Feasibility Study
A feasibility study is a detailed analysis that considers all of the critical aspects of a proposed project in order to determine the likelihood of it succeeding.
Success in business may be defined primarily by return on investment, meaning that the project will generate enough profit to justify the investment. However, many other important factors may be identified on the plus or minus side, such as community reaction and environmental impact.
Although feasibility studies can help project managers determine the risk and return of pursuing a plan of action, several steps should be considered before moving forward.
Feasibility Study
Definition
A feasibility study is a detailed analysis that considers all critical aspects of a proposed project to determine its likelihood of success. In business, success is primarily defined by return on investment, meaning the project will generate enough profit to justify the investment. However, many other important factors, such as community response and environmental impact, can also be identified as positive or negative influences.
Origin
The concept of feasibility studies originated in the mid-20th century. With the increase in large infrastructure projects and business investments, companies and governments began to recognize the importance of conducting detailed analyses before project initiation. The earliest feasibility studies were often used for public works and military projects, gradually expanding to various commercial and industrial projects.
Categories and Characteristics
Feasibility studies can be divided into the following categories:
- Technical Feasibility: Evaluates the feasibility and availability of the technology required for the project.
- Economic Feasibility: Analyzes the cost-effectiveness of the project and assesses its economic returns.
- Legal Feasibility: Checks whether the project complies with relevant laws and regulations.
- Operational Feasibility: Assesses the feasibility of the project in actual operation, including human resources and management capabilities.
- Time Feasibility: Analyzes the likelihood of completing the project within the scheduled time frame.
Each type of feasibility study has its unique characteristics and application scenarios. For example, technical feasibility focuses on the possibility of technological implementation, while economic feasibility emphasizes financial analysis.
Specific Cases
Case 1: New Product Development
A tech company plans to develop a new smart watch. During the feasibility study, the company first conducted a technical feasibility analysis to confirm whether the required technology was mature. Next, an economic feasibility analysis was performed to assess market demand and potential profits. Finally, legal and operational feasibility analyses were conducted to ensure the product complied with relevant regulations and had production capacity. Based on these analyses, the company decided to proceed with the product development.
Case 2: Infrastructure Construction
A city government plans to build a new bridge. Before starting the project, the government conducted a comprehensive feasibility study, including technical feasibility (bridge design and construction technology), economic feasibility (project budget and funding sources), legal feasibility (environmental impact assessment and legal permits), and time feasibility (construction schedule). Through these analyses, the government confirmed the project's feasibility and began implementation.
Common Questions
Question 1: How long does a feasibility study take?
Answer: The duration of a feasibility study depends on the complexity and scale of the project. Small projects may take only a few weeks, while large projects may require several months or even longer.
Question 2: What is the cost of a feasibility study?
Answer: The cost also depends on the scale and complexity of the project. Generally, the cost of a feasibility study accounts for 5% to 10% of the total project budget.
Question 3: Does a feasibility study guarantee project success?
Answer: A feasibility study does not guarantee project success, but it can significantly reduce risks and help decision-makers make more informed choices.
