How to Conduct a Feasibility Study

By Jennifer Bridges   |   Dec 10, 2019

A feasibility study is just one step in a long journey. Try ProjectManager.com and get award-winning
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Why is a feasibility study so important for a project? For one, the feasibility study is the foundation
upon which the rest of your project resides. If it can’t support your project, you don’t have a project.
Now that we got your attention, read on to learn what you need to know about feasibility studies.

What is a Feasibility Study?

Let’s begin by clarifying what a feasibility study is. 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.

7 Steps for a Feasibility Study

Follow these steps when conducting a feasibility study:

1. Conduct a Preliminary Analysis

Begin by outlining your plan. You should focus on an unserved need, a market where the demand is
greater than the supply, and whether the product or service has a distinct advantage. Then you need to
determine if the hurdles are too high to clear (i.e. too expensive, unable to effectively market, etc.).

2. Prepare a Projected Income Statement

This step requires you to work backwards. Start with what you expect the income from the project to be
and then what investment is needed to achieve that goal. This is the foundation of an income
statement. Things to take into account here include what services are required and how much they’ll
cost, any adjustments to revenues, such as reimbursements, etc.

3. Conduct a Market Survey, or Perform Market Research

This step is key to the success of your feasibility study, so make it as thorough as possible. It’s so
important that if your organization doesn’t have the resources to do a proper one, then it is
advantageous to hire an outside firm to do so.

The market research is going to give you the clearest picture of the revenues you can realistically expect
from the project. Some things to consider are the geographic influence on the market, demographics,
analyzing competitors, value of market and what your share will be and if the market it open to
expansion (that is, response to your offer).

4. Plan Business Organization and Operations

Once the groundwork of the previous steps has been laid, it’s time to set up the organization and
operations of the planned business venture. This is not a superficial, broadstroke endeavor. It should be
thorough and include start-up costs, fixed investments and operation costs.

These costs address things such as equipment, merchandising methods, real estate, personnel, supply
availability, overhead, etc.

5. Prepare an Opening Day Balance Sheet

This includes an estimate of the assets and liabilities, one that should be as accurate as possible. To do
this, create a list that includes item, source, cost and available financing. Liabilities to consider are such
things as leasing or purchasing of land, buildings and equipment, financing for assets and accounts
receivables.

6. Review and Analyze All Data

All these steps are important, but the review and analysis are especially important to make sure that
everything is as it should be and nothing requires changing or tweaking. So, take a moment to look over
your work one last time.

Reexamine your previous steps, such as the income statement, and compare it with your expenses and
liabilities. Is it still realistic? This is also the time to think about risk, analyzing and managing, and come
up with any contingency plans.

7. Make a Go/No-Go Decision

You’re now at the point to make a decision about whether the project is feasible or not. That sounds
simple, but all the previous steps we’re leading to this decision-making moment. A couple of other
things to consider before making that binary choice is whether the commitment is worth the time, effort
and money and is it aligned with the organization’s strategic goals and long-term aspirations.

Best Practices for a Feasibility Study

 Use project management software like ProjectManager.com to organize your data and work

efficiently and effectively
  Use templates or any data and technology that gives you leverage

 Involve the appropriate stakeholders to get their feedback

 Use market research to further your data collection

 Do your homework and ask questions to make sure your data is solid

Feasibility Report Template

Finally, here is an outline for the nine parts of a feasibility report:

1. Executive summary

2. Description of product/service

3. Technology considerations

4. Product/service marketplace

5. Marketing strategy

6. Organization/staffing

7. Schedule

8. Financial projections

9. Findings and recommendations

That final item is broken down into subsets of technology, marketing, organization and financial findings
and recommendations.

https://www.projectmanagementdocs.com/template/project-initiation/feasibility-
study/#axzz6na7oGe9r