What is Feasibility Study in Project Management?

A feasibility study is one of the easy terms; a feasibility study is a critical study to do, especially when starting a project or business. By carrying out this feasibility study, you can assess and analyze a company’s or project’s feasibility if implemented.

Essential things to do when starting a project or building a business. By doing this, you can assess and also analyze business feasibility.

When you are about to start a new business, an idea alone is not enough to create success in business. The picture needs to be studied more deeply to determine whether the concept is feasible.

This study must assess whether all resources and logistics have been prepared. In addition, the feasibility study can also analyze the Return on Investment (ROI) figure that will be obtained by the company or project organizer.

Into to Feasibility Study

A feasibility study is one of the essential things to do when starting a project or building a business. By doing this, you can assess and also analyze business feasibility.

When you are about to start a new business, an idea alone is not enough to create success in business. The picture needs to be studied in more depth to determine whether the idea is feasible.

This study must assess whether all resources and logistics have been prepared. In addition, the feasibility study can also analyze the Return on Investment (ROI) figure that will be obtained by the company or project organizer.

Definition

The feasibility study is an analysis of the feasibility of an idea. This term comes from English which means feasibility study.

Quoted from the book Feasibility Study (FS) for the Development of Gor Type B by Dedi Syafikri, a feasibility study will help us answer questions and decide whether a business is feasible to run. A business can run if the company can provide sufficient cash flow and profits.

Apart from that, a good business can also withstand any risks. A viable business is also a business that can realize its founders’ vision and mission.

The feasibility study will help entrepreneurs to be able to make the right decisions for the business they are running. This will also help minimize the risk of loss while the company operates.

Types of Feasibility Study

There are 4 types of feasibility studies that are commonly used by companies. Each type certainly has a different role. The following types of feasibility study examples include:

1. Economic Feasibility Study

The first type of feasibility study is from an economic standpoint. Generally, this type of feasibility study involves analyzing costs and assisting the company in assessing the project’s feasibility before financial capital is used.

The economic feasibility study also acts as a benchmark for project capability and can increase project credibility. As a result, the company can make decisions, so later the project can positively impact the company’s economy.

2. Technical Feasibility Study

This type of feasibility study relies on the technical capacity of the company.

A technical feasibility study can assist a company in determining whether its technical capacity has met the resources required for the project and is capable of transforming the concept into the best working system.

The technical feasibility study also includes an evaluation of the software, hardware, and other technical aspects announced during the project planning stage.

3. Operational Feasibility Study

An operational feasibility study is an analytical study related to assessing the implementation of a project can be fulfilled optimally or not. This type of feasibility study can also verify the extent to which the project plan meets the requirements, in this case, at the project development analysis stage.

4. Legal Feasibility Study

The last type of feasibility study is a legal feasibility study. This study is used to identify factors in the project that are contrary to legal provisions, namely laws.

Feasibility Aspects

Meanwhile, regarding the implementation of the feasibility study, you also need to know what aspects must be considered when conducting a feasibility study. Some aspects of the feasibility study are:

1. Operational aspects

From an operational standpoint, the feasibility of a project can determine the expertise and skills of human resources.

This expertise and skills can provide a more specific picture regarding the operating system that carries out the project.

2. Market aspect

Then, the aspects that need to be considered in the feasibility study are market analysis. This analysis includes an analysis of the company’s products or services, supply analysis, demand analysis, marketing strategy analysis, and market penetration analysis.

3. Economic aspects

The economic aspect focuses on forecasting the country’s economic conditions for the next five years and predicting the growth rate of the business industry from the projects being implemented.

4. Financial aspects

The financial aspect of the feasibility study includes capital, investment, and reinvestment from the flow of expenditure and cash receipts for the entire project. In addition, the application of taxes must also be considered on the project to be carried out.

5. Environmental aspects

Related to the impact on the environment around the project, including natural, social, and cultural elements.

6. Organizational aspects

Then the last aspect of the feasibility study is the organizational aspect. This aspect measures how many human resources are needed to be able to run a project. Prospective workers can assess quality and quantity.

Components

After knowing the meaning of a feasibility study and its types, the next thing you need to understand about a feasibility study is the components in it, which include:

  • executive summary
  • Details of technology requirements
  • Market analysis
  • Marketing strategy
  • Required human resources
  • Project schedule
  • Financial details
  • Study results and recommendations

Feasibility Practices

The tools for the following feasibility study refer to practice or how the analysis works.

While every project has unique goals and needs, this type of research offers the same practical stages with satisfying results.

Almost all companies can even follow how it works from different industrial sectors.

The following are several feasibility study practices that you can practice for company project needs.

1. Perform initial analysis stages, such as seeking feedback on the new concept of the project from appropriate stakeholders.

2. Analyze the quality and ask questions regarding the data obtained in the initial phase of the research.

3. Conduct surveys or market research to identify demand and opportunities to pursue project goals.

4. Write organizational, operational, and business plans, including identifying the amount of labor needed, how much it will cost, and for how long.

5. Prepare a projected income statement, which includes revenue, and operating expenses.

6. Prepare an opening day balance sheet.

7. Identify barriers and potential vulnerabilities and how to overcome them.

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