What Does "Feasibility Study" Mean?
A feasibility study is a rigorous evaluation conducted by an entrepreneur or business owner before launching a new project. Its primary purpose is to assess the viability and chances of success of the proposed idea.
The Relationship Between Feasibility Studies and Strategic Planning
A feasibility study is about evaluating a new project, while strategic planning is the study of the best fields the organization can work in during the coming years and how it can compete in them. Strategic planning is broader than a feasibility study.
Despite this, there is a great similarity between them; both require studying the market, competitors, customers, influencing external factors, and available capabilities, ending with predicting the expected financial return.
Using Consulting Firms vs. Ready-made Feasibility Studies
Consulting firms can be used to prepare a feasibility study, or one can rely on pre-prepared studies for certain projects. Using a consulting firm carries the cost of preparing the study but provides a custom analysis. Ready-made studies force you to restrict yourself to the presented projects, which are often traditional and lack innovation.
Advanced Types of Feasibility: Beyond Economics
It is a mistake to believe that feasibility only concerns numbers. In today's projects and information systems, the project is evaluated from several angles:
1. Organizational Feasibility
Focuses on how the project supports business strategy and priorities, and the extent of change the system will cause and its suitability for the organization's culture.
2. Technical Feasibility
Required to ensure technical project needs are met, and the possibility of acquiring hardware or developing software and providing it on time with high efficiency.
3. Economic Feasibility
Concerned with the benefits gained, and development and operating costs. Revenues and returns are estimated compared to tangible and intangible costs to ensure long-term profitability.
Conclusion
A feasibility study answers one crucial question: "Is this project worth the investment?" By analyzing the idea organizationally, technically, and economically, you can reduce risks and draw a clear path for investment success. Therefore, this step should never be skipped.
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