation of the practicality or viability of a proposed project whose outcome determines the decision of whether the project is worth investing in or not.
Why do you need to conduct a feasibility study?
The initiator of any project should consider conducting a feasibility study because of the following critical reasons:
- A feasibility study allows for foresight
- A feasibility study evaluates the viability of a project, informing the decision on whether to proceed with it or not.
- A feasibility study gives insights into the ideal strategy to use for a particular project
- A feasibility study clearly defines the goals, objectives, and success of a project
What are the steps in conducting a feasibility study?
A feasibility study is a critical process to a project hence is required to be as factual, objective, and highly accurate as possible. While the steps taken in conducting a feasibility study may vary from one project to another, here are the general steps for carrying out a feasibility study.
1. Preliminary Analysis
The preliminary analysis step is important in that it gives and documents a clear overview of the bigger picture of the study while also highlighting important elements such as:
- Possible opportunities
- Why the project is important to the organization or institution
- The direct and indirect influence of the environment under which the project will be undertaken
- General risks and how to manage them
The scope is basically the extent of the project’s relevance to its audience and stakeholders. It involves clearly defining the:
- Project vision. A project vision is a clear description of the overall idea of the project and the ultimate condition that should be in place after the completion of the project.
- Project goals. Project goals refer to the desired outcome or a clear description of what the project should achieve. Also, project goals should be measurable and specific, i.e detailing deliverables in terms of time and resources.
- Boundaries. The boundaries of a project are in essence the content of the project. They indicate the project’s limits and exclusions.
- Stakeholders. Based on Project Management Institute (PMI), stakeholders are individuals or organizations that are actively involved in the project or whose interests will be impacted positively or negatively by the project execution and outcome.
- Audience or clients. The person or organization that defines the requirements of the project and sets the parameters for resources in terms of budget and timelines.
3. Market Research
The market research stage is quite critical in a feasibility study since it assesses the market in which the project is intended. This will determine whether the project is a market-fit or needs adjustments to be so, and proposes the necessary adjustments to be made.
It also evaluates the existing competition(both direct and indirect) and how the project should adapt accordingly to stand a chance of success.
4. Financial Assessment
Costing and budgeting are factors that significantly determine whether a project is viable or not. This involves generating a detailed budget and gauging it vis-a-vis the available financial resources. It also evaluates the project’s general impact on the organization or institution’s financial status, which is basically a cost-benefit analysis.
5. Roadblocks and Alternative Solutions
Roadblocks and hurdles for any project are a must and what a feasibility study does is to determine and define them, and the alternative ways of handling or avoiding them. Some of these hurdles are internal while others are external. If it is technically impossible to handle or avoid them, it may as well be concluded that the project is not feasible.
A re-assessment is simply a cross-check of all the above steps to ensure that every assessment has been clearly outlined and documented as deduced.
7. Presentation of Recommendations
This is the final report which is a verdict of whether the project is feasible or not, as well as any adjustments that ought to be made for the project to be feasible. The presentation of recommendation informs the decision whether the project will be approved for execution or not.
Types of feasibility studies
There are loosely four major types of feasibility studies based on the major facets of a project. They are:
- Technical Feasibility Study
This is where the feasibility of the project is analyzed from a technical standpoint. The technical capacity and resources needed for the project are assessed against the available resources. Technology also plays a major role here and should also be included in this analysis. This is because the availability of technology and the personnel to handle the same certainly go a long way in determining the viability of the project.
- Economic Feasibility Study
An economic feasibility study considers the economic implications of a project to an organization or institution, its stakeholders, shareholders, and the community it influences. This makes it very essential since it has both a micro-economic and macro-economic impact on the entire ecosystem in which the project exists. It is important that it also includes a cost-benefit analysis for clearer insights.
- Legal Feasibility Study
This deals with the evaluation of the legal implications of the project depending on the laws in place particularly in the locality where the project is set to be done, the existing regulations, as well as approvals and agreements between parties which also include the employees and team members. This may save the project team and organization a myriad of court battles both internally and externally.
- Operational Feasibility Study
The overall feasibility of a project can be nullified by operational challenges. Hence operational feasibility plays a major role in determining the overall viability of a project. Here, what is evaluated is how efficient and effective the day-to-day running of activities is and how it translates into the intended purpose of the project.
There are many factors that influence the success or failure of a project. Most of them interact in a complex and unpredictable way making it a bit difficult to predict the chances of a project’s success. The resources invested in a project in terms of time, money, personnel, and technology can only be justified and informed by a feasibility study. The practical steps followed in conducting a feasibility study allow for accuracy, objectivity, and rationality which makes the analysis and its recommendations realistic and trustworthy.
The specific types of feasibility studies narrow down the analysis to ensure that no stone is left unturned and that each facet is properly handled in terms of evaluation. It is for this reason that companies and institutions (both government and non-governmental) have adopted this tool to inform their decisions on whether to proceed with a project or not.