A Feasibility Study is a formal project document that shows results of the analysis, research and

evaluation of a proposed project and determines if this project is technically feasible, cost-effective and
profitable. The primary goal of feasibility study is to assess and prove the economic and technical
viability of the business idea. A project feasibility study allows exploring and analysing business
opportunities and making a strategic decision on the necessity to initiate the project. For each project
passing through the Initiation Phase, a feasibility study should be developed in order for investors to
ensure that their project is technically feasible, cost-effective and profitable. A thorough feasibility study
can give you the right answer before you spend money, time and resources on an idea that is not viable.
It must therefore be conducted with an objective, unbiased approach to provide information upon which
decisions can be based.

If you are planning on conducting a feasibility study, you will need to include the following important
elements:

The project scope:The first step is to clearly define the business problem/opportunity that has to be
addressed. The project scope has to definitive and to the point. Rambling narratives serves no purpose
and can actually confuse participants. Also ensure that you define the parts of the business that would
be affected either directly or indirectly. This would include project participants and end-users. A well-
defined project scope can ensure an accurate feasibility study. Starting a project without a well-defined
scope can easily lead to wandering outside budget and time.

The current Market analysis:This step is critical as it examines the business environment in which the
new product or service will be placed. From this analysis, you can discover the strengths and
weaknesses of the current approach. Reviewing the strengths, weaknesses, opportunities, and threats
faced by a project helps decision makers focus on the big picture. In some organizations, the executives
may not want to approach a new market unless they know they can dominate it. Other companies prefer
to focus on profits gained instead of market share.

The requirements:This component represents two groups of requirements, including technical

requirements and organizational requirements. If there is a potential market and demand for the
product or service then you need to identify what technical and resource requirements are needed for
the new venture. You will need to define your requirements depending on the objective of your project.
Project managers that understate the physical and fiscal resources required for a new product or service
often end up with failed projects or unfulfilled promises.

The approach:You will next have to consider and choose the recommended solution or course of action
to meet your requirements. You can consider various alternatives and then choose a solution that is the
most preferable. Before you finalize on the approach, ask yourself the following questions: Does the
approach meet my requirements? Is the approach taken a practical and viable solution?
Evaluation: Examines the cost effectiveness of the selected approach and the estimated total cost of the
project. Other alternatives will also be estimated for comparison purposes. After the total cost of the
project has been calculated, an evaluation and cost summary will be prepared to include a return on
investment, cost/benefit analysis etc.

Review:Finally, all the above elements will be assembled into a feasibility study and a formal review will
be conducted. The review will be used verify the accuracy of the feasibility study and to make a project
decision. At this stage, you can approve, reject or even revise the study for making a decision. If the
feasibility study is approved, make sure that all the involved parties sign the document.