What Is a Feasibility Study?

Simply put, a feasibility study in project management is used to

find out if a project is feasible prior to investing real resources and dollars. Often,
project managers are hired to complete studies for clients to determine if a proposed
venture will be profitable as well as what risks it will take.

The feasibility process is completed prior to project initiation or often, can be utilized
to see if a set of processes or procedures will enhance or harm project outcomes.

Feasibility Study Steps

Whether you are working for a client to see if a business, product, or process is
feasible or if you need to know if a project is feasible, follow these steps. In our
Media Galley you will find an example of a feasibility study for a client and
a feasibility study template you can use to assist you.

• Project Description – Identify the project name and purpose. Include details
including stakeholders, and end result expected.
• Goals – List long and short-term goals and what processes will be needed to
achieve those goals.
• Timeline – What will be the estimated time until project completion?
• Costs and Budgeting – Include all costs incurred for the project including the
cost of the feasibility study itself.
• Purpose – What purpose does the project have and whom will it benefit?
• Market Analysis – If applicable, will the market or market environment benefit
from the project. If so, list why.
• Resources – Identify all the resources both IT, technical, inventory, and
human that will be needed to complete the project.
• Project Process – How will the project flow? Include flow charts showing
project stages.
• Management and Teams – Who will manage and who will work on
scheduled tasks? Will project management outsourcing be needed?
• Observations– Statements that do or don’t support the project should be
included here. If for a client, does the client have the finances to complete the
project or are there alternatives? If for a project or process, will it work and will
it be beneficial?

Outcomes of a Feasibility Study

Often, after the completion of a study, a determination may be made not to proceed
with the project. A good feasibility study sample will include:

• Project Problems – Does the study include risk or problematic areas that
need to be addressed and are they clearly identified?
• The Outcome – Ever study should identify the process, product, client
request, and goal and how they will affect the outcome; positively or
negatively. Will outcomes be beneficial or deterrent?
• Alternatives – Are possible alternatives available or suggested and
researched?
• Assessment – The assessment part of your feasibility study should
include risk management and controls, solutions, if the project is feasible, and
how the project should be implemented.

Summing Up Feasibility Studies

For projects to be considered, especially if they are to undertake many resources
including real dollars, real time, and real effort, a feasibility study is essential prior to
project initiation, project scope, and initiation.

Read more: http://www.brighthub.com/office/project-

management/articles/63692.aspx#ixzz1ENmqRUN1

(a) Scope of the study:

Fundamentally before taking any project the scope of the project and the magnitude
should be clearly spelled out based on the requirement of the project. Hence without
having a clear vision of the project objective it is impossible to make a successful
project. All the resource needed for the project should be presented in the report clearly,
scheduled completion date etc.

(b) Procurement of data for the studies:

Though the investment and production costs should be estimated as accurately as

possible, the costs and time involved in obtaining the data are not always precise and it
therefore sometimes it is necessary for the project team to rely on assumptions.

(c) Verification of alternatives and assumptions:

This is one of the most crucial steps in project feasibility analysis. When various
alternatives are being provided with regarding choice of technology, capacity, financing
etc. In fact the foundations will be strong when the following alternatives are supplied
along with the details of the project profile:

1. Proposed cost structure.

2. Work schedules.
3. Exchange mechanism.
4. Continent factors.

(d) Proposed cost structure:

The spending for the project deliverables are always in terms of costs, irrespective of the
nature of the product such as research costs, labour costs, overhead cost etc. Therefore
it would be ideal to label all the necessary expenditure incurred during the project
implementation, which deserves to be treated as cost. The production cost depends on
availability of the information about the required resources, manpower, work
programme, type of technology, available resources, and distribution costs, skills of the
labour.

(e) Scheduling the operations:

Deadline for the completion of the project is also an important factor in project feasibility
study. New techniques such as PERT, GERT, CPM, ZBB etc are used for effective time
management, in order to be precise in their completion date.

(f) Project team:

It is advisable to prepare the report under the supervision of experts since they are
aware time constraints, funds, and resource requirement for the project. To conduct a
feasibility study the ideal team members would comprise.

1. Industry economist.
2. Market analyst.
3. Management expert.
4. Technical head.
5. Project Manager.

(g) Project meant for expansion:

Feasibility studies for a new project might be slightly different from already existing
projects whose interest is to expand their scale of operation and the scope of coverage.
Depending upon the size of the project, it should be clear from the new proposal
whether the existing internal organizational structure and supporting facilities will be
sufficient or need some adjustments.

(h) Cost studies:

Calculation of pre-investment costs varies from project to project. Since cost are vital
determinants of various types of pre-investment studies it is preferable to indicate the
magnitude of the cost.

There are basically six parts to any effective Feasibility Study:

1. The Project Scope which is used to define the business problem and/or opportunity
to be addressed. The old adage, "The problem well stated is half solved," is very
apropos. The scope should be definitive and to the point; rambling narrative serves no
purpose and can actually confuse project participants. It is also necessary to define the
parts of the business affected either directly or indirectly, including project participants
and end-user areas affected by the project. The project sponsor should be identified,
particularly if he/she is footing the bill.
I have seen too many projects in the corporate world started without a well defined
project scope. Consequently, projects have wandered in and out of their boundaries
causing them to produce either far too much or far too little than what is truly needed.
2. The Current Analysis is used to define and understand the current method of
implementation, such as a system, a product, etc. From this analysis, it is not
uncommon to discover there is actually nothing wrong with the current system or
product other than some misunderstandings regarding it or perhaps it needs some
simple modifications as opposed to a major overhaul. Also, the strengths and
weaknesses of the current approach are identified (pros and cons). In addition, there
may very well be elements of the current system or product that may be used in its
successor thus saving time and money later on. Without such analysis, this may never
be discovered.
Analysts are cautioned to avoid the temptation to stop and correct any problems
encountered in the current system at this time. Simply document your findings instead,
otherwise you will spend more time unnecessarily in this stage (aka "Analysis
Paralysis").
3. Requirements - how requirements are defined depends on the object of the project's
attention. For example, how requirements are specified for a product are substantially
different than requirements for an edifice, a bridge, or an information system. Each
exhibits totally different properties and, as such, are defined differently. How you define
requirements for software is also substantially different than how you define them for
systems.
4. The Approach represents the recommended solution or course of action to satisfy
the requirements. Here, various alternatives are considered along with an explanation as
to why the preferred solution was selected. In terms of design related projects, it is here
where whole rough designs (e.g., "renderings") are developed in order to determine
viability. It is also at this point where the use of existing structures and commercial
alternatives are considered (e.g., "build versus buy" decisions). The overriding
considerations though are:

• Does the recommended approach satisfy the requirements?

• Is it also a practical and viable solution? (Will it "Play in Poughkeepsie?")

A thorough analysis here is needed in order to perform the next step...

5. Evaluation - examines the cost effectiveness of the approach selected. This begins
with an analysis of the estimated total cost of the project. In addition to the
recommended solution, other alternatives are estimated in order to offer an economic
comparison. For development projects, an estimate of labour and out-of-pocket
expenses is assembled along with a project schedule showing the project path and start-
and-end dates.
After the total cost of the project has been calculated, a cost and evaluation summary is
prepared which includes such things as a cost/benefit analysis, return on investment,
etc.
6. Review - all of the preceding elements are then assembled into a Feasibility Study
and a formal review is conducted with all parties involved. The review serves two
purposes: to substantiate the thoroughness and accuracy of the Feasibility Study, and to
make a project decision; either approve it, reject it, or ask that it be revised before
making a final decision. If approved, it is very important that all parties sign the
document which expresses their acceptance and commitment to it; it may be a
seemingly small gesture, but signatures carry a lot of weight later on as the project
progresses. If the Feasibility Study is rejected, the reasons for its rejection should be
explained and attached to the document.

Conclusion
It should be remembered that a Feasibility Study is more of a way of thinking as
opposed to a bureaucratic process. For example, what I have just described is essentially
the same process we all follow when purchasing an car or a home. As the scope of the
project grows, it becomes more important to document the Feasibility Study particularly
if large amounts of money are involved and/or the criticality of delivery. Not only should
the Feasibility Study contain sufficient detail to carry on to the next succeeding phase in
the project, but it should also be used for comparative analysis when preparing the final
Project Audit which analyses what was delivered versus what was proposed in the
Feasibility Study.
Feasibility Studies represent a common sense approach to planning. Frankly, it is just
plain good business to conduct them. However, I have read where some people in the IT
field, such as the "Agile" methodology proponents, consider Feasibility Studies to be a
colossal waste of time. If this is true, I've got a good used car I want to sell them.