How To Conduct A Feasibility Study

How to Conduct a Feasibility Study | Enkonix 24/04/2023, 7:21 PM
How to Conduct a Feasibility Study

A feasibility study aims to identify both if the project
can be a success and if the company developing the
project can achieve this success. Typical processes
following the principles of a SWOT analysis, looking
at the strengths and weaknesses, the opportunities
and threats.
16 minutes
In simple terms, this process establishes if a project is feasible, meaning it

is practical and possible to complete and will deliver a successful
outcome. Success is generally defined as giving what the customer
requires to provide a sufficient return on investment. A feasibility study
aims to identify both if the project can be a success and if the company
developing the project can achieve this success. Typical processes
following the principles of a SWOT analysis, looking at the strengths and
weaknesses, the opportunities and threats. The output of the activity
should be the evidence for the go/no go decision for the project and, in
the case of a go, any additional resources or capabilities that the company
must acquire to satisfy any assumptions and prerequisites that underpin
the decision.
What is a Pre-Feasibility Study?
You may come across the term pre-feasibility study, so what is meant by
this term. It is the process of taking the concept for a project and
analyzing the various business scenarios that could be embraced to
deliver that project. Where there are several possible options, the pre-
feasibility study will select which option will produce the best technical
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and financial results and fit with the business's strategic goals. This option
is then carried forward for a more in-depth analysis in the main study.
How to Conduct a Feasibility Study
The study is best performed as a sequential stepped process. Each step

provides the opportunity for the business to review feasibility at each
stage and choose to halt the process if a no-go decision is likely.
The study should follow the following steps:
1. Study Scope
2. Preliminary Feasibility Analysis
3. Financial Analysis
4. Market Survey
5. Operational Planning
6. Financial Planning
7. Risk Analysis
8. Project Review
The Stages of a Feasibility Study

Each of the steps identified above defines the process for completing the
feasibility study. It follows from the business case that sets out what the
business intends to do for the end customer. Its aim is to establish if the
business case's goals can be successfully achieved.
1. Study Scope
A feasibility study can have many objectives, from technical feasibility to

financial feasibility. It is essential that the scope of the study is clearly
defined and agreed upon with all stakeholders to prevent the study from
excluding areas that may later prove disastrous to the success of the
project. Finding out that the company does not possess the correct
development tools until the project has begun may result in additional
costs that compromise the project's financial feasibility.
2. Preliminary Feasibility Analysis
The analysis starts with a preliminary survey of the marketplace for the
planned product or service. The project must deliver something for which
there is a market need to be successful. There must be an untapped
demand, or the planned product or service must be better than the
existing products or services that currently meet the demand. Here, better
can be cheaper, faster, easier to use, or any other factor sufficiently
strong to persuade the end customers to move away from an established
product/service to the new product/service.
3. Financial Analysis
The financial analysis will look at how much it will cost to produce the new
product or service and the predicted revenue streams based on the
preliminary analysis of market demand and price points. This will provide
an indication of investment requirements, cash flow profiles and eventual
return on investment. The analysis will include the feasibility of obtaining
the required investment and any project requirements for early prototypes
to support interim investment or MVP to generate revenue streams during
the development lifecycle.
4. Market Survey
The purpose of the market survey is to validate the assumptions made in
the financial analysis in terms of customer demographics, supply and

demand profiles, product or service pricing, delivery schedules, and
growth potential. This will require comprehensive competitor analysis to
verify that the predicted demand is achievable, both for competitors
active in the marketplace and any potential competitors known or believed
to be developing competing products or services. The market survey
results are refined to revenue predictions that can be fed back into the
financial analysis for an impact assessment of the changes. The results
will also drive the marketing strategy and sales planning exercises in
terms of key milestone dates.
5. Operational Planning
With the financial and marketing preparation in place, operational planning

can begin. This step develops organizational, technological, and
development planning. These are necessary to realize the implementation
of the project within the required timescales.
Organizational planning will balance resource requirements with the

existing organizational structure. The aim is to identify any resourcing
or facility shortfalls. These will require investment, outsourcing, or
subcontracting to resolve. The planning will also balance existing
skillsets and capabilities against project requirements, identifying any
gaps.
Technology planning will compare specific project requirements

against existing technological capability, identifying where new
capabilities must be acquired, purchased, leased, or contracting to
third parties with the necessary facilities.
Development planning will identify the processes and methodologies

that will best meet the project requirements and develop plans that
require product or service capability at each delivery point, driven by
program milestones, marketing strategy, and customer expectations.
6. Financial Planning
The outcomes of the operation planning processes will produce detailed

costings for implementing the project. This will include the costs of
acquiring necessary resources and capabilities, supply chain expenditure,
and business investment. The results of the operation planning are further
refined to revenue predictions that can be fed back into the financial
analysis for an impact assessment of the expected costs. The results will
also affect the marketing strategy and external investment requirements.
7. Risk Analysis
A vulnerability analysis will look at the outputs of the planning processes

and identify critical threats to the project. The results will create a set of
credible risks to the project that can then be assessed against the
corporate risk appetite. Those risks deemed too great can be reduced or
eliminated by introducing contingency planning and risk mitigation
strategies. The risk analysis exercise will end when all credible threats
have been identified and either eliminated, reduced to an acceptable level,
or accepted by the stakeholders as being accepted.
8. Project Review
The final step in the feasibility study process is the formal review of all
evidence by stakeholders and an agreed-go or no-go decision. This
decision is driven by the previous steps but will be mindful of the
business's tactical aims and long-term strategic goals.
Feasibility Study Example
So how do you write a feasibility study?
The documented results typically adopt the following structure, which can
form a feasibility study template for your own analysis:
1. Executive Summary
A summary of the project, the feasibility study process, and the agreed
scope of the study.
2. Product/Service Description
A summary of the product or service that the project will deliver.
3. Operational Considerations
Details of the organization regarding facilities and resources required

to complete the project include what is currently available and what
will need to be obtained.
Details of the technology regarding equipment, tools, and skills

required, including what resources and capabilities will need
acquisition or outsourcing.
Details of development processes regarding tools, skills, capabilities,

and resources required to complete the project, including what is
currently available and what will need to be obtained.
This section should include purchasing, leasing, and training costs

associated with the operation factors that are not currently available.
4. Target Marketplace
Analysis of the marketplace for the product or service, defining target

demographics, competitors, growth potential, and existing presence
that can be leveraged.
5. Marketing Strategy
Detail strategy for marketing the product or service including any

marketing requirements for prototypes or MVP and sales plans.
6. Resourcing Plan
Identification of resourcing requirements and analysis against the

organizational structure to identify any recruitment or training
requirements.
7. Project Schedule
Definition of key milestones, task dependencies, and overall project

timescales highlighting resource requirements, critical paths, task
prerequisites, and critical program dates.
8. Financial Projection
Details of initial and interim investment requirements, cost breakdowns,

spend profiles, and predicted revenue streams to generate cash flow
forecasts and quantify the expected return on investment.
9. Risk Register
List of all significant and credible risks to project success along with
planned mitigations and stakeholder agreement for acceptance of those
risks that cannot be eliminated or reduced to a level below the company's
risk appetite.
10. Contingency Planning
For each significant risk unmitigated in the risk register, a plan for actions
to be taken should the risk materialize.
11. Findings and Recommendations
The study's conclusions clearly laid out to facilitate decision-making and

the recommendationsthat must be actioned to support the findings.
What is the Purpose of a Feasibility Study?

This process can fulfil a range of purposes; the scope of the study must
be defined and agreed upon with all stakeholders before any detailed
analysis is undertaken. Typically, a feasibility study will fulfil one or more of
the following purposes and answer the relevant questions for that
purpose.
1. Financial Feasibility
What initial investment is required, and is it available?
What financial resources will be required, and are they available?
What will be the projected return on investment, and is it sufficient?
2. Technical Feasibility
What infrastructure will be required, and is it available?
What development tools will be required, and are they available?
What development skills will be required, and do we have them?
What technologies will need to be acquired, and are they available?
What facilities will be required, and are they available?
3. Market Feasibility
Is there a non-saturated market for the end product or service, and

what is its growth potential?
What are the demographics of the target market, and do they exist in
sufficient numbers?
Are the competitors in the marketplace dominant or vulnerable?
Does the end product or service have unique selling points?
What is the marketing strategy, and is it achievable?
What are the project sales, and are they sufficient?
4. Organizational Feasibility
Does the business have the capability to complete the project on

time and within budget?
Does the business have the required resources and skillset to realize
the project?
Does the business have the correct structure and governance to

realize the project?
Why Do Feasibility Studies Fail?
Feasibility studies help businesses avoid making bad decisions, taking on

projects that are not technically feasible or produce products for non-
existent markets. Getting the research right is essential for the future
viability and profitability of the business. So, what is one of the most
common mistakes made in the market feasibility study?
What Are The Common Pitfalls?

The biggest problem is insufficient effort spent on the study. Feasibility
studies should be considered a self-contained project, requiring
management to guide the process and sufficient resources to achieve its
aims. Without adequate time and resources, the study will not be helpful,
and the integrity of the decision-making processes compromised.
Some other common pitfalls we have seen when businesses conduct

these studies include:
The study must have a clear and complete scope to ensure essential
factors that influence the decision-making process are not omitted.
Critical components and competencies required to complete the
project are not overlooked.
The study must be inclusive of all stakeholders for the project and
not just within the business. Not listening to target users or
representatives' supply chain may exclude vital information that
affects the study's outcome.
The stakeholders must embrace all opinions and not reject views that
do not match the prevailing views to prevent a preconceived go or
no-go decision from adversely influencing the evidence and
railroading the decision.
The Bottom Line

A feasibility study is a vital step in ensuring the success of a project. It
doesn't matter how brilliant the development team is and how
experienced the project management is. If a project is not feasible, then
by definition, it cannot be a success. The study is an assessment of the
practicality of a project undertaken before the project starts.
1. It establishes the gaps between what the business needs to carry out
the project, what is missing from this list and how it will fill the gaps
2. It then establishes if the costs of completing the project, including

filling those gaps, will be sufficiently compensated by predicted
revenue to deliver a return on investment
3. It then balances this financial argument against the goals of the

business.
We hope this has shown you how to do a feasibility study and emphasized
the disadvantages to your business of not conducting such a study before
starting a project. At Enkonix we are always happy to help you with the
project and give a consultancy, just contact us!

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How to Conduct a Feasibility Study | Enkonix 24/04/2023, 7:21 PM

In simple terms, this process establishes if a project is feasible, meaning it

What is a Pre-Feasibility Study?

How to Conduct a Feasibility Study

The study is best performed as a sequential stepped process. Each step

The study should follow the following steps:

2. Preliminary Feasibility Analysis

The Stages of a Feasibility Study

A feasibility study can have many objectives, from technical feasibility to

2. Preliminary Feasibility Analysis

The purpose of the market survey is to validate the assumptions made in

the financial analysis in terms of customer demographics, supply and

With the financial and marketing preparation in place, operational planning

Organizational planning will balance resource requirements with the

Technology planning will compare specific project requirements

Development planning will identify the processes and methodologies

program milestones, marketing strategy, and customer expectations.

The outcomes of the operation planning processes will produce detailed

A vulnerability analysis will look at the outputs of the planning processes

Feasibility Study Example

So how do you write a feasibility study?

A summary of the product or service that the project will deliver.

Details of the organization regarding facilities and resources required

Details of the technology regarding equipment, tools, and skills

Details of development processes regarding tools, skills, capabilities,

This section should include purchasing, leasing, and training costs

Analysis of the marketplace for the product or service, defining target

Detail strategy for marketing the product or service including any

Identification of resourcing requirements and analysis against the

Definition of key milestones, task dependencies, and overall project

Details of initial and interim investment requirements, cost breakdowns,

10. Contingency Planning

11. Findings and Recommendations

The study's conclusions clearly laid out to facilitate decision-making and

What is the Purpose of a Feasibility Study?

What initial investment is required, and is it available?

What financial resources will be required, and are they available?

What will be the projected return on investment, and is it sufficient?

What infrastructure will be required, and is it available?

What development tools will be required, and are they available?

What development skills will be required, and do we have them?

What technologies will need to be acquired, and are they available?

What facilities will be required, and are they available?

Is there a non-saturated market for the end product or service, and

Are the competitors in the marketplace dominant or vulnerable?

Does the end product or service have unique selling points?

What is the marketing strategy, and is it achievable?

What are the project sales, and are they sufficient?

Does the business have the capability to complete the project on

Does the business have the correct structure and governance to

Why Do Feasibility Studies Fail?

Feasibility studies help businesses avoid making bad decisions, taking on

What Are The Common Pitfalls?

Some other common pitfalls we have seen when businesses conduct

The Bottom Line

2. It then establishes if the costs of completing the project, including

3. It then balances this financial argument against the goals of the

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