Feasibility analysis - is a detailed study of the workability of the project, solution or any other process. It should be conducted before the implementation stage. Its aim is to detect wether given operation is more likely to be a success or a failure. The study covers different areas of the project, e.g. technical, financial, organisational or legal. The feasibility analysis should be conducted on internal level - focusing on the strengths and weaknesses of the executors which may influence the project, as well as on the external level - taking under consideration the external threats. The analysis methods and examined areas differ among the projects, however the feasibility study can be applied to all kids of proposals. The credibility of the study is of great importance, so as the outcomes are reliable and can be used in the decision making process further on. The results of feasibility study help to asses if the project is reasonable and should be finalised.
How to organise a study
1. Project definition - visualise the project, see the goal, want to cooperate and share the enthusiasm, set the individual interests, describe the project briefly and understand it, already have some numbers - quantify the project, define the scope of the project (what it deals with and what it doesn’t). Make the project complete before making and analytical study in it. Otherwise it can be a waste of time and money.
2. Group characteristics - prior to conducting feasibility study a group of project members should be wisely chosen. Motivation and ambitions of the members are key to lead to the project’s implementation. However, at different stages of the project a specialists may be needed, e.g. lawyers. analytics, etc. It is essential to identify which actors may be needed in the project and most importantly - establish a strong leadership team. The group should depend on the scale and scope of the project as well.
3. Group decisions - since the outcomes of the feasibility study may be used as support in decision making process, it is useful to clarify the attitude of group members towards decision making. It is useful knowledge if they are willing to invest into the prior-implementation study? If they are a risk takers or prefer to play it safe? Are they fast to decide or rather use to elaborate for a long time on the best solution? In addition, it should be decided together with representatives if the costs of the study do not exceed the costs of potential failures. Possibly establish a guideline for decision-making.
4. Feasibility study decisions - before beginning the feasibility analysis several issues should be clarified. First of all the project to be studied should be clearly described and its boundaries should be set. Secondly, the main areas of interest of the study should be identified. It is costly and time consuming to investigate all aspects connected with the project on that some precision level. Usually some factors are more significant than others, e.g. low budget, competition market, time limitations. It is recommended to prioritise the research areas. Next, it ought to be decided who would be the conductor of the study, how to analyse the findings, how they would be applied. The prior assumptions and thesis are welcome as well.
After making a decision to conduct a study, there are three possibilities of who would be in charge of this study.
The first possibility is to have the analysis done by one of the group members. The advantages are detailed knowledge and deep understanding of the studied project. Additionally, this solution is cheaper than others. Disadvantages of this solution include the increased risk of subjectiveness influencing the outcomes of the study. Group members tend to be determined to realise the project, hence they may overlook some negative factors. Another issue is that team members may not have a wide enough perspective or the reference point, simply because they have not been assessing other projects before. They may be lacking expertise. Last but not least, the potential project investors and sponsors often perceive the internal feasibility studies as less reliable than internal ones.
Hiring an external consultant increases objectivity of the study. However it is more expensive than internal analysis and demands some additional time to explain the project to the consultant in detail and make sure they understand it. Still, the single consultant cannot be an expert in every field, so if this method is chosen it is essential to make sure that that the consultant is an expert in the fields prioritised in the feasibility study.
Asking the specialists from different fields to conduct a feasibility study for the study components corresponding with their specialisation. The solution is appropriate for big, complex projects, which are covering various fields. Since it is the most expensive way of conducting feasibility study the budget of the project needs to be higher as well. It provides the most detailed assessment which is reliable for the investors. People analysing particular factors of the project have wider perspective and can uncover the risks or opportunities which were not thought about before by the team members.
Components of the study
Bryce Tim, The Elements of a Good Feasibility Study, 2015