Project feasibility study
|Project feasibility study|
Feasibility studies allow companies to identify and organize all the necessary details so that the company can exist. The feasibility study helps to identify logistical problems and almost all problems related to business, as well as their mitigation and solutions. Feasibility studies can also lead to the development of marketing strategies that would convince investors or the bank that investing in business is a wise choice. The feasibility study belongs to a comprehensive method, defining the chances, problems or benefits and costs that may occur in the project. By identifying the above, it is possible to define implementation options and to determine whether the project is possible to be implemented. The elements described below show that complexity is the most important aspect of the project's feasibility/
Elements of the project feasibility study
The feasibility study assesses the potential of the project to succeed; therefore, the perceived objectivity is an important factor in the credibility of the research for potential investors and credit institutions. There are five types of feasibility studies - separate areas that analyze the feasibility study. These 5 types of feasibility studies belong to one of the stages in the most popular feasibility study - the TELOS methods. This method suggests contacting potential possibilities with their limitations, such as:
- Technical feasibility - this assessment focuses on the technical resources available to the organization. It helps organizations determine if technical resources match capabilities and whether a technical team is capable of converting ideas into working systems. The technical feasibility also includes the assessment of the equipment, software and other technological requirements of the proposed system. As an exaggerated example, the organization does not want to try to place Star Trek transporters in their building - currently this project is not technically feasible.
- Economic feasibility - this assessment usually includes a cost / benefit analysis of the project, helping organizations to determine the profitability, costs and benefits of the project before granting funds. It also serves as an independent project assessment and increases the project's credibility - helping decision makers to identify positive economic benefits for the organization that the project will provide.
- Legal enforceability - this assessment assesses whether any aspect of the proposed project conflicts with legal requirements, such as zone regulations, the Data Protection Act or the Social Media Act. Let's assume that the organization wants to build a new office building in a specific location. The feasibility study may reveal that the ideal location of the organization is not intended for this type of activity. This organization has saved a lot of time and effort, learning that their project was not possible from the very beginning.
- Operational feasibility - this assessment includes conducting analysis to analyze and determine whether - and how well - the organization's needs can be met by completing the project. Operational feasibility studies also analyze how the project plan meets the requirements set in the analysis phase of system development requirements.
Planned feasibility - this assessment is the most important for the success of the project; eventually the project will fail if it is not completed on time. When planning the feasibility of the project, the organization estimates how long it will take to finish the project.
Limitations in the project feasibility study
After examining all of these areas, the feasibility study helps identify any constraints that the proposed project may face, including:
- Technical - determine the current capabilities of the company in a given field, and then compare them with the technical requirements that we must meet.
- Financial - to determine if you have sufficient cash to properly perform the tasks, take into account the costs of current operations and fixed costs of maintenance, if necessary, prepare a profit and cost analysis.
- Operational - define the extent to which the project fits the usual operations of the company, also pay attention to operational issues concerning branches, sections, branches of a given company.
- Geographical - appear when the project's shareholders (those to whom the project influences in any way) and team members are dispersed in the field - there is a difficulty in coordinating activities and some tasks are not feasible.
- Time - determining the time frame in which the project is feasible; determining whether the time is not too long or too short can be checked by comparing our project with a similar project already completed. When we face an unrealistic deadline, it can be achieved by changing the strategy, scope or resources of the project.
- Resource - determine if we are in possession of an appropriate amount of resources and if, if necessary, the given resources will be available to us, so that we will be able to carry out the work properly. One should also remember about additional factors, characteristic for given resources, such as skills (with human resources), efficiency or quality (with resources needed for construction).
- Legal - exclude any contradiction to the law that arose under the project, which would result from non-compliance with applicable laws and agreements.
- Political - avoiding project conflicts with other, even competing companies and with politicians. Political feasibility can be assessed through some forms of risk management or portfolio management.
Benefits of a feasibility study
The importance of a feasibility study is based on an organizational desire to "do it well" before resource, time or budget is involved. The feasibility study can discover new ideas that can completely change the scope of the project. It is best to make these arrangements in advance than to jump in and find out that the project simply will not work. Conducting a feasibility study is always beneficial to the project because it gives you and other interested parties a clear picture of the proposed project. The main benefits of the feasibility test method include:
- Improving the concentration of project teams
- Identification of new opportunities
- Providing valuable information about the "go / no" decision
- Limiting business opportunities
- Determining legitimate reasons for undertaking the project
- Increasing the success rate by assessing many parameters
- Supporting decision-making about the project
- Identifying reasons why you should not continue
- Shen, L. Y., Tam, V. W., Tam, L., & Ji, Y. B. (2010). Project feasibility study: the key to successful implementation of sustainable and socially responsible construction management practice. Journal of Cleaner Production, 18(3), 254-259.
- Kang, K. C., Cohen, S. G., Hess, J. A., Novak, W. E., & Peterson, A. S. (1990). Feature-oriented domain analysis (FODA) feasibility study (No. CMU/SEI-90-TR-21). Carnegie-Mellon Univ Pittsburgh Pa Software Engineering Inst.
- Dey, P. K. (2001). Integrated approach to project feasibility analysis: a case study. Impact Assessment and Project Appraisal, 19(3), 235-245.