Importance of a Feasibility Study- A feasibility study is a preliminary investigation of the viability of a project. It entails looking at what resources are needed to complete the project, how much initial investment will be required, and what the anticipated costs for ongoing expenses might be. A feasibility study does not provide any definitive answers about whether or not to proceed with a proposed project; it only says that it poses no risk of being infeasible.
It helps clarify what sort of knowledge and skills are needed for different aspects of the project, so that these can be assembled together with clarity. It can also help identify potential conflicts or issues with any stakeholders who will have an interest in this process, such as regulatory bodies or other third parties. A feasibility study is often used to justify further investment in a project.
A feasibility study does not provide any definitive answers about whether or not to proceed with a proposed project. Instead, it helps clarify what sort of knowledge and skills are needed for different aspects of the project, so that these can be assembled together with clarity.
It can also help identify potential conflicts or issues with any stakeholders who will have an interest in this process, such as regulatory bodies or other third parties. A feasibility study is often used to justify further investment in a project once an initial decision has been made to pursue it based on the available information.
Types of Feasibility Studies
There are five types of feasibility studies:
1. Market study
2. Technical assessment
3. Feasibility study
4. Environmental impact analysis
5. Financial feasibility analysis
Market study:
The purpose of this type of feasibility study is to analyze whether there is a demand for the product, or, in other words, whether it will have a market and generate revenue if designed and manufactured. The size, distribution, and demographics of potential customers are examined in detail, as estimate from competitors on their products’ sales performance; also looked at are any changes to the market that may affect projections for future growth (e.g., the government’s decision on trade restrictions). This type of feasibility study usually does not entail much technical research or development but rather focuses on financial research, marketing strategy, etc.
Technical assessment:
Aims to evaluate the feasibility of a proposed product’s design and its manufacturing process, including all aspects of the manufacturing process: resource requirements, production rate, costs, and profitability. A technical feasibility study may include the following fields of expertise: materials engineering, fabrication technology, electronics, and software development (hardware and programming), mechanical engineering (including functional element design), etc.
Feasibility study—also called an economic feasibility or market-demand assessment (MDA) study;
The purpose of this type of analysis is to assess whether a product design, as well as a production method, can be profitable if it is produced in large quantities or if it should be produced at all considering its cost against the competition in the market. It should evaluate the market potential of the product (i.e., demand) and relate to the feasibility of its manufacture and operation if at all these are viable financially. These feasibility studies also estimate production costs and how long it will take to produce a certain quantity of the product.
Environmental assessment:
involves some sort of mitigation strategy in order to prevent any negative impact on human health or the environment, such as reclamation, rehabilitation, and restoration (see: ecotourism). This type of study is often required for wastewater treatment systems.
Financial feasibility analysis:
This is usually used when a company needs to acquire funds from investors in order to launch a new product or start manufacturing an existing one. Its purpose is to determine the viability of a business in light of future sales, expenses, and any other factors, such as the general economy. This type of study may also be used to evaluate how much investment capital is required for a new venture.
The Importance of a Feasibility Study
1. A feasibility study is performed to determine the possibility of a project being implemented as a business venture. This simply indicates the probability of the business idea is a successful venture if it is executed.
2. A feasibility study determines the viability of project objectives: the extent to which the objectives can be attained by using available resources, technology, and human resources. A large amount of planning is required at project initiation to make sure that there are no obstacles in executing a small-scale or pilot feasibility study.
3. As stated by WorldAtlas, a feasibility study contributes to an effective decision-making process: “The success or failure of a particular undertaking can often depend on many variables or conditions that cannot be effectively handled without an understanding of how feasible and practical they are beforehand.”
4. It helps you identify the situations that have to be taken care of before starting your project. There are so many things that go into planning and executing any kind of project. The general idea is that you will first find out if the project or product is feasible or not and then proceed further with its implementation plans.
5. A feasibility study creates a transparent view of the project or product being implemented or produced. It makes sure that all parties involved are aware of what they are agreeing on. The client or customer knows that their money is well spent because their demands or requirements have been studied and brought out to the public through a feasibility study report. The software development team knows that the client’s needs are being met because of the feasibility study report that they have read. And finally, the stakeholders know what to expect from a particular project because of its feasibility study report.
The study presented here concludes that the feasibility of building a commercial and mass-marketable business could be possible and feasible in the future. The original idea for this project, however, seems to have been discarded. There are many interesting aspects that should be explored further, but without a proper feasibility study, there is no way to determine whether it will be cost-effective or not. This article is meant as an entry point into the world of large projects that may seem very daunting in their initial stages.
Frequently Asked Questions
What is the most important part of a feasibility study?
The most important part of a feasibility study is the economics. Economics is the reason most projects are undertaken (with some exceptions for government and non-profit projects in which cost-benefit analysis is the primary tool)
What are 4 benefits of a feasibility study?
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.
What are three reasons for feasibility analysis?
Feasibility Studies Help Execute That Plan
By understanding development costs, the competitive landscape, where potential customers will come from, and revenue potential, you’ll have a feel for the sources of capital, partners, and business model needed to achieve success.
What are the objectives of feasibility?
The main objectives of feasibility include the assessment of recruitment capability and resulting sample characteristics, data collection procedures and outcome measures, acceptability of the intervention and study procedures, resources and ability to manage and implement the study and intervention, and preliminary
What are the key characteristics of a feasibility study?
Very Articulate.
Highly Systematic.
Focused.
Strategic in nature.
Cost-effective.
Value adding.
Organized.
Flexible.
References
- Small business.chron.com – The Importance Of a Feasibility Study
- Dubaibusinessadbiors.com – The Importance of Feasibility Study To An Entrepreneur
- UK.indeed.com – What is Feasibility Study and Why Is it Important?
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