A feasibility study takes place during a project concept phase and then during the design and development phases of a project. It is made before significant expenses are made. It typically includes making decisions to do with the technical and financial aspects of the project.
A feasibility study represents a definition of a problem or an opportunity to be studied, an analysis of the current mode of operation, a definition of requirements, an evaluation of alternatives and an agreed upon course of action.
The following steps need to be taken in conducting a feasibility study:
Company or Client Finance
Does the company or client have the budget, cash flow and is it going to make enough of a profit to make the project worthwhile? Will the return on investment be what the company expects in order to make the project feasible? Consider how long it will take after the completion of the project for the break even point to be attained for the company to start making a profit. Companies with shaky cash flow would want the break even point of the product to be sooner rather than later.
Identify the risk area and list all possible risks involved such as future economic climate, lack of proper market research, lack of skills available, unacceptable corporate governance, current financial position of the company, team work and need for secrecy (product security to guard product against intellectual property theft).
Procurement Analysis
- Human resources – The cost and availability of human resources needs to be analyzed. Cost of resources per day must be worked out and entered into the Pert and Gantt charts. Look at the impact using internal human resources.
- Equipment – Analyze the cost of buying or hiring equipment. Pay back time and value added gain in doing so. Look at impact using resources from within the company.
- Tools – As above, it needs to be ascertained if there is a need for specialized tools or equipment.
As the scope of the project grows, it becomes more important to document the feasibility study especially if large amounts of money are involved and/or timing is critical.
The feasibility study should contain sufficient detail to carry on to the succeeding phase in the project and it should also be used for comparative analysis when preparing the final project audit which analyses what was delivered versus what was proposed in the feasibility study.
There are plenty of e-books and resources available on and off line to help project managers conduct in depth feasibility studies and business research.
Source:
Project Management planning & Control Techniques, 3rd edition - Rory Burke
Related Articles:
Project Management Methodology Overview
Project Management Methodology- Optimizing Leadership
Fleur Hupston - Fleur Hupston is a professional freelance writer based in Botswana, Southern Africa. From this unique perspective, she writes travel ...
Join the Conversation