Frequently asked questions about feasibility study
-What is a feasibility study?
A feasibility study is an analysis that considers all of a project’s relevant factors, including economic, technical, legal, and scheduling considerations, to ascertain the likelihood of completing the project successfully. The term feasibility study typically refers to a pre-business or preliminary plan for obtaining financing for major projects. The feasibility study details the potential success of the project, including whether it will be profitable for investors. A feasibility study is often used for simple purposes, such as determining whether someone should invest time and capital building a product or a service.
-What are the typical steps of a feasibility study?
A feasibility study typically follows three steps:
1.Preliminary screening of the project idea to determine if it is worth the time and money necessary for a full-scale analysis
2.Detailed examination of all relevant factors such as management capability, economic climate, market demand, and financing options
3.Preparation of a final report to justify the decision to continue or stop the project
-What is the function of a feasibility study?
Feasibility studies provide information that can help decision makers determine whether to move forward with a given project. For example, an app developer may use a feasibility study to determine whether the market needs the product, or an investor may use the study to decide whether there is enough return on investment to invest capital on a project.
-How is a feasibility study different from other project evaluations?
Other types of evaluations include operational and managerial performance reviews. Whereas a feasibility study has a clear goal: to determine whether the project should be continued or stopped; an operational review may consider many factors that have nothing to do with continuing or stopping a project. For example, while feasibility studies consider financial forecasting of a project, managerial performance reviews typically look at issues like leadership skills and style, which has nothing to do with continuing or stopping a project.
-When is a feasibility study used?
The main use of a feasibility study is to determine whether the project should be continued. For example, a business owner would like to know if his new product idea will sell in the market, or an attorney would like to know if it is worth filing a patent for a client’s invention or if the client should look for another option such as trademarking.
-Where is a feasibility study used?
A feasibility study can be applied in any setting where there is uncertainty about whether to move forward with a particular project. This includes business settings where management needs to determine if financial resources should be invested in a new product or if they are better off spending money of a different project.