Feasibility Study – 5 steps to conduct a feasibility study
A feasibility study is an in-depth process of determining the factors that will lead a project to success or failure. For simplicity’s sake, I’ve made sure to break this process down into five steps.
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Step 1: Perform the preliminary analysis
Conducting a full feasibility study is very time-consuming and resource-consuming, so instead of first jumping into this brutal assessment, it is important to test the situation and do an initial analysis. Consider this an eligibility qualification before the feasibility study.
There are four main steps to conducting an initial assessment:
- Create an idea outline: Outline everything you hope to achieve by taking on this project and why this project is important to your team, organization, or business.
- Assess the market space for this project: Try to find examples of this type of project and whether or not others have had success in implementation.
- Examine your competitive advantage: What would you do differently to ensure the success of your idea, such as talent, location, technology, etc.
- Identification of project risks: risk management is a large part of assessing the feasibility of any project. Do a risk assessment to identify anything that might pose a threat to your success.
Once you have completed your initial evaluation, you will have a better idea of whether or not to continue exploring the feasibility of your project. If there are no major insurmountable risks that you find during this evaluation, then it is time to move on to the full feasibility study.
Step 2: Create a project scope diagram
Now that you have an initial understanding of what you’re getting into with this project, it’s time to create a scope diagram.
This outline will illustrate the project objectives using the five feasibility questions I explained earlier in this guide:
Is this Plan:
- Technically feasible?
- Legal?
- Operationally feasible?
- Feasible within a reasonable time?
- Economically feasible?
Using these five questions, you will outline the key principles of this project including the current situation or problem you plan to solve, what you plan to accomplish, estimates about the impact of the project, and what it will take to achieve that goal.
Step 3: Do your market research
I use the term “market research” because it’s the most common way to describe this step, however, not all projects are about competing with other companies.
Some projects revolve around improving team performance, trying out a new management method, or perhaps in your case implementing a new project management program.
In any case, this step is crucial in discovering the feasibility of your proposed project idea. What better way to know if your project will be successful than by researching others who have done it before?
The five main benefits of market research are:
- Identify other market opportunities for your project (new customers, additional uses, etc.) through focus groups, surveys, and interviews of potential clients.
- Insight into your competitors including their products, services, marketing options, customer base, etc.
- Market information for your project, including the size and needs of your potential customers.
- Conclusions about whether this project has been successful in the past, the cost of completing it, and what success looks like.
- Insight into the best ways to implement the project, such as the time frame, personnel required, and event management techniques.
Step 4: Calculate the financial cost
We’re almost done. No matter what type of project you’re proposing, it’s often the financial cost that spoils the viability.
All kinds of financial factors will go into determining the viability of a project proposal, however, there are a few key considerations you should keep in mind when making these calculations:
- Do financial resources come from within your organization or from an external funder?
- The financial cost of failure when implementing your project
- Risks that will impose an undue financial burden on your project budget
- The break-even point for profit once your business has started, if possible
- How much will you need to complete this project, including stakes?
Step 5: Review your research and present your findings to the project stakeholders’ “Partners”
The day of reckoning is upon us, and it’s time to take stock of everything you’ve discovered, put it all together, and present it to the clients or relevant stakeholders.
Make sure your findings answer all five feasibility questions, and if every question is answered in the affirmative, that’s all you need to recommend approval for this project.
However, if there are some concerns about certain aspects of feasibility, this does not mean that you have to cancel the project completely. Perhaps this is an opportunity to re-evaluate your approach, budgets, or end game to better fit your organization.
