Feasibility Study: Types and Importance in
Project Management
By SimplilearnLast updated on Nov 2, 202019644260
The growth and recognition of project management 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.
What is a Feasibility Study?
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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Types of Feasibility Study
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 analyse 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.
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Importance of Feasibility Study
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 analysed -
Internal Project Constraints: Technical, Technology, Budget, Resource, etc.
Internal Corporate Constraints: Financial, Marketing, Export, etc.
External Constraints: Logistics, Environment, Laws, and Regulations, etc.
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 PMP Certification that covers new trends,
emerging practices, tailoring considerations, and core competencies required of a
Project Management professional. Happy reading!
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Simplilearn
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