A feasibility study is a critical step in the project planning process, helping you determine whether your project is viable, achievable, and worth pursuing. It involves assessing various factors, analyzing risks, evaluating resources, and determining the financial feasibility of your project. By conducting a comprehensive feasibility study, you can make informed decisions and set a solid foundation for project success.
In this article, we will explore the five key considerations to keep in mind for your project’s feasibility study. Whether you are embarking on a new business venture, product development, or a large-scale project, understanding these essential aspects will help you evaluate the potential of your project and make informed decisions.
How To Measure Feasibility of a Project
As per the Lean Six Sigma training, there are 2 important factors for judging viability inside a project feasibility assessment. The 1st of them is the cost needed, and the 2nd is the quality that must be supplied. A study that has been thoroughly planned and designed must include the following:
- Brief history of the company issue or potential for change
- Simple overview of the item or service
- Marketing studies
- Financial reports
- Operational details and managerial information
- Legal requirements
- Tax responsibilities
Why Should You Perform A Feasibility Study?
There are plenty of reasons why you should conduct a feasibility study for your project. Here are some of them:
- Some projects cannot be completed.
- It is not necessary to take on every project
- Executing every project can divert potentially valuable resources to a low-value endeavor.
- Not all projects make optimal use of resources.
A feasibility study entails defining a company issue or potential for improvement, analyzing operations, defining customer needs (which might include both internal and external customers), and agreeing on a plan of action.
Perks Of Doing A Project Feasibility Study
Now let’s take a brief look at some of the advantages of doing a project feasibility study. Doing a feasibility study for your project will always be valuable, as it provides a clear image of any business issue or growth opportunity to all relevant people involved, including stakeholders.
Benefits Of Conducting A Feasibility Study #1 – Properly Justify Why You Are Taking The Project
Talking about why you want to take on the project will help your team in identifying legitimate reasons for pursuing the project. Keep in mind that not all reasons will be legitimate.
It’s also critical for all the team members to be able to evaluate the reason’s validity in regards to information, facts, and numbers. The project feasibility study assists the team members in quantifying the legitimacy of the grounds for undertaking a project. Don’t go with your instinct, use the data.
Benefits Of Conducting A Feasibility Study #2 – Plan All The Fundamental Details Before Starting
Making a thorough plan before the project starts will enable the project team in making key decisions ahead of the start of the project. The major choice might be whether the project is feasible or not, as well as logistically and financially sustainable.
Benefits Of Conducting A Feasibility Study #3 – Focus On The Problems And Finding Their Solutions
A project feasibility study assists project teams in prioritizing business issues or opportunities for improvement. Naturally, the prioritizing is done quantitatively.
Benefits Of Conducting A Feasibility Study #4 – Find The Scope
Narrowing down the scope of a business challenge is another benefit of conducting a project feasibility study. The nature of the business issue might be complicated and enormous. In this instance, narrowing the overall scale of the issue or improvement potential is important to lessen the intricacy. A few improvement initiatives will not be enough to fix all of the institution’s problems. So, as long as the business challenges are interconnected, you’ll have to examine each of them independently.
Benefits Of Conducting A Feasibility Study #5 – Estimate The Project’s Rate Of Success
By examining several criteria, the research aids in improving the project’s chances of success. The rule is straightforward, a 360-degree feasibility study is required for the project. The research must take into account all essential elements for the stated business challenge or improvement potential. It guarantees project success about 95 percent of the time or more.
Usual Project Feasibility Study Problems You’ll Come Across
We must understand the frequent project challenges that project teams face in order to properly complete the project feasibility research. Some of the usual project issues you will be coming across are:
- Not Important For The Customer Or The Business’ Needs
- Can’t Specify What A Fault Is
- Difficulties Collecting Data
- The Scope For The Project Is Too Broad
- Sponsors Aren’t Providing Adequate Support.
Let’s go through each of them individually to learn more about them.
Not Important For The Customer Or The Business’ Needs
This problem is more common than you think. Sometimes, the project will simply be unrelated to the demands of the client or the business. If a Six Sigma project isn’t related to consumer or business needs, it will almost surely fail. After all, it must be a critical business requirement. All business important and non-urgent problems can’t be addressed in a single initiative. This problem will be addressed by a project feasibility study.
Can’t Specify What A Fault Is
The failure to identify any form of fault or process boundary is our second common issue. When the team is unable to detect one or more faults for the business issue under examination, the chances of having to evaluate the feasibility study for the project again becomes very high. Furthermore, if the team is unable to define Starting and Ending marks, the problem must be rectified immediately.
Having Difficulties Collecting Data
The next point to consider is the complexities of data collecting. Prior to the start of the project, the project teammates must always verify that data collecting is not complicated. The Six Sigma process is information-driven and very rigorous. The project team might not be able to advance at all throughout different phases of the project cycle if they do not have enough information and data. The project may be put on hold if data is not available. A project feasibility study aids in the validation of measuring methodologies.
The Scope For The Project Is Too Broad
This issue connects to the project’s scope. It’s conceivable that the business issue or growth opportunity is just so large and complicated that the team won’t be able to commit deadlines and resources. These business issues should not be tackled all at once. A project feasibility study will assist with this by dividing the problem.
Sponsors Aren’t Providing Adequate Support
The final common issue to consider is related to sponsorship assistance. Six Sigma is a method that works from the ground up. Every single Six Sigma initiative needs strategic approvals from senior management to prosper. A project feasibility study may provide you with all the ammo you need to acquire all the key decision-makers you need to join you on board.
Evaluating Project Viability
Before diving into the details of a feasibility study, it’s crucial to evaluate the overall viability of your project. Consider the following factors:
1. Market Demand and Opportunities:
Assess the current market demand for your project’s product or service. Identify opportunities, analyze market trends, and evaluate the potential customer base.
2. Competitive Landscape:
Understand the competitive landscape and how your project will differentiate itself from existing competitors. Identify your unique selling proposition and assess potential barriers to entry.
3. Project Alignment with Strategic Goals:
Ensure that your project aligns with the strategic goals and objectives of your organization or stakeholders. Evaluate how the project fits into the overall business strategy and contributes to long-term growth.
Analyzing Potential Risks
Risks are inherent in any project. A thorough analysis of potential risks helps you anticipate challenges and develop strategies to mitigate them. Consider the following:
1. Technical Feasibility:
Assess the technical feasibility of your project by evaluating the availability of necessary technology, infrastructure, and expertise required for successful implementation.
2. Operational Risks:
Analyze potential operational risks, such as resource availability, project complexity, dependencies, and constraints. Identify critical success factors and develop contingency plans.
3. Legal and Regulatory Compliance:
Ensure that your project complies with relevant legal and regulatory requirements. Identify potential compliance issues and evaluate the impact on project feasibility.
Effective resource management is crucial for project success. Evaluate the availability and adequacy of the following resources:
1. Human Resources:
Assess the availability of skilled personnel required for project execution. Consider factors such as expertise, capacity, and training needs.
2. Financial Resources:
Evaluate the financial feasibility of your project by analyzing the required investment, anticipated revenue streams, and potential return on investment. Consider funding options and cash flow projections.
3. Material Resources:
Analyze the availability and cost of materials, equipment, and technology needed for project implementation. Consider potential suppliers, logistics, and procurement strategies.
Determining Financial Feasibility
A critical aspect of a feasibility study is assessing the financial viability of your project. Consider the following:
1. Cost-Benefit Analysis:
Conduct a comprehensive cost-benefit analysis to evaluate the projected costs, potential benefits, and financial returns of your project. Consider both short-term and long-term financial implications.
2. Return on Investment (ROI):
Determine the expected return on investment and payback period for your project. Assess the profitability and financial sustainability of your project over the desired timeframe.
3. Sensitivity Analysis:
Perform sensitivity analysis to assess the impact of various factors, such as changes in costs, market conditions, or project scope, on the financial viability of your project.
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Try the first two modules of Brain Sensei’s story-based PMP and CAPM Exam Prep courses and a mini practice exam and see how it all works
A thorough feasibility study is a critical step in project planning, helping you evaluate the viability, assess risks, and determine the financial feasibility of your project. By keeping these five key considerations in mind, you can make informed decisions, mitigate risks, and set your project on the path to success. Embrace the feasibility study as a valuable tool to ensure that your project is well-founded, achievable, and aligned with your strategic goals.
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