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What Is a Feasibility Study?

Understanding a feasibility study, how to conduct a feasibility study, the bottom line.

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Feasibility Study

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.

Key Takeaways

• A company may conduct a feasibility study when it’s considering launching a new business, adding a new product line, or acquiring a rival.
• A feasibility study assesses the potential for success of the proposed plan or project by defining its expected costs and projected benefits in detail.
• It’s a good idea to have a contingency plan on hand in case the original project is found to be infeasible.

Lara Antal / Investopedia

A feasibility study is an assessment of the practicality of a proposed plan or project. A feasibility study analyzes the viability of a project to determine whether the project or venture is likely to succeed. The study is also designed to identify potential issues and problems that could arise while pursuing the project.

As part of the feasibility study, project managers must determine whether they have enough of the right people, financial resources, and technology. The study must also determine the return on investment, whether this is measured as a financial gain or a benefit to society, the latter in the case of a nonprofit project.

The feasibility study might include a cash flow analysis, measuring the level of cash generated from revenue vs. the project’s operating costs . A risk assessment must also be completed to determine whether the return is enough to offset the risk of undergoing the venture.

When doing a feasibility study, it’s always good to have a contingency plan that is ready to test as a viable alternative if the first plan fails.

Benefits of a Feasibility Study

There are several benefits to feasibility studies, including helping project managers discern the pros and cons of undertaking a project before investing a significant amount of time and capital into it.

Feasibility studies can also provide a company’s management team with crucial information that could prevent them from entering into a risky business venture.

Such studies help companies determine how they will grow. They will know more about how they will operate, what the potential obstacles are, who the competition is, and what the market is.

Feasibility studies also help convince investors and bankers that investing in a particular project or business is a wise choice.

The exact format of a feasibility study will depend on the type of organization that requires it. However, the same factors will be involved even if their weighting varies.

Preliminary Analysis

Although each project can have unique goals and needs, there are some best practices for conducting any feasibility study:

• Conduct a preliminary analysis, which involves getting feedback about the new concept from the appropriate stakeholders.
• Analyze and ask questions about the data obtained in the early phase of the study to make sure that it’s solid.
• Conduct a market survey or market research to identify the market demand and opportunity for pursuing the project or business.
• Write an organizational, operational, or business plan, including identifying the amount of labor needed, at what cost, and for how long.
• Prepare a projected income statement, which includes revenue, operating costs, and profit .
• Prepare an opening day balance sheet .
• Identify obstacles and any potential vulnerabilities, as well as how to deal with them.
• Make an initial “go” or “no-go” decision about moving ahead with the plan.

Suggested Components

Once the initial due diligence has been completed, the real work begins. Components that are typically found in a feasibility study include the following:

• Executive summary : Formulate a narrative describing details of the project, product, service, plan, or business.
• Technological considerations : Ask what will it take. Do you have it? If not, can you get it? What will it cost?
• Existing marketplace : Examine the local and broader markets for the product, service, plan, or business.
• Marketing strategy : Describe it in detail.
• Required staffing : What are the human capital needs for this project? Draw up an organizational chart.
• Schedule and timeline : Include significant interim markers for the project’s completion date.
• Project financials
• Findings and recommendations : Break down into subsets of technology, marketing, organization, and financials.

Examples of a Feasibility Study

Below are two examples of a feasibility study. The first involves expansion plans for a university. The second is a real-world example conducted by the Washington State Department of Transportation with private contributions from Microsoft Inc.

A University Science Building

Officials at a university were concerned that the science building—built in the 1970s—was outdated. Considering the technological and scientific advances of the last 20 years, they wanted to explore the cost and benefits of upgrading and expanding the building. A feasibility study was conducted.

In the preliminary analysis, school officials explored several options, weighing the benefits and costs of expanding and updating the science building. Some school officials had concerns about the project, including the cost and possible community opposition. The new science building would be much larger, and the community board had earlier rejected similar proposals. The feasibility study would need to address these concerns and any potential legal or zoning issues.

The feasibility study also explored the technological needs of the new science facility, the benefits to the students, and the long-term viability of the college. A modernized science facility would expand the school’s scientific research capabilities, improve its curriculum, and attract new students.

Financial projections showed the cost and scope of the project and how the school planned to raise the needed funds, which included issuing a bond to investors and tapping into the school’s endowment . The projections also showed how the expanded facility would allow more students to be enrolled in the science programs, increasing revenue from tuition and fees.

The feasibility study demonstrated that the project was viable, paving the way to enacting the modernization and expansion plans of the science building.

Without conducting a feasibility study, the school administrators would never have known whether its expansion plans were viable.

A High-Speed Rail Project

The Washington State Department of Transportation decided to conduct a feasibility study on a proposal to construct a high-speed rail that would connect Vancouver, British Columbia, Seattle, Washington, and Portland, Oregon. The goal was to create an environmentally responsible transportation system to enhance the competitiveness and future prosperity of the Pacific Northwest.

The preliminary analysis outlined a governance framework for future decision making. The study involved researching the most effective governance framework by interviewing experts and stakeholders, reviewing governance structures, and learning from existing high-speed rail projects in North America. As a result, governing and coordinating entities were developed to oversee and follow the project if it was approved by the state legislature.

A strategic engagement plan involved an equitable approach with the public, elected officials, federal agencies, business leaders, advocacy groups, and Indigenous communities. The engagement plan was designed to be flexible, considering the size and scope of the project and how many cities and towns would be involved. A team of the executive committee members was formed and met to discuss strategies, as well as lessons learned from previous projects, and met with experts to create an outreach framework.

The financial component of the feasibility study outlined the strategy for securing the project’s funding, which explored obtaining funds from federal, state, and private investments. The project’s cost was estimated to be $24 billion to $42 billion. The revenue generated from the high-speed rail system was estimated to be $160 million to $250 million.

The report bifurcated the money sources between funding and financing. Funding referred to grants, appropriations from the local or state government, and revenue. Financing referred to bonds issued by the government, loans from financial institutions, and equity investments, which are essentially loans against future revenue that need to be paid back with interest.

The sources for the capital needed were to vary as the project moved forward. In the early stages, most of the funding would come from the government, and as the project developed, funding would come from private contributions and financing measures. Private contributors included Microsoft Inc.

The benefits outlined in the feasibility report show that the region would experience enhanced interconnectivity, allowing for better management of the population and increasing regional economic growth by $355 billion. The new transportation system would provide people with access to better jobs and more affordable housing. The high-speed rail system would also relieve congested areas from automobile traffic.

The timeline for the study began in 2016, when an agreement was reached with British Columbia to work together on a new technology corridor that included high-speed rail transportation. The feasibility report was submitted to the Washington State Legislature in December 2020.

What Is the Main Objective of a Feasibility Study?

A feasibility study is designed to help decision makers determine whether or not a proposed project or investment is likely to be successful. It identifies both the known costs and the expected benefits.

In business, “successful” means that the financial return exceeds the cost. In a nonprofit, success may be measured in other ways. A project’s benefit to the community it serves may be worth the cost.

What Are the Steps in a Feasibility Study?

A feasibility study starts with a preliminary analysis. Stakeholders are interviewed, market research is conducted, and a business plan is prepared. All of this information is analyzed to make an initial “go” or “no-go” decision.

If it’s a go, the real study can begin. This includes listing the technological considerations, studying the marketplace, describing the marketing strategy, and outlining the necessary human capital, project schedule, and financing requirements.

Who Conducts a Feasibility Study?

A feasibility study may be conducted by a team of the organization’s senior managers. If they lack the expertise or time to do the work internally, it may be outsourced to a consultant.

What Are the 4 Types of Feasibility?

The study considers the feasibility of four aspects of a project:

Technical : A list of the hardware and software needed, and the skilled labor required to make them work

Financial : An estimate of the cost of the overall project and its expected return

Market : An analysis of the market for the product or service, the industry, competition, consumer demand, sales forecasts, and growth projections

Organizational : An outline of the business structure and the management team that will be needed

Feasibility studies help project managers determine the viability of a project or business venture by identifying the factors that can lead to its success. The study also shows the potential return on investment and any risks to the success of the venture.

A feasibility study contains a detailed analysis of what’s needed to complete the proposed project. The report may include a description of the new product or venture, a market analysis, the technology and labor needed, and the sources of financing and capital. The report will also include financial projections, the likelihood of success, and ultimately, a “go” or “no-go” decision.

Washington State Department of Transportation. “ Ultra-High-Speed Rail Study .”

Washington State Department of Transportation. “ Cascadia Ultra High Speed Ground Transportation: Framework for the Future .”

Washington State Department of Transportation. “ Ultra-High-Speed Rail Study: Outcomes .”

Washington State Department of Transportation. “ Ultra-High-Speed Ground Transportation Business Case Analysis ,” Page ii (Page 3 of PDF).

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What is a Feasibility Study?

Wondering What is a Feasibility Study? Feasibility Study is a vital process for assessing project viability, risks, and benefits. It helps determine whether a project is practical and achievable. By analysing key factors, it guides decision-making and reduces potential risks. Keep reading this blog to learn more!

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Before starting any project, understanding What is a Feasibility Study is essential to determine whether the idea is practical, achievable, and worth pursuing. A Feasibility Study is a crucial assessment that is conducted to determine the viability and potential success of a project.

By thoroughly examining such factors, stakeholders can make informed decisions regarding the project’s feasibility. Apart from the technical and financial considerations, this study ensures a project’s compliance with relevant laws, regulations and industry standards.

To give you a better overview, this blog will talk about the multiple aspects associated with this. So, let’s dive in to learn What is a Feasibility Study. After reading this blog, stakeholders can make well-informed decisions that enhance the chances of a project’s success.

Table of Contents 

1) Feasibility Study - An Overview

2) Benefits of Conducting a Feasibility Study

3) Types of Feasibility Study

4) What is Included in a Feasibility Study Report?

5) Seven Steps to do a Feasibility Study 

6) Examples of a Feasibility Study

7) How Reliable are Feasibility Studies? 

8) What Percentage is a Feasibility Study?

9) Conclusion

Feasibility Study - An Overview

A feasibility study analyses all aspects of a business proposal, including economic, legal, and technical factors. This in-detail assessment helps businesses determine if they can successfully complete a project and if the expected results justify the resources used. It also identifies potential issues that can be addressed before implementation. Upon completing a feasibility study, businesses can decide whether to proceed with or abandon a project.

Feasibility varies by industry and business goals. For example, one company might measure success by return on investment (ROI) or revenue, while another might focus on customer loyalty and retention. Feasibility studies are applicable to various decisions, from major policy changes to small team assignments.

Benefits of Conducting a Feasibility Study

Conducting a feasibility study before launching a new project offers several key benefits:

a) Confirms market opportunities and target market before committing significant resources.

b) Identifies potential issues and risks early in the process.

c) Provides detailed data for better decision-making regarding the project's viability.

d) Documents expected costs and benefits, including financial analysis.

e) Demonstrates due diligence, gaining stakeholder buy-in.

Feasibility studies are crucial for projects that require substantial investments or have a major impact on your market presence.

As a project manager, you might not directly handle the feasibility study, but understanding its elements can help you support the team conducting it and ensure the best outcomes for your project.

Types of Feasibility Study

Technical Feasibility Study

A technical Feasibility Study aims to verify whether the organisation is eligible to use its technical in-house resources and expertise to perform successfully. This assessment involves scrutinising various aspects, including the following:

a) Production Capacity: Does the company have the resource base to produce that number of products and services for the customers? 

b) Facility Needs: Will today’s facilities fulfil the standards required, or will new facilities be constructed?

c) Raw materials and Supply Chain: Are there enough purchases, and have the organisation maintained a supply chain?

d) Regulatory Compliance: Does the Project Execution follow the relevant guidelines and professionals bear the relevant certifications to meet the requirements and the industry standards?

Economic Feasibility Study 

It is a financial Feasibility Study that primarily examines the project's financial viability. The economic Feasibility Study typically involves several steps:

a) Determining Capital Requirements: Calculate funding collection, overhead, and other capital.

b) Cost Breakdown: Determining and listing all the project costs including the purchase of materials, hardware, labour, and overheard costs are too.

c) Funding Sources: Trying out a variety of possible solutions like banks, stakes, or grants.

d) Revenue Projection: By using prediction tools such as a cost-benefit analysis or business forecasting to get the level of income, return on investment and profit margin.

e) Financial Analysis: Projecting the performance of the Project based on means that are related to a financial analysis and are characterised by the utilisation of such things as cash flow statements, balance sheets and financial projections.

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Legal Feasibility Study  

Legal Feasibility is a type of analysis that seeks to confirm that a pProject follows all the relevant laws and regulations. Key considerations include: 

a) Regulatory Compliance: Briefing the whole project team about all required laws and regulations that the project has to comply with. 

b) Business Structure: Assessing the legal systems (e.g., LLCs vs. corporations) that would best protect liability, governance, and minimising taxation, if any. 

Operational Feasibility Study

An operational Feasibility Study looks at how effectively a product will meet its needs. It also talks about how easy it will be to use and maintain once it is in place. In addition, this study enumerates the necessity of evaluating a product's utility and the response and suggestions of  application development team.

Scheduling Feasibility Study

Proposed project schedules and deadlines are the main subject of a scheduling a Feasibility Study. This evaluation concerns how long team members will need to complete the project. It also highly impacts the business because if the programme isn't finished on time, the planned result might not be realised.

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What is Included in a Feasibility Study Report?

The results of your project feasibility study are gathered in a feasibility report, which typically includes these elements:

a) Executive summary

b) Description of the product/service

c) Technology considerations

d) Product/service marketplace analysis

e) Marketing strategy

f) Organisation and staffing

g) Project schedule

h) Financial projections

i) Findings and recommendations

Seven Steps to do a Feasibility Study

As Feasibility Study is a crucial step in determining the potential of a project, it involves a substantial period of time and resources. Let’s take you through some of the steps involved in the following points:

1) Do a Preliminary Analysis and Define the Scope of the Study

Before going through a Feasibility Study, it is wise to do just one small check. The time and resources involved in Feasibility Studies may be burdensome; hence, it is imperative to determine if it is worth it as early as possible.

Through this form, one can establish whether the study holds awarding potential and who else should be involved on a higher level. You further this stage by answering questions like what you might win, what pitfalls you will face, and what you need for the success of the project.

2) Prepare a Projected Income Statement

First, while doing a Feasibility Study, you should obtain the income statement projection. In this, the statement calculates earnings and expenditures in subsequent one-year amounts. It is made up of the sum of what you will surely get and the cost you will need to cover.

Smaller businesses tend to need marketing strategies to grow into bigger companies. These facts are extremely important because they help business owners make smart decisions regarding the stage of the business.

3) Carry Out Market Research

Market research is of paramount importance or, naturally, it will be of no use when developing the Feasibility Study. Primarily, it operates to ascertain the viability of the project. This point tells you time, which gives you knowledge of the current market state: Who your customers are, who your competitors are, how big the market is, and how many of it you could have. One way of doing this market research is by asking people questions, referring to experts, and checking very broad social media and other public info to find out what's going on.

4) Organisation and Operations Plan

Once you've figured out how the market behaves and the scope of your organisation, you can draft the setup of your plan. The detailed work plan for the project will provide the answer to how it will work in a practical form. It tests three aspects of your project, like whether it can be run, whether it is cost-effective, whether it complies with the law, and whether the technology fits.

This is to help you comprehend everything you can do and what you may require getting this project going, for example, the equipment, the materials to start the project, additional costs, and if you need to hire or train people. If you need to, you may make that change if the information you have brought is enough.

5) Calculate and Prepare the Initial Balance of Expected Revenue and Expenses

In this step, you must be an expert in handling things from the financial part. You’ll make estimates on how much you may initially spend starting up your project, and then how much your project could make and spend based on that estimate. Among the many issues involved are the amount of money you receive from your customers, money you owe to others, and assets that you own.

Fixed costs, such as variable costs that will change based on the number of goods you produce, and equipment costs also need to be factored in money you may borrow or pay for land and service other companies. Keeping this in mind, you should also consider your business’ off seasons and how much risk you are willing to take. These calculations save a lot of time and effort and can be used to answer the most difficult questions of Feasibility.

6) Review and Analyse all Data

After going through all the steps, it's crucial to do a thorough review and analysis. This helps ensure that everything is in order and there's nothing that needs adjusting. Take a moment to carefully look back at your work, including the income statement, and compare it with your expenses and debts. Ask yourself: Does everything still seem realistic?

This is also the perfect opportunity to consider any risks that might come up and create contingency plans to handle them. By doing this, you'll be better prepared for any unexpected challenges that may arise.

7) Make a go/No-go Decision

Now, it's time to decide if the project can work. This might seem simple, but all the work you've done so far leads up to this moment of decision-making. Before making the final call, there are a few more things to think about. First, consider if the project is worth the time, effort, and money you'll be putting into it. Is the commitment worth it?

Secondly, think about whether the project fits with what your organisation wants to achieve in the long run. Does it align with the organisation’s strategic goals and plans? These factors are essential to consider before making your decision. 

Examples of a Feasibility Study

To better understand the concepts behind feasibility assessments, here are two hypothetical examples showing how these studies can be applied in real-world scenarios.

University Science Building Upgrade

This example is about a university that wanted to upgrade its old science building from the 1970s. They thought it was outdated and needed a change. To implement this, they evaluated different options and determined how much they would approximately cost. Some people were worried about the project being too expensive or its potential to cause issues in the community. The study also analysed what technology the new building would require, how effectively it would help students, and if it would attract more students.

Along with this, they looked at the financial aspect too, as to how they would sponsor for it and if they would make more money from having additional students. The study showed that the project could work, so they went ahead with the upgrade.

High-speed Rail Project

This example is timed when the Washington State Department of Transportation wanted to see if they could build a fast train connecting Vancouver, Seattle, and Portland. To initiate this, they first focused on how to make decisions about the project in the future.

They discussed it with several people and groups to ensure everyone was okay with the plan. Later, they looked at how to pay for it and thought it would cost between $24 billion and $42 billion. They would get money from the government and maybe from loans and investors.

The study showed that the train could bring lots of good things like better jobs and less traffic. They started looking into this in 2016 and finished the study in 2020. They then shared the report with the government.

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How Reliable are Feasibility Studies?  

Feasibility studies are generally reliable as they provide a thorough analysis of various aspects of a proposed project, including economic, legal, and technical considerations. Their reliability depends on the accuracy of the data collected and the methodologies used in the assessment. 

While feasibility studies can't eliminate all risks, they significantly reduce uncertainties and help businesses make informed decisions by identifying potential issues early in the project planning process. 

What Percentage is a Feasibility Study?

Feasibility studies typically do not have a fixed percentage. They have a thorough evaluation of the project's viability. However, some organisations may assign a specific confidence level to their feasibility studies, such as an 80% or 90% probability of success. 

This will be based on the thoroughness of their analysis. The percentage can vary depending on the complexity of the project, the quality of data, and the assumptions made during the study.

You are now more familiar with how a well-executed Feasibility Study is a cornerstone of informed decision-making in Project Management and business ventures. It acts as a critical guide, helping organisations assess the practicality and viability of their initiatives, ultimately minimising risks and increasing the likelihood of success.

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Frequently Asked Questions

Employers value skills like analysis, problem-solving, attention to detail, and communication in Feasibility Study specialists. They need to be good at crunching numbers, finding solutions, and explaining complex ideas clearly.

Many industries need expertise in feasibility studies, such as construction, healthcare, tech, and more. It helps decide if projects are doable.

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What is a feasibility study (definition and overview).

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Feasibility Study Decoded

A feasibility study is a comprehensive and systematic analysis that evaluates the practicality of a proposed project or system.

The depth and breadth of a feasibility study can vary significantly based on the project or investment's nature. However, at its core, typical research will feature five key components.

Market Feasibility

An understanding of the market landscape is essential for any business venture. For instance, when Amazon acquired Whole Foods in 2017, a thorough market analysis would have been crucial. Market feasibility includes:

Identifying The Target Market: Understanding customer demographics, needs , and purchasing habits.

Competitive Analysis: Assessing the competition, its strengths, and weaknesses.

Market Trends and Dynamics: Scrutinizing industry trends, growth rates, and expected market share.

Technical Feasibility

This component assesses the resources required to turn the project from a proposal into reality. Tesla's Gigafactory in Nevada is a prime example of assessing technical feasibility, as it requires extensive resources. Factors to consider include:

Required Technology and Resources : What technology, machinery, and materials are required?

Production Processes : What processes are necessary to produce the goods or services?

Operational Capabilities : Can your team meet the operational demands?

Financial Feasibility

Financial feasibility is a critical aspect of any feasibility study. For example, when Microsoft acquired LinkedIn for $26.2 billion, a rigorous financial feasibility study would have been pivotal. Key considerations include:

Capital Requirements and Funding Sources: How much will the project cost, and where will the funding come from?

Cost-benefit Analysis: Will the benefits outweigh the costs over time?

Projected Financial Performance: What are the projected revenues, cash flow, and profitability?

Organizational Feasibility

An often overlooked aspect of feasibility studies is organizational feasibility — evaluating whether your company has the capability to manage the project successfully . When Google restructured to become Alphabet Inc. in 2015, organizational feasibility would have been critical. Factors to consider include:

Management Structure and Team: Do you have the right team and leadership in place to execute the project?

Legal and Regulatory Considerations: Are there any legal hurdles or requirements that must be addressed?

Risk Management: What potential risks are there, and how will they be mitigated?

Environmental/Social Impact Feasibility

In today's world, businesses must be mindful of their environmental and social impact . Consider Patagonia's dedication to environmental responsibility as an example. Feasibility in this aspect includes:

Environmentally Sustainable Practices: Will the project adhere to environmental standards and promote sustainability?

Social Impact and Community Acceptance: What is the potential social impact, and how will the community react?

Legal and Regulatory Compliance: Are there any environmental laws or regulations that need to be considered?

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Common Mistakes and Pitfalls to Avoid When Conducting a Feasibility Study

A well-conducted feasibility study can provide a wealth of information, helping you make informed and strategic decisions. However, as valuable as these studies can be, they can also lead to costly mistakes if not executed properly. Let's dive into four common pitfalls and how to avoid them.

Insufficient Market Research

One of the most common pitfalls when conducting a feasibility study is inadequate market research. This lack of insight can lead to misconceptions about the demand for a product or service, its market value, or the competitive landscape .

For instance, the mobile streaming platform Quibi made headlines in 2020 for its rapid rise and even quicker downfall. Despite significant investment, the platform was shut down just six months after launch, largely due to a misunderstanding of market trends and consumer behavior. Prevention:

To avoid this pitfall, it's crucial to invest time and resources into comprehensive market research. This involves understanding the target audience, competition, pricing, market trends, and other key factors. Utilize both primary and secondary sources of information for a well-rounded perspective.

Unrealistic Financial Projections

Another common mistake is making unrealistic financial projections. This error often stems from overly optimistic assumptions about revenues, costs, or market penetration rates .

For example, Pets.com became infamous for its financial missteps during the dot-com bubble in the early 2000s. The company, like many others at the time, overestimated the market demand and underestimated the logistical costs, leading to its demise.

Prevention:

To avoid this, you should always adopt a conservative approach when making financial projections. This includes estimating revenues, costs, cash flows, and return on investment. It's also crucial to conduct a sensitivity analysis to understand how changes in assumptions can impact financial outcomes.

Ignoring Legal and Environmental Factors

Often, feasibility studies focus too heavily on market and financial factors and overlook important legal and environmental considerations. These could include regulatory requirements, potential legal disputes, and environmental impacts, among other things.

A prime example of the fallout from ignoring these aspects is the Volkswagen emission scandal . The automaker faced huge fines and a significant hit to its reputation after it was discovered it had installed software in cars to cheat emission tests.

To circumvent this, ensure that your feasibility study includes a thorough review of all relevant legal, regulatory, and environmental factors. If necessary, seek expert advice to help you navigate these complex areas.

Overlooking Organizational Capacity

A final common mistake is underestimating the organizational capabilities needed to execute the project. This encompasses aspects like the team's skills and experience , management structures, and internal processes.

A cautionary tale in this regard comes from the merger of HP and Compaq . The integration led to organizational chaos, with cultural clashes, leadership issues, and a lack of clear strategy causing significant problems.

To avoid this, it's essential to conduct an honest assessment of your organization's capacity and readiness for the project. This should include looking at the skills and knowledge of the team, as well as the processes and structures in place to support the project's execution.

Feasibility studies are an integral part of the investment and project planning process. By carefully considering market, technical, financial, organizational, and environmental factors, you can make informed decisions that optimize your chance of success.

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What is a feasibility study? Definition and examples

A Feasibility Study is an evaluation and analysis of a project or system that somebody has proposed. We also call it a Feasibility Analysis . The study tries to determine whether the project is technically and financially feasible, i.e., is it technically or financially viable? Financially feasible, in this context, means whether the project is feasible within the estimated cost.

A feasibility study also determines whether a project makes good business sense, i.e., will it be profitable?

Put simply; the study is an analysis of how easily or successfully we could complete something. It also tries to determine how profitable or unprofitable it might be.

When large sums of money are at stake, companies and organizations typically carry out feasibility studies.

Such studies are crucial in mitigating risks and ensuring that resources are allocated to projects with the highest potential for success and sustainability.

Feasibility study vs. business plan

The term is similar to a business plan, but the meaning is not the same. When somebody has an initial business idea, the company carries out a feasibility study.

The study aims to flesh out the possibilities in that business idea.

The business plan, on the other hand, describes the company, its goals , strategies, and financial projections (forecasts).

A feasibility analysis tells you whether something will work. A business plan tells you how it will work.

Definition of feasibility

The word ‘ feasibility ‘ means the degree or state of being easily, conveniently, or reasonably done. If something is ‘ feasible ,’ it means that we can do it, make it, or achieve it. In other words, it is ‘doable’ and also ‘viable.’

A viable business, for example , is one we expect will make a profit every year for a long time.

On an Iowa State University webpage, Mary Holz-Clause and Don Hofstrand write:

“A feasibility study is an analysis of the viability of an idea .”

“The feasibility study focuses on helping answer the essential question of ‘should we proceed with the proposed project idea?’ All activities of the study are directed toward helping answer this question.”

A viability study is similar to a feasibility study. However, the viability study only looks at how profitable or commercially successful an idea or project might be. It does not determine whether something is doable.

Feasibility study – example

A hospital, for example, aiming to expand, i.e., add an extension to the building, may perform a feasibility study. The study will determine whether the project should go ahead.

The people carrying out the study will take into account labor and material costs. They will also take into account how disruptive the project might be for staff and patients.

The study may have to gauge public opinion regarding the new extension. In other words, would the local community be in favor or against such a project?

It is important to determine how the stakeholders will respond. A stakeholder is a person with an interest or concern in a project, business, or organization.

Hospital stakeholders are, for example, doctors, nurses, other hospital staff, patients, hospital visitors, and the hospital’s owner. Members of the local community may also be stakeholders.

Those conducting the study go through all the pros and cons of the project. They then weigh them against each other. Finally, they determine whether it is a good idea to go ahead.

Cost vs. value

In its simplest terms, the two main criteria to determine whether a project is feasible are:

• How much will it cost?
• What value will the project bring upon completion?

A good feasibility study

According to Wikipedia , a good feasibility study should provide:

• A historical background of the project or business.
• Accounting statements.
• Details of all the operations and management.
• A detailed description of what it is.
• Financial data.
• Tax implications and obligations.
• Legal requirements.
• Marketing research data and policies .

It should assess the environmental impact and sustainability of the project, ensuring it aligns with contemporary ecological and social responsibility standards. The study should also consider potential technological advancements that could affect the project’s feasibility and future profitability.

These two videos come from our sister channel in YouTube – Marketing Business Network . They explain what a “Feasibility Study” and “Viability Study” are, using easy-to-understand language and examples.

What is a Feasibility Study?

What is a Viability Study?

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Understanding Feasibility Studies: Definition, Importance, and Examples

A feasibility study is a crucial process undertaken to assess the practicality and viability of a proposed project or business venture before significant resources are allocated. This article explores what a feasibility study entails, why it is important, provides examples of its application, and discusses its role in decision-making.

Table of Contents

What is a feasibility study.

A feasibility study is an analysis conducted to evaluate whether a project or business idea is technically, financially, and operationally feasible. It examines the potential for success and identifies potential challenges or risks that may impact the project’s outcomes.

Key Elements of a Feasibility Study

• Market Analysis : Assessing the demand for the product or service in the target market and understanding consumer preferences and behaviors.
• Technical Feasibility : Evaluating whether the technology and resources required for the project are available and achievable.
• Financial Feasibility : Analyzing the costs and benefits of the project to determine its profitability and return on investment (ROI).
• Operational Feasibility : Examining the logistics and operational requirements of the project to ensure it can be effectively implemented.

Importance of Feasibility Studies

Decision-making tool.

A feasibility study serves several important purposes:

• Risk Assessment : Identifying potential risks and challenges early in the planning process allows stakeholders to mitigate these risks or reconsider the project if necessary.
• Resource Allocation : It helps allocate resources efficiently by focusing on projects with the highest likelihood of success based on objective analysis.
• Investment Confidence : Investors and stakeholders gain confidence in the project’s potential by reviewing the findings and recommendations of the feasibility study.

Conducting a Feasibility Study

Steps involved.

• Define the Scope : Clearly outline the objectives, goals, and parameters of the study.
• Gather Data : Collect relevant data through market research, interviews, and analysis of technical and financial information.
• Analysis and Evaluation : Assess the data to determine feasibility based on predetermined criteria and benchmarks.
• Prepare Report : Compile findings into a comprehensive report that outlines the feasibility of the project and provides recommendations.

Examples of Feasibility Studies

Example 1: real estate development.

• Scenario : A real estate developer wants to build a new residential complex in a growing suburb.
• Feasibility Study : Conducts a feasibility study to analyze market demand, construction costs, regulatory requirements, and potential profitability.
• Outcome : Based on the study, the developer decides to proceed with the project due to favorable market conditions and projected ROI.

Example 2: New Product Launch

• Scenario : A company considers launching a new line of organic skincare products.
• Feasibility Study : Assesses consumer preferences, production costs, distribution channels, and competitive landscape.
• Outcome : The study reveals strong consumer interest and competitive pricing, leading the company to move forward with product development and marketing.

Reference and Authority

Feasibility studies are commonly used across industries and are governed by best practices and standards set by project management and consulting bodies. They help ensure that projects are strategically planned and have a high probability of success before implementation begins.

In conclusion, a feasibility study is a systematic analysis conducted to determine the viability of a proposed project or business venture. By examining technical, financial, and operational factors, stakeholders can make informed decisions and allocate resources effectively. Understanding the purpose and process of feasibility studies is essential for mitigating risks, maximizing opportunities, and ensuring the successful implementation of projects in various sectors of the economy.

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Feasibility Study

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A feasibility study is undertaken to determine whether there is a sufficiently high (acceptable) likelihood that a research study being considered can be successfully executed.

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When planning a large and complex research study (particularly an experimental study such as a randomized clinical trial of a behavioral intervention), it is wise to conduct a feasibility study once the study protocol has reached a relatively final stage of development. At that point, the researchers have a good idea of the number of subjects they will need to participate in the trial (the sample size) and many other methodological requirements. The question then becomes: Is there an acceptably high likelihood that it is actually feasible to conduct the trial? Phrased in another manner, the question is: Can the trial be executed as currently laid out in the protocol? A feasibility study is undertaken to answer this question. If the answer is “no,” the researchers can consider making...

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Turner, J.R. (2020). Feasibility Study. In: Gellman, M.D. (eds) Encyclopedia of Behavioral Medicine. Springer, Cham. https://doi.org/10.1007/978-3-030-39903-0_1026

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