What Is a Feasibility Study?
What Is a Feasibility Study? From the Nigerian perspective.
What Is a Feasibility Study?
A feasibility study is an analysis that takes all of a project’s relevant factors into account—including economic, technical, legal, and scheduling considerations—to ascertain the likelihood of completing the project successfully. Project managers use feasibility studies to discern the pros and cons of undertaking a project before they invest a lot of time and money into it.
Feasibility studies are the assessment of the practicality of proposed plans or projects. As the name implies, these studies ask: Is this project feasible? Do we have the people, tools, technology, and resources necessary for this project to succeed? Will the project get us the return on investment (ROI) that we need and expect?
A feasibility study is part of the initial design stage of any project/plan. It is conducted in order to objectively uncover the strengths and weaknesses of a proposed project or an existing business. It can help to identify and assess the opportunities and threats present in the natural environment, the resources required for the project, and the prospects for success.
Generally, feasibility studies evaluate projects potential for success; therefore It must be conducted with an objective, unbiased approach to provide information upon which decisions can be based.
Project Feasibility Study
A project feasibility study is a comprehensive report that examines in detail and analyses a given project. It also takes into consideration its four Ps, its risks and POVs, and its constraints (calendar, costs, and norms of quality). The goal is to determine whether the project should go ahead, be redesigned, or else abandoned altogether.
The four Ps are traditionally defined as Plan, Processes, People, and Power. The risks are considered to be external to the project (e.g., weather conditions) and are divided in eight categories: (Plan) financial and organizational (e.g., government structure for a private project); (Processes) environmental and technological; (People) marketing and sociocultural; and (Power) legal and political. POVs are Points of Vulnerability: they differ from risks in the sense that they are internal to the project and can be controlled or else eliminated. Depending on projects, portions of the study may suffice to produce a feasibility study; smaller projects, for example, may not require an exhaustive environmental assessment.
The most important factors that determine the selection of project location are the following:
- Availability of land or buildings.
- The impact of the project on the environment and the approval of the concerned institutions for license.
- The costs of transporting inputs and outputs to the project’s location (i.e., the distance from the markets).
- Availability of various services related to the project such as availability of extension services or veterinary or water or electricity or good roads …etc.
The objective study may be completed in conjunction with a SWOT planning process, which looks at the strengths, weaknesses, opportunities, and threats that may be present externally (the environment) or internally (resources). Feasibility studies help determine:
a) does the company possess the required resources or technologies needed; and
b) does the plan/proposal offer a reasonable return vs. risk from the investment.
Feasibility studies can be used in many ways but primarily focus on proposed business ventures. Farmers and others with a business idea should conduct a feasibility study to determine the viability of their idea before proceeding with the development of a business. Determining early that a business idea will not work saves time, money, and heartache later.
A feasible operating business structure is one where the business will generate adequate cash-flow and profits to withstand (a) the short-term risks it will encounter, and (b) remain viable in the long-term to meet the goals of the owner/founders. The venture might be an investment start-up or the purchase/expansion of an existing business, beyond its present business footprint or enterprise.