Unit-III

Financial Estimates and Projections

Feasibility Study
A feasibility study is performed by a company when they want to know whether a project is
possible given certain circumstances. Feasibility studies are undertaken under many
circumstances – to find out whether a company has enough money for a project, to find out
whether the product being created will sell, or to see if there are enough human resources for the
project. A good feasibility study will show the strengths and deficits before the project is planned
or budgeted for. By doing the research beforehand, companies can save money and resources in
the long run by avoiding projects that are not feasible.

A feasibility study is simply an assessment of the practicality of a proposed plan or method. Just
as the name implies, you’re asking, “Is this feasible?”

For example, do you have or can you create the technology to do what you propose? Do you
have the people, tools and the resources necessary? And, will the project get you the ROI you
expect?

When should you do a feasibility study? It should be done during that point in the project life
cycle after the business case has been completed.

So, that’s the “what” and the “when” but how about the “why?” Meaning, why do you need a
feasibility study? Well, it determines the factors that will make the business opportunity a
success, making it pretty important.

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

Types of Feasibility Studies

There are many different types of feasibility studies; here is a list of some of the most common:

 Technical Feasibility – Does the company have the technological resources to undertake
the project? Are the processes and procedures conducive to project success?

 Schedule Feasibility – Does the company currently have the time resources to undertake
the project? Can the project be completed in the available time?

 Economic Feasibility – Given the financial resources of the company, is the project
something that can be completed? The economic feasibility study is more commonly
called the cost/benefit analysis.

 Cultural Feasibility – What will be the impact on both local and general cultures? What
sort of environmental implications does the feasibility study have?

 Legal/Ethical Feasibility – What are the legal implications of the project? What sort of
ethical considerations are there? You need to make sure that any project undertaken will
meet all legal and ethical requirements before the project is on the table.

 Resource Feasibility – Do you have enough resources, what resources will be required,
what facilities will be required for the project, etc.

 Operational Feasibility – This measures how well your company will be able to solve
problems and take advantage of opportunities that are presented during the course of the
project
 Marketing Feasibility – Will anyone want the product once its done? What is the target
demographic? Should there be a test run? Is there enough buzz that can be created for the
product?

 Real Estate Feasibility – What kind of land or property will be required to undertake the
project? What is the market like? What are the zoning laws? How will the business
impact the area?