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Feasibility study

A feasibility study is an assessment of the

practicality of a proposed project or
system. A feasibility study aims to
objectively and rationally uncover the
strengths and weaknesses of an existing
business or proposed venture,
opportunities and threats present in the
natural environment, the resources
required to carry through, and ultimately
the prospects for success.[1][2] In its
simplest terms, the two criteria to judge
feasibility are cost required and value to be
attained.[3]

A well-designed feasibility study should

provide a historical background of the
business or project, a description of the
product or service, accounting statements,
details of the operations and
management, marketing research and
policies, financial data, legal requirements
and tax obligations.[1] Generally, feasibility
studies precede technical development
and project implementation. A feasibility
study evaluates the project's potential for
success; therefore, perceived objectivity is
an important factor in the credibility of the
study for potential investors and lending
institutions.[4] It must therefore be
conducted with an objective, unbiased
approach to provide information upon
which decisions can be based.

Formal definition
A project feasibility study is a
comprehensive report that examines in
detail the five frames of analysis of 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.[5]. The five frames of analysis
are: The frame of definition; the frame of
contextual risks; the frame of potentiality;
the parametric frame; the frame of
dominant and contingency strategies.

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.

The constraints are the standard

constraints of calendar, costs and norms
of quality that can each be objectively
determined and measured along the entire
project lifecycle. 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.
Common factors
The acronym TELOS refers to the five
areas of feasibility - Technical, Economic,
Legal, Operational and Scheduling.

Technical feasibility …

This assessment is based on an outline

design of system requirements, to
determine whether the company has the
technical expertise to handle completion
of the project.[6][7][8] When writing a
feasibility report, the following should be
taken to consideration:

A brief description of the business to

assess more possible factors which
could affect the study
The part of the business being
examined
The human and economic factor
The possible solutions to the problem

At this level, the concern is whether the

proposal is both technically and legally
feasible (assuming moderate cost).
The technical feasibility assessment is
focused on gaining an understanding of
the present technical resources of the
organization and their applicability to the
expected needs of the proposed system. It
is an evaluation of the hardware and
software and how it meets the need of the
proposed system[9]

Method of production …

The selection among a number of

methods to produce the same commodity
should be undertaken first. Factors that
make one method being preferred to other
method in agricultural projects are the
following:

Availability of inputs or raw materials

and their quality and prices.
Availability of markets for outputs of
each method and the expected prices
for these outputs.
Various efficiency factors such as the
expected increase in one additional unit
of fertilizer or productivity of a specified
crop per one thing
Production technique …

After we determine the appropriate

method of production of a commodity, it is
necessary to look for the optimal
technique to produce this commodity.

Project requirements …

Once the method of production and its

technique are determined, technical
people have to determine the projects'
requirements during the investment and
operating periods. These include:
Determination of tools and equipment
needed for the project such as drinkers
and feeders or pumps or pipes …etc.
Determination of projects' requirements
of constructions such as buildings,
storage, and roads …etc. in addition to
internal designs for these requirements.
Determination of projects' requirements
of skilled and unskilled labor and
managerial and financial labor.
Determination of construction period
concerning the costs of designs and
 consultations and the costs of
constructions and other tools.
Determination of minimum storage of
inputs, cash money to cope with
operating and contingency costs.

Project location …

The most important factors that determine

the selection of project location are the
following:

Availability of land (proper acreage and

reasonable costs).
 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.

Legal feasibility …
It determines whether the proposed
system conflicts with legal requirements,
e.g., a data processing system must
comply with the local data protection
regulations and if the proposed venture is
acceptable in accordance to the laws of
the land.

Operational feasibility study …

Operational feasibility is the measure of

how well a proposed system solves the
problems, and takes advantage of the
opportunities identified during scope
definition and how it satisfies the
requirements identified in the
requirements analysis phase of system
development.[10]

The operational feasibility assessment

focuses on the degree to which the
proposed development project fits in with
the existing business environment and
objectives with regard to development
schedule, delivery date, corporate culture
and existing business processes.
To ensure success, desired operational
outcomes must be imparted during design
and development. These include such
design-dependent parameters as reliability,
maintainability, supportability, usability,
producibility, disposability, sustainability,
affordability and others. These parameters
are required to be considered at the early
stages of design if desired operational
behaviours are to be realised. A system
design and development requires
appropriate and timely application of
engineering and management efforts to
meet the previously mentioned
parameters. A system may serve its
intended purpose most effectively when
its technical and operating characteristics
are engineered into the design. Therefore,
operational feasibility is a critical aspect of
systems engineering that needs to be an
integral part of the early design phases.[11]

Time feasibility …

A time feasibility study will take into

account the period in which the project is
going to take up to its completion. A
project will fail if it takes too long to be
completed before it is useful. Typically this
means estimating how long the system
will take to develop, and if it can be
completed in a given time period using
some methods like payback period. Time
feasibility is a measure of how reasonable
the project timetable is. Given our
technical expertise, are the project
deadlines reasonable? Some projects are
initiated with specific deadlines. It is
necessary to determine whether the
deadlines are mandatory or desirable.
Other feasibility factors

Resource feasibility …

Describe how much time is available to

build the new system, when it can be built,
whether it interferes with normal business
operations, type and amount of resources
required, dependencies, and
developmental procedures with company
revenue prospectus.

Financial feasibility …
In case of a new project, financial viability
can be judged on the following
parameters:

Total estimated cost of the project

Financing of the project in terms of its
capital structure, debt to equity ratio and
promoter's share of total cost
Existing investment by the promoter in
any other business
Projected cash flow and profitability

The financial viability of a project should

provide the following information:[12]
Full details of the assets to be financed
and how liquid those assets are.
Rate of conversion to cash-liquidity (i.e.,
how easily the various assets can be
converted to cash).
Project's funding potential and
repayment terms.
Sensitivity in the repayments capability
to the following factors:
Mild slowing of sales.
Acute reduction/slowing of sales.
Small increase in cost.
 Large increase in cost.
Adverse economic conditions.

In 1983 the first generation of the

Computer Model for Feasibility Analysis
and Reporting (COMFAR), a computation
tool for financial analysis of investments,
was released. Since then, this United
Nations Industrial Development
Organization (UNIDO) software has been
developed to also support the economic
appraisal of projects. The COMFAR III
Expert is intended as an aid in the analysis
of investment projects. The main module
of the program accepts financial and
economic data, produces financial and
economic statements and graphical
displays and calculates measures of
performance. Supplementary modules
assist in the analytical process. Cost-
benefit and value-added methods of
economic analysis developed by UNIDO
are included in the program and the
methods of major international
development institutions are
accommodated. The program is
applicable for the analysis of investment in
new projects and expansion or
rehabilitation of existing enterprises as,
e.g., in the case of reprivatisation projects.
For joint ventures, the financial perspective
of each partner or class of shareholder
can be developed. Analysis can be
performed under a variety of assumptions
concerning inflation, currency revaluation
and price escalations.[13]

Market research studies

This is one of the most important sections
of the feasibility study as it examines the
marketability of the product or services
and convinces readers that there is a
potential market for the product or
services. If a significant market for the
product or services cannot be established,
then there is no project. Typically, market
studies will assess the potential sales of
the product, absorption and market
capture rates and the project's timing. The
feasibility study outputs the feasibility
study report, a report detailing the
evaluation criteria, the study findings, and
the recommendations.[14]
See also
Project appraisal
Environmental impact
Mining feasibility study
Proof of concept
SWOT analysis

References
1. Justis, R. T. & Kreigsmann, B. (1979).
The feasibility study as a tool for
venture analysis. Business Journal of
 Small Business Management 17 (1)
35-42.
2. Georgakellos, D. A. & Marcis, A. M.
(2009). Application of the semantic
learning approach in the feasibility
studies preparation training process.
Information Systems Management 26
(3) 231-240.
3. Young, G. I. M. (1970). Feasibility
studies. Appraisal Journal 38 (3) 376-
383.
4. Feasibility studies as a tool for
successful co-operative business
enterprises "(A case study of the
importance of Feasibility students to
co-operative investment)" .
grossarchive.com. Retrieved
2015-11-09.
5. Mesly, Olivier. (2017). Project
feasibility – Tools for uncovering
points of vulnerability. New York, NY:
Taylor and Francis, CRC Press. 546
pages. ISBN 9 781498 757911. See
page 130.
6. Blecke, Curtis. Financial Analysis for
Decision making. Englewood Cliffs,
N.J.: prentice-Hall, 1966
7. Caiden, Naomi, and Aaron Wildovsky.
planning and Budgeting in Poor
Countries. New York: John Wiley and
Sons, 1974
8. Pouliquen, Louis Y. Risk Analysis in
Project Appraisal. World Bank Staff
Occasional Papers, no. 11. Baltimore:
Johns Hopkins University Press, 1970.
 9. O'Brien, J. A., & Marakas, G. M. (2011).
Developing Business/IT Solutions. In
Management Information Systems
(pp. 488-489). New York, NY: McGraw-
Hill/Irwin.
10. Bentley, L & Whitten, J (2007). System
Analysis & Design for the Global
Enterprise. 7th ed. (p. 417).
11. Benjamin S. Blanchard & Wolt
Fabrycky (uk). Systems Engineering &
Analysis . 5th ed. (p. 361).
12. Finance, Department of (30 October
2013). "ASSESSING FINANCIAL
VIABILITY" . www.finance.gov.au.
Archived from the original on 17
December 2017. Retrieved
21 November 2015.
13. COMFAR III Expert Reference Manual
United Nations Industrial Development
Organisation.
14. Michele Berrie (September 2008),
Initiating Phase - Feasibility Study
Request and Report

Further reading
 Matson, James. "Cooperative Feasibility
Study Guide" , United States Department
of Agriculture, Rural Business-
Cooperative Service. October 2000.
https://pilotandfeasibilitystudies.qmul.a
c.uk/

External links

The Wikibook Professional and

Technical Writing has a page on the
topic of: Feasibility
 Wikimedia Commons has media
related to Feasibility studies.

Hoagland & Williamson 2000

United Nations Industrial Development
Organization (UNIDO)
Matson
Allan Thompson 2003

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