What is Feasibility Study?
986 reads · Last updated: December 5, 2024
A feasibility study is a detailed analysis that considers all of the critical aspects of a proposed project in order to determine the likelihood of it succeeding.Success in business may be defined primarily by return on investment, meaning that the project will generate enough profit to justify the investment. However, many other important factors may be identified on the plus or minus side, such as community reaction and environmental impact.Although feasibility studies can help project managers determine the risk and return of pursuing a plan of action, several steps should be considered before moving forward.
Definition
A feasibility study is a detailed analysis aimed at evaluating all critical aspects of a proposed project to determine its likelihood of success. It is typically used to assess factors such as return on investment, community response, and environmental impact.
Origin
The concept of feasibility studies originated in the mid-20th century as businesses and project management became more complex, prompting systematic evaluations of project viability. Early feasibility studies were often conducted for large infrastructure projects like railways and highways.
Categories and Features
Feasibility studies can be categorized into technical, economic, legal, operational, and scheduling feasibilities. Technical feasibility assesses the availability and applicability of the technology required for the project; economic feasibility analyzes the cost-benefit of the project; legal feasibility checks the project's legal compliance; operational feasibility evaluates the operational capabilities; and scheduling feasibility focuses on the project's timeline and deadlines.
Case Studies
A typical case is Tesla's feasibility study in 2014 for its Gigafactory. The study assessed the technical and economic feasibility of establishing a battery production plant in Nevada, leading to a $5 billion investment decision. Another case is Disney's feasibility study for Disneyland Paris, which, despite identifying potential cultural and economic challenges, led to the project's advancement.
Common Issues
Common issues investors face when conducting feasibility studies include misestimating market demand, overlooking potential legal hurdles, and underestimating project time and costs. To avoid these issues, it is recommended to conduct comprehensive market research, seek legal advice, and develop a detailed project plan.
