Project Feasibility Study and Feasibility Analysis Explained
Importance of Project Feasibility
Everyone knows that any project that is executed to fulfill the client's requirements has to go through many phases.
We all know about the multiple phases carried out during the project but what about the processes that have been carried out before starting any project to increase the feasibility in project. Here, we are not talking about the requirement gathering but the process that is being carried out before initiating the project; we call it project feasibility analysis.
Every project management team decides a particular process or method which is to be implemented for the feasibility of project.
The process which is carried out to assess this process or method is generally referred to as feasibility analysis. The layman or the employee at the start of their career may not be familiar with the term project feasibility study.
So, here we are going to see in detail everything associated with determining feasibility of a project
What is Project FeasibilityAnalysis?
The name itself defines the term - Feasibility analysis, this process assesses the practicality of the proposed plan for the project.
To give some examples, feasibility analysis involves questions like –
1) Is the decided technology for the project available with the organization?
2) Are the relevant technology resources, tools or every necessary factor is available with the organization?
3) Is the proposed project will be a successful return on investment?
If all the answers to these questions are ‘yes’ or positive then the further process of the project is executed, else solution or alternatives are considered.
Hence, the feasibility study is the process of checking the feasibility of project in all aspects.
Now, as we have understood the terms, let us know when to and how to carry out a feasibility study.
Generally, it is carried out after the completion of the business case in the project life cycle. It is also important to understand the key reasons why there is a need for a feasibility analysis. The major reason is that it makes the business prospect a success, and makes it significant too.
How to Conduct Project Feasibility Study - Explained in Seven Steps
The project feasibility study is carried out in seven steps.
Let’s discuss all the steps of project feasibility analysis in detail.
Step 1 - Have a Detailed Initial Analysis of Project
The first thing is to do in the project feasibility study is to outline your plan. This gives you a vision of what is the goal of your project and which areas your analysis must be going.
One must concentrate on the unattended need, a market with loads of demand than the supply, and the distinct advantages of the product or services while deciding the feasibility in project.
The most important thing to be studied is the hurdles on the way and their possible solutions. One must also consider various factors while studying the possible solutions of the hurdles such as, it is too expensive, unable to market, etc.
Step -2: Formulate a Proposed Income Report
The second and most important step for the project feasibility study is the financial backward study of the proposed project. The finances are the primary concern in any project and there should be a good return on investments hence, this step has vital importance in the feasibility analysis process.
Firstly, state what income you are expecting from the project and after that what is the investment amount. This is important to study to achieve the project goal and feasibility in project.
The investment costs include every single service, their cost, revenue adjustments like reimbursements, etc. This should also include any known, unknown, and surprising cost that may occur in the project execution. Once, you are positive about this step then we are good to go for the next analysis step.
Step - 3: Carry out a Market Survey and Conduct Market Research
This is the key step for the project feasibility study and must be executed thoroughly to check the feasibility of project. One must have qualified and excellent resources to execute this step of project feasibility study else, the basic market research won’t be helpful for the whole project. This is because the correct market research is going to give you the precise scope of the projected revenue.
The market research is also important from various aspects as it gives us details about the planned scope along with its expansion possibilities. This step includes many factors such as, geographic, demographics, competitor’s analysis, market value, market expansion, etc. is important.
Step - 4: Plan Business Organization and Operations
Once you have precisely performed the previous three steps from the project feasibility study, it is now important to set up the organization and processes of the intended business endeavor. This step must include the startup cost, investments including the operational costs.
The said cost includes factors such as equipment, marketing methods, infrastructure, personnel, supply convenience, etc. This may also include any known and surprising costs that may occur while implementing the project.
Step 5: Organize an Opening Day Balance Sheet
Preparing the balance sheet is again a significant step in the project feasibility study that decides the feasibility of project. This step includes the accurate estimation of some assets and liabilities such as item, source, cost, and available financing, land purchasing, infrastructure, etc.
All these assets and liabilities must be studied and researched well to come to a deciding point in the project. One must have skilled professionals while working on this step as it is going to affect positively or negatively on the project scope.
Step - 6: Review and Analyze All Data
The reviewing and analyzing the data or processes decided in the previous steps of the project feasibility study is again an important task. This is important because many times have known or unknown changes or elimination on some points may occur in different stages.
So this step of review and re-examination is important that everyone is following the above steps precisely. This step is again to encounter the risk analysis and design for any possible plans.
Step - 7: Make a Decision from the Feasibility Analysis
Now the last and vital step of the project feasibility study is taking the decision about the project from the analysis of previous steps. Once you are getting positive outcomes for all the above six steps then you are good to go and have good feasibility in project for the execution of the intended project.
This stage must be carried out from the experienced and skilled professionals to end on the right decisions for a successful project that will be implemented in the decided time and budget.
Suggested Read - Complete Guide to Project Management
Here, we have seen the importance of project feasibility study or feasibility analysis from different perspectives. We have discussed how it is going to help to execute a successful project in an organization. The takeaway message here is that you must understand the significance of the feasibility analysis of the project and implement the same while initiating any project.
To learn project management concepts and enhance your skills, get Project Management Certification Training and get certified. We offer PMP Training all across the globe and we are a REP (Registered Training Provider) of Project Management Institute, the governing body for project management certifications.
To get full details about project management courses, chat with our course expert, and find the certification that fits your current career goal.
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