What Is a Feasibility Study?

A feasibility study is an assessment of the practicality of a proposed plan or project. It 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.

Understanding Feasibility Studies

As part of the feasibility study, project managers must determine whether they have the right people, financial resources, and technology. The study must also determine the 澳洲幸运5官方开奖结果体彩网:return on investment (🐟R🐈OI), whether this is measured as a financial gain or a benefit to society.

The feasibility study might include a 澳洲幸运5官方开奖结果体彩网:cash flow analysis, measuring the level of cash generated from revenue vs. the project’s 澳洲幸运5官方开奖结果体彩网:operating costs. A 澳洲幸运5官方开奖结果体彩网:risk assessment must also be compl🔯eted to determine whether the return is enough to offset the risk of undergoing the venture.

Benefits of Feasibility Studies

Feasibility studies help project managers discern the pros and cons of undertaking a project before their business or organization invests a significant amount of time and capital.

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 s𒐪tudies also help convince investors and bankers that investing in a particulꦗar project or business is a wise decision.

How to Conduct a Feasibility Study

ꩵ The e🌜xact format of a feasibility study will depend on the type of business or organization that requires it. However, the same factors will be involved even if their weighting varies.

Preliminary Analysis

Although each project c💯an 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. Identify the cost of the labor needed, and how long it will be needed for.
• Prepare a projected 澳洲幸运5官方开奖结果体彩网:income statement, which includes revenue, operating costs, and profit.
• Prepare an opening day 澳洲幸运5官方开奖结果体彩网: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 澳洲幸运5官方开奖结果体彩网:due diligence has bee𒁃n completed, the real work begins. Compꦉonents that are typically found in a feasibility study include the following.

• Executive Summary: Formulate a narrative describing the details of the project, product, service, plan, or business.
• Technological Considerations: Ask what it will 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 澳洲幸运5官方开奖结果体彩网:human capital needs for this project? Draw up an organizational chart.
• Schedule and Timeline: Include significant interim markers and the project’s completion date.
• Project Financials: Be thorough.
• Findings and Recommendations: Break these down into subsets of technology, marketing, organization, and financials.

Examples of Feasibility Studies

Below🍨 are two examples of feasibility studies. 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 are concerned that their science building—built in the 1970s—is outdated. They want to explore the cost and benefits of upgrading and expanding th🏅e building. So they conduct a f🐈easibility study.

In the preliminary analysis, school officials 𝄹explore several options, weighing the benefits and costs of expanding and updating the science building. Some school officials have concerns about the project, primarily about the cost and possible community opposition. The feasibility study needs to address these concerns and other issues, like zoning.

The feasibility study must a✃lso explore the technological needs of the new science facility and the benefits to the students. A modernized science facility would expand the school’s scientific research capabilities, potentially attracting new faculty and students.

Financial projections show the cost and scope of the project and how the school plans to raise the needed funds, which includes issuing a bond to investors and tapping into the school’s 澳洲幸运5官方开奖结果体彩网:endowment. The projections also show how the expanded facility would expand student enrollment in the🎐 sciences, increasing revenue from tuition and fees.

The feasibility study demonstrates that the project is viable. ꦅThe p𓆏lan to modernize and expand the science building is given the green light.

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

A High-Speed Rail Project

In this real-world example, the Washington State Department of Transportation decided to conduct a feasibility study on a proposal to construct a high-speed rail line 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. To research the most effective framework, study leaders interviewed experts and stakeholders, reviewed governance structures, and researched other high-speed rail projects.

A strategic engagement plan used 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 cit♍ies and towns would be involved. A team of executive committee members formed to discuss strategies and lessons learned from other projects. The team met w🅺ith 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 would 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 contribut༒ors 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. In December 2024, the project received nearly $50 million from the Federal Railroad Administration. The Washington State Legislature also pledged $5.5 million to the project.

The Bottom Line

A feasibility study helps a project manager determine the viability o🐈f a project or venture by identifying the factors that can lead to its success. The stuღdy 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 pꦺroposed 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.