Feasibility study

Definition

A feasibility study is an assessment of the practicality and potential success of a proposed project or idea. It evaluates various factors such as technical, financial, and market aspects to determine whether the project is worth pursuing. This evaluation helps stakeholders make informed decisions about resource allocation and project planning.

5 Must Know Facts For Your Next Test

1. Feasibility studies can cover various aspects, including technical feasibility, economic feasibility, legal feasibility, operational feasibility, and scheduling feasibility.
2. These studies often involve collecting data through surveys, interviews, and existing research to support the analysis.
3. A positive feasibility study outcome indicates that a project is viable and can move forward, while a negative outcome may suggest reevaluation or abandonment.
4. Feasibility studies can also help in securing funding by providing potential investors with detailed information on the project's viability.
5. They serve as a crucial step before significant investments are made, ensuring that resources are not wasted on impractical ideas.

Review Questions

• How does a feasibility study influence decision-making in project management?
  • A feasibility study influences decision-making in project management by providing a thorough analysis of the viability of a proposed idea. By examining factors like market conditions, costs, and potential risks, stakeholders can make informed choices about whether to proceed with the project. This assessment minimizes the chances of investing in projects that may not yield favorable results, ultimately leading to more successful project outcomes.
• What role does market analysis play within a feasibility study?
  • Market analysis plays a critical role within a feasibility study by providing insights into the demand for the proposed product or service. It assesses target demographics, competitive landscape, and market trends to gauge potential success. This information helps determine if there is enough demand to justify the investment in the project, thus forming an essential component of the overall feasibility assessment.
• Evaluate how conducting a feasibility study can affect a company's strategic planning process.
  • Conducting a feasibility study can significantly impact a company's strategic planning process by ensuring that decisions are grounded in realistic expectations of project success. By identifying potential obstacles and resource requirements early on, companies can prioritize initiatives that align with their strategic goals. Moreover, it fosters an environment where informed risk-taking is encouraged while minimizing the chances of costly missteps in pursuing unviable projects.

Related terms

Market Analysis: A systematic examination of the market to identify opportunities, trends, and competitive dynamics that can impact a project's success.

Risk Assessment: The process of identifying, analyzing, and evaluating potential risks that could negatively affect a project or business decision.

Cost-Benefit Analysis: A financial assessment that compares the projected costs of a project against its expected benefits to determine overall value.