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However, a feasibility study isn't only used for projects looking to measure
and forecast financial gains. In other words, feasible can mean something
different, depending on the industry and the project's goal. For example, a
feasibility study could help determine whether a hospital can generate
enough donations and investment dollars to expand and build a new cancer
center.
Although feasibility studies can help project managers determine the risk
and return of pursuing a plan of action, several steps and best practices
should be considered before moving forward.
KEY TAKEAWAYS
The study is also designed to identify potential issues and problems that
could arise from pursuing the project.
When doing a feasibility study, it’s always good to have a contingency plan
that you also test to make sure it’s a viable alternative in case the first plan
fails.
Although each project can have unique goals and needs, below are some
best practices for conducting a feasibility study:
Suggested Components
Once the initial due diligence has been completed, listed below are several
of the components that are typically found in a feasibility study:
The feasibility study explored the technological needs of the new science
facility, the benefits to the students, and the long-term viability of the
college. A modernized science facility would expand the school's scientific
research capabilities, improve its curriculum, and attract new students.
The financial projections showed the cost and scope of the project and how
the school planned to raise the needed funds, which included issuing
a bond to investors and tapping into the school's endowment. The
projections also showed how the expanded facility would allow more
students to be enrolled in the science programs, increasing revenue from
tuition and fees.
The feasibility study demonstrated that the project was viable, paving the
way to enacting the modernization and expansion plans of the science
building. Without conducting a feasibility study, the school administrators
would never have known whether its expansion plans were viable.
The financial component of the feasibility study outlined the strategy for
securing the project's funding, which explored obtaining funds from federal,
state, and private investments. The project's cost was estimated to be
between $24 billion to $42 billion. The revenue generated from the high-
speed rail system was estimated to be between $160 million and $250
million.
The report bifurcated the money sources between funding and financing.
Funding referred to grants, appropriations from the local or state
government, and revenue. Financing referred to bonds issued by the
government, loans from financial institutions, and equity investments,
which are essentially loans against future revenue that needs to be paid
back with interest.
The sources for the capital needed were to vary as the project moved
forward. In the early stages, most of the funding would come from the
government, and as the project developed, funding would come from
private contributions and financing measures. Private contributors included
Microsoft Inc., donating more than $570,000 to the project. 2
The benefits outlined in the feasibility report show that the region would
experience enhanced interconnectivity, allowing for better management of
the population and spur economic growth by $355 billion throughout the
region. The new transportation system would provide people with access to
better jobs, affordable housing, and increase collaboration throughout the
community. The high-speed rail system would also relieve congested areas
from automobile traffic.1
The timeline for the study began in 2016 when an agreement was reached
with British Columbia to work together on a new technology corridor that
included high-speed rail transportation. The feasibility report was submitted
to the Washington State land Legislature in December 2020. As of 2021,
the project has yet to begin construction. 1
The study included an analysis of the potential need, the expected number
of patients, projected revenues, and operating costs, such as staff, doctors,
and nurses. The project managers explored how to finance the project
through a combination of financing from local financial institutions and
donations from wealthy investors.
The potential risk to the project was considered along with public opinion
and interest by the community. The return on investment was calculated
and was determined that the forecasted revenue exceeded the expected
costs, leading the hospital administrators to approve the project.
Financial: The return on investment and the amount of funds needed to pay
for the project, including the sources of capital, such as a financial
institution or investors
Market: an analysis for the market for the product or service, the industry,
competition, consumer demand, sales forecasts, and growth projections