What is a feasibility study?

Feasibility studies aim to objectively and systematically identify  

•strengths and weaknesses of an existing or proposed project
•opportunities and threats present in the environment
•the resources that will be required to successfully implement the project
•forecasts for success which is fundamentally measured by two criteria
- cost required to complete the project and value to be attained.
A feasibility study evaluates the project's potential for success; therefore, it must be
conducted with an objective, unbiased approach to provide information upon which
decisions can be based.

Why is it necessary to conduct a feasibility study?

Identifies new opportunities

Identifies reasons to proceed or abandon the proposed project

Increases probability of business success by identifying weaknesses early.

Provides documentation that the idea was thoroughly investigated.

Areas of feasibility assessment
        1)Technology and system feasibility
This type of feasibility study determines whether the company has the technical
expertise to handle completion of the project.
2)Legal Feasibility
This type of feasibility study determines whether the proposed system conflicts with
legal requirements, e.g. a data processing system must comply with the local Data
Protection Acts.
3          3)Operational Feasibility
The operational feasibility assessment focuses on the degree to which the proposed
development projects fits in with the existing business environment and objectives with
regard to development schedule, delivery date, corporate culture, and existing business
processes.
          4)Economic Feasibility
The purpose of the economic feasibility assessment is to determine the positive
economic benefits to the organization that the proposed system will provide. It includes
quantification and identification of all the benefits expected.
          5)Technical Feasibility
The technical feasibility assessment is focused on gaining an understanding of the
present technical resources of the organization and their applicability to the expected
needs of the proposed system. It is an evaluation of the hardware and software and
how it meets the need of the proposed system.
6       6)Schedule Feasibility
A project will fail if it takes too long to be implemented. Schedule feasibility is a measure
of how reasonable the project timetable is.
Factors that must be addressed in the Feasibility Report
Market feasibility
This feasibility analysis examines the marketability of the proposed product or services;
if a significant market for the product or services cannot be established, then it would
not be wise to implement the project.
Resource feasibility
This involves questions such as how much time is available to build the new system,
when it can be built, whether it interferes with normal business operations, type and
amount of resources required.
Financial feasibility study
The financial viability of a project should provide the following information:
Fulldetails of the assets to be financed
Project's funding potential and repayment terms.
Upon completion of a feasibility study, a feasibility report is prepared.  What is the
purpose of the feasibility report?
The feasibility report provides an objective analysis of the proposed venture along with the
alternative paths it could follow. By collecting this data, management can then make an informed
decision on which path should be pursued in order to create the most profitable revenue stream for
the company.

Components of feasibility report

Executive Summary
Problem statement

Project Scope

Due Diligence

Business Environment/Forces

Critical Success Factors

Human Resources

Finance and Projected Cash Flows

Risk Analysis

Options Analysis